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TWST: Would you give us a brief historical sketch of the company and a
picture of the things you are doing at the present time?
Ms. Smith: We have successfully transformed this business over the past
several years. Five to seven years ago, we were predominantly a
metalworking, metal cutting tools company, and were very heavily
influenced by the automotive industry. About 70% of our business was in
North America. We undertook a strategy to diversify that and over the
last five to seven years, we have substantially transformed this
business. Today, we are on a path; we have two businesses essentially:
advanced materials and metalworking. We are not quite equal, but that is
one of our umbrella strategies, which I'll talk about in a minute. We
are also working on diversifying our geographic footprint. We have
already diversified from what was once 70% of sales in North America;
we'd like to get to one-third being North America, one-third being
Western Europe, and one-third being the rest of the world. And, as I
said, we come from being very heavily influenced by the automotive
industry. Today, going into next year, only about 12% of our sales are
now in automotive. So you see a very different business than we were a
couple of years ago. We have two underlying strategies as a company,
which are what I like to call umbrella strategies. That is, one, we'd
like to diversify our sales into the one-third/one-third/one-third
geographic ratio that I mentioned earlier. And the reasons for the
diversification are to help dampen the cycles and to allow us to take
advantage of the substantial growth in the emerging economies. The
second umbrella strategy we have is to grow our advanced materials
business to be equal to that of our metal cutting tools business. And
again, for similar reasons. The advanced materials business is a very
large market; it's about an $11 billion market out there. It is highly
fragmented, even more fragmented than the metal cutting business. It
tends to be niche technologies and very high margins. It also happens to
serve different end-markets than the metal cutting business. It is a
great complement, and yet it is essentially the same underlying
technology. So we have those two umbrella strategies, we call them 'a
third, a third, a third' and then having advanced materials equal to
metalworking sales. That is the background to where our business has
come from and where we are going.
Tickers included in this excerpt: KMT
For more information call (212) 952 7433. The
Wall Street Transcript does not endorse any of the comments made by interviewees, and does
not make stock recommendations.
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