A subsidiary of Canadian investment holding firm TerraVest Capital has agreed to acquire Signature Truck Systems Inc and Lakeshore Metal Works Inc, which are both focused on assembling propane bobtail trucks for fuel distributors. The affiliated companies are based in Clio, Michigan. The deal, the value of which was not published, is expected to close in the coming weeks. TerraVest said the acquisition complements its current operating businesses.
TerraVest Capital Inc. To Acquire Leading U.S. Propane Product Assembler
VEGREVILLE, AB, March 13, 2015 /CNW/ – TerraVest Capital Inc. (TSX:TVK) (the “Company” or “TerraVest”) announced today that a wholly-owned subsidiary of the Company has entered into an asset purchase agreement (the “Asset Purchase Agreement”) pursuant to which it will acquire substantially all of the assets of Signature Truck Systems, Inc. and Lakeshore Metal Works, Inc. (collectively, “Signature”), each a privately-owned Michigan based company primarily focused on assembling high quality propane bobtail trucks for leading fuel distributors across the U.S. (the “Acquisition”).
In 2014, Signature generated earnings before interest, taxes, depreciation and amortization (“EBITDA”) in excess of USD $3.0 million. The purchase price multiple is consistent with TerraVest’s most recent acquisitions.
The Acquisition is expected to close on or around April 1, 2015 and is subject to customary closing conditions for a transaction of this nature. Following the closing of the Acquisition, the business of Signature will operate as Signature Truck Systems, LLC.
The Acquisition is consistent with TerraVest’s strategy of acquiring businesses at attractive valuations, that complement the Company’s existing operating businesses and that have committed management teams willing to remain with the Company.
Joe Volk, founder of Signature, and Mike VanDenBoom, Director of Operations, will continue on at Signature Truck Systems, LLC and play a pivotal role in growing the business.
Charles Pellerin, Executive Chairman of TerraVest, welcomes the management team and employees of Signature and looks forward to their continuing commitment to the business and its customers.
“We told our shareholders that we intended on growing our propane business into the U.S. where we see substantial growth opportunities and the acquisition of Signature is the first step in that direction”, said Mr. Pellerin. “In addition, Signature will work closely with our leading Canadian propane business, Propar Inc. (“Propar”), to provide an enhanced product suite to U.S. customers.”
“Propar and Signature offer some of the best propane trucks in North America and we are well positioned to supply the Northeastern Seaboard which is the largest market for propane.”
“Last, this acquisition positions TerraVest in a manner whereby greater than 55% of the Company’s EBITDA is being generated from assets that are insulated from decreases in world oil prices.”
•TerraVest believes the acquisition complements its current operating businesses and offers a number of operating and financial benefits to shareholders, including: ◦Strategic geographical expansion into Michigan and the Northeastern Seaboard – the United States’ largest residential propane market as well as close proximity to Propar, which will allow for cooperation in servicing existing markets;
◦Complementary product lines that will lead to significant cross-selling opportunities between Propar’s propane trailers and storage vessels and Signature’s propane service trucks;
◦Coordination and streamlining of manufacturing capabilities with Signature being able to provide some unique component parts to the Canadian business and Propar being able to supply new vessels to Signature; and
◦Further diversification of TerraVest’s overall cash flow streams so that the Company is more insulated from decreases in world oil prices.
About TerraVest Capital Inc.
TerraVest Capital has a mandate to look for stable cash flow (and/or growing) businesses that will increase cash flow. At the present time, the Company is focused on evaluating opportunities in oil and gas processing equipment and liquid containment sectors (such as propane tanks, commercial tanks and home heating products) which require expertise in metal fabrication and welding.
About Signature Truck Systems Inc.
Signature began operations on January 4, 1999 and operates in a niche market as a supplier of vehicles used in the propane industry. Signature’s mission is: Commitment To Quality, Backed By A Signature.
Each delivery vehicle built by Signature has a decal that is signed by the lead technician, and, after inspection, signed by a member of the management team.
Signature operates from its approximately 19,000-square-feet of a facility space in Clio, Michigan, which is just north of Flint, Michigan. The facility accommodates 10 units at one time and transports of any length. Besides building new and refurbished propane trucks, Signature also builds and services crane, cylinder and service trucks specific to the propane industry. Signature provides a wide array of repair services including “R”-Stamp vessel repairs, performs DOT and annual “V” and “K” inspections, five-year pressure testing (hydro-tests) along with internal inspections for MC330/331 vessels.
Signature also provides delivery anywhere in the world and own two transport trailers capable of transporting two bobtails at one time in the 48 contiguous States.
Signature has a second location in Houghton Lake, Michigan which consists of approximately 30,000+ square feet and also provides niche services to the propane industry.
Non-GAAP Financial Measures
This news release contains the following non-GAAP financial measures: EBITDA. Non-GAAP financial measures do not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similarly titled financial measures presented by other issuers. The Company believes that the use of non-GAAP financial measures provides useful information to management and investors in determining the operating performance of the Company. Readers are cautioned that non-GAAP financial measures should not be construed as an alternative to other financial measures determined in accordance with GAAP.
Certain statements contained or incorporated by reference herein, including those that express management’s expectations or estimates of future developments or TerraVest future performance, constitute “forward-looking statements” within the meaning of applicable securities laws, and can generally be identified by words such as “will”, “may”, “could” “expects”, “believes”, “anticipates”, “forecasts”, “plans”, “intends” or similar expressions. These statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events and performance.
Forward-looking statements are necessarily based upon a number of opinions, estimates and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies. TerraVest cautions that such forward-looking statements involve known and unknown contingencies, uncertainties and other risks that may cause TerraVest’s actual financial results, performance or achievements to be materially different from its estimated future results, performance or achievements expressed or implied by those forward-looking statements. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation: the risk that the conditions to the closing of the Acquisition will not be satisfied or that the Acquisition will not close on the terms expected; the impact of general economic conditions; TerraVest’s dependence on key customers; cyclical trends in TerraVest’s customers’ industries; sufficient availability of raw materials at economical costs; weather conditions, production and sales; TerraVest’s ability to develop new customers; changes in accounting policies and methods, including uncertainties associated with critical accounting assumptions and estimates; changes in the value of the Canadian dollar relative to the US dollar; changes in tax laws and potential litigation; ability to obtain financing on acceptable terms; environmental damage caused by TerraVest and non-compliance with environmental laws and regulations; potential product liability and warranty claims and equipment malfunction. This list is not exhaustive of the factors that may affect any of TerraVest’s forward-looking statements.
Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent written and oral forward-looking statements attributable to TerraVest or persons acting on its behalf are expressly qualified in their entirety by this notice. Forward-looking information contained herein is made as of the date of this press release and, whether as a result of new information, future events or otherwise, TerraVest disclaims any intent or obligation to update publicly these forward-looking statements except as required by applicable laws.
SOURCE TerraVest Capital Inc.
For further information: Mitchell Gilbert, Chief Investment Officer, TerraVest Capital Inc., at 416.364.0064 or email@example.com, or Paul Casey, Chief Financial Officer, TerraVest Capital Inc., at 780.632.2040 or firstname.lastname@example.org
Photo courtesy of Signature Truck Systems Inc