Acquisition enhances ADENTRA's product mix
and geographic footprint in the Pro Dealer channel
Expected to be immediately accretive to
adjusted earnings per share and adjusted EBITDA margin
LANGLEY,
BC, July 29, 2024 /CNW/ – ADENTRA Inc.
("ADENTRA" or the "Company") (TSX: ADEN)
today announced that one of its wholly owned subsidiaries
has completed the acquisition ("the Acquisition") of
substantially all the assets of Woolf Distributing Company, Inc.
("Woolf") and has assumed certain working capital
liabilities.
"We are pleased to welcome Woolf's team to ADENTRA," commented
Rob Brown, President and Chief
Executive Officer of ADENTRA. "Woolf expands our geographic
footprint and product offering, adding complementary millwork
locations to our US Midwest operations, as well as new branded
specialty products in the outdoor living product category. The
addition of Woolf also deepens our access to the attractive Pro
Dealer customer channel where ADENTRA expects favorable multi-year
demand from new residential and repair and remodel markets,
supported by low existing home inventories, favorable demographics,
strong home equity levels and an aging US housing stock."
"We remain committed to our Destination 2028 goals, including
the achievement of US$3.5 billion in
annual run-rate sales through a combination of organic and
acquisitions-based growth. With today's announcement, we are right
on pace to achieve our stated goal of adding US$800 million in run-rate sales from
acquisitions by 2028," said Mr. Brown.
Financial Consideration
The Acquisition of Woolf was completed for an upfront purchase
price of US$130 million, financed by
the Company's existing credit facilities. An additional earn-out
consideration of US$5 million may be
payable related to each of the calendar years ending 2024, 2025 and
2026 contingent upon achieving certain earnings performance
targets. Should the additional earn-out consideration become
payable, the effective valuation multiple associated with the
Acquisition will reduce, making the acquisition even more
accretive. On a pre-synergy basis the Acquisition is expected to be
immediately accretive to Adjusted EBITDA margin and is anticipated
to be high-single digit accretive to adjusted basic earnings per
share on a pro-forma basis. Following the acquisition of
Woolf, ADENTRA will still have ample access to capital
remaining. With a strong balance sheet the Company will continue to
be well positioned to act on additional future acquisition
opportunities in the highly fragmented architectural building
products industry.
About Woolf Distribution Company, Inc.
Woolf is a value-added distributor of architectural building and
millwork products for residential and commercial markets, serving
customers in seven US states from four facilities located in
Northern and Central Illinois, and
in Northen Wisconsin. Woolf's millwork product category includes
interior and exterior doors and associated products. Its specialty
building materials category is focused on products for outdoor
living spaces, including composite decking and composite and
aluminum railing. Woolf adds value to millwork products by
machining doors to customer specifications, pre-hanging door units
in jambs, and pre-finishing millwork products as requested. Its
customer base is comprised of professional building materials
dealers, one-step distributors, millwork houses, and big box
stores. Woolf has a strong culture of customer service, with a long
tenured management team led by its President & CEO Mr.
Craig Steagall, who will remain with
ADENTRA post-acquisition. During the twelve months ended
June 30, 2024, Woolf achieved
US$164 million in sales.
About ADENTRA
ADENTRA is one of North
America's largest distributors of architectural products to
fabricators, home centers, and professional dealers servicing the
new residential, repair and remodel, and commercial construction
end markets. The Company currently operates a network in
North America of 86 facilities in
the United States and Canada. ADENTRA's common shares are listed on
the Toronto Stock Exchange under the symbol "ADEN".
Forward-Looking Statements
Certain statements in this news release contain "forward-looking
information" within the meaning of applicable securities laws in
Canada ("forward-looking
information"). The words "anticipates", "believes", "budgets",
"could", "estimates", "expects", "forecasts", "intends", "may",
"might", "plans", "projects", "schedule", "should", "will",
"would", and similar expressions are often intended to identify
forward-looking information, although not all forward-looking
information contains these identifying words.
Forward-looking information in this news release includes,
without limitation: ADENTRA expects favorable multi-year demand
from new residential and repair and remodel markets, supported by
low existing home inventories, favorable demographics, strong home
equity levels and an aging US housing stock; we remain committed to
our Destination 2028 goals, including the achievement of
US$3.5 billion in annual run-rate
sales through a combination of organic and acquisitions-based
growth; with today's announcement we are right on pace to achieve
our stated goal of adding US$800
million in run-rate revenues from acquisitions by 2028; on a
pre-synergy basis the Acquisition is expected to be immediately
accretive to Adjusted EBITDA margin and is anticipated to be
high-single digit accretive to adjusted earnings basic per share on
a pro-forma basis; and following the acquisition of Woolf, ADENTRA
will have ample access to capital remaining, with a strong balance
sheet positioning the Company to act on additional future
acquisition opportunities in the highly fragmented architectural
building products industry.
