HOUSTON—The novel coronavirus got real early on for Singer Equities Inc.
On March 10, an employee of the hose and rubber goods distributor tested positive for COVID-19, before there was much guidance on how to handle such situations.
"We immediately had to react," said Sam Petillo, president of Singer Equities, an operating unit of Houston-based SBP Holdings. "We shut that small branch down. We quarantined the other employees who worked with this gentleman. This was long before any of the articles came out on how to handle the coronavirus within your company."
Petillo didn't identify which Singer Equities branch was involved, but did say the employee was the fourth person in that state to test positive.
"It was a wakeup call for us," he said. "One, that this was real and we needed to scramble immediately to protect all of our employees. We were ahead of most companies getting the (personal protection equipment) for our employees, ordering Purell and getting all of the rules in place, such as not allowing any visitors on-site, and keeping our employees at home. We were taking every precaution because for us it was real."
Being proactive paid off, as Singer has not had another employee test positive since that early case. And the diligence hasn't stopped.
"We've had executive management calls every day since mid-March for SBP Holdings," he said. "We were keeping a very close eye on coronavirus outbreak in those states (where it operates.) We were watching that bell curve. That was part of our forecast as well, looking at industry and coronavirus forecasts to help us figure out what April, May and June would look like, and beyond."
Dealing with a situation like the pandemic is much different than just an economic downturn, where the focus is on one issue. "With this, there is an emotional pull it takes on the companies and the employees," Petillo said. "They get anxious about reporting to work, working side by side with people, even though we're taking every measure to protect them. Their families are nervous for their spouses going into work.
"It takes a toll on management too, when they're trying to deal with the virus, and at the same time trying to deal with declining revenues. I know the word unprecedented is so over-used, but that's exactly what's happening."
Financial side of the equation
With the economy taking a steep dive because of the COVID-19 outbreak, Singer Equities has been keeping a close eye on its revenues. In part because it was cautious in its forecasts, numbers for March and April came in better than expected. "That doesn't mean it's good. It just wasn't as bad as we thought it could have been," he said.
Because of that, the firm also has been watching its operating costs closely, and scaling the business to the new revenue level.
"We're no different than any other company," Petillo said. "You can only focus on what you can control. You can't control the virus. We can't control when states are going to open up. You can't control when our customers are going to go back to work and start ordering more product from us."
Unfortunately, Singer Equities has had to enact a number of what he terms both furloughs—for jobs expected to come back—and layoffs—for positions that likely will be cut for good. Those on furlough remain on Singer Equities benefits, according to the company executive.
"We're furloughing as much as possible, because like others in the industry, we believe that those COVID-related turnouts will come back—maybe slowly, but they will come back," he said. "We chose to furlough some people where it's more COVID-related.
But before the coronavirus was even on the horizon, he said Singer Equities was watching a potential downturn in the oil and gas industry dating back to November and December. So at its branches that cover the Gulf Coast area, Singer has used a mix of layoffs and furloughs.
"We think the oil and gas pain is going to be inflicted on distribution through next year," Petillo said. "We don't think it's right to furlough somebody with the hope of coming back."
The situation for oil and gas worsened when the pandemic hit, causing demand to plummet as planes basically were grounded and people were driving many fewer miles. "Because of fuel consumption and supply, we don't feel that the drilling activity will get hot for awhile, which means the fracking activity won't either," he said. "So I don't care if you're calling it upstream, midstream or downstream, we just feel it's going to be slow through the majority if not all of 2021."
Petillo didn't have exact figures for how many people have been furloughed or laid off.
With a number of branch companies serving a variety of end markets, Singer looks at a wide range of forecasts from vendors and other sources to try to understand how each company unit will perform going forward.
"It's certainly not a one size fits all type of forecast for us," Petillo said. "And we're scaling the business according to the forecast that we've developed for each one of those specific companies based on their markets served."
Construction and aggregate are two related sectors that have been impacted in a negative way. Construction, which uses both industrial and hydraulic hoses, has been stale as far as growth is concerned, according to Petillo. Singer expects it to start picking back up when states begin reopening, and some limited construction jobs will start in the coming months.
The aggregate industry has impacted the conveyor belt business that Singer serves, because while aggregate was deemed essential after a lobbying effort, for the most part the sites aren't letting contractors on-site to do conveyor belt jobs, whether repair or replacement, pushing those projects into the future. That's because they are both watching their cash flow and guarding against outsiders bringing COVID-19 on-site and spreading it among their workers.
Singer's business also was hurt when governors in the Northeast and Midwest began shutting states down. "We might have been deemed essential, but some of the businesses we're selling to might not have been open, and were very cautious about letting people on their property," he said.
Other sectors taking a hit include general industrial maintenance and repair operations, which Singer does serve, along with aerospace and heavy duty trucks, two areas where it doesn't have a big exposure.
Food and beverage is one area that has posted strong results through the pandemic, and the chemicals industrial also is holding its own, he said.
Petillo deemed Singer's revenue decline as "significant," but not as bad as expected. "We went into it assuming it could get a lot worse before it got better, because we wanted to stay ahead of the revenue drop with our goals to scale the business," he said.
All in all, he said he couldn't be more proud of how the Singer team has rallied around each other through the crises, both the pandemic itself and the economic fallout.
"Grit" is the word he used to describe how the employees and management have handled things thus far. "I don't know what other word to explain it, but coming in and grinding it out through tough times shows a lot of grit," Petillo said. "There's still hustle there and there's a lot of passion. We're making tough decisions and everybody's impacted, including the families.
"You can only do the best you can do in managing a really bad situation that's been handed to you, where you have less control than you would want."