A Case Of Déjà Vu

September 9, 2005
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The team from Coolray and Mr. Plumber include (from left) Joel Powell, operations manager; Eric Evans, HVAC service manager; Ken Haines, president; Lisa Barnard, controller; Bill Boykin, plumbing service manager; and Ken Buwalda, HVAC installation manager.
If some of The News' 2005 Residential All-Stars look familiar, it's because they are. There are many repeats on both the residential new construction team, as well as the residential replacement/add-on squad.

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 percentage of work in the residential arena had to be significant. To be more specific, 50 percent or more of a company's total 2004 sales volume had to be in residential sales to qualify and be classified as a "residential contractor."

  • The company had to have a reputation for professionalism, quality workmanship, and accountability.

  • Candidates had to be willing to have the company's sales figures published.

    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.)

    A Beutler Corp. technician installs a new condenser at a new residential home. It was another strong year for Beutler in 2004, as it recorded $170 million in residential new construction.

    New Construction Leaders

    President 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."

    Tempo Mechanical Services senior vice president Tom Murrell (standing, white shirt) provides training to Tempo service technicians at a weekly service meeting.
    Tempo Mechanical Services is No. 2 on the 2005 new construction scorecard. Last year was another strong year for CEO Steve Saunders. Total income for 2004 was nearly $20 million, with 78 percent of that coming from the residential new construction market.

    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.)

    Green Heating and Cooling president Jimmy Green (far right) discusses business with (from left) account representative Jim Gibson Jr., production manager Brandon Chapman, and general manager Jimmy Gibson III.
    Rounding out the new construction elite squad are:

  • No. 5 - Green Heating & Cooling Inc., Canton, Ga. Owner Jimmy Green's business moved up two slots in The News' standings, thanks to a strong 2004. The company earned nearly $12 million in residential work last year, with 78 percent (or nearly $9.5 million) coming from residential new construction.

  • No. 6 - Conditioned Air Corp. of Naples, Inc., Naples, Fla. It moved up three slots in The News' rankings. Owner W. Theodore Etzel III is happy to report nearly doubling its residential new construction output from 2003 to 2004. Whereas in 2003 Conditioned Air earned just over $9.5 million overall, it earned $8,380,000 in residential new construction alone in 2004.

  • No. 7 - Roscoe Brown Inc., Murfreesboro, Tenn. Owner Gary Brown's business earned $9.8 million overall last year, of which just over 60 percent can be attributed to residential work. In the end, the firm racked up nearly $3 million in the new construction market for 2004.

  • No. 8 - With two of The News' Residential New Construction All-Stars from last year's squad opting to bow out of the competition for 2005, this helped Guertler-Fulford Heating and Air Conditioning of Batavia, Ill., crack the lineup. It earned just over $1 million in residential new construction for 2004.

    Working on a unit is American Home Maintenance vice president Ron Schuman.

    Replacement/Add-On Leaders

    In 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."

    American Home Maintenance president Jordy Tessler, seated at the head of the table, conducts a meeting with a few techs and personnel. Among the listeners is vice president Ron Schuman (to the left of Tessler).
    Admittedly, it is easier to sell a lower-priced system, said Schuman, "but I feel the main reason is because our industry does not know how to sell enough value." It's why last year, with sales coach Joel Weldon leading the way, American Home Maintenance stressed training.

    "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.

    Tommy Estes (standing), president of Estes Heating and Air Conditioning, looks over some business figures with vice president Brian Estes (left) and general manager John Waldorf (right).
    Rounding out the replacement/add-on elite squad are:

  • No. 6 - Brothers Air & Heat Inc., Rock Hill, S.C. President Roger Costner's company had another strong year, but finished in the same slot at sixth. Whereas in 2003 Brothers Air & Heat accumulated over $6.8 million in the replacement/add-on business, it recorded $7,515,545 in this market for 2004.

  • No. 7 - Isaac Heating and Air Conditioning, Rochester, N.Y. Total income jumped to nearly $16 million for 2004, 72 percent coming from residential business. For Ray Isaac, replacement/add-on income did drop somewhat in 2004, accounting for $7,135,910 in business.

  • No. 8 - Estes Heating and Air Conditioning, Atlanta. Tommy Estes and his team nearly duplicated what it did in 2003. This past year the company earned over $9.5 million in income, breaking that down into nearly $6 million in replacement/add-on business.

  • No. 9 - Welsch Heating and Cooling, St. Louis. As mentioned before, owner George "Butch" Welsch's company is the lone firm to make both of The News' Residential All-Stars teams. In addition to the company's more than $14 million performance in the residential new construction market, it pulled in nearly $4.5 million in replacement/add-on business for 2004.

  • No. 10 - Service Champions of Northern California, San Ramon, Calif. Owner Kevin Comerford is proud of the fact his team took in $4.8 million in revenue for 2004, that being its first full year of operation. Breaking that down into replacement/add-on numbers, it equates to $3.9 million of business.

    "The only way this could happen is by having a team with ‘can-do' attitudes, said Comerford. (See related story on Service Champions of Northern California, "The Poster Boy For Replacement Sales," in this issue.)

    Honorable Mentions

    Due 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:

  • Pacific Aire, Ventura, Calif. Owner/president: Mark Schneider. Total income for 2004: $3,153,160. Percentage attributed to residential work: 99 percent. Total residential income for 2004: $3,143,160. Percentage attributed to residential replacement/add-on: 98 percent. Total residential replacement/add-on income for 2004: $3,130,000.

  • Don Hoffacker's Air Conditioning & Heating Inc., Germantown, Md. Owner/president: Don Hoffacker. Total income for 2004: $4,211,556. Percentage attributed to residential work: 100 percent. Total residential income for 2004: $4,211,556. Percentage attributed to residential replacement/add-on: 68 percent. Total residential replacement/add-on income for 2004: $2,737,000.

  • Wilkins Mechanical Services Inc., Bedford, N.H. Owner/president: Bob Wilkins. Total income for 2004: $4,222,901. Percentage attributed to residential work: 100 percent. Total residential income for 2004: $4,222,901. Percentage attributed to residential replacement add-on: 60 percent. Total residential replacement/add-on income for 2004: $2,548,746.

  • General Air Conditioning, Thousand Palms, Calif. Owner/president: Frank Harrison. Total income for 2004: $4 million. Percentage attributed to residential replacement add-on: 62 percent. Total residential replacement/add-on income for 2004: $2.5 million.

  • Keil Heating and Air Conditioning Inc., Riverdale, N.J. Owner/president: Barbara Keil. Total income for 2004: $2,859,598. Percentage attributed to residential work: 97 percent. Total residential income for 2004: $2,791,458. Percentage attributed to residential replacement add-on: 64 percent. Total residential replacement/add-on income for 2004: $1,834,521.

  • Bob Woodall Air Care Systems Inc., Dothan, Ala. Owners/presidents: Bob Woodall and Cal Turner. Total income for 2004: $2.5 million. Percentage attributed to residential work: 86 percent. Total residential income for 2004: $2.14 million. Percentage attributed to residential replacement add-on: 65 percent. Total residential replacement/add-on income for 2004: $1.63 million.

  • Jacob Brothers Heating and Air-Conditioning, Cincinnati. Owner/president: Gary Jacob. Total income for 2004: $3,110,731. Percentage attributed to residential work: 80 percent. Total residential income for 2004: Approximately $2.5 million. Percentage attributed to residential replacement add-on: 52 percent. Total residential replacement/add-on income for 2004: Approximately $1,613,063.

    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 markskaer@achrnews.com.

    Publication date: 09/12/2005

    CLICK HERE for charts.

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