The merging of three key specialty firms, two with parallel origins, has launched an ascending star, GreenStar Services, that has kept both revenue and jobs flowing through the economic downturn. The three-year-old firm's aggressive pursuit of high-profile jobs in New York has resulted in a luminous list of contracts, including electrical, heating and plumbing deals on seven different projects at the 16-acre World Trade Center site.
“They're out there working for jobs all the time,” says Ron Berger, executive director of New York's Subcontractors Trade Association. “They hustle.”
That has kept the Mount Vernon, N.Y., firm busy with a $1.2-billion backlog and steady revenue. For its strategic growth in tough times, GreenStar Services is ENR New York's Specialty Contractor of the Year.
New York-based private equity firm Eos Partners helped create GreenStar in 2008 by buying ownership stakes and merging the plumbing and mechanical specialties of Mount Vernon, N.Y.-based WDF with the electrical expertise of Ozone Park, N.Y.-based Five Star Electric, along with Fort Lauderdale, Fla.-based Nagelbush Mechanical.
The result: The new company now handles all three of the MEP trades, whose installations typically overlap on construction sites.
“It all goes in the same space in the ceiling,” Berger says. Coordination among those trades is critical, so creating a one-stop shop offers contractors and owners a big opportunity to save on time and cost, Berger adds.
Their greater combined scale also enabled GreenStar's affiliates to take on bigger, more complex jobs—and made it an attractive target for Tutor Perini, a contractor based in Sylmar, Calif. On July 1, Tutor bought the outfit for $208.4 million from Eos and other investors, including Gary Segal, GreenStar chairman and CEO, and Larry Roman, vice chairman. Segal heads Five Star, and Roman is WDF's CEO.
Tutor explains in a recent SEC filing that it bought GreenStar “because it is one of the largest specialty contractors in the United States and it will provide an opportunity to expand our presence in the northeastern markets.”
The contractor is leaving GreenStar's corporate structure intact, keeping Segal and Roman in their posts at both the holding company and the underlying affiliates. “We're starting to discuss some joint efforts [with Tutor] on even larger projects in the future,” Segal says.
As the New York market's second-largest subcontractor behind Emcor Group, GreenStar has marshaled $1 billion of work in the flagging construction market during the last two years. GreenStar posted New York regional revenue of $520.3 million in 2010, about flat with the previous year's total, citing the slower construction market and a large 2009 backlog.
GreenStar also is gradually exiting the general contracting business, where it chased work for several years and generated more than $60 million in revenue in New York last year across such trades as steel and concrete. About 18 months ago, it decided to wind down that effort and refocus Five Star and WDF on their core specialties, Roman says. “We decided [GC work] wasn't our strength,” he adds.
The trade-off may well be worth it, since the company is already handling some of the market's largest MEP jobs. This includes the $3.2-billion 1 WTC tower and a major renovation of Madison Square Garden that is valued at roughly $850 million.
Thanks to 2,000 New York region employees, GreenStar can handle such giant projects, says Rich Cavallaro, president and CEO of Skanska USA Civil, a general contractor that has hired the subcontractor. “There are very few subcontractors who can manage a huge work force,” he says.
Managing big jobs is in GreenStar's DNA, Roman says. Each affiliate is staffed to tackle complex, $50-million or larger subcontracting tasks. “We have 17 people in our drafting department,” Roman says. “Many of our competitors don't have a drafting department, or if they do, it's one or two people.”