Strategic growth fuels Todd Pipe &amp; Supply

The last time we checked in with Anaheim, Calif.-based Todd Pipe & Supply, the plumbing products distributor was in the infant stages of its rebirth.

As a quick history lesson to those newer to the industry, Todd Pipe & Supply originally was started in the 1960s by Ralph Todd, a former employee of current Todd Pipe partner Karl McMillen, who got his start in the industry as a plumber of track housing in Southern California and also started a plumbing contracting business. They remained partners until McMillen became sole owner in 1979.

By 2004, Todd Pipe, the 2002 Supply House Times Supply House of the Year, had grown to nine locations and employed more than 400 people. McMillen, known for his philanthropic contributions to various charities and foundations, sold the original Todd Pipe, with annual sales at that point north of $200 million, to Orlando, Fla.-based Hughes Supply, which sold to Home Depot. Home Depot later revamped that business unit as HD Supply before spinning it off to private equity ownership.

The new Todd Pipe, with McMillen as one of five partners who were involved with the first incarnation, started in February 2010 as a one-branch location out of Anaheim, Calif. Five years after Supply House Times first profiled Todd Pipe, 2.0, business has showed no signs of slowing down.

Today, Todd Pipe boasts six Southern California locations in Anaheim, Hawthorne, Riverside, San Diego, Sylmar and West Los Angeles. The company did about $120 million in sales in 2015 (compared to $15 million its first year back in 2010) and rolls in at No. 56 on the 2016 Supply House Times Premier 150 ranking of the top PHCP-PVF distributors in the country. Complete 2016 Premier 150 rankings can be found here. Todd Pipe also ranks No. 11 among Premier 150 survey-taking companies focused on plumbing and hydronics. Todd Pipe is strictly a plumbing products distributor.

Todd Pipe President and CEO Dan Patrick notes business has been especially brisk of late. Todd Pipe enjoyed a 24% growth rate from 2012 to 2014, but cautions the brakes have been lightly tapped in recent times to ensure future growth can be accomplished when the time is right.

“We’ve had some good growth, but we settled down in 2015,” says Patrick, who got his start in the industry as a truck driver (at another company). “We can’t continue to grow too crazy like we have. We sat down, took a hard look at our business, made some adjustments, tightened up credit and our profits went way up in 2015.”

In addition to Todd Pipe originals McMillen and Patrick, the three other partners include Executive Vice President of Sales Tom Morrow, Executive Vice President of Sales Jason Kemp and Executive Vice President of Operations Aaron Olsen. Morrow and Kemp also started as truck drivers (with the original Todd Pipe), while Olsen got his start in the receiving department at the original company. Today, Todd Pipe has a roster of nearly 180 employees. Patrick, Morrow, Kemp and Olsen each work out of a different branch, thus there is no “official” company executive headquarters.

“We have the right mix of people here,” Olsen says. “It’s laidback. We’re jeans and T-shirt kind of guys. It’s a very employee-centric company. We have guys driving 45 minutes to an hour-and-a-half to come to work because they love it here.”

Customers first

A common refrain in the PHCP-PVF industry— and rightfully so with competition high and margins tight — is the extreme importance companies place on customer service. Todd Pipe is no different.

“The most important reason we are in business is the customer,” Patrick says. “Karl has imbedded that in all of us. Karl started as a plumbing contractor and saw the wholesale side of the business. Karl tells us always to do the right thing with our customers no matter the cost.”

To that extent, Todd Pipe has measures in place to make sure it is at the forefront when it comes to the folks who depend on the distributor for plumbing products throughout Southern California.

All Todd Pipe’s branches are located with easy access to freeways. “We’re either right off the freeway or a stoplight or two away,” Kemp notes. “We wanted to make it as easy as possible to get to our locations, get material and get back on the road. It’s been especially beneficial for our will-call customers.”

Olsen adds: “Any contractor can get to a Todd Pipe branch within 15 minutes. Karl was very strategic with our real estate (some branches are former HD Supply locations). These are the best locations for us to do business.”

Kemp explains Todd Pipe has 32 delivery trucks on the road and recently placed an order for six more. Two semi-trucks make inventory deliveries twice a day to the branches. The West Los Angeles branch is an almost exclusive will-call location and receives a truck daily at 6 a.m., from the Hawthorne location.

