Cambridge, Ontario, November 7, 2021/CNW/-Industry-leading automation solutions provider ATS Automation Tool Systems (TSX: ATA) ("ATS" or "Company") today announced that it Has reached a final agreement with SP Industries, Inc. ("SP"), a designer and manufacturer of advanced biopharmaceutical processing equipment, life science equipment and laboratory instrument products, for US$445 million (approximately CAD 550 million). Subject to mailing-closing adjustment, representing 15.3 times SP's adjusted EBITDA over the past 12 months or 11.9 times synergy (1).
Andrew Hider, Chief Executive Officer of ATS, said: “SP has greatly expanded our capabilities and products by increasing its aseptic and non-sterile freeze-dried product portfolio and filling solutions, and has strengthened our presence in the drug development and production end markets. Status.” “SP participates in very attractive market segments. The growth of these market segments is driven by strong pharmaceutical pipelines, increased use of biological agents, and increased product freeze-drying. It is worth noting that ATS The combination of SP and SP will enable us to better support the needs of our customers throughout the life cycle of drug development and production, as well as diagnosis, a wider range of life sciences and applied science applications. With its good track record and talented team, SP Will become an important contributor to the ATS series, providing our life sciences business with compelling sales synergy potential, including visitors."
SP was founded in 1982 and is headquartered in Warminster, Pennsylvania. It provides a wide range of research and commercial freeze dryers, aseptic filling equipment and systems, life science equipment, and provides attractiveness through its laboratoryware and glassware business Powerful and meaningful recurring income. In the past 12 months ending September 30, 2021, SP generated $179 million in revenue and $29 million in adjusted EBITDA. About 70% of its revenue comes from North American customers, 14% comes from Europe, and the rest comes from other regions. About 73% of SP's sales come from biopharmaceutical processing equipment and life science equipment, including services, and about 27% comes from professional laboratories and glassware products. SP has approximately 700 employees in nine manufacturing plants and locations in the United States, the United Kingdom, and Spain.
SP will continue to be led by its CEO, Brian Larkin, who said: "For many years, we have been observing the actions of ATS and recognized its leadership in the life sciences field and creating value for customers Some of these customers are also SP customers. As part of ATS, we will be able to develop to a new level, focusing on customer-oriented innovation and further enhancing our value proposition in the target end market."
The transaction is expected to be completed in the fourth quarter of 2021, but no later than the first quarter of 2022, waiting for the completion of regular regulatory filings. ATS plans to use its revolving credit line to fund the acquisition.
ATS expects to achieve approximately US$3.5 million in annual cost synergies within three years after the acquisition, including material cost savings and production process optimization. ATS also expects revenue synergies to generate approximately US$5 million in additional EBITDA within three years. These synergies will be achieved by leveraging the combined ATS and SP technology portfolio to provide extended turnkey customer solutions. The transaction is expected to increase ATS's earnings and cash flow per share indicators in the first year after the acquisition. ATS expects to achieve a double-digit return on invested capital (ROIC) in the fourth year after the completion of the acquisition.
ATS will host an analyst conference call and accompanying webcast on Monday, November 8, 2021, at 8:30 AM Eastern Time to discuss the transaction. Demos and webcasts can be accessed in real time at www.atsautomation.com. To participate in the conference call, please dial (416) 764-8659 five minutes in advance. A replay of the meeting will be available on the ATS website after the conference call. Or, by dialing (416) 764-8677 and entering the password 045577 and entering the number symbols, you can get a week's call recording (until midnight on November 15, 2021).
SP is the world's leading supplier of the most advanced filling-finished pharmaceutical manufacturing solutions, research, pilot and production freeze dryers, laboratory equipment and supplies, and specialty glassware. SP products support research and production in different end-user markets, including pharmaceuticals, life sciences, ophthalmology, environmental testing and monitoring, food and beverages, etc. SP has a long and successful track record of quality and scientific innovation. It is headquartered in Warminster, Pennsylvania and has production facilities in the United States and Europe. SP provides a global sales and service network, including product training and technical support. For more information, please visit www.spindustries.com.
ATS is the industry's leading supplier of automation solutions, providing services to many of the most successful companies in the world. ATS uses its extensive knowledge base and global capabilities in customized automation, repeated automation, automation products and value-added services (including pre-automation and after-sales service) to meet the complex manufacturing automation system and service needs of multinational customers in the following markets such as life sciences, Food and beverages, transportation, consumer goods and energy. Founded in 1978, ATS has 28 manufacturing plants and more than 50 offices in North America, Europe, Southeast Asia and China, with more than 5,000 employees. The company’s stock is traded on the Toronto Stock Exchange under the symbol ATA. Please visit the company's website www.atsautomation.com.
