George Bancroft

George Bancroft of GAMCO Investors, Inc. asked how Ducommun is positioned to benefit from the large U.S. defense budget and increased European defense spending, and which programs offer the best growth exposure.

Answer

CEO Stephen Oswald responded that the company's portfolio is well-positioned in high-priority areas like electronic warfare, missiles, and radar. He emphasized a key strategy of diversifying the defense customer base beyond its historical concentration with Raytheon (RTX) to include major primes like Northrop Grumman and BAE Systems. Oswald also noted that the trend of primes offloading work to improve their own margins creates a significant growth opportunity for Ducommun in its core competencies like complex cabling and circuit cards.

George Bancroft of Gabelli Funds requested an update on the integration of Honeywell's avionics businesses and the company's appetite for similar deals. He also asked for thoughts on Berkshire Hathaway's investment and the possibility of a future acquisition.

Answer

Eric Mendelson, Co-President, expressed that the three product lines acquired from Honeywell have worked out "extraordinarily well" and that HEICO is known as a reliable partner for such deals. Regarding Berkshire Hathaway, he stated they are "overjoyed" with the investment and noted the cultural alignment but affirmed that "HEICO is not interested in selling the business."

George Bancroft asked about the acquired Honeywell displays business and whether HEICO sees opportunities for similar product line acquisitions in the broader cockpit display market.

Answer

Eric Mendelson, Co-President, described the display market as a very good one for HEICO to be in. He emphasized that acquiring the intellectual property from Honeywell was critical to being able to service these complex units. He expressed excitement about the acquisition, noting it fits nicely within HEICO's existing avionics offerings and enhances their relationship with airline customers.

George Bancroft asked about the company's long-term M&A strategy, the characteristics of desirable businesses, and the five-year vision for the portfolio, particularly in actuation and fuel controls.

Answer

CEO Charles Blankenship outlined a clear strategy focused on increasing shipset content on the next single-aisle aircraft. He stated that Woodward targets high-technology, precision-engineered systems and components that have a healthy aftermarket opportunity, which aligns with the company's core strengths in actuation and fuel control systems.

George Bancroft of Gabelli asked for a definition of the competitive landscape in the healthcare waste solutions market, noting the significant growth potential WM is highlighting for the business.

Answer

Rafael Carrasco, head of WM Healthcare Solutions, responded that the focus in acquiring Stericycle was on its comprehensive network and large customer portfolio, rather than a detailed analysis of competitors. He emphasized that the current priority is on maximizing the value of the acquired assets and integrating WM's customer-centric discipline into the business.

George Bancroft asked about Graham Corporation's long-term, five-year vision, probing whether the company is considering more transformational moves, its M&A appetite, or if it might become an acquisition target itself.

Answer

President and CEO Daniel Thoren outlined a future focused on continued organic and inorganic growth, with a logical next step of moving from components to subsystems and system integration. He emphasized that as a small company, there is significant room for growth and that he enjoys the current strategy of leveraging the company's diversified strengths across different markets.