MASTERING MARKET THE THE MASTER GROUP COVER STORY THE MASTER GROUP PREPARES FOR GROWTH IN THE CANADIAN HVAC MARKET. BY BOB RAKOW

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1 THE MASTER GROUP COVER STORY MASTERING THE MARKET THE MASTER GROUP PREPARES FOR GROWTH IN THE CANADIAN HVAC MARKET. BY BOB RAKOW 18 Fall 2015

2 For The Master Group, finding the appropriate niche in the HVAC distribution market was the ticket to success. There are not too many other companies like us in Canada, says President Louis St. Laurent. The company is positioned comfortably between small HVAC distributors in Canada and the multinational firms. More importantly, The Master Group can compete successfully with companies on both ends of the spectrum, he says. Specifically, The Master Group has the financial and human resources that small companies do not possess. But the distributor also is more flexible than the multinational firms with which it often competes, allowing it to develop better and more significant relationships with its clients, St. Laurent notes. And there s little question that The Master Group has thrived in the middle market. Twenty-five years ago we were a $30 million operation, St. Laurent says. Today, The Master Group is a burgeoning $300 million business. The company sells to contractors in the commercial, residential and industrial markets. It distributes a variety of products ranging from 5,000-BTU air conditioners to 3,000-ton chillers. Air conditioning makes up nearly half of The Master Group s business, St. Laurent says. One-third of the business is refrigeration while heating and ventilation make up the remaining 25 percent, he says. The Montreal-based company was founded in 1952 and is one of the oldest independent HVAC distributors in eastern Canada. The company serves the residential, commercial and industrial sectors from 24 branches that span from Ontario to the Maritime Provinces. It The Master Group / / Annual revenue: $300 million / Location: Boucherville, Québec / Employees: 585 / Specialty: HVAC distribution / Louis St. Laurent, president: There are not too many other companies like us in Canada. THE MASTER GROUP Fall

3 THE MASTER GROUP also has three distribution centers with a total of 245,000 square feet that house inventory from more than 1,600 product lines, St. Laurent notes. EXPANSION PLAN The Master Group has a significant presence in eastern Canada with 13 branches in Quebec, five in Toronto and three in both Ottawa and the Maritime Provinces, St. Laurent says. The fifth Toronto area location opened in July 2014 in Mississauga, three years after the company entered the Toronto market. But ambitious plans call for expansion into the western portion of the country over the next few years. During 2015, the company s primary focus has been on growth in the Toronto region. The company s philosophy is to build as strong a base as possible in eastern Canada before initiating expansion The Master Group encourages employees to be problem solvers and grow within the company. The objective is to bring the company nationwide. We want Canada to take notice Fall 2015

4 The Master Group has locations in eastern Canada and is poised to expand into the western part of the country. in western part of the country, St. Laurent explains. The company s fifth Toronto site, situated in a prime location, is representative of The Master Group s aggressive approach to the marketplace. The 8,000-square-foot location was specifically designed to meet customers needs by including easy access to displays and a varied inventory. The facility also features a modern layout with maximized ergonomics, brightness, contemporary colors and refined style, St. Laurent notes. The branch offers all HVAC specialties and top brands to meet the growing needs of contractors, he says. Given the increasing traffic of our existing locations and the growing needs of customers, we have been planning for over a year to add several new Toronto branches, St. Laurent says. The company also has placed considerable focus on expansion in the Quebec region. For example, The Master Group opened a new branch in Lévis, a city in eastern Quebec. The strategic move expanded the operation s network to the entire southern region of Québec City. The company believes the branch is situated in a prime location, close to the Trans-Canada Highway. In another move designed to strength- THE MASTER GROUP Fall

