by Maureen Flanagan
Since its establishment in 1959, Dixie Trucking Company, Inc. has been a profitable company, providing business-to-business freight delivery services in the Southeast. Over the years Dixie forged a solid reputation in its geographic area - North and South Carolina, northern Georgia and southern Virginia - and became a leader in its niche market. The company is the premier carrier in the Carolinas to provide overnight freight delivery that arrives before 10 am the next day. Jimmy D. Crisp, former president of a major regional trucking company, appreciated Dixie's strengths and saw untapped potential and opportunity for growth. In August 1999, Crisp partnered with American Capital (Nasdaq:ACAS) to buy and operate Dixie. American Capital provided $4.2 million in senior subordinated debt with detachable warrants, enabling Crisp to realize his dream to own and operate his own company.
"The move to efficient manufacturing systems in the Southeast region of the country is driving the demand for the kind of service only Dixie can provide economically. I am proud to be joining a company that is the best in its class and am looking forward to leading its future," said Crisp.
Operating in a market that exceeds $2 billion, Dixie specializes in transporting textiles, chemicals and industrial supplies. The company has thousands of customers, with textile-related businesses making up the majority of its customer base. Superior service is the hallmark of the company's business and reputation. In the words of one of its customers, Dixie is "the grits of the textile industry in the Carolinas." For this customer, like many others, Dixie's services are a staple of remaining competitive in a just-in-time management operation. These companies and their customers count on Dixie's early morning delivery to help them maintain their competitive advantage.
As an integral part of its customers' just-in-time management, for example, Dixie may pick up drums of dye from a chemical manufacturer and deliver them before 10 am to a textile company for use that same day. A few hours later, it would then pick up the empty drums and return them to the chemical manufacturer. Dixie's delivery system is based on a modified hub and spoke configuration. Charlotte is the hub terminal with satellite terminals in Raleigh, NC, Wilmington, NC, and Columbia, SC. The company employs 339 people and maintains a fleet of 171 tractors and 423 trailers.
American Capital's expertise in middle market financing enabled Crisp to go forward with the purchase of the company. With resources exceeding $360 million, American Capital invests $3 million to $20 million in the form of senior debt, subordinated debt and equity in middle market companies in need of capital for growth, acquisitions, employee buyouts, management buyouts, liquidity and restructurings. For companies like Dixie, American Capital financing enables competent entrepreneurs to realize their visions of owning their own companies.
In partnership with American Capital, both single entrepreneurs and management teams in a wide range of industries have realized their ownership goals. In January 1999, for example, the managers of Lion Brewery bought a landmark Pennsylvania brewing company with subordinated debt financing from American Capital. In the case of Dixie, Crisp was in an ideal situation for the acquisition - he had years of industry and management experience as well as a thorough knowledge of the company he wanted to buy.
"This investment in Dixie was an opportunity for American Capital to participate in the growth of a company that is the leader in its market niche," said Virginia Rollins, American Capital Principal. "Under Crisp's experienced management, Dixie has the potential to expand its operations and become even more profitable in the growing markets of the southern states it serves." In addition to American Capital's financing, Wachovia Bank provided senior loan and revolving credit facilities to complete the transaction.
As President of Dixie, Crisp will look for additional opportunities to expand the service offerings of Dixie.
Short-haul overnight delivery services are a growing part of the country's $347 billion trucking industry. Dixie's service falls into the "less than truck load" (LTL) category which the Interstate Commerce Commission defines as shipments weighing less than 10,000 pounds that typically go through five different phases, including pick-up, sorting at the origin, hauling, sorting at the destination, and delivery. Regional carriers such as Dixie moved some $10 billion in freight in 1998 with a market that has been growing at 12% to 13% a year, compared to the flat 1% growth in the long-haul ""truck load" national market. Moreover, regional carriers have grown rapidly, benefiting from cost containment measures in the manufacturing industry. To maintain a just-in-time inventory system, manufacturers stock much less inventory and rely on frequent small shipments, delivered just in time, to be used in the production process.
The emergence of the Internet in the business-to-business sector is also seen as a positive for carriers such as Dixie. In this market, Dixie's concentration on regional and short-haul service provides advantages over large trucking firms that cover a wide geographic area.
Already a leader in its niche market, Dixie is a company with great promise, fueled by the booming economic market of the Southeast and new direction from a CEO with extensive industry experience and entrepreneurial spirit. The company's unique appeal combines the homespun "grits" image of being a staple in its customer's business operations with an ability to keep those customers at the forefront of the most competitive, fast moving management systems in the country.
