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Mustang CAT chairman and CEO Brad Tucker near construction equipment, and machinery at the company’s headquarters by the northwest freeway on Tuesday, Sept. 24, 2019, in Houston.
Mustang CAT chairman and CEO Brad Tucker near construction equipment, and machinery at the company’s headquarters by the northwest freeway on Tuesday, Sept. 24, 2019, in Houston.
Mustang CAT chairman and CEO Brad Tucker near construction equipment, and machinery at the company’s headquarters by the northwest freeway on Tuesday, Sept. 24, 2019, in Houston.
Mustang CAT chairman and CEO Brad Tucker near construction equipment, and machinery at the company’s headquarters by the northwest freeway on Tuesday, Sept. 24, 2019, in Houston.
Mustang CAT chairman and CEO Brad Tucker near construction equipment, and machinery at the company’s headquarters by the northwest freeway on Tuesday, Sept. 24, 2019, in Houston.
Mustang CAT CEO Brad Tucker in the company’s headquarters. Mustang Cat’s revenue reached a record $1.62 billion in 2018 before slipping by about 8 percent to $1.49 billion last year, which still placed it at No. 9 among the Chron 100’s top private companies.
One may not associate an 88,000-pound Caterpillar D8 bulldozer with the concept of a “soft landing,” but Houston-based Mustang Cat, which sells and rents everything from oilfield power generators to massive construction and earth-moving machinery, is planning for just that after last year’s revenue spiked on a combination of oil and gas activity and tax breaks.
Absent of the kind of tailwinds that drove 2018’s revenue up 39 percent to a record $1.62 billion, Mustang Cat, Houston’s longtime exclusive dealer of Caterpillar equipment, is projecting an approximately 10 percent drop in revenue this year. Seeing that on the horizon, it is hedging its bets by expanding its equipment-rental business while broadening its geographic reach to capitalize on local road-construction projects such as the Grand Parkway project and Northwest Freeway expansion.
“If you’ve been around Houston, you know traffic has been a bit of a problem, and not everyone wants to come to northwest Houston to pick up a piece of equipment,” said Mustang Cat Chief Executive Brad Tucker. “We need to have rental yards close to where our customers are doing business.”
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Granted, many customers have already taken advantage of low-interest financing as well as newer tax laws that allow companies to accelerate tax write-offs for capital expenditures by acquiring Caterpillar machinery outright. Regardless, Mustang Cat continues to expand the number of its facilities that offer prospective customers to rent equipment that can range from a $20,000 mini-excavator to that big-ticket, $800,000 D8 bulldozer. The company is slated to open a 10,000-square-foot Katy facility — its 21st in the Houston area — in December.
“Close to 50 percent (of heavy-machinery business) is because of highway and road construction,” said Sam Tucker, Mustang Cat’s executive vice president of sales and Brad Tucker’s son. “The stores we’ve been adding are primarily rental locations.”
It’s the most recent move for a company whose strategy continues to evolve while its family-run leadership remains constant. The business was founded in 1952 by Brad Tucker’s maternal grandfather (and former Houston mayor) Otis Massey and his father Frank Tucker. Massey chose the name because he’d worked for roof-shingle maker Johns Manville and associated its Mustang-branded roof shingles with high quality. It has since evolved into one of the country’s largest Caterpillar dealers — and possibly the world’s largest in terms of engine-horsepower sold — while mirroring local growth.
With Houston’s metropolitan area population surging to more than 7 million people today from fewer than 1 million people in the early 1950s, Mustang Cat has provided machinery for contractors who’ve built local landmarks such as the Astrodome (which opened as the Harris County Domed Stadium in 1965), Sam Houston Race Park, Reliant Stadium and Minute Maid Park.
All the while, the company has ridden the booms and busts commensurate with an economy so dependent on oil and gas.
“We don’t take a lot of money out of the business, so we have a strong balance sheet, which is helpful when you go into a downturn,” the senior Tucker said.