EBITDA is based on the twelve-month period ending September 30, 2021; a post-synergy multiple of 11.9 times includes approximately $8.5 million in revenue and cost synergies
Note to readers: Non-IFRS measures:
This press release uses non-International Financial Reporting Standards to measure EBITDA, adjusted EBITDA, adjusted EBITDA margin and return on invested capital related to this investment. These terms do not have any standardized meanings stipulated in IFRS, and therefore may not be able to be compared with similar measures provided by other companies. These metrics should not be considered in isolation, nor should they be used as a substitute for performance metrics compiled in accordance with IFRS. EBITDA is defined as operating income that does not include depreciation and amortization (including amortization of intangible assets). Adjusted EBITDA is defined as EBITDA that does not include items other than management’s internal analysis of operating performance, such as transaction and integration costs related to acquisitions and certain non-recurring adjustments. The adjusted EBITDA margin represents the entity's adjusted EBITDA as a percentage of revenue. The company uses adjusted EBITDA to evaluate operating performance. The management believes that adjusted EBITDA is an important indicator of the ability to generate operating cash flow to fund continuous operations and investment. Management believes that ATS shareholders and potential investors of ATS will use these non-IFRS financial indicators to make investment decisions and measure operational results. The return on invested capital associated with this investment, as used in this article, refers to, for any fiscal year, the SP’s net income in that fiscal year divided by the purchase price of the acquisition. As used in this article, ATS uses the return on invested capital to evaluate the efficiency of ATS capital allocation.
This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of ATS or SP, or the development and expectations of ATS or SP’s business or its industry to be significant Differences in results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements include all disclosures about possible events, conditions, or results of operations. These disclosures are based on assumptions about future economic conditions and action plans. Forward-looking statements may also include, but are not limited to, any statements related to future events, conditions or circumstances. ATS reminds you not to rely too much on any such forward-looking statements, which are only effective from the date they are made.
The forward-looking statements in this press release refer to the following: completion and completion time of the acquisition, transaction funds, expectations related to the number and timing of cost and revenue synergies, expectations related to the impact on ATS earnings, and cash flow per share indicators , And the rate of return on invested capital. The risks and uncertainties that may affect forward-looking statements include: the performance of the market sectors served by SP and ATS; the progress of COVID-19 and its impact on the company and SP’s ability to operate their respective assets, including possible closure due to the COVID-19 outbreak Facilities; the severity and duration of the COVID-19 pandemic in all jurisdictions where companies and SPs do business; the nature and extent of government restrictions on travel and business activities, and the nature, extent, and applicability of government assistance programs , In both cases are related to the COVID-19 pandemic, applicable to all jurisdictions where the company and SP conduct business; the impact of the COVID-19 pandemic on the company and SP’s employees, customers and suppliers; COVID- 19 Impact on the global economy; general market performance, including capital market conditions and the availability and cost of credit; foreign currency and exchange risks; the relative strength of the Canadian dollar; the impact of factors such as increased pricing pressure and possible profit margin compression; regulation and taxation Environment; failures or delays related to the new customer plan; delays or prohibition of closure due to completion of regulatory filing procedures or other closure conditions; expected cost and revenue synergies not achieved within the expected time frame or not achieved at all; due to multiple A variety of reasons, including the above reasons. Earnings per share and cash flow indicators did not increase in the first year; the return on investment capital target was not reached within the expected time frame or at all; one or more customers, or other contracted with SP People, delays, expenses or losses due to insolvency or bankruptcy; political, labor or supplier interruption; imposing new tariffs, tariffs or other legal obstacles that affect the SP market; the market growth of SP services is lower than expected; and SP and / Or ATS is or may become a party to legal proceedings related risks; faced with product liability claims; risks related to higher than expected tax liabilities or expenses; ATS files submitted to Canadian provincial securities regulators from time to time detailed Other risks. Forward-looking statements are based on management’s current plans, estimates, forecasts, beliefs and opinions, except for the requirements of applicable securities laws, if these plans, estimates, forecasts, beliefs and opinions are subject to change.
Source: ATS Automation Tooling Systems Inc.
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