Ameron International Corporation

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Ameron International Corporation

245 South Los Robles Avenue
Pasadena, California 91101
U.S.A.
Telephone: (626) 683-4000
Fax: (626) 683-4060
Web site: http://www.ameron.com

Public Company
Incorporated: 1929 as American Concrete Pipe Co.
Employees: 2,700
Sales: $600.49 million (2003)
Stock Exchanges: New York
Ticker Symbol: AMN
NAIC: 327999 All Other Miscellaneous Nonmetallic Mineral Product Manufacturing; 327320 Ready-Mix Concrete Manufacturing; 327390 Other Concrete Product Manufacturing; 331210 Iron and Steel Pipes and Tubes Manufacturing from Purchased Steel; 332312 Fabricated Structural Metal Manufacturing; 332812 Metal Coating, Engraving, and Allied Services (Except Jewelry and Silverware) to Manufacturers; 332999 All Other Miscellaneous Fabricated Metal Product Manufacturing

Ameron International Corporation is a manufacturer of highly engineered products that are sold to customers in the chemical, industrial, energy, transportation, and infrastructure industries. Ameron's business is divided into four operating groups: Performance Coatings and Finishes, Fiberglass-Composite Pipe, Water Transmission, and Infrastructure Products. Through its Performance Coatings & Finishes group, the company makes coatings and surfacer systems that protect metallic and concrete facilities and equipment. The Fiberglass-Composite Pipe group makes fiberglass pipe and fittings used by industrial, petroleum, chemical processing, and petrochemical industries, offering an alternative to metallic piping systems, which inevitably are destroyed under corrosive operating conditions. The company's Water Transmission group manufactures concrete and steel pipe used in the construction of water pipelines. Ameron's Infrastructure Products group includes operations that manufacture concrete and steel poles for highway, street, and outdoor area lighting and for traffic signals. The Infrastructure Products Group also supplies ready-mix concrete, crushed and sized basaltic aggregates, dune sand, and concrete pipe to the construction industry in Hawaii. Ameron operates in North America, South America, Europe, Australasia, and Asia. Through joint-venture companies, Ameron operates in the Middle East, maintaining a presence in Saudi Arabia and Kuwait.

Origins

The earliest precursor to Ameron was established in 1907, but company historians point to 1929 as the true beginning of their enterprise. Early in the year, two companies merged to form American Concrete Pipe Co., the company recognized as Ameron's oldest, direct antecedent. The company's name changed several times during the Great Depression, finally finding some permanence in 1942, when the American Pipe and Construction Co. name first appeared. The company operated under that corporate banner for roughly the next 30 years, as it gradually began to develop interests in the businesses that would support it late in the century.

Ameron Develops Its Modern Structure After the 1970s

During Ameron's formative decades, there were several defining events. The most significant of those milestone moments occurred after the late 1960s. Ameron, at that point, operated nearly exclusively as a manufacturer. Its product line had expanded beyond concrete and steel pipe to include high-performance protective coatings, ready-mix concrete, construction aggregates, and reinforced thermosetting resin pipe and fittings—product categories that became the pillars supporting Ameron. The other principal components of the company's business were added after the beginning of the 1970s, when the name Ameron, Inc. was adopted as the company's official corporate title.

In the years leading up to the company's 50th anniversary, an important addition was made to Ameron's portfolio of products. During the 1970s, the company began to manufacture concrete and steel poles used for lighting streets and other areas. Ameron also began to manufacture tapered steel vertical and cantilevered poles for traffic signals.

During the 1980s, Ameron's moves on the acquisition front added a new business line and greatly increased its involvement in another business line. In 1984, the company acquired a major domestic fiberglass pipe business, marking its entry into the manufacture of fiberglass pipe. The acquisition gave the company a manufacturing plant in Burkburnett, Texas. Ameron gained another important facility four years later, when the company purchased a major steel pipe fabricating facility in Fontana, California. The addition of the plant substantially increased the company's ability to serve the water transmission and distribution market, making its production of water transmission lines one of its primary businesses.

