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Allied Defense Group, Inc. (ADG) |
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CEOCFO
Interview Index |
This is a printer friendly page! The Allied Defense Group, Inc. is a
diversified international portfolio of defense and security companies which operate in
worldwide markets BIO: Prior to this position, he was the Chief Executive
Officer of the Army’s $1.3 billion international morale and recreation business
encompassing the Army’s quality of life programs. He managed this large
organization providing direction, personnel management, professional development and
training. In this position, he was fully accountable to an internal executive Board
of Directors on the strategy, budget and results of all policies and programs. He is a graduate of Florida State University and
obtained a Masters of Arts degree from Sam Houston State University. He is also a
graduate of Duke University’s Advanced Management Program. He is the author of “Company Command: The Bottom Line,” an
authoritative leadership book widely used throughout the Army and other services. Gil Meyer, a versatile senior executive, has a strong
record in developing and implementing strategic programs, team building, managing large
budgets and optimizing fiscal efficiency. He brings 33 years of experience in the
fields of law enforcement, human resource management, business, business communication and
leadership consulting to the Allied Defense Group team. MECAR S.A. is a long-time,
recognized leader in the development and production of advanced conventional medium to
large caliber ammunition and sophisticated weapons systems. MECAR's complete spectrum of
products ranges from 25mm to 155mm ammunition, in addition to recognized world leadership
in bullet trap grenades and a complete line of the highest quality hand grenades.
Key to MECAR's success is its unbroken record of providing products with high
performance, quality, and reliability to meet the toughest combat conditions and the most
urgent schedules. With the creation of MECAR USA, ADG added a U.S.-based ammunition
and pyrotechnics device manufacturer to its portfolio. MECAR USA is anticipated to
be operational in the last quarter of 2004. The VSK Group designs, develops, markets, and
services sophisticated electronic security systems throughout Europe. Whether for
security, access control, fire detection or intelligent management systems, VSK Group
provides governments, commercial businesses and financial institutions with reliable,
cost-efficient, state of the art solutions to the most demanding and complex security
problems. NS Microwave's products and
systems are used in gathering, transmitting, receiving and processing multiple signals
from remote locations. Proprietary products and services include cameras, command/control
systems, video concealments, microwave link solutions and other sensors, which are ideally
suited for fixed observation and transmitter surveillance installations. NS
Microwave also offers customizable mobile command centers and airborne
camera/tracking/transmitter surveillance packages. Battlefield Effects Simulators
are used to safely prepare soldiers and marines for battlefield conditions. The simulators
fire pyrotechnic cartridges that simulate the flash, smoke and sound of fired or exploding
shells. Titan Dynamics Systems, Inc.’s (TDSI) systems are ultra-safe, highly reliable
and cost effective. The company's focus for the future is on taking advantage of its
patented technologies to innovate military training environments and applicable commercial
fields. TDSI's underlying technologies are applicable to a diverse range of other markets
and products such as triggering automotive airbags and military ejection seats, initiating
fire extinguisher systems, and theatrical fireworks. SeaSpace Corporation was
established through work started by scientists at Scripps Institution of Oceanography,
whose efforts were aimed at receiving and processing data from the first generation of
weather- and ocean-monitoring satellites launched in the mid-1970s. Founded in 1982,
SeaSpace sells internationally to over 450 commercial and military customers and supports
over 350 installed receiving stations. It pioneered the development of small-scale remote
sensing earth stations in the late 1980's, and recently introduced the first ground
station that supports the newest generation "X-Band" satellites being launched
by NASA and other organizations. From these early roots within the research community,
SeaSpace has matured into an innovative company that develops and markets TeraScan®
systems throughout the world, serving the needs of both academic and commercial users as
well as government agencies. CEOCFOinterviews:
General Meyer, how has Allied Defense Group changed under your leadership? General Meyer: “The
Allied Defense Group changed under the leadership of General (Retired) J. H. Binford Peay
and me when we were hired by the Board of Directors in 2001. Our mandate was to take the
company to a new strategic level and not take a long time getting there. By that, the
board meant for us to expand the Company’s horizons. Consequently, we developed a
vision for the future of the company and we are now a portfolio of strategic defense and
security businesses. When we started in 2001, we had two companies, MECAR S.A. and the VSK
Group. Now we have four additional companies, expanding our portfolio in the defense and
security arena.” CEOCFOinterviews: How
does it break up as far as the different companies and how would you like to see that in
the future? General Meyer: “Right now, ADG is primarily a defense company (75%); the remainder of our business is divided between commercial and law enforcement business. I would like to see that division in the future probably a little bit more in the commercial arena with less reliance by Allied Defense on its main subsidiary of MECAR. MECAR makes up about 70% of our business and we would like to get this ratio down to around 55% so that we are more diversified. We have two dominant subsidiaries located overseas and we would like that mix to be better on the U.S. side, again establishing balance.” CEOCFOinterviews: What
is the plan to accomplish your goal? General Meyer: “We
would like to go from $170 million in revenue to about $400 million in revenue in the next
three to five years. These goals would be accomplished through increasing the
profitability of our current subsidiaries, particularly the U.S. subsidiaries, and through
acquisitions. In the next few years, we would like to grow from six subsidiary companies
to ten or eleven.” CEOCFOinterviews: How do
you increase the profitability and how do you grow the U.S. companies? General Meyer: “We
have to do a better job of keeping those organizations right-sized. We have already taken
measures to do just that by implementing new leadership, taking material cost reduction
efforts, and reducing the workforce. The next area of concentration for increasing
profitability is diversifying the customer base, which we have already started. Two of the
three U.S subsidiaries had a dominant customer base that, through no fault of their own,
waned in the last year. It was a good lesson and helped us expand our customer base more
quickly. For example, NS Microwave, instead of relying primarily on law enforcement, has
expanded its horizon and is working on orders in port security, airport security, boarder
security, and the international arena. That is an example of what will help our subsidiary
companies become more profitable.” CEOCFOinterviews: Will
you tell us the types of companies you might be looking for when considering future
acquisitions? General Meyer: We will
add companies that stay within the portfolio of strategic defense and security companies.
