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Companies See Better Results in Memorable Winter


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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%

 

 

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