Haskel International, Inc.

views updated

Haskel International, Inc.

100 E. Graham
Place Burbank, California 91502
U.S.A.
Telephone: (818) 843-4000
Fax: (818) 556-2518
Web site: http://www.haskel.com

Private Company
Incorporated: 1952 as Haskel Engineering and Supply Company
Employees: 335
Sales: $55 million (2002 est.)
NAIC: 332919 Other Metal Valve and Pipe Fitting Manufacturing

Based in Burbank, California, Haskel International, Inc. is the global leader in the manufacture of hydraulic and pneumatic high-pressure pumping systems and accessories. The privately owned company draws its customers from a wide range of industries, including aerospace, automotive, defense, energy, and oil and gas. Haskel also operates through two subsidiaries: BuTech High Pressure Systems, makers of high pressure valves and fittings and Durameter, which manufactures a line of metering pumps. In addition to Burbank, North American operations are located in Williamsville, New York; Brea, California; and Erie, Pennsylvania. Internationally, Haskel maintains sales and marketing, distribution, and system assembly facilities in Australia, England, Scotland, France, Germany, Italy, The Netherlands, Singapore, and Spain.

Establishment of Haskel: 1946

Haskel grew out of Hayman Engineering, founded by engineer Richard L. Hayman. He teamed with Don W. Driskel to create Haskel Engineering and Supply Company in Burbank, California, in 1946. The "Haskel" name was coined by fusing the "Ha" from Hayman with the "skel" from Driskel. The name was retained in spite of Hayman buying out Driskel a year later. It was not until 1952 that Haskel was incorporated in California. In the beginning the company was involved in the design of hydraulics and pneumatics, primarily to serve the aircraft industry, as well as for use in missiles and general engineering. A major step was the development of a patented nose wheel power steering and shimmy damping unit. The resulting growth to the company allowed Hayman to launch an industrial division, which began to distribute hydraulic and pneumatic equipment manufactured by third parties and later by Haskel itself.

In 1954 Haskel was a pioneer in the development of the first dry running hydraulically driven gas booster, which did not require lubrication for the compressor, used in missile technology with nitrogen and helium to pressures as high as 10,000 psi. Also during the 1950s, Haskel began to shift its attention from aircraft production activities in order to focus on the growing business of its industrial division. From 1958 to 1961 the company shifted its manufacturing efforts to licensees.

During the 1960s Haskel achieved a number of significant advances. In 1961 it launched a range of metal seals able to withstand the extreme temperatures of aircraft engines, a product line that would remain vital more than 40 years later. Another major development was the air-driven gas booster, introduced in 1963. This product line was supplemented with the introduction of air-driven liquid pumps, leading to the publication of the first liquid pump catalog in 1963.

Haskel added air pressure amplifiers in the 1970s. The company launched an international effort in 1978 with the acquisition of a 60 percent stake in U.K.-based Olin Energy Systems, Ltd., part of the Olin Matheson Group. The company subsequently changed its name to Haskel Energy Systems Limited, and the remaining 40 percent of the company was ultimately purchased by Haskel in 1983. The goal of the subsidiary was to distribute Haskel products throughout Europe and the Middle East. In 1984 Haskel Energy broadened its scope, opening an office in Aberdeen to serve the oil and gas industry. To better reflect the changing nature of the company, Haskel Engineering assumed the Haskel International name in 1986.

Death of Richard Hayman: 1991

Overseas expansion continued in 1991 when a controlling interest in its French distributor, General Pneumatic S.A., was acquired for approximately $1.6 million. All told, for more than 40 years Haskel enjoyed steady growth until shortly before Hayman's death in 1991, when decreasing sales combined with rising costs began to hurt the business. In an attempt to revive the flagging company and provide some diversification, management in November 1993 acquired M.G. Electronics, a Westlake Village, California, electronics parts distributor, paying $6 million in cash plus stock. Using a proprietary software system and telecommunications, MG was able to procure needed electronic components from anywhere in the world, especially integrated circuits, capacitors, transistors, and resistors. As part of the deal, which was completed in February 1994, MGE's president, Maury Friedman, was named Haskel's new president and chief executive officer. Friedman immediately launched an effort to restructure the company, firing some 50 workers. He also began implementing a growth strategy that called for the introduction of new industrial products as well as fresh applications for old product lines, and an aggressive move into emerging markets around the world. To help finance these changes, Friedman also prepared to take Haskel public. An initial public offering was completed in November 1994, and the company's stock, originally priced at $10 per share, began trading on the NASDAQ. A month later, the 44-year-old Friedman replaced A. Charles Wilson, 70, as chairman of the board. For the previous three years the company had been trending downward. Although sales increased from $35.5 million in 1992 to $41.4 million in 1994, net income steadily eroded, from $2.4 million in 1992 to $2.2 million in 1993, to just $3,000 in 1994.

In March 1995 Friedman reorganized Haskel's business within two new operating groups: the Industrial Products Group, to house the company's traditional pumping systems and accessories, and the Electronic Products Group, for the MGE operations in both the United States and the United Kingdom. Former Puroflow Inc. President Robert A. Smith was brought in to head the Industrial Products Group, reporting to Friedman who in addition would oversee the Electronics Products Group. Less than a month later Haskel underwent further management changes when the board eliminated the CEO position and replaced Friedman as chair with Edward Malkowicz. A Haskel director since December 1994, Malkowicz had previous executive experience at Turbo-tek International, Edwards Capital Corp., and Purex Industries. At the time he was elected chair, he was teaching business courses at Riverside Community College and Fullerton College. Now Friedman was on a par with Smith, both men reporting to Malkowicz. Haskel's balance sheet improved significantly, with revenues rising by nearly 25 percent to $51.7 million, while net income rebounded, topping $1 million. Nevertheless, the management arrangement proved short-lived. R. Malcolm Greaves was named president and CEO on February 14, 1996. A month later Friedman resigned. Greaves was well seasoned, having been with Haskel since 1989. He held a number of top executive positions, including chief operating officer for Europe, the Middle East, India, and Africa.

