With significant investment and a new, energetic owner at the helm, what started as a scrap-metal salvage business has become a high-tech, fast-growing dynamic company.
When Troy Underwood, owner and CEO of Tampa-based Urban Metals LLC — which does business as Tampa Steel & Supply — says he has a diverse customer base, it’s an understatement.
The firm, which Underwood acquired in December 2018 after serving as president since 2014, sells steel products to everyone from lawn-care sole proprietorships, artists and rock bands to Amalie Arena, Amazon and even Elon Musk’s SpaceX. In an average year, TSS will serve between 3,000 and 4,000 clients. Remarkably, Underwood says, around 70% of its sales are same-day transactions to walk-up customers. All told, annual revenue has more than doubled since Underwood bought the business, from $3 million to $6.5 million.
That’s a testament to how quickly Underwood, 51, has put his stamp on the company, which dates back to 1983. But it wasn’t as simple as changing the name on the door of the corner office. Going from president, working for the owner, to being the actual owner, required Underwood do shelve his ego, think differently about problems and embrace outside help, among other lessons. He also took some sizable financial risks in positioning the business to grow its customer base.
Underwood, who financed the acquisition — he declines to disclose the sale price — with an SBA loan from Valley Bank, says overall the transition from president to owner was smooth in many ways. Yet he also faced doubts and obstacles from external stakeholders, such as suppliers who treated him like a new customer. He got pushback, internally, for example, when he tried to institute minor policy changes, such as instituting a $10 delivery fee for all orders.
“The group was hesitant to change,” he says. “I said, ‘You know, even the pizza guy gets a delivery fee, and here we are bringing customers all this heavy metal, so they don’t have to come pick it up.’”
Underwood, who served in the U.S. Army Reserve for 10 years, put his leadership skills into action and convinced his sales team to try out the delivery fee for 30 days.
“I was expecting all kinds of calls,” he says. “I didn’t get any.”
The key, he says, is incremental change.
“I’ve implemented a little bit at a time. I haven’t pushed a lot on them.”
STUDENT OF HISTORY
Underwood had little knowledge of the steel and metal fabrication industry when he took the job at TSS. What he did know was history, having majored in the subject at the University of Florida. He says he looked to industrial titans of the past, like steel magnate Andrew Carnegie, when figuring out his approach to leading TSS as its new owner.
Carnegie “essentially developed the steel industry in the U.S., and he had no steel experience,” Underwood says. “He brought steel companies together.”
He was also familiar with TSS’s history, having worked in an adjacent industry — stonework. Underwood was aware former TSS Owner Mark Goldman was looking to exit the business, where sales growth had gone flat in the years following the economic troubles of the late 2000s.
“It wasn’t living up to its potential,” Underwood says. “It was still hung over from the downturn. They had really hunkered down, but in a good way, because it allowed the company to weather the storm. But it was in need of somebody to come in and prepare it for the next level.”
‘They had really hunkered down, but in a good way, because it allowed the company to weather the storm. But it was in need of somebody to come in and prepare it for the next level.’
That somebody was Underwood, who agreed to become president. Initially, Underwood demurred when Goldman offered to transfer ownership of the business, saying he wanted to learn more about steel and metals before making such a commitment.
“I said: ‘I’ll tell you what I’ll do: I’ll come down and run it for a couple of years. We’ll see how it goes, see if it’s something I want to invest in. At the very least, I’ll get the ship righted for you, get it organized and give you a platform to sell it or bring somebody else in.’”
TSS had severely cut back investment in equipment and technology when Underwood arrived. Also, Goldman had become a part-time presence due to involvement in his wife’s business. Underwood says TSS had a massive customer database for a company its size — some 16,000 names — but that information had never been mined, organized and leveraged for sales and marketing purposes.
Underwood could practically smell the opportunity. “I could see the low-hanging fruit,” he says.
KEEP IT SIMPLE
Underwood needed help and guidance, though, to pick that fruit, so instead of Carnegie, he turned to a more modern guru: Mike Shenefield, a Lakeland-based business development consultant.
“He was really struggling at the time, in terms of trying to make sense of things,” Shenefield says. “He didn’t have a controller or CFO because the company just didn’t have the size to be able to do that. So he was trying to do everything himself and getting caught up in all the financial stuff.”
Shenefield identified Underwood’s strengths — sales and operations — and encouraged him to concentrate on those areas instead of burying his nose in TSS’s financials.
A key lesson Shenefield imparted: Simplify, simplify, simplify.
“I picked out for him 15, maybe 20 accounts that represented 80%-90% of what was really important to the business,” Shenefield says. “And then I developed monthly tracking mechanisms, so he could see exactly what was happening to those accounts because those were really the drivers of the business.”
With Shenefield guiding him, Underwood also realized he needed to improve TSS’s marketing game.
Under Goldman, the company’s staff — some of whom had been with the firm for more than 20 years — had been so focused on the existing customer base that little effort had been made to grow the TSS brand via print and online channels. Underwood and his team updated the website and created a one-page capability statement that summarized TSS’s core competencies, company data, past performance and differentiators. The document also clearly indicated what products and services the company could provide, as well as the national and global metal manufacturers with which it works.
“Then we got the salesforce focused on those things,” Underwood says.
The impressive result was 30% growth, year-over-year, from 2015 to 2016. A major win was a deal to supply steel to Kiewit Corp., an Ohio-based contractor working on the 1.9-mile Selmon Expressway extension in South Tampa.
Big project-based jobs like that have been a boon to the firm’s revenue — stuck at $3 million in 2014 when Underwood arrived. By 2016 that number had risen 56.6% to $4.7 million, then $5 million in 2017 and $6.5 million in 2018.
In addition to expanding TSS’s clientele beyond its traditional walk-up customer base, Underwood has also invested heavily in new technology that allows the firm to create custom-designed decorative steel pieces for retail shops, restaurants, offices and private homes. One example: He spent nearly $200,000 on a computer numerical control router outfitted with a plasma cutter. The machine can take an intricate design uploaded by a customer and carve it out — exactly as specified — of a piece of sheet metal in a matter of minutes.
TSS General Manager Bill Andrasco recently demonstrated the machine’s capabilities for a visitor. Sparks flew as a circular picture of a rearing stallion was crafted.
“We would charge about $99 for a custom piece like this, initially,” Andrasco says, “but then less because the design is already in our system.”
Shenefield applauds Underwood’s venture into high-end, custom steelwork like that.
“Otherwise, you’re just a commodity business,” Shenefield says. “If you can add value to something, you can mark it up accordingly and create a pretty good margin. Otherwise, you’re just pushing steel. You’re buying something at X and selling it at Y.”
For Underwood, the big outlay on the plasma cutter has been money well spent — and a prime example of how he’s transformed what was teetering on the edge of becoming a legacy business into a modern, dynamic, well-rounded company.
“I saw this niche for us that we had been missing,” he says, “And now we’ve had people knocking down our doors to use the router.”
Shenefield, meanwhile, went on to help Underwood recruit that much-needed CFO. And the firm's new directions and newfound success under Underwood aren't a surprise to Shenefield.
“Troy is a very strategic guy,” he says. “He’s always thinking about trying to change things, trying to improve things and so forth. He’s a quick learner, and he’s not afraid to make decisions. When you put ‘owner’ on your business card, it’s a whole lot different than being president, but I think he’s having fun. He wants to help this business be all that it can be.”