Back in July Aerospares 2000 Limited (Aerospares), an Acorn Growth Company, completed a merger with Sentry Aerospace Corporation (Sentry). The combination of Aerospares 2000 and Sentry Aerospace created what they call “a leading independent stocking distributor of high value, hard-to-find commercial aircraft rotable components with global reach.” The combined company says it maintains a significant inventory of factory new and used serviceable material across its global locations to serve its customers most urgent needs, particularly aircraft on ground (AOG) requirements. Further, the company has tremendous financial flexibility and access to capital to support its customers’ aircraft material needs as the global aviation market continues its strong recovery.
Headquartered in Morganville, New Jersey, within close proximity to metro New York and Philadelphia airports, Sentry is a leading global stockist of commercial aircraft spare parts covering the full range of AOG components, including avionics, escape slides, life rafts and ram air turbines for all major commercial aviation platforms. Sentry was founded in 1975 by Tony DiSimone, Sr. who will serve as executive chairman of the combined company.
“Sentry is a leader in the aerospace aftermarket with a highly focused stocking strategy, deep vendor and sourcing relationships, and a sterling reputation,” said Rick Nagel, Acorn Growth Companies’ (Acorn) managing partner. “Given the similarities in the business strategies and corporate cultures, limited inventory overlap, and the longstanding deep personal relationships between Aerospares’ and Sentry’s principals, the merger was a natural combination and one that will benefit all constituencies, particularly our customers. The merger of these two outstanding companies creates a tremendous platform for growth in the aerospace aftermarket, which we believe can be further augmented by the resources that Acorn will contribute.” The new website will be https://sentry.aero/.
Aviation Maintenance spoke with Adam Nemenyi, president of the new company to get his input about how the merger went, and where the company is headed now, as they announce the opening of their merged, rebranded website.
Aviation Maintenance: First, give our readers a bit of background about why the two companies merged what the strengths of each company is.
Adam Nemenyi: Essentially, we’re very similar companies. Both focus on the aviation after market, specifically the go/nogo, AOG parts for the latest generation platforms. We appreciate there are 1,001 different stockists outthere who all say they’ve got everything. But for us, we’re not companies that just stock everything nose to tail. We’re quite unique for both of us, given the size, that neither of us has ever done a tear down, which is typically the root on how to acquire parts. We use data analytics so we get a more modern take. A lot of people think it should come from the hip – have a gut feeling. We are much more analytical and we’ve got on both sides of the pond in house development of these algorithms that really help us identify the key parts demanded by the marketplace. So typically, whilst an airline won’t need us for a lot of the day-to-day material, we have a very disproportionately high rate of requirements for the AOG Desk. So that’s who we predominantly work with and more than 90% of our revenue comes from the airline hard grounded AOGs.
Aviation Maintenance: What was it specifically about Sentry that you guys were interested in?
Nemenyi: Well, they’ve got a great reputation. They’ve been established since the seventies – one of the longest standing companies. And with us being based in the UK just looking at our sales trajectory, it was very much Europe, Africa and, to an extent, Middle East-centric because of our proximity. Whenever we’d try to penetrate to the U.S. operators, it wasn’t really a viable proposition saying we’ve got amazing spare parts, but they’re on the other side of the pond. Just like our customers in Europe, they want it locally. They’re American operators and we have known Sentry for many years. We thought they could be a perfect partner for that. And fortunately, from the ownership side, the original founder, Tony DeSimone, was looking to de-risk somewhat his sons who are very active in the business and driving it forward andwanted to continue.
It was as if all the stars lined up for us that they were also looking for an investment. They were on their own expansion trajectory where they recognized they’re selling to many American operators, but they have limited traction in Europe. We felt collectively there were great synergies there, cross coverage, not only on the customer penetration side, but also with the supplier relations. We’ve got great relations with the likes of Sacra, the likes of Thales, whereas Sentry had great connections with the likes of Hamilton Sunstrand and others. It was a coming together, not just of customer relations, but vendor relations and collectively we can pull that together to provide a better service offering to operators in North America,South America and Europe.
Aviation Maintenance: Tell us about the principles of the company and how the two have meshed together in these last couple of months since the acquisitions.
