Friday, July 19, 2013
Lafayette’s economy has been on the upswing for the past three years, with the Top 50 consistently outperforming the previous year. This year is no exception, as the list is but five companies shy of perfection in achieving across-the-board increases — and three of those five companies’ revenues were flat.
The outlook for deepwater drilling is the talk of the town — with many industry officials saying the region is poised for a 10-year run based on current contracts — and indicators like retail sales and home sales are continuing to break records. Retail sales through May are up 4.25 percent over 2012, and new residential sales are up 35 percent compared with the first half of last year. The Lafayette Economic Development Authority’s analyses reveal that economic indicators are performing well compared to the first quarter of 2012.
For Lafayette in particular, health care and oil and gas are the big economic drivers. Roughly one-fourth of the Top 50 companies’ revenues are tied directly to oil and gas, and many others benefit indirectly from the activity this sector generates. But health care is where most of the jobs are. Since 2003, when the Louisiana Workforce Commission began reporting health care employment as a separate category, the Lafayette metro area’s health care employment has exceeded employment in mining. LEDA points out that when the MSA was changed in 2005 (to just Lafayette and St. Martin parishes), health care overtook retail and government as the single largest employing industry — ranging from 12.16 percent to 14.08 percent of the total workforce.
Schumacher Group and Acadian Cos. are bellwether health care standouts on the Top 50 list, each growing their revenues by 15 and 14 percent, respectively. Along with jewelry manufacturer Stuller Inc., which experienced a slight uptick in revenues, Schumacher and Acadian are companies to watch, as Frank’s International’s planned initial public offering will create a vacancy in the No. 1 slot.
While there are only two companies whose revenues declined, it’s important to keep in mind that an entity’s year-over-year revenues don’t necessarily indicate success and/or profitability, as smaller jobs can be more profitable than larger ones. That means there is often more to the story when collected revenues drop off. For example, there isn’t a contractor in town busier than The Lemoine Co. — among its local projects are Park Place Surgical Hospital and Camellia Tower V, both in Lafayette, and Freeport-McMoRan Oil and Gas (formerly Plains Exploration & Production or PXP) in Broussard. Yet the general contractor, which also does a significant portion of its business out of town, experienced a 19 percent drop in revenue from 2011 to 2012.
The other company reporting a decline in revenues, 14 percent, is C&C Technologies. That decrease is attributable to the surveying and mapping entity’s decision to cut back on work it was doing in Brazil to increase its profitability. “We have been losing money in Brazil for several years and finally made the decision that it is too harsh of a business environment,” says C&C Vice President and General Manager Jeffrey Sides. “We had four long-term contracts working three vessels with the national oil company Petrobras. When two of those contracts ended, we demobilized two vessels back to the Gulf of Mexico and terminated those vessel charters. We currently have two contracts with Petrobras and have downsized our office in Brazil,” he continues. “It was a conscious business decision, and while decreasing our revenues, increased our profits and outlook for the future.”
This year several companies make their debut on the Top 50 list — all earning their spots on major revenue increases: Machine Tools, No. 42, rose 35 percent; Blue Victory Holdings, No. 43, climbed an astonishing 142 percent; and Stella Maris, a Lafayette-based oil and gas engineering and manufacturing company, jumped a whopping 164 percent. Earlier this year, Stella Maris, No. 44, announced that it is expanding its corporate headquarters at 930 W. Pont Des Mouton Road, with completion of the project expected in February. A manufacturer of products like hydraulic power units, chemical injection skids and customized equipment, Stella Maris will not only more than double the size of its existing 22,000-square-foot facility by an additional 23,000 square feet, but also its workforce.
Ryan Dugas, the company’s director of operations, says once the project is complete, its workforce will grow from 67 to just under 100 employees.
Read more about newcomers Machine Tools and Blue Victory Holdings, along with five other companies that have a positive outlook for their future, on the following pages.
That optimism, along with new leadership at the Greater Lafayette Chamber of Commerce in the form of a seasoned economic development professional, is a powerful signal of an even better, stronger Top 50 in the years to come.
The last two years have brought incredible growth for Apex Freight Services, and after revenues rose 46 percent in 2011, and another 13.7 percent last year, the relatively new Lafayette company — this month marks only its seventh year in business — has landed a spot, for the second year in a row, on ABiz’s Top 50 list.
