Wyant Corporation

views updated

Wyant Corporation

100 Readington Road
Somerville, New Jersey 08876
U.S.A.
(908) 707-1800
(877) 326-1650
Fax: (908) 707-1526
Web site: http://www.wyantcorp.com

Public Company
Incorporated: 1971 as Hosposable Products, Inc.
Employees: 500
Sales: $67.12 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: WYNT
NAIC: 322291 Sanitary Paper Product Manufacturing; 325612 Polish & Other Sanitation Good Manufacturing

Wyant Corporation, a New York corporation based in New Jersey, manufactures and distributes disposable wipers and sanitary paper products and systems through IFC Disposables, Inc., a U.S. subsidiary, and manufactures and distributes sanitation products and systems, including janitorial chemicals, to commercial and institutional markets in Canada through Wood Wyant Inc., a Canadian subsidiary.

Hosposable Products: 1971–90

The company was founded and incorporated in 1971 as Hosposable Products, Inc., with Leonard Schramm as president and chief executive officer and Sidney Schramm, his father, as chairman of the board. Each of them owned 23.6 percent of the stock. Hosposable produced disposable incontinence pads and adult diapers for use by hospitals, nursing homes, and other institutions providing services to the sick and elderly. Its (leased) office and plant were in Jersey City. During 1972, the company’s first full year, about 83 percent of its net sales of $726,943 were made to government agencies, especially federal agencies. Hosposable added the production of infants’ disposable diapers for sale to an agency of the U.S. Department of Defense in 1973 and, later, also aimed the product at the civilian market, but this business segment never became a significant source of revenue and was eventually dropped.

In 1975 Hosposable Products, through Bridgewater Manufacturing Corp., a new subsidiary, purchased the machinery, equipment, and inventory of Blessings Products, Inc. of Bound Brook, New Jersey, for about $500,000. This acquisition enabled Hosposable to substantially expand its production of underpads and to broaden its product line to include disposable washcloths and draw cloths for sale to the same class of institutions. The company’s net sales rose to $7.8 million in 1977, but net earnings were extremely slender in this period, with a peak of $185,209 in 1976. By 1977 government agencies accounted for only about one-quarter of Hosposable’s business, in part because the company found that such contracts were not proving lucrative. By contrast, Hosposable was now making a significant proportion of its sales to American Hospital Supply Co., a national distributor of equipment and supplies to hospitals.

By 1984, when Hosposable Products became a public company, it was no longer sited in Jersey City. Its products were being manufactured at leased plants in Bound Brook, which also served as corporate headquarters, and in Fresno, California. The company’s disposable underpads, draw sheets, and diapers continued to consist of multiple layers of absorbent paper wadding or fluffed cellulose sandwiched between a top sheet of nonwoven fabric—rayon at the time—and a bottom layer of polyethylene sheeting, all bonded together with an adhesive. The fabric layer had the soft, supple characteristics of bed linen and was permeable. The polyethylene sheeting provided a barrier against penetration by liquids and other discharges not absorbed by the wadding.

These products were being sold mainly to large distributors for eventual use, under private labels, primarily by hospitals, nursing homes, other healthcare institutions, and government agencies. About nine percent of the company’s sales in 1984 were being made to retail chains selling to individual consumers, generally under their own private labels. American Hospital Supply accounted for 52 percent of the company’s sales in 1984, but its share declined markedly in subsequent years.

Hosposable Products’ net sales in 1982 came to $11.9 million (a figure not topped until 1987), but its net earnings amounted only to $38,000. In February 1984 the company made its initial public offering, receiving about $1.4 million in net proceeds by the sale of 400,000 shares of common stock at $5 a share. Sidney and Leonard Schramm each retained 11.7 percent of the shares. Some of the proceeds of the sale were used to retire about $530,000 in bank debt. Some of it also went for the purchase, for about $2.6 million, of an air-laid plant and machine installed at Bound Brook in 1986. A $2.3 million bond issued by the New Jersey Economic Development Authority also made this purchase possible.

