About LXG

 

ABOUT LXG Inc

Sutter’s Mill Specialties Inc. occupies a distinct, defensible niche in the high end promotional product, corporate identity and corporate marketing arena by manufacturing high quality innovative products value-added customization on a quick turnaround basis and supplying their products directly to corporate customers at an affordable price.

The offices of Sutter’s Mill Specialties Inc. (Company) currently located in Tempe, AZ 85282 was started over 27 years ago in the original founder’s garage. At that time its primary business was supplying on a direct sales basis through telemarketing gold plated golf putters to car dealers and beverage companies to be used as corporate promotional gifts.

The current owner, Michael Butler, acquired the Company with a partner in 1990. When acquired, the Company employed four (4) sales people, had basically one (1) product line consisting of several styles of gold-plated putters and generated annual revenues of $500,000 to $600,000. Both the current owner and the former partner worked in the business until 1996 when Mr. Butler bought out his former on an amiable basis.

In the last fiscal year ending December 2011, the Company has offered more than 400 proprietary products, has employed over 75 people and generated 2011 fiscal year end revenues of $11.9 million dollars.

To accommodate this growth, the Company has moved its operation three times in the past 20 years. The most recent move was in the spring of 2003, when Mr. Butler bought a building through a separate entity and relocated the Company to the current site. The Company currently occupies approximately 30,000 square feet of combined office, warehouse and production space.

Since its beginning, the Company’s roots have been in sourcing proprietary products, providing value-added services such as a laser engraving or embroidery and selling these products direct to the end customer, typically corporations. In the early years, the Company employed professional telemarketers who called on a various industry sectors, such as insurance, auto dealers and beverage-bottling companies. The Company continued growing and in 1999 had 19 experienced and high skilled telemarketers calling on businesses in the United States with 80 or more employees.

Prior to 1999, the Company’s product line consisted of mostly putters, key tags, and pens which were mostly sourced from distributors and product brokers who represented manufacturers located in Hong Kong in the United States. At that time the Company outsourced its laser engraving needs to local providers and it had the capability to do some short run diamond engraving in-house. In 1999, Mr. Butler working with one (1) of his long time key employees began investigating their own ability to source products directly from manufacturers in Hong Kong and Taiwan. They quickly learned they could control the quality of their products and work directly with a number of manufacturers to create new and innovative products, receive excellent pricing and quickly expanding the variety of products the Company was offering. In this summer of 2001, this key employee left the Company and moved to Hong Kong, where she began working as a consultant, assisting the Company in further establishing direct supplier relationships with a greater number of manufacturers, and insuring that the Company’s stringent quality control standards were being met for each product. This person continues to work on the Company’s behalf to secure additional manufacturing relationships and source new products.

Parallel with the direct sourcing of products that began in 1999, the Company brought the laser engraving operation in-house with the purchase of two (2) laser engraving machines. At the time this was a large step for the Company; however, management felt the risk was minimal because the volume of business they were outsourcing at the time would use up the production capacity of two (2) machines for one (1) shift. This effort had an immediate impact on customer satisfaction, due to the high quality of customization and logo engraving that could be offered, coupled with the short turnaround for delivery. Another benefit that surfaced was that the Company could offer smaller minimums, for example 10 pieces, when the industry was requiring significantly larger orders. Shortly after acquiring the first two (2) engravers, the Company added a second shift. Today the Company has ten laser engraving machines, operates two (2) shifts per day, five (5) to seven (7) days per week depending on demand. Based on current growth trends the Company further anticipates adding one (1) or two (2) laser engraving machines per year through 2013.

Some of the strategic benefits the Company enjoys as a result of going to manufacturer direct sourcing and bringing the laser engraving capability in-house are:

  • They can bring in key tags, pens, golf tools, and other items in quantity.
  • The Company has the ability to directly control the quality of their proprietary products while maintaining low prices.
  • They have the ability to be creative and innovative when introducing new products, they currently offer over 400 proprietary products in seven (7) different categories.
  • Turnaround time for the customized product orders in usually 5 to 7 days where the industry average is 3 to 6 weeks.
  • The Company can profitably handle small minimum orders.

 

By 2000, the Company’s ability to manufacture high quality products at favorable prices and offer quick turnaround, 5-7 days where industry standards are 3-6 weeks, on customized logo engraved products opened a new marketing opportunity which was marketing to companies within select industries through participation in trade shows.

In 2011 the Company participated in approximately 26 Trade Shows, covering industries including construction, medical, banking and education, etc. at the same time the Company was ramping up its participation in industry trade shows, their experienced telemarketing sale people were becoming specialists in certain industries, taking turns working industry trade shows and building face to face relationships with potential customers. Today, the Company’s former telemarketing sales force has transformed and evolved into an account manager sales team, with each sales person having a base of specific accounts and industries to work in the last five years, the Company has almost doubled its revenue while the sales department has actually decreased, believed by the Company to be a testament to the effectiveness of the Company’s evolved sales process.


Collegiate Market

In late 2003, the Company identified a vertical segment in the college and university marketplace. The Company created a new division, Sutter’s Mill Specialties Inc. d/b/a LXG Inc. to service this segment of marketplace. Gaining a strong foot hold in this market with a reputation as a preeminent supplier of select, high quality merchandise was the primary objective of the Company.

One validation of the Company’s acceptance in this marketplace was the award of contracts giving the Company access to sell to over 1450 college bookstore locations owned or controlled by Follett Higher Education Group and Barnes & Noble College Booksellers, the two largest retail suppliers in this market. The Company has since secured both on campus and national retail accounts with many collegiate retailers across the country. Because of the Company’s business model and evolution in a changing market sales have continued to increase year over year.