67 WALL STREET, New York - November 12, 2012 - The Wall Street Transcript has just published its Industrial Equipment, Aerospace and Defense Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Commercial Aviation and Energy Expenditures - Industrial Restructuring - Emerging Markets Penetration - Heightened M&A Activity - Future Growth and Market Share Gains - Increased Commercial Aircraft Production Rate - Defense Budget Uncertainty - Growth Opportunities in Data Security -
Companies include: Edac Technologies Corp. (EDAC) and many others.
In the following excerpt from the Industrial Equipment, Aerospace and Defense Report, the CEO of EDAC discusses the outlook for his company for investors:
TWST: Please give us a history and an overview of EDAC Technologies.
Mr. Pagano: EDAC was founded in 1946. We went public in 1985. Its core competency right from inception had been to design and manufacture complex precision parts, primarily in the aerospace and tooling industries. In 2001, 50% of its business was manufacturing parts for the aerospace market, and in particular jet-engine components that were used in ground-based power generation. Because the company was overly concentrated in one market and overleveraged, it ran into a financial crisis in 2002, post-9/11 and the collapse of Enron, which virtually eliminated demand for ground-based turbines.
In the middle of the crisis, I was named President and CEO and promptly focused on saving the company. We managed to have the debt restructured, divisions consolidated and got the company right-sized to survive. By the end of 2004, the company returned to operating profitability.
The following year we refinanced our debt with a conventional banking relationship. Then, in 2006, we began to reconstruct the company, including modernizing some of our plants. And for the first time after seven years of turmoil, we began to invest in new machinery and equipment and replace some obsolescent equipment.
In 2007, we began expanding our client base in aerospace rather than remaining captive to one engine program, as well as diversifying our machine tool markets. We began to deploy our growth strategic plan during that year, and we made a small acquisition of an engine-repair facility from MTU, North America. Our profitability continued after that, and over the next two years, we continued with organic growth. In 2009, we acquired a much larger manufacturing operation from MTU, which was their complete rotating-component manufacturing facility in North America. It is located close to our headquarters in Connecticut. That nearly doubled our aerospace revenues.
We were on the road to increasing our sales, which rose to $45 million, then $55 million, and we got up to $73 million. Our backlog during this period from 2008 forward also continued to increase. In 2008, our backlog was $52 million. And the end of this third quarter of 2012, backlog has been at near record level of $314 million. In the second quarter of 2012, we made another accretive acquisition, of EBTEC Corporation, which contributed to our record sales and record operating profits in the third quarter.
With our substantial growth, one of our challenges has become our capacity constraint. To address that, we purchased a state-of-the art manufacturing facility in Cheshire, Conn., to support both our unprecedented backlog, and the growth opportunities that are going to be in front of us in 2013, 2014 and 2015. We also needed a much larger facility to be able to consolidate and keep implementing synergies. That pretty much brings us up to date.
TWST: EDAC Technologies has several product lines now. Would you go through each of them and explain them for us?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
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