How do I read a restoration company’s earnings when storm work swings from year to year?

Restoration earnings do not move in a straight line. A severe storm season can fill the crews for months, and a quiet one can leave them waiting. If a seller hands you one strong year, you have learned very little about the next. The task is to find the base that shows up every year, and to see the storm work for what it is.

Separate storm work from base work

Ask the seller to tag each job as storm-related or everyday: a burst pipe, a kitchen fire, a flooded basement. Then look at the two groups on their own. The everyday group tells you what the company does in a calm year. The storm group tells you what it can do when demand spikes, and whether it keeps those customers afterward.

Remember that insurers set the terms

On insurer-referred work, the insurer or its program may set what can be billed, and this varies. That limits how much margin the company can add, however busy it is. Ask which jobs were done under program terms and which were privately arranged. Ask, too, about jobs that were reduced on review, because they reduce what the books say the company earned.

Ask for several years of job-level revenue

Request revenue by job and by month, not just annual statements. Ask your accountant to compare it with the financial statements and the bank deposits. Look at overtime, subcontractors and rented equipment in the busy periods, because those costs rise with storm work and can shrink the gain. Ask what the seller would call a normal year, and why.