The Company's products are used in a variety of applications across diversified markets, including the building and housing, munitions, automotive, transportation, coinage, electronics/electrical components, industrial machinery and equipment and general consumer markets. They access these markets through direct mill sales, a captive distribution network and third-party distributors. They hold the exclusive production and distribution rights in North America for a free machining, lead-free brass rod product, which they sell under the Green Dot and Eco Brass brand names. The vertical integration of Olin Brass's manufacturing capabilities and A.J. Oster's distribution capabilities allows Global Brass and Copper to access customers with a wide variety of volume and service needs.
Global Brass and Copper services nearly 1,600 customers in 23 countries across four continents. They also employ almost 1,900 people and operate 11 manufacturing facilities and distribution centers across the United States, Puerto Rico and Mexico.
Global Brass and Copper Holdings, Inc. converts, fabricates, processes, and distributes specialized non-ferrous products in the United States, the Asia Pacific, and Mexico. The company operates in three segments: Olin Brass, Chase Brass, and A.J. Oster. The Olin Brass segment manufactures, fabricates, and converts specialized copper and brass sheets, strips, foils, tubes, and fabricated products; and rerolls and forms other alloys, such as stainless steel, carbon steel, and aluminum. Its products are used in the building and housing, automotive, electronics/electrical components, munitions, and coinage markets. The Chase Brass segment manufactures and supplies brass rods in round, hexagonal, and other shapes for use in the building and housing, transportation, electronics/electrical components, and industrial machinery and equipment markets. The A.J. Oster segment processes and distributes primarily copper, brass, and aluminum sheets, strips, and coated products for use in the building and housing, automotive, and electronics/electrical components markets. The company sells its products under the Olin Brass, Chase Brass, A.J. Oster, Green Dot, and Eco Brass brands through its direct mill sales, distribution network, and third-party distributors. Global Brass and Copper Holdings, Inc. was founded in 2007 and is headquartered in Schaumburg, Illinois.
(Summary) (Company) (Chart)
18 March 2018
1yr Target $45.00
Payout Ratio 9.12%
1yr Cap Gain 32.54%
1yr Tot Return 33.24%
EPS (ttm) $2.63
EPS next yr $3.25
Forward P/E 10.45
EPS next 5yr 10.00%
1yr Price Support $32.50
Market Cap $733.66 Mil
Revenues $1.56 Bil
Earnings $58.20 Mil
Profit Margin 3.71%
Quick Ratio 1.60
Current Ratio 2.80
1yr RevGR 16.59%
3yr RevGR -3.01%
5yr RevGR ---
1yr EarnGR 54.36%
3yr EarnGR 15.40%
5yr EarnGR ---
1yr DivGR 45.33%
3yr DivGR 13.13%
5yr DivGR ---
Global Brass and Copper Holdings is a leading value-added converter, fabricator, processor and distributor of specialized non-ferrous products, including a wide range of sheet, strip, foil, rod, tube and fabricated metal component products. While the Company primarily process copper and copper alloys, they also reroll and form certain other metals such as stainless steel, carbon steel and aluminum. Using processed scrap, virgin metals and other refined metals, they engage in metal melting and casting, rolling, drawing, extruding, welding and stamping to fabricate finished and semi-finished alloy products. Key attributes of copper and copper alloys are conductivity, corrosion resistance, strength, malleability, cosmetic appearance and bactericidal properties.
Unlike traditional metals companies, particularly those that engage in mining, smelting and refining activities, Global Brass and Copper is purely a metal converter, fabricator, processor and distributor, and they do not attempt to generate profits from fluctuations in metal prices. The Company's financial performance is driven by metal conversion economics, not by the underlying movements in the price of copper and the other metals. The Company strives to match the timing, quantity and price of metal sales with the timing, quantity and price of replacement metal purchases. This practice, along with their toll processing operations and last-in, first-out inventory accounting methodology, substantially reduces the financial impact of metal price movements on earnings and operating margins.
The Company's products are used in a variety of applications across diversified markets, including the building and housing, munitions, automotive, transportation, coinage, electronics and electrical components, industrial machinery and equipment, signage, and general consumer markets. The Company accesses these markets through direct mill sales, their captive distribution network and third-party distributors. They hold the exclusive production and distribution rights in North America for a lead-free brass rod product, which sells under the Green Dot and Eco Brass brands. The Company believes they are the only domestic copper and brass sheet manufacturer with captive distribution and service center operations, a competitive advantage that allows them to service and access customers with a wide variety of volume and service needs.
Global Brass and Copper services 4,500 customers in 28 countries and across four continents. They employ 1,900 people and operate 16 manufacturing facilities and distribution centers across the United States, Puerto Rico and Mexico.
In addition to manufacturing, fabricating and converting specialized copper and brass sheet, strip, foil, tube and fabricated products, Olin Brass also rerolls and forms other alloys such as stainless steel, carbon steel and aluminum. Sheet and strip is generally manufactured from copper and copper-alloy scrap.
