Mr. Roberts has been our Chairman, Chief Executive Officer and President since our inception on January 22, 2013. Mr. Roberts brings over 20 years of private equity investing experience to us. In July 2011, Mr. Roberts formed the 1847 Companies LLC, a company that is no longer active, where he began investing his own personal capital and capital of high net worth individuals in select transactions. Prior to forming the 1847 Companies LLC, Mr. Roberts was the co-founder and was co-managing principal from October 2009 to June 2011 of RW Capital Partners LLC, the recipient of a "Green Light" letter from the U.S. Small Business Administration permitting RW Capital Partners LLC to raise capital in pursuit of the Small Business Investment Company license with the preliminary support of the Small Business Administration. Mr. Roberts was a founding member of Parallel Investment Partners, LP (formerly SKM Growth Investors, LP), a Dallas-based private equity fund focused on re-capitalizations, buyouts and growth capital investments in lower middle market companies throughout the United States. Previously, Mr. Roberts served as Principal with Lazard Group LLC (LAZ), a Senior Financial Analyst at Colony Capital, Inc., and a Financial Analyst with the Corporate Finance Division of Smith Barney Inc. (now known as Morgan Stanley Smith Barney LLC). Mr. Roberts has also served as the chairman of the board of 1847 Goedeker (GOED) since April 2019 and has also been a director of Western Capital Resources, Inc. (WCRS) since May 2010. Mr.
Roberts received his B.A. degree in English from Stanford University.
FULL INTERVIEW:
Thank you for taking the time to answer my questions about 1847 Holdings LLC. For our readers who may be unfamiliar, will you briefly describe the Company and its focus?
1847 Holdings LLC is operating company focused on acquiring lower middle market businesses headquartered in the United States at reasonable prices wherein we believe we can make changes to those businesses to accelerate growth thereby increasing operating cash flow to provide current distributions to our shareholders in the short term or special distributions due to a liquidity event represented by the sale of one of our operating subsidiaries over a longer time horizon.
Will you go into more detail about the Company’s recent acquisition of ICU Eyewear Holdings, Inc.? How does this milestone align with the Company’s overall growth strategy?
Our acquisition of ICU Eyewear represents an exciting opportunity to expand our exposure in the consumer products segment end leverage an existing operating subsidiary, Wolo Automotive Parts, and a number of relationships our management team has with other retailers and consumer product companies and impactful advisors. The ICU acquisition fits within our overall growth strategy of acquiring lower middle market businesses at reasonable prices with an opportunity for near term and long-term growth. We believe that ICU may also be a platform that can grow through the acquisition of other eyewear related small businesses.
With the Company’s engagement of Griffin Archer, EFSH aims to execute marketing campaigns for its operating subsidiaries. How do you anticipate these campaigns will enhance brand awareness, drive value, and increase revenue growth?
The engagement with Griffin Archer is one about which we are quite excited. Rarely do businesses the size of our operating subsidiaries have access to the depth of experience brought to their marketing development and campaign implementation by a firm such as Griffin Archer. We are not sure the magnitude of the impact a firm such as Griffin Archer may have but we believe it can be material over the long-term horizon. Marketing in general, and brand building, more specifically, is much more of an art than a science but when you realize the clients with whom Griffin Archer has worked, forging a relationship with them at this stage of our maturation can only be a positive.
What challenges is EFSH facing, if any, and how is the Company addressing these challenges?
Our biggest challenge at the moment is managing our acquisition pipeline to ensure we remain patient in light of the changing economic landscape. Given that we are experiencing near triple digit growth within our existing stable of operating subsidiaries, and the economic uncertainty confronting the financial markets, we feel fortunate that we don’t have to chase growth but want to be ready to pounce on any attractive opportunity we find.
In terms of the Company's long-term strategy and vision, what are EFSH’s goals as you look forward?
Our long-term goals are to reach a level of operating cashflow that allows us to self-fund acquisitions without the need to raise additional capital through future equity offerings. The point at which we can build a war chest of balance sheet cash or use our stock as acquisition currency on an accretive basis is the point at which we believe we will see significant compounding annual returns.
Are there any upcoming and exciting milestones our readers can look forward to?
Yes, as we mentioned on January 11 of this year, we engaged an investment bank to assist us in evaluating strategic alternatives of 1847 Cabinets Inc. Given the growth we are experiencing, specifically in that operating subsidiary, we believe there are a number of options we may have in the near future to capitalize on the hard work our managers and employees have done over the last two years. Additionally, we believe that ICU may be an even better opportunity than we originally thought. Stay tuned on that front.
What is your perspective on the total addressable market for EFSH now and in the future?
With the advent of trillion dollar enterprises, the graying of America which will require more changes in ownership than ever, and the entrepreneurial spirit in this country being more robust within the last decade than perhaps at any time in recent memory, we believe the market is expanding at a rate that will allow us to pick and choose selectively in a relatively uncompetitive market because the supply of investable opportunities will far outpace supply of sophisticated buyers.
EFSH’s Q1 2023 financial results showed a significant increase in revenue by 27.6% compared to the same period last year. Will you elaborate on the driving force behind this growth and the Company’s projected growth in 2023 and beyond?
The force behind the growth that we're experiencing in 2023 is the result of investments we've made in 2021 and 2022. Our growth this year is consistent with a phenomenon often seen within portfolio companies of private equity firms. This phenomenon is called the J curve effect. The investments we have made in people, processes, and systems are now starting to bear fruit. We envision future dividends of growth going forward which will be consistent with our operating strategy of buying stable lower middle market businesses injecting thoughtful effort and energy to drive higher levels of growth.