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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 102,300 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 102,300 companies (including solo operators), employs more than 1.2 million workers and generates $218 billion annually.
    • Just over 60% of HVAC and plumbing contractors are solo operators and generate about $65,200 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

                                Recent Developments

                                Mar 15, 2024 - Wage Growth Outpaces Price Growth
                                • Producer prices charged by nonresidential HVAC and plumbing contractors have risen steadily in 2023 and, by Q4, were up slightly over the same period in 2022, according to the Bureau of Labor Statistics (BLS). However, BLS data shows wages in the industry are rising faster than pricing, which could signal a pinch on contractor margins. Industry employment increased slightly in Q4 compared to the same time a year earlier, according to the BLS.
                                • The Dodge Momentum Index (DMI) decreased by 1.4% in February 2024 to 180.5 (2000=100), down from the revised January reading of 180.5. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component dropped by 2.3%, and institutional rose by 0.1%. Dodge’s associate director of forecasting, Sarah Martin, said, “Weaker office and healthcare planning constrained nonresidential planning in February. However, the Index remains 25% higher than where it was just two years ago. Most other categories showed growth over the month and Dodge remains optimistic that nonresidential planning will stay elevated throughout 2024 alongside rising confidence in 2025 market conditions.”
                                • Apartment buildings are getting taller amid sustained demand for rentals, scarcity of land, and some cities’ willingness to change zoning rules to attract development, according to The Wall Street Journal. Between 2021 and 2023, US cities added more than 2,900 buildings with more than 200 units, a 17% increase of the number built between 2018 and 2020, according to property data firm Yardi. High interest rates and single-family home prices continue to prop up demand for rentals, even among those with relatively high incomes. Some cities are easing some zoning rules, such as minimums for parking. The economics of multifamily development have also changed. Higher construction costs mean buildings need to have more units to be profitable.
                                • Total nonresidential building construction spending is projected to rise 8% in 2024 over 2023, according to FMI’s first-quarter 2024 North American Engineering and Construction Outlook. At growth of 18%, manufacturing will lead 2024 nonresidential building construction, followed by lodging (+12%), educational (+10%), and healthcare (+8%). Some other segments of the nonresidential building sector face headwinds, including high interest rates, inflation, and tighter lending standards. These pressures and high vacancy rates will reduce office project spending by 2% in 2024. Commercial project spending is forecast to decline by 4% in 2024. High interest rates will also challenge the housing market. Single-family construction spending is forecast to drop 5% in 2024 after falling 14% in 2023. Spending for multifamily is expected to decline 15% in 2024 after projects in development peaked at 1 million units in mid-2023. Home improvement project spending will drop 4% in 2024 from 3% growth in 2023.
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