Exec Interview: UAS Leadership Discuss 50 Years in Business, Contending With Today’s Challenges
Executing on custom installation, quality service, dependable monitoring, on-time performance and affordable pricing have led to five decades of success for UAS.
Inspired by the necessity to develop an alarm system to combat the vandalism and burglary of vending machines, married couple Ron and Sandy Schwartz founded Universal Alarm Systems (UAS) in 1972.
“Ron was in the vending business for Philadelphia-area bars. When those establishments got broken into the vending machines were also targeted,” says Scott R. Elkins, who joined the company in 1989 and remains its president today. “Ronnie had an entrepreneurial spirit and sought to protect the machines. After looking into the alarm industry, he decided he could do it himself and started installing alarm systems in local bars. It then occurred to Ron and his wife that the alarm business was their future.”
Celebrating its 50-year anniversary in 2022, UAS has grown to become a leading security systems, integration and monitored services provider to local, regional, multilocation and national accounts throughout the United States and Canada.
Its 120 employees help safeguard more than $15 billion in client assets, with the nerve center being a 6,500-square-foot, state-of-the-art, UL-certified monitoring center that earned the firm The Monitoring Association’s 2021 Central Station of the Year Award.
“There’s plenty of competition in this space today and in order to succeed and excel you simply have to always be getting better. That’s something at UAS we not only preach but actually do, constantly training on improvement. We’re big devotees of Jim Collins, author of the famous book, ‘Good to Great,’ and his concept of BHAGs, or big hairy audacious goals. One of those was to win that TMA award,” adds Elkins.
To deconstruct UAS’ recipe for success and longevity, SSI met with Elkins and his executive team of Vice President of Sales Chris McGurk, Senior Director of Technology Jeff Crowther, HR Director Michelle May and Senior Director of Operations Rich Rhodes.
In addition to sharing how the firm is contending with procurement, pricing and personnel challenges, leadership explains the steps taken to satisfy customers and a recent transaction that promises to transform the entire operation.
Congratulations on UAS’ landmark 50th anniversary. But that’s not all the big news for 2022, can you summarize what has transpired?
Scott R. Elkins: Sure. It is a big jump from the early days to where we are today. UAS is a family owned and operated business. Some of our shareholders were ready to move on. However, I am also a shareholder with controlling interest of the business the past couple of decades and had no interest in moving on.
This business gets in your blood. I love this industry, love the business, and sought opportunities to take care of the family while making sure, first and foremost, that we took care of our employees and our customers.
So we partnered with Access Holdings, a private equity firm in Baltimore. They formed a company called Zeus Fire & Security. Today, I am CEO of Zeus Fire & Security, which owns and operates three companies: UAS, SMG Security in Chicago and Alert Alarm in Hawaii. We will continue to build out our infrastructure and acquire additional companies as we continue to grow our footprint throughout the United States.
Considering the business’ history and only focusing on organic growth, that’s quite a different landscape for the operation now.
Elkins: It is. As we’re just about 100 days into this, it’s both incredibly exciting and also a change. It’s a change from that core family business to being part of something even bigger. But the beautiful part about what we’re building is that each of our companies, each of our hubs, UAS, Alert and SMG, we’ll always fly their name flags. These are companies that have great brand recognition. The name means something in the industry. We’re incredibly proud of the companies we have under the Zeus umbrella.
What does UAS’ geographic footprint presently encompass, what territories are covered?
Elkins: UAS operates throughout the United States and Canada. The UAS national account department is the only centralized national account model I am aware of in the industry. Everything we do from a national account standpoint comes out of our corporate office in Paoli, Pa. — sales, service, installation, finance and customer care. The reason we did that was quite intentional. There’s absolutely no reason we couldn’t have opened offices throughout the U.S.
But we learned very early in the world of national accounts that be it a security manager, loss prevention manager or IT director, the acquirer of security services values the ability to call one number and speak to the same people over and over again from one location where those people all know exactly who they are. Not only do our customers know everybody on this call, everybody on our team also knows our customers.
If Chris and I are walking down the hall together and there’s information about a particular customer he can share with me on an ad hoc basis, that information can get shared with the entire organization very quickly versus having offices in different time zones, different states’ offices worried about their own P&L. We wanted to create a centralized model where our employees would know everything about our customers in a very detailed way, and our customers could know everything about our employees.
