A Case Of Deja Vu
In other words, when you're good, you're good.
Leading the way for the 2005 Residential New Construction All-Stars is Beutler Corp. of Sacramento, Calif. Beutler recorded nearly $170 million in residential new construction last year, surpassing its $117 million-plus figure of 2003.
Leading the way for the 2005 Residential Replacement/Add-On All-Stars is, once again, American Home Maintenance of Tempe, Ariz. Owner Jordy Tessler is happy to report that his firm's total income for 2004 was $25 million, of which 80 percent is attributed to residential replacement/add-on. Right behind in the running is newcomer Air Group LLC of Whippany, N.J., which recorded approximately $18 million in residential replacement/add-on revenue last year.
The companies are ranked according to their 2004 total sales volume, but there were other qualifications requirements, including:
The editorial team surveyed and contacted hundreds of candidates, plus asked for possible nominees via fax, phone, and e-mail. As a result, what The News has compiled is a strong list of residential contractors who can really hit it out of the park. (For the complete listing of The News' respective All-Star New Construction and Replacement/Add-On teams, click on the link below for a PDF of the two charts.)
New Construction LeadersPresident Rick Wylie can point out three specific reasons why Beutler recorded such a strong year in residential new construction in 2004. First of all, in November of 2003, it acquired its largest competitor, which also specializes in new residential construction.
"This accounted for about $25 million in increased revenue for 2004," said Wylie. "They had been a part of Blue Dot, and when they collapsed, we were able to acquire the local branch division, Air Design. We continue to operate that as a separate brand/choice for our builder community."
At the same time, Wylie said he saw a significant increase in revenue per home, due to increased option sales, both in traditional HVAC product lines, and in its Beutler Digital Home Division, which installs low-voltage wiring, central vacuum systems, home theater, distributed audio, and home security.
"We continue growing our market in our outlying regions, particularly our central valley business operations," he added.
In short, Beutler has built its business processes specifically to address the new product home market place. It prefabricates its own duct systems "and do as much of the work in our plant as possible, where labor is much more cost-effective, more easily trained and supervised, and in a much friendlier work environment, weather-wise," explained Wylie.
Beutler also has tailored its products, services, and marketing specifically to the new construction segment.
"We work hard to continually understand what our builder-customers need," said Wylie. "And we work hard to reinvent those products and services as often as needed to keep meeting their needs. Our patented HVAC and sheet metal products are a testament to this strategy."
At the same time, Wylie said the company takes on a much larger responsibility for its work "than many of our competitors." For instance, it inventories more equipment and materials, he said, in addition to making its own sheet metal products and delivering its own materials.
"Many of our competitors try to subcontract out portions of this work, but we believe that increases their costs and decreases their ability to maintain the tough construction schedules and quality requirements of our new home builders," he said.
Wylie would also like to think that his company has a higher capacity to handle the volatile swings in construction volume.
"Over time, our builder-customers have come to the conclusion that we are the only reliable source for goods and services, as they have experienced tragic failures during other construction-peak periods when using other providers," said Wylie.
Then again, success can bring about success, he admitted.
"As we have grown, we have been able to increase our buying power and internal resources, making us more able to compete in cost and yet provide more services that are more reliable for our builders," he said. "Our ability to finance our own apprentice training program means we have the best trained work force, and the ability to expand this workforce with the growing market much more easily than our competitors."
Moving up three slots and finishing third in the standings is AirCo. of Hurst, Texas. President Rick Thornton's firm jumped from just over $11 million in residential new construction sales in 2003 to recording $12,875,380 in 2004.
Welsch Heating and Cooling of St. Louis has the lone distinction of being on both sides of The News' residential fence. Thanks to a strong 2004, Welsch placed fourth overall among the 2005 Residential New Construction All-Stars, earning over $9 million in residential new construction. Meanwhile, George "Butch" Welsch's firm came in ninth among the 2005 Residential Replacement/Add-On All-Stars, earning nearly $4.5 million in replacement/add-on income. (See related story on Welsch Heating and Cooling, "Welsch Heating & Cooling Is A Class Act," in this issue.)
Replacement/Add-On LeadersIn the residential replacement/add-on market, American Home Maintenance keeps rolling along. Vice president Ron Schuman can point to various reasons why the company increased its overall income by $5 million from 2003 to last year.
"For Arizona contractors, 2004 was a year in which our weather conditions were not as extreme as we've been accustomed to," he said. "Fortunately, we were still able to foster growth on gross margins, closing percentages, and high-efficiency sales."
If he had to point to one reason for staying atop The News' Residential Replacement/Add-On All-Star team for the second year in a row, it would be to the development and training of the company's new approach toward sales.
"One of the most important tips I can pass on is something we've all heard before: never prejudge the customer," said Schuman. "We offer everyone the opportunity to buy the most comfortable and cost-effective system for their needs, whether the client appears wealthy or not.
"When you look at rising utility costs, durability, comfort, warranties, and air quality, are we really doing the customer a favor by offering 12-SEER products? I would like to believe that most of the industry agrees we are not."
"If your organization develops an ongoing training program with the aim of teaching your technicians how to continually raise value or benefits, you will become more successful in the add-on/replacement market," said Schuman. "The choice is simple: stand on price and add more value, or enter into the low-bid, price-war game."
Placing second on The News' residential replacement/add-on team is Air Group LLC of Whippany, N.J. President John Conforti is happy to report that his company took in $19 million last year, with 95 percent coming in from replacement/add-on business.
Placing third in the overall replacement/add-on standings is United Air Temp, headquartered in Lorton, Va. The company continued to ramp up in 2004, topping 2003's total revenues by more than $3 million. President Gabe Ivanescu said his company continued to provide high-quality service, products, and complete customer satisfaction last year, which translated into nearly $14.5 million in total replacement/add-on business in 2004.
No. 4 - Cropp-Metcalfe Air Conditioning and Heating, headquartered in Fairfax, Va., is not new to The News' list. Ironically, it had a better year in 2004 than 2003, but fell in the rankings. Not that president Mitchell Cropp is concerned. He will take $23.5 million in earnings any year. Translating that into replacement/add-on business, that's over $11.5 million amassed in that segment last year. It was also strong in service and service contracts, taking in nearly $9 million in that side of the business.
Finishing fifth for the second straight year is Coolray Heating and Cooling, Atlanta. Owner Ken Haines' team earned $9,754,600 in the residential replacement/add-on market for 2004, plus earned more than $1 million more in total revenue for 2004 compared to 2003's totals.
"The only way this could happen is by having a team with â€˜can-do' attitudes, said Comerford. (See related story on Service Champions of Northern California, "The Poster Boy For Replacement Sales," in this issue.)
Honorable MentionsDue to the overwhelming number of responses from contractors, The News opted to put together a list of Honorable Mention Replacement/Add-On All-Stars. Making this list are:
Did We Miss You? The News tried to reach as many contractors as it could to compile its list of 2005 Residential All-Stars. However, it is possible we may have missed you. The News will publish its listing of the 2006 Residential All-Stars in the Sept. 11, 2006 issue. If you would like The News to consider your company for inclusion on next year's team, please contact senior editor Mark Skaer at 618-239-0288, or e-mail him at email@example.com.
Publication date: 09/12/2005
CLICK HERE for charts.