IS THE BUSINESS FOR YOU?
New home construction increased 25 to 30
percent in 2005. Pool-building firms
had their hands full.
There was a tremendous
boom in home building,
and many of our
clients are national
home builders.
It was an extremely
busy time.
As a result of their
numerous successes
in the past five
years, our company
opened a second
pool operation. They're
two separate, stand-alone
companies with
basically the same
owners, but we did this to be able to consolidate the geographic
areas that we serve so we can better service our customers in
terms of performing construction.
Such aggressive expansion plans are just one of the reasons why this year's Pool & Spa News Top 50 Builders shattered records. The honorees grossed more than $2 billion in 2005, thanks to strong housing markets, expansions, acquisitions and a number of other factors. Looking ahead, they hope to continue that growth despite a softening economy.
Leaps and bounds
As an industry closely linked to the housing market, pool construction continued to prosper in the first three quarters of 2005, during which time existing and new home sales stayed strong.
Interest rates were
still favorable.
Housing starts
and sales, and
the appreciation
rate, were still
good. The time
is now to be
well-positioned,
well-trained
and
growing in these
areas.
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|
Top 50 Total Revenue |
| 2003: |
$1,436,492,841 |
| 2004: |
$1,810,730,118 |
| 2005: |
$2,080,906,307 |
| Includes retail, service, residential and
commercial construction. |
|
This year's Top 50 Builders showed revenues of $2.08 billion,
nearly 15 percent more than the $1.81 billion total in 2004. Revenue
has grown consistently since 2001 when Pool & Spa News unveiled
its Top 50 Builders program.
Construction dollars
followed in line.
Revenue rose more
than 25 percent to
$17.8 million. Nearly
every month, had
record-breaking numbers.
There is incredible
demand for swimming pools and spas. Last year was one of the best
markets we've ever experienced in terms
of new- pool construction.
The boom is due in
part to the growth in residential renovation revenue. As a group,
the Top 50 Builders averaged $1,350,875 in renovation dollars,
nearly seven times the $205,000 average in 2004. Ten builders
reported that more than 10 percent of their revenue is coming
from renovations.
| |
|
Construction Revenue |
| 2003: |
$14,220,000 |
| 2004: |
$14,269,000 |
| 2005: |
$17,837,920 |
| Includes all residential and commercial construction. |
|
Still, 21 builders have no renovation business at all. That explains why renovations accounted for only $67.5 million, or 4 percent, of the Top 50 Builders' total construction revenue.
Despite the disparities among companies, growth was evident across the board. Only two Top 50 Builders saw a dip in numbers this year; the majority reported revenue increases ranging from 2 percent to 89 percent.
The near doubling of this business to a healthy building
environment in the
Southeast. We're
in a hot, robust market,
with a lot of home
builders started building
spec homes.
Pool and spa builders did not stop there. Besides expanding their construction business, many companies entered new arenas. Shasta aggressively grew its commercial construction and manufacturing operations. Similarly, 29 companies on the Top 50 Builders list earned revenue from commercial construction, raking in nearly $94.5 million from such public and municipal works.
| |
|
Total Retail Revenue |
| 2003: |
$75,770,151 |
| 2004: |
$95,815,693 |
| 2005: |
$101,107,572 |
|
Overall, nearly half of the builders on this year's list sell products in retail outlets; four of those companies derive more than one-quarter of their gross revenue from retail operations. In all, the Top 50 Builders raked in more than $101 million in retail sales, up 6 percent from $96 million in 2004. Still, retail revenue accounted for only 5 percent of the Top 50 Builders' gross revenue in 2005.
Pool building burdens
For most pool builders, however, financial transactions, retail sales and gross revenue aren't the nitty-gritty of their business. Their day-to-day efforts focus on putting pools in the ground.
| |
|
Total Top 50 Volume |
| 2003: |
35,568 |
| 2004: |
42,253 |
| 2005: |
46,513 |
|
The Top 50 Builders constructed a total of 46,513 pools last year, up 10 percent from 42,253 in 2004. The top five volume builders had less pronounced growth, inching up 6 percent from 21,338 pools in 2004 to 22,656 pools in 2005.
Overall, volume for the Top 50 Builders ranged from 30 pools built by high-end luxury installers to more than 8,000 installations by industry behemoths.
The average pool price for the entire Top 50 group shot up to $43,423, a whopping 17 percent over the previous year's $37,203. Many report that this increase will continue due to skyrocketing costs of raw materials, fuel and labor.
Rising costs are a big challenge, in years past, suppliers and vendors would price increase off and on. This year, it's been across the board. Fuel has really taken a toll as well.
Materials costs weren't the only factor driving pool price increases, however. Many Top 50 Builders say their aquascapes continue to be feature-packed as the entire industry moves toward embracing the backyard living concept. Salt-chlorine generators, energy-efficient pumps, upscale patio furniture and hot tubs were among the most popular additions in 2005.
Despite this energy and movement last year, some Top 50 Builders are wary about the future. In the fourth quarter of 2005, they say the fruitful situation began to change.
We've had a dramatic drop in the whole economic climate in our industry. Interest rates started inching up. We got a new Fed chair. Housing inventories started rising. We're just starting to feel the impact of the rising interest rates. I think it's having an impact in certain markets, California being one. Rising construction costs and materials costs are also a big challenge. Regardless of what may come in 2006, the pool industry is sure to look ahead, survive and prosper. |
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