Company Overview

Northwest Hardwoods, Inc. operates the largest and most efficient network of hardwood sawmills in North America together with concentration yards and distribution centers that service global end markets including furniture, cabinetry, flooring, molding, door and window and pallet manufacturers.

Partnership Overview

Acquisition Dynamic / AIP Differentiation

  • Complex carve out from Weyerhaeuser Company (“WY”)
  • Prior advisory role in successful WY transaction
  • AIP relationship with highly qualified CEO candidate with prior WY carve out experience
  • Undermanaged turnaround business opportunity

Investment Rationale

  • Global manufacturing leadership
  • Favorable cycle entry point
  • Favorable industry dynamics, including increased standard of living trends in China
  • Attractive log supply cost dynamics
  • Modern and leading fixed asset base
  • Attractive price and structure

Value Creation Accomplishments

  • Converted mills to profit centers from cost centers
  • Implemented employee profit sharing to transform culture
  • Increased volume and implemented best-in-class manufacturing practices to reduce production costs and increase throughput and yield
  • Developed rigorous analytic approaches to increase profit, and maximize profit per log through improved cutting and grading
  • Strategically bolstered operating footprint and product offering through five distressed acquisitions; acquired assets contributed nearly $14 million of EBITDA in 2013 vs. $2 million at respective add-on dates
  • Invested in high payback capital projects that delivered paybacks of under two years
  • Successfully implemented new export initiatives that grew Asian sales at a 26% CAGR during AIP ownership
  • Increased EBITDA from $8.7 million at acquisition to $67.8 million at exit

Exit

Sold to a financial buyer in July 2014

Company Highlights

Website

www.northwesthardwoods.com

Sector

Wood Products

Headquarters

Tacoma, WA

Acquisition Year

2011

Exit Year

2014

Fund

AIPCF IV

Disclaimer: Please note, the above case study does not represent all of the types of investments AIP, LLC has made or the outcomes it has achieved during its lifetime. Each investor must consider whether private equity investments are suitable for their specific goals. Past performance is not indicative of future results. A comprehensive list of all investments along with Portfolio Company information and investment fund performance is available to qualified prospective investors who may be considering an investment in a fund advised by AIP, LLC.