Gray, Gray & Gray, LLP Certified Public Accountants, Westwood, Mass., recently released the results of the firm’s 23rd annual Oilheat Industry Survey. The survey was distributed to retail fuel oil and propane dealers throughout the Northeast and Mid-Atlantic regions of the U.S.
“This year’s survey results reflect the positive effect of a long and cold winter. Oil sales and margins were both up and customer lists are growing at an increasing rate. I am thrilled to see this upward trend, but many challenges still face oil and propane dealers and they need to be addressed for companies to remain viable,” said Joe Ciccarello, CPA, managing partner at Gray, Gray & Gray.
Some of the highlights of the 2014 Gray, Gray & Gray Oilheat Survey results include:
- 48 percent of respondents report an increase in the number of customers their company serves, up significantly from the 31 percent who reported customer growth in 2013.
- 32 percent of dealers report losing customers to gas conversions, continuing a trend of slowing losses to pipeline gas utilities. In 2013, 41 percent reported losing customers to gas, which was down from a high of 74 percent reporting customer loss to gas in 2012.
- Sale of residential heating oil was up almost 3 percent over last year, and the average margin was up 3 cents to $0.63 per gallon.
- Despite all the attention focused on the potential burdens imposed on businesses by the Patient Protection and Affordable Care Act, 98 percent of respondents say it will not affect them (61 percent won’t change their health care plan, and 37 percent have fewer than 50 employees and are exempt).
Complete oilheat survey results are available on Gray, Gray & Gray’s web site at: www.gggcpas.com, or by calling (781) 407-0300.
Here are the complete results of the 2014 Gray, Gray & Gray Oilheat Industry Survey.
In what state does your company primarily do business?
23 percent Massachusetts
29 percent Pennsylvania
13 percent New York
13 percent Connecticut
5 percent Maine
3 percent New Jersey
10 percent New Hampshire
1 percent Maryland
1 percent Vermont
5 percent Rhode Island
2 percent Virginia
2 percent Delaware
Total number of employees: 16
Number of service technicians (full-time equivalent): 5
Number of delivery drivers (full-time equivalent): 4
What is the average HOURLY rate you pay?
Delivery Drivers $20.00 per hour
Dispatchers $20.00 per hour
Customer Service Representatives $17.00 per hour
Accounts Payable/Receivable Staff $19.00 per hour
Service Technicians $23.00 per hour
Service Manager $29.00 per hour
How do you compensate Sales People?
21 percent – Straight salary (Avg. amount: $54,507)
20 percent – Salary plus commission (Avg. percentage: 8 percent)
0 percent – Commission only
What will your approach be to meeting the health care mandates of the Patient Protection and Affordable Care Act?
61 percent – Continue offering our current health coverage
1 percent – Change health insurance plans
1 percent – Drop health insurance altogether
37 percent – We have fewer than 50 full-time employees and are not affected by health care mandates
Are you considering any of the following?
28 percent – Acquire another company
22 percent – Sell your company
19 percent – Transition to the next generation of family
9 percent – Conduct a business valuation
0 percent – Refinance
8 percent – Develop a bulk plant
10 percent – Upgrade an existing bulk plant
2 percent – Converting to an S Corporation
8 percent – Converting to flat rate billing for service
13 percent – Retire
How many fuel customers do you have?
Retail/Residential Heating Oil: 2,249
Commercial Heating Oil: 160
In comparison to this time in 2013, has your customer list:
48 percent – Increased
24 percent – Decreased
28 percent – Same
To what do you attribute the gain or loss of customers since April 2013?
12 percent – Gained to increased advertising
2 percent – Gained due to acquisition
39 percent – Gained due to other reason
2 percent – Lost to competitor with similar pricing
12 percent – Lost to discounter
32 percent – Lost to gas conversion
8 percent – Lost due to other reason
In the past year, do you think gas competition/conversion has:
69 percent – Increased
5 percent – Decreased
26 percent – Same
In what range do your current receivables fall?
37 percent – Less than 30 days
53 percent – 30-60 days
7 percent – 60-90 days
3 percent – Over 90 days
Do you have a bank line of credit?
75 percent – Yes Total line (from all banks) avg.: $1,046,418
25 percent – No
How many gallons of fuel did you sell during the heating season just ending?
Retail/Residential Heating Oil: 1,347,807
Commercial Heating Oil: 287,950
What was your average TARGETED margin for fuel sales during the heating season just ending?
Retail/Residential Heating Oil: $0.63 per gallon
Commercial Heating Oil: $0.45 per gallon
Propane: $1.16 per gallon
Kerosene: $0.63 per gallon
Gasoline: $0.24 per gallon
Diesel: $0.39 per gallon
Which of the following do you offer to RETAIL customers?
45 percent – Fixed pricing
33 percent – Price cap
85 percent – Budget payment plan
55 percent – Service contracts
7 percent – Free oil for new customers (oil coupons)
8 percent – Free service for new customers
18 percent – Temperature monitoring device/alarm
11 percent – Tank monitoring system
31 percent – Tank protection plans
79 percent – Heating equipment service
78 percent – Heating system installation
Do you charge retail customers for price protection?
6 percent – Yes – For Fixed Price $0.25 per gal. – $44 avg. fee
25 percent – Yes – For Cap Price $0.26 per gal. – $129 avg. fee
5 percent – Yes – For Down Side $0.27 per gal.
64 percent – Do not offer a price protection plan
Do your price protection plans offer a buyout option?
16 percent – Yes – Fixed amount ($392 avg.)
43 percent – No
Will you offer price protection plans next year?
44 percent – Yes
43 percent – No
13 percent – Not sure
If you hedge your price protection programs, what percentage do you hedge?
What is your average RESIDENTIAL drop (gallons delivered per stop)? 165
What is the average renewal price you charge for a service contract? $242
How many PAID service contracts do you have? 1,150
How many service calls were made last year? 2,979
Have you completed a merger or acquisition in the past 3 years?
8 percent – Retained gallons
8 percent – Cash at closing
84 percent – No
Do you have or are you planning to add alternative sources of revenue?
Already Offer Plan to Add
Service Gas Equipment 36 percent 6 percent
Sell Propane 25 percent 1 percent
Sell Electricity 8 percent 1 percent
A/C Installation & Service 50 percent 2 percent
Plumbing Services 15 percent 0 percent
Solar Installations 6 percent 1 percent
Home Security Services 1 percent 3 percent
Other 4 percent 2 percent