by Maureen Flanagan
BLI Holdings Corporation, a high value-added manufacturer and packager for the personal care products industry, is looking good. The parent of two operating subsidiaries, Bocchi Laboratories, Inc., and Medicia Corporation, BLI produces a wide range of liquid products (including shampoos, body lotions, hair sprays and perfumes) for the personal care industry. The company is becoming the manufacturer of choice when leading market retailers seek an outside vendor to manufacture their products.
Since its founding in 1989, BLI has grown rapidly, offering customers broad-based, flexible manufacturing capabilities, innovative product research and development services, and high levels of service and product quality. In an August 24, 2001 transaction, BLI refinanced debt that was reaching maturity and solidified its strong financial base. In support of the refinancing, American Capital Strategies, Ltd. (Nasdaq: ACAS) provided $12 million in senior subordinated debt.
"American Capital's financing enables our company to continue its operations on sound financial footing and maintain our commitment to high-quality, innovative and responsive customer service," said Leon Scruton, the company's President and CEO.
BLI is owned by Bain Capital, one of the largest private equity firms in the country with over $12 billion in assets under management, and Charles River Capital Partners. In 1996, Bain and Charles River purchased Bocchi, originally founded to produce hair care products for John Paul Mitchell Systems (JPMS). A year later Medicia was acquired to give the company a presence in the northeastern heartland of the personal care products industry. In the Medicia transaction, BLI purchased M-Flex, one of the premiere foil package filling operations in the country. BLI has proceeded to grow this important sampling operation to an industry leader. Since then, BLI has aggressively pursued new customers, carved out additional market niches, and developed a reputation as a premiere outsource manufacturer and packager.
BLI now produces a complete range of non-aerosol liquid products from lotions, shampoos, conditioners and hair gels to facial cleansers and perfumes. The company manufactures 1,200 product lines and more than 250 million units a year. Containers are made from a variety of materials and range in size and shape from product samples to bulk drums that hold up to 55 gallons.
The company's services range from filling the container and packaging the product to performing a complete turnkey operation -- ordering raw materials, from chemicals to bottles, and completing every step of the manufacturing process including, when requested, conceptualization and formulation. Most customers are served by a mix of "fill only" and turnkey operations. This arrangement provides maximum flexibility, allowing the customer to provide bottles, caps, tubes or other raw materials and to outsource the remaining operations to BLI.
The company has developed strategic advantages that put it ahead of its competition. BLI's bi-coastal presence gives customers three separate manufacturing operations and allows BLI to accommodate the needs of companies with multiple product lines and varying production requirements. Based in Walnut and Santa Clarita, CA, Bocchi focuses on large-production, heavy volume manufacturing while Medicia, operating in Dayton, N.J., handles smaller volume, specialty runs. The dual manufacturing facilities are also helpful in allowing BLI to meet customers' overflow production needs on short notice. All BLI facilities are FDA approved, enabling the company to include active ingredients in its product lines, such as anti-microbial agents in facial cleansing products and SPF sunblock agents in sunscreen or tanning lotions.
BLI has one of the most innovative R&D departments in the industry. Staffed by 15 chemists, the company assists clients in formulating new products from scratch. It also develops customers' laboratory products for mass-market production. The company is viewed as the benchmark in R&D and its collaborative efforts can contribute significantly to the launch of new products. Known as an industry leader in quality control, BLI maintains a laboratory equipped with the latest high-tech processes at each of its production facilities.
The company's manufacturing capabilities and strong R&D have paid off in terms of both growth and reputation. BLI has one of the highest quality customer lists in the business -- strong premier industry players who look to BLI for their manufacturing needs. In many cases, customers have no in-house manufacturing and BLI is the primary contractor or sole source supplier. And, as customers begin to outsource more of their manufacturing requirements to the company, BLI is able to achieve even greater production efficiencies and lower costs for its clients. With long-term contracts and excellent industry reputation and connections, BLI is in a solid position to continue its long-standing customer relationships.
"American Capital is highly impressed with the impact BLI has had on manufacturing and packaging for the personal care industry. The company combines top-tier manufacturing capabilities, marketing savvy and product innovation that serve its customers well in a highly competitive industry," said Jeri J. Harman, American Capital principal. "BLI makes an excellent addition to American Capital's portfolio."
American Capital's subdebt investment in BLI was made alongside senior term loans and a revolving credit facility provided by GE Capital and ING. In addition to its role in refinancing companies such as BLI, ACAS provides middle-market companies with financing for management and employee buyouts, growth, acquisition, and liquidity. Its investments cover a wide range of industries. The BLI refinancing marks its second investment in the personal care industry. In September 1999, ACAS invested $4.2 million in Caswell-Massey Holdings Corp., one of the oldest companies in the country and a leader in producing soaps, toiletries and other personal care products.
The $29.4 billion personal care products market has been largely resistant to market downturns and is expected to grow about 4% annually between 2000 and 2005. The specific market segment BLI serves is a $13.3 billion market with manufacturing outsourcing amounting to about $1.5 billion in revenues. Because of the high level of competition, the economic and strategic rationale of outsourcing is becoming increasingly more compelling.
The industry need for contract manufacturers will likely benefit BLI, already a leader in the national market. BLI is strategically well placed to serve both the high and low end of the personal care market and service customers on both coasts. Its research and development prowess, size, broad range of manufacturing capabilities, and customer relationships give it a competitive edge as does the unique services it makes available. For example, BLI is the only outsource manufacturer and packager that can manufacture sample size flex packaging and fill it with product at the same facility.
The strength of BLI's customer relationships is key to its future. The company's top-tier clients maintain strong financials in their businesses and expect to continue to expand their markets. This provides opportunities for BLI to take on a larger manufacturing role, including the shift from "fill only" to turnkey operations. In addition, BLI's R&D capabilities open doors to additional collaborative ventures with its clients as well as positioning it to win new customer accounts. Indeed, recently changing relationships within the industry may open up several major corporations as potential customers.
Most importantly, BLI consistently ranks at the top in terms of what matters most to its customers: dependability, timeliness, and product quality. Rapid production times, on-time delivery and focus on quality contribute to the company's reputation as a premier source for manufacturing and packaging personal care products.
When it comes to looking good, BLI knows how to manufacture and package the personal care products Americans depend on. As a company at the forefront of its industry, BLI is grooming itself for a bright future.
