On February 13, 2017 we stated to our premium members that we intended to keep a close eye on a microcap wind energy company due to its restructuring efforts and a recent acquisition of a privately-held fabricator, kitter and assembler of industrial systems, primarily supporting the global gas turbine market.
Company Fun Facts
- Wind Towers – 92% of revenue
- Industrial (mainly gearing products) – 8% of revenue
- Employees – 600
- 2016 Revenue – $181 million
- Zero debt
- $200 million in NOL (tax shelter)
- Served Markets :
“Our most significant presence is within the U.S. wind energy industry, although we have diversified into other industrial markets in order to improve our capacity utilization and reduce our exposure to uncertainty related to favorable governmental policies currently supporting the U.S. wind energy industry.
Outside of the wind energy market, we provide precision gearing and specialty weldments to a broad range of industrial customers for oil and gas (“O&G”), mining, steel and other industrial applications.
Recent Acquisition of Red Wolf targets the gas turbine industry.”
Challenges Faced Over The Years
- Manufacturing inefficiencies
- Too much exposure to this segment
- Loss of major customer
- Exposure to energy customers impacted by depressed oil prices
- Unsuccessful acquisitions made in 2007 and 2008
- Customer concentration
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- More focused acquisition strategy
- Improve quality control
- Diversify within the industrial segment
- Compressed Natural Gas (CNG) Equipment
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Interview with Management
We had a chance to speak with a member of the company’s management team. We were impressed with her candidness when we discussed past missteps and unfortunate circumstances the company has faced since it went public through a reverse merger in 2006.
Log in to read our interview notes, as well as our take on valuation: