DLC Resources is spreading its wings like an eagle soaring over deserts in the Southwest as it continues to grow. Jumping from $16.86 million in annual revenue in 2007 to $21.98 million in 2008 and $22 million in 2009, the company recently expanded out of its headquarters into Tucson and Las Vegas.
With a niche of managing large master-planned communities, DLC is using its proprietary GPS software, water management system, environmental policies and talented employees to differentiate from competitors and boost business.
It seems to be working.
Keep track of it
The proprietary software using GPS technology, which was implemented five years ago, measures and tracks properties’ assets — such as trees, playgrounds, mail kiosks, water meters and irrigation components — that require maintenance. DLC employees can do this via handheld PDA devices.
Using the software, DLC plots all assets on aerial photographs and, in the case of trees and other assets, can put a value (dollar amount) on each. The company keeps track of everything it prunes and stores the information electronically, allowing the company to look back five years to help it plan for future maintenance needs.
The software also helps DLC and the communities it serves regarding liability. “If a particular tree fails, causing damage resulting in a claim, we can demonstrate there’s a plan in place to minimize a negligence argument,” says Jeff Penney, CEO and co-founder of DLC Resources.
The most obvious edge DLC has over its competitors is the use of this GPS technology, says Don Schlander, head of business development.
“No one else does it like this,” he says.
Every drop counts
Aside from the GPS software, DLC is using water management to set itself apart from its competition.
“The goal is to provide only enough water to the turf and plants to remain healthy but no more,” Penney says.
The comprehensive water management program, which was implemented eight years ago, tracks all water meters (50 to 200) monthly per community, including previous years’ water use. A water budget is implemented based on acreage and vegetation type. That budget and actual usage is compared to an association’s budget.
“Our people who program the clocks know how much it costs to run a cycle ($500 to $4,000 per cycle), which is all the watering needed on a property for one night,” Penney says. “We can save significant dollars per cycle because we’re looking at water reports and weather conditions. We analyze the local conditions and work continually to balance the systems. We arm our people in the field with resources and knowledge, and then they’re held accountable for the budget.”
DLC’s water management program saved Desert Mountain 30% on its water bill the first year it maintained the property. Penney says 15% to 30% is the norm for water savings for its clients. Another example: Johnson Ranch saved $50,000 on water the first year DLC maintained the property.
DLC Resources is spreading its wings like an eagle soaring over deserts in the Southwest as it continues to grow. Jumping from $16.86 million in annual revenue in 2007 to $21.98 million in 2008 and $22 million in 2009, the company recently expanded out of its headquarters into Tucson and Las Vegas.
With a niche of managing large master-planned communities, DLC is using its proprietary GPS software, water management system, environmental policies and talented employees to differentiate from competitors and boost business.
It seems to be working.
It’s easy being green
Another way DLC tries to make a difference is via the environment. It recycles all the green waste that’s generated on a property — 90% of all material removed from a site is green waste and processed in the company’s yard with a horizontal grinder. Then it’s hauled to a third-party recycler that makes low-grade paper and mulch. An average of 25 tons of processed green waste a day is hauled away from the DLC yard. Even though DLC pays for that waste to be hauled away, it saves about $10 a ton by not taking the waste in multiple loads to a transfer site or landfill facility. The other 10% of the waste is trash, which is nongreen. The company recycles half of that (cans, bottles, etc.).
Additionally, all managerial and supervisory employees drive Honda Accords, CRVs and Toyota Priuses instead of pickup trucks SUVs. Another environmental initiative: all two-cycle equipment (trimmers, chain saws, edgers, etc.) is sold annually, and the company buys new equipment, which has improved emissions.
Growth spurt
All aspects of DLC’s operation adds up to growth — the company has been averaging 10% to 15% annually from its conception until ’04 when it had two years of back-to-back 25% growth. It grew 30% from ’07 to ’08. And employee growth has been proportional to revenue growth. This growth is due mainly to the expansion of Phoenix, Penney says. Rapid growth has slowed in the tough economy — 2009 was a flat year, and Penney predicts 2010 to be flat.
DLC, which is 100% maintenance focused on master-planned communities (about 30 of them), has only one municipal project, which represents 5% of its business. That project is for the city of Phoenix and entails maintenance of the landscape buffer along the residential side of sound walls next to freeways throughout the city.
“We don’t want to grow the municipal or commercial business,” Penney says. “Large HOA (homeowners’ association) is our market, and if we continue to focus on that, we’ll have continued success because we provide services other companies don’t.”
Most companies in Phoenix combine maintenance and construction, Schlander says. As the economy slowed, companies with a sizable construction business were hurt worse than those with a smaller construction business.
When comparing the Phoenix market to Las Vegas, Schlander says the quantity of target properties in Vegas are similar to those in Phoenix, and the competition in Vegas is similar to Phoenix, he says, citing three national companies (ValleyCrest, TruGreen, Groundskeeper) and one local company (Par 3 Landscape & Maintenance) competing for business in Sin City. The Vegas market, however, is smaller than Phoenix. It’s metro population is 2 million compared to Phoenix’s 4.5 million.
While trying to earn new business in Vegas and Tucson, Schlander says 90% of the sale is the presentation, the company’s credibility and the work.
The economy is DLC’s main growth obstacle, not new development. Second to the economy is cost pressure because there is more competition.
“We have one-third of the Phoenix market, and we can capture another third,” Penney says. “We’ve opened offices in Tucson and Las Vegas, but it will take a year or two to get a foothold in these cities. Once that happens, we expect 10% to 15% annual growth.”
Penney is looking to find managers in those two cities and says he’ll take key players in Phoenix that desire the challenge and relocate them there. He’ll oversee both offices but not the day-to-day operations.
To date, DLC has garnered four contracts in Tucson but none in Vegas yet. The revenue goal is to generate $2 million through targeting master-planned communities. As Schlander says: “We need better name recognition in those markets.”
