USI is a Leading Provider of Insulation
Installation and Distribution Services to the Residential and
Commercial Construction Markets
TopBuild Corp. (NYSE:BLD) has entered into
an agreement to acquire United Subcontractors, Inc. (“USI”) in an
all-cash transaction valued at $475 million. The Company expects to
finance the acquisition using a combination of debt financing and
cash on hand.
USI is a leading provider of insulation
installation and distribution services to the residential and
commercial construction markets, generating pro forma annual
revenue of approximately $375 million in 2017 and an adjusted
EBITDA margin of 12.5%. It has a diversified product
and service offering including fiberglass, spray foam and window
and glass installation. Founded in 1998 and headquartered in
St. Paul, Minnesota, USI has 38 locations in 14 states, including
high growth regions in the Pacific Northwest, Mountain West,
Southwest and Southeast.
TopBuild expects to achieve cost savings of $15
million, with approximately $5 million to $10 million expected in
the first full year after closing and the full run-rate by the end
of year two after closing. The acquisition provides TopBuild with a
stronger geographic footprint in key growth regions and a more
robust business and product mix, which should enhance the value
proposition for customers.
Jerry Volas, Chief Executive Officer of
TopBuild, stated, “Since implementing our acquisition program in
August 2016, we have completed nine transactions and have
established a successful track record of integrating them onto our
systems and supply chain. We’ve also closely adhered to our
strategy of seeking well managed companies with experienced
operators, well-trained installers, solid customer bases and a
footprint that expands our presence in high growth
geographies. USI fits well within these stated
goals.”
Bill Varner, Chief Executive Officer of USI,
noted, “We are very pleased to announce this transaction with
TopBuild. This will be a tremendous outcome for all our
stakeholders as the combined organization will be better positioned
to provide innovative and high-quality solutions to our
customers. Both companies have shared values and are guided
by a commitment to reliability, high performance and safety.”
On a December 31, 2017 pro forma basis,
inclusive of expected run rate synergies of $15 million, the
combined company had revenue of $2.3 billion, adjusted EBITDA of
$259 million, almost 10,000 employees and close to 300 installation
and distribution locations.
The Company plans to fund this transaction using
proceeds from a $350 million bond issuance, $100 million from a
delayed draw term loan commitment currently available under its
existing secured credit facility and $25 million from cash on hand
or drawings under its revolving credit facility. In the event
the bond market terms are not attractive to the Company at the time
of execution, the Company would expect to finance the transaction
with secured bank debt.
At the close of the transaction, the Company’s
net debt to pro forma adjusted EBITDA implies a multiple of 2.9
times pre-synergies, or 2.8 times post-synergies.
Volas noted, “The transaction is expected to be
accretive in the first year and it should produce strong cash flow,
enabling us to de-lever quickly. We expect to benefit from
greater supply chain efficiencies, a strong and energized branch
management team, and the addition of a seasoned labor force.
Bottom line, we are confident it will help drive value creation for
our shareholders.”
The transaction, which has been approved by
TopBuild’s Board of Directors, is subject to customary closing
conditions, including expiration or termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976. The Company expects the transaction to close in the
second quarter of 2018.
Supplemental information on TopBuild’s binding
agreement to acquire USI will be available online at
www.topbuild.com/Investors.
J.P. Morgan Securities LLC and SunTrust Robinson
Humphrey, Inc. acted as financial advisors to TopBuild and
Greenberg Traurig, P.A. served as its legal advisor. RBC
Capital Markets LLC acted as financial advisor to USI and Gibson,
Dunn & Crutcher LLP served as its legal advisor.
Conference Call A conference
call to discuss the USI transaction is scheduled for today, March
2, at 8:00 a.m. Eastern Time. The call may be accessed by
dialing (800) 672-5142. The conference call will be webcast
simultaneously on the “Investors” section of the Company’s website
at www.topbuild.com.
About TopBuildTopBuild Corp.,
headquartered in Daytona Beach, Florida, is the leading purchaser,
installer and distributor of insulation products to the U.S.
construction industry. We provide insulation services nationwide
through TruTeam®, which has over 175 branches, and through Service
Partners® which distributes insulation from over 70 branches.
We leverage our national footprint to gain economies of scale while
capitalizing on our local market presence to forge strong
relationships with our customers. To learn more about
TopBuild please visit our website at www.topbuild.com.
Safe Harbor StatementThis press
release contains “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act. These
forward-looking statements may address, among other things, our
expected financial and operational results and the related
assumptions underlying our expected results. These
forward-looking statements are distinguished by use of words such
as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,”
“plan,” or “intend,” the negative of these terms, and similar
references to future periods. These views involve risks and
uncertainties that are difficult to predict and, accordingly, our
actual results may differ materially from the results discussed in
our forward-looking statements. Our forward-looking
statements contained herein speak only as of the date of this press
release. Factors or events that we cannot predict, including
those described in the risk factors contained in our filings with
the Securities and Exchange Commission, may cause our actual
results to differ from those expressed in forward-looking
statements. Although TopBuild believes the expectations
reflected in such forward-looking statements are based on
reasonable assumptions, the Company can give no assurance that its
expectations will be achieved and it undertakes no obligation to
update publicly any forward-looking statements as a result of new
information, future events, or otherwise, except as required by
applicable law.
Investor Relations and Media
ContactTabitha
Zanetabitha.zane@topbuild.com386-763-8801
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