Olin Brass manufactures its wide variety of products through four sites in North America. It is not uncommon for Olin Brass to produce 50 different alloys, approximately 30% of which could be high performance alloys (“HPAs”).
Olin Brass’s integrated brass mill in East Alton, Illinois is its main operating facility, which melts metal and produces strip products that are either sold directly to external customers, sold to its affiliate, A.J. Oster, or shipped to Olin Brass’s downstream operations for further value-added processing. Olin Brass’s downstream operations include:
- a stamping operation located in East Alton;
- a rolling mill in Waterbury, Connecticut with rolling, annealing, leveling, plating and slitting capabilities for various products (“Somers Thin Strip”), including stainless steel thin strip;
- a manufacturing facility in Bryan, Ohio specializing in products sold in the automotive and electronics / electrical components markets; and
- a manufacturing facility in Cuba, Missouri that produces high frequency welded copper-alloy tube for heat transfer, utility, decorative, automotive and plumbing applications.
Olin Brass’s products are sold to original equipment manufacturers, other external customers, distributors and rerollers or to its affiliate, A.J. Oster. In 2017, 19% of Olin Brass’s products were shipped to distribution customers, which includes its affiliate A.J. Oster. In 2017, approximately 17% of Olin Brass’s domestic copper-based shipments were to A.J. Oster.
Munitions Market. Olin Brass manufactures products utilized in both the military and commercial munitions markets, such as strip and cups, that are used to produce shot shells, bullet jackets, centerfire, rimfire and small caliber military munitions. Customers in this market include major munitions producers in the U.S., including those producing small caliber ammunition for the U.S. military. Demand within this market is affected by the U.S. government’s security policies and troop size, as well as consumer demand for firearms and munitions. While munitions demand is predominantly domestic, occasional opportunities arise to supply U.S. alliance partners with these products.
Coinage Market. Olin Brass supplies strip for use in the production of coins (no pennies) primarily for the United States Mint, for which they are a key supplier contracted into 2022. They have been a highly regarded supplier to the United States Mint for over 40 years as their long-term contracts have historically been renewed at termination. The demand within this market is affected by the level of activities in retail transactions, the use of vending machines, and the trends affecting forms of payment.
Automotive Market. Olin Brass manufactures both strip and fabricated products used as electronic and electrical connectors for use in automobiles. These products are made with HPAs, suitable for applications requiring high reliability, high temperature and low insertion force. For example, these electrical connectors, along with lead frames manufactured by us, are used in junction boxes, wiring harnesses, ignition and battery systems, lighting and media systems within vehicles. Customers in this market include primary automotive connector suppliers in the U.S. Historically the business in this market remained largely regional in the U.S. Demand within this market is affected by the level of consumer spending on automobiles, which is significantly dependent on overall economic conditions and the amount of electrical components contained within automobiles.
Building and Housing Market. Olin Brass manufactures a variety of strip, welded tube and stamped parts used in commercial and residential buildings, such as faucets, locksets, decorative door hardware and hinges, which require workability, corrosion resistance and attractive appearance. Olin Brass also manufactures strip for products requiring high electrical conductivity, such as plug outlets, switches, lamp shells, other wiring devices, industrial controls, circuit breakers and switchgears. These products are generally manufactured with copper and copper-alloy sheet and strip, both HPAs and standard alloys, as well as copper- alloy welded tube. Customers in this market are OEMs producing building and housing products. Olin Brass also supplies building and housing products in China through Olin Luotong Metals.
Electronics and Electrical Components Market. Olin Brass manufactures strip used in integrated circuit sockets for circuit boards, electrical connectors for laptop computers and similar devices, consumer electronics and appliances, and foils for flexible circuit applications. The strip manufactured in this market is high in HPA content and is sold directly to end-use customers and distributors. Customers in this market are primarily electronics manufacturers that operate globally. A portion of these customers is serviced through A.J. Oster, and the remainder is supplied directly by Olin Brass, with its Somers Thin Strip facility providing the foil products on a global scale.
Chase Brass primarily manufactures solid brass rod, in round, hexagonal and other shapes, ranging from 1/4 inch to 4 1/2 inches in diameter. Brass rod is generally manufactured from copper or copper-alloy scrap and all of Chase Brass’s rod is manufactured at its Montpelier, Ohio facility. Chase Brass customers machine, bore out, or otherwise process the rod for various applications used in a variety of markets. Brass rod is primarily used for forged and machined products, such as valves and fittings. Key attributes of brass rod include its machinability, corrosion resistance and moderate strength.
Chase Brass has been able to capitalize on opportunities arising from regulation limiting lead content in potable water plumbing fixtures. Our green product portfolio, including Eco Brass®, has grown significantly over the past few years as customers switch from leaded to non or low-leaded products in certain applications.
