Service experts seeks buyer

NASHVILLE, Tenn. — Three years after its formation and growth to the $600 million level, the consolidated contractor Service Experts, citing poor earnings projections, said it is seeking a buyer.

The acquirer may be a utility, an hvac manufacturer, or a mass retailer like Home Depot. In recent weeks, one rumored buyer was a major hvacr manufacturer, but the company has denied such reports.

The Service Experts development follows last week’s announcement that the publicly traded company would miss by 50% its projected quarterly earnings of 44 cents per diluted share, earning instead in the range of 23 to 28 cents. In response, the price dropped 38% to $12.63 a share in one day, where it remained last week.

Chairman Alan R. Sielbeck blamed bad weather, a fall-off in the company’s light commercial business (30% of its volume), and unexpected expenses in combining hubs (service centers) in three locations.

“Part of the reason was uncooperative weather, some was self-inflicted,” said Sielbeck.

The company also said its financial advisors have had “preliminary discussions with several potential acquirers.”

Corporate survival

This news underscores the difficulty of large contracting companies operating in the world of Wall Street. Disappoint the analysts and the reaction is quick and severe.

Nashville-based Service Experts went public on Aug. 16, 1996, opening at $13 a share. One year ago, it reached a high of $38 a share. In mid-February the shares dropped when the company cited warm weather for cooling its 1999 earnings.

During its life, the company has completed an aggressive roll-up of contractors. It now has 116 service centers in 36 states, focusing mainly on residential replacement and service work.

Each quarter the company acquired from 12 to 34 dealers in a cash-and-equity transaction. The company announced in April the acquisition of 31 dealers representing $48.8 million in combined sales.

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