Haskel looked to add to its international presence in its Industrial Products group. In 1995 it acquired the high-pressure pump distribution and systems fabrication division of Armaturenbau, GmbH, and opened Haskel Germany in Wesel, Germany, to provide sales, service, and system manufacture. A year later, an office was established in Zoetermeer, The Netherlands, named Haskel Benelux, to provide sales and service for Haskel's full line of high-pressure pumps, boosters, and systems. Haskel also supplemented its U.K. operation when Haskel Energy acquired Hydraulic Mobile Equipment Ltd., a Manchester, England-based company. At the same time, in 1996, the company's Electronic Products Group, which now contributed about one quarter of Haskel's revenues, was forced to close offices in the United Kingdom and Germany due to a drop in orders from computer and semiconductor manufacturers. In addition Haskel cut staff in its Westlake Village office. Meanwhile, domestically, the Industrial Products Group enjoyed strong growth in 1996, acquiring Hogan Fluid Power, a Houston-based company that supplied pumps and specialized systems for oil, gas, and fluid power applications. According to Greaves, the acquisition represented "an important strategic step in our efforts to expand our high-pressure system sales in the oil and gas business. Hogan's presence in the Gulf Coast region provides a direct foothold in the worldwide oil, gas and fluid power systems and service business, which industry sources estimate to be in excess of $150 million."

Sale of Electronic Products Group: 1997

Early in 1997 Haskel decided to put its electronic products business up for sale in order to focus on its core business of high-pressure technology. In September the unit was sold to an unnamed individual investor for an amount that was worth its net asset value. While the electronic products group was being divested in 1997, Industrial Products continued its expansion. Haskel established a sales office in Singapore to serve southeast Asia, a move which it soon supplemented with the establishment of a second Asian operation in Hong Kong, thus providing Haskel with the ability to grow in both the north and south Pacific Rim markets. Later in 1997 Haskel opened a sales, service, and systems facility in San Sebastian, Spain, a move that according to management provided an even stronger foothold in Europe and served to complement operations in the United Kingdom, France, Germany, and Holland. Haskel Energy also continued to grow via acquisition, acquiring Nanojet Engineering GmbH and Palpro Limited, which served the oil, gas, and petrochemical industries.

Company Perspectives:

Haskel International, Inc. is the world's leading manufacturer of hydraulically and pneumatically driven, high pressure systems and accessories. For nearly 60 years, the Company has been a recognized leader in high pressure technology.

In 1998 Haskel expanded further in the Pacific region by completing the acquisition of two Australia-based companies, M.D.C., Pty. Ltd. and Hydraulics and Air. Pty. The businesses had served as exclusive distributors of Haskel products throughout the 1990s and combined for annual sales in the $2 million range. They now formed the basis of a company named Haskel Australasia, Pty. Ltd. Despite these positive developments, the price of Haskel stock languished in the marketplace and in the opinion of management was greatly undervalued. After going public at $10 a share, Haskel's stock peaked in September 1997 at $16, but in early September 1998 fell to a two-year low of $6.625. Adverse investor reaction was due in part to the $7.5 million writeoff Haskel took in 1997, caused by the electronic division that had ultimately been cast off. Ironically, another major reason for investor reluctance was related to a significant economic downturn in Asia, a region which Haskel believed held great potential.

To enhance shareholder value, management decided in the fall of 1998 to engage investment banker Schroder & Co. to evaluate all strategic alternatives, including acquisitions, a buyout, or a merger. The company essentially put itself up for sale, but found no immediate suitors. In March 1999 Haskel management announced that once again it would become a private company. A group led by New York-based investment fund Tinicum Capital Partners LP agreed to pay $12.9 a share in cash, or approximately $72.8 million, to acquire Haskel. As a result of being taken private, Haskel no longer faced short-term earnings pressure and could better focus on long-term plans. In addition, according to CEO Greaves, "a number of costs will disappear."

Haskel completed one significant acquisition in 1999, picking up Erie, Pennsylvania-based BuTech, a 30-year-old company that had been a major supplier to Haskel of high pressure valves, fittings, and tubing. In 2001 the company made two significant developments. It opened an office in Italy for sales, service, and system manufacture. It also completed an acquisition, paying $3.75 million for Aqua Care Systems Inc., plus earnout payment of $1 million for the next two years, for Durameter Pump Company, Inc. The Angola, New York-based business designed, manufactured, and sold fluid handling and water purification systems and products. As part of the deal, Aqua Care retained the New York land and facilities, and Haskel moved the Durameter manufacturing and engineering operations to its Burbank headquarters.

In more recent developments, Haskel opened sales offices in China and United Arab Emirates in 2003.

Key Dates:

1946:: Company is founded by Richard Hayman and Don Driskel.
1952:: Haskel Engineering and Supply Company is incorporated.
1986:: Company changes name to Haskel International.
1991:: Richard Hayman dies.
1994:: Haskel goes public.
1999:: Tinicum Capital takes company private.

Principal Subsidiaries

Haskel International, Inc.; BuTech High Pressure Systems; Haskel Energy Systems Ltd.; GermanyHaskel Hichdruck-Systeme GmbH; Haskel Benelux B.V.; Haskel Asia Pts. Ltd.; Haskel Australasia Pty. Ltd. (Australia).