Case Studies | Hudson Products

Background
Hudson had seen steady and improving financial performance in recent years prior to Sterling’s acquisition, but was not near reaching its full potential. The company had not been encouraged to leverage its name recognition and manufacturing capabilities to expand into some of the rapidly growing international markets. Also, capital expenditure and acquisition limitations had further inhibited the Hudson from lowering its manufacturing cost base to improve margins.

Sterling Impact
Sterling established an incentive based partnership with Hudson management, and worked jointly with management to develop the company’s strategic direction to expand into key domestic and international markets, while lowering manufacturing costs globally. This strategic direction was the backbone for a series of initiatives that were developed, implemented, and closely monitored for success. Those initiatives totaled over 20 and included:

1. Intense lean manufacturing implementation at the company’s facilities in Texas and Italy, resulting in lower cost and improved margins.
2. Improved business model and cost dynamics to serve the Canadian Oil Sands in Western Canada, which resulted in a highly strategic acquisition in Edmonton, Alberta.
3. Establishment of a new manufacturing facility in China to more cost effectively serve the domestic and export markets, which yielded increased market share and better profit margin.
4. Expanding into the production of ACHE’s for pipelines and gas compression through a strategic acquisition in Tulsa completed at 3.0x EBITDA.
5. Signing of a joint venture in Saudi Arabia to serve the highly attractive Middle East energy markets.

Outcome
As a direct result of the success of these initiatives, Hudson experience great improvement in its financial results. Revenue grew dramatically, gross margins expanded, and EBITDA more than doubled in less than two years. After only 20 months, Hudson was sold to Riverstone Holdings.

EBITDA increase	151%
Add-on acquisitions completed	2
Ownership period	20 months
Sterling return on investment	6.2x

Overview