Apex’s business, according to its founder and CEO Tracy Pellerin, requires a two-fold explanation. Here’s how he tells it:
“We’re a non-asset-based logistics company. For one, we offer standard brokerage services. So say a customer has a load they need to have moved from point A to point B; we contract with [the] carrier, and we have it moved. The second aspect is we provide complete management of a customer’s supply chain.”
In 2011, the company went on the fast-track with the buyout of another freight services company, Coble Enterprises, resulting in $18.97 million in revenues for the year. That 46 percent revenue increase resulted in Apex’s first-ever appearance on the Top 50 list.
The rise in revenues hasn’t stopped, and while they didn’t climb as drastically as in 2011, 2012 also brought growth, as revenues increased 13.7 percent to finish the year at $21.57 million.
“While I’d say our first revenue boost in 2011 was a combination of organic growth and the acquisition of [Coble Enterprises], this year’s jump was all organic,” Pellerin tells ABiz. “We’ve worked hard and acquired some very large accounts, and we’ve had tremendous growth in our existing accounts, and we’re now servicing customers all over the U.S. and Canada.”
One of 2012’s biggest developments, and reasons for the continued growth, says Pellerin, was Apex’s landing of the transportation management contract for the McIlhenny Company.
Apex’s growth won’t slow anytime soon either, as Pellerin points to several “in-the-works” deals, including the pending acquisition of a Colorado-based company that specializes in refrigerated transportation services. With that deal set to be sealed in July, Pellerin says he expects another revenue increase to the tune of about 26 percent.
“We should close on that acquisition by the 26th,” notes Pellerin, though he wouldn’t identify the Colorado company. “I can’t say anything until the 27th, the day after the deal is all done. I can tell you this though, once we buy them out, we’ll be closing that office and bringing all the business back here.”
Two more acquisitions also are in the works, adds Pellerin, saying the only details he can currently divulge are that those deals involve buyouts of companies in Illinois and Atlanta.
“With these three acquisitions, it’ll almost triple our business to the point that next year at this time, we’ll be at a run rate of $6 million dollars a month in gross revenue, which will be in addition to our continued organic growth rate of 15 percent a year,” Pellerin says. “By the end of next year, we’ll basically be providing a global suite of logistic services.”
Unlike the thousands of mom-and-pop businesses across the country that met the business end of big box stores, Lafayette-headquartered Doug Ashy Building Materials has not only survived but thrived even as mega chains like Home Depot and Lowe’s have steadily saturated the market.
Founded in 1960 by its namesake and now employing some 300 people, Doug Ashy rang up $91 million in revenue in 2012.
How do they do it? “Mainly customer service, and just working closely with our contractors and providing a very competitive price,” says Steven Ashy, the third-generation vice president of business development and grandson of the company founder.
Doug Ashy is able to maintain competitive prices with the big boys through its membership in LMC, the largest building material buying group in the country, which serves smaller, privately owned companies and helps them compete by pooling their buying power. “We will beat the prices on just about everything that Lowe’s and Home Depot will offer,” Ashy guarantees.
With six certified interior designers on staff and a custom kitchen-design team, Doug Ashy works closely with contractors in Acadiana’s bustling residential construction sector, which has rebounded from a short Great Recession-induced slump with gusto.
“There’s a lot of young families coming in the market from the oilfield and different industries that are bringing a lot of new buyers. It’s definitely increased sales,” Ashy adds, noting that with the surge of young families comes environmental awareness — many home purchasers want their investments to be as ecologically friendly as possible: “They’re switching to more energy efficient items and things like that — ‘green’ items I guess you could say.”
The VP says his company’s bread and butter these days is the construction of mid-priced homes in the $200,000 to $300,000 range, and he’s noticed a common denominator in both new construction and remodeling: the Great Outdoors. “All the homes now have an outdoor fire place and big patios; outdoor living areas have become very popular,” Ashy says. “A lot of people are adding that on, and most new spec houses have an outdoor living area with a fireplace.”
When next year’s Top 50 project rolls around, there will be a new level of excitement to the list, as there will be an opening in the No. 1 spot. Frank’s International, this year’s solid winner, will move over to the publicly held companies list. And it’s likely to top that list as well.
“I hope we’re blessed that way,” Keith Mosing, chairman, president and CEO of Frank’s International, tells ABiz. “All the forecasts are quite high for oil companies.”