Nemenyi: We concluded the merger 1st of July so tomorrow is going be the first full quarter. Both companies are closing with record quarters. It’s gone from strength to strength, even in the infancy where you’d sometimes see a little bit of a setback as the companies are feeding each other, trying to work on the new thing. Not at all in our case. And I think that’s a testament to the strength of both the company, the staffand the strategy. And whilst we’re steadily working on integration, we feel, having done record numbers, we haven’t even scratched the surface of what we can achieve collectively together. So we’re even more excited about that.
Aviation Maintenance: Let me ask you about the last two years. It’s been a crazy ride for aviation. We seem to be on the other side of it now and aviation is in strong recovery.
Nemenyi: We really used that period to reevaluate market opportunities. Going into Covid, both companies werevery strong ad were very much driven by margins, not revenue. Whilst obviously the market was quiet, we really used that period to get the whiteboard out, look at opportunities. Covid wasn’t bad for everyone. I think in every changing situation there’s winners and losers and I think numbers wise, it’s showing that we’re certainly on the winning side. I think that’s due to tapping into new opportunities in the cargo sectorand expanding to different platforms that are proving to be more popular now.
Aviation Maintenance: Like what platforms?
Nemenyi: For example, on the freight side, whilst typically we’re very much focused on the latest generation cargo you’re seeing 767, 747, 757, all of those – so very much cargo driven. But we’re also seeing that during Covid, it was more favorable to keep stocking for the later generation aircraft because those were the ones, the airlines were flying most with the lowest maintenance costs. For many operators they were expediting the phasing out of all the platforms and really relying heavily on the new ones. And yes, they’re new, but things still break. So coming out of Covid now, we’re set to this year close to the 80% up on what we did pre-Covid in 2019 so we’re almost double. When we look at other industry figures, most companies are yet to even get to their pre-covid numbers and we far exceeded it. I think that really resonates and shows that the different strategies we deployed and the different opportunities we uncovered. We also went about recruiting some top talent as well.
Aviation Maintenance: Let’s talk about the aviation industry’s supply chain. The supply chain across the board has beenstruggling and then Covid hit and that exacerbated it. How can your company help people solve their supply chain issues?
Nemenyi: So that’s also played a big part in our growth, post-covid. A lot of airlines would rely on the traditional supply chain directly from the OEM. Now the manufacturers are pushing back deliveries of parts for months, years on end. The aftermarket supply chain is even more paramount and always placing an emphasis on stopping material we’re getting more airlines coming to us now than ever. They need the parts ready to go and being heavily invested in hundreds million in assets where combined, we’ve got collectively about $140 million worth of inventory on our shelves.
Aviation Maintenance: Okay. Talk to me a little bit about the strengths of each company. What do you consider the strengths of Sentry and also of Aerospares 2000?
Nemenyi: Reputation. I think especially in a conservative industry where airlines want to know they’re working with a reliable, dependable, trustworthy partner. That plays a key role. Both of the companies have really got a strong established brand and reputation. Hence the reason in the merger, we were very careful to still maintain some of our company names, rather than go for a completely new entity name, it’s a merger of both our companies, Sentry Aerospace. I’d say also the dependability side. Airlines know if they need something in the middle of night, we’re there to support them. They know they can depend on Sentry as well. So, collectively, once again, industry leading AOG 24/7 service is our strength.
Aviation Maintenance: In any merger situation there are inevitably hiccups. Can you tell our readers if you experienced any hiccups and how you dealt with them?
Nemenyi: Well, obviously we speak the same language, but American English and British can be slightly different.But really, there’s not been anything, lost in translation. I think we’re very conscientious going into this that we are different countries, different cultures, but we respect how each side works. So far so good. It’s been an absolute dream.
Aviation Maintenance: When you merge two companies together, how do you preserve the company culture and make sure that the good things that were part of the original companies continues on?
Nemenyi: Culture plays in incredibly crucial part in not in our identity, but how we operate and we recruit. When we look to bring people on board, because every person within the organization plays such a key role, supporting customers, whether you’re in the warehouse, account, sales, regardless that you need the right candidate, the right culture there. There are going to be cross-cultural differences, of course. But, similar to before, it’s respecting each other’s international cultures, but at the same time having a common cause, which is essentially to keep aircraft flying, to go that extra mile, be dependable.
