Global Fastener News

1999 FIN – Gilchrist: Questron Acquisition Provides Opportunity for Growth

July 01
00:00 2015

May 22, 1999 FIN – Questron Technology Inc. announced an agreement to acquire Capital Fasteners Inc. of High Point, NC.
Capital president Robbie Gilchrist will become regional vice president for the parent corporation’s principal operating subsidiary, Questron Distribution Logistics.
Gilchrist, who founded Capital in 1985 with funds from refinancing his house, borrowing from friends and a SBA loan, said the sale provides Capital “with an opportunity to grow.”
Gilchrist started in the fastener business with Automotive Fasteners in Greensboro, NC, after graduating from high school in 1972. The planned summer job lasted 13 years until he opened his own distributorship.
Questron is “a good partner with all the tools in place moving forward gradually instead of a giant leap,” Gilchrist explained. “That is best in the long range.”
Being part of a publicly held company will “propel us into the future.”
“I had to get involved with somebody that has more clout to get where we want to go,” Gilchrist said in noting small private firms can have a more difficult time arranging financing for expansion.
Capital has 65 employees and has grown into “a full-line house focused on inventory management for OEMs,” Gilchrist said. Fasteners bring in 80% of Capital’s revenues, with other items including cutting and hand tools and aerosol paints.
A desire to grow his business was a major factor in selling his business. He decided to sell after “a lot of sleepless nights of thought,” Gilchrist added
Questron CEO Dominic Polimeni said Capital “is an important, strategic move for us, establishing a significant presence in the Mid-Atlantic states. With the recently announced pending acquisition of Olympic Fasteners in Cleveland and the recently completed acquisition of AFCOM in Orlando, the Capital acquisition further broadens our presence on the East Coast and is another step in the expansion of Questron’s inventory logistics management business that will allow us to service OEMs nationally.”
Questron reported first quarter 1999 sales totalling $19,304,485, nearly doubling the opening quarter of 1998. Operating income was $2.4 million, compared with $1.5 million in the same period.
Questron’s 85.6% sales increase was attributed to acquisitions of Fas-Tronics, Fortune and AFCOM in the second half of 1998, plus a 19.8% increase in internal growth.
Questron is expanding facilities and staff in San Diego, San Jose and Grand Rapids “to support the expected increase in our inventory management business with both new and existing customers,” Polimeni said.
Capital, which had revenues of $9.5 million in 1998, has branches in Chesapeake, VA, and Jacksonville, FL.
Gilchrist told FIN he had been approached by “a number of the players in the past 14 to 18 months” and he decided the time was right to sell. “I threw my hat in the ring to see what the market would bear.”
Questron purchased Capital for $10,650,000, consisting of $8 million in cash, $2 million in notes and the balance in shares of Questron common stock. Additional purchase considerations of up to $1.5 million may be paid based on future operating result.
Boca Raton, FL-based Questron (Nasdaq symbol Qust) provides inventory logistics management and is a master distributor of fasteners, lithium batteries and other “C’ inventory.
The Capital acquisition is expected to be completed in June and is subject to financing and other customary closing conditions.
Gilchrist said his employees are excited about the change. “They see good opportunities at a number of locations,” he explained.
Gilchrist said he found such fastener executives as Dermott Rogers of AFCOM and Doug Zadow of California Fasteners “have built some great companies.” Such distributors join Questron by “checking your ego at the door and becoming a team player to do what we can to build Questron.” ©1999/2015 Fastener Industry News.
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