Quanex Building Products announces the strategic acquisition of

[ad_1]

HOUSTON, TEXAS, Nov. 01, 2022 (GLOBE NEWSWIRE) — Quanex Building Products Corporation (NYSE: NX) (“Quanex” or the “Company”) today announced that it has acquired substantially all of the assets of LMI Custom Mixing, LLC (“LMI”) for $92 million, or $79 million of dollars, net of the present value of $13 million of expected future tax benefits. The transaction will be financed with cash on hand and borrowings from the Company’s existing revolving credit facility. Quanex expects to realize approximately $500,000 in synergies in the first year following the acquisition. The Company expects LMI to generate revenue of approximately $80 million and an EBITDA margin of approximately 15% in fiscal 2023.

LMI is a state-of-the-art custom polymer blender that produces high quality custom rubber compounds used in a variety of applications in complementary and attractive diversified industrial end markets, including fenestration, where LMI is a supplier of Quanex for about 20 years. LMI has a strongly customer-centric model with a reputation for developing cutting-edge compounds using state-of-the-art machinery.

Main strategic advantages of the combination:

  • Fits perfectly into Quanex’s expertise in materials science and process engineering
  • Expands product portfolio into an attractive new category with significant growth opportunities
  • Vertical integration and cost reduction by supplying compounds to Quanex’s existing IG spacer business in North America, which is co-located with LMI’s facility in Cambridge, OH
  • Familiar and complementary operations represent low execution and integration risk

Main financial benefits of the merger:

  • Attractive effective purchase price multiple
  • Immediately accretive to adjusted EPS
  • Improves consolidated margin profile
  • Meets Quanex return requirements within 3 years
  • The pro forma balance sheet remains solid

George Wilson, President and CEO of Quanex, said, “The acquisition of LMI is consistent with the ‘growth with purpose’ strategy we recently unveiled and represents an important first step on our path to generating at least $2 billion in annual revenue. Part of our strategy is to acquire businesses that help us expand into new and existing markets, strengthen our leadership positions, as well as improve our scale to create a more effective platform to drive growth and share earnings. this strategy as it adds capabilities well aligned with our materials science and process engineering expertise while expanding our product offering in an attractive category with significant organic and inorganic growth opportunities. long-standing relationship with LMI and we strongly believe the addition of LMI’s complementary capabilities will help us realize our long-term growth strategy. an integration that will produce solid results over time for our employees, our customers and our shareholders.

Kevin Gray, President, Chairman and CEO of LMI’s parent company, Lauren International, added, “Quanex is the preferred buyer for this business and an excellent home for LMI. Quanex is an undisputed leader in the industries it serves and presents a perfect fit with LMI’s custom composition capabilities. I believe in the value that can be created for our customers by combining these businesses and am delighted that the LMI team is joining the Quanex brand.

Quanex has posted a presentation on its website (http://www.quanex.com) in the Investors section under Events and Presentations which provides a summary of the strategic rationale and financial benefits of the transaction.

Bank of America served as exclusive financial advisor to Quanex Building Products on the transaction.

About Quanex

Quanex is a global manufacturer with core capabilities and broad applications in various end markets. The company currently collaborates and partners with leading OEMs to provide innovative solutions in the window, door, vinyl fence, solar, refrigeration and cabinetry markets. Going forward, Quanex plans to leverage its materials science expertise and process engineering to expand into adjacent markets.

About ITM

LMI Custom Mixing is a state-of-the-art custom polymer mixer. The company focuses on advanced methods of blending rubber compounds for the most demanding applications in a range of industries, including construction products, automotive, and wire and cable.

Forward-looking statements

Statements that use the words “estimate”, “expect”, “could”, “should”, “believe”, “will”, “could” or similar words reflecting future expectations or beliefs are statements prospective. Forward-looking statements include, but are not limited to, the following: the impacts of public health issues (including pandemics, such as the recent COVID-19 pandemic) on the economy and demand for the products of Quanex, the Company’s future results of operations, future financial condition, future uses of cash and other expenses, expenses and tax rates, expectations regarding Quanex’s industry and future growth of Company, including any guidance discussed in this press release. The statements and advice set forth in this press release are based on current expectations. Actual results or events may differ materially from this release. For a complete discussion of factors that could affect Quanex’s future performance, please see the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2021 and the Company’s Quarterly Reports on Form 10-K. Q under the sections entitled “Caution Regarding Forward-Looking Statements” and “Risk Factors”. All forward-looking statements contained in this press release are made as of the date hereof, and Quanex undertakes no obligation to update or revise forward-looking statements to reflect new information or events.

Non-GAAP Terminology Definitions and Disclaimer

Adjusted EPS is a non-GAAP financial measure that Quanex believes provides a consistent basis of comparison between periods and more accurately reflects operating performance, as it is not influenced by certain revenue or expense items not not affecting ongoing operations. EBITDA (defined as net earnings before interest, taxes, depreciation and amortization and other) is a non-GAAP financial measure that the Company uses to measure operating performance and to assist in financial decision-making. A reconciliation of LMI’s projected EBITDA margin (defined as LMI’s projected EBITDA divided by LMI’s projected revenue, expressed as a percentage) to a corresponding GAAP measure is not included in the release as it is not available without unreasonable effort, since various items required for reconciliation are beyond Quanex’s control or cannot be predicted (including the fact that Quanex did not own LMI until the date of publication) . Quanex believes that these non-GAAP measures provide a consistent basis of comparison between periods and will help investors understand the Company’s financial performance when comparing the results to other investment opportunities. These non-GAAP measures may not be the same as those used by other companies. Quanex does not intend to consider this information in isolation or as a substitute for other measures prepared in accordance with US GAAP.


        
[ad_2]Source link

About Cecil D. Ramirez

Check Also

Acquirell – A reputable enterprise sourcing platform releasing unique products to the US market with best-in-class procurement management approaches

[ad_1] The company is highly regarded for releasing new products to improve purchasing efficiency. Acquirell …