The turnaround strategy engineered by Bell and Howell, the No. 1 producer of high-speed mail-sorting equipment, is paying off.
Efforts to cut costs and boost efficiency have enabled the privately held company to generate five consecutive quarters of positive EBITDA – that is, earnings before interest, taxes, depreciation and amortization, a key performance indicator – a first under the company’s current ownership.
Next up for the business, which has 250 employees at its Durham headquarters and 1,000 company-wide, is growing revenue – which will be flat this year, as opposed to last year, when revenue dipped a little.
“2015 has really been about completing that turnaround we started in 2014,” said CEO Ramesh Ratan, who joined the company at the beginning of last year. “2016 and ahead is really about growing the company.”
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With demand for the mail-sorting and inserting equipment that Bell and Howell sells to big corporations and direct-mail companies gradually shrinking, the company has been adapting its technology for new package-handling machines so it can tap into the fast-growing e-commerce market.
At the same time, the company is expanding its equipment maintenance services business, which accounts for more than half of its revenue. In addition to selling maintenance contracts along with its own equipment, Bell and Howell also provides services for machinery made by others, which is the fastest-growing piece of its services business.
Many of the company’s service workers are embedded at customers’ sites, but a key component of that business is the ability to remotely monitor the equipment in Durham.
“More and more, a services business is really about technology,” said Ratan, who expects that business to be the company’s primary growth engine over the next two to three years.
The company also is stepping up its marketing efforts.
“We absolutely are investing in sales and marketing in a way we haven’t before,” said Mark Durrett, who was named vice president of marketing in November. “That was one of the things that was exciting to me about joining the company.”
Private equity firm Versa Capital Management acquired the business, which at the time was called Bowe Bell and Howell, in 2011 after its German-based corporate parent became insolvent. Versa subsequently moved the company’s headquarters from Wheeling, Ill., to Durham.
“We are excited about Bell and Howell’s future,” Kamal Advani, managing director at Versa, said in a statement. He lauded the company’s leadership in sorting equipment and “linerless” labels – labels with no peel-away backing – and its innovative packaging equipment.
“The company is now servicing more brands of equipment than anyone else in the industry,” said Advani, who served as Bell and Howell’s interim CEO in 2013.
When Bell and Howell was acquired four years ago, the company had about 1,600 employees. Since then it has shed about 600 of those workers through a combination of layoffs – the most recent of which was two years ago – plus attrition and the spin-off of its 75-employee BCC Software unit.
In October Bell and Howell secured a $25 million revolving credit facility from Bank of America.
“It’s a vote of confidence from one of the largest banks in the world that we are a healthy company worthy of credit,” Ratan said. “That was a huge positive statement for us.”