Monday, June 05, 2006

Blog of the Week: Value Discipline

Cascade Corp...Not the Dishwashing Detergent Company

Cascade Corp (CAE) will not get your dishes clean and shiny. But this relatively unknown company may shine in your portfolio.

Cascade, based in Fairview, Oregon, manufactures material handling "load engagement" products that are widely used on lift trucks. As per the 10-K: "Products are designed to handle loads with pallets and for specialized application loads without pallets. Examples of specialized products include devices specifically designed to handle loads such as appliances, carpet and paper rolls, baled materials, textiles, beverage containers, drums, canned goods, bricks, masonry blocks, lumber, plywood, and boxed, packaged and containerized products."

The company markets worldwide both to the end-use customer through the retail lift truck dealerships as well as to lift truck manufacturers. In emerging industrialized economies, lift trucks are repolacing manual labor and are viewed as productivity enhancements, consequently, softening the cyclicality of the business.

The company has leading market share in North America, and Europe, but holds significant share in Asia Pacific countries. It has had a strong presence in China for 20 years. The company has manufacturing facilities in the US and Canada as well as the Netherlands,Germany, England, Italy, France,Australia, Korea, and China.

Foreign sales are significant at Cascade representing $200 of $451 million in sales or 44%.The level of profitability of the European businesses has suffered due to price competition from several privately-owned companies in local and regional markets. The company, as a result of the integration of several acquisitions as well as new management is addressing European issues.

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