Healthcare
Medical Equipment & Supplies
NASD: SPAN
Span America Medical
70 Commerce Center
Greenville, SC 29615
James Ferguson
President and
Chief Executive Officer
Interview conducted by:
Walter Banks
, Co-Publisher
CEOCFOinterviews.com
March 2001
BIO OF CEO
Mr. Ferguson joined Span-America as Materials Manager
in April 1990. He was named
General Manager of the Company’s contract packaging business in
October 1992. He was
elected Vice President of Operations in July 1995, and President and
Chief Executive Officer in August 1996.
Prior to joining the Company, Mr. Ferguson was employed by C.B.
Fleet in Lynchburg, VA from 1981 to 1990 where he served most recently
as Director of Manufacturing. Mr.
Ferguson is a graduate of Hampden-Sydney College (BA).
About
Span America Medical
Span-America Medical Systems has the industry's most
comprehensive line of specialty solutions for pressure management and
patient positioning. Recognized in medical facilities throughout North
America, Span-America's clinically proven product lines include
PressureGuard® and Geo-Mattress® therapeutic mattress systems;
Geo-Matt® overlays and seat cushions; Span+Aids® patient positioners;
and Isch-Dish® wound care seating products. These products are sold
through hundreds of dealers and distributors in the US and Canada.
In January, 2001 Span-America obtained the exclusive
rights to sell and market the Selan® product line - a complete line of
skin care products for the treatment and prevention of dry skin, diaper
rash and pressure ulcers.
The Company also manufactures and markets specialty
foam products for the consumer market, and custom components for
industrial customers.
CEOCFOInterviews - Mr.Ferguson,
please give us a brief history of Span America?
Mr. Ferguson: "Span America is about 25 years old.
We were started in Greenville, South Carolina by a gentlemen
named Don Spann, thus the name Span America. The business had
been started with our patient positioner line, today called Span+Aids®.
Over the course of the last 25 years, we have added overlays, mattreses
and wheelchair cushions. Most
recently, we have added several new replacement and treatment
mattresses, for the long term and acute care markets. In addition, we have another business called Custom
Products. We sell
foam products for packaging and cushioning in the industrial segment. Companies such as BMW and Fuji Photo Films use our products
in their manufacturing processes.
On the consumer side we sell overlays and pillows to many of the
retailers and mass merchandisers across the country."
CEOCFOinterviews
- How do you
market your products and which of the lines is your greatest revenue?
Mr. Ferguson: "The medical side of the business is around 60%
of our total sales. We do a lot of direct marketing through trade
journals and direct mailers which reach many
hospitals and nursing homes throughout the country.
We have our own sales force with approximately 28 people spread
through the entire country. In addition,
we have a fully staffed customer
service group, sales analysts, a marketing department and corporate
accounts representatives."
CEOCFOinterviews -
What is your
market share of the medical business?
Mr. Ferguson: "The medical business is about 17 million out of
our 25 million in sales. When
you look at the patient positioners market our share is approximately
40%. With respect to replacement mattresses, it gets kind of hairy
trying to decide what sort of market share we do have, because so much
of that market is in leased products.
The market leaders are Hil-Rom and KCI.
They deal primarily in leasing their products and not selling
them. When it comes to actual sales with the companies we are in direct
competition with the market is much smaller. I would say that our share
of that market is probably in the 10-15% range."
CEOCFOinterviews -
What do you
think you need to do to increase market share?
Mr. Ferguson: "We have to get out and do a better job of
marketing our products. When we talk about mattresses, we have been a
Johnny come lately into this marketplace. We have only been selling
mattresses for about nine years while many of our competitors have been
there for a much longer period of time.
Generally, I think that it will take a very good marketing effort
on our part, and some time."
CEOCFOinterviews
- How much of
your revenue are you put towards research and development?
Mr. Ferguson:
"About 2-3%.
