wellspring capital management llc · creating the largest player in the diversifi ed steel ... is...
TRANSCRIPT
1
Wellspring is
a leading private equity
investor in middle-market
companies.
A strategic partner
to management
in unlocking potential
and creating value.
1
a leading private equity
investor in middle-market
companies
to management
in unlocking potential
and creating value.
ccoompanies..
1
Wellspring is
a leading private equity
investor in middle-market
companies.
A strategic partner
to management
in unlocking potential
and creating value.
Wellspring’s consistent investment
approach has resulted in ...
2
201%
184%
100%
Superior Performance
Wellspring’s
long-term track record
ranks among
the top private
equity funds.
A Stable Capital Base
We have grown assets
under management
with each successive
fund raised since
our initial fund in 1995.
Fund I (1995)
$85 Million
Fund V(2011)$1.2 Billion
Fund II (1998)
$268 Million
Fund III (2002)$640 Million
Fund IV (2006)$1 Billion
Benchmark = MedianIndustry Performance*
*Source: Cambridge Associates for similar
vintage funds.
Top Quartile vs. Benchmark
Wellspring Performance vs. Benchmark
3
EXPERIENCE
The partners of Wellspring have worked closely together for
over a decade and have a broad range of industry experience. We appreciate the challenges
that senior management face in driving change and creating value.
PARTNERSHIP
Wellspring partners with motivated senior management teams, actively working together to unlock a company’s potential value. It is a true partnership with no bureaucracy.
RELIABILITY
Our most valuable asset is our reputation. We understand
that reliability, integrity and straightforwardness are
paramount to success at every stage of an investment.
“Wellspring’s teamwork and spirit of productive
collaboration with executive management
created a synergy level that enabled our company
to become a premier institution in the post-
secondary education market.”PAM BELL
Chief Executive Offi cer Vatterott Educational Centers, Inc.
• Grew enrollment through new programs tied to
local job demand
• Enhanced the demographic appeal by increasing
the mix of female student enrollment from 15%
to 51%
• Leveraged the company’s large Midwest
footprint with fi ll-in campuses
• Expanded and renovated over 75% of
campus facilities
• Created a centralized organization under a
“best in class” management team
PERFORMANCE
Return on Invested Capital: 5.3x
A premier post-secondary education operator with
leading market share in the Midwest.
An acquisition of a closely held family-owned
and operated business.
Multiple Expansion
21%
Debt Reduction
15%
Earnings Growth
64%
“GAME PLAN” ACHIEVEMENTS
4
Source of Value Creation
CASE STUDY
A PROVEN INVESTMENT STRATEGY
5
IDENTIFY OPPORTUNITY
Wellspring targets strong business franchises in mature industries
that have opportunities for value creation through market share gains
and margin expansion.
We welcome complex situations where business plan execution is
critical to creating value.
EXECUTE “GAME PLAN”
Wellspring believes that partnering with strong management is the
key to unlocking the underlying value of any company.
We understand that execution of a well thought out business plan is the
key to a successful investment.
STRUCTURE CONSERVATIVELY
Wellspring is committed to the principle that investment returns are maximized by growing profi tability and not from the use of fi nancial leverage.
We provide a strong equity base so senior management has the fl exibility to execute and weather industry swings.
JOSEPH CURTINChief Executive Offi cer
Tube City IMS Corporation
• Completed the merger of IMS and Tube City,
creating the largest player in the diversifi ed steel
services sector
• Successfully implemented a complex
cross-selling strategy
• Realized synergistic cost effi ciencies
• Developed an international growth platform,
expanding operations in Asia, Europe,
and South America
• Facilitated multiple expansion by opening
growth avenues
PERFORMANCE
Return on Invested Capital: 2.7x
A leading provider of outsourced
services to the global steel industry.
A carve-out of a healthy, non-core division
of a bankrupt conglomerate.
Multiple Expansion
81%
Earnings Growth
19%
“GAME PLAN” ACHIEVEMENTS
Source of Value Creation
6
“Wellspring has a long history of working
collaboratively with management and we could
not have successfully created the largest
player in the diversifi ed steel services sector
without their endless support.”
R
CASE STUDY
SEEKING OPPORTUNITIES TO CREATE VALUE
7
BROAD FOCUS
IN ESTABLISHED
INDUSTRIES
With value oriented characteristics:
Brand equity
Limited obsolescence risk
Advantages versus foreign competition
COMPANIES IN
TRANSITION
Private ownership transfers
Corporate carve-outs
Public to private transactions
Bankruptcies and restructurings
OPPORTUNITY
FOR VALUE CREATION
Organic market share gains
Productivity improvements
Strategic acquisitions
8
GEORGE HOLMChief Executive Offi cer
Vistar Corporation
• Aggressively grew through both organic and
acquisition-based opportunities to build scale
and route density
• Acquired Roma in 2004, the leading food
service distributor to independent pizza
restaurants in the United States
• Shed over $500 million of unprofi table
national-chain accounts
PERFORMANCE
Return on Invested Capital: 3.7x
A national distributor of food,
snacks, and related products to the
food service and vending industries.
