Global Fastener News

FIN Review of Fastener Stocks in 2002 L-T

Jason Sandefur

Lawson Products
Lawson Products Inc. finished 2002 �debt free� and focused on increasing long-term net income. Lawson reported sales edged up 2%, while net income increased 40% to $12.4 million. Full-year OEM sales increased $5.6 million, while MRO revenues gained $2.5 million and had improved gross margins.
Lawson expanded its fastener business at the beginning of 2001 with the acquisition of the North American Industrial Products and Kent Automotive divisions of Premier Farnell plc.
Lawson�s 900,000 products include such industrial supplies as hoses, lubricants and cleansers, and car parts.
Founded in 1952, Lawson purchases most products in bulk and repackages in smaller quantities, and 90% of the products are sold with Lawson�s own label. Capital expenditures in 2002 were $6 million.
Lawson has 16 distribution centers and a manufacturing plant � Automatic Screw Machine Products Co. of Decatur, AL � and 1,775 independent sales reps in North America.
Founder Sidney Port and his family own about 45% of the stock.
Headquarters: 1666 E. Touhy Ave., Des Plaines, IL 60018. Tel: 847 827-9666 or 800 448-8985 Fax 847 297-2037
Web: lawsonproducts.com
NASDAQ Symbol: LAWS
CEO: Robert Washlow, 58
Investor Relations: Joseph Pawlick
Founded: 1952
Employees: 1,440
Percentage of revenue from fastener-related products: 43%
Nucor
Nucor Corp. laid claim to two distinctions in 2002: largest North American steel producer (13.62 million tons) and largest U.S. recycler (13.2 million tons). The steelmaking side of Nucor got a boost from the 30% Bush Administration steel tariffs for two years. However, the Bush tariffs have increased steel prices to fastener manufacturers � including Nucor Fasteners.
The company took advantage of a weak economy to make two acquisitions, most notably the December 2002 purchase of Birmingham Steel for $615 million. The acquisition was the largest in Nucor history.
Nucor�s cold finished steel sales � including production at its fastener plant in St. Joe, IN � rose from 203,000 tons in 2001 to 226,000 for 2002. Fastener capacity at Nucor�s highly automated facility is more than 75,000 tons. In August 2002 Scott Wulff was named general manager of Nucor Fasteners, replacing Jerry DeMars, who was promoted to vice president of SBQ Products, which includes the fastener division.
Nucor has turned a profit in every quarter since 1966, and reportedly has never laid off any employees in 30 years.
Steel sales rebounded 11% to $4.3 billion. Some U.S. steelmakers struggled in 2002, while others used the steel tariffs to expand market share.
Nucor entered the fastener business in 1986 when it opened its $25 million plant in St. Joe. The facility produces hex-head cap screws, hex bolts, structural bolts and custom engineered fasteners. Nucor closed its Conway, AR, fastener plant.
Nucor fasteners are used in automotive, machine tool, farm implement, construction and military applications.
Headquarters: 2100 Rexford Rd., Charlotte, NC 28211. Tel: 704 366-7000 Fax 704 362-4208
Web: nucor.com
NYSE Symbol: NUE
CEO: Daniel Dimicco, 52
Key fastener executives: Mike Parrish, executive vice president; Jerry DeMars, vice president of SBQ products; Scott Wulff, general manager of fastener division
Founded: 1899
Employees: 9,800
Park-Ohio
Restructuring and price increases were the order of business for Park-Ohio Holdings Corp. in 2002. Sales were flat at $634.5 million, while operating income rose to $16.2 million compared to a loss of $4.4 million in 2001.
Park-Ohio invested $14.7 million in capital expenditures, and used $5.6 million to pay off debt.
Park-Ohio�s Integrated Logistics Solutions provides logistics services for production components to OEMs, other manufacturers and distributors, including semiconductor equipment, industrial equipment, aerospace and defense, electrical controls, HVAC, heavy-duty truck, vehicle parts, appliances, and lawn and garden equipment.
Park-Ohio supplies logistics services for fasteners and related industrial components and manufactures engineered products for OEMs. The company consolidated 20 logistics facilities and closed or sold eight manufacturing facilities in 2001 and 2002, recording restructuring charges of $28.5 million in 2001 and $19.2 million in 2002.
Park-Ohio entered the fastener business in 1995 by acquiring a historic name in the industry, RB&W. With the added acquisitions of Arden Industrial Products Inc., Arcon Fastener Corporation and screw machine products manufacturer Delo Screw Products Co. in 1997, and Direct Fasteners of Ontario, Canada, and Gateway Industrial Supply in 1998, the industrial fastener logistics business became a majority of Park-Ohio revenue.
In 1999 Park-Ohio acquired northern NJ-based Columbia Nut & Bolt Corp.
