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October 31, 2016

HVAC Contractors Report Sizzling Summer Sales

Summer of 2016 was one of the best ever

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Most HVAC contractors head into summer hoping for endless days of hot and steamy weather that ultimately encourages customers to buy new cooling systems. Mother Nature certainly came through this year, according to the National Oceanic and Atmospheric Administration(NOAA), which noted that above-average temperatures spanned the nation from June to August with every state across the contiguous U.S. reporting above-average temperatures.

The hot weather, combined with an improving economy, proved to be a boon for contractors, many of whom saw sales of cooling equipment spike this summer. As Theo Etzel, CEO ofConditioned Air Company of Naples LLC in Naples, Florida, noted, “Our sales have well exceeded our estimates this season. We consider this to be a homerun summer season in spite of wetter-than-normal weather for the west coast of Florida.”

MIDSUMMER PREDICTIONS

When asked in July about how summer sales were faring, Etzel was cautiously optimistic that the season would be a good one. “Year-to-date, our equipment sales have been stronger than expected and are staying very steady through the summer, which is quite an accomplishment given the mild weather. We’ve also experienced a reduction in the number of Canadian second-home buyers and part-time residents due to the devaluation of the loonie versus the dollar. Our outlook remains very bullish on the market for the remainder of the year.”

Butch Welsch, president of Welsch Heating and Cooling Co. in St. Louis, was also cautiously optimistic midsummer, noting that June and the first half of July were very good in terms of cooling equipment sales. “Unfortunately, April and May were extremely mild, and, as a result, our replacement business got off to a very slow start. We had budgeted an overall increase of 7.5 percent in that department for the year, and, at the end of July, we have very nearly reached that budget number.

“Our service department has been a real bright spot for us,” continued Welsch. “We set a new record for the number of service calls made in any one month as well as record sales.”

Cooler, wetter weather in April and May also led to a slower start for Total Air and Heat Co. in Plano, Texas, but by early summer, sales of cooling equipment began to pick up. “We forecasted a 15-20 percent increase in replacement sales this year, and, by mid-June, we were meeting our goals,” said company president, Steve Lauten. “Going into August, our sales remain strong, and we are meeting expectations. As long as the higher temperatures hold, we should continue to see strong replacement sales.”

Warmer weather in the Northeast brought Eric Knaak, vice president and general manager ofIsaac Heating and Air Conditioning in Rochester, New York, exceptional results. “Sales are up. While our marketing efforts are partially responsible, the weather has been the biggest driver. The past two summers combined, we had three days that reached 90°F or higher. So far this year, we are at around 10-12 days, and that is making all of the difference in the world.”

Midsummer cooling equipment sales at Fairview Heating and Air Conditioning in Oakley, California, were up, as well. Company president Robert Conner predicted that sales would be good for the rest of the year, provided they had enough skilled labor. “Being a signatory union contractor, we have a very limited pool to draw workers from. Our union does not train or recruit for the residential aspect of the trade, so I rarely get any workers who can install a furnace or air conditioner. Last year, we didn’t add any workers, and they wonder why we are losing residential work to the non-union contractors.”

FINAL RESULTS

After Labor Day, these contractors checked in again, and most agreed that summer 2016 would go down in the books as a great one. Welsch Heating and Cooling was extremely busy all summer and all the way through August and September, when sales typically drop off. Welsch attributes this surge to a new strategy the company implemented this summer.

In early July, Welsch asked the service department to start keeping track of all calls in which more than 1 pound of refrigerant was added to a cooling system. During the first week of August, the company sent a personal letter to each of those customers, that let them know if they wanted to change out their air conditioner in August or September, the cost of that refrigerant would be subtracted from the final price. The letter also noted the price of refrigerant is increasing at an alarming rate, which could cost more money down the road.

As a result, quite a large number of those individuals opted to have their air conditioning systems — often along with their furnaces — replaced in the late summer months. “I think this is why we had a really good summer,” said Welsch. “Based on the continuing number of leads we are getting, we anticipate sales remaining good through at least the first part of fall, as well.”

Equipment sales were up significantly at Isaac Heating, as well, with an increase in volume of between 25 and 30 percent. Much of that can be attributed to the weather, as well as being well-prepared for the season, said Knaak. “During the 2014 cooling season, our area had one day that reached 90°F or higher and, during the 2015 season, that number doubled to two. This year we reached 90° or higher 29 times. Compared to other years, this summer was the strongest we have ever experienced as an organization.”

While Isaac Heating had a record number of sales from June to August, Knaak is especially proud that the quality work was performed with little to any decrease in response time. “There were some installations that had to wait a few weeks, but reactive service was never more than two work days, and most work was completed the same day or within 24 hours. I attribute this to a highly functioning team that was well-trained and well-prepared for the season. The only missing piece was maybe another 10-12 experienced service technicians and installers in that mid- to upper level.”

Lack of labor was also an issue at Fairview Heating, although sales held up well during the summer. “Sales were about the same as last year and would have been up, but we elected not to hire any installers from our union, they were out of work for a reason,” said Conner. “Service calls were up so much this year that we had to turn away customers due to a week-long backlog.”

Overall, Conner is generally happy with both service and replacement sales this season. “It was a good season that could have been great, but that goes back to not being able to get qualified employees. We changed equipment brands this year and started private labeling the Goodman brand, which I think helped. We also ended up having better closing ratios, sold lots more maintenance agreements, and had some success with extended labor warranties this year.”

At Conditioned Air, sales exceeded estimates for the season, and the company is well ahead of last year and carrying a lot of momentum into the fall, said Etzel. “I am very happy with the results for our team and applaud them for consistently delivering value to our customers by staying true to our core values and a no-gimmick, no-pressure model.”

While actual service call numbers were up this year at Conditioned Air, the number of requests for replacement quotes was down. But the increase in closing ratios and better system/IAQ combination packages made up the difference and then some, said Etzel. “We found that customers often chose upper-middle SEER equipment and added more IAQ and duct upgrades into their systems for better comfort. This obviously increased the cost of the overall system, but yielded a better value on customers’ investments.”

Sales and service calls were both strong at Total Air and Heat this summer, which Lauten attributes to good planning. “The key for us has always been, and will remain, offering maintenance agreements and preseason tuneups. We train our technicians to give customers options based on what best serves their plans. Since Texas is always hot in the summer, and nobody likes to go without cooling, we focus on keeping our customers’ systems maintained and ready for the heavy loads in the summer.”

To make sure employees are ready for the demands of summer, Lauten makes sure they all receive training during the slower times of the year. “We have a large training budget that goes into effect in January and February, which are usually a little slower for us. Many HVAC contracting owners have the attitude that they won’t spend money on training, because the employee might leave. I’ve always had the attitude of, what if they stay? This industry is evolving at a rate that many can’t keep up with — customers are evolving, the equipment is evolving, and the employees are evolving. We must band together if we want to control the industry we love.”

Publication date: 10/24/2016

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