Iec Electronics (NYSE AMEX:IEC)

Conference notes from the Western New York Investors Conference at the Hyatt Regency, Buffalo, New York held on Friday, September 24, 2010.

Industry

• 100% in U.S.  
• Niche: Dealing with customers who do not export technology needs overseas. This represents about 20% of a $360.0 billion industry.
• Serves the military, aerospace, industrial, medical device and high end communication markets.

Competitive Advantage: Focus is on high reliability, low volume and customers with complex needs.

• IEC manufactures complicated assemblies used in many electronic products.  Requires specialization and close cooperation.  This leads to higher margins and customer loyalty.
• Developed proprietary technology employed to test products for failure before delivery.
• Also trouble shoots products after delivery in real time through an online system with 2 million lines of code.
• Able to serve customers who have choppy demand.
• Selects customers carefully. Will make no compromises if a relationship will not make sense. Will not sacrifice margins just to obtain business. 

Growth Outlook

• All markets are growing solidly.
• Customer increasing outsourcing.
• Customers winning market share.

Forecast

• $150 million in revenues by close of 2012. 
• Will come from organic growth and acquisitions.
• Organic growth is about 17.0%.
• Expecting to be many times bigger than they are today.
• No intention to go overseas. Many companies coming home.
• Prepared for debt to equity to increase to 50%, since cash flow from operations and sufficient tax loss carry forwards can quickly bring this into line. 
• Equity for acquisitions is not out of the question if will accelerate growth.