Ames True Temper

TOP CALIBER CEO

Wind Point partnered with Rich Dell to acquire Ames True Temper, Inc. (“Ames”).  Rich joined Ames after an impressive 25-year career at Newell Rubbermaid.  Rich’s most recent position at Newell Rubbermaid was Group President, where he was responsible for 11 companies that generated over $2 billion in sales and annual earnings growth of over 16%.  Prior to his position as Group President, Rich served as President of Newell’s Amerock division, a manufacturer of cabinet hardware.  Over his two years at Amerock, Rich grew revenue from $159 million to $200 million, drove EBIT margins from 11% to 18%, and improved customer service levels from 80% to 98%.  Prior to Amerock, Rich served in various sales positions at both Amerock and other Newell companies.  Rich was introduced to Wind Point by Dan DalleMolle, a board member of another Wind Point portfolio company, Bushnell.

UNDER-MANAGED MIDDLE MARKET BUSINESS

Ames was the market leader in non-powered lawn and garden tools and accessories.  Ames had leading market share in most of its product categories and was four to five times the size of its next closest competitor.  Additionally, Ames had a large portfolio of recognized brands that enabled it to develop specific branding strategies for individual customers, an advantage that no other competitor in the market could match. Wind Point acquired Ames from U.S. Industries for $165 million, or 6.2x pro forma EBITDA, in 1999.

At the time of Wind Point’s acquisition, Ames had weak revenue growth, multiple years of margin erosion, bloated working capital, and, despite pressure from its key customers, no overseas sourcing.  Rich had navigated such issues with the same channels and customers during his prior experiences.  Recognizing the weak operational foundation of Ames and the large value creation opportunity, Rich also recruited a highly experienced COO with whom he had worked at Newell Rubbermaid to be a key part of the due diligence and leadership teams.

PATH TO VALUE CREATION

Wind Point and Rich Dell developed the following path to value creation that was executed during Wind Point’s ownership:

• Rationalize facilities.  At the time of Wind Point’s acquisition, Ames was suffering in the wake of a flawed acquisition integration that left poorly configured facilities, two corporate headquarters, no operations leadership, and EBITDA margins that had been halved over the prior two years.  Under Wind Point’s leadership, Ames added a strong new COO (a former Newell operations executive), closed the redundant corporate headquarters and six manufacturing plants, and reconfigured the remaining operations.

• Implement foreign sourcing.  Prior to Wind Point’s ownership, Ames had no overseas sourcing effort and was losing business at major retailers on select sourced items as a result.  Under Wind Point’s leadership, Ames established a global sourcing office in Shanghai, grew Asian sourcing to over 30% of products / components, acquired an ownership position in three Chinese JVs, and regained control of previously lost retailer shelf space.

• Invigorate new product development.  Previous to Wind Point’s ownership, Ames was lacking marketing leadership and experiencing flat growth.  Under Wind Point’s leadership, Ames hired a Vice President of Marketing to create cross-functional, product-focused “core teams”, rejuvenated new product development engine, and introduced approximately 300 items with above average margins.

• Reduce working capital.  Prior to Wind Point’s ownership, Ames’ working capital had materially increased due to poor systems and lack of oversight.  Under Wind Point’s direction, Ames reduced inventory by over $20 million, improved days sales outstanding by over eight days, and implemented tight working capital controls.

• Acquire complementary companies at attractive multiples.  Under Wind Point’s ownership, Ames completed three acquisitions, adding additional product categories and sourcing capabilities.

FINANCIAL RESULTS

Wind Point grew revenue by 26% and EBITDA by 113% during ownership.