Building and Housing Market. Chase Brass manufactures brass rod for use in faucets, valves and fittings used in residential and commercial construction. Chase Brass produces a number of low-lead and lead-free products, or “green portfolio” products, which comply with certain state and federal laws that became effective in January 2014. This legislation defines the allowed level of lead content in products used in plumbing and drinking water applications. Chase Brass’s Green Dot rod, Eco Brass rod and Eco Brass ingot products are part of the green portfolio, and Chase Brass is the exclusive licensee of the intellectual property rights for their production, sale and distribution in North America. Chase Brass also manufactures other non-patented green portfolio products. Green portfolio products accounted for approximately 20% of pounds shipped by Chase Brass in 2017.
Industrial Machinery and Equipment Market. Chase Brass manufactures brass rod which is further machined into industrial valves and fittings. Demand within this market is affected by capital spending levels, U.S. gross domestic product growth and industrial production growth in the U.S. Customers in this market include various major diversified manufacturers and a variety of screw machine companies supporting OEMs.
Transportation Market. Chase Brass manufactures brass rod for applications in heavy trucks and automobiles. Specific applications include heavy truck braking systems, tire valves, temperature sensors and various truck and automotive fittings. Demand within this market is affected by levels of transportation activity, levels of maintenance capital spending by transportation companies and the level of commercial truck fleet replacement activity, all of which are affected significantly by overall economic conditions. Customers in this market include major OEMs in the transport industry and customers who support domestic automotive production.
Electronics and Electrical Components Market. Chase Brass manufactures brass rod used for telecommunication applications, including products such as coaxial connectors and traps and filters for cable television, as well as larger connectors supporting the cell tower industry. Demand within this market is affected by consumer spending, new home construction, and technologies affecting communication devices and methods, such as wi-fi. Customers within this market include major manufacturers of specialty products for use in home and commercial construction, both of which are very dependent on overall economic conditions. We believe a significant portion of shipments in this market segment are directly associated with the building and housing market and transportation markets.
A.J. Oster has historically been a processor and distributor of primarily copper and copper-alloy sheet, strip, and foil. However, with the acquisition of the Alumet business on November 1, 2017, A.J. Oster significantly expanded its product portfolio into aluminum sheet and coated aluminum products. The acquisition also deepened its presence in the signage (aluminum) and roofing (copper and copper-alloy) markets within the building and housing industry. A.J. Oster historically operated six strategically located service centers in the U.S., Puerto Rico, and Mexico and, with the Alumet acquisition, added five more service centers, including those in the South and Southeast where A.J. Oster had no presence.
Key A.J. Oster competitive advantages are: short lead-times with high reliability, high level of service, small-quantity deliveries, high quality metal, and a broad alloy breadth offering, including HPAs from Olin Brass. These capabilities, combined with A.J. Oster’s operations of precision slitting, hot tinning, traverse winding, cutting, coating, and special packaging, provide value to a broad customer base.
In 2017, Olin Brass provided A.J. Oster with 54% of its copper-based products. Aurubis AG is A.J. Oster’s second largest supplier after Olin Brass, supplying approximately 26% of A.J. Oster’s copper-based products in 2017. Many of the coils purchased from Olin Brass and Aurubis are full- width and require slitting.
Building and Housing Market. A.J. Oster distributes copper-alloy strip and aluminum foil used for products in commercial and residential applications. The primary applications are electrical, hardware, signage, and roofing. Electrical products are primarily for wiring devices. Other electrical applications include switchgears, switches, controls and circuit breakers. Several of our customers for these products are in Puerto Rico or Mexico. A.J. Oster’s capabilities are well-suited for these geographic locations and the stringent service requirements of the electrical market because A.J. Oster is able to provide customers with high-quality metals, in less-than-truckload quantities, and can deliver products shortly after receiving orders. Hardware products include products such as faucets, window trim, locksets, hinges and kick plates. A.J. Oster provides aluminum coated products into the signage industry for a wide variety of government and commercial purposes. With the Alumet acquisition, A.J. Oster now provides copper and copper-alloy sheet and strip product into the architectural roofing industry for both commercial and residential buildings.
Automotive Market. A.J. Oster distributes copper-alloy strip and aluminum foil used in automobiles. Primary customer products are electrical connectors, automotive trim and heat exchangers. A.J. Oster’s subsidiary in Queretaro, Mexico is strategically and geographically well-positioned to take advantage of the growing number of second-tier automobile component suppliers in Mexico. Demand within this market is affected by the level of consumer spending on automobiles, which is significantly dependent on overall economic conditions.
Electronics and Electrical Components Market. A.J. Oster distributes copper-alloy strip used for electrical connectors in computers, consumer electronics and automobiles. The demand within this market is affected by consumer spending and trends in electronics, which may fluctuate significantly as a result of economic conditions.
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