Asked to comment on any weaknesses FdG sees in Hercules, Mr. Hauser was quick to state, ``It doesn't have any.''
``Mark fixed those,'' Mr. Anderson added, laughing. ``FdG looked at us, and those strengths they found were the management team, manufacturer platform and supplier platform, our strong customer loyalty with our brands.''
Added Mr. Hauser, ``We saw a company with wonderful management, a well-known brand and representation in the marketplace, and which we think has significant growth potential.''
He said FdG is working with management on a five-year plan, and it would be premature to talk about specifics. However, ``we see an ability to grow Hercules' distribution network, possibly by acquisitions, and by opening new distribution centers. The Hercules brand is well-known as a private label, and we feel the brand can penetrate more of the North American tire market.''
Mr. Seawell said the company has a ``growth engine going in our various business segments, and we expect to see organic growth in a very dramatic fashion. But we also think there's opportunity now-on an acquisition front-due to continuing consolidations in the industry.
``I think some of the limitations of the previous co-op culture were impediments to the kind of growth we'd like to see across the U.S.''
Members of management from Hercules and FdG, as well as company representatives from Canada, Texas, California and Illinois had what Mr. Seawell called a ``kick-off meeting'' May 17 in the company's 400,000-sq.-ft. distribution center in Findlay. There, they discussed ``where we want to go in the next five years with the new Hercules.''
At this point it can safely be said Hercules has no plans to enter the retail tire market like some of its larger competitors such as TBC Corp. and, for a time, American Tire Distributors Holdings Inc.
``We know who we are,'' Mr. Anderson stated. ``We're a distributor of tires.... We've always been a supplier to independent retailers and not been their competitor. We don't open a retail store next door. That's the platform we'll build on.
``That's not to say things can't change in five years, but ours is a distribution strategy at the current time.''
He alluded to some of his competitors' retailing ventures, noting, ``We've had some great opportunities because of their strategy changes. When (companies) change their approach to the market, it leaves some voids and opportunities.''
Mr. Seawell said there is a ``lot of North America where we don't have distribution, don't have our `unfair' share yet. There's a tremendous amount of growth left in wholesale.
``We'll be looking for new dealers, places where we can put a controlled distribution facility-whether it be a greenfield or via the acquisition of a wholesale tire business. But our niche will be wholesale.... Hercules is a wholesale company.''
For the most part, Hercules has most regions covered, Mr. Anderson said, ``though there are areas where we can backfill and strengthen our presence.''
As for adding any new labels to its Hercules, Signet and Merit private brand stable, Mr. Anderson said the company is content to ``work on the ones we've got,'' especially as rampant proliferation continues, Mr. Seawell added.
Last year the company rang up $350 million in revenue. Projections are for Hercules to ``be north of $350 million''-perhaps between $370 million and $375 million, Mr. Anderson said. Along with this, the company has to make up for the $10 million to $12 million it lost when it got out of the manufacturing arena with the sale of its custom mixing business earlier this year.
Mr. Hauser wouldn't predict a net income figure but said, ``We're confident we can build the business both on a revenue and bottom-line basis.''
``An opportunity will come up that will change these numbers-they can change in 30 days,'' Mr. Anderson said. ``The industry is fairly fluid and highly fragmented. We're in a position to capitalize now on organic and acquisition growth.''
Asked if FdG's wallet is deep for potential acquisition opportunities, Mr. Hauser laughed and said, ``Absolutely.''
``That's why we like those guys in New York,'' Mr. Anderson interjected. ``We didn't have that opportunity with 33 stockholders.''
Mr. Hauser ventured that ``doing acquisitions is easy. It's having a management team that picks the right ones and integrates them properly. That's where an acquisition really goes off track. Getting the capital for it is not a problem.''
Going full circle
Shortly after the acquisition was a done deal, Mr. Seawell sent a letter to employees ``telling everybody Hercules is still Hercules, only stronger, and we're going to grow in the future.''
Mr. Anderson reiterated that ``the excitement's ahead of us. The board and former owners gave us a great foundation to let us grow. We've changed our mission. This is just another natural transition.''
He pointed out the company has come full circle, being founded 54 years ago in New York and ``now we've come back to New York City.''
``Our customers, suppliers and employees are really excited,'' Mr. Seawell said. ``This is a great time for any of them to be part of the Hercules family. This is the beginning of something big.''
* * *
Hercules' new executive team
* Craig Anderson: chief executive officer, vice chairman of board of directors
* Larry Seawell: president/chief operating officer
* Mike Distel: president, Hercules U.S. Tire
* Rob Keller: president, Hercules Canada
* Joe Recchia: president, Hercules International
* Mark Hauser: managing director, FdG Associates L.L.C.