Park-Ohio has grown rapidly, with sales going from $67 million in 1992 to $754,7 million for 2000 from both internal growth and acquisitions.
Ford accounts for 10% of sales.
CEO Edward Crawford owns more than 25% of Park-Ohio stock.
Headquarters: 23000 Euclid Ave., Cleveland, OH 44117. Tel: 216 692-7200 Fax 216 692-7174
NASDAQ Symbol: PKOH
CEO: Edward Crawford, 63
Key fastener executive: Andrew Arena, president, logistics
Employees: 2,900
Percentage of revenue from fastener-related products: 63%
H. Paulin & Co.
H. Paulin & Co. Ltd. reported record sales of CAD 123.6 million (US$91.3 million) in 2002, an increase of 12%. The retail hardware and automotive markets provided the biggest boost in sales. Exports climbed 40% to about CAD 12.3 million. �Every division in the Company achieved sales increases,� president Richard Paulin announced. However, net income remained flat at CAD 3.22 million as worldwide steel prices rose and the auto industry demanded price concessions and zero-defect quality improvements. In response, Richard Paulin said his company will diversity its customer base, gain higher margins by developing complex parts, improving operations, and providing additional employee training.
Part of the Toronto, Ontario-based manufacturer and supplier�s success during 2002 came from the successful introduction of Paulin fasteners into 46 Home Depot stores in Illinois. Paulin installed its Fastener Finder computer touch screen technology and stocked 2,400 fasteners.
Overall, Paulin added more than 1,100 new products to its inventory.
Paulin made $5.4 million in capital expenditures during 2002 � a 54% increase � to buy cold forming and screw machine equipment, as well as material handling equipment.
Founded by Harry Paulin in 1920, Paulin manufactures and distributes bolts, nuts, screws, industrial fasteners, fluid system components, metal stampings, automotive parts and screw machine components. Paulin supplies 41,000 standard fasteners and manufactures custom cold headed products, metal stampings, screw machine products, self-locking fasteners and custom parts for the automotive, agricultural, electronic and appliance industries. Paulin also produces stainless and nonferrous fasteners for the marine, pulp and paper, chemical and processing industries.
Trademarks include Paulin, Papco, Easy-Spot, Work Savers, Loxxon, Pie-a-Pae, Uni-Bolt, Uni-Nut, Pro-Tip, Contractor Quality and Dominion.
Headquarters: 55 Milne Ave., Toronto, Ontario M1L 4N3 Canada. Tel: 416 694-3351 Fax 416 694-1869
Web: hpaulin.com
Toronto Symbol: PAP.A
CEO: Richard Paulin
Founded: 1920
Employees: Over 500
PennEngineering
PennEngineering 2002 fastener sales dropped 22.6% to $119.23 million. In response, the company cut its workforce by 13.2%. North America accounts for 68.8% of total fastener sales, Europe 23.9%, and the Asia/Pacific market 7.3%.
Sales of fasteners and related products accounted for 79.1% of total product sales in 2002, down from 81.9% in 2001.
PennEnginnering consolidated gross profit dipped 20.7% to $46.6 million in 2002, while fastener segment gross profit decreased 34.4% last year. Gross profit margins in the fastener segment were also negatively impacted by the company�s inventory reduction program, resulting in under-used capacity as production was curtailed.
Fastener Operations segment profit, including Atlas Engineering, dropped 58% to $5.7 million on sales of $83.6 million, a decline of 29%.
In 2002 the company established an Arconix Group distribution facility in Shanghai. This facility joins established Arconix operations in the United States, United Kingdom, Singapore and Mexico. In addition, several of the Arconix sites, most notable Doncaster, UK, underwent expansion in 2002.
Capital expenditures declined 78.5% to $2.8 million.
Of the total 2002 fastener sales, telecommunications and datacommunications markets accounted for 20%, computers were 20%, and automotive comprised 15%.
Fasteners and Pemserter presses are in the Pem Fastening Systems unit, rivet nut fasteners are in Atlas Engineering, distribution and logistics are in Arconix Group; and DC motors are in Pittman.
Founded in 1942 by K.A. Swanstrom, PennEngineering produces self-clinching fasteners, fastener installation equipment, miniature DC electric motors and other metal products. Brand names include PEM self-clinching fasteners, SI inserts for plastics and Pemserter automatic fastener installation equipment.
PennEngineering has locations in North Carolina, Ohio, Pennsylvania, Europe and Asia and independent distribution facilities in several countries.
The Swanstrom family owns more than half the class A common stock.
