Wajax acquires Groupe Delom Inc.
By Wajax Corporation
By Wajax Corporation
Wajax Corporation (Wajax) today announced that it has acquired all of the issued and outstanding shares of Montréal-based Groupe Delom Inc. (Delom). Pursuant to the terms of the share purchase agreement entered into between Wajax, Delom and Delom’s direct and indirect shareholders, the aggregate purchase price for the Shares was $51.8 million, with $2.0 million of such purchase price remaining subject to the achievement of certain performance targets post-closing.
Founded in 1963, Delom specializes in the maintenance and repair of critical electromechanical and rotating equipment for continuous process industries. Serving customers in diverse end markets, including hydroelectric, wind and nuclear power generation, mining, pulp and paper, petrochemical, aluminum smelting, and rail and marine transportation, Delom has six branches across Eastern Canada and employs more than 350 people.
Delom transaction highlights
• Consistent with Wajax strategy, the acquisition of Delom is expected to provide meaningful growth in the corporation’s Engineered Repair Services (ERS) business;
• For the twelve months ended September 30, 2018, Delom had revenues of approximately $69.4 million and adjusted EBITDA of approximately $8.5 million(1); and
• The acquisition is expected to be immediately accretive to Wajax shareholders in an anticipated range of $0.10 – $0.15 for the 2019 financial year, on an earnings per share basis.
“We are extremely pleased to welcome Delom and its team of dedicated professionals to our company,” said Mark Foote, president and CEO of Wajax. “The addition of Delom not only enhances our ERS service offering and value proposition to existing customers, it also satisfies each of the criteria we have outlined in our updated acquisition strategy, which includes enhanced EBITDA margins, advancement of our corporate strategy and scale to drive further growth.”(1)
Mario Montpetit, the president of Groupe Delom Inc. stated, “Joining Wajax provides our team with significant opportunities to grow our volume nationally, leveraging the Wajax branch network and extensive sales and marketing infrastructure. Combining Delom’s electromechanical motor expertise with Wajax’s hydraulics, process, bearings and power train capabilities offers customers a value proposition unique in the marketplace. As well, Wajax’s commitment to its employees and customers is entirely aligned with the Delom philosophy and we’re excited to be a part of the organization.”
The transaction will be subject to normal post-closing adjustments.
Amendment and extension of senior secured credit facilities
Wajax also today announced amendments to its senior secured credit facilities. Pursuant to such amendments, the aggregate commitments of the lenders under such facilities have been increased from $300 million to $400 million, and the maturity date has been extended from 2021 to 2023, representing a five year commitment from lenders. Following the amendments, Wajax continues to have ample capacity under its credit facilities to pursue organic growth initiatives and to fund strategic acquisitions while maintaining the stability of its dividend.
Founded in 1858, Wajax (TSX: WJX) is one of Canada’s longest-standing and most diversified industrial products and services providers. The Corporation operates an integrated distribution system providing sales, parts and services to a broad range of customers in diverse sectors of the Canadian economy, including: construction, forestry, mining, industrial and commercial, oil sands, transportation, metal processing, government and utilities and oil and gas.
The Corporation’s goal is to be Canada’s leading industrial products and services provider, distinguished through its three core capabilities: sales force excellence, the breadth and efficiency of repair and maintenance operations, and the ability to work closely with existing and new vendor partners to constantly expand its product offering to customers. The Corporation believes that achieving excellence in these three areas will position it to create value for its customers, employees, vendors and shareholders.
(1) “EBITDA”, “Adjusted EBITDA” and “EBITDA margin” are financial measures which do not have standardized meanings prescribed under generally accepted accounting principles, and may not be comparable to similar measures presented by other issuers. EBITDA is defined as net earnings before finance costs, income tax expense, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before transaction and other related costs. EBITDA margin is defined as EBITDA divided by revenue.
Cautionary Statement Regarding Forward-Looking Information
This news release contains certain forward-looking statements and forward-looking information, as defined in applicable securities laws (collectively, “forward-looking statements”). These forward-looking statements relate to future events or the Corporation’s future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward looking statements can be identified by the use of words such as “plans”, “anticipates”, “intends”, “predicts”, “expects”, “is expected”, “scheduled”, “believes”, “estimates”, “projects” or “forecasts”, or variations of, or the negatives of, such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward looking statements involve known and unknown risks, uncertainties and other factors beyond the Corporation’s ability to predict or control which may cause actual results, performance and achievements to differ materially from those anticipated or implied in such forward looking statements. There can be no assurance that any forward looking statement will materialize. Accordingly, readers should not place undue reliance on forward looking statements. The forward looking statements in this news release are made as of the date of this news release, reflect management’s current beliefs and are based on information currently available to management. Although management believes that the expectations represented in such forward-looking statements are reasonable, there is no assurance that such expectations will prove to be correct. Specifically, this news release includes forward looking statements regarding, among other things, our expectation that the acquisition of Delom will provide meaningful growth in our ERS business; our expectation that the Delom acquisition will be immediately accretive to Wajax shareholders in an anticipated range of $0.10 – $0.15 for the 2019 financial year, on an earnings per share basis; our expectation that, following the recent amendments to our senior secured credit facilities, Wajax continues to have ample credit capacity under such facilities to pursue organic growth initiatives and to fund strategic acquisitions while maintaining the stability of its dividend; our goal of becoming Canada’s leading industrial products and services provider, distinguished through our core capabilities; and our belief that achieving excellence in our areas of core capability will position Wajax to create value for its customers, employees, vendors and shareholders. These statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions regarding general business and economic conditions; the supply and demand for, and the level and volatility of prices for, oil, natural gas and other commodities; financial market conditions, including interest rates; our ability to execute our updated Strategic Plan, including our ability to develop our core capabilities, execute on our organic growth priorities, complete and effectively integrate acquisitions and to successfully implement new information technology platforms, systems and software; our ability to realize the full benefits from our 2016 strategic reorganization, including cost savings and productivity gains; the future financial performance of the Corporation; our costs; market competition; our ability to attract and retain skilled staff; our ability to procure quality products and inventory; and our ongoing relations with suppliers, employees and customers. The foregoing list of assumptions is not exhaustive. Factors that may cause actual results to vary materially include, but are not limited to, a deterioration in general business and economic conditions; volatility in the supply and demand for, and the level of prices for, oil, natural gas and other commodities; a continued or prolonged decrease in the price of oil or natural gas; fluctuations in financial market conditions, including interest rates; the level of demand for, and prices of, the products and services we offer; levels of customer confidence and spending; market acceptance of the products we offer; termination of distribution or original equipment manufacturer agreements; unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, our inability to reduce costs in response to slow-downs in market activity, unavailability of quality products or inventory, supply disruptions, job action and unanticipated events related to health, safety and environmental matters); our ability to attract and retain skilled staff and our ability to maintain our relationships with suppliers, employees and customers. The foregoing list of factors is not exhaustive. Further information concerning the risks and uncertainties associated with these forward looking statements and the Corporation’s business may be found in our Annual Information Form for the year ended December 31, 2017, filed on SEDAR. The forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement. The Corporation does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.
Additional information, including Wajax’s Annual Report, is available on SEDAR at www.sedar.com.