Flying under the radar may be just the ticket for a small aerospace company working on military projects, but for Reinhold Industries, a low profile definitely has its drawbacks.

The Santa Fe Springs-based maker of sheet molding compounds, and rocket and commercial aircraft components is trying for the second time in three years to find a buyer. The thinly-traded company has been on the block for six months a long time for a firm in the hot aerospace industry.

Reinhold, which was founded in Los Angeles in 1928, makes rocket nozzles for missiles, heat re-entry shields for spacecraft, including the space shuttle, and seat backs and trays for commercial airliners.

“They’ve got a great outlook in a specialized niche. They’ve just been looking to sell for quite awhile now,” said Jon Kutler, a founding principal of Admiralty Partners Inc., a Westside consulting firm and one of only a handful of analysts following Reinhold.

Investors, who initially reacted favorably to the news that the company was going up for sale again, have recently pulled back on Reinhold, taking the price down from its recent peak of $17 a share in May to $13 a share last week. The market capitalization is a small $46 million.

Not helping was a mixed earnings report earlier this month. While revenues for the first six months of 2006 jumped to $18.8 million from $14.7 million for the first half of 2005, net income fell to $2.2 million from $3.4 million, primarily because of the sale of British subsidiary NP Aerospace Ltd. last fall.

That sale was part of a long-term strategic plan to refocus the company after its first failed attempt to find a buyer. Three years ago, Reinhold management hired Chicago investment banking firm William Blair & Co. LLC to sell the company. The main reason for putting the company on the market was to increase its market capitalization.

“We have very little public float, so our major shareholders would find it difficult to sell a large portion of their holdings without destroying the main stock price,” said Reinhold chief financial officer Brett Meinsen.

But that first attempt languished. Instead of finding buyers, William Blair found issues at Reinhold itself. The company had underperforming subsidiaries, Meinsen told Mergers & Acquisitions Report this past March. What’s more, those subsidiaries weren’t directly related to its core rocket component business.

“When you’re a small company, buyers are a lot less interested in taking pieces that don’t fit together,” Kutler said.

So, a year later, in 2004, the company decided to sell its Samuel Bingham Enterprises subsidiary which makes industrial rollers to Finzer Roller LLC for about $3 million.

Then, last November, Reinhold sold NP Aerospace, a maker of military helmets and other ballistic protection equipment, to the British Carlyle Group for $53 million.

“We sold those two entities to make it easier to sell the remaining portion of the business,” Meinsen said last week.

The William Blair review flagged another item that scared away potential buyers: Reinhold’s defined benefit pension plan. Such plans are of particular concern at manufacturing companies where workers tend to stay longer and the workforce itself tends to be older. The plan has since been frozen, with new employees shifted into defined contribution plans that are increasingly common in the private sector.

With all these changes, the hot market for specialty military products and a rebounding commercial airline sector, Reinhold’s management team figured the time was right to market the company again. So, in late February, Reinhold hired New York-based TM Capital Corp. to help find buyers.

That review is still pending, Meinsen said.

This would not be the first time that Reinhold went through an acquisition. In 1984, New York-based asbestos maker Keene Corp. bought Reinhold, spinning it off as a public subsidiary six years later. Then Keene fell victim to the wave of lawsuits that swept the asbestos industry in the late 1980s. That company filed for Chapter 11 bankruptcy protection in 1993 and reorganized in 1996, minus its asbestos unit.

The new management team, including president and chief executive Michael Furry, sought to broaden the company’s focus with a string of small purchases in the 1990s, including the NP Aerospace unit.

“That management team was really dealt a bad hand and had their work cut out for them,” Kutler said. “If you look at what they’ve done in shedding their asbestos past and finding profitable niches, it’s really been quite an accomplishment.”

If only more potential buyers would notice.