Imperial Industries, Inc.
Imperial Industries, Inc.
1259 NW 21st Street
Pompano Beach, Florida 33069
Telephone: (954) 917-7665
Fax: (954) 917-2775
Web site: http://www.imperialindustries.com
Sales: $72.3 million (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: IPII
NAIC: 327999 All Other Miscellaneous Nonmetallic Mineral Product Manufacturing
Based in Pompano Beach, Florida, Imperial Industries, Inc. is a NASDAQ-listed company that manufactures and distributes building materials, primarily in Florida and Georgia. Most of Imperial's business is conducted through subsidiaries Premix-Marbletite Manufacturing Co. Inc. and Just-Rite Supply, Inc. Premix is Florida's oldest manufacturer of stucco, plaster, and pool finish products. The company also offers interior products such as WONCOTE, a gypsum-based veneer plaster coating, and the TILE-TITE brand of roofing tile mortar. In addition to a manufacturing facility in Pompano Beach, Premix operates plants in Winter Springs, Florida, and Kennesaw, Georgia.
Just-Rite, which contributes most of Imperial's revenues, is a distributor of Premix products as well as other gypsum, roofing, masonry, millwork, insulation, and related building products manufactured by Germany's Degussa Construction Chemicals. With more than a dozen distribution centers in Florida, Georgia, Alabama, and Mississippi, Just-Rite serves the southeastern United States and the Caribbean. The distribution of Premix products is not limited to Just-Rite, however. They also are sold through a large number of supply companies throughout the Southeast and Caribbean as well as Maryland, Illinois, Nebraska, and North Dakota.
COMPANY FOUNDING IN 1968
The man responsible for the rise of Imperial Industries was Eugene C. Ferri, Jr. A Miami native, Ferri made his mark in the early 1960s as a life insurance salesman for Gulf Life Insurance Co. Leo Brinkley, Jr., a former Gulf Life executive, told Florida Trend that Ferri was a fixture on the firm's "Million-Dollar Roundtable." Ambitious and insightful, he recognized that Gulf Life needed to invest the premiums he and his fellow salesmen brought in, and he began acting as an unofficial broker between companies in the market for a loan and Gulf Life. Ferri soon broke away to launch his own insurance agency as well as to set up a financial consultancy to help Miami-area companies with fundraising and the completion of acquisitions. Two of his clients were Premix, a producer of gypsum and stucco products founded in Miami in the 1950s, and Imperial Industries, a holding company founded in the city in 1968. Imperial became involved in the building materials business with the 1969 acquisition of Allied Electric Supply and the addition of Regal Wood Products Inc., but it did not limit itself to this sector, as reflected by the 1969 acquisition of Pegasus Luggage. In 1971 Imperial moved into the distribution of building materials through the purchase of Adobe Brick and Supply Co.
At the behest of its owners, Ferri bought into Pre-mix in 1967, and a year later became the company's principal shareholder. Imperial remained a client as Ferri took Premix public. Then, in 1971, he engineered a merger with Imperial, which became the holding company for Premix. When the transaction was completed, Ferri emerged as Imperial's largest shareholder. Moreover, he came away with a financial consulting contract that guaranteed a minimum yearly fee of $50,000. For the next four years he did not take a direct hand in the running of Imperial, which began to build up Adobe by forming a chain of Florida retail outlets under the Adobe Home Centers name. In addition, the company became involved in another venture, establishing Empire Plastics, Inc., in 1973.
Pegasus Luggage was spun off in September 1975 and, a month later, the senior officers at Imperial left in a spinoff of Regal Wood Products, forcing Ferri to step into the breach and take a more active role in running Imperial, while continuing to head an insurance agency and serving as a consultant. He assumed control of Imperial at a trying time for the building materials sector, crippled by the worst construction slump the state had seen for many years. Revenues plummeted, and in 1975 the company posted a $1.8 million loss.
In the second half of the 1970s Ferri rebuilt Imperial by snapping up Florida building supply companies that could be bought at reasonable prices and then taking advantage when construction rebounded. Some of the major acquisitions during this period included C&F Electrical Supply Co. in 1977; Solar Systems of Sun Dance, Inc., a year later; and in 1979 Just-Rite Lumber Co., Inc., and Douglas Lumber Co. The Just-Rite acquisition included a subsidiary, New Steel, Inc., a fabricator and distributor of reinforced steel products, which Imperial would shut down two years later. Also in 1979 Imperial acquired Growers Packing Corp., a Florida City-based tomato packer and distributor. Imperial returned to profitability in 1977 and two years later sales peaked at $90 million, resulting in a net profit of $3.8 million.
