10/7/2014 1:10:00 PM
HEADLINES
TriMas Acquiring Allfast Fastening Systems
Hagan: Allfast Price
The recent acquisition of Allfast by TriMas Corp. for $360 million revealed TriMas paid a high price for the aerospace fastener manufacturer.
“From a revenue and cash flow generation perspective, this could be the richest purchase price ever paid for a large, industry-significant fastener manufacturer,” Hagan told FIN.
In the 12 months ended August 2014, the company generated net sales of $55 million. According to TriMas, the $360 million purchase price represents “a multiple of 12 to 13 times projected 2015 Pro Forma EBITDA” for Allfast. Pro Forma EBITDA was defined as earnings before interest, taxes, depreciation & amortization, including expected cost synergies and excluding the impact of purchase accounting costs and adjustments.
“Therefore, projected 2015 Pro Forma EBITDA for Allfast is between $27.7 and $30.0 million… which is pretty amazing based on current trailing 12 months net sales of $55 million.”
“This was an astonishingly high price for TriMas to pay for Allfast, particularly based on the fact that during the current year (through Sept. 21), TRS shares have traded within a range of 11.2 and 8.9 times Enterprise Value / trailing 12 month EBITDA (Enterprise Value = Market Capitalization + Debt Outstanding – Cash).”
Investors reacted swiftly to the news.
Prior to the deal announcement, TRS shares traded within a range of $38.96 (on Jan. 2) and $29.54 (on Sept. 19) during the current calendar year. As of today (Sept. 29), TRS shares have declined by $4.60 (or 15.6%) since the deal announcement to $24.94 per share. At the current market price, TriMas shares are trading at 7.8 times trailing 12 month EBITDA.
The Allfast acquisition will be funded through an incremental $250 million Senior Secured Term Loan and additional borrowings under TriMas’ existing Revolving Credit Facility.
Hagan “question(ed) how such a high purchase price for Allfast was justified and we anticipate that this transaction will not have a positive impact on the TRS share price any time soon.”
Richard Hagan is president of New York-based Pinnacle Capital Corp. He specializes in investment banking services for the fastener industry. Email: rphagan@pinnaclecapitalcorp.com
TriMas Corp. agreed to acquire Allfast Fastening Systems, Inc. for approximately $360 million.
Allfast manufactures solid and blind rivets, blind bolts, temporary fasteners and installation tools for the aerospace industry, with content on substantially all commercial, defense and general aviation platforms.
Headquartered in Southern California, Allfast generated approximately $55 million in revenue for the 12 months ended August 2014.
Allfast will become part of TriMas’ Aerospace segment, formerly known as the Aerospace & Defense segment. The segment includes Monogram Aerospace Fasteners, Mac Fasteners and Martinic Engineering.
TriMas CEO David Wathen called Allfast “a well-run, high margin, strong cash flow business with a track record of revenue growth and even greater growth potential.”
Allfast president Jim Randall said the transaction would “dramatically expand the product offering of both businesses… in a time of unprecedented growth in the aerospace market.”
“Both companies have proprietary products and processes, as well as strong application engineering and product development capabilities focused on solving customer problems,” Randall added.
Allfast has about 270 employees and operates a 170,000 sq ft plant, which has capacity to produce nine million rivets per day.
Allfast is located at 15200 Don Julian Rd., City of Industry, CA 91745. Tel: 626 -968-9388 Fax 626-968-9393 Web: allfastinc.com
In August TriMas appointed Tom Aepelbacher as president of its Aerospace segment.
The company recently ceased operations at NI Industries, which manufactured cartridge cases for the defense industry and was party to a federal facility maintenance contract. TriMas received $6.7 million for the sale of certain intellectual property and related inventory and tooling. Web: trimascorp.com
For more, read FIN’s 2013 article “Randall Credits Machinery & People for Allfast’s Aerospace Fastener Success” in Fastener History.
The last six years of TriMas fastener results are also available to FIN subscribers in the FIN Stock Review section.
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