By the end of the 1980s, 60 years of expansion had produced a company with more than $400 million in annual revenue. The company's financial growth during the ensuing two decades occurred at a measured pace—nothing to dazzle Wall Street—but Ameron was not a company operating in markets capable of fueling electric financial growth. The company was a reliable profit generator that achieved revenue growth incrementally, steadily improving its position in markets fundamental to industry.

James Marlen Taking Control: 1993

During the early 1990s, Ameron fell under the control of the leader who would guide it into the 21st century. James Marlen was appointed president and chief executive officer of the company in mid-1993. Marlen joined Ameron after spending nearly 30 years at GenCorp, Inc., a suburban Sacramento, California-based company that underwent significant change during Marlen's lengthy service. When Marlen joined GenCorp, the company ranked as one of the largest tire manufacturers in the world, but by the time he left the company it was beginning to concentrate on manufacturing rocket propulsion systems. Marlen was named vice-president of the company in 1988, the same year he was named president of the company's primary consumer and industrial products segment, GenCorp Polymer Products.

When Marlen joined Ameron, the company was generating approximately $450 million in annual revenue. The company derived the total from four business groups: Protective Coatings Systems, Fiberglass Pipe Systems, Concrete and Steel Pipe Systems, and Construction and Allied Products. The company's Protective Coatings Systems group made high-performance coatings that prevented corrosion, abrasion, and other forms of chemical and physical attack. The coatings, which were used by a broad range of industries, were manufactured at the company's plants in California, Arkansas, and overseas in the Netherlands. Ameron's Fiberglass Pipe Systems group manufactured fiberglass pipe and fittings used by a variety of customers, including operators of offshore oil platforms and marine vessels, who avoided metallic piping systems because of their vulnerability to corrosion. Through its Concrete and Steel Pipe Systems group, Ameron made pipe used by utility companies to transport water and for industrial wastewater and sewage collection. The company conducted such activity at eight manufacturing plants located in the western United States. The Construction and Allied Products group comprised two divisions, the HC&D division, which supplied ready-mix concrete, basaltic aggregates, and dune sand to the construction industry in Hawaii, and the Pole Products and Systems division, which manufactured poles for highway, street, and outdoor area lighting and for traffic signals.

Under Marlen's leadership, Ameron expanded its operations along the company's four business lines, increasing its interests both domestically and abroad. The company's involvement in international markets, which preceded Marlen's appointment as president and chief executive officer, increased under his rule. In 1996, one year after Marlen was named chairman, the company changed its name to Ameron International Corporation to reflect the multinational composition of its business. The year also included two acquisitions that strengthened the company's Protective Coatings Systems group and Fiberglass Pipe Systems group. The former was enriched by the acquisition of the Devoe marine coatings business belonging to Imperial Chemical Industries, Plc, while the latter was bolstered by the purchase of Centron, a leading manufacturer of fiberglass pipe for the oilfield market.

During Marlen's first five years of leadership, Ameron increased its revenue volume by roughly $100 million. The company generated $552 million in sales in 1998, a year that saw it acquire the industrial paints business belonging to a British company, Croda International. The acquisition, which supplied paints for heavy duty and general industrial applications, comprised operations in the United Kingdom, Australia, and New Zealand. Ameron also acquired Hope Composites 2000, Inc. in 1998. Hope, a privately owned company based in Georgia, manufactured fiberglass pipe and fittings.

Company Perspectives:

Ameron has consistently achieved quality earnings by developing and executing specific strategies that are unique for each business and by relying on a common set of strategic fundamentals. These can be summarized as: selective investments, value-added growth, and operational efficiency. By selective investments, we mean making capital investment decisions after rigorous risk examination to ensure that the investment returns are commensurate with the risk.

Ameron in the 21st Century

As Ameron entered the 21st century, it altered the names of its four business groups. The Protective Coatings Systems group was renamed the Performance Coatings and Finishes group. The Fiberglass Pipe Systems group was renamed the Fiberglass-Composite Pipe group. The Concrete and Steel Pipe Systems group was renamed the Water Transmission group. The Construction and Allied Products group was renamed the Infrastructure Products group. Ameron's reliance on its four business groups was fairly balanced, with the company's largest segment, its Performance Coatings and Finishes group, generating $186 million in sales in 2000 and its smallest segment, the Fiberglass-Composite Pipe group, generating $103 million in sales for the year. Of the $550 million collected in revenue in 2000, nearly $390 million was derived from sales to customers in the United States.

