Forterra Announces Definitive Agreement with Thompson Pipe Group
(Thomson Reuters ONE) -
Thompson Pipe Group to Acquire Forterra's U.S. Concrete and Steel Pressure Pipe
Assets
Forterra to Acquire Thompson Pipe's Drainage Pipe & Products Manufacturing
Facility with a Strategic Position in Houston Market
IRVING, Texas, June 26, 2017 (GLOBE NEWSWIRE) -- Forterra, Inc. ("Forterra" or
the "Company") (Nasdaq:FRTA), a leading manufacturer of water infrastructure
pipe and products in the United States and Eastern Canada, today announced it
has entered into a definitive agreement to sell the U.S. concrete and steel
pressure pipe assets of its Water Pipe and Products business segment to Thompson
Pipe Group. The transaction is subject to customary closing conditions and is
expected to close in the third quarter of 2017.
Under the terms of the agreement, an affiliate of Thompson Pipe Group will
acquire assets related to five Forterra manufacturing facilities and a fittings
facility. Forterra will receive approximately $23.2 million in cash, exclusive
of fees and expenses, as well as assets relating to a drainage pipe and products
manufacturing facility located in Conroe, Texas, which primarily serves the
Houston market. The Company intends to use the net proceeds from the transaction
to pay down debt. The transaction is expected to be immediately accretive to the
Company's earnings, margins and cash flows.
"After a review of strategic alternatives to enhance shareholder value, we are
pleased to reach this agreement with Thompson Pipe Group," said Jeff Bradley,
CEO of Forterra. "We believe this transaction, which includes not only the
divestiture of non-core assets, but also the acquisition of a drainage pipe and
products facility in the large Houston market, will enable us to sharpen our
focus on our core business and high-margin growth opportunities and more
efficiently allocate capital to execute our strategic objectives."
Key Transaction Rationale
· Expected to be immediately accretive to Forterra's earnings, margins and cash
flows:
* Eliminates significant working capital requirements associated with
contracts with uncertain delivery schedules; and
* Reduces expected maintenance capital expenditure requirements.
· Acquisition of Houston-area plant bolsters Forterra's strategic position in a
large and growing market, and will become part of Forterra's Drainage Pipe and
Products business segment.
· With the asset sale, Forterra will focus on its core drainage and ductile iron
pipe product lines with favorable end-market fundamentals:
* The Company's U.S. concrete and steel pressure pipe assets have minimal
synergies with the remaining core business due to limited customer overlap,
separate manufacturing facilities and a different manufacturing process.
· Exits a business with unfavorable market dynamics in the United States:
* Long-term projects subject to customer delays can create earnings
volatility; and
* Narrow market segment with significant competition and limited near-term
catalysts for improvement in demand.
Financial Summary
The following is a summary of certain financial information for the U.S.
Concrete and Steel Pressure Pipe assets to be sold in the transaction:
· For the year ended December 31, 2016, net sales were $99.7 million, net loss
was $1.6 million and Adjusted EBITDA(1) was $1.4 million
· For the quarter ended March 31, 2016 as compared to the quarter ended March
31, 2017, net sales declined from $30.0 million to $27.7 million, net income of
$1.0 million declined to a net loss of $6.1 million and Adjusted EBITDA(1) of
$1.9 million declined to a loss of $5.5 million
About Forterra
Forterra, Inc. (Nasdaq:FRTA) is a leading manufacturer of water and drainage
pipe and products in the U.S. and Eastern Canada for a variety of water-related
infrastructure applications, including water transmission, distribution,
drainage and stormwater management. Based in Irving, Texas, Forterra's product
breadth and scale help make it a one-stop shop for water-related pipe and
products, and a preferred supplier to a wide variety of customers, including
contractors, distributors and municipalities. For more information on Forterra,
visit forterrabp.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking
statements may be identified by the use of words such as "anticipate",
"believe", "expect", "estimate", "plan", "outlook", and "project" and other
similar expressions that predict or indicate future events or trends or that are
not statements of historical matters. Forward-looking statements should not be
read as a guarantee of future performance or results, and will not necessarily
be accurate indications of the times at, or by, which such performance or
results will be achieved. Forward-looking statements are based on historical
information available at the time the statements are made and are based on
management's reasonable belief or expectations with respect to future events,
and are subject to risks and uncertainties, many of which are beyond the
Company's control, that could cause actual performance or results to differ
materially from the belief or expectations expressed in or suggested by the
forward-looking statements. Forward-looking statements speak only as of the date
on which they are made and the Company undertakes no obligation to update any
forward-looking statement to reflect future events, developments or otherwise,
except as may be required by applicable law. Investors are referred to the
Company's filings with the Securities and Exchange Commission for additional
information regarding the risks and uncertainties that may cause actual results
to differ materially from those expressed in any forward-looking statement.