In the early 1980s construction once again slowed, and the company posted a loss in 1981, but this time the Ferri magic failed to work. He tried to cut costs by in part selling off most of the Just-Rite assets and spinning off Solar Systems. Anticipating that construction activity was due to pick up, he expanded his distribution operations at the start of 1983, funded by a $6.6 million stock offering and the assumption of debt. In November 1983 Imperial also acquired Miami's C&R Building Materials, Inc. During the last months of 1983 Imperial was once again making money and Ferri was touting the company's stock on trips across the country. He succeeded in building up excitement about Imperial, leading Wall Street to project profits for Imperial in the $3 million range for 1984, but his hype would only lead to serious disappointment when the company in fact lost $280,000 for the year, this despite record revenues of $112.6 million, almost half of which were provided by Adobe.
Imperial's situation grew worse in 1985. Ferri tried to control costs by closing down operations, but the company lacked the cash flow needed to pay suppliers, who reacted by cutting off Imperial. The operations of Allied Electric Supply and Adobe were devastated, essentially leaving Premix, and to a lesser extent Growers Packing, as the only whole businesses left. Together they generated less than $10 million a year in sales. Not surprisingly, Ferri's stewardship of Imperial came under close scrutiny. He was accused of alienating his managers along the way, curtailing profit sharing while at the same time increasing his own compensation. The purchase of a twin-engine airplane, a helicopter, and five condominiums also raised eyebrows. Moreover, Imperial's board of directors was stocked with Ferri's relatives and friends.
Adobe trimmed the number of locations from 37 to 16 in 1985 but because it was unable to buy supplies it was forced to discontinue operations in 1986. Then, in July 1986, Allied, also hamstrung by a loss of working capital, filed for Chapter 11 bankruptcy protection. In early 1987 Allied discontinued its operations as well and the company's assets were assigned to creditors. In the meantime, Imperial Industries was forced into Chapter 11 bankruptcy protection in September 1986 by its creditors.
Mission: To become the premier manufacturer and distributor of selected building products and achieve consistent levels of profitability sufficient to increase stockholder value.
FERRI'S DEATH IN 1988
While finding a way to salvage Imperial and his own reputation were extremely important to Ferri, he would soon have another more pressing concern: cancer. Only in his early 50s, he died from cancer in March 1988. Long before his passing, however, Ferri had engineered a deal with creditors on a reorganization of Imperial with a pair of options, agreed to in November 1986. The creditors were allowed to shop Premix to potential buyers but Imperial retained the right of first refusal. Two offers were presented, but both were laced with so many conditions that Imperial refused. Imperial's creditors pursued the second option, which called for Imperial to pay $2.5 million in three installments, but the company, lacking adequate cash flow, had difficulty making a final $1.2 million payment due three months after Ferri's death. It was at this point that Ferri's daughter, Lisa Thompson, formed an alliance with Miami attorney S. Daniel Ponce to rescue Imperial. A combination of two secured loans and investments from two investors raised the cash needed to satisfy the creditors.
Imperial emerged from bankruptcy in July 1988 and Ponce was installed as the chairman. With the June 1988 sale of Growers Packing, Imperial was left with little more than $6 million in assets and two subsidiaries, Premix and Adobe, which was down to a single retail outlet. "Right now, the future is our core company, Premix-Marbletite Manufacturing Co.," Howard Ehlers, an Imperial vice-president, told South Florida Business Journal. Due to its losses, Imperial had some $12 million in carryforwards that could have some value if the company opted to make acquisitions, but Ehlers made it clear that the company was not thinking that far ahead. "We haven't really had the chance to put together a real solid business plan for the future."