5 22 Fall 2015 en its presence in Québec, The Master Group in May acquired Frivent Inc., a Québec supplier of ventilation and energy saving equipment. The strategic transaction allows the company to strengthen its leading position in the ventilation sector, St. Laurent says. In recent years, Master has invested in the development of this sector in order to become a leading player, either through acquisitions or even opening a branch entirely dedicated to ventilation, St. Laurent says. These efforts have been successful, and we see in the acquisition of Frivent, a dynamic, respected company recognized for its expertise and a natural and promising continuity in the development of this field of activity. In June, the company opened a new branch in Québec City s South Shore. Located in a newly constructed building, the 12,000-square-foot facility features a 4,000-square-foot showroom with counter space designed to maximize service and the customer experience. The facility also has easy access to displays and features a full range of HVAC products available in inventory, St. Laurent says. In the Atlantic Provinces, meanwhile, the company in March opened a new branch in Fredericton, New Brunswick. Located in a industrial area and accessible by the Trans-Canada Highway or from downtown, the 7,300-square-foot facility houses an inventory encompassing all of the company s products in refrigeration, air conditioning, heating and ventilation.

6 Given the growing needs of our customers, we have been planning for over a year to add several Toronto branches. Meeting the needs of a growing customer base is the key reason The Master Group has expanded. Prior to the expansion, the company conducted a market analysis of eastern Canada s provinces to identify growth opportunities. Two cities stood out for their respective potential: St. John s, Newfoundland, where the company has a sales office, and Fredericton, which is experiencing significant economic growth. The establishment of a branch in Fredericton comes in response to feedback from industry members that emphasized lack of HVAC products supply in the region, St. Laurent explains. The primary objective of The Master Group is to meet the various needs of its current and future clientele, which // FLUOROCHEMICALS CANADA // Arkema Inc. is proud to partner with Le Groupe Masters and to be a part of their growth within the Canadian HVAC-R industry. Working with their highly energetic team for the past fifteen years, it is easy to understand the reasoning behind their industry growth. Arkema Inc. is looking forward to working with Le Groupe Masters with their future needs for Forane Refrigerants. Fall

7 THE MASTER GROUP An extensive inventory is a primary reason The Master Group is an industry leader. includes offering them quick and easy access to a large inventory of products. The Master Group also continues to provide superior service, reflecting its reputation throughout the industry, St. Laurent says. PAYING FOR GROWTH Funds for The Master Group s expansion were acquired when 65 percent of the company was sold in 2014 to Novacap, one of the leading private equity firms in Canada. Now we can move forward with the expansion plan, St. Laurent says. We re working on several acquisitions in our market. The [long-term] objective is to bring the company nationwide. We want Canada to take notice Fall 2015

8 But growth and acquisition can be a difficult proposition, St. Laurent notes. The Master Group performs significant due diligence on the companies it targets for acquisition, seeking ones with diversified product lines that can be easily integrated. Indeed, The Master Group wants to acquire firms that will add value to the company. So for, the company has met that goal. The reputation of our company is important to me, St. Laurent says. It s not all business numbers and results. Rather, he is focused on retaining key personnel and encouraging employees to grow and improve their performance, he says. Money has never been a priority for me, my main motivation is to love what I do and to work as a team. The reputation of our company is important to me. It s not all about numbers. WORKFORCE IS THE KEY The Master Group was family owned for nearly 40 years, and the company strives to retain the philosophies cultivated during that time, St. Laurent says. For instance, appropriate treatment of employees remains a primary objective. We re built on respect for our employees, he says. We retain our employees because they feel they re treated fairly. We have vice presidents who worked at the counter 25 years ago. Additionally, the company s philosophy calls for veteran employees to serve as mentors to new hires. But while The Master Group honors its traditions, it also strives to be a progressive organization. We don t want to hear that something is wrong, St. Laurent says. We want solutions and resolutions. We want you to make some mistakes. If you stay in your comfort zone, you won t do a good job. Indeed, creativity is one of the company s key differentiators. You have to have a more creative team, St. Laurent says. This is something that differentiates us from the others. Respect for customers and rapid follow-up also set the company apart, he says. The company s growth and strategic plans have not gone unnoticed. Deloitte, the Canadian Imperial Bank of Commerce and the Globe and Mail have designated The Master Group one of Canada s best-managed companies each of the last four years. The recognition is given to companies for outperforming their competitors; job creation; achieving sustainable growth and excelling both at home and abroad. q Fall