Keith Buckley, President and Chief Executive, ASC Signal Corp.

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In the two years since Keith Buckley took the reins at ASC Signal, the Plano, Texas-based manufacturer of satellite antennas has been steadily rebuilding the millions in revenue it gave up when it sold off its direct-to-home (DTH) and very small aperture terminal (VSAT) antenna businesses.

Buckley, who previously ran a firm that streams music to stores and restaurants, said ASC saw an opportunity to unload a product line that had become a commodity and use the proceeds to sharpen its focus on building high-performance antenna products for mobile applications and the new generation of broadband satellites using high-throughput Ka-band frequencies.

Although ASC traces its roots to 1947, it has been a standalone company only since February 2008, when Andrew Corp., a manufacturer of hardware for all manner of communications networks, sold off its satellite business to the Cleveland-based private equity firm Resilience Capital Partners for $39 million. At the time, the satellite business employed more than 500 people and had about $100 million in annual sales.

Following the DTH and VSAT divestitures, ASC — which is still owned by Resilience — employs 180 people and has seen sales rebound 80 percent, though they remain below $100 million.

Buckley spoke recently with Space News Deputy Editor Brian Berger.

 

Does ASC’s narrow focus make it an enticing acquisition prospect for a larger company?

I would hope. With what we’ve been able to do with this business I think our customers would welcome a continuation of the business. There are plenty of people who invest in this segment that would look at us as a great opportunity for acquisition.

 

Why did ASC sell its DTH and VSAT antenna businesses?

We saw the VSAT and DTH business as a commodity-based, high-volume, low-niche business. ASC is a company with very strong design and manufacturing capabilities and a very long history of developing intellectual property. We decided to focus on those products that could utilize that very high skill level, so we made a decision to focus on much more highly sophisticated antenna products.

 

How did the divestiture affect revenue?

Revenue initially dropped as a result of losing a business unit. But our revenue has grown by 80 percent over the last two years, so we have certainly recovered.

 

Has ASC fully realized the anticipated benefits of unloading the DTH and VSAT business, or are you still waiting?

We’ve definitely realized it. By divesting we’ve been able to focus on growing our core businesses: Earth station antennas and radar antennas for air traffic control and weather applications. We’ve improved our quality, improved our delivery times and improved the types of products we are developing. And we’ve been able to do that right away.

 

What percentage of your revenue comes from satellite communications products?

Since we divested the VSAT and DTH business, we’ve hovered around a 50-50 split between our Earth station antenna products and our other products. But in our current fiscal year we will see more like 65, 70 percent of our revenue coming from Earth station antennas.

 

What’s the split between government and commercial sales?

That one’s a little bit harder for us to fully quantify. Generally speaking, we hover around a 50 percent commercial and 50 percent noncommercial split for all of our products. That does move around a bit because very frequently we are selling a commercial product to one of our system integrator or prime contractor partners that  ends up being used in a defense application. If we know that it’s going into a defense contract, we would call that government business. But we don’t always know.

 

Why wouldn’t you know?

A lot of times the primes won’t tell us specifically what our product is being used for, either to prevent the world from knowing it may be a defense contract that needs to be kept quiet or just to not let the competition know to whom they’re selling.

 

Are you having much success selling commercial products to military customers?

We definitely continue to see growth in the use of commercial-off-the-shelf products in defense applications. Most governments continue to push for lower cost, faster delivery times — proven products — rather than developing specific products for specific applications. Our commercial products, which are so widely used around the world, are an easy fit, so that market continues to grow quite well.

 

How will reduced U.S. defense spending impact ASC?

The products ASC designs, manufactures and sells are part of a very critical communications infrastructure. In the big scheme of defense spending, these products are not the really big-dollar products. But they are some of the most critical that will be used in theaters of war. So I don’t see us being impacted adversely at all. In fact, this segment of the business continues to grow for us.

 

What’s the biggest contract currently on your books?

The largest one we are delivering on right now is with L3 Communications’ Narda Microwave division. It’s a contract for our 3.9-meter, very quickly deployed carbon fiber antenna system. We are delivering more than 100 quad-band units before the end of this year to L3 Communications for onward delivery to the Department of Defense. We are also delivering on a number of commercial contracts, but unfortunately I’m not at liberty to give out names on those.

 

Do you have any direct government contracts?

We do some direct sales to the Army and Navy and other military organizations around the world. But based on the types of systems we design, the vast majority of our defense business goes through prime contractors.

 

How many Ka- and X-band antennas has the company delivered in the past year?

Currently in manufacture and deployed we are looking at close to 150. A lot of those antennas are dual band capable or greater.

 

How big is your work force and where is it located?

About 180 people. We’ve grown about 30 percent in the last 12 months in our manufacturing, product development and engineering departments, primarily as a result of a very robust satellite Earth station market.

The majority of our headcount resides at our manufacturing facility near Toronto. Our engineering and product development group, which resides at our Plano headquarters, is the second biggest. We also have 14 sales offices around the world and are looking to add more in Africa, south-central Asia and South America.

 

Do you have a role in the U.S. Air Force’s Wideband Global Satcom program?

Through prime contractors, we’re designing and manufacturing X- and Ka-band terminals ranging from 3.5 meters up to 9 meters.

 

What trends are shaping your business?

The main ones are mobility and Ka-band. Our very mobile, very customizable 2.4-meter antenna is an area where we will see a tremendous amount of growth, both on the government and commercial sides. There are also a tremendous amount of opportunities being created around the world for the expanded use of Ka-band for satellite-delivered broadband. We are participating in the development of quite a few large Ka-band networks for satellite broadband and we see our leadership position continuing to grow.

 

How long before Ka-band antennas become a commodity and ASC has to look for a new value-added opportunity?

Not in the foreseeable future. The financial benefits of increased throughput that results from better tracking, better antenna technology, better compression techniques, etc., are going to continue to push that value-add further and further because the investment return is so significant.

 

Who are your competitors?

Our two main competitors are ViaSat, who have a significant portion of their business tied up in their own satellites and distribution of broadband to the consumer, and then General Dynamics, which has a very large portion of its business in defense and weapon systems.

 

What about Harris Corp.?

We don’t compete with Harris. In fact, we are a very good contractor to them.