TIDMSNR
RNS Number : 2205G
Senior PLC
19 November 2015
Trading Update & Aerospace Acquisition
Senior plc ("Senior" or "the Group"), an international
manufacturer of high technology components and systems, principally
for the worldwide aerospace, defence, land vehicle and energy
markets, issues this trading update for the four months since 1
July 2015 (the "Period") and announces the acquisition of Steico
Industries, Inc ("Steico") for a total consideration of $90m
(GBP59.2m)(1) .
Markets & Operations
In the Aerospace Division, activity in the Group's most
important market, large commercial aircraft, increased with Boeing
and Airbus delivering a combined 448 aircraft in the Period, 2%
ahead of 2014. However, at the same time, there have been reducing
levels of activity in the regional, business jet and commercial
helicopter markets. Margins in the aerospace division have been
impacted in the Period due to costs associated with temporary
activities to protect customer schedules together with continuing
declines in income received from machined waste aluminium, as
revert prices continued to fall.
In the Flexonics Division, growth in North American heavy truck
production has slowed in the Period and demand for agricultural and
mining vehicles continues to be weak. Industrial markets,
particularly oil and gas related, have continued to weaken,
compounded by de-stocking across the sector.
Year to date cash generation remains healthy with net debt at
the end of October of GBP154.8m. As expected, this is higher than
at the end of June due to the normal seasonal increase in working
capital, continued investment in capital expenditure in support of
organic growth, and adverse currency impacts.
US Private Placement
On 30 October 2015, Senior issued $80m (GBP52.6m)(1) of new loan
notes through a private placement offer. The issuance consists of
two tranches, carrying a weighted average fixed coupon rate of
3.67% per annum, with $20m maturing in October 2022 and $60m
maturing in October 2025. These new funds in part replace $25m of
loan notes with a coupon rate of 6.42% that matured and were repaid
on 8 October 2015. The remainder will be used to finance the
acquisition of Steico detailed below.
The Group now has committed borrowing facilities of GBP261.4m,
with a weighted average maturity of 3.9 years. This represents an
increase in maturity profile of 1.5 years.
Outlook
Given the financial performance in the Period and the
challenging conditions in some of our end markets, the Board
currently anticipates 2015 adjusted profit before tax(2) to be
around the lower end of current market expectations(3) .
The Group remains well positioned for the future as new
Aerospace and Flexonics programmes and products enter production,
albeit certain of our end markets are likely to remain challenging
in 2016. Senior's continuing investment in state-of-the-art
production equipment, and new facilities in Asia and Mexico is
helping the Group to remain highly competitive. Together with the
Group's cash generative nature and solid funding position, this
gives the Board confidence in the long-term prospects for the
Group.
The 2015 full year results will be announced on Monday 29
February 2016.
Aerospace Acquisition
Senior is pleased to announce that it has entered into an
agreement to acquire 100% of the issued share capital of Steico
Industries, Inc from its majority shareholder Mr Troy G. Steiner
and two other minority shareholders for a cash consideration of
$75m (GBP49.3m)(1) on a debt free/cash free basis.
In addition, Senior has agreed to acquire Steico's trading
facilities from Oceanside Industrial Properties LLC, for $15m
(GBP9.9m)(1) .
Steico is a leading manufacturer of precision tube and duct
assemblies for the commercial and defence aerospace industries,
located in Oceanside, California, USA. Steico employs 208 people,
operating from a state-of-the-art 112,000 sq.ft., vertically
integrated facility. Steico has established itself as a trusted
manufacturing partner to major original equipment manufacturers
(OEMs) and first tier suppliers in the aerospace industry.
Steico brings new and adjacent capabilities to the Group and
enables Senior's Aerospace Fluid Systems Division to offer the full
range of tube and duct assemblies covering a wider scope of
aerospace fluid systems. With content on key growth platforms such
as the Boeing 737 MAX, Airbus A350 and Joint Strike Fighter, the
business is expected to outgrow end markets. Steico will form part
of the Aerospace Fluid Systems Division with the current management
team staying with the business following acquisition.
In the year ended 31 December 2014, Steico reported revenues of
$36.9m (GBP24.3m)(1) and trading profit before interest, tax and
depreciation of $6.6m (GBP4.3m)(1) . In 2015, Steico is on track to
deliver revenues of $37.7m (GBP24.8m)(1) and trading profit before
interest, tax and depreciation of $7.5m (GBP4.9m)(1) . Gross assets
of the business, including the properties, are approximately $32.7m
(GBP21.5m)(1) .
The transaction will be funded using the Group's existing
borrowing facilities, including the recent private placement noted
above. The acquisition is expected to be immediately accretive to
earnings and is anticipated to cover its cost of capital in the
second full year of ownership.
Commenting on the acquisition, David Squires, Senior's Group
Chief Executive, said:
"I am very pleased to announce the acquisition of Steico and to
welcome all of its employees to the Group. Steico represents an
important addition to Senior's Aerospace Division, broadening our
product offering and enabling Senior to respond to our customers'
desire for us to offer more complete fluid systems work packages.
Under Troy Steiner's leadership, Steico has an impressive track
record of growth and that is expected to continue based on strong
customer relationships which are underpinned by long term
contracts. The joint capabilities of the two companies combined
with Senior's wider market access and financial strength, are
expected to further enhance the future growth prospects for
Senior's Aerospace Division."
Completion of the transaction is conditional on regulatory
clearances and customary conditions typical of a transaction of
this scale and nature, and is expected to occur in December
2015.
Conference Call
There will be a call for investors and analysts at 8.30am GMT
today. The dial-in details are as follows:
International access number: +44 (0)20 3003 2666
UK toll free number: 0808 109 0700
Password: Senior
Notes
(1) An exchange rate of GBP1 : $1.52 has been assumed.
(2) Adjusted profit before tax is before loss/profit on sale of
fixed assets, acquisition related costs and amortisation of
intangible assets arising on acquisitions.
(3) Company compiled range of analyst forecasts for adjusted
profit before tax of GBP99.0m to GBP106.5m.
Further information
Group Finance Director, Senior
Derek Harding plc +44 (0) 1923 714 722
Head of Investor Relations
& Leadership Development,
Bindi Foyle Senior plc +44 (0) 1923 714 725
Philip Walters Finsbury +44 (0) 20 7251 3801
About Senior
Senior is an international manufacturing group with operations
in 14 countries. It is listed on the main market of the London
Stock Exchange (symbol SNR). Senior designs, manufactures and
markets high technology components and systems for the principal
original equipment producers in the worldwide aerospace, defence,
land vehicle and energy markets. Further information on Senior plc
may be found at: www.seniorplc.com
About Steico
Steico is a privately held company which has been in operation
since 2001. It is a prime manufacturer of precision tube and duct
and welded assemblies to the world's major airframe manufacturers
and their sub tiers servicing the commercial, regional and defence
sectors. Further information on Steico may be found at:
www.steicoindustries.com
Cautionary Statement
This announcement contains certain forward-looking statements.
Such statements are made by the Directors in good faith, based on
the information available to them at the time of the announcement,
and they should be treated with caution due to the inherent
uncertainties underlying any such forward-looking information.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGGGRAGUPAGMR
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November 19, 2015 02:00 ET (07:00 GMT)
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