Notes from today's call
- moved to focus on EMS business because of global cross-industry trend to outsourcing and the growth in the EMS sector- industry experience is 500% growth in last 9 years and current growth rate is 3-4 times global GDP
- they had come to the realization that their core competence is manufacturing - not in developing, marketing and selling products
- fourth largest electronic contract manufacturer in Canada
- offer a full range of electronic "solutions" to their clients, not just products
- specialize in medical, aerospace, telecom, wireless
- last quarter sales were $22.5m - Gross profit margin was 12% - most competitors get 5% (e.g. Celestica)
- have 5 manufacturing facilities - current utilization is at 40% of capacity - full capacity is about $400m year
- current backlog $110m
- divestiture of gas detector business to be completed this month; all financial impacts/writeoffs already and reflected in published Q3 results. Expect to get US $4.5m
- investment in the JD Edwards ERP has paid off in reducing costs (and increasing gross margins)
- rock solid balance sheet
- long list of direct & indirect clients including Abbot Labs, Visible Genetics, Spectrum Signal, HP, Siemens , Raytheon, US Dept of Defense, Cell-Loc, Omnipoint, Nortel, CREO, Scientific Atlanta, Honeywell ...
- competition?: operations are so diverse that their competitors range from top of Tier 1 companies to bottom of Tier 3 private companies
- key AGT differentiator for their clients: excellent technology plus ability to fully engage all relevant business units within their partner/client organisations
- why do wireless players find you attractive?: We have the most effective means for shielding from RF and EM interference
- do you feel you can improve further on your gross profit margins? - absolutely, as we integrate the JD Edwards even further into our processes, we expect to achieve 15-20%
- business outlook? We are constrained as to what we can say at the moment because of the financing going on - we can say that we expect that sales growth is expected to exceed industry averages
- why are there no numbers mentioned in recent partnerships? Agreements are mean to highlight and cement relationships going forward, absolute numbers will depend on orders received by their partners as well. In some cases, partners don't want to publish numbers for competitive reasons
- significance of partnerships with Omnipoint and Cell-Loc? - we have both the GSM (European) and CDMA (North American) E911 players covered. [Legislation will place significant demand for these products in the near future]
The company will hold the next CC after YE results are available. |
