By Maureen Flanagan
Imaging and Sensing Technology Corporation ("IST"), based in Horseheads, NY, designs and assembles equipment for use in nuclear power plants. Its market leading products -- radiation-hardened cameras, electrical penetrations and nuclear detectors -- are critical to the safe and efficient operation of nuclear power plants all over the world. Since its incorporation in 1988, IST has expanded and diversified its product lines and is now an acknowledged leader in its markets, well positioned for continued growth. Over the past several years, IST's position has resulted in significant new contracts, a strong pipeline of potential orders, and increased profitability.
In a May 25, 2004 buyout, American Capital Strategies, Ltd. (Nasdaq: ACAS) provided a financing package of $44.5 million to purchase the company. American Capital acquired IST from a former management team who had purchased the business from Westinghouse in a management buyout.
"American Capital's buyout supports the continued growth of IST and lays the groundwork for further integration with leading nuclear instrumentation businesses," said Donald Hartman, the company's CEO.
The electrical penetrations, radiation and thermal detectors and related products IST manufactures and distributes are found in some 60% of commercial reactors around the globe. IST detectors measure the distribution of power (neutron flux) in the containment area of nuclear plants and are critical components that ensure the stability and efficiency of the reactors. Electrical penetrations are portals in a nuclear power plant's containment vessel that allow cabling for nuclear detectors, closed-circuit TVs, and other control and instrumentation devices to pass safely through the containment vessel wall while maintaining the wall's integrity (i.e., not permitting radiation to escape). IST designed electrical penetrations are installed in all major nuclear power plant designs including Westinghouse, General Electric, and Combustion Engineering as well as French, Korean, and Japanese designed reactors.
IST's radiation-tolerant cameras and camera systems operate in most of the world's commercial nuclear power plants as well as in more than two-thirds of the major nuclear fuel reprocessing locations. The company's camera systems are radiation and seismically "hardened" to withstand significant dosages of radiation, temperature, and seismic activity, enabling them to provide remote inspection in nuclear facilities and remediation sites. These cameras also have broad application in other types of hazardous or high temperature environments including pulp and paper mills, cement plants, steal mills, and glass plants. The company's recently introduced digital variants of these products represent the next generation of camera equipment.
IST's non-related nuclear products include specialized lamps (most of which are patented), including Deuterium Arc Lamps, Hollow Cathode Lamps, and Electrodeless Discharge Lamps. These high-intensity, stable light sources are necessary components of environmental testing, industrial process control and medical research instrumentation.
IST is the leading or sole supplier in many of its market segments. To ensure operational integrity, many of the company's products are regularly replaced as part of a reactor's refueling cycle, thus generating a recurrent revenue stream. Thus IST complements its new plant construction revenue potential with a solid and predictable core of business opportunity.
The nuclear power industry provides about 16% of the world's electricity. The market is driven by insatiable demand for energy, particularly from fast growing less developed economies such as China and Korea as well as growth in developed economies. These factors, coupled with reductions in the natural gas supply and downwardly adjusted reserves of major global energy companies continue to stress the requirement for a global energy balance. Industry analysts predict a renaissance in nuclear power which will spur investment in nuclear power plants.
Through its relationships with major nuclear power plant suppliers, the company is positioned to meet increasing demands for nuclear power. In the past few years, IST has won contracts for new plant construction in Taiwan and South Korea in addition to replacement and upgrade business in U.S. power plants.
The need for radiation hardened cameras for use in nuclear remediation and power plant decommissioning sites is also growing. IST recently was awarded a contract to supply radiation-hardened cameras for a major nuclear remediation project at the Hanford site near Richland, Washington. Additional contracts of this type are expected.
As nuclear energy emerges as an important source of the world's power, IST's imaging and sensing products will ensure the safe and efficient operation of nuclear power for years to come.
Since 1997, American Capital has invested more than $2.7 billion in middle-market companies. Its current portfolio now includes more than 90 companies in a wide range of industries. For more information about American Capital's portfolio click here.
