1847 Secures $1.0 Million Credit Facility to Address Accelerated Growth for its High Mountain Door & Trim Subsidiary
- Year-over-year revenue for High Mountain increased by 44.5% in 2023 compared to 2022.
- 1847 Holdings LLC secured a $1.0 million credit facility for its subsidiary, High Mountain Door & Trim Inc.
- High Mountain specializes in finished carpentry products and services for homebuilders and developers, including doors, cabinetry, and fireplace mantles.
- The credit facility aims to provide additional working capital for High Mountain to accelerate its growth, optimize financial flexibility, support expansion plans, and strengthen its market position.
- The CEO of 1847, Mr. Ellery W. Roberts, highlighted the solid growth within the construction segment and the increasing demand for High Mountain's products despite challenges in the residential housing market.
- The credit facility does not involve any equity dilution at either the 1847 or subsidiary level.
- None.
Insights
The announcement of High Mountain's 44.5% year-over-year revenue increase is a significant financial indicator, suggesting robust growth within its niche of finished carpentry products. The procurement of a $1.0 million credit facility can be seen as a strategic move to leverage this growth momentum. It is important to assess the company's debt-to-equity ratio post this credit facility to understand the financial leverage and risk involved. Additionally, the decision to avoid equity dilution indicates a focus on shareholder value, which could be perceived positively by the market.
However, it's crucial to consider the broader economic context, specifically the high-interest-rate environment mentioned by CEO Ellery W. Roberts. While the demand for High Mountain's products is increasing, the residential housing market is facing headwinds due to these rates. This could potentially affect future growth and the ability of large homebuilders and developers, High Mountain's primary customers, to continue their current rate of expansion. The company's reliance on the construction segment makes it susceptible to economic cycles in this industry.
High Mountain's performance should be evaluated against industry benchmarks for growth in the finished carpentry sector. The reported revenue increase substantially outpaces the average growth rate for the construction industry, suggesting that High Mountain is capturing market share. This could be attributed to their diversified product range catering to both residential and commercial clients. However, the impact of macroeconomic factors, such as the potential cooling of the housing market due to high-interest rates, may temper the demand for construction services in the short to medium term.
It is also important to analyze customer concentration risk. High Mountain's focus on large homebuilders and developers could be a double-edged sword; while it ensures steady business from large-scale projects, any downturn in these clients' activities could disproportionately affect High Mountain's revenue streams. Diversification of their client base could mitigate this risk.
The credit facility secured by High Mountain can be viewed as a microcosm of the broader economic environment where businesses are seeking to capitalize on growth opportunities despite rising interest rates. The company's decision to opt for debt financing over equity financing to fuel growth is a reflection of the cost-benefit analysis that many firms undertake in a tightening monetary policy landscape. The additional working capital could indeed support expansion plans, but it's essential to monitor the company's debt service coverage ratio to ensure that the generated cash flow will be sufficient to cover the new debt obligations without compromising operational stability.
Long-term implications of this financial decision also hinge on the trajectory of the housing market and the Federal Reserve's interest rate policy. Should interest rates continue to rise, the cost of borrowing will increase and consumer mortgage rates could follow suit, potentially slowing down the housing market and, by extension, demand for High Mountain's products.
High Mountain experienced unaudited
NEW YORK, NY / ACCESSWIRE / February 22, 2024 / 1847 Holdings LLC ("1847" or the "Company") (NYSE American:EFSH), a unique holding company that combines the attributes of owning private, lower-middle market businesses with the liquidity and transparency of a publicly traded company, today announced that it has secured a
High Mountain specializes in all aspects of finished carpentry products and services, including doors, door frames, base boards, crown molding, cabinetry, bathroom sinks and cabinets, bookcases, built-in closets, and fireplace mantles, among others, working primarily with large homebuilders of single-family homes, commercial and multi-family developers.
Mr. Ellery W. Roberts, CEO of 1847, commented, "Over the past few quarters we have achieved solid growth within our construction segment with High Mountain demonstrating a
Additional details High Mountain's credit facility will be available upon the filing of a Current Report on Form 8-K, which will be filed with the Securities and Exchange Commission and available on the Company's website once filed.
About 1847 Holdings LLC
1847 Holdings LLC (NYSE American: EFSH), a publicly traded diversified acquisition holding company, was founded by Ellery W. Roberts, a former partner of Parallel Investment Partners, Saunders Karp & Megrue, and former Principal of Lazard Freres Strategic Realty Investors. 1847 Holdings' investment thesis is that capital market inefficiencies have left the founders and/or stakeholders of many small business enterprises or lower-middle market businesses with limited exit options despite the intrinsic value of their business. Given this dynamic, 1847 Holdings can consistently acquire businesses it views as "solid" for reasonable multiples of cash flow and then deploy resources to strengthen the infrastructure and systems of those businesses in order to improve operations. These improvements may lead to a sale or IPO of an operating subsidiary at higher valuations than the purchase price and/or alternatively, an operating subsidiary may be held in perpetuity and contribute to 1847 Holdings' ability to pay regular and special dividends to shareholders. For more information, visit www.1847holdings.com.
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Forward-Looking Statements
This press release may contain information about 1847 Holdings' view of its future expectations, plans and prospects that constitute forward-looking statements. All forward-looking statements are based on our management's beliefs, assumptions, and expectations of our future economic performance, taking into account the information currently available to it. These statements are not statements of historical fact. Forward-looking statements are subject to a number of factors, risks and uncertainties, some of which are not currently known to us, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include but are not limited to the risks set forth in "Risk Factors" included in our SEC filings.
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SOURCE: 1847 Holdings LLC
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FAQ
What was the year-over-year revenue increase for High Mountain in 2023 compared to 2022?
What type of products and services does High Mountain specialize in?
What is the purpose of the $1.0 million credit facility secured by 1847 Holdings LLC?
Does the credit facility involve any equity dilution at the 1847 or subsidiary level?
