After seeing sales plummet during the recession, building equipment contractors rebounded in 2010 and have stayed on a steady upward course since then.
Building equipment contractors are responsible for the parts of a building that make it run smoothly--from the installation and servicing of elevators and escalators in skyscrapers to central vacuum cleaning systems in homes. They're all part of what's known as the building mechanical system, which also includes electricity, water, heating, and cooling. Perhaps unsurprisingly, building equipment contractors operate largely in step with the construction industry, particularly commercial construction.
The sector went from double-digit growth before the housing bust--it experienced a 12 percent rise in sales for the 12-month period ending January 26, 2008--to an 8 percent drop in the 12 months ended January 26, 2010.
"The downward slope coincided with the downturn in the housing market, and of course the incline corresponds to the recovering demand for construction, says Sageworks analyst Chuck Nwokocha. "Although by looking at the graph it seems that the demand has plateaued, that has not been the case at all. From 2011 through January 2015, sales have been growing at an average of 10.2 percent annually--a very positive sign for the industry."
As of May 2014, the Building Equipment Contractors Industry ranked 13th on Sageworks' list of fastest-growing U.S. industries based off data from the previous 12 months.
"Growth in commercial construction demand drives increased sales for building equipment contractors, and looking at bank-loan data, we can say that growth in non-owner occupied, non-residential construction loans show a similar upward trend," Nwokocha says.
Another loan segment that shows positive correlation is commercial and industrial loans, Nwokocha adds. "Businesses occupying new office spaces typically renovate or restructure those spaces, which can call for the services of the building equipment contractors."
Over the past four years, net profit margin in the sector has seen steady growth, increasing to 5.8 percent from 2.6 percent in 2011.