Headquarters: 5190 Old Easton Rd., P.O. Box 1000, Danboro, PA 18916-1000. Tel: 215 766-8853 or 800 237-4736 Fax 215 766-7366
Web: penn-eng.com
NYSE Symbol: PNN (nonvoting) and PNN.A (voting)
CEO: Kenneth Swanstrom, 63
Investor Relations: CFO Mark Simon
Key fastener executive: Francis Wilson, president of Pem Fastening Systems
Founded: 1942
Employees: 1,344
Percentage of revenue from fastener-related products: 79.1%
Precision Castparts
Precision Castparts Corp. posted a 10% improvement in sales for 2002. However, lower sales volume and �severely depressed� machine tool and automotive markets forced sales in the industrial products segment down 17% to $166.4 million. Segment operating income plummeted to a $4.5 million loss in 2002 compared to a $1.1 million profit in 2001. CEO Mark Donegan said automotive and other industrial customers �continued to cut back orders and hunker down with a recessive mindset.� PCC doesn�t expect those markets to improve in the near future.
PCC Specialty Products Inc. � the fastener machinery tooling group of Precision Castparts �manufactures thread rolling dies and header tooling under technical collaboration with Reed-Rico and Astro Punch in a joint venture with Kadimi Toll Manufacturing Co. in Gurgaon, India. Kadimi began making flat-milled dies during the second quarter of 2002, helping Reed-Rico compete in Europe and South America for sizeable orders. Reed-Rico and Hartford supply threading machines and attachments for fastener production.
Donegan announced PCC reduced costs by moving most of its fastener machine tool production to Rockford, IL. PCC Specialty Products also has plants in Massachusetts, Rhode Island and Michigan.
In 2002 PCC Specialty Products increased ownership of DTI in Raciborz, Poland, to 70%. DTI supplies components and assembles various PCC machine tools.
PCC supplies structural and airfoil components for the aircraft engine and industrial gas turbine industries and has diversified into non-aerospace businesses. The company has more than 100 manufacturing facilities worldwide.
Headquarters: 4650 SW Macadam Ave., Portland, OR 97201-4254. Tel: 503 417-4800 Fax 503 417-4817
Web: precast.com
NYSE Symbol: PCP
CEO: Mark Donegan, 47
Investor Relations: Dwight Weber
Key fastener executives: Greg Delaney, president, PCC Specialty Products
Employees: 13,813
R&B
R&B Inc. sold its Dorman specialty fastener business in May 2002 for $7.4 million, resulting in an after-tax gain of $1.3 million. Sales for the year gained 7% to $215.5 million.
R&B designs, packages and markets 65,000 automotive replacement parts and fasteners, with 40% of its business to OEMs. About half of its products are bought in the U.S.
Hardware fastener brands include Pik-A-Nut. R&B sells under its own brand names (90% of business) and customer private labels.
Customers include AutoZone, Pep Boys, Advance, NAPA, Carquest, AutoValue, Home Depot, Lowe�s, salvage yards and local independent wholesalers. Auto Zone and Advance accounted for 36% of net sales in 2002.
R&B operates 12 warehouse and office facilities in the U.S., Sweden, China and Korea. Domestic warehouses are located in Warsaw, KY; Carrollton, GA; Louisiana, MO; and Baltimore, MD.
Brothers Richard Berman and Steven Berman and their families own 51% of common stock.
Headquarters: 3400 E. Walnut St., Colmar, PA 18915. Tel: 215 997-1800 Fax 215 997-7968
Web: rbinc.com
NASDAQ Symbol: RBIN
CEO: Richard Berman, 46
Investor Relations: Mathias Barton, CFO
Founded: 1978
Employees: 975
SPS Technologies
SPS Technologies Inc. is celebrating 100 years of business during 2003. Despite the milestone, the Jenkintown, PA, fastener manufacturer spent 2002 restructuring its business, closing 11 plants and cutting its workforce by 1,200. In April, SPS moved all automotive fastener manufacturing from Coventry, England, to its operations in Shannon, Ireland. SPS operates 23 factories in the U.S. and 17 in England, Ireland, Canada, Brazil, Australia, China, Italy and France.
SPS reported sales dropped 9.6% to $830.3 million, while net income fell 72% to $6.1 million. Aerospace fastener revenue declined 13.3% during 2002 to $306.1 million. The company does not expect the airline industry to rebound until 2004 or 2005. While sales were poor, SPS was able to reduce its debt by $38.6 million in 2002.
U.S. customers account for 75% of sales, but SPS said its products are gaining market share in Asia, prompting the increased transition of manufacturing to the continent. SPS has over 250 employees in Asia.
John Thompson succeeded Charles Grigg in April 2002 as CEO.
A group lead by investor Mario Gabelli owns about a 30% stake in SPS.
SPS� largest market is aircraft, followed by transportation, turbine engines, general industrial, consumer products, electronics and medical.
SPS Technologies, founded in 1903 as Standard Pressed Steel Co., manufactures high-strength fastening and assembly systems, superalloys and magnetic materials.
Aerospace fasteners represent about 36% of SPS revenues, automotive fasteners 17% and industrial fasteners 12%.
