New York, NY—1847 Holdings LLC (OTCQB: EFSH) (the “Company”), a publicly traded holding company platform that combines the attractive attributes of private, lower-middle market businesses with the liquidity and transparency of a publicly traded company, today announced the completion of its acquisition of Kyle’s Custom Wood Shop, Inc. (“Kyle’s”), a leading custom cabinetry maker servicing the direct-to-builder and new construction markets. Based in Boise, Idaho, Kyle’s has designed, built, and installed custom cabinetry for new construction since 1976
“We set out to complete this transaction within 60 days of when we announced it, and we delivered on that goal, completing the acquisition in just over 30 days,” stated Ellery W. Roberts, the CEO of 1847 Holdings. “Kyle’s is a great addition to our portfolio with strong positive cash flow, 30% operating margins, and a 7.1% CAGR on revenue over the past three years. It also has a clean capital structure with no debt, affording us substantial flexibility as we work to unlock value creation through participation in opportunities previously untouched by this regional operation. I look forward to working with the Kyle’s team as we capitalize on these opportunities to accelerate growth and build lasting shareholder value.”
The Company believes strong housing demand in the region is driven by out-of-state immigration into Idaho. Current operations are focused primarily in the Boise area, providing opportunities to capitalize on high-growth adjacent regions. In addition to regional expansion, 1847 Holdings plans to expand capacity by increasing the network of builders, participating in new bids, and investing in facilities and labor resources. Product line expansion and broadening sales channels to include multifamily housing, remodels, and DIY segments could further accelerate growth.
Idaho’s population grew by 2.1% in 2019, faster than any other state, and the Boise Metro Area was the eighth fastest growing metro in the US, seeing a population increase of 2.8%. Driven by retirees and older workers attracted to lower home prices, shorter commutes, less natural disasters, and fewer taxes, the majority of inbound Idaho movers earn above the state income level.
The Company appointed Ken Yuan, an Operating Partner to 1847 Holdings, as CEO of Kyle’s. Prior to working with 1847 Holdings, Yuan was the Head of Strategy at FedEx Supply Chain where he led a team of analysts and worked closely with the CEO office in developing growth strategies. Prior, Yuan was the president of American Plastics, a provider of medical-grade materials and services to the Orthotic & Prosthetic industry, where he led the company in developing new product-offerings and expanding its customer base. Because of Yuan’s effort, American Plastics’ sales grew by more than 10% and its EBITDA grew by more than 15% in less than two years. Ken successfully helped the owners of American Plastics exit the business by selling it to a strategic buyer.
Previously, Yuan was a Director with Alvarez & Marsal North America, LLC., a global professional services company. At Alvarez & Marsal, Yuan developed and executed a vendor management strategy for a $14 billion, tier-1 automotive supplier in securing a $135 million bankruptcy court vendor relief; negotiated a $120 million senior debt facility for a corrugated packaging company; and developed a POS system implementation play for a $300 million oil-&-lube franchisee for its bankruptcy restructuring.
Prior to Alvarez & Marsal, Yuan worked at TPG Capital, a global, large-cap private equity firm. His work at TPG focused on portfolio-company performance and operational analysis, and his operational portfolio included companies such as Neiman Marcus, Petco, and Debenham.
The Company raised the capital to fund this acquisition through the private placement of its Series A Senior Convertible Preferred Shares. The Series A Preferred Shares pay dividends on a quarterly basis at an annual rate of 14% and are redeemable, at the Company’s option, at a redemption price equal to 115% of the stated value plus accrued but unpaid dividends. The securities of the Company issued in connection with the acquisition of Kyle’s and the related financing transaction will not participate in the Company’s recently announced special dividend of the common stock of its subsidiary, 1847 Goedeker Inc.
About 1847 Holdings LLC
1847 Holdings LLC (OTCQB: EFSH) is a publicly traded partnership that combines the most attractive attributes of owning private, lower-middle market businesses with the liquidity and transparency of a publicly traded company. 1847 Holdings seeks to generate returns for shareholders in the future through consistent, annual distributions of operating subsidiary income and capital appreciation resulting from the timely sale of operating subsidiaries.
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