Norcraft was a national manufacturer of framed and frameless kitchen and bathroom cabinetry for the new construction and remodeling markets. During Pfingsten’s relationship with the company, its products included stock and semi-custom kitchen and bathroom cabinetry. The company sold its products to dealers, distributors, contractors and builders. In addition to its headquarters in Eagan, Minnesota, the company had additional facilities in Minnesota, Kansas, North Carolina, South Dakota, Virginia, Arizona, Florida, Colorado and California.
In 1998, Pfingsten acquired the company from its three entrepreneur owners, who wished to monetize their investment and retire from day to day management. We brought in a new CEO and supplemented the senior management team, and capitalized the company with over fifty percent equity. The added resources and conservative capital structure provided Norcraft the foundation and flexibility for growth centered on new product development, geographic expansion and targeted acquisitions.
We saw in Norcraft an opportunity to improve earnings through operating process improvements, expense reductions, investment in new automated equipment and facilities. More importantly, in partnership with management, we saw the potential for internal growth through accelerating new product development, expanding core product lines, and augmenting strong sales and marketing infrastructure. Growth potential through strategic acquisitions also existed in a fragmented $6 billion industry with over 5,000 participants.
For Norcraft, the goal from the very beginning was building an engine for growth, focusing on revamping the product development process, repositioning the product line to more of a lifestyle brand, and shifting the company’s revenue mix from 85% new construction and 15% remodeling to 45% new construction and 55% remodeling. In addition, the acquisitions of Robinson Wood Products, The UltraCraft Company and StarMark, Inc. provided an additional sales channel, two new product categories, and four new brands that gave Norcraft deeper access across a diversified market.
Headquarters: Eagan, Minnesota
Industry: Kitchen and Bathroom Cabinet Manufacturing
Acquired: June 1998
Divested: October 2003
Case studies have been selected for illustrative purposes only. The specific portfolio companies identified are not representative of all active or prior Pfingsten portfolio companies; results may not be typical and it should not be assumed that investments in other portfolio companies will be or were as profitable. Investment in a fund involves significant risk, including loss of the entire investment.