Rebuilding Momentum

Rebuilding Momentum

By Janet Leiser

Senior Editor

For five years, annual revenue declined at Hillsboro Printing Co. Some employees lost jobs and others took pay cuts as the company fought for survival after more than 80 years in business.

Leonard Levy, who had helped bring the National Football League and three Super Bowls to the Tampa Bay area, decided it was time to sell the company where he started his career in 1959.

A new group headed by majority owners - Chief Executive Officer Dick Lange and Executive Vice President Jerry Bray - took over in May.

"A lot of printers were going out of business," says Levy, 72, who owned the company since 1984. "We were glad to let someone else fight the battles. We'd been doing it a long time."

In the last seven months of 2005, the company was profitable for the first time in five years. Revenue increased $1 million to $10.5 million from the same period a year earlier.

"We'd planned a 7.5% increase in sales, and we're running at about 16%," says Lange, 58.

Later this month, the 75-employee company will move to a new 48,000-square-foot facility at the Silo Bend Industrial Park from its old, dark and dingy offices on Mississippi Avenue in South Tampa.

It will usher in a new era for the printing company founded in 1918 by Frank Hill. The new facility, the company's fourth location in its history, was designed by Clint Bolte, one of the industry's preeminent engineers, Lange says, adding: "The factory is painted white. It looks like a hospital operating room, not a press room."

More important, the press room will boast a new $2.5 million Heidelberg six-color press that's three times faster than the one it's replacing.

"We're looking at significant growth this year," Lange says. "It's a huge paper eater. It's going to produce an awful lot of product. I expect we will have 10 new jobs in the factory in 2006."

He expects the business to triple annual revenue to $30 million in two years. He plans on going after former customers, as well those that belong to his competitors. Plus, he wants to do more work for his existing customers.

Up or down

In 2004, Lange retired to Fort Myers after being involved in sales and management at some of the world's largest printing companies, including 3M, R.R. Donnelley and Merrill. He realized quickly that retirement wasn't for him, adding, "You can only golf so much and catch so many fish."

Lange called old friend and mentor Harris DeWese, an investment banker who's chairman of Compass Capital Partners Ltd. in Philadelphia. DeWese asked Lange if he was interested in buying a company. Then he told him about Hillsboro Printing.

"He said, 'This is just the thing for you. I'll tell you what, I have enough confidence, I'll put my own money in this, too.' " Lange recalls.

Neither Lange nor Levy will say what the group paid for Hillsboro Printing. Lange and Bray each own 31% of the company, and DeWese owns 25%. Other minority owners are Richard Lind, chief financial officer, Cecil Doppelheurer, vice president of manufacturing, and Bradley Albertson, vice president of sales.

In nearly 150 deals over several years, it was the first time DeWese invested his own money, Lange says.

As for the 2.5-acre property on Mississippi Avenue, Levy and his investors are selling it for townhomes.

Levy, now chairman emeritus, still works at Hillsboro Printing. "We promised to pay him some money," Lange says. "It's in his best interest for us to do well."

At its peak, Hillsboro Printing had annual revenue of about $15 million with Levy in charge. But revenue declined as the industry changed with the advent of the Internet, Levy says. And the company lost some of its biggest clients, including Delta Airlines, as deregulation changed the airline industry.

In the past few years, Levy and General Manager Dick MacIntyre were looking for an exit strategy so they weren't interested in spending millions on a new press or technology, Lange says.

"As a result, they weren't as efficient," Lange says. "They just weren't driving the company to grow, and, frankly, you're never static. You're either going up or going down."

The turnaround

Lange cites three reasons for the turnaround: cost reduction, efficiency gains and increased sales.

Twelve employees received severance packages. "One of the things that's difficult to do when you have longtime employees is make some of those hard decisions," Lange says. "Where it's a matter of having the company stay afloat or go under, you have to make those decisions."

Lange, who says his expertise is sales, began working with the 10-person sales group. "In a lot of cases, people view print as a commodity, and it's not," he says. "There are always ways to differentiate. If you are a professional consultant sales person, you are going to get inside the head of your client or prospect and understand what it is they're trying to do. You use your experience and the resources at your organization to see if there are ways to save time or bring an improvement in quality, depending on what's important to them."

Lange and the sales group meet weekly to discuss strategy and niches.

The CEO also visits clients to thank them for their business and find out why they've stayed with Hillsboro Printing.

It was more difficult than Lange expected to identify the low-hanging fruit. One problem was how the business was run, he says, adding, "The philosophy of 'it's not my job' permeated the organization. What we have to do is break all those walls down and say everybody has responsibility for everything. The whole sole purpose of our being here is to become a sales-driven organization.

"It's easy to say, not easy to do."

In the first month with new management, Hillsboro Printing made a profit, he says. Employees received $35 gift certificates for Memorial Day.

"We have lots of meetings," Lange says. "People understand they're accountable for what they do. Most important we are accountable for doing the right thing for the client."

Feeding the machine

Hillsboro Printing's niche is high-quality materials such as annual reports or advertising brochures. A typical press run is between 7,500 and 15,000. Major competitors include Rinaldi Printing Co., Fidelity Printing Corp. and Martin Litho. Customers include the Tampa Bay Buccaneers, the New York Yankees, Jabil Circuit and WellCare Health Plans Inc., to name a few. Most customers are based in the Tampa Bay area - from Sarasota to Pasco County. The company also publishes a destination guide and sells advertising for the Tampa Bay Convention & Visitors Bureau.

Lange expects to grow the publishing business. "If you're printing the things that you publish, then you're feeding yourself," he says. "I'm guaranteed that piece if I can create it."

Not all of the business' growth will be organic, he says. He declined to name any possible takeover targets, but he says, "There are tuck-in opportunities where we can take the synergies and one plus one makes three."

Growth is essential to the company's survival, especially since three issues - overcapacity, lack of scale, sales and marketing experience - plague the printing industry.

He expects smaller firms to continue to go out of business as consolidation continues. He expects to be a survivor.

Lange's biggest regret is that he didn't start or buy a company earlier in his career. "At the end of the day, the deal is either made or lost by the CEO," he says. "The strategic decisions - the CEO makes them. Granted, you've got your team, but they're looking to you. If you called it wrong, you're going to suffer the consequences. If you called it right, you're going to reap the rewards. I like being in the position where it's put on me."

CONSOLIDATION SWEEPS PRINTERS

In the late 1990s, the printing industry saw a consolidation as public companies bought smaller printers in an effort to reduce operating redundancies and improve buying power, says Peter Schaefer, president of Compass Capital Partners Ltd.

But when the economy went into a downturn, worsened by the terrorists attacks of 9/11, the aggregators saw their sales stagnate or fall while they still carried the debt payments accumulated with their acquisitions. Predictably, their stocks fell out of favor on Wall Street.

The consolidators have continued to manage the companies they acquired, but they haven't been actively buying more printing companies, he says.

Today, there are about 35,000 printing companies in the United States.

Hillsboro Printing Co. CEO Dick Lange expects the consolidation to continue since there are so many small mom and pop operations.

"You're going to see companies just go out of business and others will just be gobbled up," Lange says. "I think it's a terrific opportunity for us."

As for the acquisition of new companies, he expects to finance new debt, he says. "If we have a good business plan, there are many companies that will underwrite it."