Graham Corporation Acquires Barber-Nichols Inc. for $70 million - Seite 2

Compelling Strategic Rationale

• Accelerates diversification strategy; expands exposure to the defense industry and brings new higher growth markets such as aerospace, more than doubling Graham’s total addressable market
• Demonstrated strong annual growth over last 10 years with low double digit operating margins
• Combined revenue is expected to be over 50% to the defense and aerospace industries
• Brings backlog of $100 million, primarily in the defense industry; approximately
  $40 million of backlog is expected to convert to revenue in fiscal 2022 and the remainder to convert to revenue over the following three to four years
• Strong management team with entrepreneurial culture, engineering leadership and solid pipeline of new products under development
• Broadens Graham’s engineering expertise with cryogenics, thermal, fluid and power management solutions, as well as systems integration capabilities
• Employs available cash and improves balance sheet efficiency

Terms of the Transaction and Financing

Graham acquired BNI for total consideration of $70.1 million comprised of approximately $61.1 million in cash and $9.0 million in equity, or approximately 610 thousand shares at $14.69 per share. The purchase price is subject to typical working capital adjustments. The cash consideration was paid using a combination of $41.1 million of cash on hand and $20.0 million from a new credit facility. The purchase price represents an 11x twelve-month forward Adjusted EBITDA multiple. Following the acquisition, Graham’s total shares outstanding are 10.6 million.

Jeffrey F. Glajch, Graham’s Vice President Finance and Chief Financial Officer, commented, “After nearly three years of working with the BNI leadership team, I am pleased we were able to successfully consummate this acquisition. The strategic rationale is abundantly clear. Importantly, we anticipate this acquisition, along with further organic and M&A investment opportunities in the defense and aerospace markets, will strengthen long term shareholder returns.”

The stock purchase agreement also includes a contingent earn-out dependent upon certain post-acquisition financial measures of BNI, in which the sellers are eligible to receive up to $14 million in additional cash consideration.

Graham entered into a new five-year, $20 million term loan to pay a portion of the acquisition purchase price and a $30 million revolver with a $10 million accordion feature for potential acquisitions. The interest rate on the term loan is variable based on levels of borrowings. At the current level, the rate is the Bloomberg BSBY short-term credit sensitive index plus 1.50%.