Using this air-forming plant, Hosposable Products began making nonwoven fabrics for various industry uses in January 1987. Production reached about 2.3 million pounds in 1988 and was being sold to converters producing a wide range of consumer and industrial products, mostly for dusting, wiping, and cleaning. By 1989 some of this raw material was being used by the company itself. This new venture was not immediately profitable, however. After earning $570,000 in 1986 the company lost $294,000 the following year, primarily because of the start-up costs of the new machinery and high costs of purchased raw materials. Hosposable Products, on sales of $14.3 million, lost $464,000 in 1988, an outcome it blamed on the escalating price of purchasing raw materials. The company was profitable again in 1989. In 1990 its net income passed $1 million for the first time, on sales of almost $19 million.

Controlled by Wyant: 1990–99

Wyant & Co. Ltd., a privately owned Canadian sanitation firm, purchased a large block of Hosposable Products stock in 1990 and received an option to purchase twice that amount. Wyant was in existence by 1971, when it had net income of $201,000 Canadian on net sales of $9.1 million. (The Canadian dollar was at virtual parity with the U.S. dollar at the time.) Wyant and Hosposable Products also entered into an agreement whereby Wyant agreed to purchase 72 hours of production per week of Hosposable’s air-laid product for six years and to pay $1.9 million for Hosposable’s product, research, development, sales training, market information support, and advertising suggestions over a six-year period.

Wyant, in early 1991, exercised its option by purchasing the Schramms’s stock and thus raising its share of Hosposable Products to 41 percent. Leonard Schramm remained president of the company, however, until fiscal 1996. Also in early 1991, Hosposable Products purchased IFC Nonwovens, Inc., a Tennessee-based corporation with a manufacturing plant in Jackson, Tennessee, for $4.7 million. This company was producing abroad line of disposable, industrial, and “clean room” wiping products, some of which utilized air-laid nonwoven fabric being supplied by Hosposable. This company became a Hosposable subsidiary, IFC Disposables, Inc. IFC Disposables accounted for 30.5 percent of the parent company’s net sales of $27.1 million in 1991.

In 1993 Hosposable Products described itself as a manufacturer of plastic-resin and paper-based products produced by air-laid processing technology and equipment. These, besides the aforementioned products, included airline inflight service-cart covers. In December 1993 the company received $5.3 million in 20-year bonds from the New Jersey Economic Development Authority to finance both the acquisition of additional air-laid production equipment and the $3.7 million purchase of a warehouse facility in Branchburg, New Jersey. The Branchburg property, which had a Somerville mailing address, replaced the Bound Brook facility and also became Hosposable’s corporate headquarters.

Net sales for Hosposable Products continued to increase annually, reaching $34.5 million in 1994. Net income reached $1.2 million in 1993 and was slightly above $1 million in 1994. Net sales rose in 1995 to $40.5 million, of which private-label sales accounted for 18.6 percent, compared with only 2.5 percent in 1994. The company lost $209,000, after taking a $550,000 writedown of IFC property. Sales reached $42.3 million in 1996, but Hosposable lost more than $1 million after paying $550,000 in fees associated with the impending acquisition of Canadian operations of G.H. Wood + Wyant Inc.

This completed transaction, effected in 1997, brought the newly named Wood Wyant Inc., a Canadian manufacturer and national distributor of a broad range of industrial and institutional sanitation products, under the Hosposable corporate umbrella. In addition to the former Wyant & Co., Wood Wyant consisted of the former G.H. Wood & Co. This privately held Canadian manufacturer, marketer, and distributor of janitorial products and sanitary supplies was the leading supplier of sanitary supplies and equipment in Canada, with annual sales of about $40 million, when it was sold in 1987 to Ecolab Inc. Ecolab sold it to Wyant & Co. in 1993. The combined Wood and Wyant operations adopted, in 1994, a primary focus on washroom and floor care programs within the healthcare, education, industrial, and office channels of distribution, with account managers providing customers with cost-effective solutions to sanitation problems.

Hosposable Products was renamed Wyant Corporation in 1997. Wyant consisted of three segments: IFC, Wood Wyant, and Wyant Health Care Division, the original segment of the Hosposable business. The Health Care Division introduced branded and private-label adult briefs in 1997 to further expand its line of incontinent care products in this growth market. Also in 1997, IFC transferred its manufacturing operations from Jackson, Tennessee, to Brownsville, Tennessee. With the addition of Wood Wyant, net sales of the consolidated company rose to $94.9 million in 1997. There was a net loss of $360,000.

