J.B. Poindexter & Co., Inc. developed from its origins as a private equity investment firm, through a secondary stage as an investment partnership, to today’s diversified manufacturing corporation. In each instance, the management and administrative team from the predecessor evolved into the new entity and the holdings of the prior firm became the core of the subsequent one.
The original predecessor of J.B. Poindexter & Co., Inc. was formed in New York City in 1983. KD/P Equities was a partnership between Kellner, DiLeo & Co. (the KD), a highly respected merger arbitrage firm, and John B. Poindexter (the P). Mr. Poindexter at the time had most recently been a General Partner at Smith Barney Venture Corp., a subsidiary of Smith Barney, Harris Upham & Co., today Salomon Smith Barney.
The objective of KD/P Equities was to assemble a portfolio of manufacturing concerns with excellent growth prospects and profit characteristics. Kellner, DiLeo & Co. desired to expand its trading and financial base, through a separate affiliate, into a group of ownership interests that offered good capital gains prospects. They chose to partner with Mr. Poindexter in order to capitalize on his experience at Smith, Barney, Harris Upham & Co., Salomon Brothers, and other investment firms.
KD/P Equities was a very successful venture that acquired, among other companies, All Steel, Inc., Carolina Steel Corporation, and a group of four companies that were merged with Carolina Steel. All Steel manufactured a full line of office furniture and accessories and Carolina Steel and its affiliates produced and distributed a variety of steel industrial and building products. Altogether, the revenues of the acquired companies approached $500 million. They were competently operated by KD/P Equities and each provided highly rewarding capital gains for the partnership.
A NEW STRATEGY
The investment strategy of the KD/P team, however, began to evolve from that of acquiring companies by means of ingenious financial structuring, implementing operational enhancements, and reselling businesses for capital gains. The new objective that was adopted in the mid-1980s emphasized buying companies to hold and operate for the long term. Along with this shift in strategy, a new partnership, J.B. Poindexter & Co., LP, was formed by KD/P’s management team in 1985. The staff of the new organization was the same as that of the previous firm. The new partnership also retained most of the management responsibility for the companies purchased by KD/P Equities until they were sold. The capital gains realized by KD/P Equities provided the equity base for the new partnership.
J.B. Poindexter & Co., LP made a number of acquisitions, including Morgan Corporation, EFP Corporation, Leer, Inc., The Lowy Group, Traxxon, Inc., Magnetic Instruments Corporation, and others, almost all of which were operated very successfully. Morgan produces truck bodies, EFP is a fabricator of expandable foam plastic products, Leer (now a part of Truck Accessories Group) assembles and distributes pickup truck accessories, the Lowy Group manufactures and distributes flooring products, Traxxon was a distributor of flat rolled steel products, and Magnetic Instruments (now MIC Group) is a high precision machining concern. Aggregate revenues of the new acquisitions, again, were in the $500 million range.
AN ACTIVE MANAGEMENT
The partners of J.B. Poindexter & Co., LP began to take a more active role with the management teams of its affiliates as the company’s perspective shifted from being an investor to being an owner/manager. They learned the importance of leaving the subsidiaries’ incumbent managements in place and working with them to improve corporate strategy, financial performance, budgeting, and capital expenditure discipline.
Additionally, J.B. Poindexter & Co., LP began to provide a wider range of corporate services to support the operating managements of its subsidiaries. For example, the firm developed the ability to generate external funding beyond the initial acquisition financing, and it established internal audit, risk management, information technology, and human resources capabilities, together with a more formalized approach to acquisition analysis.
FROM PARTNERSHIP TO CORPORATION
As the orientation of the company continued to shift from seeking intermediate-term capital gains to long-term ownership and management, the decision was made to relocate the partnership headquarters from New York City to Houston. The transfer was accomplished in stages between 1987 and 1990 as the firm ceased to be an investment partnership and became an operating entity.
In 1994, the partnership decided to generate more capital for operations and acquisitions by issuing $100 million of senior notes through Morgan Stanley Dean Witter & Co., Inc. Consequently, the company was converted from a partnership to a corporation, J.B. Poindexter & Co., Inc., and John Poindexter became the sole shareholder.
The new corporation continued its active acquisition program both before and after the sale of the senior notes. During this period it acquired 20th Century Fiberglass, Inc., GemTop Manufacturing, Inc., and the companies comprising Raider Industries, all of which are manufacturers of pickup truck accessories. Additional purchases included Midwest Truck Accessories, Inc., a distributor of aftermarket truck accessories, KWS Manufacturing Company, Inc., a manufacturer of bulk material handling systems and conveyors, Universal Brixius, Inc., a contract manufacturer, and Beltrami Door, a fabricator of vehicular doors. The revenues of the new acquisitions, together with others not described here, approximated $200 million. Aside from the acquisitions, J.B. Poindexter & Co., Inc. undertook a large-scale expansion of Leer, Inc.’s retail and wholesale distribution system for pickup truck accessories.
STRENGTHENING THE CORPORATION
The corporation developed new and effective internal communications practices, including standardized reporting, quarterly joint management meetings with all subsidiaries, and formal budgeting and capital appropriations procedures. A corporate level senior executive, for example, now supports the subsidiaries in their continual improvement of manufacturing processes, operating efficiencies, and the quality of their final products. Nonetheless, the goal of the corporate headquarters remains to coordinate, support, and provide financing for the operations of its subsidiaries rather than to manage them.
Between 1995 and 1998, the new corporation faced a period of serious internal trial in one of its three divisions. As part of a strategy of corporate expansion that emphasized internal growth, the Truck Accessories Group, including the Leer division, had grown to comprise four manufacturing companies and a sizeable group of retail stores and wholesale distribution centers. Management undertook a costly and complicated reorganization of the $200 million division so as to focus it more properly on its separate retail and wholesale markets and to upgrade its manufacturing and marketing capabilities. While the concept of the reorganization was sound, its execution was not, with the result that some of the components of the Truck Accessories Group ceased to operate profitably. Consequently, the division and the company suffered financially between 1995 and 1998. Nearly all of management’s attention in those years was devoted to correcting the Truck Accessories Group’s shortcomings rather than building value in the other more profitable divisions.
TODAY AND BEYOND
In the years since 1999, financial performance has improved throughout all subsidiaries. The company enjoys positive cash flows and maintains an excellent working capital profile. Additionally, corporate management has been able to focus upon filling out several of the subsidiary management teams and the parent staff by recruiting first class operating and administrative executives.
Today, J.B. Poindexter & Co., Inc. is a diversified manufacturing company with 4,500 team members in over 35 facilities from Oregon to Florida and Saskatchewan to Mexico. The majority of the business is in the transportation related manufacturing sector, with many of our businesses leaders in their markets with longstanding branded product offerings. Annual revenue is in excess of $1.25 billion dollars and J.B. Poindexter & Co., Inc.’s medium term goal is to expand to three billion dollars in profitable, growth oriented revenues.
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