(1) Adjusted EBITDA is a non-GAAP measure. See Appendix A for how we define this
measure, a discussion of why we believe it is useful and reconciliation thereof
to the most directly comparable GAAP financial measure.
Appendix A
Reconciliation of Non-GAAP Measure (Unaudited)
In addition to results calculated under generally accepted accounting principles
in the United States ("GAAP"), in this press release we also present adjusted
EBITDA. Adjusted EBITDA is a non-GAAP measure and has been presented in this
press release as a supplemental measure of financial performance that is not
required by, or presented in accordance with GAAP. We calculate adjusted EBITDA
as net income (loss) before interest expense, income tax benefit (expense),
depreciation and amortization and before impairment and restructuring charges,
(gains)/losses on the sale of property, plant and equipment and certain other
income and expenses, such as transaction costs, carve-out costs related to our
separation from HeidelbergCement and costs associated with disposed sites.
Adjusted EBITDA is presented in this press release because it is an important
metric used by management as one of the means by which it assesses our financial
performance. Adjusted EBITDA is also frequently used by analysts, investors and
other interested parties to evaluate companies in our industry. We use adjusted
EBITDA as a supplement to GAAP measures of performance to evaluate the
effectiveness of our business strategies, to make budgeting decisions, to
allocate resources and to compare our performance relative to our peers.
Adjusted EBITDA is also an important measure for assessing our operating results
and evaluating operating performance on a consistent basis, by excluding the
impacts of depreciation, amortization, income tax expense, interest expense and
other items not indicative of ongoing operating performance. Additionally, this
measure, when used in conjunction with related GAAP financial measures, provides
investors with additional financial analytical framework which management uses,
in addition to historical operating results, as the basis for financial,
operational and planning decisions and present measurements that third parties
have indicated are useful in assessing the Company and its results of
operations.
Adjusted EBITDA has certain limitations. Adjusted EBITDA should not be
considered as an alternative to net income or as a substitute for any other
measure of financial performance calculated in accordance with GAAP. This
measure also should not be construed as an inference that our future results
will be unaffected by unusual or nonrecurring items for which these non-GAAP
measures make adjustments. Adjusted EBITDA is not intended to be a liquidity
measure because of certain limitations such as: (i) it does not reflect cash
outlays for capital expenditures or future contractual commitments; (ii) it does
not reflect changes in, or cash requirements for, working capital; (iii) it does
not reflect interest expense, or the cash requirements necessary to service
interest, or principal payments, on indebtedness; (iv) it does not reflect
income tax expense or the tax necessary to pay income taxes; and (v) although
depreciation and amortization are non-cash charges, the assets being depreciated
and amortized will often have to be replaced in the future, and this non-GAAP
measure does not reflect cash requirements for such replacements.
Other companies, including other companies in our industry, may not use this
measure or may calculate this measure differently than as presented in this
press release, limiting its usefulness as a comparative measure. In evaluating
adjusted EBITDA, you should be aware that in the future we will incur expenses
that are the same as or similar to some of the adjustments made in the
calculations below and the presentation of adjusted EBITDA should not be
construed to mean that our future results will be unaffected by such
adjustments. Management compensates for these limitations by using adjusted
EBITDA as a supplemental financial metric and in conjunction with results
prepared in accordance with GAAP.
Forterra's U.S. Concrete and Steel Pressure Pipe Assets
Reconciliation of net income (loss) to adjusted EBITDA
($ in thousands)
Three months ended Year ended December
March 31, 31,
2017 2016 2016
unaudited
Net income (loss) $ (6,071 ) $ 956 $ (1,594 )
Interest expense 6 - 931
Depreciation and 750 985 3,639
amortization
Income tax expense - - 1,828
EBITDA (5,315 ) 1,941 4,804
(Gain) loss on sale of
property, plant & 358 - (129 )
equipment, net(1)
Non-cash compensation(2) 19 - -
Other (gains) expenses(3) (538 ) - (3,263 )
Adjusted EBITDA $ (5,476 ) $ 1,941 $ 1,412
(1) (Gain) loss on sale of property, plant and equipment, primarily related
to the disposition of manufacturing facilities.
(2) Non-cash equity
compensation expense.
(3) Other (gains) losses, such as gain on insurance
proceeds related to the destruction of property.
CONTACT:
Matt Brown
Executive Vice President, Chief Financial Officer
Forterra, Inc.
469.299.9113
IR(at)forterrabp.com
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Forterra, Inc. via GlobeNewswire
Datum: 26.06.2017 - 14:00 Uhr
Sprache: Deutsch
News-ID 549774
Anzahl Zeichen: 13334
contact information:
Town:
Irving, TX
Kategorie:
Business News
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