However, we are going do more than that particularly as we start to look
at other areas to hone in on, not just in the pressure management
area."
CEOCFOinterview
- Do you market
your products globally?
Mr. Ferguson: "We do very little business outside of North
America. We do a lot of
business in Canada, a little bit in the Caribbean, yet when it comes to
Europe and Asia, we do not get there hardly at all. We feel we have too
much to do right here before we start moving over there. There is still
a lot of opportunity in North America for us, and we feel that we need
to spend our time, dollars and efforts working right here."
CEOCFOinterviews -
Is there
competition in the Custom Product segment of your business?
Mr. Ferguson: "It is very competitive.
You see we are a foam converter. We actually buy foam from people
who make it. Then we cut it, convert it and resell it. When you get into
that side of the business you are competing with a lot of foam producers
like Foamex and Carpenter who
have their own foam converting divisions."
CEOCFOinterviews
- Are you
doing anything to increase the market share of that side of your
business?
Mr. Ferguson:
"We have a
relationship with another company called Louisville Bedding. They are
the sales and marketing arm for the consumer part of our Custom Products
business. They have gotten us into a lot of nice accounts and have
driven our business from 2 million dollars in 1999 to almost 6 million
dollars in the year 2000. It looks like it will continue, probably not
at that pace, yet we will still see some nice growth out of them in
2001."
CEOCFOinterviews -
Can you tell
us about some of your new and exciting expansions?
Mr. Ferguson: "We are looking to expand into other areas,
because we feel like the niche that we are now in with the positioners
and the overlays and the mattresses does not
allow us enough room for growth. January 1st of this year,
we have licensed a line of products from a company called P.J.
Noyes, out of New Hampshire. Their product line is called Selan®, and
it is a lotion and a cream that helps to treat and prevent pressure
ulcers. This is a good fit for us because on the pressure management
side, our products are
overlays, positioners and mattresses, all aimed at treating and
preventing pressure ulcers. Our sales people can carry these items into
the same people that they are calling on today and it expands the area
of products we will have taken to the marketplace. The wound care market
has been projected at anywhere from 600-800 million dollars in sales and
it would be great if we could get 1% of that. We are already looking for
other products, beside the lotions and creams which
we could leverage to add to
this product line. We would like to get into some more high end
wound care type products and are working on that with P.J.Noyes as we
speak."
CEOCFOinterviews -
Historically, have your product line been built through your R&D,
acquisitions or partnering?
Mr. Ferguson: "For the most part we have done everything
internally, with the exception of one major acquisition in 1992
where we initially got into replacement mattresses. We purchased
a product line called Pressure Guard, it was our first entrance into the
mattress market. The product is a combination foam and air mattress
which we still produce and market today."
CEOCFOinterviews - Will
acquisitions be a part of your future?
Mr. Ferguson: " Absolutely. We have been working on that very
diligently for the last 2 years. It may seem outrageous, yet part of the
problem was that most of the companies we have looked at are smaller
private firms. In a situation like this, usually the owners, because
they built it, and have grown it, they think is it worth a lot more than
we do. We have gotten very far into negotiations with several people to
the point where either they back out or do not want to sell, or we could
not come to an agreement of what the fair price was. However we continue
that effort. We are working on a couple of things right now and believe
that we might be able to put something together in the next 3-6
months."
CEOCFOinterviews
- What is your
current cash and/or credit position?
Mr. Ferguson:
"From a cash
standpoint we have in the neighborhood of 4-5 million dollars, and we
have no long term debt whatsoever. Therefore, not only do we have a nice
little piece of cash to keep our business moving, but we also have the
ability to finance growth if we find something that we want to do."
CEOCFOinterviews -
Is there
anything that you would like to say to your current shareholders and to
potential investors?
Mr. Ferguson: "What you get with Span America is a well managed
company that will do the right things.
You can count on the fact that we will not do something foolish.
From the boardroom to the plant floor we have the best interest
of our shareholders on our minds."
