Randolph — The management group that acquired Vermont Castings Group in 2013 and ran the troubled company for 14 months did pretty well when it sold the company to an Iowa-based furniture and hearth products giant in October.
HNI Corp. paid $62.2 million in cash for the Randolph maker of wood burning stoves and grills in October, according to financial filings with the Securities and Exchange Commission last week, indicating a remarkable turnaround for a company that was on the verge of bankruptcy when Chief Executive Officer Ricardo Leon and three other executives took it off the hands of private-equity firm The Riverside Co. in 2013 for what amounts to transaction costs and the assumption of $20 million in debt.
The sales price included about $16 million in “goodwill,” which is the difference between the company’s tangible assets and the amount for which it was sold.
Vermont Castings, with plants in Randolph and Bethel that employ about 190 workers, also operates a facility in Kentucky, where it manufactures insert fireplaces under the Monessen Hearth Systems name. HNI Corp. said at the time of its purchase that Vermont Castings and Monessen had total annual revenues of about $100 million.
Leon, in a telephone interview on Friday from Japan, where he was visiting international distributors of Vermont Castings products, said the sale price reflected both the value of the assets as well as efforts among employees to improve operations. The assets include the foundry with electric-induction furnaces in Randolph, the plant in Bethel, corporate office in Kentucky, customer list and not least “the brand name” as a pioneer in the wood-burning stove market.
“The assets always had value, they just weren’t being valued by the (previous) owners,” Leon said.
Leon added that a portion of the purchase price also had to go toward paying off Vermont Castings’ debt.
Since the acquisition, HNI has invested more than $2 million in the Randolph plant, Leon said, and employees recently received their first bonus checks in a long time as a measure of strides they’ve made. He said a plan to consolidate the two plants at the Randolph site is proceeding, although doesn’t expect it to be fully implemented until 2016.
Now that the company is on a firm financial footing, he said, the emphasis under HNI is on improving quality, customer service and worker safety — no small issue when the temperature of molten cast iron can reach 2,500 degrees Fahrenheit.
HNI owns several of the biggest names heating, including wood-burning and pellet stove makers Harman and Quandra-Fire, gas-fired fireplaces Heat&Glo and electric fireplace maker SimpliFire, among others. HNI acquired Vermont Castings to solidify its position in the niche premium wood-burning stove market, a Vermont Castings specialty despite of its recent troubles.
Vermont Castings accounts for a sliver of HNI’s overall business. HNI’s 2014 revenues totaled $2.2 billion and net income was $61.5 million. In the SEC filing, HNI said Vermont Castings represented 6 percent of the company’s assets, and accounted for 1 percent of revenues.