Ox Bodies Trail Ox steel end dump trailers.Federal Signal Corporation has completed its acquisition of Truck Bodies and Equipment International (TBEI) for $270 million.
TBEI operates 5 manufacturing facilities throughout the U.S. and employs approximately 850 people. Its brands include Travis Trailer & Body, Crysteel, Ox Bodies, Rugby, DuraClass and J-Craft.
“We are excited to welcome the TBEI businesses to our Federal Signal portfolio of brands,” says Federal Signal President & CEO Jennifer L. Sherman. “Their product offerings will allow us to further diversify into higher growth, maintenance and infrastructure markets, while balancing the mix of revenue streams between municipal and industrial, and reduce our exposure to oil and gas.”
Sherman adds the purchase also will help the company “achieve achieve sustainable and profitable growth.”
“After factoring in a preliminary estimate of the anticipated increase in amortization expense resulting from acquisition- related accounting impacts, we continue to expect TBEI to be modestly accretive to 2017 earnings.”
“We are excited to join the Federal Signal family and add TBEI’s six established brands to Federal Signal’s portfolio of market-leading businesses,” says TBEI’s President & CEO Robert Fines. “There are many similarities between TBEI’s operations and those of Federal Signal and we are confident in our ability to cross-pollinate manufacturing practices, leverage our distribution networks and create a leading platform to serve the needs of our customers.”
Highlights of the purchase include:
- TBEI is expected to be combined with the businesses within the Company’s Environmental Solutions Group (“ESG”) to create a single platform providing municipal and industrial customers with a complete suite of maintenance and infrastructure equipment and supporting solutions. This platform will expand the Company’s leadership position in these markets and will provide a springboard for future organic growth and mergers and acquisitions
- The transaction diversifies the company’s current end markets through an expanded focus on infrastructure, construction, waste, rendering and other industrial end markets
- The company expects the acquisition to be modestly accretive to EPS in 2017, increasing to an annual run rate of between $0.07-$0.12 per share and $0.12-$0.17 per share by the second and third anniversary of the acquisition, respectively
- The company intends to apply its 80/20 principles to TBEI’s operations to further optimize an already strong business
- Annual run-rate synergies are anticipated to be between $3-4 million, phased in over three years. Supply chain, cross-selling products from both ESG and the Safety and Security Systems Group through the TBEI distribution channel, leveraging our existing parts and distribution business and sharing of manufacturing best practices will drive the synergies
- The company intends to fund the acquisition through a combination of available cash and borrowings available under its existing credit agreement. Upon closing, the Company anticipates a debt to EBITDA ratio of approximately 2.7x
- With the healthy combined cash flow from its legacy businesses and TBEI, the Company expects a rapid reduction in debt levels
