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Transtar hits new heights: pursuing a global vision, this young company has embarked on a long, sometimes difficult, journey to the top of aerospace metals distribution.

Article Excerpt
Transtar Metals Inc. was nearly grounded by the recession in the metals and airline industries, but is now reaching new heights as one of the largest aerospace metals suppliers in the world.

"Right now, our business is growing, very robust, and we're very profitable," says Steven W. Scheinkman, president and CEO of the Torrance, Calif.-based service center, who says shipments this year will easily exceed those of 2003.

Back in the fall of 1998--while the aerospace and metals distribution industries were both consolidating--Chase Capital Partners and Aerostar Capital LLC set out to create the only global provider of the entire range of aerospace metals.

Their plan was to acquire and integrate the most successful aerospace distributors in the world, which they launched by creating Transtar from the merger of Production Supply Co., New Orleans, with Pioneer Aluminum, Los Angeles, in September 1998. The following year, the investors added Tiernay Metals, Redondo Beach, Calif., and Benjamin Metals Co., Gardena, Calif., to their holdings.

The newly formed company was operationally successful. "We integrated these businesses and had a run rate [earnings estimates] that was arguably better than other publicly traded companies in our market," Scheinkman says.

However, the investors found themselves over-leveraged as a result of the unprecedented decline in aerospace metal sales following the Sept. 11 terrorist attacks. Transtar's debt was so significant that management and lenders agreed to sell the company in December 2002 to H.I.G. Capital, a private equity firm. Executives retained minority ownership.

During its period of financial distress, Scheinkman says, Transtar kept suppliers and customers informed of the struggle and both groups of stakeholders continued to support the company.

As possibly the largest distributor of nonferrous products into the aerospace and military markets today, Transtar projects 2004 revenues exceeding $300 million. "Our current run rate represents a 30 percent increase, and we see nothing that will get in the way of that rate going forward," he adds.

RATIONALIZATION

Transtar's leaders believe the company is an integrator rather than a consolidator, though it...

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