The Carlton-Bates Co. of Little Rock shattered its $200 million revenue goal by more than $60 million last year, president and chief executive officer Bill Carlton said.
With $261 million in annual revenue, 25,000 customers in all 50 states and Mexico served by 35 offices in 16 states and Mexico, 750 employees and five regional warehouses, the company’s revenue has doubled since its debut two years ago at No. 36 on Arkansas Business’ list of the 75 largest private companies.
This year, the electronic components supplier checks in at No. 21, up 10 places from last year.
Over the past 10 years the company has seen a 650 percent increase in revenue. The company’s November 1999 acquisition of Resource Electronics Inc., a division of NCH Corp. of Dallas, for $15 million added revenue of about $60 million and 6,000 customers.
“The purpose was to expand geographically,” said Carlton. “They had locations on the East Coast that we didn’t have.”
The purchase also increased Carlton-Bates’ buying power and added about 125 employees.
“Now a lot of these people are buying only $100 worth of products a year. A lot of them are buying much more than that,” Carlton said.
Carlton noted that same-store sales were strong last year.
And this year the company is on pace to do revenue of $285 million.
The company is planning offices in Denver, Omaha, Albuquerque, Minneapolis, Cleveland, Milwaukee, San Francisco, Los Angeles, Tampa and Fort Lauderdale, Fla. Such expansion was delayed by the Resource Electronics purchase.
“Putting them on our computer platform took about one year,” Carlton said.
In five years, Carlton’s goal is $700 million in revenue — which isn’t far from the $750 million that investment bankers told him is a minimum before taking the company public.
To hit $700 million in revenue, Carlton said the company will develop its existing customers and acquire companies “that fit into our geographical expansion plans. So it might be a $5 million company or a $60 million company — it just depends on where they are.”
And the company will need more employees.
“Recruiting is a big challenge for us,” Carlton said. “We’ve got regional sales directors who go into colleges to hire communications people and then we have to teach them the product. Nobody knows about the electronic components industry.”
Salespeople fresh out of college earn $30,000-$40,000. After five years, Carlton said sales reps should make $50,000-$60,000 and up to $150,000.
“We hire and train them in sales skills and train them in the products we handle,” Carlton said. “We have a training room, and then we send them to factories. They have to have a certain understanding of electronics so they can know what they’re talking about. It takes two and a half years to get new sales people up to speed.”
To get a jump on bigger-name employers, Carlton said the company participates in a mock interview program at Baylor University in Waco, Texas.
“That gives us a good opportunity to hire them before somebody else does,” he said.
Harding University in Searcy is the only Arkansas college from which Carlton said his company actively recruits.
“We’re probably looking for four qualified people each year,” he said.
And one way to get a leg up in training potential hires is through the company’s summer internship program.
“Most interns are in Arkansas because that way we can ensure that it is a true internship with a syllabus,” Carlton said. “We hire them from outside the state, pay their living expenses and $8 per hour. We’ve been running this program for four years and have hired two out of five interns. We would have liked to hire all five, but the other interns had other areas of the country in mind where we didn’t have operations.”
In any event, the company is a long way from its original foundation. When the late Joe Carlton, father of the current president, and Doyle Bates founded the company in 1957, it stocked antennas, television picture tubes and vacuum tubes.
Over time, Bill Carlton said, the television-repair business disintegrated as it became less expensive for customers to buy new television sets than to have an old one repaired.
While that business was declining, demand for electronic components was growing in Arkansas as manufacturers modernized with electronic component-laden equipment.
“Industry was just starting in Arkansas, and there was very few places to buy electronic components,” Carlton said. “Then in industry the equipment they were getting had more electronic parts. As that became more prevalent, our sales grew and we started expanding.”
Today the company distributes electronic components made by Tyco, Power One, Honeywell, Micro Switch, Belden Wire, AMP and Potter & Brumfield with an outside sales force of 120.
“It’s relationship-type selling,” Carlton said. “We like to find out what the customer’s pain is and then try to take the pain away with our service. If a customer has a certain type of switch they need, we try to come in and show them their options. Ideally we get in on the design end when they are designing the product and proving to them what value you are bringing to them.”
About 70 percent of the company’s business is through original equipment manufacture (OEM) and the remainder is through maintenance repair operations (MRO).
Carlton said OEM involves consulting on the design of a product that may result in the sale of as many as 100,000 switches at $1-$50 a switch.
“There’s not as much consulting on the MRO side. Something breaks and they have to replace it. So we get it for them,” Carlton said.
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