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Commercial HVAC & Sheet Metal Fabrication with 80% School District Clients

Clients include education, manufacturing, industrial, medical, government, and municipalities!

CASH FLOW
$405,077

Specifications

  • Price
    $1,800,000

  • Revenue
    $11,247,405

  • Cash Flow
    $405,077

  • Location
    Kansas City Metro

  • Service Area
    Kansas City Metro, 50 mile radius of the office

  • Reason for Sale
    Retirement / Age

  • Employees
    41: 9 Office, 5 shop, 7 service, 21 field

  • Equipment
    $1,276,759: Fabrication equipment, shop tools, security system/cameras, office equipment

  • Intangible Assets
    Well-established business, respected community partner, highly regarded for exceptional workmanship, customer service oriented

Clients for this commercial HVAC & sheet metal fabrication business include education, manufacturing, industrial, medical, government, and municipalities! With a 22,000 sq. ft. fabrication shop and 41 skilled personnel on staff, this HVAC design and installation company has been in operation for 70 years. The team is comprised of 9 office staff, along with 4 in the shop, 7 service staff, and 21 field employees. Not only do they specialize in new construction and renovation ventures, but they successfully work on refrigeration systems and manage projects as prime contractors as well.  The team focuses mainly on new construction (40%) and renovations (45%), and their service department accounts for 15% of annual revenues.  Prime contracts amount to about 15-20% of work performed. The service department performs approximately $1.5M per year, while hard bid projects are in the $10.5M range.

 

This multi-faceted business is held in high regard by the general contractors, architects, and engineers in the Kansas City Metro.  Their increasing revenues show that this healthy business is growing organically through positive word-of-mouth reviews and high-quality workmanship. 

 

The business operates from a complex that has ample space for all current operations with room for continued expansion.  A large 30,000 square foot building features a 22,000 square foot shop which is the fabrication hub and the remaining spaces (8,000 square feet) are utilized as storage warehousing.  The lots are both paved and gravel and offer plenty of parking and working space.   In addition to continuing the current successful trajectory, continued growth could be found in expanding the maintenance and service annual contracts.  

About the Company

The facilities are perfectly suited for the work completed.  The complex is made up of four buildings.  The first is a 30,000 square foot building of which one quarter is dedicated office space.  The remaining 22,000 square feet is the fabrication shop and warehouse storage.  This building was renovated in 2007 and is up to all codes.  Two additional buildings are 5,000 square feet and both are utilized as warehouses.  There is one 2,800 square foot building within the property that is leased to another tenant who has been a reliable lease, but if a buyer would like to expand, this property can be assumed for expansion purposes.  All buildings on the 3.8 acres feature security systems with fire and intrusion alarms, cameras, as well as a fully fenced property with gates and it is all topped with barbed wire making for a very secure facility.  The front lots are asphalted, the back lots are gravel, and the loading docks are paved in concrete. 

The company is generally a specialist mechanical sub-contractor on most projects, yet they do have the capability to manage projects.  When they are the prime contractor, they manage services including plumbing, painting, general construction, structural steel, roofing, building automation and electrical services in addition to their HVAC and refrigeration duties.  At times they manage fifteen subcontractors on a project. 

Recently the business became accredited and certified by NEMIC (National Energy Management Institute Committee), as Fire Life Safety professionals who are able to be fire and smoke damper contractors and inspectors.  They are now able to test and certify fire and smoke damper systems.  There are few competitors in the area with this certification and they just completed their first project with this specialization.

Photos

   

Affiliations

      

Income Analysis

  • Jobs range anywhere from $100k-$2M.

 

  • Prime contracts amount to about 15-20% of work performed.

 

  • Service Department performs approximately $1,500,000 per year.

 

  • Hard Bid projects are approximately $10,500,000

 

  • Bonded for $10MM – only used when they are prime, not sub

 

  • 60% of revenues were earned from projects in the local schools.

 

  • Project range: $100 - $5,000,000

 

  • Average project range: $500,000 - $1,000,000

 

  • Most sales are completed by the in-house sales representative and the owner.

 

  • Average A/R: $1,500,000 - $2,000,000 

 

  • A/R turnaround: 30-90 days

 

  • Billings are submitted monthly.

Breakdown of Revenue for 2020

  • Mechanical HVAC Contracts: 85%
  • Service Department: 13%
  • Ductwork Fabrication sold to others: 2%
  • YTD: $7.498M w/ $4.5M in the backlog
  • Predicting to do $11.2M

Business Highlights

  • Year Established: 1950
  • Location: Kansas City Metro
  • Service Area: Kansas City Metro, 80-mile radius of the office
  • Services: Install (40%), Renovation (45%), and Service (15%)
  • Clients: Schools & higher education, manufacturing, industrial, medical office buildings & hospitals, government facilities, municipalities
  • Building: Expansive complex with ample space including a 22,000 sq. ft. fabrication shop and warehouse, plenty of office space and additional warehousing and storage sites, paved & gravel lots
  • Reason for Selling: Retirement / Age
  • Personnel: 41: 9 Office, 4 shop, 7 service, 21 field
  • Seller Training Period: 2-year transition
  • Growth Opportunities: Build service department and annual maintenance contracts
  • Current Owner's Responsibilities: Business development, financial oversight

Financial Highlights

  • List Price: $1,800,000
  • Gross Sales:
    • 2020: $11,247,405 Annualized
    • 2019: $11,279,623
    • 2018: $11,088,178
    • 2017: $9,125,350
  • Cash Flow:
    • 2020: $405,077 Annualized
    • 2019: $334,624
    • 2018: $612,309
  • Assets Included in Purchase*
    • Equipment: $1,276,759" Fabrication equipment, shop tools, security system/cameras, office equipment
    • Vehicles: 6 service vans, 7 pickups (3 fairly new), 2 1-ton F350s, 1 30' freightliner box truck, 16' flatbed trucks; 18 trucks & 3 trailers total
    • Inventory: $102,301
    • A/R: $1,564,304
    • Intangible Assets: Well-established business, respected community partner, highly regarded for exception workmanship, customer service oriented

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Clients and Services

Services:

  • HVAC design, fabrication, and installation
  • Refrigeration
  • Project management

 

Breakdown:

  • Install (40%) & Renovation (45%)
  • Service (15%)

 

Clients:

  • Schools and higher education
  • Manufacturing
  • Industrial
  • Medical office buildings and hospitals
  • Government facilities, General Services Administration, National Archives and Records Administration
  • Municipalities

 

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Personnel

Total Personnel: 41

  • 9 Office and administration
  • Controller
  • GM / Senior Estimator
  • Detailer / PM
  • Receptionist/Payroll/Dispatcher
  • Project Manager / Estimator
  • Project Manager / Shop Production
  • Detailer / Designer
  • Service Manager
  • Truck Driver
  • 4 Fabrication shop
  • 7 Service department
  • 21 Work in the field completing installations and project management

Growth Opportunities

  • Build service department
  • Grow the number of annual service and preventative maintenance/inspection contracts

Funding Example

Purchase Price:                             $1,800,000

12.5%Buyer Down Payment:          $225,000

12.5%Seller Financing:                   $225,000

75%Bank Loan:                             $1,350,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $4,195.

Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $14,988.

A lender is required to have a minimum 1.25 coverage ratio for any business loans extended. At a proposed purchase price of $1,800,000 with the terms listed above, the coverage ratio is 1.96.

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

Purchase Price:

$1,800,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
3-year average cash flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
3-year average cash flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.