Presented by LEAF Commercial Capital
Ray Morgan Company is enjoying an upward trajectory, thanks, in part, to prudent decisions, acquisitions, and the addition of new MIF.
Above: It’s rare for a dealer to have a fully equipped video studio, and CJ and Frank Cannata were impressed with Ray Morgan Company’s production capabilities. A first for our dealer tour, the visit was documented with a brief video “interview,” featuring Greg Martin, Chris Scarff, and Frank and CJ Cannata.
Above: CJ Cannata and Frank were given a detailed tour of Ray Morgan Company’s state-of-the-art in-house video production facility by members of the company’s marketing team, including (from left to right): Chris Cartwright, graphic designer; Shawn Dyer, director, video production; and Cameron Stacy, special projects coordinator.
It was a long time coming, but we finally made it to Ray Morgan Company (RMC) in Chico, California. This 62-year-old company enjoys a wonderful reputation, and for many years, we have heard from different sources that we should pay a visit to this company because they are truly special people.
On February 4, CJ and I flew to Sacramento and rented a car to drive about 90 miles to Chico. Our usual schedule allows us to have dinner with the principals the night before our visit, and this trip was no different. We met with Greg Martin, president of RMC, and Chris Scarff, executive vice president and owner, for a first-class steak dinner.
The next morning, we arrived at RMC headquarters to get the story. This dealership has 18 locations throughout California and Nevada and 470 employees. In 2017, RMC finished the year with $107 million in revenues. Last year, that number soared to $124 million, a 15.9% increase. Its primary vendors are Canon and Ricoh, and it also sells HP.
How the dealership’s business breaks out is typical of a successful dealer. MPS represents 10% of the business and MNS is responsible for 2% to 3% of revenue. Production print represents another 10% and document management contributes 3%. Traditional imaging hardware and maintenance comprise the remainder.
When asked about industrial print, Martin revealed the company has placed a couple of Canon Arizona machines and there are another few in the pipeline.
“We fundamentally believe that is the future of the industry,” said Martin.
Without question RMC is an upbeat company on a roll. Martin expects the business to grow to $131 million this year. Hearing that number piqued our interest as to what the dealership has done thus far to achieve this kind of growth.
In October 2013, Ricoh sold its SMB MIF located in rural Northern California to RMC. In a short period of time, RMC had established itself as an important dealer to Ricoh and simultaneously remained one of Canon’s top dealers. Then, in April 2017, RMC acquired a Las Vegas location, along with its MIF from Ricoh.
Prior to the Las Vegas acquisition, when RMC management conducted an analysis of the Ricoh MIF they had acquired four years prior, what they ultimately discovered was an astoundingly positive 98% retention rate.
The acquisition of the Ricoh MIF intrigued us, and I reached out to Jim Coriddi, vice president, dealer division, Ricoh Americas Corp., to learn what specifically motivated this manufacturer to partner with RMC for this sale. As always, we got a straight answer from Coriddi.
“We really did not have anyone large enough to absorb that kind of MIF over such a wide rural area,” Coriddi said. “We did our due diligence and discovered that doing business in the RMC part of the world was a no-brainer.”
Next up for RMC was a merger. On November 5, 2018, UBEO Business Services, a portfolio company of the private equity firm Sentinel Capital Partners, announced its merger with RMC. The partnership represents one of the largest transactions in the office equipment industry in the past several years. The combined businesses now represent more than 700 employees and an installed base of 135,000 machines in the field.
Martin balks when people refer to this as an acquisition, and corrects them by saying this was a merger.
“We can learn from UBEO,” responded Martin when we asked why RMC chose to engage with the company. “We now have the resources to acquire.”
And UBEO has a help desk that has a 30% call-avoidance rate, which is critical in the MNS segment.
RMC is bullish on the business and is committed to moving and expanding customers into MNS to compensate for the decline in imaging. Management is also proud of its record in the enterprise space.
“I use the word “˜premium’ offering,” said Scarff. “[Customers] choose to do business with us because of the solution that we provide. It’s fun to be in business with Ricoh, Canon, and HP because we offer great solutions. We’re not always the lowest price, but we’ve had a tremendous amount of growth in the enterprise business, and we have a lot of loyalty, as well, in small- and medium-size businesses.”
“MNS and the ECM are the two specific areas where we are currently really helping our existing customer base and growing that business,” added Martin about the enterprise business opportunity. “It’s helping us get in the door.”
RMC excels when taking its message to the IT decision maker.
“If IT is involved in the decision making, we’re going to win 80% of the time,” reported Scarff.
We wrapped up the interview by asking how the dealership holds its margins at profitable levels?
“We don’t want to be lower priced than the competition and to do that you have to offer customers the better solutions, said Martin. “You also have to increase personnel on the services side and build teams specifically focused on solutions.”
He concluded by noting in particular that RMC wants to sell production products like the Canon Arizona and Colorado series. “It helps us in so many ways and not just in increased revenue.”
A big part of our reason to visit RMC was to learn more about its efforts to assist their employees who lost everything in last year’s Paradise Camp Fire. The entire industry has praised RMC for their immediate response and we echo that wholeheartedly. We interviewed seven of RMC’s employees and encourage you to read the accompanying article and learn about these resilient and inspiring individuals as well as what RMC is doing to support them.
Above: CJ Cannata and Frank were given a detailed tour of Ray Morgan Company’s state-of-the-art in-house video production facility by members of the company’s marketing team, including (from left to right): Chris Cartwright, graphic designer; Shawn Dyer, director, video production; and Cameron Stacy, special projects coordinator.
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