Flamemaster Finds Success in Sticky Business of Exotic Glue
The stench of glue clogs the air as Joseph Mazin guides a visitor past the vats of gooey polymers that are the ingredients for the super-strong plastics he sells.
Mazin is president of Flamemaster, a Sun Valley company, whose exotic glues--or sealants--end up in an aircraft’s fuel tanks or pressurized cabins to protect them from moisture and 340-degree swings in temperature.
Mazin’s product line also includes flame-retardant coatings used on cables that can withstand 1,925 degrees, coatings for Navy cruisers to protect the decks from scorching after missile launches, and steel cabinets that store flammable liquids and hazardous wastes. However exotic these glues and coatings are, they are not the kinds of product that make the heart race, but Mazin could care less.
There’s money to be made, he says, adding, “There’s less competition than perfume or cosmetics. That makes it a glamorous business.”
Even more intriguing is that Flamemaster suddenly has become a glamorous stock. Since last spring, its stock, long in a slumber, has scooted from about $3.50 a share to close Monday at $6.625.
Why? By Mazin’s reckoning, Flamemaster is one of the last two companies left in the U.S. aerospace sealants business. Earlier this year, Products Research & Chemical in Glendale, a specialty chemicals company that dwarfs Flamemaster with $100 million a year in sales, bought another small, independent sealant company. Since then, Mazin said, “23 companies have approached us,” and expressed interest in buying Flamemaster or investing in the company.
The aerospace sealants business is petite, a mere $60-million-a-year industry, but not without its complexities. For one thing, it is not easy for would-be rivals to jump in. First they must qualify, as Products Research and Flamemaster have, as Defense Department-approved suppliers in order to bid for government contracts.
The sealants are made to order and have a shelf-life of only 9 months. They are shipped in a twin-set of cans to customers who mix 11 parts sealant with one part catalyst to make it bond. And there are pollution laws that must be met to operate a factory that turns out this stuff, as noted by a bumper sticker in Flamemaster’s laboratory: “Don’t Let Jane Fonda Pull Down Your Plants.”
From the recent spurt of interest in Flamemaster, Mazin suggests a joint venture might happen with Chemetall, a $365-million-a-year diversified West German metal and plastics concern that would license some of Flamemaster’s technologies for sale in Europe. Mazin said Flamemaster, in return, would get “an exchange of ideas and support. Plus it would mean a big up-front fee.”
He has also been talking to some companies, which he won’t identify, about selling them a big stake in Flamemaster with the idea that he would keep running it. An alliance with a bigger company would boost Flamemaster’s coatings business, Mazin said. “With some of the companies we’re talking to, all they have to do is sneeze at it, and it’s going to quadruple in sales.”
Still unclear is whether someone else is honing in on Flamemaster. The company’s stock has been trading more heavily than usual, and Mazin says there is a mystery buyer accumulating his stock.
No one has bought 5% of Flamemaster’s stock, which would trigger an automatic filing with the Securities and Exchange Commission. So, Mazin has contacted stock brokerages to try to find out who is doing the buying and why, but he’s still staring at a question mark.
George Gregory, the chief executive of Products Research, says his company isn’t the buyer. Gregory calls Mazin a stock promoter, and he is not being unflattering. If Mazin pulls off a licensing deal with a European company, Gregory says, “it’s a credit to Mr. Mazin’s talent. We don’t consider them much of a competitor. They are in a very mundane, run-of-the-mill sealant business. We’re in a more advanced, sophisticated market.”
Larger, More Diversified
There’s no denying that Products Research is far larger and more diversified than Flamemaster. Last year, Flamemaster, on $5.8 million in sales, turned a $442,772 profit. That profit is less than half what Gregory paid himself in salary and bonuses last year.
Products Research also makes coatings and adhesives, and its sealants are used in skyscraper windows. Gregory proudly ticks off the new military sealant products he is selling to “the new Stealth area, with sophisticated high-temperature requirements for advanced bombers. We’re not permitted to mention specific aircraft, but we’re in every one of them.”
And yet Flamemaster and Products Research resemble a dance between an ant and an elephant. For several years, Gregory has talked to Mazin about buying Flamemaster’s sealants business, if only, Gregory says, “because he’s a nuisance not because he has anything to offer.” Gregory points out that the government likes to have at least two suppliers, and Products Research couldn’t really buy out Flamemaster’s business; instead he’d have to arrange for a friendly company to buy it in “an arm’s length deal.”
Mazin says Gregory is worried about a big rival buying into into Flamemaster and boosting the competition. However idiosyncratic, there’s no doubt that in Mazin’s 4 years in charge, things have improved at Flamemaster. Mazin, the son of an Iraqi banker, grew up in the United States and after college he started investing in the stock market. Mazin says he took $42,000 he made in the market and plunked it down to buy a 14% stake in Altius, a Los Angeles company that makes storage cabinets and other metal products.
Mazin ended up running Altius, then Altius bought a controlling interest in Flamemaster, and later Mazin merged the two companies. Flamemaster’s profits have steadily increased over the last few years, although they have dipped 6% for the first 9 months of this fiscal year.
Along the way, Mazin has turned Flamemaster into something of a family business. His father and father-in-law sit on the company’s five-member board of directors, and Mazin owns part of a commercial building that is leased to a Flamemaster subsidiary for about $21,000 a year.
Mazin has also struggled, and failed, to push Flamemaster into new fields. In quixotic fashion, he bought a stake in a local cosmetics company and planned to set up a chain of cosmetic and shoe stores. Flamemaster lost a few thousand dollars on that one.
Early last year, Mazin bought stock in Audiotronics, a North Hollywood company that makes audio-visual gear for schools, which again had nothing to do with Flamemaster’s basic business. “Audiotronics was a loser,” Mazin admits. Flamemaster lost about $150,000 on that deal.
Most recently, Mazin tried to take over a Utah company that makes camping stoves and housewares; alas, the target was six times Flamemaster’s size and somebody else stepped in to buy it. Still, Mazin claims Flamemaster earned a $90,000 pretax profit on that deal.
Which brings Mazin back to Flamemaster’s most profitable business: exotic glues and coatings. Mazin says the aerospace sealants business has “a lot of potential into the next century.” He notes Boeing’s $22-billion order backlog and hopes to ride with that. Flamemaster already sells some products to Boeing and is trying to get approved as a Boeing supplier for more repair and maintenance supplies.
Jack Granahan, a mutual fund manager who runs the Vanguard Explorer 11 Fund and owns some Flamemaster stock, agrees in part with Mazin. Flamemaster, Granahan says, “has some good prospects. They don’t have exotic products or rapid growth, but decent enough.”
Some worries remain about the aerospace sealants business. As with any government supplier, Mazin is dependent on the whims of government orders, and besides Products Research, mighty 3M, the $11-billion Minneapolis conglomerate, could always decide to compete in the U.S. sealants market.
Keeping Flamemaster growing, perhaps by putting together a deal with a bigger company, is important to Mazin. For one thing, he isn’t getting rich from his job running Flamemaster. He pays himself a modest $65,680 salary. Mazin does own, however, about 100,000 shares, or 5%, of Flamemaster’s stock. If he is going to make a fat profit, it is going to have to be from the old fashioned way: getting the stock price up.
“We’re not looking to get cashed out,” Mazin said.
Spoken like a true glue man. He’ll stay in and see if he can make a deal with another company stick.