New owners, now new locations
LIVERMORE, Calif.--Six months after an acquisition by private equity firm Carlyle Enterprises, Contractors Wire in December opened its second new location, in Atlanta, following its July opening of a location in Dallas. And Contractors' president Derek McMullen, who sold the company to Carlyle while retaining an ownership stake, said the expansion wouldn't stop any time soon.
"Our next move is up into the northeast," he said, "and then the upper Midwest, maybe Colorado, and up into the northwest, and then somewhere in the Pacific. Right now we're targeting Honolulu." The sales projections are in line with the geographic plans. After doing $25 million in 2007, McMullen said he expects to be at $31 million in 2008, growing steadily to hit $75 million by 2011. "We believe we'll grow 20 percent just with our current customer base," he said, "with the additional growth coming from the expansion markets."
McMullen's aggressive enthusiasm was one of the factors that attracted Carlyle in the first place, said partner David Canedo. "On the small business side," he said, "it's important to find owners that we want to partner with. We were taken with his reputation in the industry, his knowledge of the industry, and the fact that since he's founded the company there was only one year with no growth. That's a long history of success."
"A lot of times," Canedo noted, "you'll see guys who are satisfied with what they have. Derek had a real passion for making sure the business was going to get larger."
He and McMullen both feel, too, that Contractors' combination of manufacturing and distribution abilities give the company a competitive advantage. "In our manufacturing side," said McMullen, "the one thing that sets us apart from other manufacturers is they're not specialists. Being geared into a certain area, we can look for ways to reduce costs to the installers."
Canedo also pointed to Contractors' diversification between the residential and commercial/industrial markets as a reason for continued growth. He admitted to being surprised by how deep the downturn in the builder market has been, but "so far there hasn't been a downturn in the commercial/industrial side," he said. "Whatever we're losing on the residential side we'll more than offset with the industrial side."