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Long before the U.S. military became the largest end user of its performance fluids, Radco had established itself in the early 1970s as a recycler — rather than producer — of specialty fluids. Join us as Mike Damiani tells us of his plans to grow this middle-market manufacturer of high quality specialty fluids and lubricants.

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Words in the Middle

“In our five-year plan, we have a number, I think, that’s really attainable and achievable for our company in terms of our growth that would put us definitely in the top tier as a manufacturer and supplier in both our industries.”

The Abstract

The following is an edited abstract from CFO Thought Leader’s podcast featuring Mike Damiani, CEO of Radco Industries, and Jack Sweeney, co-host of CFO Thought Leader.

MMTL: As a middle market firm where does Radco Industries fit among the competition?

Damiani: On both sides: On the specialty chemicals heat transfer side, we compete against the Fortune 500. One of our main competitors is Dow Chemical. Our other primary competitor is Eastman Chemical, formerly Solutia. Before that, it was Monsanto. On the lube side, another company we compete against is Chemtura and a couple of other international companies, one of them in France. So we compete against some of the big boys on both sides of our business.

MMTL: Is your size an advantage in some ways?
Damiani: We think it is. We’ve never really lost our small business mentality. We’ve always been very, very nimble not only in our approach to the competition, but also in our approach to our growth. I think having that nimbleness has really helped us compete against some of the Goliaths that we’re up against every single day.

MMTL: Has access to capital been a challenge or an obstacle?

Damiani: We’ve been fortunate. Capital has always been a challenge and I think it’s a challenge for every company at our size. But we’ve had very, very good relationships on the private side with our banks. So we’ve always had enough capital growth. We’ve always been a very cash flow-oriented company, which has always kept us able to finance our growth internally. So from a capital standpoint, we’ve been in pretty good shape. We’ve done a lot of our growth internally, so we have not had to look outside for any significant influxes of cash.

MMTL: As a private company you don’t talk about revenue, but can you speak specifically about how you’re growing?

Damiani: In fact, Jack, yes, we do keep our revenues pretty close as a private company. But, you know in the past three years we’ve added a new corporate headquarters in Bethany, Ill., which put another 40,000 square feet of manufacturing capability under roof and plenty of room both internally and externally to grow that building in that facility. We have two other manufacturing facilities in La Fox, Ill. So we’ve got plenty of room in terms of our manufacturing capability. We’ve got plenty of room to expand.

MMTL: Where do your workers reside primarily today?

Damiani: Primarily in Bethany. Again, most of our manufacturing is there. We have an R&D facility in Florida. And we have a new sales office now in Houston, Texas. So there are a few of us that are out and about, but the majority of our employees are located in northern Illinois.

MMTL: Can you share with us, Mike, an “aha” moment, a moment of strategic insight that was revealed to you perhaps, and led you to open a new chapter of growth for the firm or pointed to a new direction?

Damiani: Yes, it’s one of our fluids. Our exotherm NaK1 is used in the concentrated solar power industry, CSP industry, which had a recent explosion in terms of growth back in 2012. We were fortunate that our product, our fluid manufactured by Radco, was approved by two or three of the major international engineering and construction firms. So we were able – with that fluid, and our sales, and those contracts – to be a substantial player in that market. The growth for that, for Radco, was phenomenal. We are basically, from a production standpoint, sold out for about a year and a half. That industry, of course, with some of the changes in Europe, was put on hold for a little bit, and is starting to come back. With those sales, and that business that we had entered, and we’re a primary player in, we’re really able to use a lot of that income to go ahead and retrench, reinvest back in the company and continue our growth in other fields.

MMTL: Can you give us some sense of the firm’s expected growth trajectory?
Damiani: In our five-year plan, we have a number, I think, that’s really attainable and achievable for our company in terms of our growth that would put us definitely in the top tier as a manufacturer and supplier in both our industries.

MMTL: Has offshore business been growing over the last three years or so?

Damiani: We’re a manufacturer. We manufacture all our products, our heat transfer fluids, and we manufacture blend our lubricants. Manufacturing in the United States, as everybody is aware, is starting to come back. Come back nicely. We’ve seen a pick-up in that. Our heat transfer fluids are used in the production of everything from die casting all the way up to major refining. The gas industry, of course, is a big customer base for us right now. During some of those lean years, within the last five, a lot of our new business was coming from overseas. So we’re strong overseas players in both our markets right now. We’re seeing a lot of growth in Southeast Asia. We’re starting to see some growth and some good potential, especially in the solar side of our business, in North Africa. So we’re excited about our foreign capabilities and we’re excited about the foreign markets.

MMTL: Didn’t you recently win a large U.S. military contract?

Damiani: We did. This was exciting for us. A lot of our lubricant business is all internal in terms of our R&D growth. Our R&D department is churning out a lot of products. A lot of them are exciting. We have actually just won a contract where we make the smoke that comes out the back of the Blue Angels. So every time there’s an air show, and the Blue Angels hit that lever and that blue smoke comes out the back, that’s one of our products. That’s pretty exciting for us. That was a brand new product. The product was finished, was approved, and we had a contract with them in about two weeks.

MMTL: Is there another area of growth I’ve missed that you’d like to talk about?
Damiani: Most of our growth in the last two years has come through our internal R&D efforts, both on the heat transfer side and also on the lubricant side. We’re getting to that stage in our five-year plan where we need to look externally to augment our growth. So that’s always a possibility for us. But we’re not close to being done internally with some of the ideas, and some of the markets that we want to get into, that we can get into through our own R&D efforts.

MMTL: Has your growth affected your U.S. workforce?
Damiani: It has. We’ve added a number of key employees. One of the things that we’ve done corporately, and I’ve done as CEO, is invest a lot of the good things that happened to us the last few years – in terms of revenues and profits – back into the company. And we’ve done that through hiring some very key people, some very talented people. Again, we’re retrenching back into the company to build for our future success. So we’ve been extremely happy with that.

MMTL: Over the next 12 months, what are your top priorities for your middle market business?

Damiani: On both sides, the lubricant side and the specialty chemical side, we’ve got new products coming out that will substantially increase our revenues for both sides. So we’re excited about that. We’re going to finish that up in the next year and then start taking a look at some other avenues for growth.