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Roctest is the worldwide market leader in the civil
engineering sector while their FISO optical
sensors business presents them with the
opportunity to sell into multiple markets from medical to defense
665, rue Pine
St. Lambert QC Canada J4P 2P4
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
May 5, 2005
Mr. Cordeau is President and Chief Executive Officer of Roctest since September 2004.
Prior to that date, he was Senior Vice President at Mitel Corporation and General
Manager of Mitel Semiconductors from 1998 to 2001. He worked as a consultant until
2003 when he joined the Caisse de dépôt et de placement du Québec as senior partner for
private investments. He is a graduate from Sherbrooke University in electrical
engineering and holds a masters degree in the same field from Waterloo University.
Roctest designs, manufactures and markets sensors and high-precision measuring instruments
for the process control, civil engineering, healthcare and defence markets. The company is
recognized for its leading-edge technology, the quality of its technical expertise and its
product development capabilities.
Roctest products are based on two technologies: the vibrating wire technology
well-know and proven, and the fiber optic technology state-of-the-art and promising
technology. The Companys products are mainly sold internationally. Roctest has more
than 140 employees at plants in St-Lambert, Quebec City and Gretz-Armainvilliers (near Paris).
Its shares are listed on the Toronto Stock Exchange under the symbol RTT.
Roctest manufactures geotechnical and structural instruments for monitoring and field
testing of soil, rock, concrete and steel structures which include extensometers,
inclinometers, piezometers, water level systems, cells & stressmeters, strain gauges,
settlement systems, packers, in-situ testing and laboratories equipment, as well as
readout units and dataloggers. The companys instruments measure pressure, bearing
capacity, permeability, displacement, deformation and inclination. All products are
customizable to fit non-standard requirements and specialised projects.
FISO Technologies Inc., a subsidiary of Roctest, is a
leading developer and manufacturer of fiber optic sensors and signal conditioners. FISO is
committed to provide customers with innovative and reliable solutions for measuring
parameters such as temperature, pressure, strain, displacement, force, load and refractive
index in harsh environments and challenging applications.
primary technology and markets
Civil engineering, the Companys traditional market since its creation, offers
countless opportunities and applications for our products whether it is a matter of
design, construction, management or maintenance and repair for projects in the structural,
geotechnical, hydraulic or environmental fields. Used by engineers and technicians, our
sensors and measurement instruments enable our clients to precisely determine the real or
anticipated behavior of a structure by taking into account various factors and physical
parameters. Our products are use for buildings, bridges, dams and energy transmission
The potential of the health market is considerable, offering not only opportunities in the
medical field, but also in health protection and monitoring of workplace safety. Because
of their sensitivity, microscopic size and reliability, the sensors that we manufacture
can also be integrated into a variety of medical instruments such as catheters and
implants. They are especially used for sensing blood pressure and body temperature for
medical diagnoses and during surgical treatments. They also gather the data necessary for
the control and functioning of assistance and vital signs monitoring devices.
This market segment includes both the military and aerospace sectors. Our products are
primarily used in the development, control and testing of propulsion systems, detonators
and detection devices. We have acquired an enviable reputation in this market and we are
especially proud of the strategic role that we play. The needs of this demanding clientele
constantly force us to surpass ourselves and stay at the cutting edge of the technology.
The industrial control market offers promising opportunities, all of which demand
performance and robustness. Our current and targeted customers work in extremely
challenging environments and need customized solutions that exceed their expectations. Our
solution development efforts in this market have placed us in an enviable position as a
preferred high-volume supplier.
CEOCFOinterviews: Mr. Cordeau, what attracted you to Roctest?
Mr. Cordeau: What attracted me was the potential the
company has in their two main sectors. We have a line of business where our sensors are
based on fiber-optic technology, which is relatively new to the market and has huge
potential in many markets including medical and process control. The other line of
business is a more traditional, which Roctest has been involved with for over thirty-five
years. It involves sensors for the civil engineering market, and specifically sensors for
large projects like tunnels and dams. In this market, even though it is a small market of
$150 million dollars, Roctest is one of the leaders with only 10% of the market. I am
excited about the potential to grow this company.
have you done to get things on the right track and what do you still need to accomplish?
Mr. Cordeau: The previous management did much of the
work before I arrived in terms of reducing the overhead of the company. Since my arrival,
my focus has been mainly on the sales and marketing activities as well as a focus to drive
the cost of goods down as much as possible.
CEOCFOinterviews: How is
Mr. Cordeau: It is going well. Obviously, the sales
cycle is very different in both of our businesses. We are seeing improvements on the
Roctest side in Asia and we are getting more aggressive in most regions. On the FISO side,
the optical sensor business, we have a large number of leads now but the design cycle is
quite long, so I do not anticipate a significant boost in revenues for another twelve
you tell us more about the fiber-optic sensors?
