AHR Expo sets record despite winter storm. As snow fell over Manhattan, guests numbering in the tens of thousands descended upon the Jacob K. Javits Convention Center for the 66th Annual Air-Conditioning, Heating, Refrigeration (AHR) Expo, January 21-23 in New York City. Braving a fierce winter storm that 

dumped more than 10 inches of snow on most of the tri-state area, over 61,000 visitors and exhibitors from all 50 states and over 130 countries came out to see the latest products and innovations on display by more than 1,900 HVACR companies.

            Organizers' initial concerns were assuaged when the weather failed to stop attendees from arriving in droves, with initial estimates suggesting that the 2014 edition was the highest-attended AHR Expo ever.

             "We were obviously very concerned when the weather forecast predicted a snow storm and arctic cold," said Clay Stevens, President, International Exposition Company. "We were encouraged when we saw thousands of people pouring in. I'm sure we would have blown away the attendance record even more if the weather hadn't been so severe."

The largest HVACR exposition in the world, the AHR Expo is co-sponsored by ASHRAE and AHRI, with the Heating, Refrigeration and Air-Conditioning Institute of Canada (HRAI) as an honorary co-sponsor. 

Financial Lessons from the Super Bowl Champs

Jeffrey Simpson

    As I watched the Seattle Seahawks dominate the Denver Broncos in Super Bowl XLVIII, it became apparent why Seattle made it to the "Big Game."  In addition to superb talent, the Seahawks did the little things the right way.  However, their mastery of the nuances of the game didn't just appear on game day.  Like any successful team, the players put in the work year-round to be positioned to capitalize whenever an opportunity presented itself.

Simpson

    Many parallels can be drawn between a successful football team and a successful fuel dealer.  After generally sub-par winters in recent years (from a fuel dealer's perspective, anyway) this winter provided us with the weather managers have long craved.  In virtually all regions, demand for heating oil and propane has been brisk, yet too many "teams" in our industry could not take full advantage of the opportunities presented.  Despite the high demand, many faced supply constraints, tight or insufficient working capital availability, basis blowout and squeezed margins.  Some were even limited in the amount of product they could access as the most creditworthy were allotted a greater percentage of the available gallons in a tight supply environment.

    It is undeniable that the dealers who will post the strongest earnings this winter were positioned to win based on decisions made well before the first leaf changed color last fall.  Those who worked the hardest in the off-season were the most likely to reap the greatest rewards during the regular season.  Good coaching from managers allowed them to follow through on a plan and win big.

    Like pro football teams, fuel dealers should follow a similar training regimen during the financial off-season to increase the odds of success when the spotlight shines during the regular season.

Do the Heavy Lifting

    The brute strength needed to impose one's will on an opponent is developed in the weight room before the season begins.  Similarly, the real strength of a fuel dealer - its financial standing - is nurtured in the off-season as well.   Although the greatest ability to generate profits may not exist in the summer months, the ability to either locate the necessary capital or restructure your existing line of credit and other debt does.  Like weight training, the evaluation and restructuring of your financial position can be difficult, time consuming and requires focus.  Conduct the necessary analysis to determine what level of credit availability will allow your company to take full advantage of the sales and profit opportunities that emerge.  Bring in the right "trainers" to help you facilitate this process.  If your financial structure is weak, you simply can't expect a quick fix during the regular season. 

Stay Healthy

    The off-season is also the time to identify and evaluate the factors that hinder your team's health and, consequently, your profitability.  Unfortunately the current banking environment rewards the healthy and largely ignores the weak and injured.  Take a hard look at the divisions of your company and challenge your long-held assumptions about cost structure.  Are there certain pieces (costs or employees) that you could function without?  How could you add variability to your cost structure to reduce expense?  These are often extremely difficult decisions but when implemented they reap ongoing rewards for owners.  Increasingly, dealers are turning previously full-time positions into seasonal positions with little or no negative operational impact. 

    Likewise, a disciplined approach towards commodity and weather hedging over the summer months acts as an immunization of sorts against profit-busting conditions that often emerge during the regular season.  Warm weather is a major risk to your operation - address it using a combination of financial tools and management discipline.  If you do not utilize the full array of hedging tools available, you will lag behind your competitors over time.

Set Periodic Goals for the Year, Then Measure Progress

    Breaking down your off-season and regular season into a series of manageable segments with specific targets is a key to long term success.  The off-season is the time to prepare your detailed budget, including expected deliveries, segmented margins, service goals, staffing levels, overhead expenses and income goals.  Every month of the year carries its own target and those who manage toward each month's target will fare the best over time.  A good manager doesn't rely on luck in the form of a very cold winter or a steady drop in commodity costs to juice profitability (although fortune does favor the prepared), but instead plans for adversity and sets periodic benchmarks that will trigger hard choices if short term goals are not being met.  It is far easier to make a series of small, moderately difficult decisions than it is to wait and make one gut-wrenching decision late in the season.  For example, bumping a margin target by a nickel within a month or delaying the hiring of a seasonal employee when you fall behind your monthly goal is far easier than discovering late in the winter that you need to raise margins by fifty cents just to break even - a nearly impossible task in a competitive environment.  Even when the winter weather shows no signs of breaking, don't assume the late winter period will bail you out; it rarely does.