Aviation Maintenance: Let’s talk about the future. You’ve made this merger, you’ve had a great quarter. What do you see going forward?
Nemenyi: The year one plan is really focused on integration. There’s the brand in which we’re announcing today, then there’s the [RP] integration going into the new year. Once we’re both on the same computer system, that’s when we’re really going to be able to turbocharge the synergies and be able to instantaneously share the critical information we need in both operations. It’s very much working on extracting as much of that synergy over the next 12 months. With Acor behind us, we’ve got a huge amount of capital to deploy, to keep making significant multimillion dollar investments in the rotable spare parts that we need to help facilitate the growth and to better support customers across the globe. We’ll be making sure we’re making the investments in the right areas, growing the company, both from a resource point of view, headcount and on the integration.
Aviation Maintenance: What about future acquisitions? Are you looking at that, is that a possibility?
Nemenyi: I’ll never say no to that, but I think it really has to be one which complements what we do. So potentially an expansion in the Middle East or the Far East, to once again provide even more global, yet local AOGsupport. But we feel we’ve certainly got the foundations for a European and American coverage today.
Aviation Maintenance: You said earlier that you used data analytics to determine exactly what you need and what your clients might need. Tell our readers a little bit more about that algorithm.
Nemenyi: Sure. It’s really pulling intelligence to be able to make better informed decisions, in order to be making multi-million dollar investments. We’re making sophisticated investments based on data and not just gut feeling, so to speak.
Aviation Maintenance: Sentry has been a family owned business. Is maintaining that sense of family important?
Nemenyi: It’s important. Myself, I’m second generation in the industry — my father set up a company selling aircraft chemical maintenance materials. Whilst he wasn’t necessarily involved day to day on spare parts, we really ran out of his family business. Despite myself not having any relatives in the business, I’ve still always looked to foster that family spirit. So the team, the staff we’re like an extended family. I mean, you spend more time with your work fellow sometimes then with your real family.
Everyone knows everyone’s partners, their kids, all of that. That was another important element when we were looking at the Sentry side, that they had that family values, which we feel is a really important facet of the business because when you have that at its core, you really got a dynamic group there who cares about what they do. It’s not just another faceless organization, we’re at five o’clock, put your pen down. On the Sentry side you’ve got the two sons there who are the co-presidents of the operation there. All the staff there is like extended family and it works really nicely together.
Aviation Maintenance: You mentioned cargo platforms earlier so how do you see cargo in the future. Is it going to be a big part of where you find your clients?
Nemenyi: I think even though we’re established with a lot of the flank area airline passenger operators out there, we still haven’t really touched surface in terms of the broader market. There’s a huge amount of well established operators that we’ve yet to work with, and we look forward to that element of our business development. There’s a huge runway way for growth there. But equally, I think the buoyancy of the cargo market, which we’ve seen really excel during covid, isn’t about slow down anytime soon. You can see the confidence the cargo operators are having in terms of placing record numbers of orders, not only for new freighter aircraft, but freighter conversions as well. I think it’s definitely a market which is going to be exceptionally bullish for the coming decade.
Aviation Maintenance: If there’s one thing you could tell my readership that sets your company apart now that you merged, you have all of these capabilities, locations, etc., what would that be?
Nemenyi: I’d say collectively being located at two of the world’s best-connected hubs, London and New York, with the inventory we’ve got together, as far as I’m concerned, there’s no company better placed to provide a truly global AOG support of aircraft spare parts for the operator’s needs.
Aviation Maintenance: Any closing thoughts?
Nemenyi: I think we’ve really covered a lot in terms of the integration, that’s really the key piece. I think the market is very excited about the merger as well. The feedback we’ve had from airlines, from the vendors, certifiers, collectively, we’ve been working with these airlines individually, now they’re able to buy more from one entity. The OEMs can now entrust more of their deliveries to one company who’s better serving the market. So it’s been exceptionally well-received all around.