Traffic Sign Manufacturer in Western US

The Company is an established company (25+ years of ownership by current owner) in the traffic sign manufacturing business. The company’s main customers consist of cities, counties, and state agencies that are responsible for maintaining street and highway signs throughout their respective jurisdictions. Currently, the Company manufactures traffic signs out of its Western US location for sale into three states, California, Nevada, and Arizona.

Traffic signs of the type that the Company manufactures and sells can be categorized as a “traffic control device” intended to communicate specific information to road users through a word, symbol, and/ or arrow legend that is defined by the U.S. Department of Transportation through the Manual on Uniform Traffic Control Devices (MUTCD). Individual states are allowed to have their own version of the MUTCD, if it is in substantial conformance with the national MUTCD. California in particular has adopted its own state manual, which the Company products conform with.

There are four main categories of traffic signs defined by the MUTCD as follows:

• Regulatory Signs – a traffic sign that gives notice to road users of traffic laws or regulations. The most common of these would be STOP signs, Yield signs, Merge signs, etc.
• Warning Signs – a traffic sign that gives notice to road users of a situation ahead that they need to be made aware of. The most obvious of these signs would be Construction Zone Ahead, 55 MPH Zone Ahead, Pedestrian Crossing, School Zone, etc.
• Guide Signs – a traffic sign that shows route designations, destinations, directions, distances, services, points of interest or other geographical, recreational, or cultural information. The most obvious of these would be street signs and signs we see on the highways giving us upcoming exits.
• Construction Signs – a traffic sign that plays a vital role in conveying essential information, guiding workers, and alerting visitors to potential hazards.

The Company manufactures all four types of traffic signs for use in traffic control. Because the traffic sign industry is governed by federal, state, and local government entities, the traffic signs themselves are typically very specific in their required dimensions, materials used, and fabrication processes. The body of knowledge required to manufacture these multitude of traffic signs to the exact government specifications and dimensions and how to do it economically is considered a clear barrier to entry for new entrants into the traffic sign market.

The Company has a unique position in the traffic sign industry in that they are only one of a few commercial entities in the United States that recycles the aluminum substrate of traffic signs. The aluminum substrate of a traffic sign typically represents a material portion (25%- 35%) of the cost to manufacture a traffic sign.

The Company’s revenue stream from the recycled aluminum substrate from traffic signs is realized in several ways:

1) The Company sells the refurbished aluminum it collects from government agencies (municipalities, counties and state agencies) back to these same end users in the form of new traffic signs (using this recycled aluminum).
2) The Company resells the refurbished blank aluminum substrate of the sign back to the same government agencies it collected the discarded signs from (in these situations the government agencies use these recycled blanks to make their own traffic signs).
3) The Company will sell the discarded aluminum as scrap aluminum for the discarded traffic signs that are considered to be too damaged to be refurbished.

Under all three scenarios, the refurbishing of these aluminum signs or the sale of discarded traffic signs as scrap, the Company is compensated for its transportation, labor costs and cost of operating machinery in the refurbishment process.

When signs are refurbished, the costs for transportation, labor, and operating machinery is still materially cheaper than the purchase of new aluminum substrate. Also, when the Company receives revenue from the scrap sale of discarded aluminum substrate that it can’t refurbish, its cost of collecting and sorting this discarded aluminum is deducted from the proceeds of these scrap aluminum sales.

Beyond the economic advantages, the Company’s unique service offering of refurbishing the aluminum from discarded traffic signs gives the Company a sustainable and ecological product profile that is valued by municipalities, counties, and state agencies looking for ways to promote green initiatives. This unique recycling ability is a growth opportunity for the Company that has yet to be tapped to its full potential.

Breakout of Income:

The Company’s projected revenue total in 2024 is approx. $2,639,000. It is distributed to more than 200 customers (mainly Cities and Counties in CA, NV, AZ), with the largest customer representing only 4.2% of total sales and the Company’s top five customers representing just 17.6% of total sales.

Revenue is broken out into the following categories:

A. Manufactured Traffic Signs – 2024 estimated % revenue of 35%.
B. Refurbished Traffic Signs – 2024 estimated %revenue of 23%.
C. Refurbished Labor – 2024 estimated % revenue of 14%.
D. Rolled Goods – 2024 estimated % revenue of 15%.
E. Recycling Revenue – 2024 estimated % revenue of 10%.
F. Other miscellaneous items (transportation charges, etc.) of an additional % of 3%

Market:

The traffic sign business in the U.S. is part of a larger global sign market valued at around $26.4 billion in 2022 with an expected market size of $47.56 billion by 2030 (CAGR of 7.58%). The traffic sign business in the U.S. is a meaningful subsegment of this industry and is projected to experience steady growth in the decade ahead due to increasing traffic congestion, government regulations, and road safety initiatives aimed at enhancing road safety.