Scott Boxer, president and CEO of Richardson-based Service Experts, came out of retirement to turn the company around.

The Second Time Around

CEO Scott Boxer is making a success of Richardson-based Service Experts Heating & Air Conditioning—again.

American Capital Ltd., a publicly traded private-equity firm and global asset manager, likes to tell its shareholders that cobbling together a group of smaller companies can be a great strategy. The reason: Large businesses are usually valued at higher multiples than small ones.

Without the right management, though, a lot can go wrong when rolling up local businesses into a national outfit. So when American Capital snapped up Richardson-based Service Experts Heating & Air Conditioning in 2013, it needed a president and CEO with experience not only in the air conditioning business, but also in acquiring and successfully integrating small, local companies.

It couldn’t have found a better fit than Scott J. Boxer, a long-time industry executive who’d turned Service Experts around once before and is doing it again for its private-equity owners—and himself.

Service Experts, which in 2015 had more than $400 million in sales, operates 90 heating and air conditioning contracting service centers in 68 markets. It does residential and light commercial repairs and installations, and has been expanding into the plumbing business as well. 

In Dallas-Fort Worth, Service Experts operates four units: Kruger’s in Garland, Calverly in Fort Worth, Service Experts in Plano, and highly respected Levy & Son in Dallas. The latter was acquired in 2015— one of Service Experts’ five acquisitions over the last two years. 

Levy & Son is “the kind of company we just love—a great brand,” says Boxer, casually dressed in a blue Stonebriar Country Club sweater for a recent Friday at the office. “It’s nearly 110 years old, third-generation family owned, [with a] great customer list, but they probably got a bit complacent. Exactly the type of company we want to buy.

“This is a very local business,” Boxer says, spelling out his approach to managing Service Experts, which has 2,800 employees spread out over most major markets in the U.S., and some in Canada. Since coming out of retirement almost four years ago to run the Richardson company for American Capital, his strategy has been to centralize functions such as IT, legal, and accounting, and leave as much decision-making and accountability as possible to the general managers of the local outlets. 

Boxer has restored Service Experts to profitability, with 8 percent revenue growth per year.

He’s also chosen to keep and accent all of the company’s legacy names, like Levy & Son. “You could do away with all those and there’s some benefit in it, but you’d have to follow it up with a tremendous investment in marketing—millions and millions of dollars across all of our markets,” he says.

Boxer’s approach has restored Service Experts to profitability, with eight percent revenue growth per year. 

Service Experts was struggling the first time he took it over in 2003.  At that time Boxer was president of Lennox Industries, the $1.4 billion North American division of Lennox International Inc., the big heating and air conditioning manufacturer based in Richardson.

Service Experts had been founded in 1996 and purchased in 2000 by Lennox, which was gathering local service companies through acquisitions and had assembled 225 outlets.

Boxer says he returned the company to profitability in that go-around by selling off companies doing new construction and large commercial installations, and “narrowing our fairway” to home and light commercial sales and service. That alone is a gigantic market, and today Service Experts owns a 1 to 2 percent share. 

Boxer, 65, learned the AC business from the ground up. As a teenager coming of age in Bergen County, New Jersey, he’d take summer jobs in local factories. When he was 16 he worked in a factory that made rooftop air conditioners, wiping down the units before they were shipped. The following year he moved up to applying insulation to the panels. “The factory wasn’t air-conditioned, so you can imagine,” he says. 

The plant managers learned that Boxer was studying engineering at the University of Rhode Island, so every summer they hired him as an engineering aide. “When I graduated, one of the companies that came to campus to recruit was York [Heating & Air Conditioning],” Boxer recalls. “Forty-five years later, I’m still in the industry.” 

Boxer advanced through a number of senior management positions for York and spent more than a decade abroad directing European and Asian businesses for both York and Lennox. He “retired” in 2010, at a time when the Service Experts unit he’d been running was stable and profitable.

Over the next three years, though, the company’s profits turned to losses, and it began losing money—more than $30 million over two and a half years.

Boxer, who says he remains a shareholder and major customer of Lennox, says Lennox always found it somewhat aggravating to own a service and installation company while trying to sell equipment to roughly 6,000 other independent contractors competing for the same home sales and service business. “When it started underperforming, and because of that strategic reason, they decided to put the company up for sale,” he says.

Lennox received $10.4 million cash when it sold Service Experts to Washington, D.C.-based American Capital, according to filings. Boxer says he bought 10 percent of the company at the outset and insisted that his management team be allowed to buy in on the same terms. They purchased another 8 percent.

Boxer, who’s married and has an adult daughter, says playing a lot of golf in retirement got his handicap down to 12. Still, he decided to trade in the leisure time for 10- and 12-hour days at Service Experts.

The company had lost accountability at the local level and lost customers after it dropped its local legacy names in 2011. “People recognize us again,” Boxer told one trade publication after he restored the sidelined names. Within eight months, same-store sales were up 7 percent and the company was once again profitable.

Service Experts’ advantage in competing against companies operating just a handful of trucks starts with volume pricing. Boxer says he is Lennox’s biggest customer, buying $50 million worth of equipment a year.

Another safeguard he’s built into the company is the separation of sales and tech work. Some companies combine those functions, with “selling techs” working on commission with a strong incentive to oversell, he says. Separating repair diagnostics from sales provides something of a check and balance. Boxer says he wants his company to build trust and repeat business so customers will feel confident when they need to make an expensive repair or buy new equipment.

“Talk to anyone here, and I think they will tell you it’s a healthy organization,” says Anne Crowe, Service Experts’ vice president and general counsel.  “I’m huge on ethics and Scott also thinks that way.”

Crowe says Boxer has a common touch, as though his days at the New Jersey factory weren’t very long ago. “When he goes into one of our centers, people feel like he’s talking to them and cares about them, and he really does,” she says. “That’s unusual for a CEO.”  

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