For One Middle-Market Firm, Propane is the Gateway to the Future

Boonsboro, MD — For many Americans, a mere mention of the propane business can bring to mind the image of Hank Hill, the likable family man of the animated TV series King of the Hill, who never grew tired of reminding his son Bobby of the virtues of being a propane salesman.

Not only is propane a clean fuel, Hill once told his son, but 90 percent of propane consumed domestically is produced domestically — a surprising and apparently accurate fact that has arguably been putting an enduring new luster on a business that even today remains largely rooted in family-owned enterprises.

“The fact is that propane is a volatile fuel that can have catastrophic consequences if not handled correctly, and we find that customers in rural communities frequently know and trust these family-owned businesses to take care of them in a safe manner,” explains ThompsonGas CEO Randy Thompson, who over the years grew the middle-market company by buying out a number of just such family-owned and -run businesses.

In fact, when Thompson joined his own family business a little more than 15 years ago, ThompsonGas had just one store, three delivery trucks, and eight employees serving three states. Today, the firm has more than 51 branch locations and 350 employees serving 10 states.

“What we’ve done is introduce these small businesses to a really solid accounting and customer relations platform and allow the local staff to do what they do best — which is take care of customers rather than have them dedicate time to payroll and bill collections, which can be all done centrally,” explains Thompson, who says that often the local owners will remain as branch managers after the sale of their business is completed.

He adds: “Most of the time, they’re asking themselves why they didn’t sell sooner.”

Today, the firm, with annual sales estimated at between $100 million and $115 million, supplies close to 30 million gallons of propane annually, making it the 18th largest propane supplier in the U.S., according to Thompson.

Looking forward, Thomson says that the acquisition menu is now likely to broaden beyond retail operations.

“We refer to them as midstream assets, but this just means that they’re complementary. These are assets like propane rail terminals, propane storage facilities, trucking companies, things that move our product around and that we could charge other propane companies a fee to utilize,” says Thompson.

With residential customers making up about 75 percent of the firm’s business, the remaining 25 percent is largely customers from agriculture, where many farms rely on propane to heat their livestock shelters and facilities. Still, the firm’s motor fuel customers are growing, and for obvious reasons Thompson underscores the opportunity.

“Propane is the third most predominantly used motor fuel in the world, and it’s clean-burning — so the industry has really been working to promote it for fleet vehicles and other areas,” says Thompson, who meanwhile believes that propane’s virtues are beginning to register more widely with the American public.

“This is just a wonderful fuel that can be delivered in a liquefied state like gasoline and diesel. It can operate and fuel vehicles and lawn mowers, but does so with 95 percent less greenhouse gas emissions — and meanwhile costs about $2 less a gallon than gasoline,” says Thompson, whose early memories of the business run back to the age of 10, when he would sometimes accompany his father on cold winter’s day deliveries.

With a little luck, Thompson says, he’d occasionally be handed a fresh-baked cookie from a thankful home owner.

Not unlike in King of the Hill, life has always been about family as well as business at ThompsonGas.