Fleetwood Expands Modular Accommodation and Parts and Accessories Segments Through Strategic Acquisitions

25-Jul-2018 Intellasia | | 9:05 AM Print This Post

* Fleetwood has executed contracts to acquire:
Sydney based Modular Building Systems (MBS) for $34.15m (or 3.6x FY18 EBITA) plus a potential earnout; and
Melbourne based caravan plumbing and electrical services and parts supplier Northern RV (NRV) for $10m (or 2.1x FY18 EBITA) plus a potential earnout.
* MBS provides a strong entry point for Fleetwood into the New South Wales corrections, education and commercial sectors, through its large, modern facility in the key Western Sydney market.
* NRV extends Camec’s reach into the key Campbellfield RV manufacturing market in Melbourne. It also services the growing imported caravan market.
* The acquisitions will be funded by a placement and pro-rata accelerated non-renounceable entitlement offer, which are underwritten to $60m.
* The combined transactions are strongly EPS and ROE accretive and will leave Fleetwood with a balance sheet capable of funding future growth.

Fleetwood has entered into a binding agreement to acquire Sydney based modular building company MBS for $34.15m (or 3.6x FY18 EBITA), plus a potential earnout.
Fleetwood is also acquiring Melbourne based caravan plumbing parts supplier NRV for $10m (or 2.1x FY18 EBITA), plus a potential earnout.
Both the acquisition of MBS and NRV are subject to standard conditions precedent for transactions of this nature.

Fleetwood Managing Director and CEO, Brad Denison, said “MBS provides Fleetwood with a large and modern facility in the key Western Sydney market that has forward contracted government commitments in the growing corrections sector. As well as allowing Fleetwood to enter a new sector that has economic and political tailwinds, the acquisition will provide Fleetwood an opportunity to participate in the large upcoming education spend in NSW.”
“NRV represents an exciting bolt-on opportunity for our Camec business which will increase integration with our important OEM customers in Melbourne.”
“The attractive acquisition multiples will drive strong EPS accretion and substantially improved returns on a pro-forma FY18 basis. In addition, Fleetwood will retain a strong balance sheet capable of funding future growth.”
Mr Denison continued “We are pleased to welcome MBS founder, Murray Shaw, NRV founder, David Slorach, and their respective teams to Fleetwood. Both businesses have excellent niches in their respective markets which are a credit to the teams that have built them.”

About MBS
Murray Shaw commenced trading in 1998 as Site Establishments before a name change to Affordable Portable Buildings in 2001 and to Modular Building Systems in 2007.
MBS is based in NSW and specialises in the manufacture and installation of prefabricated modular buildings.
In June 2016, the NSW Government announced a $3.8 billion budget allocation to build 7,000 prison beds over the four years to 2020 to address capacity concerns.
MBS is one of two builders on a panel appointed to build modular cells for the NSW Government.
MBS also has the Australian rights to use all patented steel prison cell designs belonging to US company Maximum Security Systems for 10 years.
MBS’s location in Western Sydney is ideal from the perspective of bidding for education work as the Western Sydney corridor will be one of the largest markets in the upcoming $6 billion, 170 school development program.
FY18 revenue was $49.6m and EBITA of $9.4m before adjustment for likely costs under Fleetwood ownership.

About NRV
NRV is an established supplier of products and services to the Melbourne RV manufacturing sector, having been founded in 2006 by licensed plumber David Slorach. David will remain with the business post acquisition.
Its core offering centres on providing specialised plumbing and electrical labour and parts to the production lines of mid-tier caravan OEMs.
NRV provides plumbing kits and labour to over 6,000 of the 22,000 caravans manufactured annually in Australia. The extension of these services to imports represents a growing part of its business given they require certification to Australian plumbing and electrical standards.
Secondary revenue streams are derived from repair and warranty services, and retailing RV parts and accessories, from its 2,200sqm premises in Campbellfield.
FY18 revenue was $15.7m and EBITA was $4.7m before adjustment for likely costs under Fleetwood ownership.

Acquisitions Aligned with Fleetwood’s Strategy
The acquisitions represent compelling transactions that are consistent with Fleetwood’s existing strategic growth objectives. Strategic benefits include:
* MBS gives Fleetwood a strong foothold in the key Sydney market where Fleetwood does not currently have representation.
* Near term modular cell pipeline of over 2,000 cells in NSW plus possible expansion into other geographic regions.
* Well positioned to take advantage of the large announced NSW Government school spend over the medium term.
* NRV is a bolt-on acquisition giving Camec the opportunity to further integrate with key OEM customers, particularly in the Campbellfield production hub.
Benefits from the increasing trend towards direct caravan imports into Australia as all imports must be certified to Australian plumbing and electrical standards.

Fleetwood Managing Director and CEO, Brad Denison, said: “The acquisitions are strategically and financially compelling for Fleetwood. MBS takes our MA business into a new geography and an expanding market niche. NRV is a logical bolt-on for Camec which will drive improved returns and quality of earnings in that business. We believe both acquisitions will deliver long term value to our shareholders.”


(Source: Fleetwood)


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