A carve-out of a non-core
division of a public company.
Multiple Expansion
18%
Earnings Growth
82%
“GAME PLAN” ACHIEVEMENTS
Source of Value Creation
“The acquisition of Vistar/VSA would
not have been possible without the
insight and commitment of the
Wellspring team.”
CASE STUDY
8
9
STRONG BALANCE SHEETS
99
LARGE EQUITY BASE
Every Wellspring investment is structured with a large equity base
and modest debt levels.
Our companies are capitalized to weather unanticipated
bumps in the road and facilitate “Game Plan” execution.
DEEP LENDER RELATIONSHIPS
Wellspring’s ability to attract debt fi nancing in good markets and bad
is a key competitive advantage.
We have a network of debt providers who acts as partners and value our conservative investment approach
and track record.
Wellspring avoids market bubbles and investment fads and employs conservative leverage regardless of market cycles.
BELOW MARKET LEVERAGE
1999-2001 WCM Fund II: 2.3x
Industry: 4.3x
2006-2010 WCM Fund IV: 3.6xIndustry: 5.0x
2002-2005 WCM Fund III: 3.4x
Industry: 4.7x Source: S&P 3Q 2010.
CASE STUDY
STEVE KINGChief Executive Offi cer
Dave & Buster’s, Inc.
• Assembled a world class management team of
executives who previously led brands such as
TGI Friday’s, Chili’s and Six Flags
• Invested heavily in research and systems to assist
management to derive decisions based on
quantitative and qualitative benchmarking
• Implemented a national TV advertising program
to extend the brand’s reach
• Developed a new, smaller store format to allow
the brand to grow
PERFORMANCE
Return on Invested Capital: 2.8x
A premier national owner and operator
of high-volume entertainment/casual dining
units in the United States.
A take-private transaction of a public company.
Multiple Expansion
37%
Earnings Growth
63%
“GAME PLAN” ACHIEVEMENTS
Source of Value Creation
10
“Wellspring brought considerable strategic value to
our business, resulting in several years of record
growth and signifi cant increases in profi tability.
We thank the fi rm for its support and for positioning
Dave & Buster’s for continued success.”
11
PARTNERS TO MANAGEMENT
11
DISTINGUISHED REPUTATION
Wellspring has built a reputation as an attractive partner to
senior management teams.
We provide support to our senior management partners but
do not profess to be the day-to-day managers of our portfolio companies.
VALUE CREATION
We draw on deep transactional experience to position investments
for a successful exit. We work to understand what fi nancial and
strategic buyers are looking for.
Management incentive plans are structured so that our interests are
aligned in driving economic returns.
COLLABORATIVE PLANNING
We believe in setting achievable “Game Plans” that focus on the largest opportunities to create value.
We understand that resources are limited and companies cannot focus on key value drivers.
EXPERIENCED AND COHESIVE TEAM
12
From Left to Right: Greg S. Feldman; Joshua C. Cascade; William F. Dawson, Jr.; Alexander E. Carles; Carl M. Stanton; John E. Morningstar
GREG S. FELDMAN Managing Partner
Greg S. Feldman co-founded Wellspring in January 1995. For four years prior to the formation of Wellspring, he was in charge of acquisitions at EXOR America Inc. (formerly IFINT USA, Inc.), the U.S. investment arm of the Agnelli Group. For two years before joining EXOR, Greg was vice president and co-founder of Clegg Industries, Inc., an investment fi rm backed by Drexel Burnham Lambert Incorporated to invest in leveraged acquisitions of middle-market manufacturing companies. From 1983 to 1988, Greg was a mergers & acquisitions lawyer at Paul, Weiss, Rifkind, Wharton & Garrison in New York. Greg has served on the boards of numerous public and private companies and is actively involved in several charitable organizations. He has a Bachelor of Arts degree from Hampshire College and a JD from the Benjamin N. Cardozo School of Law, where he was Editor-in-Chief of the Law Review.
Born and raised: New York, NY
WILLIAM F. DAWSON, JR. Managing Partner
William F. Dawson, Jr. joined Wellspring as a partner in 2001. He previously spent one year at Whitney & Co., where he was head of the middle-market buyout group. Prior to that, Bill spent 14 years at Donaldson, Lufkin & Jenrette Securities Corporation where he was most recently a managing director at DLJ Merchant Banking. Bill has been involved in numerous acquisitions and recapitalizations as well as leveraged fi nancings and restructurings. He has served on the boards of a variety of public and private companies. Bill received a Bachelor of Science degree from St. Francis College and an MBA from Harvard Business School.
