Overview
Kelly-Moore Paints was a prominent paint manufacturer and retailer, distinguished as a significant entity in the U.S. paint industry. Established in 1946 in San Carlos, California, the company operated in California, Nevada, Texas, and Oklahoma, with a manufacturing facility in Hurst, Texas. Kelly-Moore was known for its high-quality, innovative paints and coatings, and was among the largest independent paint manufacturers in the U.S., employing roughly 1,200 individuals.
Recent Developments
In October 2022, the company saw a leadership transformation with the appointment of Charles Gassenheimer as CEO. His background spans over two decades in capital markets and corporate transformations. Subsequent to this leadership change, the Flacks Group acquired Kelly-Moore Paints, aiming to amplify its market presence. Nonetheless, by January 2024, Kelly-Moore Paints declared a sudden cessation of its operations, orchestrating an orderly wind-down. This closure was primarily due to financial distress aggravated by substantial asbestos litigation costs, with expenditures reportedly at $600 million for settlements. This led to the shutdown of 150 stores and the loss of over 1,000 jobs.
Financial Performance
Kelly-Moore Paints encountered discrepancies in its reported annual revenues. While a report from Growjo pegged the revenue at $266 million, another report from Coatings World indicated revenue exceeding $400 million. Prior to its closure, the company had a substantial operational footprint with 837 to over 1,200 employees.
Leadership
- Charles Gassenheimer, as CEO, concentrated on strategic growth and acquisition endeavors before the company's liquidation.
- Steve Devoe, a longstanding executive, assumed the role of President and Chief Revenue Officer in 2022. His focus was on relationship management and bolstering market competitiveness.
Market Position and Products
Before its closure, Kelly-Moore Paints was deemed a Rising Star due to its robust revenue growth commensurate with market share, which stood at an estimated 6.5% in the U.S. paint industry. The company's product line encompassed exterior and interior paints, painting equipment, and coatings under brands like Kel-Pro and KM Professional.
Challenges
The company faced several crucial challenges leading to its closure, notably, the overwhelming financial burden of asbestos-related lawsuits. It also struggled to maintain profitability against larger competitors such as PPG Industries, Inc. and Sherwin-Williams Co.
Competitive Landscape
Key Competitors:
1. Sherwin-Williams:
- Headquarters: Cleveland, Ohio
- Revenue: $23.05 billion (2023)
- Known as the largest coatings manufacturer in the U.S., with operations in 120 countries. Offers a wide range of products such as chemicals, decorative paints, and industrial finishing items.
2. Behr Paint Company:
- Headquarters: Santa Ana, California
- Revenue: Estimated at $443.4 million
- A Masco Corporation subsidiary, operational in the U.S., Canada, and Mexico. Known for brands like BEHR®, KILZ®, and WHIZZ®.
3. Benjamin Moore:
- Headquarters: Montvale, New Jersey
- Part of Berkshire Hathaway, with a strong foothold in premium residential and commercial paint markets.
4. Axalta Coating Systems:
- Headquarters: Philadelphia, Pennsylvania
- Sales: Approximately $4.8 billion
- Operates in 130 countries, focusing on industrial and automotive applications.
5. Dunn-Edwards:
- Headquarters: Commerce, California
- Employee-owned, specializes in premium architectural and industrial coatings mainly in the southwestern U.S.
Market Opportunity
The closure of Kelly-Moore Paints signifies a pivotal shift in the market landscape, providing competitors a chance to capture the vacated market share. Sherwin-Williams, with its diverse product offerings, is strategically positioned to expand its market footprint further. In parallel, Behr can leverage its innovative and DIY-focused products to meet growing consumer remodeling demands.
