Leadership drives American Standard Brands’ philosophy

Saving a major plumbing manufacturer from financial trouble is one daunting task. To take it on during one of the worst economic times in recent history takes something short of a miracle.

American Standard entered the housing downturn with weak financial results and facing an ownership change, but perhaps it was good timing for the company. A new leadership direction was needed and Don Devine, president and CEO of American Standard Brands, loved challenges. Armed with his experience from U.S. Industries, the predecessor company to Jacuzzi Brands, Devine was “all in” when he started in 2006.

Changes happened quickly. American Standard Companies, the parent company, announced a break-up in early 2007, which resulted in the Global Bath and Kitchen business being purchased by Bain Capital in July 2007. In December 2007, the Americas operations of the American Standard ’s Global Bath and Kitchen plumbing business in the U.S., Canada and Mexico was purchased by Sun Capital, leading to a triple merger with Eljer and Crane Plumbing, both portfolio companies of Sun Capital.

By early 2009, American Standard reported that the merger integration had been successfully completed, creating a building products-focused project solutions company called American Standard Brands. At year-end 2010, the now profitable company had expanded its stable of building products, under well-respected brands such as American Standard, JADO, Porcher, Safety Tubs, Crane, Eljer, Fiat and Decorative Panels International. American Standard Brands now employs more than 5,000 people in the United States, Canada and Mexico. “We are unique in our ability to provide total residential and commercial project solutions, competing in markets from economy to luxury, with coordinated and innovative designs across multiple product categories and price points,” Devine said.

The company has achieved a leading position in the water efficient plumbing products market. Under Devine’s leadership, the company has invested substantial resources to educate the public on the benefits of water efficiency without sacrifice. “Our current partnership with The Nature Conservancy helps educate consumers about fresh water conservation, while our company’s Responsible Bathroom tour reaches plumbers, wholesalers, utilities and other stakeholders with products and demonstrations to help homes and businesses save water,” Devine said.

On World Water Day 2011, American Standard announced an exclusive sponsorship with the Green Education Foundation (GEF), a non-profit organization committed to creating a sustainable future through education. GEF provides curriculum and resources to K-12 students and teachers worldwide with the goal of challenging youth to think holistically and critically about global environmental concerns and solutions.

On the trade side, the company also supports educational efforts. “American Standard was a founding member of GreenPlumbers USA, supporting programs that provide contractors with the training and education to differentiate themselves in a meaningful way in this competitive marketplace,” Devine said. GreenPlumbers USA is a national training and accreditation program assisting plumbers in creating sustainable communities, and providing consumers with water conservation information.

In January 2011, American Standard Brands completed a successful refinancing through a high yield debt offering of $187.5 million in aggregate principal amount concurrent with a new $60 million asset-based lending facility. “The refinancing dramatically increases our operating and financial flexibility. We are investing heavily in product innovation, the Internet, social media and in our supply chain. The company is well positioned for organic growth, as well as growth through complementary and synergistic acquisitions,” Devine said.

Phc News recently sat down with Don Devine and discussed the company, the industry and the economy.

Tell us about your initial challenges upon assuming leadership of the American Standard business in North America.

Devine: My first challenge was to put the company on the right track as quickly as possible, while also preparing the company for sale. It was imperative to formulate a plan that returned the company to profitability, while making American Standard a more reliable partner for both consumers and the trade.

Once the sale process was announced, the American Standard Global Bath and Kitchen Business attracted a great deal of attention, which resulted in ongoing management presentations to various interested parties. The goal was to keep the sale process from disrupting our turnaround plan, which was focused on improving the company’s products, cost structure and business systems.

What we didn’t realize at the time, was that the sale process would result in the America’s plumbing business being purchased twice. The first was the sale of the global bath and kitchen plumbing business to Bain Capital. The second was a sale of the America’s to Sun Capital in December 2007, leading to a triple merger with Eljer and Crane Plumbing, both portfolio companies of Sun Capital. As we brought the three companies together we renamed the company American Standard Brands.

How did you get involved in the industry & company?

Devine: I joined U.S. Industries, the predecessor company to Jacuzzi Brands, in 2002 when the company was truly in trouble, including having a “going concern” opinion from its auditors, meaning liquidation was more likely than survival. We developed a plan that enabled us to raise over $600 million dollars to refinance our debt, fund our operations and helped the company to survive. Along the way, we renamed the company Jacuzzi Brands, which included Jacuzzi, Sundance Spas, Zurn and Eljer Industries. I have always been attracted to challenging situations, and U.S. Industries and Jacuzzi Brands fit that bill. When I joined American Standard in 2006, it was also a challenging situation in that the America’s was an underperforming business and the parent company was about to be broken up.

What are some attributes that you have that you have instilled into the company?

Devine: Impatience and urgency to get after things that are important to our customers and consumers, and that drive our profitability. Being highly organized, which has enabled us to execute a great deal of change on time, and on budget, in a difficult market.

The economy is weighing heavily on people’s minds these days, what do you project for the foreseeable future? Particularly in this kitchen and bath market, do you see a turnaround imminent?