“We do first, second and sometimes third runs,” Kemp says. “We’ll do special orders on a Saturday or Sunday and come in and open up if needed. Without this kind of service our volume would probably be 80% less than it is right now. We load our trucks at night so we’re on the road at 5:30 or 6 a.m. to get out to jobsites. We do what we need to in order to provide the best service.”

Todd Pipe, a member of the Geneva, Ill.-based Embassy buying group, also is cognizant of the wide swath its customer base travels in Southern California. Thus, three of its locations open at 4:30 a.m., for will-call orders. “Our Sylmar branch is out of the way,” Kemp says. “You get people coming in from Santa Clarita and Lancaster to go to work. Now they can pick up material from us bright and early.”

Kemp points out many of the branches face intense competition, including from national and regional distributors. “At our Hawthorne location there are six wholesalers within a mile or two,” he says. “Service means almost everything.”

Ready to help

Superior customer service means having employees who are experts in what a company has to offer. Todd Pipe feels it has a surplus of ammunition needed to provide the highest level of service possible.

“Anybody can buy a bunch of trucks and move material, but you are in trouble if you don’t have the employees who can provide a high level of service,” Morrow says.

To that point, Todd Pipe employees are fully immersed in courses through the American Supply Association Education Foundation’s ASA University (Todd Pipe is an ASA member). “We started swimming in ASA University a little in 2015 and will go full-blast this year,” Patrick says. “We want to make sure we are educating our people so they can be the best in our area.”

The company also is a staunch advocate of promoting from within. Patrick, Morrow, Kemp and Olsen worked their way up at the original Todd Pipe to executive management positions. Patrick estimates in the six years the company has been back in business 20 individuals have been promoted to sales positions.

“You have to build your own bench,” Morrow says. “Hiring other companies’ retreads doesn’t work for us. Our employees look at us as someone they could be some day. We all started in the industry as truck drivers or in receiving.”

Patrick adds: “What makes me most proud is watching people develop and watching them improve their lives. If you are buying from Todd Pipe, you are doing business with our own people.”

Kemp calls Todd Pipe employees the No. 1 company asset. “If we didn’t have great employees we wouldn’t be in business,” he says. “Everybody is a contributor here. When we give bonuses, we do it for drivers all the way up to top management. Our best sales guys are our drivers who are out on the jobsite daily talking to customers.”

Making a difference

The four active partners rave about the contribution McMillen has made not only to the new Todd Pipe but to a variety of philanthropic efforts tied to substance abuse recovery. The McMillen Family Foundation has donated more than $15 million to various charitable and foundation initiatives over the years. More information on the McMillen Family Foundation can be found at www.mcmillenfamilyfoundation.org. Patrick and Olsen are Foundation board members.

“We’re extremely lucky to have a partner like Karl,” Morrow says. “He’s always been frugal with himself. It’s never been about Karl. If a branch needs a forklift, we get a forklift. He always is thinking about this business and how we can best help our customers.”

McMillen does not take a Todd Pipe salary. “Karl donates all his profits to the Foundation,” Patrick says. “Karl works for the greater good. Everything he does goes to the Foundation to help people in need. We couldn’t be prouder of Karl.”

Setting up the future

In an always-changing construction environment, Todd Pipe has its eye on ways it can move the company forward. For example, as part of its deep-dive into the company’s recent rapid growth, Todd Pipe got out of the residential faucet market and is
focusing on new construction and commercial jobs, moves that have paid dividends.

And as far as expansion plans, the partners are following one of McMillen’s key tenants — successfully running a business by controlling the metrics.

“We have no plans for expansion right now, but I could see us growing down the road,” Kemp says. “Right now we’re focusing on making sure our operations are clean and tight, and making sure we take care of customers with our service. It’s what we pride ourselves on.”

Looking back, Olsen admits going to work for a startup distributor coming out of the recession was a risk. But he also saw the potential for long-term reward.

“At the time, all of us had good corporate jobs paying more money,” he says. “The good thing was the market was pretty much at its end. We built our business to the lowest part of the recession. We built it exactly where we knew it needed to be. We were on a dead sprint and came in with customer service and people flocked in droves.”

And the result is Todd Pipe making the absolute most out of its second chance.