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When Randy Thompson began running the family business a little more than 20 years ago, ThompsonGas had just one store, three delivery trucks, and eight employees serving three states. Today, the middle-market firm has more than 51 branch locations and 350 employees serving 12 states. Join us as Randy tells us where the firm’s next chapter of growth is being written.

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“We centralized our supply logistics program for the distribution of propane to our branches. That’s helped us in times like last winter when we had some supply issues nationwide.”

The following is an edited abstract from the Middle Market Thought Leader podcast featuring Randy Thompson, CEO of Thompson Gas, and Jack Sweeney, co-host of MME Thought Leader.

MMTL: What is the current landscape for Thompson Gas and your competitors?

Thompson: The propane industry is made up of the top ten companies that control about 35 percent to 45 percent of the market. Many of them are publicly traded companies. Then the remaining, call it 4,000 to 5,000 companies, are very small mom and pop companies. Those companies are the ones that we have been targeting to acquire and bring under the Thompson Gas fold. We certainly compete with both, independent marketers and the large public companies. We are serving in about 12 states, from southern Pennsylvania clear down to the southern tip of Florida. We compete day in and day out with all the majors in every market we serve.

MMTL: Does being a middle market firm have any special advantage?

Thompson: The current size of our business has permitted us to do some major things: One is to hire some very, very talented people to help operate the business. Second, we centralized our supply logistics program for the distribution of propane to our branches. That’s helped us in times like last winter when we had some supply issues nationwide. Making sure we keep our tanks full has also allowed us to buy better, directly from a number of distributors of propane, directly as opposed to going to wholesalers. All of those things have permitted us to have a several cents per gallon advantage over our competition.
MMTL: In your drive for acquire other propane companies, what are some of the real obstacles you confront day to day?

Thompson: The main obstacle is capital. The propane industry tends to work towards an acquisition target of seven to seven and a half times cash flow. That’s what they value at and bank financing typically wants to stay in the three to four times range, so you have to figure out a way to work with the seller to get them comfortable without taking back financing on the other two to three terms, or find other private capital to do that. That’s really been the major growth hindrance. We’ve always been able to figure out a way to do it, but it’s still something that’s out there in the shadows that you have to be aware of when you make an offer to a seller to buy their business.

MMTL: Where does Thompson Gas draw most of its workers from?

Thompson: We typically source the field crew, field operation folks from the geographic area that we serve. We also have found some regional vice presidents outside of our area for working with our CO, who had a nationwide presence with a large major company and came on board about two and a half years ago. We are hiring people from the West Coast and moving them to the East and/or allowing them to stay in the West because we want to grow as a nationwide provider. Our goal is to get into the top ten in the next three to four years.

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