2020 Top 50 Contractors Enjoy Record Revenues While Bracing for the Unknown

Every year when I sit down to calculate our annual Top 50 Electrical Contractor survey results, I always reflect on our treasure trove of historical survey data in an effort to draw parallels or contrasts from the year before. We’ve been gathering and analyzing this survey data for so long now at EC&M that it’s always interesting to contemplate the major influences driving growth in certain markets and declines in others, leading factors affecting that particular year’s business climate and individual company profit margins, and a host of underlying circumstances that alter the electrical industry in a positive or negative way.

As examined in the cover story, this year’s Top 50 crushed yet another revenue record. Hitting a combined total of $32.7 billion for the 2020 rankings (based on electrical and voice/data/video work completed in 2019), the group enjoyed a nearly 14% increase from $28.8 billion in 2018, the biggest one-year increase since 2014 (when it spiked 39%). Glancing back over my editor’s note from last year’s Top 50 issue, I was honestly floored by the irony. Aptly titled “Business Booms, Uncertainty Looms,” the best word I can come up with to describe last year’s cover story is clairvoyant. After citing a survey in that column that indicated nearly half (48.1%) of chief financial officers in the United States believed the economy would enter a recession by the second quarter of 2020, and 69% expected one by the end of 2020, I posed the question: How long can this prosperity continue? Likening the scenario to the analogy of a moving car, Freelance Writer Tom Zind advised contractors to keep their eyes on the busy road ahead while making sure they were ready for the long haul and changing road conditions. “Worries persist that the nation’s long economic recovery may be running on fumes, and that slowing growth or even a recession is on the horizon,” he wrote in the special report. “For now, though, business is seemingly good in the electrical contractor space, and most are trying to squeeze as much out of the good times as they can.”

Fast forward to 2020, and the foreshadowing from that piece is almost uncanny. Although the Top 50 had a record-breaking year in terms of profits for 2019, marking a decade-long streak of year-over-year growth, the future is unclear, given the ongoing ramifications of the global pandemic coupled with the subsequent economic downturn. This year’s cover story not only examines the trends behind last year’s successes for the key players in the industry, but it also explores how electrical contractors must learn to navigate “uncharted territory” with less room for error. “Almost without exception, top contractors referenced the pandemic in outlining the specifics of their companies’ greatest business challenges in coming years,” writes Zind. “While some see it as something to get beyond, others see it as something to respond to constructively. As one contractor described it, ‘Our biggest challenge will be learning what our new normal looks like.’”

For the first time in Top 50 history, more than 50% of survey respondents are expecting a decrease in revenue for 2020; however, of those expecting a shortfall, almost two-thirds (64%) anticipate the percentage will be no more than 10%, 17% expect a downfall of between 11% and 19%, and 19% predict a decline of 20% to 29%. Although these uncertain times have ultimately cast a web of doubt over 2020 and beyond — and the profit numbers may inevitably take a hit when it comes time to tally next year’s results — I predict this group of companies will weather the storm and come out on the other side better than expected. I know that day can’t come soon enough for us all.