Moro Corporation (MRCR-OTC: PK)
March 26, 2010 Issue
The Most Powerful Name In Corporate News and Information
Construction Material And Mechanical Contracting Company Moro Corporation Made More Money In 2009 Than The Previous Year Despite A Slower Economy
Moro Corporation, together with its
subsidiaries, engages in construction materials and mechanical contracting
businesses. The company’s construction material activities include
fabrication of reinforcing steel and distribution of construction
accessories to customers primarily in metropolitan New York City, New
Jersey, eastern Pennsylvania Rhode Island and greater Boston. Its mechanical
contracting activities consist of fabrication of sheet metal ductwork and
process piping; mechanical contracting (HVAC, plumbing, piping) to customers
located in North East Pennsylvania. The company also provides residential
HVAC contracting in the greater Albany/Schenectady and Hudson Valley
sections of New York State. The company’s products and services are
primarily used in construction projects, such as highways, bridges,
industrial and commercial buildings, hospitals, schools, office buildings,
and other kinds of structures. Its customers are mainly contractors and end
users. The company was formerly known as Foodcourt Entertainment Network,
Inc. and changed its name to Moro Corporation in June 1999. Moro Corporation
is based in Wayne (suburban Philadelphia), Pennsylvania.
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – March 26, 2010
Mr. Menard: Moro’s business is divided into three segments; one, steel fabricating and steel distribution, two, commercial mechanical contracting, and three, residential heating, ventilating and air-conditioning contracting. In general, we have avoided most of the economic problems in the downturn of the economy, although most construction oriented customers are not doing well. In the year 2009 we made more money than we did in the previous year, and we probably are an exception.
CEOCFO: How have you managed to thrive in the current economic environment?
Mr. Menard: First of all we have highly decentralized management. All of our subsidiaries are run very autonomously and Moro Corporation goes out of its way to not hurt or harm these businesses like many parent companies do.
CEOCFO: Would you elaborate on the philosophy of Moro?
We have good entrepreneurial management. We reward our people well and we
control costs. We have some very good customers and good contracts. Instead
of accepting the status quo, we fight to make certain that we earn as much
money as we can and we are sort of a feisty company. In addition, we have
extremely good customer relationships. We pay all of our bills faster than
do most of our competitors do. We are considered to be a very nice company
to do business with.
CEOCFO: What about the infrastructure and shovel ready construction projects that has been talked about by the Obama administration, has there been any effect on Moro?
Mr. Menard: With regard to the stimulus, all of our businesses have been negatively impacted by the Obama stimulus program. We have found very little stimulus money coming into our market place. The reason it has had a negative affect is that our customers and the banks that support our customers have been very confused about what the stimulus plan was supposed to do and when it would occur. So jobs that we might otherwise have gotten and jobs that might have proceeded, have been slowed down by municipalities and state governments, because they are waiting to see what the stimulus program might be.
CEOCFO: Is fact that the various companies are under the Moro Corporation umbrella meaningful to your customers; is there a lot of synergy and does it make a difference to people you are working with?
Mr. Menard: There is not very much synergy, but as a bigger company, we are able to secure some jobs because we are bigger, and that benefits most companies that are in the contracting business that sometimes have to be able to post a bond. So that is an important synergy, plus customers are more comfortable working with a larger company and there is strength in numbers. Part of the theory of Moro Corporation is that by having different subsidiaries dealing with different customers in different markets is that they all of the businesses won’t have earnings problems at the same time.
CEOCFO: Are there new trends in manufacturing that you are doing in fabrication and construction that you are able to take advantage of and build on?
Mr. Menard: In all of our fabrication businesses, the manufacturers of fabrication equipment have come out in recent years with new equipment that is faster and less costly to operate. All of our companies have relatively new equipment, so we have taken advantage of that, and we have been able to do that because all of our companies are profitable. We reinvest 100% of the profits in our businesses. Moro Corporation in its tenure has never paid a dividend and probably never will, and that has also been a strength and advantage.
CEOCFO: Do you see new acquisitions?
Mr. Menard: We are constantly looking at new acquisitions. We are looking at acquisitions today and we are in conversations with companies now. We will be visiting some new companies this year. The recession is making some companies available for purchase that might not otherwise be available for purchase. Some companies are having trouble getting bank financing, bonding or maybe they are not making very much money. Since we are in a very strong financial position, we hope to be able to acquire two or three companies over the next year or so.
CEOCFO: Moro has worked on some fairly big projects; who are some of you customers?
Mr. Menard: Some of the customers that we have had in recent years for refurbishing steel are the Garden State Parkway in New Jersey, The New Jersey Turnpike, Merck, Newark Airport, New York New Jersey Port Authority, Philadelphia Airport, and Siemens. Customers also may be owners of numerous buildings such as bank buildings, government buildings, hospitals, schools and shopping centers.
In the contracting business some of our customers have been: Geisinger Medical Center, GlaxoSmithKlein, Marriott Hotel in Lancaster, Mount Airy Casino, Mohegan Sun Casino, Penn National, Scranton Wilkes Barre Airport, East Stroudsburg School District, Verizon, William Penn School District, Williamsport Hospital, and many others.
CEOCFO: Do you see geographic expansion?
Mr. Menard: I expect that we will geographically expand
CEOCFO: Is most of your work done on a bid basis, and are you coming in lower or is your reputation the deciding factor?
Mr. Menard: When we bid for schools and certain government projects, the general consideration by the customer is the lowest price and a responsible contractor. It is very competitive in selection by the customer. Where we are not dealing with a government entity, the price is a consideration. However, consideration is also given to reputation, the credibility of our company, and the fact that in the forty years our mechanical contracting business has been in existence, we have never had a lawsuit against the company, or a claim for poor workmanship. We have a lot of what is called ‘last looks’. This is where we have good relationships with our customers and they come back to us and say, ‘if you can match a certain price you can have the work’. Then the decision is made by us whether or not to reduce our price. Reputation is very important, it is very critical in our business.
CEOCFO: How do you maintain your high standards?
Mr. Menard: First of all, we have good relations with our employees. We are a nice company to deal with, and we pay competitive or slightly higher wages. We are mainly non-union, although one subsidiary has union employees. All of our non-union people have company-paid health insurance and a company 401-k or the equivalent. We have a variety of profit sharing plans for the various subsidiaries. Everybody has cash dangled in front of them and that is the great motivator.
CEOCFO: In closing, what is the strategy going forward and why should investors pay attention to Moro Corporation?
Mr. Menard: Moro Corporation is a old fashioned low profile company that is very profitable. We are not a gimmicky company, and we don’t follow the latest fads. We try to do exactly the opposite of what they are teaching in the business schools. We don’t have a lot of overhead; we don’t have a lot of fancy lingo. Our average return on net worth has been roughly 25-30% over its existence. We are dedicated to building the company. Last year, we did about $75 million in sales. We are probably a year or two away from being a $100 million company and then we are going to take actions to eventually become a $200 million company. We are a neat little company. We are not making things complicated for our customers or employees, nor for our vendors.
CEOCFO: So you have it right!
Menard: I think
Moro Corporation is a old fashioned low profile company that is very profitable. We are not a gimmicky company, and we don’t follow the latest fads. We try to do exactly the opposite of what they are teaching in the business schools. We don’t have a lot of overhead; we don’t have a lot of fancy lingo. Our average return on net worth has been roughly 25-30% over its existence. We are dedicated to building the company. Last year, we did about $75 million in sales. We are probably a year or two away from being a $100 million company and then we are going to take actions to eventually become a $200 million company. - David W. Menard
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