In 1998 Wood Wyant acquired six Canadian businesses. Two of these, H.A. Perigord Co. Ltd. and Professional Sanitation Products Ltd., were distributors of sanitation products purchased for a combined $3.1 million in cash and stock. Four were related businesses, based in British Columbia: Fraser Valley Industrial Chemicals Inc., a manufacturer of janitorial chemicals; Furnel Distributors Ltd.; Midway Furnel Sanitary Supply Ltd.; and Midway Supply Ltd. The latter three were distributors of sanitation products. Wood Wyant paid $2.6 million in cash and stock for these acquisitions. Wyant Corporation’s sales were $67.1 million in 1998.

In early 1999 Wyant agreed to sell the Health Care Division to Paper-Pak Products, Inc. of La Verne, California, for about $15.5 million, including the assumption of $3.5 million in debt. Net sales of this division came to $36.5 million in 1998, and net income, after two unprofitable years, to $1.6 million. Wood Wyant, in May 1999, agreed to purchase certain assets and the operating business of the Atlantic Sanitation Division of Cassidy’s Ltd. Based in Dartmouth, Nova Scotia, this division was a leading provider of sanitation products and services to the commercial and institutional markets in the Canadian provinces of Nova Scotia, New Brunswick, and Prince Edward Island.

Wyant Corporation in 1998

Wood Wyant was manufacturing and distributing a broad range of industrial and institutional sanitation products in Canada in 1998, including paper hand towels, bathroom tissue, related sanitary paper products, janitorial chemicals, waste receptacles, and cleaning equipment and systems. It was the only dedicated national distributor of a full line of sanitary paper products, janitorial chemicals and equipment, and sanitation supplies to institutional markets in Canada. It was servicing some 20,000 customers through a direct sales organization supported by customer service centers located across Canada.

Wood Wyant’s manufacturing operations included the conversion of base paper and the manufacture of janitorial chemicals. Base paper was being converted into paper hand towels and bathroom tissue. Janitorial chemicals were being developed and manufactured from raw materials produced by chemical suppliers, which were then blended in large tanks and packed into shipping containers for sale by Wood Wyant.

Wood Wyant’s major facility was an owned 149,500-square-foot manufacturing and distribution plant in Pickering, a borough of Toronto. It also had smaller leased manufacturing plants in Scarborough (also a borough of Toronto) and Abbotsford, British Columbia. The latter two were chemical plants with total production in 1998 of about 2.9 million liters (49 percent of capacity).

Wood Wyant also had 14 leased distribution facilities/service centers in the provinces of Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, and Quebec. It maintained a policy of nextday delivery of all core stocking products from its major service centers. The principal customers were in the healthcare and education (including schools, universities, and colleges) segment but also included industrial entities and distributors. U.S. customers accounted for less than eight percent of sales. Wood Wyant’s corporate headquarters was in Montreal.

IFC’s manufacturing operations, at leased quarters in Brownsville, Tennessee, included the conversion of various materials into wiping products. Specialized machinery was cutting, folding, or winding various materials into finished products, which were then packaged and placed into shipping containers. These products were being sold to some 683 distributors and brokers located in 44 states by both a direct sales organization and independent brokers. IFC accounted for only 6.5 percent of Wyant’s sales in 1998.

The Wyant Health Care Division, prior to its sale to Paper-Pak in July 1999, was manufacturing products—principally disposable underpads and adult briefs—for protection against incontinence, some of it for sale as private-label brands by major customers. The division’s air-laid fabrics were being used as components of wiping products manufactured by IFC and also were being sold in roll form to converters and manufacturers producing a wide range of healthcare, consumer, and industrial products. Manufacturing facilities were in Branchburg and Fresno. Most division sales (other than intercompany transactions with IFC) were being made to distributors that, in turn, sold its products to institutional users such as hospitals and nursing homes and to industrial users. Other sales were to private labelers selling to retail individual/chain stores. The retail chains usually sold the products under private label.

Wyant Corporation had long-term debt of $3.9 million in 1999. A Wyant family voting trust held 55 percent of the company’s common stock. Wyant & Co. held 37 percent of its preferred stock, which was convertible to common stock on a share-to-share basis. Two Wyant family members were on the seven-person board of directors.