Mustang Cat’s customers range from nationally renowned firms like infrastructure giant Kinder Morgan and garbage-removal firm Waste Management to local construction firms like WT Byler Co. and Reytec Construction Resources. Reytec, whose infrastructure-construction work includes bridges, roads and underground utilities, has acquired or leased “hundreds of pieces” of heavy equipment from Mustang Cat during the past two decades, reflecting what Reytec Chief Executive Gregg Reyes said were the benefits of continuity in the company’s leadership.
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Specifically, Reyes says the company walks the fine line between suggesting what’s most appropriate among the myriad of equipment options and refraining from pitching what may be a profitable but unnecessary sale. He estimated that his company spends on average about $2 million a year on equipment leases and acquisitions — it’s not uncommon for Reytec to lease a piece of equipment from Mustang Cat for three years before deciding on whether to buy it outright — as well as parts and service from Mustang Cat. During especially active years, Reyes says that number has more than tripled.
“There’s always a surprise every year,” added Reyes, referring to the ever-changing nature of both his business and heavy-equipment choices. “Ninety-five percent of what we do on the heavy-equipment side, we do with them. They don’t just sell us equipment. They help us develop what we need, not what they want to sell us.”
Mustang Cat has also reflected the region’s dependency on the oil and gas industry. Whereas a typical Caterpillar dealer’s revenue is about 70 percent construction machinery and 30 percent engines, about 60 percent of Mustang Cat’s volume is from engines and 40 percent is from selling or renting construction machinery.
The company’s growth also reflects its association with Caterpillar Inc., the world’s largest maker of mining and machinery equipment. Founded in 1925 with the merger of the Holt Manufacturing Company and C. L. Best Tractor Co., the company last year boosted its revenue 20 percent to $54.7 billion.
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And while Mustang Cat’s long-term standing with Caterpillar is impressive, its standing among multi-generational dealers isn’t unusual, as worldwide Caterpillar dealers have worked with the Deerfield, Ill.-based company for more than 50 years, on average, according to Caterpillar spokeswoman Lisa Miller. She declined to say where Mustang Cat’s annual sales ranked among global Caterpillar dealers, though Brad Tucker estimated that the company was “certainly in the top five in the U.S.”
“Caterpillar has a long-lasting, valued relationship with Mustang and all of its dealers around the world,” Miller said. “Cat dealers are independently owned businesses, and most of them for multiple generations.”
Mustang Cat, which employs about 850 people, including about 650 in the Houston area, continues to evolve, though, in both sales emphasis and generational succession. Having long established itself through sales of engines and heavy machinery, Mustang Cat now derives about 44 percent of its construction-machinery revenue through rentals, reflecting the shorter-term nature of road and highway projects compared to the longer-term requirements of oil and gas fields.
Additionally, the company’s next generation of leadership appears to have approached the task of potentially running the company differently than the current generation. Trained as a tax attorney, Brad Tucker, 65, initially practiced law after graduating law school before joining his family as Mustang Cat’s general counsel in 1985.
“The longtime CFO had decided to leave, so they needed somebody to come in with a financial background, which I did. They never had general counsel before, and everybody in Houston was in a pretty bad spot. The oil business had already fallen apart, banks were in trouble, and real estate was falling apart, so there were plenty of legal issues out there,” Brad Tucker said. “My brother (now-retired Louis Tucker) was the greatest salesman ever. He convinced me to take a 50 percent pay cut and be happy about it.”
In contrast, Sam Tucker, who is 32, grew up working in the family business and rejoined it as soon has he graduated Baylor University (another son, 28-year-old Ben Tucker, has also worked for Mustang Cat though is currently studying for his master’s degree in business administration at Babson College near Boston).
“I worked every summer in high school in the warehouse pulling parts and washing racks, so I’ve kind of been in it my whole life,” said Sam Tucker. As for family dynamics and gaining credibility among co-workers, “there’s always going to be that (challenge) but you have to get past it and treat everyone with respect, and things will work out.”
“Sam’s a pretty humble guy. I didn’t have to deal with (accusations of nepotism) because when I came in, I was the only lawyer, so I got instant credibility,” added Brad Tucker. “Sam’s tried to earn it.”
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