Delta Systems Getting Global

Delta Systems Inc.’s second-quarter expansions may have put a new twist on a 19th Century book by Jules Verne — “Around the World in 90 Days.”

Delta, the automation control solutions firm in Rogers, has opened doors during the last three months in about a dozen countries by partnering with a plastic wrapper maker in Italy and hiring a sales representative organization to cover Mexico, Central and South America.

But unlike the original novel that celebrated circling the globe “80 days,” Delta appears to be just getting started.

The company announced on July 29 that it will broaden its product line through a joint venture with privately held Delfin Srl — a small- to mid-sized food and candy wrapper manufacturer in Malo, Italy. Alberto Drago, Deflin’s company director, said in a press release that his decade-old firm is eager to do business in America.

The real news for Delta, however, is that Drago said he will also explore the application of Delta’s PC-based software control technology to the equipment and systems Delfin already services on four continents.

That comes two weeks before Delta is expected to release its second-quarter earnings. Previous guidance predicted a $3 million quarter, or a 100 percent increase over 2001’s comparable period. (See chart).

The company previously attributed its rising vigor to a tiered-licensing agreement it struck March 12 with Tyson Foods Inc. The deal called for Delta to implement nine production systems at the Springdale poultry producer’s Sedalia, Mo., plant.

Delta and Delfin will jointly design, assemble and market special food wrapping machines. In particular, they will focus on entry-level, horizontal-flow equipment to be marketed as the Falcon Wrapper system. The machinery is widely used by food manufacturers.

Jake Bushey, Delta’s president, described Delfin as catering primarily to mid-sized food producers that have strong but maybe not gargantuan packaging budgets.

“[Delfin] makes a very high-quality wrapper,” Bushey said. “We met Delfin at a trade show, and they expressed a desire to find a U.S. company to partner with. We’ll bring their wrapper products here, do some retrofitting and go sell them to end-user manufacturers.”

Bushey said the low-cost wrappers could theoretically be used for almost any manufacturing application that would allow for a horizontal-flow product entry. Delfin will complete most of the assembly of Falcon Wrapper machines in Italy, then ship the equipment to Delta’s Rogers facility.

The software automation components will then be added prior to shipment to customers.

Delta, which is traded publicly on the Canadian Venture Exchange, announced on July 24 that it had appointed Jyever SA of Monterey, Mexico, as its official sales rep south of the U.S. border. Delta previously had market coverage in Canada through Trillium Machinery Inc., which does its sales there.

Bushey said it’s an opportune time for a Central and South American expansion because Delta now offers a Spanish-language version of its software controls. The company also hopes to achieve a dual Canadian and U.S. public listing by the end of this year, and eventually convert to a market such as Nasdaq.

Bushey said he did not believe that being traded in Canada has shielded Delta from the market fallout associated with the widespread accounting and CEO scandals that have pressured Wall Street of late.

“We already adhere to U.S. standards,” Bushey said. “But we don’t feel insulated. What affects the market affects everyone as a whole, especially small-cap companies.”

Delta reported 2001 revenue of $6.11 million, down 9 percent from the previous year. But in January it confirmed the guidance of $12 million for 2002 revenue.