ITS Logistics is expanding into this 350,000-square-foot facility in Whitestown, Indiana, which will be the Reno-based firm’s first Midwest location.
Courtesy Photo
Throughout the pandemic, Reno-based ITS Logistics has not stopped moving in more ways than one.
Last year, as online shopping and e-commerce boomed, and businesses sought new supply chain solutions amid COVID disruptions, the third-party logistics company saw demand surge. In all, ITS Logistics rolled to nearly $500 million in revenue in 2020 — a 60% jump compared to 2019.
Riding that momentum, the Reno-based firm has shifted into accelerated growth mode.
On June 15, ITS Logistics announced that it has sold to GHK Capital Partners LP, a Greenwich, Connecticut-based private equity firm focused on making control investments within the industrials sector.
Terms of the acquisition were not disclosed.
“The original founders of our company, and our current investors and our leadership team — everybody just wanted to continue to go down this path of growth,” Patrick McFarland, director of marketing at ITS Logistics, said in a video interview with the NNBW. “And so, we went out and found a partner that aligned with us in so many ways — culturally, same confidence level in the marketplace, and we both wanted to go after that growth.
“We’ve been aggressively growing for the last handful of years, and this just gives us that strength and confidence to keep on going. So, we’re excited to have them on board.”
GHK’s acquisition will enable ITS “to pursue several growth initiatives and build on its history of strong execution and customer-centric business model,” according to a June 17 press release.
“We are excited about our new partnership with ITS, anchored by an exceptional leadership team that has pioneered a disruptive and unique approach to asset lite network transportation, middle mile logistics, omnichannel fulfillment and beyond,” Gil Klemann, managing partner of GHK, said in a statement. “We are committed to investing in (ITS) to fuel continued growth and superior, solutions-based customer service.”
Senior financing for the transaction was provided by Goldman Sachs Asset Management and Churchill Asset Management. GHK was advised by Stephens Inc. and represented by Weil, Gotshal & Manges LLP.
Lincoln International served as the sell-side advisor to ITS Logistics. Ropes & Gray LLP served as legal counsel.
“We believe that our great momentum combined with GHK’s strategic business acumen, financial expertise and aligned culture will allow us to double-down on our growth and aggressively invest in our people, technology, physical assets and geographic expansion,” ITS Logistics CEO Scott Pruneau said in a statement. “This is the beginning of the next era of ITS Logistics, and we are extremely confident in our immediate and long-term future.”
It marks the second change in ownership in the past six years for ITS Logistics, which was co-founded in 1999 by longtime friends Jeff Lynch, Darryl Bader and Dan Allen; the trio were born and raised in the Reno area, and all attended the University of Nevada, Reno.
After years of expansion and growth — including opening locations in Phoenix, Seattle and Los Angeles in 2011 — investment firms McNally Capital and Coughlin Capital announced the acquisition of ITS in 2015.
According to previous NNBW reports, the sale and partnership allowed the three founders to decrease their own financial risk in the company while still being able to run the company.
“We identified with McNally Capital given their experience, history and reputation,” Lynch said in a June 16 statement. “Having founded and operated ITS Logistics for 15 years before partnering with McNally Capital, the firm and the expertise of their industry partners made them a like-minded investor for us.
“Importantly, ITS was able to affect meaningful growth under McNally’s ownership, while protecting and even enhancing the company’s culture and core values.”
EXPANDING TO HOOSIER STATE
The sale to GHK comes on the heels of ITS Logistics announcing its first expansion to the Midwest.
ITS plans to open a 350,000-square-foot distribution facility in Whitestown, Indiana, a stone’s throw from Indianapolis. An investment of roughly $11.8 million, the firm’s new fulfillment and distribution center will create up to 199 new jobs by the end of 2024, according to a June 7 announcement from ITS.
“Indianapolis made the most sense not only from a labor perspective and an economic perspective — it’s an established logistics hub — but also from a customer-reach perspective,” Zak Urrutia, senior director of operations at ITS Logistics, told the NNBW. “It’s a really good place to expand to as a complement to our multiple facilities in Reno-Sparks.”
To that end, Urrutia said ITS’s new Indiana operation, combined with its existing 1 million square feet of West Coast distribution space in Reno-Sparks, will allow the company to offer distribution and fulfillment services to nearly 90% of the U.S. within a two-day turnaround period.
Urrutia said ITS also investigated central Pennsylvania and Texas as potential expansion areas before deciding the “no brainer” choice was Indiana, which ranks first in the nation in interstates with 14.
The Hoosier State is also home to the second largest FedEx hub, ranks third nationally in freight railroads with 41, and has east and west coast intermodal rail access.
“This puts us in a whole different category of customers,” McFarland said. “Previously, it was entirely people that were looking to get to the western United States in less than two days by truckload. Now, we can go after that national customer that needs that less than two-day delivery to anywhere in 90% of the U.S.
“We have a whole different caliber of customer that we can go after at a national scale.”
The Indiana Economic Development Corporation offered ITS Logistics up to $1.5 million in conditional tax credits based on the company’s job creation plans. ITS is eligible to claim the performance-based tax credits once Hoosiers are hired, according to ITS. The company says the town of Whitestown is considering additional incentives.
McFarland said ITS is in the process of making tenant improvements and setting up equipment and technology in its new fulfillment and distribution center planted in America’s heartland.
The company — which has started hiring administrative, warehouse, forklift, IT, HR and leadership positions in Indiana — expects to be operational on August 1.
And ITS, which and now employs more than 600 team members across the U.S., only expects to grow from there.
“Indianapolis is the first step here in distribution,” McFarland said. “There’s no reason in the next three to five years we can’t open up two to three more facilities exactly like that. And instead of getting to 90% of the country in two days by truckload, now we’re getting 100% of the country and bridging into Canada. It’s an exciting time.”
Comments
Use the comment form below to begin a discussion about this content.
Sign in to comment