Steven L’Heureux didn’t know anything about the car wash industry when the new owner of Ryko Solutions Inc. approached him a year ago, asking him to consider becoming the company’s CEO.

Though Grimes-based Ryko had grown to become the largest supplier of car wash equipment in North America, its sales had been declining for five years. In December 2010, Trivest Partners LP, a Florida-based private equity firm, purchased Ryko from co-founder Jim Nelson.

In March 2011, Trivest tapped L’Heureux, who in the past 15 years has engineered turnarounds at several technology and manufacturing companies, to lead Ryko.

“The more research I did, the more interesting that business actually became,” L’Heureux said. “It’s a lot larger and a lot more complex than I ever imagined. There’s a lot more than just bending metal; there’s a lot of electronics and a lot of interesting technology that goes into the car wash business.”

With L’Heureux at the helm, Ryko has embarked on an aggressive program to double its revenues within the next three years.

To achieve that objective, Ryko has invested more than $1 million in equipment and technology upgrades to its 250,000-square-foot plant in the past nine months and revamped its service and chemical supply operations. The company has also acquired two of its largest regional distributors and is actively seeking more strategic acquisitions. This quarter, it plans to roll out a new energy-efficient touch-free car wash system as part of a wave of new products planned to drive its expansion.

Three-legged stool

It didn’t take long for Trivest to sell L’Heureux on Ryko and its prospects for growth. However, the company wasn’t in the same type of situation as others he had resuscitated.

“Typically, I come into a situation after the private equity company has given up on a company,” L’Heureux said. “Trivest had just made this investment. I said, ‘Guys, do you know my background? I usually come in at the end.’”

At the time, L’Heureux was chief operating officer of Noritsu America Corp., a California-based digital equipment maker. At Noritsu, he oversaw the first acquisition in the company’s history and increased gross profits by 38 percent within a year. Prior to leading similar turnarounds, he had worked his way up in corporate sales, including a stint as director of global sales for Eastman Kodak Co. in the early 1990s.

Trivest liked his approach to running companies and wanted L’Heureux to map out a growth strategy for Ryko. He hit the ground running in March 2011.

“It was literally my first day here that I called everybody together and told the work force, ‘The decline in sales stops right now,’” he recalled. Before the end of 2011, he convened another meeting, this time to announce that sales were up 7 percent – to $75 million – and profitability had increased by 42 percent.

Founded in 1973, Ryko built its business on manufacturing and servicing car washes, primarily for service stations seeking to offer free washes with gas tank fill-ups. Now, with an infusion of new capital from Trivest – the companies won’t disclose how much – Ryko is pursuing a growth renaissance by focusing on its core convenience store customer base and entering emerging international markets.

L’Heureux’s turnaround strategy is simple: grow by helping Ryko’s customers succeed.

“Our business is really based on a three-legged stool: the equipment business, the services business and the chemistry business,” he said. “We need to continue to lead the industry in innovation and customer care. Most importantly, we are developing programs to help our customers be more successful, programs to help drive up car wash (customer) count and increase the average ticket per sale.”

Ryko currently controls about 45 percent of the North American car wash equipment market, with more than 10,000 units installed in 33 states. The company’s Grimes plant, its sole manufacturing site, produces about 400 car wash units annually ranging in price from about $50,000 to $350,000. It also manufactures more than 125 chemical products for its customers and operates a coast-to-coast service network staffed by more than 250 technicians.

The manufacturer has added about 100 people to its staff in the past nine months, increasing its total employment to nearly 400 people, of whom 125 work at the Grimes plant. Ryko has bulked up its Iowa payroll by 50 percent in less than a year, a figure that caught Gov. Terry Branstad’s attention when he toured the plant late last year. L’Heureux said he expects 5 to 10 percent growth in employment this year.

Made to order

Ryko custom produces nearly all of its car wash machines, which enables customers to hand-pick options and accessories, including a choice of 14 brush colors. Prior to shipment, every unit is tested for up to 10 hours of continuous use in a simulated car wash bay that includes a mockup of a vehicle.

All of the design and evaluation of new products takes place in Grimes as well. To accelerate its research and development efforts, the company tripled its number of engineers, from six to 18, in 2011.

Ryko’s newest touch-free machine, which it expects to begin shipping by March, will set new industry standards for price and performance, L’Heureux said.

“Most touch-free machines are in the $85,000-and-up price range; this machine is going to be less than half that price,” he said. “Yet it will clean a car as well and as fast as those more-expensive machines.” The units will also use substantially less water than current units, about 25 gallons per wash, as well as less electricity.

The chemical business also promises to be a platform for growth. The company moved its chemical blending operation from Des Moines to its Grimes plant last year, and in the past year produced and sold approximately $10 million of chemical products. L’Heureux hopes to double that figure within two years, in large part by focusing on increasing chemical sales to its existing service contract customers.

On the service end of the business, Ryko built a centralized dispatching system that sends electronic work orders directly to laptop computers carried by each technician and put nearly $1.5 million in replacement inventory out in the field to make parts more readily accessible. Those steps taken in 2011 helped the company to improve the percentage of car washes fixed on the first visit to nearly 99 percent, compared with a percentage in the 70s a year ago.

Aging machines

Statistically, about one out of every 10 touch-free machines in North America is made by Ryko, and one out of three machines with brushes is a Ryko. About 75 percent of the company’s customers are convenience stores.

“The biggest opportunity for us is that a lot of those machines are aging,” L’Heureux said. “A lot of convenience stores aren’t building new operations; they’re buying retail gas outlets from the oil companies and rebranding them. I see that as a big opportunity for us within our core convenience store market.”

Though Kum & Go LC and Casey’s General Stores Inc. are based in Greater Des Moines, neither is a major customer. Among Ryko’s largest convenience store customers are Exxon Mobil Corp. and 7-Eleven Inc.

One challenge will be to expand internationally. Currently, only about 5 percent of its sales are outside North America.

“With a 45 percent share of the (North American) market, as you start to grow that market share, that incremental point becomes increasingly more expensive and difficult,” L’Heureux said. The top foreign markets Ryko will be targeting are those with the largest automobile sales: China, Brazil and India.

About Trivest Partners

Trivest Partners LP is a private equity firm that specializes in buying founder-owned and family-owned businesses with revenues between $25 million and $250 million. It has completed more than 170 transactions totaling more than $4.6 billion since its founding in 1981 and currently is investing in companies from its fourth fund, which has more than $325 million in total commitments.