SEGUIN, Texas, Oct. 24, 2019 /PRNewswire/ -- Alamo Group
Inc. (NYSE: ALG) reported today that it has completed the
previously announced acquisition of Morbark, LLC, a former
portfolio company of Stellex Capital Management, for a total
consideration of approximately $352
million, on a debt free basis and subject to certain
post-closing adjustments. This includes the products sold
under the Morbark, Rayco, Denis Cimaf and Boxer brand names.
Morbark is a leading manufacturer of equipment and aftermarket
parts for the forestry tree maintenance, biomass, land management
and recycling markets. Their products include a broad range
of tree chippers, grinders, flails, debarkers, stump grinders,
mulchers and brush cutters plus related aftermarket spare and wear
parts. Morbark products are sold through a network of
independent dealers with about 300 sales locations. The company,
with approximately 720 employees, is based in Winn, Michigan, with subsidiary operations in
Wooster, Ohio and Roxton Falls, Quebec.
Net sales for 2018 adjusted for the full year effect of
Morbark's acquisition of Denis Cimaf, which took place in
December 2018, was $225.5 million on an unaudited basis.
Adjusted EBITDA in 2018 was $40.6
million.(1)
Morbark's 2019 trailing twelve month (TTM) results for the
period ending September 30, 2019 on
an unaudited basis include net sales of $235.9 million and adjusted EBITDA of
$39.8 million.(1)
Based on the information we have available, we currently believe
Morbark is on track to achieve net sales for the full year
ending December 31, 2019 of
$245.0 million and adjusted EBITDA of
$42.9 million.(1)
Actual results may differ materially from this current estimate.
And, only the results for the remainder of the year are for
Alamo's benefit. The above
financial information is further outlined in the attached
schedule.
Ron Robinson, Alamo Group's
President and Chief Executive Officer commented, "We are very
pleased to have completed this acquisition as Morbark is a strong
fit with Alamo. Their products complement ours and they have
been growing steadily in a sector which should continue to perform
well. As is our general practice, we intend to maintain the
Morbark brands in the market place and are glad that Dave Herr, President of Morbark, will continue
in that role as part of Alamo Group. This is an exciting
opportunity for our Company."
In connection with this acquisition, Alamo has expanded its credit facility from
$250 million to $650 million to accommodate this event and the
ongoing needs of the combined entities. The new credit
facility has a five-year duration and consists of a $300 million term loan and a $350 million revolving line of credit. The
new credit facility includes all of the banks involved in the
previous arrangement, plus two new participants.
About Alamo Group
Alamo Group is a leader in the design, manufacture, distribution
and service of high quality equipment for infrastructure
maintenance, agriculture and other applications. With our
acquisition of Morbark, our products include truck and tractor
mounted mowing and other vegetation maintenance equipment, street
sweepers, snow removal equipment, forestry and tree maintenance
equipment, excavators, vacuum trucks, other industrial equipment,
agricultural implements and related after-market parts and
services. The Company, founded in 1969, and including the units of
Morbark, has approximately 4,345 employees and operates 32 plants
in North America, Europe, Australia and Brazil as of October
24, 2019. The corporate offices of Alamo Group Inc.
are located in Seguin, Texas.
Forward Looking Statements
This release contains forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The words "will,"
"anticipate," "preliminary," "expect," "believes," "intend" and
similar expressions identify forward looking
statements. These statements reflect
Alamo's current beliefs and are
based on information currently available to it.
Forward-looking statements include, but are not limited to,
statements about the benefits of the Morbark acquisition, including
future financial results, performance, growth, and other statements
that are not historical facts. Forward-looking statements involve
known and unknown risks and uncertainties, which may cause the
Company's, including Morbark's actual results, performance or
achievements to differ materially from those expressed or implied
by such statements. Among those factors which could cause actual
results to differ materially are the following: market demand,
competition, weather, seasonality, currency-related issues,
acquisition integration risks, and other risk factors listed from
time to time in the Company's SEC reports. The Company does not
undertake any obligation to update the information contained
herein, which speaks only as of this date.
(1) This is a non-GAAP financial measure that we have
provided to investors in order to allow greater transparency and a
deeper understanding of the financial results presented
herein. For a reconciliation of the non-GAAP financial
measures refer to the "Morbark, LLC Non-GAAP Financial
Reconciliation" below.
Morbark,
LLC
Non-GAAP Financial
Reconciliation
(Unaudited)
|
|
|
(in
millions)
|
2018(a)
|
|
2019(b)
|
|
2019(c)
|
|
|
|
|
|
|
Net
sales
|
$
|
225.5
|
|
$
|
235.9
|
|
$
|
245.0
|
|
|
|
|
|
|
Net
Income
|
$
|
12.1
|
|
$
|
16.6
|
|
$
|
27.3
|
Add:
|
|
|
|
|
|
Provision for income taxes
|
0.6
|
|
0.9
|
|
1.0
|
Interest
expense
|
3.0
|
|
4.1
|
|
3.8
|
Depreciation
|
3.0
|
|
3.5
|
|
3.3
|
Amortization
|
3.9
|
|
4.3
|
|
4.5
|
Sub-total
|
$
|
10.5
|
|
$
|
12.8
|
|
$
|
12.6
|
|
|
|
|
|
|
One-time
adjustments:
|
|
|
|
|
|
Run rate adjustments (Cost for various mfg
projects/initiatives)
|
7.6
|
|
0.6
|
|
—
|
Acquired inventory adjustments
|
4.5
|
|
3.7
|
|
—
|
Long-term incentive plan
|
3.8
|
|
3.8
|
|
—
|
MRP implementation
|
—
|
|
0.1
|
|
0.9
|
Various other (mgmt, legal, prof fees, etc.)
|
2.1
|
|
2.2
|
|
2.1
|
Total
One-time adjustments
|
$
|
18.0
|
|
$
|
10.4
|
|
$
|
3.0
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
40.6
|
|
$
|
39.8
|
|
$
|
42.9
|
|
(a)
Includes full year effect of the Denis Cimaf
acquisition.
|
(b) Represents trailing 12 months as
of September 30, 2019
|
(c) Projected full year forecast as
of December 31, 2019
|
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SOURCE Alamo Group Inc.