Headquarters: Two Pitcairn Place, 165 Township Line Rd., Jenkintown, PA 19046. Tel: 215 517-2000 Fax 215 517-2032
Web: spstech.com
NYSE Symbol: ST
CEO: John Thompson, 55
Investor Relations: Margaret Zminda
Founded: 1903
Employees: 5,860
Percentage of revenue from fastener-related products: 72%
T-3 Energy Services
Distribution sales, including fasteners, for T-3 Energy Services Inc. grew 21.6% to $37.25 million in 2002, comprising 25% of overall company revenue. On a pro forma basis, however, sales slid 17%. The segment was formed by the May 2001 acquisition of A&B Bolt.
Energy industry veteran Gus Halas became CEO in May 2003, replacing Mike Stansberry, who will continue as executive vice president of business development. Halas joins T-3 from Clore Automotive in Lenexa, KS.
T-3 operates 24 facilities in the Gulf Coast region, including four distribution centers.
T-3 merged with Industrial Holdings Inc. in December 2001 to form T-3 Energy Services, but with fewer fastener businesses. Walker Bolt/Ameritech, LSS-Lonestar Screw and A&B Bolt are now part of T-3. Prior to being absorbed by T-3, Industrial Holdings sold Landreth Metal Forming Inc. and the American Rivet, Ideal Products and Orbitform parts of its Engineered Products Group in preparation for the merger.
Consolidated sales increased 63% to $146.9 million in 2002 as a result of the IHI merger and the of A&B Bolt acquisition.
Today T-3 is focused on the oil and gas industry. T-3 provides oilfield products and services to oil and gas companies engaged in exploration, production and development in the Gulf of Mexico and onshore drilling and well servicing, petrochemical and refinery operators, shipyards and offshore fabrication companies in the Gulf Coast region.
First Reserve Fund VIII L.P. owns about 85% of T-3.
Headquarters: 13111 NW Fwy. #500, Houston, TX 77040. Tel: 713 996-4110 Fax 713 996-4123
Web: t3es.com
NASDAQ Symbol: TTES
CEO: Gus Halas
Investor Relations: Michael Mino
Key fastener executives: Judy Jandl, Walker Bolt and LSS-Lone Star Screw; Brandon Dawes, A&B Bolt & Supply
Employees: 886
Percentage of revenue from fastener-related products: 25%
Textron
Consolidation was the focus of Textron Inc. in 2002 as the company continued an aggressive restructuring program that will eliminate 10,000 jobs and close 99 facilities by the end of 2004. Textron Fastening Systems announced a major reorganization and new management team, creating four global business units. Previously TFS was divided into automotive, commercial and advanced solutions groups.
In early 2003, TFS announced plans to open a plant in Wuxi, China, to supply the Chinese automotive market. The plant is TFS� first facility in China. The announcement followed news that Troy, MI-based TFS will close its Syntek plant in Rockford, IL, laying off 100 workers and shifting production to Mexico and China. TFS also announced consolidation of its Precision Components line to the TFS plant in Decorah, IA, with a net loss of 100 jobs.
TFS revenues fell about 2% to $1.65 billion in 2001, providing 16% of Providence, RI-based Textron Inc.�s revenue. Segment profit increased 10% to $68 million.
TFS employs 11,000 people at plants in 17 countries.
According to the Boston Globe, Textron�s share climbed to $50 in April 2002 but closed in May 2003 at about $32, a trend analysts attribute to concern over weakness in end markets for the company�s other business lines, including fasteners.
Parent company Textron saw sales decline $1.6 billion, mostly due to the sale of its automotive trim business. Continued weakness in market conditions could see Textron turn to military sales for improvement. Military sales accounted for 13% of Textron�s revenue in 2002.
In 1999 TFS acquired Flexalloy Inc., whose automotive customer list and distribution experience position Textron for more automotive business as automakers cut the number of fastener suppliers and look for logistics services.
TFS� major brands include: Avdel, Cherry, Camcar, Elco, Boesner, S�kosim and Oelschl�ger.
Headquarters: 40 Westminster St., Providence, RI 02903-2596. Tel: 401 421-2800 Fax 401 421-2878
Web: textron.com and textronfasteningsystems.com
NYSE Symbol: TSX
CEO: Lewis Campbell, 56
Investor Relations: Mary Howell
Key fastener executives: Richard Clayton, Textron Fastening Systems president; Bob Simpson, executive vice president, global operations; Martin Schnurr, executive vice president, sales and marketing; James Mallak, executive vice president and CFO
Employees: 49,000
Percentage of revenue from fastener-related products: 16% \
Editor’s Note: The information and statistics in this report have been obtained from sources we believe are reliable but FIN does not warrant the accuracy or completeness. \ �2003 FastenerNews.com