Born and raised: Brooklyn, NY
CARL M. STANTON Managing Partner
Carl M. Stanton joined Wellspring in 1998. He previously served as a principal of Dimeling,Schreiber & Park, a middle-market private equity fi rm. Prior to this, he worked at Peter J. Solomon Co., a boutique investment bank specializing in mergers & acquisitions and restructuring advisory services, and in the National Offi ce and Corporate Finance Group of Ernst & Young. Carl serves on a number of company boards of directors and is active with the University of Alabama, where he serves on the Commerce & Business Administration Board of Visitors, and other non-profi t organizations in New York City. Carl holds a Bachelor of Science degree from the University of Alabama and an MBA from Harvard Business School.
Born and raised: Montgomery, AL
ALEXANDER E. CARLES Partner
Alexander E. Carles joined Wellspring in 2001. He was previously at Whitney & Co. where he was a senior associate in that fi rm’s middle-market buyout group. At Whitney & Co. Alex worked on a range of transactions in industries such as plastics, consumer products, telecommunications and media investments. Prior to Whitney, Alex was a high yield research analyst with Lehman Brothers, Inc. Alex graduated with honors from the College of William & Mary with a Bachelor of Arts degree in economics.
Born and raised: New Canaan, CT
JOSHUA C. CASCADE Partner
Joshua C. Cascade joined Wellspring in 2002. He previously spent four years with Odyssey Investment Partners where he worked on a number of leveraged acquisitions and recapitalizations of middle-market companies. Prior to joining Odyssey, Josh spent four years with The Blackstone Group in the restructuring group, advising clients in corporate turnarounds, debt restructurings and Chapter 11 reorganizations. Josh has served on the board of a variety of private companies. Josh received a Bachelor of Business Administration degree from the University of Michigan.
Born and raised: Detroit, MI
JOHN E. MORNINGSTAR Partner
John E. Morningstar joined Wellspring in 2007. He previously served as a managing director at Castle Harlan, where he worked on transactions in a diverse group of industries including packaging, consumer products, plastics, metals, and restaurants, and served on the boards of a number of portfolio companies. Prior to Castle Harlan, John worked in the investment banking department of Merrill Lynch & Co., where he assisted clients in corporate fi nance and strategic mergers. John received a Bachelor of Science degree from the University of Virginia and an MBA from The Wharton School of The University of Pennsylvania. John is a member of the Beta Gamma Sigma Honor Society.
Born and raised: Westminster, MD
13
1414
Hess Print Solutions, Inc., headquartered in Downers Grove, Illinois, is a North American printer serving the education and commercial print markets.
Cleaver-Brooks, Inc., headquartered in Milwaukee, Wisconsin, produces energy effi cient highly engineered fi retubes, watertubes and large custom boilers.
Stripes Holdings, LLC (NYSE: SUSS), headquartered in Corpus Christi, Texas, is the largest independent convenience store operator and non-refi ning motor fuel distributor in Texas.
OMNI Energy Services, headquartered in Carencro, Louisiana, is a provider of environmental services and seismic services to the domestic oil and gas industry.
Neucel Specialty Cellulose Ltd., headquartered in Vancouver, British Columbia, is a producer of specialty chemical cellulose that is a feedstock in a large number of applications.
Dave and Buster’s, Inc., headquartered in Dallas, Texas, is North America’s largest operator of large-format, high-volume restaurant / entertainment complexes, combining high-quality casual dining with an extensive array of entertainment attractions.
Vatterott College, headquartered in St. Louis, Missouri, is a private for-profi t post-secondary education company in the United States.
Vistar Corporation (formerly known as Multifoods Distribution Group, Inc.), headquartered in Centennial, Colorado, is a distributor of food and other products to the foodservice and vending industries in the United States.
Edwin Watts Golf Shops, LLC, headquartered in Fort Walton Beach, Florida, is a retailer of golf equipment, apparel and accessories.
Tube City IMS Corporation, headquartered in Pittsburgh, Pennsylvania, is a provider of outsourced services to the global steel industry.
Protectron Security Systems, headquartered in Montreal, Canada, sells, leases, installs, monitors and maintains alarm systems for residential and commercial subscribers and provides third-party monitoring services for smaller alarm installers.
Residential Services Group, Inc., headquartered in Dayton, Ohio, is one of the nation’s largest providers of heating, ventilation, air-conditioning and refrigeration (HVAC) and plumbing services to the residential and light commercial markets.
American Coin Merchandising, Inc., headquartered in Boulder, Colorado, is an owner, operator and franchisor of coin-operated amusement vending equipment in the United States.
Paragon Trade Brands, Inc., headquartered in Norcross, Georgia, is a manufacturer of private label infant disposable diapers in the United States and Canada.