Devine: Both residential and commercial repair and remodeling will show modest strength in the plumbing categories in 2011. New residential and commercial construction continue to bounce along the bottom and we would expect a more robust rebound sometime in 2012.

We are fortunate in that, despite the uncertain economy, bathrooms and kitchens remain two areas in the home where consumers really care about how our products look and function. We know that the consumer will replace a broken and/or poorly performing kitchen or bath faucet or toilet, especially when they know that the upgrade will truly work better, improve their homes’ appearance and reduce their water usage costs. However, the economy has resulted in consumers deferring large remodeling projects. We don’t expect this trend to change until home prices rebound and the consumer is confident the project will have a positive return on investment.

How tough has it been in these uncertain times and how do you keep the ship sailing smoothly ahead?

Devine: It has been a challenging business environment over the last 40 months or so, as demand for bath and kitchen products has continued to weaken to levels no one had imagined we could reach. For us, the key has been to see the market and the world as it is, and not just wish that things will get better. We communicate the implications of the market to our organization, and our employees have stepped up and done an amazing job in execution. Additionally, it has helped that we have been in front of a number of important issues affecting our market, such as water efficiency, toilet performance and on-trend design.

Any changes in business philosophies, structures or cultures during this period?

Devine: We have spent the last 40 months focused on updating our products, improving our cost structure, and making our business systems more reliable. We expect our focus to remain on these areas so that the consumer and trade can have confidence that when they buy an American Standard product they are getting a great value, excellent product performance and desirable styles. Our product development commitment is to deliver ‘style that works better.’ We firmly believe that end users of our products should not have to choose between design and functionality – they can get both from us.

What is your biggest sense of accomplishment since being with ASB?

Devine: It would have to be that we have successfully turned around the company so that the iconic American Standard brand will survive and continue to be part of our industry well into the future. We are also very proud of the transformation of our product line. In 2006, we were focused on high volume and low value products, and we didn’t do a very good job of servicing our customers. Today, we have successfully migrated to higher value price points because of our leading edge design and great product performance. For example, American Standard offers more WaterSense-certified toilets, capable of achieving maximum bulk removal scores for no-clog performance, than anyone else in the industry. You can check this at Alliance-forwaterefficiency.org. That means no clogs and no double flushes on a wide variety of styles and price points.

I’m also pleased with our other exclusive product innovations, including our Speed Connect drain for faucets that reduces labor time and hassle, and our patented EverClean systems for simplified care and maintenance of our plumbing products. We would encourage all of your readers to become reacquainted with the new American Standard Brands, and the extensive breadth and diversity of our product assortment.

To what degree is ASB immersed in green building? Explain.

Devine: American Standard is focused on developing design-oriented, performance-focused water efficient products that save water and money, and don’t require the consumer to trade off functionality for conservation. We have a wide variety of fixtures and fittings, styles, and functionality to meet the strictest green building codes. Our entire residential bathroom sink faucet line carries the Environmental Protection Agency’s (EPA) WaterSense-certification, and is lead-free to meet the requirements for both California and Vermont. We have a wide variety of WaterSense-certified showerhead options. We offer more WaterSense-certified toilets capable of achieving the Maximum Performance (MaP) test score (1000-grams) than any brand in the industry, with both American Standard 1.28 gallons per flush (gpf) and dual flush models.

How is American Standard doing its part in water conservation? Please describe the alliances with water conservation associations. (WaterSense, GreenPlumbers, etc.)

Devine: American Standard is a leader in water saving products, and the obvious choice for those seeking style and performance with water efficiency. We have invested significantly on educating trade professionals, consumers and local water authorities on green and sustainable products through our commitment to The Nature Conservancy, our Responsible Bathroom Tour and the Green Education Foundation. We want everyone to understand the benefits of an upfront investment that will pay for itself over a reasonably short period of time and then continue to accrue cost-saving benefits over the long term.

Any new product offerings, incentives, etc. at the company?

Devine: This month at K/BIS, we are introducing a number of new products, but our biggest story is our multi-generational solutions: walk-in tubs and showers for people with limited mobility, bathroom furniture and sinks at heights for all comfort levels, plus a special FunBath conversion kit to make it easier and more comfortable to bathe toddlers.

We also have some interesting multi-function hand showers that deliver a variety of showering experiences with the touch of a button. Our EcoSilent whirlpool is unique, because it is the first to cut noise levels by 50 percent while using 45 percent less energy than the previous generation of whirlpool systems. The EcoSilent inline heater operates for only three minutes during a 20-minute bath.

Where would you like to see the company in five years?

Devine: Over the next fives years, we will strive to improve every aspect of our company by developing great products and broadening our product portfolio. A recent example was our expansion into commercial faucets and flush valves. We have long been a leader in commercial fixtures and believe it is a natural extension of our offering, and fits with our positioning in the commercial space to provide packaged solutions. We are focused on building a superior project solutions company with exceptional products at a competitive price supported by a reliable business system. We will continue to acquire companies that enhance our offering and add technology or access to new channels. The best outcome for the company would be to return American Standard to the public markets, and set the company on a path to enable the American Standard brand to succeed for another 135 years.

WaterSense is a registered trademark of the U.S. Environmental Protection Agency.