52 week high on MJXC is $1.56. This has a long ways to go. Here is interview with CEO from wallstreetreporter.com
WSR: Your company is divided into
several different divisions. Why
don?t you take a minute or two
and explain what each one of them
does?
MJXC: We have multiple profit
centers. One of them is Majestic
Modular which builds modular
classrooms in the state of
California for the unified school
systems. Majestic Modular is
based in Modesto, California. The
other company is Majestic
Transportation which is a company
which has developed and designed
a safety restraint bar for school
buses to implement safety and
also to give an alternative to
the school industry in the use of
seat belts or safety bars.
WSR: Let?s first take a look at
the modular business. What are
these classrooms constructed of?
MJXC: They?re steel structures,
and again with timber; no
different than a classroom that
you would see in a stationary
building. Only, they are
transportable and moveable and
used by the school systems to
move school buildings from one
location to another or to be used
as temporary classrooms while
under construction.
WSR: How does the cost of this
compare to the traditional
classroom?
MJXC: The cost is approximately
$34 a square foot versus about
$100 a square foot.
WSR: What you?re saying is it
costs about one-third to produce
one of these as a standard
classroom.
MJXC: Absolutely.
WSR: And how many of these are in
existence right now?
MJXC: Throughout the state of
California, thousands.
WSR: Why haven?t other states
adopted this?
MJXC: California is one of the
first states in the union to
downsize their classrooms; so
therefore they need additional
area. They?re bringing classrooms
down from thirty students per
unit, to approximately seventeen
to eighteen students per unit.
Eventually this will extend
across the country.
WSR: Are your plans to expand
across the country when it
happens?
MJXC: Possibly, but we?re more
concerned with what we are going
to be doing in California,
because in California, most
recently, they have bond issues
that went to the tune of $10
billion for classroom and
educational improvements,
therefore the market is very
strong here in California.
WSR: And that bond issue has been
passed?
MJXC: Absolutely. As a matter of
fact, it was the state of
California that passed the bond
issue in November. It was $9.2
billion, and San Diego passed one
for the unified system of $1.8
billion.
WSR: Compared to all the
potential modular classrooms that
you could build, what percentage
of that market do you have today?
MJXC: At this point -- very
minimal. We are producing
approximately two classrooms a
day, and bear in mind the company
had just made its investment in
April 1998, therefore what we?re
doing is ramping up. At present
we have approximately $3 million
in backlog.
WSR: How many classrooms a day
can you produce?
MJXC: The plant at Modesto can
produce three twenty-four by
forties per day.
WSR: So you could do about
600-700 per year.
MJXC: Absolutely.
WSR: What?s your estimate of what
the overall market might be?
MJXC: Well, if we take a look at
our competition, Modtec they have
a $70 million backlog in
building. They do approximately,
I think, $130 million gross a
year.
WSR: What is the strategy that
you will use going forward to
convince the school system to up
the amount that you are producing
for them?
MJXC: The market?s there. There?s
nothing that we can do as far as
strategy is concerned. The orders
are there but there are not
enough manufacturers to fill
them.
WSR: So this is really a supply
challenge?
MJXC: That?s right ?- supply and
demand.
WSR: On to your other product,
which is the safety bar. Explain
how that works and what is the
technology that you used to come
up with this product?
MJXC: First of all the safety bar
was designed by Majestic
Transportation. Our engineer,
Adrian Corbett, holds the patent
to that. The bar is very similar
to an amusement park type bar
except that it has a locking
device. What it does is fold down
and sit in the floating position
until there?s an impact or a
crash, then it locks, and it
holds the students in. It?s a bar
made with foam and steel insert
as well as locking devices that
are attached to the seats in
front of each student.
WSR: So this is an alternative to
the seatbelt?
MJXC: That?s correct.
WSR: What are the advantages over
a seatbelt?
MJXC: One of the big problems
that you have with seatbelts is
the kids never use them, or
they?ll use them to hit each
other with or don?t care about
them. They will use their knives
or whatever it may be to cut them
in half, etc. The bar is a
stationary device that floats
right into their lap.
