Service Centers

Kenwood Painted Metals & Flack Global Metals Merge

Written by John Packard

On Monday, Flack Global Metals announced the merger of Kenwood Painted Metals with Flack Global Metals. With the addition of KPM, Flack Global Metals is projecting sales for 2017 to be close to $400 million.

Steel Market Update spoke with Flack Global Metals CEO, Jeremy Flack about their company’s drive to grow as a “Next Generation” or non-traditional service center and reach the $1 billion revenue target he has set for the company. Flack does not meet the traditional “brick & mortar” standard for steel service centers.

SMU Question: Are you looking to grow your footprint further in North America and beyond?

Jeremy Flack: Yes.  For the next 24 months, we will concentrate on the many organic growth opportunities we have as well as on the integration of the operations of Flack and KPM.  Over the next 2-5 years we will be looking for select mergers/acquisitions to continue to support the growth of the platform. The idea is to get to $1 billion in revenue by year seven.  It is one thing to have a great little model, differentiated from competition, but to truly impact the marketplace with our concept, we must have scale.  

SMU Question: Do you think other companies concentrate on their percentage of ownership more than what it is going to take to compete in the future?

Jeremy Flack: Yes – great point.  And, many of our competitors are family businesses more interested in estate planning than growth.   We are looking for opportunities where the principals want to stay involved, not cash out, but roll into something larger than themselves.  I have accepted long ago that I will not own 100% of Flack Global Metals, but I would rather own less of something durable, independent, and truly successful than more of an organization which is the opposite.  

SMU Question: Your company has purchased/merged with a number of different companies where the unique thread may be flat rolled specific but otherwise independent of one another. Do you think it is important for the new service center industry to be less focused on one or two end use markets and to expand its view of the industry?

Jeremy Flack: I think it is important that as distribution we find the highest and best way to add value to our customers’ businesses.  The next frontier for Service Centers is to figure out how to help their customers grow their market, not simply make push forward sales.  That is what we do at Flack Global Metals and is primarily why we have had so much traction since inception in 2010.  

In an industry where tonnage talks Flack Global Metals purchases about 32,000 tons of flat rolled steel products per month.

The following is the original press release provided to SMU by Flack Global Metals:

Chicago — Jeremy K. Flack, CEO of Flack Global Metals, and Greg Underwood, President of Kenwood Painted Metals, have announced the merger of their companies, effective April 1, 2017. Mr. Flack will retain his position as CEO of Flack Global Metals, and Mr. Underwood will join the company as executive vice president. Flack has realized considerable recent gains that are reflected in its 34 percent year-on-year revenue growth and 30 percent gross profit increase in 2016. The merger will help Flack sustain its growth trajectory moving forward.

“As Greg and I considered this opportunity, it became evident that Kenwood’s painted materials experience, strong brand recognition, and wide customer base in concert with our revolutionary approach has the potential to create a compelling presence in the metals industry,” stated Mr. Flack. Ben Bucci, Flack Global Metals president, said, “This merger represents two strong companies coming together to further our capabilities for execution at even higher levels. With combined capital and scale, our companies create a compelling offering that is galvanizing the iconic US steel and metals industry. We believe this is exactly what customers and vendors expect from The Next Generation Service Center.”

Kenwood will expand and enhance Flack’s network of North American processing partners and global network of resources. “The merger is a great opportunity for us to expand our product offering,” said Mr. Underwood. “Kenwood adds extensive coil coating expertise to Flack’s impressive processing capabilities. Flack’s pivotal convergence of its metals market expertise and international networks allow us to capture new opportunities and service clients from purchase through delivery.”

Flack and Kenwood share an asset-light business model, forgoing physical assets in favor of developing the flexibility and geographic reach to deliver customized solutions. Both companies work primarily with OEMs in transportation, automotive, HVAC, construction, doors and lighting.

Founded in 2010, Flack designs and fulfills supply chains for OEMs using flat rolled steel, aluminum and stainless. Each metal is prepared to all value levels including coating, embossing, blanking, slitting, and sheeting. The company’s market experts help customers make informed purchasing decisions and mitigate risk through long- and short-term pricing solutions that support budgets and provide increased efficiencies with greater returns. Logistics teams develop strategic programs that optimize customers’ supply chains to mitigate volatility and uneven inventories.

Kenwood has been a leader in painted metals for over 30 years. The knowledge and technical expertise behind its success augments the integrity, durability, and functionality of the original material. Also joining Flack’s leadership team will be Kenwood’s Aaron Underwood, as vice president of construction products, Rick Sutkus, as chief operating officer, and Jeremiah Porter as vice president of business intelligence. Headquartered in Cleveland, Ohio, Flack will add Kenwood’s suburban Chicago, Illinois and Atlanta, Georgia offices to its existing locations in Chicago, Scottsdale, Arizona and Columbia, South Carolina.

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