Business Spotlight: Expansion by Contraction

The owners of Springfield-based Performance Foam Insulation have narrowed their product line to the one that has performed best since the company’s formation in 2006.

Owners Jake Condict and Jeremy Searcy say the company’s sprayed insulation – both foam and retrofit – was outselling the door, window and building supplies they also were offering, so much so that the two decided to leave the rest behind in June 2008.

Concentrating exclusively on insulation has helped the company, which serves clients in Missouri, Arkansas, Kansas and Oklahoma, post revenues of $601,000 in 2009, down just $36,000 from 2008 – two years when most construction-related businesses were sluggish at best. Through six months in 2010, the firm has logged $348,000 in revenue.

Searcy said the 126 home-insulation project bids  already made by the company midway through 2010 are greater than all bids made in 2008.

Room to expand
The company’s product, made by Bayer, has been available since the 1970s, Searcy says, but popularity has increased the last 10 years.

“They’ve been putting foam insulation in refrigerators and freezers forever,” Searcy says. “That replaced Fiberglass insulation 20-some years ago. … It’s going to be something that’s truly hard to replace.”

Foam insulation can be applied by spraying into areas of homes and buildings or by applying foam insulation boards between the exterior finish and the exterior wall studs.

“The overall advantage is the fact that it completely seals the structure whether it’s a home or a building, eliminating air infiltrations,” Searcy says. “It can, if it’s done correctly, reduce your heating and cooling costs by up to 50 percent.”

The initial cost of the product can be a detriment to homebuyers, he says. For a 3,000-square-foot home, Searcy says, the cost can be up to two-and-a-half times higher than traditional Fiberglass insulation. Searcy estimated costs of both at 40 cents per square foot for Fiberglass insulation versus $1.20 per square foot for foam.

Foam costs more because it is petroleum-based, Searcy says. He added that the production process, higher shipping costs due to its weight, the cost of installation equipment and insurance necessary for equipment add to the cost.

“That kind of shies them away, but that’s where we have to come in and truly show them that they can be put in a position of positive cash flow from Day 1,” Searcy adds.

Searcy says homeowners’ savings by installing foam over Fiberglass allows them to reach positive cash flow.  

“They’re saving more than they would be had they put Fiberglass in there,” Searcy says. “This product is more expensive, but the overall monthly savings on the utilities far exceeds the additional mortgage expense they would have.”

Searcy pointed to an example of a 1,577-square-foot home in Brookline that would have a monthly utility bill of $153 with conventional insulation compared to $99 with foam insulation.

Home builder Brad King, co-owner of King Built Properties LLC, agrees the initial cost is the largest detriment.

“When we sell foam to a homeowner, they have to get past the initial cost upfront,” King says.

History in supply
Condict’s family was in the building supply business, owning Ozark Construction and Supply Inc. before he started what’s now the insulation business.

“We did windows and doors and were always looking for a new product,” Condict says. “We heard somebody talking about it on the radio one day and thought it would be a good addition to our existing business.”

Condict says the success of the foam insulation led to the elimination of the other aspects of the business. Because Fiberglass is used for about 90 percent of insulation jobs, Condict says there is plenty of room for market growth.

King says he’s used foam insulation on 15 homes in neighborhoods such as Villages at Wicklow, San Poppi at Millwood and Lexington Square. “We have homeowners who have called us and said they have a home twice the size of the home they lived in before with the same utility costs,” says King, who first installed foam insulation on a home seven years ago.[[In-content Ad]]