SG&A Efficiency Analysis: Comparing Cummins Inc. and Watsco, Inc.

SG&A Efficiency: A Tale of Two Companies

In the competitive landscape of industrial and distribution sectors, understanding SG&A (Selling, General, and Administrative) efficiency is crucial. Over the past decade, Cummins Inc. and Watsco, Inc. have demonstrated contrasting trends in their SG&A expenses. Cummins Inc., a leader in power solutions, has seen a steady increase in SG&A expenses, peaking at over 3.2 billion in 2023, marking a 53% rise since 2014. In contrast, Watsco, Inc., a major player in HVAC distribution, has managed a more modest increase of 82% over the same period, reaching approximately 1.2 billion in 2023. This divergence highlights Cummins' aggressive expansion and investment strategies, while Watsco's growth reflects a more conservative approach. As businesses navigate economic uncertainties, these insights into SG&A efficiency offer valuable lessons in balancing growth with operational costs.