[Via Satellite 02-11-2016] Communications and Power Industries’ (CPI) recent acquisition of ASC Signal showed positively for the company during its first quarter 2016 earnings, shoring up revenue at a time when weakness in global markets slowed growth in other sectors. CPI purchased ASC Signal, a manufacturer of satellite Earth station, radar and High Frequency (HF) antenna systems, in September 2015. Speaking Feb. 10 on an investor conference call, CPI CEO Joe Caldarelli cited the new add on as a main reason why the company was able to weather slowdowns in its other two sectors: defense and medical products.
“Orders increased significantly in the communications market … although our defense and medical markets are currently being impacted by general economic conditions worldwide, our communications market remains surprisingly healthy. In fact the continued strength of our core satellite communications business, coupled with the contribution from ASC Signal division, led to the highest quarterly order rate in the communications market in CPI history,” said Caldarelli.
CPI saw a 17 percent increase in booked orders during the quarter, up $18 million compared to last year, for a total of $120 million. Approximately $20 million in orders came from ASC Signal operations, mainly for communications along with some radar applications. ASC Signal contributed about $11 million in sales to a cumulative $111 million for CPI — an amount unchanged from the same quarter of the previous year.
Caldarelli said CPI already expected 2016 would be a challenging year due to global economic conditions. Because the company sells in U.S. dollars, the strengthening of this currency against others has contributed to a more difficult business environment. This is resulting in postponed orders and a general slowdown in many contracts.
“Customers worldwide are facing increasingly unfavorable exchange rates compared with the U.S. dollar, as well as slowing economies, particularly in Asia, and countries that depend on oil and gas revenues. As a result, like many others in our industry, CPI is seeing a continuation of unusually high levels of uncertainty and delays in both commercial and government funded programs,” said Caldarelli.
He added that though timelines for projects are slipping, CPI is not losing business. Projects are experiencing delays and sometimes shrinking, but are not disappearing or going to competitors, he said.
Military and commercial communications sales did experience a notable uptick, however. Again thanks in large part to CPI’s ASC Signal Division, orders increased by 68 percent to $64.7 million. Caldarelli said CPI’s traditional satcom business is also doing well, and combined with ASC Signal, communications is now the company’s largest end market. Communications sales for CPI increased 13 percent to $45.8 million in the first quarter of fiscal 2016. Declining sales of advanced Tactical Common Data Link (TCDL) antenna products for Unmanned Aerial Vehicle (UAV) programs and radomes for a shipboard military communications program partially offset these increases.
Comparatively, CPI’s defense market orders decreased 5 percent to $38.6 million, and medical orders — the most international market for CPI — decreased 35 percent. Caldarelli said CPI hopes defense will stabilize, and that medical will improve in the second half of the year. Despite challenging conditions, he does expect communications sales will remain robust.
“Right now for us communications both for the defense oriented as well as the commercial versions are quite strong. And every indication is that will continue that way for the rest of the year,” he said.