1 A Delaware Valley Success Story, With A Global Presence.
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Transcript of 1 A Delaware Valley Success Story, With A Global Presence.
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A Delaware Valley Success Story, With A Global Presence
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• Founded in 1942 by K.A. Swanstrom
• I.P.O. in 1966
• Kenneth A. Swanstrom elected Chairman and CEO in 1993.
Overview
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• Fasteners (56.0% of projected 2000 sales)
• Motors (17.5% of projected 2000 sales)
• Distribution (26.5% of projected 2000 sales)
Overview
Three operations:
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• Founded in 1942
• Operations: Full-time employees:– Danboro, PA 748
– Winston Salem, NC 298
– Suffolk, VA 128
– Willimantic, CT 25
– Tallmadge, OH 38
Fastener Division
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• Acquired in 1970
• Operations: Full-time employees:– Harleysville, PA 207
– Carson City, NV 10
Motor Division
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• Formed Arconix Group in January 2000.
• Operations: Full-time employees:– Oxnard, CA (1999) 49
– Doncaster, UK (1970) 45
– Singapore (1996) 21
Distribution Division
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Winston-Salem
Oxnard, CA
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Penn Engineering has a long termPenn Engineering has a long termtrack record of growth and profitability...track record of growth and profitability...
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$0
$50,000
$100,000
$150,000
$200,000
$250,000
1966
1970
1974
1978
1982
1986
1990
1994
1998
Sales history since IPO
CAGR: 12.3%
($000’s)
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$0$2,000
$4,000$6,000$8,000
$10,000$12,000$14,000
$16,000$18,000
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
Net income since IPOCAGR: 8.9%($000’s)
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121.5141.3
160.3 167.7179.7
198.1
020406080
100120140160180200
1994 1995 1996 1997 1998 1999
5-Year CAGR = 10.3%
Sales Growth ($millions)
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10.4
13.8 13.9 14.5
16.6 17
0
2
4
6
8
10
12
14
16
18
1994 1995 1996 1997 1998 1999
5-Year CAGR = 10.3%
Net Income Growth ($millions)
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13.9
18.019.2
21.1
24.626.0
0
5
10
15
20
25
30
1994 1995 1996 1997 1998 1999
5-Year CAGR = 13.3%
Cash Flow
Net Income + depreciation ($ millions)
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Penn Engineering’s year 2000 is off to a great start…Penn Engineering’s year 2000 is off to a great start…
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Interim Results - Comparison to 1Q99
(000’s) Three Months Ended 3/31/00 3/31/99
Sales $ 65,137 $ 46,000
Gross Profit $ 21,077 $ 14,488Gross Margin 32.4% 31.5%
Operating Profit $ 8,811 $ 5,785Operating Margin 13.5% 12.6%
Net Income $ 5,645 $ 4,056Net Margin 8.7% 8.9%
EPS $ 0.66 $ 0.47 ROE (annualized) 14.4% 12.2%
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Interim Results - Comparison to 4Q99
(000’s) Three Months Ended 3/31/00 12/31/99
Sales $ 65,137 $ 56,659
Gross Profit $ 21,077 $ 17,540Gross Margin 32.4% 31.0%
Operating Profit $ 8,811 $ 6,312Operating Margin 13.5% 11.1%
Net Income $ 5,645 $ 4,300Net Margin 8.7% 7.6%
EPS $ 0.66 $ 0.50 ROE (annualized) 14.4% 11.9%
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Review of interim results:
• Sales, net income, and earnings per share increased 42%, 39%, and 40%, respectively, over 1999.
• Excellent growth from major markets including computers and telecommunications (fastener and distribution operation), and data storage and semiconductor equipment manufacturers (motor operation)
• Increases in unit sales volume contributed to plant utilization gains and consequently, higher margins.
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Penn Engineering sells to some of the fastest-Penn Engineering sells to some of the fastest-growing high-tech customers worldwide….growing high-tech customers worldwide….
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Top five customers - Fastener operation
Cisco TelecommCompaq ComputersLucent TelecommMotorola TelecommNortel Telecomm
Customer Industry
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Top five customers - Motor operation
AGFA Computer photo-settingExabyte Data Storage/Tape Libraries IBM Data Storage/Tape LibrariesStorageTek Data Storage/Tape Libraries Sunrise Medical Medical
Customer Industry
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Top five customers - Distribution operation
Cisco TelecommHewlett Packard ComputersIBM ComputersPower One Computer PeripheralsSun Micro Telecomm
Customer Industry
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Penn Engineering has always served the Penn Engineering has always served the high tech industry….high tech industry….
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The 1940’sRCAWestern ElectricGeneral Dynamics
The 1950’sGrumman XeroxAddressograph/ Multigraph
The 1960’sDigital EquipmentData GeneralTektronix
The 1970’sAlcatelFlukeGeneral Instrument
The 1980’sHewlett PackardIBMMotorola
The 1990’sCompaqHewlett PackardIBM
The 2000’sLucentEricssonCompaq
……although the definition of “high tech” hasalthough the definition of “high tech” has changed throughout the years.changed throughout the years.
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1. “Solutioneering”: Develop new applications and new customers.
- Continually call on design engineers at customer and prospect locations to find out what new projects are underway.
- Continually “create the market” for our products.
2. Develop new products
- Goal: 5% of each year’s sales from products introduced in the past three years.
3. Expand internationally by adding new representatives and distributors (presently 45 distributors in 36 countries).
Internal Growth Strategies
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Penn Engineering is growing through acquisitions...Penn Engineering is growing through acquisitions...
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Acquisitions completed in 1999 - 2000
Company Date Acquired Purchase PriceStickScrew June 1999 $1.7 million(new fastener product line)
Carson Technologies July 1999 $ 350,000(new motor product line)
R.C. Dudek & Co. October 1999 $36 million(expansion into direct distribution)
Atlas Engineering April 2000 $3.0 million(new fastener product line)
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Summary
• Penn Engineering & Manufacturing Corp. has been financially successful over an extended time period, and across all business cycles.
• Penn Engineering has grown and prospered by providing innovative products, unparalleled engineering support, and uncompromising quality to customers in the fastest-growing markets.
• The Company has the ability - from a management as well as a financial standpoint - to grow internally as well as through acquisitions.
• The Company is entering a high-growth phase in which ongoing new business development efforts are resulting in significant new opportunities.
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A Delaware Valley Success Story, With A Global Presence, Expanding into the Future