Dealer Lab: May earnings drop $15,000

Publish Date: 
Jul 24, 2012
By Joe Delmont

Editor’s note: The Dealer Lab project is a joint effort between Dealernews and PowerHouse Dealer Services, a consulting firm run by Bill Shenk, detailing his efforts to return a Florida powersports dealership, now named Destination Powersports in Punta Gorda, Fla., to profitability.
    The financial information in this report is taken from the dealership’s Composite Report supplied by Shenk and is prepared as part of the dealership’s participation in the PowerHouse Dealer 20 Group. The Composite Report is produced from the store’s monthly financial report. In preparing these Dealer Lab reports, Dealernews reviews the dealership’s unaudited P&L statement and Balance Sheet and its Composite Report.

Revenues from unit sales and parts improved in May over the same month in 2011, but dealership earnings were hurt by a $13,000 drop in Service department revenues. Net income for the month was $14,000, down 51 percent from the $29,049 posted in May 2011. Total revenues in May this year improved to $491,404 from $463,111 in May 2011.

Gross profit for the month was $114,481, off 7.3 percent from the $123,567 in May 2011. Year-to-date earnings through May were off nearly $45,000, or 32.3 percent, for the same period in 2011. For the first five months of 2012, earnings were $93,045 on total revenues of $2,402,816, down from earnings of $137,637 on total revenues of $2,411,166 for the first five months of 2011.

The cost of goods sold was up sharply for the month, climbing $37,379, or nearly 11 percent. This total cost of sales (COS) was 76.7 percent of sales, compared to 73.3 percent for PHDS Top Gun dealers.

Parts and Service have a lower cost of sales per gross dollar collected than unit sales. So if those areas slip as a percentage of the total revenue created, COS will increase per dollar or as a percentage of revenue.

Shenk isn’t discouraged by the dropoff in earnings. “It’s still crazy good,” he says, “even though it’s down from last year. We’re getting way more than our market share and we’re getting good margins [on the sales]. We are doing above ‘good’ by any standard that I know of.”

SALES SLIGHTLY UP
During May, the store sold 49 new and used machines, up from 45 last May. “Total new and used Honda, Yamaha, Kawasaki and Suzuki motorcycles sold and registered in our county year-to-date through May by all dealers was down 2012 versus 2011, from 107 to 99,” Shenk says. “However, we are up from 132 in 2011 to 152 in 2012, and we do not have Honda, which is included in those numbers.”

Also up is the total gross profit created on that business YOY, from $237,592 in 2011 to $250,442 in 2012. “This shows that we are not only getting the business but we are making good margin on that business,” he says.