What kind of growth has UAS seen the past few years, and was it negatively impacted by the pandemic?
Elkins: The pandemic impacted all of us both personally and professionally. As a UL-Listed monitoring center, we became expert at keeping those employees in our facility. We had to go as far as buying FEMA-quality cots, pillowcases, blankets, sheets, all single-use, creating sleeping quarters for men and women when people had to stay over due to inclement weather. Then we had about three weeks to get everybody out of the office.
Our customers in our core vertical markets fared particularly well during the pandemic, and as a result, we fared particularly well during the pandemic. We take no credit for that. We entered verticals years ago for all kinds of reasons, none of which were prepandemic planning. It just so happens our customers, by and large, performed well during the pandemic despite difficulties. The industry tends to grow from a recurring revenue standpoint at about 3% a year, net of attrition. UAS has historically, including during the pandemic, far exceeded that growth — 100% organically.
What percentage of the revenue mix is recurring?
Elkins: Recurring revenue is about 40%. Video is a huge component, as is traditional intrusion alarm and fire alarm as well as access control. We provide all central station-based services.
Has UAS dipped its toe into managed or hosted access control services?
Elkins: We’ve not dipped our toe in it, we only do managed access services. We converted to only doing managed access services close to 20 years ago, well before it was in vogue.
What have been a couple of the best markets for that?
Elkins: The obvious one is where there’s a high-rise complex where you provide service for the front door and the elevators. Then there’s a plethora of tenants that are prospects and hopefully all become customers because they can use their credential not only for the front door and elevator but also to enter their private suite. Managed access control is also used in higher-end restaurants for alcohol closets, liquor closets and high-value opportunities like man-agers’ offices where there might be cash or a safe.
Is UAS doing any network health monitoring types of services?
Elkins: If we’re talking about the customer’s network, the answer is no. If we’re talking about our systems that sit on the customer’s network, the answer is yes. As part of our alarm and video offering, we’re notified, for all intents and purposes, quickly in real-time. I want to be careful here because some are quickly, some are in real-time, of failures of equipment components. Maybe even imminent failures, things are actually about to fail, we’re notified as well. Being able to provide the customer with information that matters to them is the single most important thing we do.
We talked pandemic, let’s discuss supply chain. How has that impacted the business, and what’s your outlook?
Elkins: With UAS being a private company from 1972 until 2022, we didn’t have to spend a lot of time worrying about Wall Street or bank covenants because we have a wonderful banking relationship. Because of the nature of our business in the national account space where you might be asked to install 500 systems in the next three months, there’s not the luxury of having everything housed at a distributor.
In the early days of the supply chain crisis, we went overboard to ensure we would be there for our customers by inventorying record numbers of components we regularly use in our core verticals. From time to time in national accounts you may share a customer. We had another service provider ask us if we could sell them equipment so they could install it in one of our common customer locations. One of the great stories is because we made sure we had enough product, we were able to field that request.
Unfortunately, I don’t see supply chain challenges changing this year and, frankly, don’t know that it’s going to change even next year. There’s lots of talk about countries that produce a lot of the equipment spinning up manufacturing again. In theory, COVID will dissipate. As those two factors come together and this backlog ultimately gets filled, it will become less of an issue as time goes on. But we’re not taking the chance. We need to see the supply chain fully activated before going back to our prepandemic purchasing.
How are those factors and inflation impacting your costs and pricing? How are you managing that with clients?
Elkins: Having been around for a very long time and centralized our product offering into the fewest number of manufacturers and suppliers possible, we’ve developed critically important and longstanding relationships in this space. As a result, they have worked with us to not only ensure we have a product, but also that we can keep the pricing for that product as close to pre-supply chain issues as possible.
In the national account space, there’s not a ton of elasticity in terms of pricing. While national account customers are going through the same things as the rest of us, we do everything we can not to pass too much of that along. We seek to remain not only competitive in the marketplace, but most importantly to maintain that business partner relationship with our customers. There’s a bit of a bug and windshield effect in the world of national accounts, right?
