Powell Industries Announces Closing of PowerComm Acquisition
Powell Industries, Inc. announced the closing of the acquisition of the Canadian business and assets of PowerComm Inc., effective December 15, 2009. The closing of the acquisition of PowerComm’s business and assets operating in Kazakhstan will occur upon obtaining regulatory approval from the Kazakhstan government, which is expected to be received on or before March 31, 2010. PowerComm is a provider of electrical and instrumentation construction and maintenance services, as well as a manufacturer of switchgear and related products, primarily serving the oil and gas industry in western Canada. Powell is paying $24.2 million ($25.5 million CAD) in cash with a potential subsequent payment of up to $7.6 million ($8.0 million CAD) based on earnings performance through March 31, 2010 and assumed certain liabilities including bank debt, accounts payable and obligations under leases. All funds associated with the Kazakhstan business and assets will be held and released at the closing of the Kazakhstan transaction.
Patrick L. McDonald, President and Chief Executive Officer, stated, "We are excited to have the PowerComm organization joining Powell and look forward to the opportunities that this provides us to work together to serve the Canadian market, which has been a long-term objective of Powell. This acquisition expands the scope and geographic reach of Powell’s existing operations as a leading supplier of engineered products, solutions and services in the electrical power products business."
The company expects incremental revenues from this acquisition to range between $62 and $71 million during the first 12 months of ownership. Before transaction costs, it expects the earnings results to be anti-dilutive during the integration process, which is expected to last approximately twelve months. Once the integration period is complete, Powell projects an annualized benefit from the acquisition to EBITDA of approximately $4.8 to $6.7 million. EBITDA is a non-GAAP financial measure, and a reconciliation of expected EBITDA from this transaction to the most directly comparable GAAP measure, income before interest, income taxes and minority interest, can be found at the end of this press release.