Reduced to penny-stock status, Imperial spent the next decade slowly rebuilding. It added another subsidiary, Acrocrete, formed in 1988 to manufacture exterior stucco products that complemented what Pre-mix had to offer. Revenues totaled just $7.1 million by 1992, but the company was profitable, earning $136,000. The company posted losses over the next two years, but grew sales to $11.6 million. An important development for Premix came in 1994 when it secured an exclusive five-year licensing agreement to manufacture and sell a new roof tile mortar product in Florida and foreign countries. In that same year, Acrocrete began selling its products, along with complementary products produced by other companies, directly to end-users from a leased warehouse in Savannah, Georgia. This test program proved so successful that similar operations were opened in Jacksonville, Florida, and Norcross, Georgia, in 1996. More distribution facilities were added in Dallas, Georgia, in 1998, and Gadsden, Alabama, a year later. This last operation was relocated to Rainbow City, Alabama, in 2000.
FORMATION OF JUST-RITE SUPPLY IN 2000
Business continued to pick up for Imperial in the second half of the 1990s. Revenues topped $15 million in 1997 and reached $22.6 million in 1999. Net income during this period peaked in 1998 at $2 million. The next step in Imperial's long comeback came with the January 2000 formation of Just-Rite Supply, Inc., an Acrocrete subsidiary that took over all of the distribution facilities and was established to acquire other building materials distributors. In January 2000 A&R Supply Inc. was acquired, adding distribution facilities in Foley, Alabama, and Pensacola and Destin, Florida. Then, in March 2000, Imperial acquired Panhandle Drywall Supply Inc., which expanded Just-Rite's operations to Panama City Beach and Tallahassee, Florida. Three more distributions were acquired in Hattiesburg, Mississippi, and Gulfport and Pascagoula, Florida, in May 2000. Just-Rite opened a new distribution outlet in Picayune, Mississippi, in October 2000, which led to the closure of the Hattiesburg operation in February 2001.
- The company is incorporated.
- The company merges with Premix-Marbeltit Manufacturing Co.
- Eugene C. Ferri, Jr., becomes chairman.
- Imperial is forced into bankruptcy.
- Ferri dies; the company emerges from bankruptcy.
- Just-Rite Supply, Inc., is formed.
- An alliance is formed with Degussa Construction Chemicals.
Imperial's revenues topped $40 million in 2000, accompanied by net income of $534,000. A stalled economy hurt business over the next two years, as sales dipped to $36.5 million in 2002 and the company lost money in both 2001 and 2002. The company regained its momentum in 2004 when sales improved to $41 million and Imperial returned to profitability, netting $640,000. In 2004 revenues jumped to $55.3 million and net income grew fourfold to nearly $2.5 million. By this time, it was Just-Rite leading the way, accounting for nearly 60 percent of Imperial's revenues. At one time producing most of the sales, Acrocrete accounted for just 18 percent of sales. Premix, on the other hand, contributed 24 percent of sales, but was Imperial's most profitable operation.
In May 2005 Imperial graduated from over-the-counter status when it gained a listing on the NASDAQ, in that same month reporting its eighth consecutive profitable quarter. The company's prospects would brighten even further in July 2005 when it forged a deal with Germany's Degussa Construction Chemicals. Acrocrete was sold to Degussa Wall Systems for $1.1 million, and in turn Just-Rite was able to distribute Degussa's concrete and stucco-related products. As a result of this alliance, as well as increased construction caused by heavy hurricane damage in Florida, Imperial saw its revenues surge to $72.3 million and net income improve to $3.4 million in 2005. Ponce described Imperial's achievement to Investor's Business Daily, as a "17-year overnight success story." It was very likely that even greater success was to follow as record results continued in 2006.
Premix-Marbletite Manufacturing Co., Inc.; Just-Rite Supply, Inc.
CRH PLC; Holcim Ltd.; Lafarge North America Inc.
Aquino, Jorge, "Imperial Emerges from Chapter 11," South Florida Business Journal, July 18, 1988, p. 3.
Elliott, Alan R., "Stormy Weather Equals High Demand for Building Supplies Firm," Investor's Business Daily, August 11, 2005, p. A07.
"Imperial Industries' Creditors Force Firm into Chapter 11," Wall Street Journal, October 3, 1986, p. 1.
Koenig, John, "Did the King of Imperial Industries Topple His Own Empire?," Florida Trend, July 1, 1986, p. 46.
Dinger, Ed. "Imperial Industries, Inc." International Directory of Company Histories. 2007. Encyclopedia.com. (September 27, 2016). http://www.encyclopedia.com/doc/1G2-3483900052.html
Dinger, Ed. "Imperial Industries, Inc." International Directory of Company Histories. 2007. Retrieved September 27, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3483900052.html