Sometimes you’re the bug and sometimes you’re the windshield. During supply chain challenges, you may find yourself more bug than you’d want to be but at the end of the day, over time, this is just another example of how we can partner with our customers to ensure everyone is successful. Our customers want us to be successful and we want our customers to be successful.
In order to do that, we need to work with one another to ensure we consistently provide the services they need, at the level they need, and that we can do it within a level of pricing that makes sense for our customers. It’s a team effort. It’s not us versus them. It’s us and our customers walking hand in hand. We’re all dealing with the supply chain issue together.
Everyone seems to be struggling with staffing, where does the company find itself amid The Great Resignation?
Michelle May: We’ve stepped up our game as far as follow-up. We don’t let candidates hang out there because we wait two or three days and an offer from some other company comes in. The days of waiting for two and three people to compare to, it just isn’t happening. It’s pull the trigger now and if it’s not a fit, we’ll deal with it. We’ve been more aggressive. We’ve utilized agencies, which in the past we didn’t use as much. We’ve also upped our game as far as salaries to be very competitive with other companies in our area. We have a great referral basis too, with our employees. We also have some college partnerships.
How do you sell prospective employees on the UAS culture?
May: We’re like “Cheers,” where everybody knows your name. We have an amazing culture. We tell people from day one that we’re not hiring for a job we’re hiring for a career. We have an engaging culture and people who walk in for interviews say they can feel it. We do a lot of things for employees. We promote from within. We have a family culture and a family feel.
How would you describe the UAS value proposition?
Elkins: Our guiding principle at UAS has always been integrity. First and foremost, we understand the business that we’re in. People, customers are entrusting us to protect their assets, the lives of their employees, the lives of their customers. Then there are considerable assets and we take that very, very seriously. It is easy on a day-to-day basis to forget that because we’re in the weeds of doing the actual job.
We have to step back every now and again and understand that our monitoring center is dealing with hold-up alarms and fire alarms. These events happen in real-time, where people’s lives are at risk. Without having that level of integrity, without having our customers trust and believe in us, I don’t believe we’d be nearly as effective.
Christopher McGurk: I’d say because we have the primary four product offerings and the ability to install service, monitor and support those nationwide and in Canada from one facility where it’s centrally managed. That is a big motivator for a lot of our customers who previously had disjointed products and vendor relationships and were motivated to consolidate those and to have one product in all their facilities.
They seek to have some commonality, some consistency, with one vendor to interact with no matter where their offices are. The technology, while it’s very good and somewhat unique and tailored to the particular vertical, in and of itself is not typically the primary motivator. It’s the relationship, the management of the account and our ability to get to wherever their offices or facilities are regardless of how rural or out of the way they may be.
In this industry, the common denominator is typically a camera system where you can find the video if you need it and an alarm system that will go off if someone gets into a facility. A lot of our success has come from obviously doing that, but a lot more. We understand customer well enough to be able to go back to our manufacturers and have them customize the product offering to meet those needs.
As a quick example, large multiunit restaurant chains are very particular about their backdoors staying shut and not opening after certain hours. We found that was not being monitored in any way. Our ability to alert them to backdoor openings is a huge feature, but that’s just the tip of the iceberg when you look at the verticals and customers we serve.
Moving forward, what should observers expect to see from UAS within its new, larger foundation? More marketing, more M&A, pushes into new verticals?
Elkins: We will continue to strive to be growth leaders in this industry and will do so through all the things you mentioned. Not only through marketing, not only through the possibility of acquisition, but the acquisition of talent, of new systems and services that ultimately will help us better serve our customers. That will be our mission throughout 2022 and beyond.
In honor of the 50-year milestone, what is the most valuable lesson UAS has learned in a half-century?
Elkins: That nothing should ever be taken for granted. The pandemic taught us that and when you reflect on the past 50 years, customers can come and go over time for uncontrollable reasons. We must make sure we value one another, support one another and collectively work to make sure our customers feel the same way. This industry grew and clipped along for many, many years being rather predictable.
This is one of the least predictable times in our space and we don’t take any of the services we provide for granted. We need to be there for our customers every day in an urgent manner while also keeping an eye on the future to ensure our systems and services meet their needs. Not just today, but tomorrow, next week, next month, next year and for the next decade
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