The ESOP Rise, Fall and Resurrection

The Midwest Regional ESOP Conference – 2015
The ESOP Rise, Fall and Resurrection –
Real Life Lessons Learned
Presented by:
Tom Pientok
CEO
Apache Hose and Belting, Inc.
Bob Gross
Senior Managing Director
Prairie Capital Advisors, Inc.
Minneapolis, MN
September 10, 2015
WHAT WE’LL BE TALKING ABOUT
I. Apache Today – A model of the Success of Employee Ownership
II. Apache Back in Time – The Rise and Fall…In Financial and Cultural
Terms
III. Back to the Present - The Resurrection and Real Life Lessons
Learned
I - APACHE TODAY
TH ANNIVERSARY – SHARE Value Trend
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Apache Share Value History
The share values have been adjusted to reflect the additional shares acquired and splits of shares
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Apache
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• Founded in 1963 in Cedar Rapids, as a regional supplier
of belt and hoses by Mr. Robert South
• Became a partial ESOP in 1985 and 100% in 1989
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Apache
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• 100% employee owned company (ESOP)
• $100 million in Revenue for 2015
• 300+ employees
• Average tenure is 10 years
• 6 operating locations across the U.S.
• European and South American Sales
• Asian sourcing and engineering presence
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Apache
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Corporate Office
Cedar Rapids, IA
Seals Unlimited, Inc.
Hillsboro, OR
AG Belt Inc.
Des Moines, IA
Apache | Trico
Cincinnati, OH
Apache | Trico
Dallas, TX
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Apache |Trico
St. Louis, MO
The
Apache
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II - APACHE BACK IN TIME…
THE RISE AND FALL
Apache
The Environment
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Master
• 100% Employee-owned
• Did not live the ESOP culture
• ESOP not well-understood
• Poor leadership
– Vision
– Communication
– Financial acumen
• Organizational complacency & apathy
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Apache
The Results
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Master
• Financial performance plummeted
• Verge of bankruptcy
• Company forced to consider sale
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III – BACK TO THE PRESENT…THE RESURRECTION
AND REAL LIFE LESSONS LEARNED
Apache
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• New leadership team
• Vote of confidence from trustee & valuation partners
• New banking relationship
• Re-energized the ESOP spirit
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Apache
The Environment
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Master
• 100% Employee-owned
• ESOP culture part of daily life
• Employee engagement
– Constant communication
– Link strategic initiatives to value
– ESOP team engagement
• Aggressive
– Acquisitions
– Investments
• Plant & Equipment
• Technology
• People
• Unique trustee/valuation firm partnership
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Apache
The Results
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Master
• 12 consecutive years of profitability
• Sales growth 11 of past 12 years
• Growth in share price 11 of past 12 years
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Company
Growth
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Sales Revenue
CAGR
Trico Belting &
Model Change
Apache 8.1%
Seals Unlimited
Ex-Cel Belting
Ag Belt
Hose Central
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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Validation
Success
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Master title style
Share Price
CAGR
Apache 18.5%
S&P 500 = 9.2%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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QUESTIONS? CARE TO SHARE YOUR EXPERIENCES?
Thanks!
Tom Pientok
Bob Gross
CEO
Apache Hose and Belting, Inc.
Tom.pientok@apache-inc.com
Senior Managing Director
Prairie Capital Advisors, Inc.
rgross@prairiecap.com