If all goes as planned, the tubular fabrication and installation services company, which had just north of $1 billion in revenues last year — an increase of 35 percent over the $739 million it generated in 2011 — will offer its shares to the general public for the first time in early August. The company’s stock will be listed on the New York Stock Exchange under the symbol “FI.” (Frank’s was No. 1 on the list last year with $850 million in revenues. In preparation for the initial public offering in 2012, however, it split some entities from Frank’s and is now reporting the numbers that correspond with its public information.) Securities and Exchange Commission filings show that Frank’s earned $351 million in 2012, more than double its $171 million in profits a year earlier.
The Mosing family members will retain 85 percent ownership in the company, and $600 million is expected to be raised in the IPO, which will be priced the night before the offering. That means the service company founded in 1938 by Frank Mosing, Keith’s grandfather, is now worth approximately $4 billion on the public market. “Things really are not going to be affected other than we will have the growth potential with regards to capital,” Mosing says.
One of the big beneficiaries in the IPO will be Lafayette, where all of Frank’s domestic operations remain headquartered. Proceeds from the offering will be used to pay down $464 million in debt (as of Dec. 31), and any remaining funds will go toward expansion, Mosing says. “We’re hoping to be able to grow the company and do more M&A, more research and development to develop new products and equipment for the industry. We’re planning on expanding our manufacturing and expanding the amount of investment we put back in the industry in Lafayette, so that’s mainly what it’s going to be for,” he adds. “Everything in Lafayette is going to be expanded. Tens of millions of dollars are being spent on the Lafayette facilities as we speak. We’re going to be bigger, better, stronger and able to serve our customers better.”
At its Lafayette campus on Verot School Road, Frank’s already has two major construction projects in the works — an approximately $20 million operations facility on undeveloped land on Beau Pre Road that has already gone out for bid and another five-story, 200,000-square-foot office building behind its current main facility on Verot. “What we’re doing is we’re trying to get off Verot School Road,” Mosing says of the new operations facility. “So the operations building is going to be on Beau Pre. This is raw land on Beau Pre that we’ve owned for a couple of years.”
Those expansions come on the heels of a big construction project in 2012, which added an 18,000-square-foot facility across from its corporate headquarters on Verot to triple its repair and inspection operations.
Frank’s is among the largest global providers of highly engineered tubular services to the oil and gas industry, offering its services to exploration and production companies working offshore and onshore. The company’s niche is complex and technically demanding wells.
The fourth generation is just beginning to make its mark on the company, which now operates in 60 countries.
Computer numerical control. CNC. It means nothing to most of us — just your typical tech term — but we couldn’t live without it. CNC machine tools are the machines that make machines, and metal parts like bolts, drill bits and screws, and molds, dies and casts. They make the parts that other machines are made out of — machines that make other things.
“Machine tools are the basis of industry; there’s pretty much no better way to put it,” says Pat Kane Jr., founder and CEO of Machine Tools Inc.
With 30 employees and 2012 revenue topping $31 million, Machine Tools Inc. is a familiar partner in Gulf Coast oil and gas exploration, with customers like Halliburton and Frank’s International and other industry heavyweights as well as mom-and-pop machine shops. The Hayden family in Baton Rouge, who own and operate Red Jacket Firearms and star in the popular Discovery Channel reality series Sons of Guns, manufacture their firearms on machines from Machine Tools Inc. But it’s oil that lubricates the company’s bottom line.
“Seventy-five percent of our business is done from I-10 south in oil and gas,” says the elder Kane.
Founded in 1989, Machine Tools Inc. specializes in sales, service and training, mainly for a line of heavy-duty machine tools manufactured in California by the Haas company. MTI’s territory is all of Louisiana and Mississippi. In addition to five full-time salesmen and four application engineers who train customers to use the machines (and also do sales), the company boasts eight full-time service technicians certified to work on these very complex machines. That, says company Vice President/Chief Financial Officer Patrick Kane III — Pat Kane’s son — gives Machine Tools a competitive edge: “We are set apart in our service department,” he says. “We’re the only ones who have those fully trained service technicians riding around in brand new vans with computers, iPads and spare-part inventories to be able to get to a customer and fix a machine quickly. We’re pretty much the only one in this area that has that.”
If you’re still having trouble wrapping your brain around what exactly a machine tool is, Kane Jr. can help. “There’s nothing more than twice removed from a machine tool,” he explains. “A rubber ducky is once-removed because the mold that that ducky was made with was made on one of our machines. Something that is twice removed would be the sheet metal on the front of your refrigerator; it is rolled in a machine that is made on our machines.”
Hope that squares things.
