Chase Corp.: Filling in the cracks

With asphalt additives, sealants and duct-tape supreme, Chase Corp. (AMEX: CCF) is keeping the edgy infrastructure in the United States from cracking up. There’s a lot to do and Chase is doing its share. Through acquisitions and efficient operations, Chase is forging a foundation of profit and revenue growth.

That’s what happens when you’re exploiting niches in an industry in need. Bridgewater, Mass.-based Chase, founded in 1946, has eight core product lines. These include the asphalt additives and joint sealants for paving roads and bridges, tapes for natural gas and oil pipeline repair, and tapes for electrical and telecom wire repair. It also makes coatings for printed circuit boards, durable papers for radio-frequency identification tags, custom printed labels and packaging materials. The company also has a smaller electronic manufacturing services division.

For the first quarter of fiscal 2008 ended Nov. 30, Chase reported this month an 11% gain to revenues to $34.6 million, compared to the same period the previous year. Diluted earnings per share increased 32% to $0.41, up from $0.31. The quarter’s success followed a similar 2007, when revenues increased to $127.5 million, up from $108.4 in 2006. Earnings per share were $1.22 in 2007, up from $0.77.

Chase’s power stroke is coming from highway and bridge construction products, and pipeline expansion and upgrades. Federal money earmarked for highways is driving spending on transportation infrastructure, and last summer’s bridge collapse in Minnesota also is likely to mark additional spending on repair and maintenance of bridges, says Robert Damron, analyst at 21st Century Equity Research, in an October report as he initiated coverage with a “strong buy” rating.

Higher energy costs also are spurring expansion and upgrades of national gas and oil pipelines, says Damron, the sole analyst covering the company. Management is consolidating and integrating many separately-run companies to increase cross-selling opportunities and reduce duplicate costs.

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