Gray, Gray & Gray issues results of annual Oilheat survey
Gray, Gray & Gray, LLP Certified Public Accountants, of Canton, Mass., recently released the results of the firm’s 24th 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 was one of the worst winters in weather history across the United States, but one of the best seasons in recent memory for the retail energy industry,” said Joe Ciccarello, CPA, MST managing partner at Gray, Gray & Gray. Ciccarello points to the persistent cold weather that stretched well into the spring, reliable oil supplies, and lower global oil prices as factors that contributed to a strong year for many dealers.
Some of the highlights of the 2015 Gray, Gray & Gray Oilheat Survey results include:
- 86% of respondents reported that lower crude oil prices result in better margins at the retail level;
- 51% reported that their customer list had increased over the previous year;
- 94% of dealers say customers who were on a price protection program honored that program this year, and half are planning to offer price protection next winter;
- 35% of dealers are interested in acquiring another oil company to expand their business.
Complete oilheat survey results, including a breakdown by region, are available on Gray, Gray & Gray’s web site at www.gggcpas.com, or by calling (781) 407-0300.
Gray, Gray & Gray, LLP is the country’s leading oilheat and energy industry accounting and business advisory firm. Gray, Gray & Gray’s offices are located at 150 Royall Street, Suite 102, Canton, MA. The firm also has offices in Framingham and Boston, MA.
GRAY, GRAY & GRAY 2015 OILHEAT INDUSTRY SURVEY – OVERALL RESULTS
In what state does your company primarily do business?
31% Massachusetts 20% Pennsylvania
7% New York 7% Connecticut
10% Maine 4% New Jersey
10% New Hampshire 2% Maryland
3% Vermont 2% Rhode Island
3% Virginia 1% Delaware
Total number of employees: 24
Number of service technicians (full-time equivalent): 6
Number of delivery drivers (full-time equivalent): 5
What is the average HOURLY rate you pay:
Delivery Drivers $21.00 per hour
Dispatchers $21.00 per hour
Customer Service Representatives $17.00 per hour
Accounts Payable/Receivable staff $21.00 per hour
Service Technicians $23.00 per hour
Service Manager $30.00 per hour
How do you compensate Sales People?
16% – Straight salary (Avg. amount: $51,552)
20% – Salary plus commission
5% – Commission only (Avg. percentage: 9%)
Are you considering any of the following?
35% – Acquire another company
17% – Sell your company
31% – Transition to the next generation of family
7% – Conduct a business valuation
2% – Refinance
12% – Develop a bulk plant
14% – Upgrade an existing bulk plant
4% – Converting to an S Corporation
7% – Converting to flat rate billing for service
20% – Retirement
How many fuel customers do you have?
Retail/Residential Heating Oil: 2,978
Commercial Heating Oil: 148
Propane: 2,664
In comparison to this time in 2014, has your customer list:
51% – Increased 19% – Decreased 36% – Same
To what do you attribute the gain or loss of customers?
16% – Gained due to increased advertising
6% – Gained due to acquisition
41% – Gained due to other reason
5% – Lost to competitor with similar pricing
11% – Lost to discounter
26% – Lost to gas conversion
3% – Lost due to other reason
Which of the following do you offer to RETAIL customers?
48% – Fixed pricing
42% – Price cap
90% – Budget payment plan
65% – Service contracts
5% – Free oil for new customers (oil coupons)
12% – Free service for new customers
19% – Temperature monitoring device/alarm
16% – Tank monitoring system
41% – Tank protection plans
80% – Equipment service
86% – Heating system service
83% – Heating system installation
How many gallons of fuel did you sell during the heating season just ending?
Retail/Residential Heating Oil: 1,860,552
Commercial Heating Oil: 270,925
Propane: 1,329,796
Kerosene: 104,375
Gasoline: 1,854,256
Diesel: 727,663
What was your average TARGETED margin for fuel sales during the heating season just ending?
Retail/Residential Heating Oil: $0.67 per gallon
Commercial Heating Oil: $0.45 per gallon
Propane: $1.18 per gallon
Kerosene: $0.70 per gallon
Gasoline: $0.27 per gallon
Diesel: $0.40 per gallon
How did the drop in oil prices affect your business?
86% – Better margins
3% – Lower margins
11% – No effect
In what range do your current receivables fall?
65% – Less than 30 days
20% – 30-60 days
8% – 60-90 days
7% – Over 90 days
Do you have a bank line of credit?
71% – Yes 29% – No
Total line (from all banks): $967,105
If yes, percentage did you use last year: 50%
What percentage of your customers are on a price protection plan? 22%
Do you charge retail customers for price protection?
6% – Yes – For Fixed Price $0.11 per gal. – $99 avg. fee
30% – Yes – For Cap Price $0.28 per gal. – $138 avg. fee
18% – Yes – For Down Side $0.44 per gal.
15% – Do not offer a price protection plan
Did your price protection customers honor their contracts?
94% – Yes 5% – Some (avg. 91%) 1% – No
Do your price protection plans offer a buyout option
5% – Yes – Fixed amount $500 avg.
6% – Yes – Per gallon amount $0.43 per gal. avg.
46% – No
Will you offer price protection plans next year?
50% – Yes 35% – No 15% – Not sure
If you hedge your price protection programs, what percentage do you hedge? 84%
What is your average RESIDENTIAL drop (gallons delivered per stop)? 170
What is the average renewal price you charge for a service contract? $248
How many PAID service contracts do you have? 1,345
How many service calls were made last year? 3,277
Have you completed a merger or acquisition in the past 3 years?
17% – Retained gallons 6% – Cash at closing 77% – No
Do you have or are you planning to add alternative sources of revenue?
Already Offer Plan to Add
Service Gas Equipment 45% 4%
Sell Propane 28% 5%
Sell Electricity 8% 5%
A/C Installation & Service 51% 2%
Plumbing Services 12% 5%
Solar Installations 7% 1%
Home Security Services 4% 3%
Other 5% 4%
