The good ship America’s PowerSports (APS) is looking for a new captain and several crew members, but the ship is holding course and continues to be one of the top powersports dealer groups in North America.
APS, based in Tennessee, owns 17 dealerships in eight states from Massachusetts to California, generates annual revenues of more than $200 million and has posted annual profits for six consecutive years, say company officials. The privately held operation is the second largest dealer group in North America.
Clark Vitulli, founder and CEO since the company was launched in 1999, suddenly left the company last month, along with long-time associate Deborah Chaboudy, who handled human resources, and their two executive assistants.
Stepping in to replace Vitulli are Dennis Brookshester, serving as chairman and temporary CEO, and Jerry Gilding, president and COO. Brookshester is a director and an advisor to Wind Point Partners, the Chicago private equity firm that helped launch APS and is its largest investor. Brookshester is a retired retailing executive with an impressive resume.
But Brookshester doesn’t intend to run the company, and a search is under way for a big time CEO, one who has experience in managing retail operations upwards of $600 million.
“There’s no rush,” Gilding told Powersports Business recently. “We’re not going to make a snap decision. The company is running smooth and making its numbers.”
Gilding didn’t rule out the possibility that APS could wind up with three top executives: A president, CEO and COO. “It’s most important that this company has someone with hands-on experience,” he says.
Gilding has been associated with APS since the company purchased San Diego House of Motorcycles in which he was a part owner. He has been running the three San Diego-area APS stores for several years.
What happened and why?
When a major national company suddenly parts ways with its founder and top executive, the question obviously comes up: Is this a chemistry problem between the board and the executive? Or is the company performing so poorly that a major change has to be made?
They’re reasonable questions. In this case, it seems to be more a chemistry problem.
APS seems to be chugging along, following its business plan of acquiring successful dealers across the country and providing an exit opportunity for the dealer principal.
Since being launched in 1999 by Vitulli and several venture capital firms led by Wind Point, APS has acquired 17 dealerships and has eight more in various stages of acquisition. Wind Point is no small operator: it has invested in more than 80 companies since 1984 and reports managing $1.8 billion for pension funds, endowments and individuals.
APS’s detailed financial picture isn’t available for the closely held company, but it reports 2005 sales of more than $200 million, with same store sales up 11 percent from the previous year. The company also says it has been profitable for six consecutive years.
While one published report suggested that APS was short of its goal of acquiring more than 30 stores, insiders that we spoke with at APS said that’s not true. “That’s not accurate,” says Nathan Brown, managing partner of Wind Point Partners and an APS director. “We’re well ahead of plan through March.”
Vitulli said the same thing when we spoke with him recently. “I wouldn’t classify the business model at risk at all, relative to consolidation in this industry,” he said. “Our successes have been proven.”
Gilding’s comments were interesting, focusing on APS’s role as one of the leaders in the consolidation movement among powersports dealers.
“We would have liked to grow faster than the company did,” he says, “but this is a new animal for the motorcycle industry. It’s not something that the OEMs were used to; there was a big learning curve for the OEMs.”
OEMs, he says, were used to dealing with small, independent family owned dealerships. “They really weren’t comfortable with this,” says Gilding, “even though the car industry went through it. It just wasn’t something they saw every day — a company that runs a lot of stores. APS and others really pioneered this concept.”
Gilding concludes by saying, “I wish it had grown faster than it did, but there was an educational process. And our goal never was to add a certain number of dealers every year. We were looking for the right dealers with the right demographics in the right markets.”
Vitulli seems philosophical about the change. “The investors and I agreed to disagree,” he says. “Things like that happen. After 29 quarterly board meetings, issues come up that cause management and investors to disagree.”
That seems reasonable.
“There’s no bad blood between us. It’s a good company, and I’m proud to have founded it,” says Vitulli.
And Gilding says, “Clark is good people.”
Adds Vitulli: “There are a lot of paths that a company like this can take that can cause disagreement. Do you go national or regional? Big vs. little dealerships? Successful dealerships or unsuccessful ones? Keep management or not? Which brands to carry? Hub and spoke dealer organization?”
Vitulli said he’s looking at several options, inside powersports and other industries, as well.
“I look at this as another chapter in my book,” he says. “I was successful in other industries and I expect to be successful in the next chapter.” psb
Joe Delmont is editor-at-large for Powersports Business magazine.
Copyright 2006 Powersports Business