1 History
- Began manufacturing products for home construction industry in 1950s
- Started with one division - windows and doors
- Later, made various acquisitions and held an IPO to become a public company
- The downturn in the housing sector negatively impacted its revenue growth and profits
- Now: has 14 divisions and 2,100 employees
2 Industry
-Significant consolidation due to economic downturn
-Home Construction industry is below historical norms
-Raw material costs have increased
-Leading supplier of glass windows in SE + WM
-Leading Supplier of sheds in NE + MW
-Fraud Risks - incentives and pressures to meet goals and debt covenant compliance
3 Current Strategy
● Growth-through-acquisition strategy
○ to fill in gaps in product line & geographic coverage
○ maintain a $150 million line of credit for acquisition purposes ○ had to meet EBITA targets every year
● Benefits: have negotiating power over national retailers
4. Financial Reporting
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Public company: must have filed registration statement prior to issuance of IPO
$1.5B market cap - Large accelerated filer (over $755M)
Required to file 10-K within 60 days of year end (75 days with extension)
Required to file 10-Q within 40 days of quarter end
Required to file 8-K within 4 days of the significant event that shareholders should know about
International company (US and Canada)
ICFR - Must have internal audit function
Periodically evaluated internal controls for each division and selected sites for testing on a rotating basis mainly tested from an operational perspective rather than financial reporting
Reported directly to the CFO and audit committee chair
Under COSO framework, effective internal control system components are derived from the way the company is managed day to day tone at the top continuous assessment of risks of the various processes design and implementation of controls gathering and sharing of information with internal and external users effective monitoring of these controls by management
5. Management Team
● Brennehan (CEO):10 years at Hollite; former CFO; firsttime CEO; took company IPO; supported by the Board
● Blackburt (CFO): CPA & MBA; lots of experience in finance; compensation is incentive based
● Sojohn (COO): youngest but longest tenure at Hollite; only one not put in position by CEO
● Mallite (GC): contracts, customer legal matters
● Rellon (marketing and sales VP): inside promotion by
CEO
6. Board of Directors
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8 directors in total
Hanloon - Chairman; 12 years on board - no tenure limits; supported CEO
CEO Brennahan
1 descendent of company founder
2 directors recruited by CEO
2 joined after acquisitions (executives at those companies)
Soltany - only independent director
○ Chair of Audit Committee
○ joined 2 years ago
○ not CPA
○ proposed new external auditor (CFO objected)
○ suggested holding accounting education sessions for directors (never happened) The Board of Directors are not very independent minded, and tend to go along with strategy. 7. Organizational Structure
Board of
Directors
