Case Study: C.H.I. Overhead Doors
KKR's sale of C.H.I. Overhead doors, a leader in the garage door industry, to Nucor Corporation, provides an excellent example of shared ownership at work. All 800 employees at C.H.I. received a payout on equity, averaging $175,000 through the ownership program, in addition to approximately $9,000 in dividends since 2015. By applying a comprehensive employee ownership program, the company has delivered incredible value for investors, workers, families, and the community of Arthur, Illinois.
Since 2015, KKR oversaw a dramatic operational transformation of the business, including making all 800 employees – from those who work in the factory or drive trucks to those in senior management – owners of the business. Ownership was granted as a free, incremental benefit for anyone earning less than $100,000 and was not in exchange for benefits, wages, or wage increases (wages increased 12.5% in 2021 and 7% in 2020).
On an organic basis, EBITDA increased almost 4-fold. C.H.I.’s EBITDA margin steadily improved over a seven-year period, ultimately increasing by more than 1,400 basis points from 21% to well over 30%. Revenue grew by nearly 120% organically, enabled by investments in the existing manufacturing facility in Illinois and the construction of a second plant in Indiana. Operating improvements covered nearly all aspects of the business ranging from procurement and scrap reduction to labor productivity and net working capital optimization.
There was also an emphasis on employee engagement as a key driver of commercial success. In addition to making everyone an owner, KKR and C.H.I. invested in the workforce by giving them a voice on ways to improve working conditions. These investments were directed by employees in the factory and included air conditioning the manufacturing plant, new break rooms, a new cafeteria with healthier food options, and an on-site health clinic. Safety also improved substantially. Both the rate and severity of injuries declined by more than 50% since 2015.
"C.H.I. is a powerful testament that creating a culture of ownership works. We have seen first-hand the impact that the ownership mindset can have on individual owners and the business. When you invest in employees, positive results will follow."Pete Stavros, Founder and Chairman, Ownership Works; Co-Head of US Private Equity, KKR
All employees were provided with functional training and personal financial coaching programs including 12 months of pre-paid personal financial coaching and tax preparation services through Ownership Works founding partners Goldman Sachs and EY.
C.H.I. provides a powerful example of what the coalescence of an equity program, committed and passionate leadership, high levels of employee engagement, and opportunities for financial inclusion can create for both employees and companies alike.
In April 2022, KKR joined more than 60 organizations in becoming a founding partner of Ownership Works, and recently announced efforts to apply shared ownership programs across its portfolio.