Premier Pools is continuing to expand its operations.
The firm has converted most of its corporate branches into licensed offices and opened additional locations, with negotiations taking place in the eastern part of the country.
Last year, the Rancho Cordova, Calif.-based builder took on its first licensee in Houston, stating that Premier would maintain a mixture of corporate-held offices and licensees. These new partners would run their respective offices and focus on sales and construction, while Premier headquarters would manage tasks such as marketing and bookkeeping, and provide sales training.
Since then, Premier has continued to add licensees in the West, with deals in the works for eastern offices. Currently, the firm is ready to sign on locations in Maine, New York, Philadelphia, Boston, North Carolina and Vermont, said Paul Porter, CEO of Premier, a Pool & Spa News Top Builder.
At press time, Premier had new offices in Goodyear, Ariz.; Houston, Dallas and Austin, Texas; and Novato, Santa Clarita, Redding and Temecula, Calif., according to company officials.
Most of the new licensees are pre-existing builders with at least 10 years’ experience, Porter added.
Company officials decided to turn all but the Rancho Cordova location into licensed outlets, entering into agreements with former employees who had managed the offices.
Porter cited three reasons why Premier took this turn. First, he said, it relieves corporate management of some day-to-day responsibilities so it can focus on growth. Second, he believes owners will perform better than hired managers, bringing a different mind-set to each office.
Finally, Porter said, the company wants to shed some of its liability exposure. “We were licensed in four states, and you spread yourself pretty thin liability-wise when you do that,” he said. “If you have a guy in Texas who gets in an auto accident and somebody sues and wins a $10 million lawsuit, the whole company goes down when it’s one corporation.”
Nine existing branches were purchased by former employees. They include three in Arizona (Tucson, Chandler and Peoria), five in California (Roseville, Vacaville, Modesto, San Diego and Laguna Hills), and Las Vegas. (Premier’s Oakley, Calif., office has had a different ownership arrangement for more than a decade.)
With the new model in place, Porter has set some ambitious short- and long-term goals. “We feel like we have an opportunity to open up 25 to 50 new branches in 2011,” he said. “I anticipate in five years being a $500 million company.”
This year, he expects between 50- and 300 percent increases in various offices, and corporate-wide growth of 50 percent over its 2010 sales of $40 million. Already, January sales had increased 170 percent over the same month in 2010, he said. Porter expects to enter the ballpark of megabuilders Blue Haven and Anthony & Sylvan by the end of the year.
Industry observers have had mixed reactions to Premier’s growth.
The company’s expansion model is designed to take advantage of a glut of talent that became available when the recession forced many builders to close. But while some expect the plan to prove effective for quick growth, others voiced concern about placing their company’s reputation in the hands of someone far away.
“If you have a builder out in another state and he does something wrong, it can hurt the reputation of the whole group,” said Tim Murphy, CEO of Presidential Pools and Spas in Gilbert, Ariz. “That would be my biggest fear.”
It is yet to be determined if having another national player will impact the rest of the industry. Some, for instance, wonder how Premier’s aggressive growth strategy will affect pricing.
“The question is, are the people taking over those offices well-funded?” said Sacramento builder Mike Geremia, president of Geremia Pools. “If you don’t have much money, you’re scrambling and throwing low numbers around, regardless of what you’re building. We need to stabilize our pricing to where we can cover overhead and try to eke out some profit along the way.”