(Megan)- *Talk about new products. We introduced one product in 2012, and another two products in 2013. Quickly exceeded expectations. We will introduce new products in the future.
(Brian)- New products from competitors in 2015 and 2016 impacted our growth. We also viewed this an ideal time to pursue intensive R&D projects on our product line. During this period, competitors gained market share, however we re-gained this market share (and more) over the past two years.
(Brian)This chart illustrates the revenue growth seen on the last slide (indicated by the size of the bubbles, each representing one year)Also shows net margin, represented by the bubble’s coordinates on the horizontal axis, and sales growth from the previous year, represented by the bubble’s coordinates on the vertical axis.We grew revenue every year (only company in the industry to do so), same with revenue. Highest contribution margin (53.9%) & net margin (39.4%)Growth has been entirely organic, and we expect organic growth alone to continue to average above 10% for the foreseeable future.
(Brian)Market share leader every year since we restructured the company in 2011.
(Matt)- After reaching 15-20% ROE, decide to issue dividends. Viewed ROE as a benchmarking tool, continually retained earnings in order to boost company growth.- Sustainable ROE.
(Matt)Quick slideErie only real competitor
(Matt)- Finance aggressive investmentswith 10 year notes and stock offerings;maintain healthy leverage until recent years…retired some bonds early. - Leverage returns – ties company performance to stockholder returns. They get more money if we finance partially through debt because there are fewer shareholders. (SHORTEN THIS?)- Rapid expansion – increase sales NOW to gain control over the industry, seek profits later (MAYBE REMOVE & put in Revenue slides)
Vision/Mission<br />Our vision is to provide every unique customer with a product that perfectly matches the demand within the sensor industry<br />Our brands keep up with customers’ demand and needs, fully satisfying their most valued preferences. <br />Our significant stakeholders are customers, management and employees, stockholders, and bondholders. <br />
Strategy Review<br />Broad differentiation strategy<br />Operate both as a cost leader in the Low Technology segments and as a quality leader in the High Technology segments<br />Core competency satisfies buyer criteria for every segment. <br />Combine elements of a Niche Differentiation strategy with those of a Niche Cost Leader strategy<br />
Performance Snapshot – Return on Equity<br /><ul><li>Highest ROE in industry 2018, and growing since ‘14</li></ul>Retain earnings to reinvest<br />Dividends <br />$5.00 in 2017 (4.2% Yield)<br />$7.50 in 2018 (3.7% Yield)<br />
Performance Snapshot – Stock Price & Market Cap.<br />Consistent investor ROI<br />Balanced & predictable increase in company valuation<br />
Financial Management<br />Capital Budgeting Strategy<br />Minimize costs in low tech segments to price competitively<br />Rapid expansion, large initial investment in capacity<br />Leverage<br />Avoid financing solely through debt or equity by mitigating asset/equity ratio<br />Leverage returns to shareholders<br />Dividends<br />Retain earnings for reinvestment<br />At 15%-20% ROE, begin dividend issue<br />Repurchase stock beginning in 2016 to create value for loyal shareholders<br />
Financial Management – Execution<br />Incur early losses to precipitate expansion and market dominance <br /><ul><li>Avoid emergency loans by budgeting 10% below forecast</li></li></ul><li>SWOT Analysis<br />
Strongest Competitor – Erie<br />Strategy<br />Low Cost<br />Smaller company that benefitted from early profits and consistent controlled growth<br />Capabilities<br />High automation (less than us)<br />Low capacity in early years<br />Future Goals<br />Foresaw exit from High End segment<br />Assumptions<br />Profitability<br />Compliance<br />
Key Learning and Adjustments<br />Early investments in Plants, HR, and TQM key to profitability.<br />Adjusting to current market factors, but maintain foundation. <br />Stockdale Paradox:<br />Early forecasting difficulties are being corrected.<br />Better inventory management.<br />Missed opportunities from withholding cash<br />Fear of bankruptcy<br />Overestimating competitor products and market share<br />Total Project vs. Actual (25.4%) to (28.0%). <br />
Why Executive Team Should Continue<br />Growth<br />Last years increase in net income 2017-$64,730 to 2018-$105,098<br />Understanding of Current Economic/Investor Ideology<br />High dividend payout. <br />AAA Bond Rating.<br />Diversified product portfolio.<br />Asset allocation across all 5 segments-8 products. <br />Time Tested company<br />Large Scale jump- Stock price (+83.90), Net income (+43,368)<br />Can manage this growth<br />Cohesive management team<br />
Future Outlook<br />Continued commitment to paying dividends. <br />Continued Jack Welsh philosophy to every product line, may abandon Low End as competition intensifies.<br />Continued implementation of the balanced score system to follow success and steer company action.<br />Maintain core strategy.<br />Improved understanding of sales forecasting. <br />