Republic Industries: Reborn and Rising

After going bankrupt in the mid-1980s, this Marshall, TX-based company has resurrected itself to become a leading cabinet player in the South.

By Barrett Kilmer

 

A dozen years ago, Gene Ponder repurchased and rebuilt "from scratch" the shuttered cabinet company he had sold off only a few years before. Today, Republic Industries is aggressively pursuing growth through acquisition. Its additions last year of Legacy Cabinets and Sunshine Kitchens follow its plan to expand its manufacturing and distribution capabilities south of the Mason-Dixon Line.

In an exclusive interview with Wood & Wood Products, Ponder discusses his company's merger strategy, including future goals.

W&WP: When and why did you start Republic Industries?
Gene Ponder: I originally founded Republic in 1975. I've been in the business since the 10th grade in high school in Atlanta. There was a cabinet factory right behind my school and when it wasn't football or track season that's what I did. I just fell in love with it. This is my 42nd year in the cabinet industry.

W&WP: Why was the company forced to close in the late 1980s?
GP: In the mid '80s I was approached by a group of investors that wanted to buy the company. My wife and I thought we had taken it about as far as we could, and we felt it was time for the company to go to the next tier. Well, we sold the business and three years later we ended up having to buy it back because it had been closed -- shut down completely. Myself and my partner, Bob Smith, repurchased it in 1988 and started it back from scratch. It was definitely harder to build the second time than it was the first time. But in less than 12 years we've gotten it to absolutely double where it was.

W&WP: How did you accomplish that?
GP: Our strategy for the first 10 or 12 years was to grow this business as our customer base grew. We really never set out every year to grow by a certain amount. As our customer base grew, we just had to grow with it.

W&WP: How has your business strategy changed in recent years?
GP: Two years ago I allowed a group of investors -- HIG out of Miami, FL -- into our corporation. Bob and I sold them some stock and I still own about 25% of the corporation. HIG and Republic are now out acquiring other companies. Besides the Republic Group, we have brought into the group Legacy Cabinets out of Estaboga, AL, which is about $35 million a year; and Sunshine Kitchens out of Miami, FL, which is a total European cabinet manufacturer and sells about $20 million a year. The Republic Group, based here in Marshall, will sell about $75 million this year.

W&WP: What do you look for in the companies you bring into the group?
GP: We want to acquire really good companies where management wants to stay on and own a part of the entire corporation. They continue to run it just like they have before -- but as a group we can work together with those synergies that you look for. Using one another's sales force is one example.
We go out and try to find companies who have outgrown their ability to fund the business. For instance Legacy was looking for a financial partner with the financial depth to fund their growth. We're adding one-third to Legacy right now, which is about 100,000 square feet. That will increase production there by another 20 or 25%. The people that started Legacy are now stockholders in the entire corporation, which is our method to attract companies to join our group. We can all help each other grow.
It just makes sense to me. When you go out and start a business you can't get those owners' philosophies, work ethics and all of those kinds of things. To me it's just better to go out and acquire than it is to start new plants.

W&WP: How does what you are doing compare to the way others are operating?
GP: Our overall strategy is to hopefully build a group like nobody ever has in the cabinet business. We are trying to build a sales base where the companies don't compete with one another. In other words we're buying companies at different price-point levels and in different spots around the country, with Republic being a good cabinet, Legacy being the better cabinet, Sunshine being the top end of the line. Each one is priced differently, and quality points are different.

W&WP: How will this diversity benefit the corporation?
GP: Some cabinet companies are out acquiring other companies with the same product quality as theirs and the same pricing point as theirs. Then they beat each other up. It's not logical. Why have groups within the larger group selling to the same customer base and in some cases cutting each others pricing? We don't want to do that.
In addition to acquiring companies at different pricing levels, we want to buy companies in different regions of the country.

W&WP: What regions are you concentrating on?
GP: We're now looking at some companies out west, trying to move away from where we are. We won't go up north. We just like the southern region of the country from East Coast to West Coast. You don't lose any transportation time for inclement weather days. It's just a better area to be able to operate 365 days a year.

W&WP: How does EuroCraft fit into the strategy of different price points and geographical areas?
GP: None of our companies except for Sunshine down in Miami makes a European-type cabinet. We feel there's some real growth to the European-style cabinet and we also wanted to diversify the base here in Marshall.

 

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