DALLAS, TX / ACCESSWIRE / April 28, 2016 / Stonegate Capital Partners initiates research coverage on Ironclad Performance Wear Corporation (OTCQB: ICPW).
Company Description
When Ironclad Performance Wear Corporation began operations nearly two decades ago, work gloves were sold as a commodity—virtually all industries used the same one-size-fits-all leather glove. Recognizing that different industrial tasks require different levels of dexterity and hand protection, Ironclad pioneered the concept of task-specific work gloves. Today, Ironclad is a recognized leader in high performance work gloves, designing, developing and distributing specialized gloves for a variety of industries, including automotive, construction, oil and gas, law enforcement, and the military. The Company has operations in Texas, California and Asia and sells to over 2,000 distributors and retailers in North America, Europe, Australia and Asia. Ironclad is headquartered in Dallas, Texas, and employs approximately 40 people.
Summary
Over the last two years, Ironclad's new management team, led by CEO Jeff Cordes, has been building a scalable business model that positions the Company for long-term, sustainable growth.
- Ironclad has assembled a strong global operational team in Indonesia and China and a network of 14 production partners that span 5 countries, giving it wide-ranging vertical supply control. The Company's supply chain has become one of its most critical competitive weapons, enabling Ironclad to increase innovation and product offerings, drive down costs, and improve speed to market.
- Despite the downturn in some of Ironclad's largest markets (oil and gas, mining), the Company is continuing to execute its multi-faceted growth strategy. The focus has been on expanding relationships with large current partners, leveraging the Company's technology to create new opportunities, and improving its sales channels and capabilities. As a result, Ironclad is securing some important contracts that are largely mitigating the impact of its other depressed market segments.
- The Company recently announced a signed contract with large international distributor W.W. Grainger (NYSE: GWW); Grainger has selected Ironclad as its strategic supply partner in the performance and impact glove categories throughout North America (potentially a $10+ million opportunity per management).
- Ironclad competes in the global personal protection equipment (PPE) market, which is projected to grow from $35.94 billion in 2014 to $62.45 billion in 2022, a CAGR of 7.2%. The largest segment of that market is the hand protection segment, which accounts for 22% of the PPE market, a market size of nearly $8.0 billion.
- The projected growth in the hand protection PPE market is driven by a number of factors, including ongoing technological advancements in the gloves, increasing government safety regulations, and increasing employer compliance with those regulations to increase employee safety, limit lost production due to injuries, and avoid lawsuits.
- Ironclad has built a reputation as a technology innovator in the performance glove industry. Its intellectual portfolio is comprised of 7 domestic and 2 international patents (plus 12 total pending), and 72 trademarks (61 pending). Recognition of this technology leadership has opened doors for the Company and has driven growth across multiple channels.
- On a comparable company basis for FY16 estimates, ICPW currently trades at an EV/S multiple of 0.8x with its peers trading at an average multiple of 1.2x, an EV/EBITDA of 10.8x vs. 11.5x, and a P/E of 13.6x vs. 23.5x. We believe that investors stand to benefit in the upcoming year from rapid expansion both in new markets as well as from larger market share captured within current client accounts.
Valuation
The refocusing efforts and long-range planning that began in 2014 are establishing a solid base from which Ironclad can take off. With new members of management, a corporate relocation, and a strategic goal of broadening both its offerings and target markets, the Company is poised to see healthy annual top line increases, improving margins, and positive bottom lines, all with a continued simplified capital structure. With our current estimates for FY16 E, ICPW trades at generally lower multiples than a selection of peers for comparable analysis. We note, however, that the population for the analysis is comprised of mostly apparel companies.
On a comparable company basis for FY16 estimates, ICPW currently trades at an EV/S multiple of 0.8x with its peers trading at an average multiple of 1.2x, an EV/EBITDA of 10.8x vs. 11.5x, and a P/E of 13.6x vs. 23.5x. The Company is just now "coming into its own" as a recognized leader that delivers a variety of gloves to the PPE market/industries incorporating cutting edge technology and materials, all of which are protected under proprietary rights. And while downturns in its original markets have affected its top line, and unfortunate but necessary litigation has also decreased it bottom line, we believe that these matters will be resolved in the short-term, and investors will have the opportunity to reap the benefits of the Company's rapid future expansion, both domestically and abroad.
The full report can be accessed by clicking the following link:
http://www.stonegateinc.com/reports/ICPW_April_2016 Final.pdf
About Stonegate Capital Partners
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high quality investment opportunities.
SOURCE: Stonegate Capital Partners
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