Gray, Gray & Gray Publishes Survey Results

Gray, Gray & Gray, LLP Certified Public Accountants, of Canton, MA (www.gggcpas.com), recently released the results of the firm’s 25th annual Energy Industry Survey. The survey was distributed to retail fuel oil and propane dealers throughout the Northeast and Mid-Atlantic regions of the U.S.

“After last year’s record-breaking winter, oil and propane dealers seemed to catch their breath this past season,” said Joe Ciccarello, CPA, MST, managing partner at Gray, Gray & Gray. “Although the total sales volume of oil and propane were lower due to warmer weather patterns, most dealers reported strong margins thanks to lower product prices. This also helped to slow the pace of oilheat customers who have been converting to natural gas, as oil has regained its price advantage.”

Some of the highlights of the 2016 Gray, Gray & Gray Energy Industry Survey results include:
• 97% of retail energy companies are family-owned businesses, with an average of three generations of experience
• 61% report lower wholesale prices have resulted in stronger margins at the retail level
• 35% of dealers report their customer base increased in the past year, while 39% say their customer list has remained stable – only 26% report losing customers
• One-third (33%) of company owners are interested in acquiring another oil or propane business, while 22% are interested in selling their company

Complete Energy Industry Survey results, including a breakdown by region, are available on Gray, Gray & Gray’s website at www.gggcpas.com, or by calling (781) 407-0300.

Overall Results
In what state is your company located?
32%      Massachusetts
18%      Pennsylvania
13%     Connecticut
9%      Maine
8%     New York
7%      New Hampshire
5%     New Jersey
3%      Vermont
3%     Virginia
2%      Maryland
1%    Rhode Island
1%      Delaware

In what year was your business founded?
1951 (average of 65 years)

Are you a family-owned business?
Yes – 97%  (average of 3 generations)
No – 3%

Total number of employees:
Average of 23

Number of service technicians (full-time equivalent):
Average of 7
Number of delivery drivers (full-time equivalent):
Average of 5

What is the average HOURLY rate you pay:
Delivery Drivers     $21 per hour
Dispatchers    $23 per hour
Customer Service Representatives     $19 per hour
Accounts Payable/Receivable Staff    $21 per hour
Service Technicians     $24 per hour
Service Manager     $33 per hour

How do you compensate Sales People?
67% – Straight salary (average of amount:  $60,604)
27% – Salary plus commission
6% – Commission only (average of percentage: 8%)

Are you considering any of the following?
33% – Acquiring a company
18% – Selling your company
22% – Transitioning to the next generation
5% – Conducting a business valuation
3% – Refinancing
6% – Developing a new bulk plant
7% – Upgrading a bulk plant
5% – Converting to an S Corporation
7% – Converting to flat rate billing
23% – Retiring

How many fuel customers do you have?
Retail/Residential Heating Oil:     2,636
Commercial Heating Oil:     175
Propane:     2,203

What was your average TARGETED margin for fuel sales during the heating season just ending?
Retail/Residential Heating Oil:    $0.71 per gallon
Commercial Heating Oil:            $0.45 per gallon
Propane:                $1.19 per gallon
Kerosene:                $0.73 per gallon
Gasoline:                $0.25 per gallon
Diesel:                   $0.40 per gallon

How has the change in oil prices affected your business?
61% – Better margins
7% – Lower margins
32% – No effect

In comparison to this time in 2015, has your customer list:
35% – Increased
26% – Decreased
39% – Remained the Same

To what do you attribute the gain or loss of customers?
13% – Gained due to increased advertising
5% – Gained due to acquisition
14% – Gained due to other reason
5% – Lost to competitor with similar pricing
19% – Lost to discounter
21% – Lost to gas conversion
5% – Lost due to other reason

Which of the following do you offer to RETAIL customers?
47% – Fixed pricing
44% – Price cap
83% – Budget plan
63% – Service contracts
10% – Free oil for new customers
15% – Free service for new customers
15% – Temperature monitoring
21% – Tank monitoring system
44% – Tank protection plans
65% – Equipment service
74% – Heating system service
73% – Heating system installation
68% – Early pay discount

How many gallons of fuel did you sell during the heating season just ending?
Retail/Residential Heating Oil:     1,672,145
Commercial Heating Oil:    233,310
Propane:     1,077,782
Kerosene:     94,410
Gasoline:     2,929,810
Diesel:     687,884

What percentage of receivables fall into each date range?
74% – Less than 30 days    16% – 30-60 days
4% – 60-90 days        6% – Over 90 days

Do you have a bank line of credit?
79% – Yes     21% – No

Total available line (from all banks):
$1,078,615

If yes, what percentage did you use last year?
57%

What percentage of your customers are on a price protection plan?
20%

Do you charge retail customers for price protection?
2% – Yes – For Fixed Price    $0.28 per gal.
31% – Yes – For Cap Price    $0.25 per gal.
15% – Yes – For Down Side    $0.27 per gal.
19% – No fee

Did your price protection customers honor their contracts?
47% – Yes, all
8% – Some (average of 89%)
1% – No

Do your price protection plans offer a buyout option?
10% – Yes – Fixed amount        $418 average
13% – Yes – Per gallon amount    $0.49 per gal. average
35% – No

Will you offer price protection plans next year?
48% – Yes
27% – No
11% – Not sure

If you hedge your price protection programs, what percentage do you hedge?
83%

What is your average RESIDENTIAL drop (gallons delivered per stop)?
160

What is the average renewal price you charge for a service contract?
$241

How many PAID service contracts do you have?
1,251

How many total service calls were made last year?
2,982

Have you acquired another company in the past 3 years?
13% – Yes, retained gallons
3% – Yes, cash at closing
84% – No

Are you planning to add alternative sources of revenue?
Already Offer    Plan to Add
Service Gas Equipment               38%                  5%
Sell Propane                                   27%                  5%
Sell Electricity                                 0%                   3%
A/C Installation & Service           53%                  3%
Plumbing Services                         13%                  5%
Solar Installations                           4%                  4%
Home Security Services                  1%                  1%
Other                                                  3%                  3%

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