Equipment dealer’s sales swings belie stability
Mustang Cat’s mission and ownership has been steady throughout its 67year history, but its business patterns can be pretty volatile.
The company has been Southeast Texas’s authorized dealer of Caterpillar heavy equipment since its inception. With a surge in business from the oil and gas industry, the company experienced a 39 percent jump in revenue last year to $1.62 billion, making it Houston’s ninth-largest private company.
More specifically, Mustang Cat’s deliveries of Cat engines to its gas-compression customers surged 48 percent in 2018, while service revenue for its Power Systems division jumped 71 percent.
What goes up must come down, though, said Mustang Cat President Brad Tucker, who notes that such swings come with the local territory. While sales had a similar surge earlier in the decade from a boost in oil-rig drilling, they’re expected to drop about 10 percent this year.
“A typical Cat dealer almost anywhere in the country not tied to energy may have a 10 percent swing. We don’t have that luxury,” said Tucker, who said Mustang Cat’s 2018 sales trailed only those of the San Antonio-based Caterpillar dealer among U.S. distributors. “When we have downstrikes, they can be pretty severe, but the up ones can be great. You just get a lot more out of your people during those boom years.”
The company, which has 835 employees, including about 650 in the Houston area, has experienced many such cycles.
Mustang Cat was founded in 1952 by Tucker’s maternal grandfather, and former Houston mayor, Otis Massey and father Frank Tucker. Massey chose the name because he’d previously worked for Johns Manville and associated its Mustang-branded roof shingles with high quality. Among Houston landmarks whose contractors used Mustang Cat machinery include the Astrodome, Sam Houston Race Park, Reliant Stadium and what’s now Minute Maid Park.
Amid such business swings, Tucker, 65, is hoping to pass the business on to a fourth generation. He has three sons, one of whom works for the company, to maintain stability.
“Caterpillar wants its dealers to hand the business down from one generation to the next,” Tucker said. “If you can keep it within the same ownership, there’s less disruption in the marketplace, so we spend a lot of time talking about how to transition from me to my kids.”