The forecasts and projections that make up the forward-looking
information in this news release are based on assumptions which
include, but are not limited to: no undisclosed liabilities
associated with the Acquisition; the financial impact of the
Acquisition is as currently expected by management; the general
state of the economy does not worsen; the Company does not lose any
key personnel; there is no labor shortage across multiple,
geographic locations; there are no circumstances, of which the
Company is aware that could lead to the Company incurring costs for
environmental remediation; there are no decreases in the supply of,
demand for, or market values of products that harm the Company's
business; the Company does not incur material losses related to
credit provided to its customers; the Company's products are not
subjected to negative trade outcomes; the Company is able to
sustain its level of sales and earnings margins; the Company is
able to grow its business long term and to manage its growth; the
Company is able to integrate acquired businesses, including Woolf;
there is no new competition in the markets in which the Company
operates that lead to reduced sales and profitability; the Company
can comply with existing regulations and will not become subject to
more stringent regulations; no material product liability claims;
importation of components or other innovative products does not
increase and replace products manufactured in North America; the Company's management
information systems upon which it is dependent are not impaired;
the Company is not adversely impacted by disruptive technologies;
an outbreak or escalation of a contagious disease does not
adversely affect the Company's business; and, the Company's
insurance is sufficient to cover losses that may occur as a result
of its operations.
The forward-looking information in this news release is subject
to risks, uncertainties and other factors that could cause actual
results to differ materially from historical results or results
anticipated by the forward-looking information. The factors which
could cause results to differ from current expectations include,
but are not limited to: the actual impacts of the Acquisition on
the Company's Adjusted EBITDA margin and adjusted diluted earnings
per share may not be in line with management's expectations;;
exchange rate fluctuations between the Canadian and US dollar could
affect the Company's performance; the Company's results are
dependent upon the general state of the economy; the Company
depends on key personnel, the loss of which could harm its
business; a labour shortage across multiple geographic locations
could harm the Company's business; decreases in the supply of,
demand for, or market values of the Company's products could harm
the Company's business; the Company may incur losses related to
credit provided to the Company's customers; the Company's products
may be subject to negative trade outcomes; the Company may not be
able to sustain its current level of sales or earnings margins; the
Company may be unable to grow its business long term or to manage
any growth; the Company may be unable to integrate acquired
businesses; competition in the Company's markets may lead to
reduced sales and profitability; the Company may fail to comply
with existing regulations or become subject to more stringent
regulations; product liability claims could affect the Company's
sales, profitability and reputation; importation of products may
increase, and replace products manufactured in North America; disruptive technologies could
lead to reduced revenues or a change in the Company's business
model; the Company is dependent upon its management information
systems; disruptive technologies could lead to reduced revenues or
a change in the Company's business model; the Company's information
systems are subject to cyber securities risks; the Company's
insurance may be insufficient to cover losses that may occur as a
result of the Company's operations; an outbreak or escalation of a
contagious disease may adversely affect the Company's business;
and, the Company's credit facilities affect its liquidity, contain
restrictions on the Company's ability to borrow funds, and impose
restrictions on distributions that can be made by certain
subsidiaries of the Company. More information about the risks and
uncertainties affecting ADENTRA's business can be found in the
"Risk Factors" section of its Annual Information Form dated
March 15, 2024 which is available
under the Company's profile on SEDAR+ at www.sedarplus.ca.
All forward-looking information in this news release is
qualified in its entirety by this cautionary statement and, except
as may be required by law, the Company undertakes no obligation to
revise or update any forward-looking information as a result of new
information, future events or otherwise after the date hereof.
Non-IFRS Financial Measures
In this news release, reference is made to the following
non-GAAP ratios: "adjusted basic earnings per share" and "Adjusted
EBITDA margin". For a description of the composition of each
non-GAAP ratio and how each non-GAAP ratio provides useful
information to investors and is used by management, see "Non-GAAP
and Other Financial Measures" in the Company's management's
discussion and analysis for the year ended December 31, 2023 (which is incorporated by
reference herein).
Such non-GAAP ratios are not standardized financial measures
under International Financial Reporting Standards and might not be
comparable to similar financial measures disclosed by other
issuers.
SOURCE ADENTRA Inc.