Savoie’s Foods has been pumping traditional Cajun products like smoked sausage, boudin, roux and dressing mix into local grocery stores across the region since its founding in 1955. Last year, the company pulled in $18 million in revenues, an accomplishment that Savoie’s Executive Vice President Freddie LaFleur attributes to the company’s long-standing relationship with its customers.
“We have a real steady client base,” says LaFleur. “They’ve used the products for years, and I feel like the customers who use our products are very loyal to them.”
Savoie’s hasn’t seen many drastic changes in its product line since the passing of the company’s founder and president Eula Savoie in 2010. However, the company made one major leap forward when it implemented a complete redesign of its website SavoiesFoods.com, which went live in April.
“We’re developing a relationship with the online community right now,” says LaFleur. “We’re seeing good interest in it, no real big sales yet, but we are seeing an increased traffic flow for the website, so I think that’s encouraging for us.”
LaFleur’s son, Matt, was put in charge of the project and acts as the company’s webmaster.
“The former website that we had, which was around since before I graduated high school, was very basic, very primitive,” says Matt. “What I was really vocal about being here was reaching out to people in the younger generation — people around my age where we’re very social media-present and very Internet-present, so I wanted to reflect that in our website presence in the company.”
In addition to a full graphic redesign, the new site’s biggest feature is the ability to buy Savoie’s products directly from the website and, with the help of the online distributor Cajun Grocer, have them shipped anywhere across the country.
“We do get good feedback [from online customers], and we get suggestions and ideas from them in ways that they use the products that maybe we wouldn’t,” says LaFleur.
Customers can also log onto the website to find which of their local grocery stores and supermarkets carry Savoie’s products. Another new feature is the recipes page, where customers can send in their favorite recipes using Savoie’s products.
“We have an ongoing promotion where we pick the Chef of the Month based on their recipes, and that person receives a Savoie’s Chef of the Month Apron,” says Matt. “We give out an apron as on old fashioned way to get people interested in cooking again who are still in the ‘microwave generation.’”
Matt says he has more plans for the new site in the works, including a “Cajun Nostalgia” campaign he hopes to launch in August that lets Savoie’s customers take a digital walk down Memory Lane.
“I’m encouraged about having a presence online,” he adds. “And I hope to grow from that.”
You might not know Seenu Kasturi’s name — yet — but you are familiar with his brands. KFC, Taco Bell, Hardee’s, Long John Silver’s. And you’ll likely know more of them soon.
Kasturi is at the helm of Blue Victory Holdings, a boutique private equity firm founded in 2009 that focuses primarily on developing and managing branded assets and real estate.
Kasturi’s company has ownership in locations of co-branded KFC, Taco Bell and Long John Silver’s restaurants and franchises its own brand, Dick’s Wings and Grill, in Florida. With operations in four states and almost 700 employees, it also has the rights to develop Hardee’s stores in every parish that touches Lafayette. Lafayette’s first Hardee’s location just opened on Kaliste Saloom Road, and the old KFC near Dulles Drive is being converted into the city’s second Hardee’s.
The young company’s growth is nothing short of spectacular. In 2010, it had $1.5 million in revenues, and in the past year — from 2011 to 2012 — revenues increased a staggering 142 percent, from $12 million to $29 million, earning Blue Victory its first spot on the Top 50 list. With that growth has come a sharper focus. “Over the last several months, we have divested some apartment holdings and reduced our investment in that category of real estate to focus on single tenant properties,” Kasturi says. “Our plan is to continue to expand Hardee’s in the Lafayette region by opening up to five or six more locations. We are negotiating other sites.” Between locations it owns, is the franchisor for or is operating with affiliated entities, Blue Victory has more than 60 restaurants in Louisiana, Georgia, South Carolina and Florida.
And while he would not disclose what brands he’s pursuing, Kasturi hints that the portfolio is growing. “We have reached an agreement to acquire two yogurt chains based in Florida with a combined 40-plus stores and hope to close those deals in the coming months. We also have a definitive agreement to acquire a 50-percent equity stake in an awarded-winning wings chain in Salt Lake City, Utah, that has 13 locations and growing.”
Here’s where Kasturi’s story gets more interesting. About this time you’re thinking he’s just a guy feeding his wife and three kids (and paying that Sacred Heart tuition) from the profits of his quick-service restaurants. But there’s more to Kasturi’s story; two years ago he started Global Offshore Resources, an offshore staffing company. Kasturi says the startup barely broke even in the beginning but is now a multi-million-dollar company that is solidly profitable.
