Puget Sound Business Journal July 18-24, 1997
Seemingly out of nowhere, Pacific Aerospace & Electronics Inc. is mushrooming into one of the state's largest aerospace companies.
Last week the Wenatchee company announced a record $34.2 million in revenues, up from $3 million just four years ago. Analysts were surprised at the high numbers, and said they were revising their growth estimates upwards.
The key to Pacific Aerospace's growth has been cheaply acquiring area companies, most of them unprofitable, and then integrating them into a focused and efficient whole.
Edward Larkin, director of research for Cohig & Associates Inc. in Denver said the swelling revenues from those deals are dropping down to the bottom line faster than we thought was possible. He said last quarter's profit of 7 cents per share is a year ahead of where we thought they would be.
Bolstered by the Boeing updraft, the company will hit $50 million to $60 million for the curent 1998 fiscal year, predicted Pacific Aerospace president and CEO Don Wright. His target for the company is $150 million annually in 36 months. Pacific's current backlog is $52 million.
While analyst Larkin called the $150 million target aggressive, he added that Wright is taking this company forward at a pace (that) you would have to say it is possible.
Wenatchee is a bit out of the mainstream of aerospace suppliers clustered along the I-5 corridor. But Wright says keeping Pacific's manufacturing plants at a distance has been a conscious strategy to avoid competing against Boeing for skilled workers.
We feel our job retention and cost of employees will be better on either side of the Seattle corridor, he said, adding that the company expects to soon announce another acquisition on the Olympic Peninsula. The company now employs 500.
The company's timing has been perfect, allowing it to cheaply buy companies compromised by the early 90's downturn, and then harness the aerospace upsurge to restructure those companies and turn them profitable.
We dont like to think of ourselves as a conglomerate. We like to think we've chosen the areas we want to be in, and now we're focusing on those areas, Wright said. About half of the company's revenue growth has come from its acquisitions, while the rest is new business won by existing operations, Wright said.
The company now has three divisions: an aerospace group, an electronics group and a just-formed information technology group. This triad structure is the one company directors mapped out when they planned the company four years ago, and is right where we expected to be, Wright said.
The aerospace group consists of Cashmere Manufacturing Inc., a Wenatchee aerospace machine company, and Morel Industries Inc., an aluminum casting company in nearby Entiat.
The electronics group includes Pacific Coast Technologies, Inc. and Ceramic Devices Inc., now both in Wenatchee, and Northwest Technical Industries, a Sequim company that specializes in explosively bonding metals.
The newest group covers information technology. On June 23 Pacific Aerospace signed agreements to acquire Internet providers Televar Northwest in Everett and Brigadoon.com Inc. of Bellevue, as well as Market Visibility Inc., of New York, which produces Internet products.
The information unit, which involves no manufacturing, will break the pattern of staying away from the I-5 corridor. Instead it will locate in Bellevue to be near other telecommunications and computer companies, Wright said. It will employ about 100.
Surprisingly, Pacific Aerospace's own web site, designed by the just-acquired Televar, is simple to the point of being primitive. It doesn't even disclose that Pacific Aerospace is a public company.
To be continued..... |