    Finally, and most importantly, use the off-season to put the processes and software in place to measure your progress toward specific goals on a real time basis.  If you can't see your results as they occur, it is virtually impossible to make the correct decisions on a consistent basis.  New, cost-effective tools are available to track your financial metrics each day.  Price volatility, weather volatility and the prevalence of pricing programs demand such real-time measurement.  Waiting until the following month to take stock of your profitability is a recipe for disaster.

    Of course, one key difference between fuel dealers and professional football teams is that not all of our competing "teams" will return to play next season.  Our fragmented industry is becoming more consolidated each year and there are fewer gallons to go around.  The disciplined have a much higher chance of continuing to play the game well into the future. 

    Your regular season will be winding down shortly.  What will you be doing this off-season?

Jeffrey Simpson is Managing Director of Angus Energy's Advisory & Finance team and has worked in the fuel distribution industry for seventeen years in operational, banking and financial advisory roles.  Angus Advisory & Finance provides advisory services for evaluating strengths and weaknesses, improving financial management practices, supporting banking relationships and also designs/implements growth, risk management and acquisition strategies.  The group also provides funded capital solutions through the investment fund, Angus Fund, L.P.  Jeff can be reached at (860)299-3358 or jsimpson@angusenergy.com.

    Bioheat® has announced an early 2014 advertising campaign to run for seven weeks from January 20 to March 3 across radio and television outlets throughout New England, New York and New Jersey.

    A total of 203 spots on WBZ, Boston's CBS TV affiliate will be devoted to Bioheat's® campaign, including nighttime news, the Grammy Awards and The Big Bang Theory, the most-watched TV series in the country, according to February's Nielsen ratings.

    The 30-second TV spot will also air across several cable networks to cable customers served by Comcast in Connecticut and Cox Media in Rhode Island, including a "Brought to you by Bioheat®, the Evolution of Oilheat" promo on the Weather Channel.

    The campaign also includes a wide distribution of radio spots. In Massachusetts, nearly 600 total radio spots will be split between ESPN Radio (WEEI 850 AM) and WRKO 680 AM, serving the Boston, Cape Cod, Worcester, Springfield, Providence, RI and Keene, NH metropolitan areas. This facet of the campaign also includes advertising on the two stations' websites.

    Clear Channel Radio in Connecticut and Rhode Island will broadcast commercials nearly 2,000 times across five FM affiliates serving the Hartford and Providence areas.

    In New York, 1010 WINS and WCBS 880 AM will feature 260 radio spots, reaching the entire Tri-State area.

Bioheat® 30-Second TV Spot

Grundfos USA -- Completely free and online, Grundfos Ecademy can help you boost your business with new knowledge about pump applications, pump types, relevant technologies and more. It will deepen your understanding of the world of pumps, keep you in touch with emerging technologies, let you brush up on all kinds of knowledge, and-in some states-even help you maintain your professional credentials.

When we call Grundfos Ecademy an "e-learning tool," don't get the wrong idea. Ecademy doesn't chain you to a computer for hours of lecturing. It's designed for the way you live and work today. Accessible on your smartphone, tablet or computer, you simply choose a topic and watch the videos, see or download the presentations, and read or download the articles-whenever and wherever you like.

"Ecademy allows us to get closer to our customers by providing training across our markets which, in turn, supports our growth objectives.  We are positioned to reach potential students through a combination of learning from the successful European roadmap, excellent North American training content, a comprehensive marketing and promotion plan, and strong administration."

--Dennis Wierzbicki, President

The Atlantic Region Energy (AREE) will feature two dynamic opening speakers.

The Opening Session speaker, Dan Oh, President/CEO, Renewable Energy

Oh

Group, will talk about the production, distribution and marketing of biodiesel and Bioheat®.

The Keynote speaker, Mike Tanner, Senior Fellow, Cato Institute

Tanner

will discuss "Obamacare, What We Know Now."

In addition, AREE has posted on its website, the complete schedule of seminars to be presented at this spring's expo in Atlantic City.

Go to AREEtradeshow.com for details and to register.

June 10-11, 2014, DCU Center, Worcester, MA.

Contact NEFI for more information, schedules and hotels. Phone: 617-924-1000 E-mail:  christine@nefi.com

Oil & Energy Service Professionals Road Show online
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