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Synalloy Acquires Specialty Pipe & Tube Inc.
11/28/2014 - Synalloy Corporation, a company that engages in a number of diverse business activities including the production of stainless steel pipe, fiberglass and steel storage tanks, and specialty chemicals, has acquired Specialty Pipe & Tube Inc. Specialty is a master distributor of seamless carbon pipe, with a focus on heavy wall, large diameter products.
End markets for its products include oil and gas, heavy equipment and other industrial businesses where high-pressure applications are required. Specialty was established in 1964 and has distribution centers in Mineral Ridge, Ohio, and Houston, Texas. The company generates approximately US$30 million in annual revenue and has fewer than 30 employees. The transaction will be accretive to Synalloy's earnings in the first year following the closing. BB&T Capital Markets served as the exclusive financial advisor to Specialty.
The all-cash transaction is valued at US$31.5 million, subject to working capital adjustments post-closing, and potential earn-out payments up to US$5 million over two years should the business unit achieve targeted sales revenue.
The acquisition was funded with a combination of cash on hand, additional term debt (US$10 million with a five year maturity), and an increase in the company's line of credit from US$25 million to US$40 million. Synalloy estimates that its total net debt at the end of 2014 will be approximately US$35.4 million.
Including the acquisition of Specialty, Synalloy's guidance for 2015 is as follows:
The all-cash transaction is valued at US$31.5 million, subject to working capital adjustments post-closing, and potential earn-out payments up to US$5 million over two years should the business unit achieve targeted sales revenue.
The acquisition was funded with a combination of cash on hand, additional term debt (US$10 million with a five year maturity), and an increase in the company's line of credit from US$25 million to US$40 million. Synalloy estimates that its total net debt at the end of 2014 will be approximately US$35.4 million.
Including the acquisition of Specialty, Synalloy's guidance for 2015 is as follows:
- Total Revenue - US$232 million (Q1 - US$56 million; Q2 - US$57 million; Q3 - US$60 million and Q4 - US$59 million)
- Gross Profit - US$43 million (Q1 - US$10 million; Q2 - US$11 million; Q3 - US$12 million and Q4 - US$10 million)
- Adjusted EBITDA - US$28.5 million (Q1 - US$6 million; Q2 - US$7.5 million; Q3 - US$7.5 million and Q4 - US$7.5 million)
- EPS - US$1.54 (Q1 - US$.36; Q2 - US$.38; Q3 - US$.41 and Q4 - US$.39)
