Acquisitions of Endeka Group and Gardenia
Quimica will broaden Ferro’s portfolio of products sold into the
high-end tile market, improve Ferro’s manufacturing productivity,
and provide key raw material supplies
Ferro Corporation (NYSE: FOE, the “Company”), a leading global
provider of functional coatings and color solutions, today
announced that it has entered into a definitive agreement to
acquire Endeka Group, a global producer of high-value coatings and
key raw materials for the ceramic tile market. In a separate
transaction, Ferro has acquired a majority interest in Gardenia
Quimica, which also supplies the
ceramic tile market. Both privately held companies are
headquartered near Ferro’s facilities in Castellón, Spain, a major
hub of the worldwide ceramics market.
Ferro’s acquisition of Endeka for approximately €64 million
(approximately $75 million) is subject to customary closing
conditions and is expected to be completed in the fourth quarter.
The transaction will be funded through excess cash and borrowings
under the Company’s existing revolving credit facility.
Endeka full-year forecasted 2018 revenues are approximately €75
million (approximately $88 million). Ferro expects the transaction
to be accretive to earnings and 2018 post-synergy adjusted EBITDA,
which is forecasted to be approximately €11-12 million
(approximately $13-14 million). Endeka produces frits and glazes,
digital inks and colors used in the manufacture of a broad range of
ceramic products, including tile, tableware and sanitaryware. This
transaction backward integrates Ferro into certain key raw
materials used in the manufacture of ceramic coating materials.
Endeka has approximately 340 employees who work in 9 facilities in
Europe and Asia.
The Gardenia Quimica transaction was completed on August 3,
2017. Gardenia Quimica has 26 employees and produces mediums,
additives, binders, and other ancillary products for the tile
coatings industry. Gardenia’s products enable Ferro to further
backward integrate into a number of materials used by Ferro and its
customers in the manufacture of tile coating products. The
transaction resulted in Ferro increasing its ownership in the joint
venture company from a minority to a majority position. Revenue is
forecasted to be approximately €5 million (approximately $6
million) in 2018.
Peter Thomas, Chairman, President and CEO of Ferro Corporation,
said, “These transactions will strengthen our Performance Coatings
business by providing multiple opportunities for us to optimize
manufacturing operations and cash conversion and to further
innovate within our ceramic coating products portfolio.
“Over the past few years, we have moved our tile-oriented
portfolio up the value chain, focusing on the high end of the
market. At the same time, we have driven operating efficiencies and
product innovation to ensure that our customers receive the highest
quality products and services.
“Endeka Group and Gardenia Quimica complement our previously
announced acquisition of SPC, a high-end tile coatings manufacturer
based in Italy. These businesses allow Ferro to deliver more
innovative products to the highest end of the global tile market.
Endeka is a business that has impressed us for quite some time. Its
primary production site in Castellon will provide Ferro with
necessary production capacity in Spain, enabling us to avoid
capital expenditures to expand our existing facilities there. The
opportunity to backward integrate into key raw materials and other
complementary products allows us to broaden our product portfolio
for customers, and to add manufacturing productivity.
“We are excited to work with the Endeka and Gardenia teams. We
look forward to working with them to accelerate efficiency and
innovation throughout our operations and to build on our market
leadership positions.”
Adjusted Earnings Before Interest, Taxes and Depreciation
(“EBITDA”)
Adjusted EBITDA for the transactions excludes the impact of
certain items, primarily associated with purchase accounting
adjustments, transaction-related expenses and acquisition
integration costs, restructuring activities, gains and losses on
asset sales concluded by the companies being acquired, and other
adjustments to harmonize their accounting results to our standard
accounting practices. The impact of adjusting for these items
cannot be determined because one of the transactions has not been
completed and it is not possible at this time to identify the
potential amount or significance of these items for the balance of
the year, as they have not occurred yet. Therefore, the Company is
unable to reconcile the full-year 2018 adjusted EBITDA guidance for
the acquisitions.
About Endeka Group
Endeka (http://endekaceramics.com/en/), along with its
forerunner companies, headquartered in Castellon, Spain, has been
servicing the ceramics and tile industries for 60 years. Endeka has
established a strong reputation for excellence through innovation
and market leadership. Endeka prides itself on being on the leading
edge of coatings technology and on its dedication to delivering
personalized service to customers.
About Ferro Corporation
Ferro Corporation (www.ferro.com) is a leading global supplier
of technology-based functional coatings and color solutions. Ferro
supplies functional coatings for glass, metal, ceramic and other
substrates and color solutions in the form of specialty pigments
and colorants for a broad range of industries and applications.
Ferro products are sold into the building and construction,
automotive, electronics, industrial products, household furnishings
and appliance markets. The Company’s reportable segments include:
Performance Coatings (metal and ceramic coatings), Performance
Colors and Glass (glass coatings), and Color Solutions.
