Santa Ana-based security and maintenance services company Universal Services of America has been a big buyer in recent years, expanding across the U.S. with a dozen acquisitions since 2010.
Last year was the peak for deals—with eight buys—and the company is now turning toward integrating the acquired companies, a mix of smaller, regional service providers.
That might “put the acquisition strategy on a little bit of delay,” according to Chief Financial Officer Scott Savoie.
Just a bit, though.
Deals
Universal Services last week wrapped up its acquisition of Sacramento-based All Phase Security Inc. Another deal is pending, likely to close in the current quarter. Those transactions are expected to boost Universal Services’ annual revenue to about $740 million, up from the current $670 million, according to Savoie.
That would mark another 10% boost in annual revenue, nothing new for Universal Services.
The company’s revenue has grown fivefold in Savoie’s seven years as finance chief. It is expected to have 30,000 employees by the end of the first quarter, with operations in 27 states.
Savoie was honored in the Private Company category at the annual CFO of the Year Awards presented on Jan. 29 by the Business Journal and the California Society of Certified Public Accountants.
Savoie joined Universal Services at the end of 2005, when the company only provided security services, with about $125 million in sales and some 6,000 employees in three states.
Among his first tasks was organizing a management buyout that saw the company’s two founding partners turn operations over to Brian Cescolini and Steve Jones, the current co-chief executive officers.
The company soon made its first acquisition and began starting new subsidiaries.
“In 2008, we started up a janitorial company,” Savoie said. “In 2009, we did a recapitalization. We brought in Caltius [Capital Management] to be mezzanine lenders for the company. That relationship then allowed us to have the capital we needed to go and start an acquisition strategy. Up until 2010, we were growing 25% a year organically. But then organic growth in combination with the acquisitions is what really propelled us to where we are today.”
Subsidiaries
Universal Services now operates through various subsidiaries; its largest is Universal Protection Service, the security-guard unit, which accounts for about 90% of the company’s total revenue.
The janitorial business, under the Universal Building Maintenance brand, operates in California and Arizona, and makes up about 6% of total sales.
The rest comes from Universal Protection Security Systems, “which is what we call our electronic security-systems business,” Savoie said. “That’s mainly California and some [in] Arizona, and Charlotte, [N.C.]”
Last year’s acquisitions put Universal Services in several new geographic markets, including Florida and Illinois.
“The latter half of last year, the acquisitions were all about the growth in the eastern part of the country,” Savoie said. “At the end of 2012, we bought something in the Southeast. December, we closed in New York, putting us in the Northeast. Overall, we had a 40% growth in states we had not been in previously. And with the acquisitions we plan to close this quarter, we’ll also be in Puerto Rico and the Virgin Islands. It will give us an international presence.”
Universal Services also is planning a recapitalization in the middle of this year to take advantage of the relatively low borrowing costs.
“We want to take on … more senior type of debt,” Savoie said. “We’ll look more toward the high-yield bond market.”
Using Degrees
The acquisitions and financing strategies give Savoie the chance to put both of his degrees—one in accounting from California State University, Northridge, and an MBA from the University of Southern California—a workout.
“That combination of accounting and finance really is what allowed me to take on a CFO role in the first place,” Savoie said. “I enjoy it. The life cycle of a CFO can be short. But we’ve been evolving, growing, changing. And that’s one thing that has kept me here for over seven years. And the security-guard business [is] a lower-margin, lower-wage services industry. You have to manage much higher volume of employees and lower cost of fixed assets. That’s maybe different from a manufacturing company, where you’re capital-intensive with plants and equipment, and fewer employees.”
