HVAC & Plumbing Contractors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 260,000 HVAC and plumbing contractors in the US provide installation, repair, and maintenance services for air handling and water management systems. Just over 60% of HVAC and plumbing contractors are solo operators. Contractors may specialize in residential, commercial, institutional, or industrial service.

Dependence On Construction Industry

Demand for HVAC and plumbing services is highly dependent on trends in the construction industry.

Increasing Sophistication Of HVAC Systems

Demand for improved efficiency in the non-residential market has led to increasingly complex HVAC systems and automated monitoring programs.

Industry size & Structure

The average plumbing and HVAC contractor employs 11 workers and generates about $2 million in annual revenue.

    • The HVAC and plumbing contractor industry consists of 260,000 companies (including solo operators), employs more than 1.1 million workers and generates $218 billion annually.
    • Just over 60% of HVAC and plumbing contractors are solo operators and generate about $64,700 annually.
    • Major customer segments include single family homes (20% of industry business), office buildings (10%), manufacturing and industrial buildings (5%), educational buildings (8%), commercial buildings (7%), health care and institutional buildings (6%), and apartment buildings (4%).
    • Large companies include EMCOR Group, Comfort Systems USA, Johnson Controls, and ARS Rescue Rooter.
                                Industry Forecast
                                HVAC & Plumbing Contractors Industry Growth
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                May 12, 2022 - Architectural Billings Rise
                                • Demand for building design services is strong, according to an April report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI), an indicator of future building construction demand, was 58 in March, up from 51.3 in February. Any reading above 50 indicates growth in architectural billings. The rise in billings is likely due to an effort to lock in interest rates ahead of continued rate hikes in the coming months. The ABI reading for commercial/industrial projects was 55.3 in March. On a regional basis, the South registered the strongest March ABI score with 57.2, followed by the Midwest (56.2), the West (54), and the Northeast (46.3).
                                • Residential demand for new HVAC systems is expected to flatten in 2022, though that should be offset by growth in commercial demand, according to Tim Fisher, team leader of market intelligence at Heating Air-Conditioning and Refrigeration Distributors International (HARDI), a trade organization for HVACR wholesalers. The exact market scenarios will vary from region to region, he added. Inflation, parts and equipment shortages caused by worldwide supply-chain problems, and a shortage of qualified workers in HVAC will continue to be pain points during the year. “On a dollar basis, we’re absolutely anticipating continued top-line growth. The issue here, though, will be inflated costs and slowing demand,” Fisher said.
                                • HVAC contractors are having difficulty acquiring products needed to install new systems and repair malfunctioning ones. Supply chain analysts say that copper, steel, aluminum, and ductwork parts are challenging to acquire due to pandemic-related factors, including factory closures, shipping delays at ports, and slowdowns at distribution centers due to pandemic-related safety measures. Manufacturers report waits of up to 8 weeks for order fulfillment. Russia’s invasion of Ukraine has further slowed trade flows of some metals and minerals, including copper and aluminum.
                                • HVAC contractors may benefit from attempts by businesses to improve ventilation systems. Major chains, including MGM Resorts International and the Four Seasons, have advertised that they are enhancing ventilation systems. A-Lodge Adventure Hotel in Boulder, CO, says that one of its selling points is that its rooms and suites have no shared ventilation between them. Businesses are also increasing the use of heavy-duty filters to block microbes and installing systems that use ultraviolet light or electrically charged particles in the ductwork to kill the virus. Many of the methods to reduce pathogens have been around for years but were geared more to hospitals than commercial buildings.
                                • Total construction spending increased 0.1% in value month over month on an adjusted basis and 11.8% in value year over year on an unadjusted basis in March 2022, according to the US Census Bureau. Residential construction spending increased 1% month over month and 17.8% year over year in March. Nonresidential construction spending declined 0.8% month over month and increased 5.8% year over year in March.
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