Mr. Cordeau: Fiber-optic technology has been around for
a long time in the telecom market. Right now, the main applications are for sensing things
like temperature and pressure. The fiber-optic technology has significant advantages over
traditional technology. One of the main advantage is that it is immune to all kinds of
signals, which in traditional technology would make sensing impossible for certain
applications. For example, in a large MRI machine, the magnetic field is so strong that if
you want to measure the temperature of a patient, or pressure, the traditional electrical
measurement will not work. Because fiber-optic technology is a passive technology, it can
be applied in those areas. Another area where we have significant traction is an
application in the medical sector, where pressure sensors are installed within a catheter
for some heart treatment. In this case, the technology is selected because the size of the
sensor is the size of a hair, so it is tiny. Those are two of the main advantages of
fiber-optic technology; now it is expensive, but in some applications it is the only
you going to people or are they coming to you?
Mr. Cordeau: In the last few years, FISO has been doing
a lot of marketing activities to eventually get many of the OEMs to use the technology. We
are taking a much more aggressive stand right now and identifying the specific markets
where we believe our technology will provide significant advantage to our customers.
is the reaction in the marketplace?
Mr. Cordeau: In most markets, people do not buy
technologies; they buy solutions that will add value to their products. Our first approach
is to show the potential customers the value add of our solution into their end product.
Then it is easy to get acceptance. Because it is a relatively new technology, we always go
through a phase of qualification with these new customers. That qualification phase will
vary depending whether that customer is familiar or not with that technology. In some
cases, we need to prove that this new technology is working as we claim it is.
there a particular geographic area in which you are focused?
Mr. Cordeau: The two businesses are different at the moment. The Roctest business,
which is selling the sensors into large civil engineering projects, is worldwide. It is
equal distribution. We sell in North America, Europe and Asia. You will see more
activities in Asia as there are more projects related to dams, particularly in China. In
the case of FISO, right now, most of our business is close to 60 or 65% in North America.
There is 20% in Europe and 10% in Asia. The focus this year is not only to support North
America but to push ahead in Europe and Asia more aggressively.
CEOCFOinterviews: Do you
see acquisitions in the future?
Mr. Cordeau: On the FISO side, we have solutions,
technologies, plenty of opportunities, and a strong IP portfolio, I do not see
acquisitions as a mean to grow the business. I think most of the growth will be organic.
On the Roctest side, in the civil engineering world, we have about 10% of the market
share. There may be three other players with roughly the same market share and the rest is
highly fragmented. So we see M&A (mergers & acquisitions) as a means to capture
additional market share on top of our own activities to pursue organic growth.
CEOCFOinterviews: Do you
have manufacturing facilities in both Quebec and France?
Mr. Cordeau: We have two manufacturing facilities in Quebec,
one near Montreal in St-Lambert and one in Quebec City. We have a small manufacturing
activity for specific products in Paris.
these facilities enough as the business ramps up?
Mr. Cordeau: For having spent most of my life in
operations, I would say that we have plenty of capacity now, mostly because we are
operating only 40 hours per week. It is easy to hire people and to increase the capacity
as we grow the business.
should your customers buy from Roctest as opposed to your competitors?
Mr. Cordeau: On the Roctest side, in the civil
engineering sector, we have been in business for more than 35 years with most of our
originally installed products still working. Therefore, we have a lot of experience in
that market. We are quite innovative in developing our products and supporting our
customers doing installation and offering maintenance services. We offer a total solution
and that is unique to Roctest. One the FISO side, we sell for over $6 million Canadian of
optical sensors. That makes us the largest manufacturer of optical sensors and the one
with the most experience in manufacturing those sensors in high volume. We have
significant experience in the medical and process control sectors. We understand our
customers expectations and we support them in the design phase.
is ahead for 2005?
Mr. Cordeau: "Hopefully, it will be another great year
in terms of growth and significant achievements and in reducing our costs when it comes to
manufacturing these products. I think 2005 will be a record year when it comes to
launching new products, and putting in-place a solid foundation for the following years,
and if everything goes well, maybe an acquisition."
are the challenges going forward and how are you ready?
Mr. Cordeau: On the Roctest side, the challenge we have
is the highly fragmented market we play in and the competition from countries with low
cost structure such as China. This is something we are working on. You have to come up
with a cost structure similar to them or with a product that provides sufficient
additional value to our customers that they will be willing to pay the extra money
compared to the lower cost product. On the FISO side, it is identifying those
opportunities that will provide the biggest return for us as FISO has been mostly
technology driven in the past.
should potential investors be looking at the company now, and what should they know that
they might not realize when they first look at the company?
Mr. Cordeau: From an investor point-of-view, the stock
price is relatively low and does not reflect the value of the company. We have a strong
balance sheet and roughly a dollar cash per share. For a company that is profitable and
generating over $20 million dollars, the stock price is relatively low. I think with the
growth that we have shown in the last year, with the willingness of the board and of the
management to accelerate the growth of the company, it is a very good opportunity for
CEOCFOinterviews: In closing, is reaching investors a focus for you?
Mr. Cordeau: I have always said that I cannot control
the stock price or what investors do or do not do. The only thing I can control is
building a company on solid foundations, which adds value to the customer and, which has
profitable growth. We hope investors will realize we are a serious company and we hope
they will see the same thing we see: a fantastic opportunity.
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