“Our business model of having operating partners enables us to go anywhere and produce results,” says Kasturi, a certified financial planner and former SEC-registered broker and investment adviser. “We are return on investment and return on equity type investors and are always scouring for opportunities where we can leverage expertise or hire the expertise needed to grow in any industry. So far, our success has been limited to energy staffing, real estate and food service industries, but that is not to say that it will be that way forever. We want to diversify by industry, geography and ownership structure [public versus private] to create the best value for the companies that we are a part of, along with creating value for our investors and shareholders.”
A native of India who has lived in Lafayette more than three decades (his mom moved here in 1978 and earned a Ph.D. and doctorate in English from UL Lafayette), Kasturi has an experienced management group running Blue Victory. “I want to make it absolutely clear that we cannot do that without having the right group of people working together as a team,” he says. Among its leadership are industry veterans like Rick Akam, ex-president of Hooters America; John Meyer, who has more than two decades of leadership roles at Yum! Brands; Yannick Bastien, former senior financial adviser at American Express Financial Advisors who has helmed Global Offshore Resources since its inception; Owen Thompson, who has decades of restaurant industry experience with Sonic and Krystal; and Paul Driscoll, Howard Killgo and Mack Moore — all three of whom also worked at Yum!.
The man who started his career in the food biz delivering pizzas for Sorrentos in Lafayette in the early 1980s, and eventually worked his way up to general manager, announced last year that he was buying a 45.3 percent stake in Jacksonville, Fla.-based American Restaurant Concepts Inc., parent company of Dick’s Wings. At the time Kasturi hoped to eventually fold Blue Victory’s assets into the publicly traded company, but his existing franchise agreements forced a restructuring of the transaction.
“We had to alter the manner in which we completed the deal, since acquiring more than a 10-percent interest in a publicly traded company that serves chicken created conflicts of interest with our existing franchise agreements,” Kasturi says. “The deal did close, and I am considered a control person for ARC and file all required SEC filings just like a company executive would. I also own just under 10 percent directly since that is the threshold that the franchise agreements allow.”
After months of remodeling and construction, Service Chevrolet has completed the move from its former location on Cameron Street to a state-of-the-art facility on Ambassador Caffery Parkway. The new facility, run by dealer Jesse Luquette Jr., stretches across a 56-acre lot with a wide open showroom, 20 sales offices and a new customer waiting lounge featuring a workstation complete with free Wi-Fi.
“It’s just very updated from what we’ve had before,” says Lorraine Luquette, marketing director for Service Chevrolet Cadillac. “We hold about 315 spots just in our front lot for inventory. It’s very wide open — all the sales offices are visible to the showroom, and there’s a lot of glass so everybody’s able to see you.”
The facility also features a new Cadillac dealership, which Service Chevrolet quietly purchased from Courtesy Automotive owner Don Hargroder last year. The acquisition was never publicized, and the purchase price was not disclosed.
“It’s all in the showroom here, so we are now officially Service Chevrolet Cadillac,” says Lorraine. “We share the dealership; we hold both lines in the dealership.”
According to Luquette, Service Chevrolet Cadillac is in the process of building a separate Cadillac dealership on the rest of the property right next to the new facility, but for now Cadillac is being temporarily housed at the same facility.
“Now that we’re on Ambassador there’s a lot more traffic in front of us than there was on Cameron Street,” says Lorraine. She expects the used car inventory to be completely relocated to the new site by the end of the summer. “So we’ll have everything in one building,” she says.
The company experienced a healthy uptick in revenues from 2011 to 2012, increasing 23 percent to $129 million. The addition of Cadillac along with several new Chevrolet models, including the fully redesigned 2014 Chevy Silverado and 2014 Chevy Impala, could boost those revenues even higher this year.
“As far as Chevrolet, the Silverado has been our No. 1 seller just because we are in the truck land of America right now,” says Lorraine. “It has better fuel economy, and it has a lot more power and torque so a lot of the men are loving that. And what a lot of the men are liking on it is that it’s very quiet.”
As for Chevrolet’s smaller cars, Luquette says the Chevy Cruze is one of the better sellers, offering 26 mpg in the city and 36 on the highway.
“As far as Cadillac, the SRX is our top seller for sure, which is a crossover SUV,” she notes. “And then car-wise, the ATS is a brand new Cadillac that came out this year; that’s really a good seller for us. As far as technology, it’s the top of the line. There’s really nothing that’s missing in there.”
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