The company announced that, through a wholly-owned subsidiary, it has closed the acquisition of all the business and operating assets of Houston-based FormTex Plastics Corporation (“FormTex”) for cash consideration of approximately USD $4.8 million (the “Acquisition”). The Acquisition will be funded in cash from the Company’s treasury.
“We are very pleased to complete this Acquisition and welcome everyone at FormTex to the good natured® family,” said Paul Antoniadis, CEO of good natured®. “The addition of FormTex expands the scope and reach of our packaging business, in line with the strategic direction we’ve communicated, and we believe there is material upside potential for revenue and profitability through capacity expansion, supply chain improvements and cost synergies previously disclosed.”
“We believe partnering with good natured® is a win-win scenario for our valued employees and customers,” said Mark Anselmo, co-owner of FormTex. “It is a very strong strategic fit, and we see the same path to much larger and more profitable operations leveraging greater access to capital and good natured®’s internally produced extruded roll stock capacity. This in turn will enable us to have a more significant positive environmental impact by producing more sustainable packaging solutions that the market is demanding.”
Founded in 1989, FormTex produces custom plastic packaging for the medical, food, electronic, industrial, and retail end markets. FormTex is ISO 9001:2015 certified in the design and manufacture of thermoplastic molded components and operates seven different thermoforming machines in a leased 51,000 square foot facility on 1.9 acres of land in Houston, Texas.
Key Highlights of the Acquisition:
• FormTex generated unaudited revenue of approximately USD $4.9 million and adjusted EBITDA1 of approximately USD $0.6 million in the calendar year ended December 2021 (or “FY2021”).
• FormTex generated unaudited revenue of USD $5.1 million for the trailing twelve months ended February 28, 2022.
• FormTex generated an unaudited gross margin rate of approximately 42% in FY2021.
• The Acquisition includes a minimum of USD $650,000 of net working capital as part of the purchase price.
• The Acquisition adds 30 business-to-business (“B2B”) accounts to the Company’s active B2B customer base.
• The current management team operating FormTex will be joining the good-natured® team.
• Highly strategic and synergistic acquisition that is expected to be immediately accretive to shareholders on an adjusted EBITDA1 basis.
• Expected to provide cost synergies of approximately USD $0.2 to $0.3 million in the twelve months following the close of the Acquisition.
Key Strategic Highlights:
• Strategic access to Texas and the Southern US. Texas is the world’s 9th largest and the United States’ 2nd largest economy by GDP.2
• Significant potential to increase FormTex’s current capacity utilization rate of 40% through higher production uptime and add new capacity with additional thermoforming machines in the current facility footprint, and utilization of additional warehousing space.
• FormTex’s proximity to one of the 10 largest outbound shipping endpoints in North America will significantly reduce shipping costs to the Company’s customers in the southern United States.
• FormTex’s location provides direct access to the 6th largest U.S. container port, creating a highly efficient port of entry for raw materials coming from Europe and South America.
good natured® will be able to leverage Houston-based manufacturing, importing, warehousing, and logistics to service the southeastern U.S. market, which includes Florida (the 4th largest state by GDP), Georgia (the 9th largest state by GDP), and North Carolina (the 11th largest state by GDP).
• All FormTex customers are net new customers not currently being serviced by the • Company, creating cross-selling opportunities for other good natured® products and services.
• The Acquisition was an arm’s length transaction and is subject to customary post-closing adjustments.