Within our portfolio we have an ordinance and manufacture division, an electronic security
division, software training and simulation division and an environmental security and
safety division. We want to concentrate on developing the synergies the companies can
provide one another, and that is difficult to do if we expand outside our current
divisions. We have some key metrics we would like to achieve if we could find the right
company and we lean more towards a hardware manufacturer. We would like to acquire a
company with trailing 12 months revenue between $25-50 million and a trailing 24-month
growth rate of about 10% with a similar growth rate going forward. We would like an EBITDA
target of 15%, able to deliver 6-10% in net income after tax and could be acquired for an
EBIDTA multiple of 4-7. Those are pretty ambitious goals and trying to find the ideal
company like that is going to be difficult but that is our objective.” CEOCFOinterviews: Why
should investors be interested in Allied Defense Group? General Meyer: “People choose Allied because of our strengths and our potential. For example, we have a very good diversified business model. We have a military and commercial customer base, operate in high growth markets, have proprietary products and intellectual properties, and we have the ability to design and engineer to meet the distinct needs of each customer. These qualities and abilities extend to all six of our subsidiaries and really separate us from other competitors. What excites an individual about Allied Defense is we
have the right vision for the future. We have had eighteen consecutive profitable
quarters, have minimal long term debt, a solid backlog, and an ethical and experienced
management team. Our job at the headquarters is to try to get the company the recognition
that it merits. I look at Allied Defense for the long term.” CEOCFOinterviews: What
do the companies contracting with you see in Allied that they are not finding in your
competition and what are you giving your customers that makes them want to come back? General Meyer: “MECAR has flexibility on it production line. MECAR has created the ability to adjust its production line significantly to satisfy the customers needs, particularly the time frame. MECAR’s R&D capability also separates the company from its competitors. I could go on and cite you countless examples. The proof from MECAR is that they have never lost a customer. The VSK Group’s ability to diversify, coupled with its R&D capability, also separates it because it is high end and state of the art. Overall I would say that our research and development in all of our companies is probably the main advantage that distinguishes us over others.” CEOCFOinterviews: Would
you tell us about your recent contracts that you received? General Meyer: “The most recent contract that we announced today (May 6, 2004) is the VSK Group, where they gained a $3 million contract in Portugal with a telecommunications firm. I am proud of that because VSK diversified its customer base last year by about 35% and they will try to do that again this year. Sometimes it is hard to get this publicity out, particularly in our electronic security division, because a customer does not want the world to know for security reasons that they just bought a particular security system.” CEOCFOinterviews: How do
you market your services? General Meyer: “As
a general rule, we leave it up to each subsidiary to market its own products because each
company is so unique. They have their niche arena. At the corporate headquarters, we
assist the subsidiaries with visits, solutions to problems, access, and marketing to the
investors.” CEOCFOinterviews: How
much affect does the current world condition have on interest in Allied Defense, and how
do you take the current world situation and use it to your advantage? General Meyer: “If
you look at the current state of the world, we are probably in one of the most dangerous
times of our history. Since we are defense and security, we are a natural fit to be
able to address the needs of our country today. We do not want to take advantage of the
current world situation, what we want to do is offer our products as a remedy to the
challenges in the world. We just sent a team from one of our electronic security companies
to Iraq because we think we can provide products that will alleviate and help minimize all
of the needless deaths of American soldiers in Iraq. We think our electronic security
companies can provide security assistance to federal, state and local law enforcement as
well as port and airport security. We do not have a problem stepping up to the plate and
saying we have a solution. We are not known as a hard-sell company; we like our products
to sell themselves. We present our product and provide it at an affordable price, as
quickly as possible.” CEOCFOinterviews: In
closing, what should people know about The Allied Defense Group that they may not realize
when they look the company over? General Meyer: “I think people should look at the long-term vision of Allied Defense. It is the correct vision suggested by a stellar Board of Directors and management team. The dedication and desire to excel penetrates the entire organization. Challenges are viewed as opportunities. This structure is totally focused on achieving success for the shareholder.” disclaimers |
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