Far&Wide Travel Corp., headquartered in Miami, Florida, is a tour operator in North America.
Brook Mays Music Company, headquartered in Dallas, Texas, is a full-line musical instrument retailer in the United States.
PORTFOLIO COMPANIES
R
1515
National Seating & Mobility, headquartered in Nashville, Tennessee, provides customized wheelchairs and adaptive seating systems for individuals who have been diagnosed as having a permanent or long-term loss of mobility .
API Heat Transfer Inc., headquartered in Buffalo, New York, is a manufacturer of heat exchangers with a complementary product line and geographic distribution compared to ThermaSys Corporation.
ThermaSys Corporation, headquartered in Montgomery, Alabama, is a manufacturer of a wide range of heat exchangers and heat exchanger components.
Resco Products, Inc., headquartered in Pittsburgh, Pennsylvania, is a North American producer of value-added refractory solutions.
Crosman Corporation, headquartered in East Bloomfi eld, New York, is the world’s leading designer, manufacturer and marketer of airguns, airsoft guns and related category consumables.
Prolamia, headquartered in Westfi eld, Massachusetts, supplies the food packaging, health care and industrial markets with a wide range of extrusion coated and laminated, metalized, and adhesive laminated structures.
United Sporting Companies, headquartered in Columbia, South Carolina, is a nationwide distributor of hunting, outdoor, marine and tackle products. The Company operates through two subsidiaries, Ellett Brothers and Jerry’s Sport Center.
Performance Food Group, headquartered in Richmond Virginia, is the third largest foodservice distribution company in the United States.
ChemAid Laboratories, Inc., headquartered in Saddle Brook, New Jersey is a leading contract manufacturer of premium hair care, skin care and bath and body treatment products.
JW Aluminum Company, headquartered in Mt. Holly, South Carolina, is a producer of specialty fl at-rolled aluminum products.
Checkers Drive-In Restaurants, Inc., headquartered in Tampa, Florida, is the largest double drive-thru restaurant chain in the United States.
Renin and Home Décor Europe, headquartered in Toronto, Canada, and Sheffi eld, England, respectively designs and manufactures closet door and wall décor products.
UNITED SPORTING COMPANIES
16
BRIAN J. RECATTO President and Chief Executive Offi cer
OMNI Energy Services Corporation
A premier provider of environmental and production
services to the oil and gas industry.
A take-private transaction of a public company.
“During the past two years we have
received from Wellspring the
strategic, fi nancial and operational
resources necessary to implement our
growth strategy and capitalize on very
attractive market opportunities.”
CASE STUDY
16
• Repositioned the Company as a specialized
environmental services business, that would
command a premium valuation to the broader
oilfi eld services sector
– Bundled fluid handling and environmental
services with high cost of failure to customers
– Added innovative services to meet market
needs (e.g., growing issue of drilling
waste disposal)
• Geographically diversifi ed the business with
a focus on high growth basins
– Before Wellspring, OMNI focused primarily
on the Gulf of Mexico
– Under Wellspring ownership, OMNI
expanded to nine basins, including the
Bakken, Eagle Ford, Niobrara, and Anadarko
• Positioned OMNI into production and
oil-based services
– Focused geographic expansion on oil-rich
basins
– Expanded production-based services, which act
as a more stable revenue source versus drilling
PERFORMANCE
Return on Invested Capital: 3.0x
Earnings Growth
65%
Multiple Expansion
33%
Debt Reduction
2%
“GAME PLAN” ACHIEVEMENTS
Source of Value Creation
17
P. WELCH GOGGINS, JR.President and Chief Executive Offi cer
Cleaver-Brooks, Inc.
A leading specialized provider
of boiler room solutions.
An acquisition of a sponsor-owned company.
“Wellspring’s strategic and fi nancial
support during an extremely
turbulent period for the economy
provided us with the insight and
stability we needed to meet our
business objectives.”
CASE STUDY
17
• Leveraged competitive strengths to capitalize on
market growth drivers
– Expanded product lines to cater to the
growing energy-efficiency and low-emission
needs of the markets
• Expanded the Company’s high-margin
aftermarket segment
• Signifi cantly reduced costs through lean and
procurement initiatives
• Established a sophisticated sales and marketing
plan implemented across the entire organization
• Grew organically and through strategic
acquisition
PERFORMANCE
Return on Invested Capital: 2.9x
Earnings Growth
45%
Multiple Expansion
49%
Debt Reduction
6%
“GAME PLAN” ACHIEVEMENTS
Source of Value Creation
18
Wellspring is
a leading private equity
investor in middle-market
companies.
A strategic partner
to management
in unlocking potential
and creating value.
Des
ign
ed a
nd
pro
du
ced
by
Tay
lor
& I
ves,
In
c., N
YC
18