25 October 2019, 12:57
Alamo Group Inc. 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.
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.
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. 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.
Source: Alamo Group Inc.