Although Ameron achieved only modest sales growth during the early years of the 21st century, the company's ability to squeeze increasing profits from its operations was impressive. At the end of the company's fiscal year in 2001, it posted record earnings of $27.7 million, the sixth consecutive year it increased its net income. Ameron recorded the gain despite flagging sales. An economic recession negatively affected its business, particularly the company's Fiberglass-Composite Pipe group, but the company was able to offset the adverse conditions through the performance of its Water Transmission group. The demand in the western United States for water piping to meet the needs of population growth and infrastructure modernization held the company in good stead.

Ameron continued its remarkable record of earnings growth after 2001, making Marlen's 10th anniversary at the company an event to celebrate. Earnings increased in 2002 and 2003, marking eight consecutive years of earnings growth. During Marlen's first decade in command, earnings increased at a compounded annual growth rate of 15 percent. His 10th anniversary also marked a return to more favorable market conditions, as the company recorded a substantial increase in revenues in 2003, collecting $600 million for the first time in its history. The gain in revenues—a more than $60 million increase from 2002's total, was driven by each segment of the company's business, as each facet of Ameron's business demonstrated growth.

As Ameron prepared for the future, the company looked to each of its business segments to carry it toward continued financial growth. The company's Fiberglass-Composite Pipe group was expected to benefit from what the company hailed as a revolutionary new product, steel-strip laminate (SSL) pipe, which was undergoing final specification and product qualification tests with major oil companies. Ameron perceived SSL as having the potential to deliver substantial, long-term growth. The company's Water Transmission group, after being inundated with orders at the dawn of the new millennium, was experiencing a lull in activity as the company entered the mid-2000s. There was encouraging news, however, in the group's collaboration with the Fiberglass-Composite Pipe group to develop a new composite-pipe product to serve the growing domestic sewer rehabilitation market. The Performance Coatings & Finishes group was also working on developing new products to introduce to its markets. The group was preparing to introduce an epoxy-based coatings line for the industrial flooring market. It also was developing a coating for the fire protection of steel in high-rise buildings. Ameron's Infrastructure Products Group introduced a new lightweight concrete—Isle Cell Crete—in Hawaii, which was expected to strengthen the company's leading market position. Management also wanted to extend the geographic reach of the group's pole products operations.

Principal Subsidiaries

Amercoat Japan Company, Limited; American Pipe & Construction International; Ameron (Australia) Pty. Limited; Ameron B.V. (Netherlands); Ameron Composites Inc.; Ameron (Hong Kong) Ltd.; Ameron Malaysia Sdn. Bhd.; Ameron (New Zealand) Limited; Ameron (Pte) Ltd. (Singapore); Ameron (UK) Limited; Centron International, Inc.; Island Ready-Mix Concrete, Inc.; TAMCO (50%); Bondstrand, Ltd. (Saudi Arabia; 40%); Oasis-Ameron, Ltd. (Saudi Arabia; 40%); Ameron Saudi Arabia, Ltd. (30%).

Principal Operating Units

Performance Coatings & Finishes; Fiberglass-Composite Pipe; Water Transmission; Infrastructure Products.

Principal Competitors

NS Group, Inc.; PPG Industries, Inc.; RPM International, Inc.

Key Dates:

1929:: American Concrete Pipe Co. is formed.
1942:: American Concrete Pipe Co. changes its name to American Pipe and Construction Co.
1970:: American Pipe and Construction Co. changes its name to Ameron, Inc.
1984:: Ameron enters the fiberglass pipe business.
1988:: Ameron acquires its Fontana, California, manufacturing plant.
1993:: James Marlen is appointed president and chief executive officer.
1996:: Ameron, Inc. changes its name to Ameron International Corporation.
1998:: Ameron acquires the industrial paints business of Croda International.
2003:: Ameron registers its eighth consecutive year of record earnings.