Headquartered in Mayfield Heights, Ohio, the Company has
approximately 5,300 associates globally and reported 2016 sales of
$1.15 billion.
Cautionary Note on Forward-Looking Statements
Certain statements in this press release may constitute
“forward-looking statements” within the meaning of federal
securities laws. These statements are subject to a variety of
uncertainties, unknown risks, and other factors concerning the
Company’s operations and business environment. Important factors
that could cause actual results to differ materially from those
suggested by these forward-looking statements and that could
adversely affect the Company’s future financial performance include
the following:
- demand in the industries into which
Ferro sells its products may be unpredictable, cyclical, or heavily
influenced by consumer spending;
- Ferro’s ability to successfully
implement and/or administer its optimization initiatives, including
its restructuring programs, and to produce the desired
results;
- currency conversion rates and economic,
social, political, and regulatory conditions in the U.S. and around
the world;
- Ferro’s ability to identify suitable
acquisition candidates, complete acquisitions, effectively
integrate the businesses and achieve the expected synergies
(including, but not limited to, the Endeka Group, Gardenia Quimica,
Dip-Tech, SPC, Cappelle Pigments, Electro-Science Laboratories,
Delta Performance Products, Pinturas Benicarló, Ferer, Al Salomi,
Nubiola, and Vetriceramici transactions), as well as the
acquisitions being accretive and Ferro achieving the expected
returns on invested capital;
- the effectiveness of the Company’s
efforts to improve operating margins through sales growth, price
increases, productivity gains, and improved purchasing
techniques;
- Ferro’s ability to successfully
introduce new products or enter into new growth markets;
- the impact of interruption, damage to,
failure, or compromise of the Company’s information systems;
- restrictive covenants in the Company’s
credit facilities could affect its strategic initiatives and
liquidity;
- Ferro’s ability to access capital
markets, borrowings, or financial transactions;
- the availability of reliable sources of
energy and raw materials at a reasonable cost;
- increasingly aggressive domestic and
foreign governmental regulations on hazardous materials and
regulations affecting health, safety and the environment;
- competitive factors, including intense
price competition;
- Ferro’s ability to protect its
intellectual property, including trade secrets, or to successfully
resolve claims of infringement brought against it;
- sale of products and materials into
highly regulated industries;
- the impact of operating hazards and
investments made in order to meet stringent environmental, health
and safety regulations;
- limited or no redundancy for certain of
the Company’s manufacturing facilities and possible interruption of
operations at those facilities;
- management of Ferro’s general and
administrative expenses;
- Ferro’s multi-jurisdictional tax
structure and its ability to reduce its effective tax rate,
including the impact of the Company’s performance on its ability to
utilize significant deferred tax assets;
- the effectiveness of strategies to
increase Ferro’s return on invested capital, and the short-term
impact that acquisitions may have on return on invested
capital;
- stringent labor and employment laws and
relationships with the Company’s employees;
- the impact of requirements to fund
employee benefit costs, especially post-retirement costs;
- implementation of new business
processes and information systems, including the outsourcing of
functions to third parties;
- risks associated with the manufacture
and sale of material into industries making products for sensitive
applications;
- exposure to lawsuits in the normal
course of business;
- risks and uncertainties associated with
intangible assets;
- Ferro’s borrowing costs could be
affected adversely by interest rate increases;
- liens on the Company’s assets by its
lenders affect its ability to dispose of property and
businesses;
- Ferro may not pay dividends on its
common stock in the foreseeable future;
- amount and timing of any repurchase of
Ferro’s common stock; and
- other factors affecting the Company’s
business that are beyond its control, including disasters,
accidents and governmental actions.
The risks and uncertainties identified above are not the only
risks the Company faces. Additional risks and uncertainties not
presently known to the Company or that it currently believes to be
immaterial also may adversely affect the Company. Should any known
or unknown risks and uncertainties develop into actual events,
these developments could have material adverse effects on our
business, financial condition and results of operations.
This release contains time-sensitive information that reflects
management’s best analysis only as of the date of this release. The
Company does not undertake any obligation to publicly update or
revise any forward-looking statements to reflect future events,
information, or circumstances that arise after the date of this
release. Additional information regarding these risks can be found
in our Annual Report on Form 10-K for the period ended December 31,
2016.
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version on businesswire.com: http://www.businesswire.com/news/home/20171002005808/en/
Ferro CorporationInvestor Contact:Kevin Cornelius
Grant, 216-875-5451Head of Investor
Relationskevincornelius.grant@ferro.comorMedia Contact:Mary
Abood, 216-875-5401Director, Corporate
Communicationsmary.abood@ferro.com
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