NEWMARKET, Ontario—Throughout the COVID-19 pandemic, when the U.S. federal government has faced a critical shortage of key personal protection and survivability equipment, AirBoss of America Corp. has stepped up to help fill the gap.
Last year, from the early stages of the pandemic to the end of 2020, a division within the company, AirBoss Defense Group, produced and provided 150,000 urgently needed proprietary powered air purifying respirator (PAPR) systems, more than 3.6 million PAPR filters and related accessories, including protective hoods, to agencies of the U.S. federal government.
This year, there's been a shortage of U.S.-produced nitrile gloves for the health care market in the U.S. So, once again, AirBoss has moved to the forefront.
On March 16, the company was awarded a contract worth up to $576 million by the U.S. Department for Health and Human Services for the production and sale of nitrile patient examination gloves. The award calls for an initial order in the first part of 2021 that's expected to be worth up to $288 million. A follow-up option, which HHS may exercise later in the year, is worth another $288 million.
According to Chairman and CEO P. Gren Schoch, it's the largest single glove order AirBoss has received to date. But throughout the pandemic, "we have continued to receive glove, boot and mask contracts as well as contracts for many other products," he said, adding that demand for all of the company's products is very high right now.
Because there's not enough manufacturing of nitrile gloves by companies in the U.S., he said, there is a continuous demand for the hand protection products, especially by many agencies in the federal government. So AirBoss Defense Group will supply a significant quantity of the gloves to the U.S. agency, which primarily uses them for nonsurgical purposes in hospitals and other health care settings.
The latest contract awarded to ADG and the delivery timeline demonstrates the urgency and priority HHS is assigning to increasing the supply of personal protection equipment held in the Office of the Assistant Secretary for Preparedness and Response's Strategic National Stockpile. The goods are used to supplement state and local medical supplies and equipment during public health emergencies, AirBoss said in a news release.
Supplies, medicines and devices for life-saving care contained in the SNS can be used as a short-term, stopgap buffer when the immediate supply of these materials is not available or sufficient to meet needs.
"Our track record in delivering critical medical equipment and supplies during the most challenging of times, on time and on budget, has once again put us in a position to partner with HHS to supply a critical need," Schoch said.
"AirBoss Defense Group has continually demonstrated its strength as a domestic supplier of personal protection equipment designed to protect health care workers, first responders and military personnel against communicable diseases and CBRNE (chemical, biological, radiological, nuclear and explosive) threats," he said.
Schoch noted that the company's "pedigree as a leading survivability solutions provider with global supply chain and logistics management expertise, coupled with our decades-long experience in providing PPE to government agencies, will continue to put AirBoss in a position to support urgent needs across many of our product lines."
AirBoss—which had record net sales of $501.6 million in 2020, up 52.9 percent from revenues in 2019—is projecting another record year in 2021, with organic sales and adjusted earnings per share growing at about 25 percent or higher, said Chris Bitsakakis, president and chief operating officer of the Newmarket-based company.
Boost in forecast
In an updated outlook statement for 2021, also issued March 16, Bitsakakis said the firm's projection reflects the initial $288 million portion of the company's nitrile glove contract with HHS but does not include the latter part of the pact.
"There remains potential upside for us to significantly raise our current outlook for 2021 if HHS exercises its option to order an additional $288 million of gloves, or if we are successful in obtaining significant contracts from the $175 million in additional opportunities which we are also pursuing," he said.
Bitsakakis said that the company expects all three of its business units—AirBoss Rubber Solutions, AirBoss Defense Group and AirBoss Engineered Solutions—to increase revenue growth in 2021, "assuming there are no further broader economic slowdowns such as those experienced in 2020."
He noted that, with the new ADG contract, that business unit will see the biggest jump in sales, "although because 2020 was such a big year for ADG the percentage increase might not seem as dramatic."
AirBoss, which was founded in 1989, is investing in all of its key product lines to help facilitate that growth, he said, adding that the company doesn't foresee any obstacles in its path that it hasn't dealt with repeatedly over the years.
"The rate of growth will depend on the overall recovery of the global economy," Bitsakakis said. "As such, if we see another pandemic-related slowdown this year we may see some headwinds in our non-PPE-related product lines. Having said that, the PPE product lines have done a nice job of compensating—and then some—for any slowdowns in our other product lines."
In addition, as the firm continues to grow organically and capture market share, it also is assessing potential acquisitions "to leverage our strong balance sheet and accelerate our growth strategy," he said. In the case of ADG, AirBoss is on the lookout for opportunities in the broader survivability products segment serving both the first response and defense markets.
In 2020, the firm acquired the minority interest it held in Critical Solutions Holdings L.L.C. to give it complete ownership of the ADG operation. In 2021, it bought B3, the creator of the Blast Gauge.
"I would classify both of these as tuck-in acquisitions," Bitsakakis said. "In addition, we are also looking at larger scale transformational acquisitions that will significantly increase the ongoing base recurring revenue for AirBoss immediately following the acquisitions."