WSR: Does the driver of the bus
have the ability to lower the
bars?
MJXC: No, the bars automatically
lower, but any bar that would be
in an upright position or be held
up, the bus driver can see that
bar in his rearview mirror. Then,
the driver can say, for example,
"You in seat 22, make sure that
bar is down." He can monitor it
with his rearview mirror.
WSR: How far are you from
bringing this to market?
MJXC: We?re at that point right
now. The production models are
complete, and they have been
shown to the school systems. The
state of Delaware, for one, is
very anxious to retrofit some of
their buses for testing; and we
have people in Minnesota doing
the same. Actually, we?re going
into production in the next
thirty days, so our first units
on the production level should be
done in thirty to forty-five
days.
WSR: What are you charging?
MJXC: Our cost of manufacturing
of the bar is proprietary really,
but the retail cost of the unit
is about $155 a unit, which when
you?re talking about retrofitting
between seatbelts and the bar,
we?re probably 65-70 percent of
the cost of what it would take
for seatbelts.
WSR: This would amount to about
$4,000 to $5,000 per bus?
MJXC: Yes.
WSR: What marketing strategy are
you going to use to introduce
this product?
MJXC: Well, we?ve retained a
consulting firm and public
relations firm here in San Diego
called the Nelson Communications
Group. They are designing a
grass-roots-type campaign. We
showed this bar at the "National
Association of Pupil
Transportation" Show in San
Antonio, Texas when all the
school bus operators and
institutions of school buses were
present. We had an overwhelming
turnout. Nearly 150 different
school systems have asked us to
make sure that once we brought
this bar to fruition and are
ready for production, to get in
touch with them. We also have
sales people out that are
familiar with the school systems.
WSR: Is there any competitor for
this product?
MJXC: Not that we know. It?s a
patent pending product, and we
have passed all of the NHTSA
requirements to date, which is
the National Highway
Transportation Safety
Administration, federal
government. The most critical
tests have been done and have
been approved.
WSR: As you look ahead and plan
the growth of your company, of
these two products, does one seem
to have greater potential to you
than the other, or is it going to
be a two-prong attack?
MJXC: I think it?s just a
two-prong attack. We?re not
favoring one over the other. They
are both education and school
related, and the market is there.
WSR: Since this is school and
education related, once you make
these contacts with the various
educational institutions, are
there other products you will be
able to introduce down the road?
MJXC: We?re looking at certain
things to be built in a
manufacturing facility that we
may be putting together in
Mexico. Actually those are seats
for school buses.
WSR: Anything special about these
seats?
MJXC: Yes, the cost. We feel that
we could build a better product
at a more realistic cost.
WSR: What do you see as the major
challenges that you face right
now in terms of getting your
company to where you would like
it to be in the next year or two?
MJXC: Major challenges? Just a
lot of hard work. We?re pretty
proficient in manufacturing
modular classrooms. We?re able to
build them for unified systems,
so we don?t have a problem there.
I think the sales and the
marketing of all products is
really paramount to us, but I
don?t see it as a challenge. One
thing about the company is we
have good management and good
sales people. The sales people
that we?re bringing on board are
people that are coming from our
competitors. These people have
been in the business for ten and
fifteen years when it comes to
classrooms and school
paraphernalia.
WSR: If I were to consider buying
stock in your company, to
summarize what you and I have
talked about, what are the two or
three key things you would tell
me to look at before I decided to
make a purchase or not?
MJXC: I would certainly take a
look at the management of the
company. That?s one. Second, take
a look at the market for modular
classrooms, and then I would
probably look at the safety bar
based on the numbers of school
children around the country; I
think there are 420,000 school
buses in the country transporting
hundreds of thousands of children
daily without safety restraints.
Copyright ¸ 1998 Starwood Media Group, Inc. ALL
RIGHTS RESERVED
Important Terms Of Use & Conditions
|
