Ferro Expands Its Electronics Product Portfolio with Acquisition of Electro-Science Laboratories (ESL)
November 01 2016 - 7:25AM
Business Wire
- ESL is a recognized leader in niche
electronic packaging material applications
- Adds new capabilities in advanced
coating material technologies for metal, glass, ceramic and other
substrates
- Enhances Ferro’s platform for growth in
Performance Colors and Glass
Ferro Corporation (NYSE:FOE “Company”) today announced that it
has acquired Electro-Science Laboratories, Inc. (“ESL”), a leader
in electronic packaging materials. Ferro paid $75 million excluding
customary adjustments and fees for the privately held company
headquartered in King of Prussia, Pennsylvania.
Full-year 2016 adjusted EBITDA is expected to be $9.2 million,
suggesting a transaction multiple, excluding synergies, of 8.2x.
Ferro expects synergies in excess of $10 million, with $6 million
realized within the first three years of operation. The Company
expects the transaction to be accretive to earnings in year
one.
The acquisition of ESL enhances Ferro’s position in the
electronic packaging materials space with complementary products,
and offers an attractive platform for growth in Ferro’s Performance
Colors and Glass business unit.
ESL produces thick-film pastes and ceramic tape systems that
enable important functionality in a wide variety of industrial and
consumer applications. Its key products are used to build hybrid
integrated circuits, modules and sensors that function in harsh
conditions. Hybrid integrated circuits using ESL products are used
in aerospace and defense applications, such as satellites. The
modules and sensors are used in automobile components, including
oxygen sensors. ESL products in heat sensors are used in appliances
such as ovens and water heaters. ESL paste systems for heaters are
used on a wide variety of substrates, including metal, ceramic and
glass. ESL was founded in 1962 and has remained privately owned and
associated with the founding family. The business has operations in
the United States and United Kingdom and has 86 employees.
Peter Thomas, Chairman, President and CEO of Ferro Corporation,
said, “This acquisition gives Ferro a more significant share of the
addressable market for electronic packaging materials, and is
highly synergistic within our current Ferro business. While ESL and
Ferro both employ similar manufacturing processes, the product
portfolios, end use applications and customers are complementary.
In addition, Ferro is backward integrated into glass production,
which will provide raw material synergy opportunities. ESL is
aligned with our asset-light and heavy-touch operating philosophy
and our commitment to adding value for our niche market customers
across the globe. ESL is a recognized leader in a market that is
expected to continue to grow as a result of increasing everyday use
of electronics and sensors within our homes, vehicles and
offices.”
“The ESL transaction -- the fifth acquisition by Ferro in 2016 –
is the first significant acquisition in our Performance Color and
Glass segment, and we are actively reviewing other opportunities in
this space,” continued Mr. Thomas. “We are making acquisitions
across all of our businesses to enhance our capabilities, expand
our product portfolio and drive new opportunities for growth.”
About Adjusted EBITDA Guidance
Adjusted EBITDA excludes the impact of certain items that are
not expected to recur. Ferro is unable to reconcile ESL’s adjusted
EBITDA for full-year 2016 without unreasonable effort. 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 yet occurred.
About Ferro Corporation
Ferro Corporation (http://www.ferro.com) is a leading
global functional coatings and color solutions company that
supplies technology-based performance materials, including
glass-based coatings, pigments and colors, and polishing materials.
Ferro products are sold into the building and construction,
automotive, appliances, electronics, household furnishings, and
industrial products markets. Headquartered in Mayfield
Heights, Ohio, the Company has approximately 4,900 employees
globally and reported 2015 sales of $1.1 billion.
About Electro-Science Laboratories, Inc.
ESL (www.electroscience.com) manufactures screen-printable
pastes such as thick-film paste conductors, dielectrics and
resistors (also known as thick-film inks, paints or coatings),
ceramic tape systems, and fired parts such as porous alumina and
zirconia cover plates, solid oxide fuel cell substrates,
multi-electrode arrays, and both anode-supported and
electrolyte-supported fuel cells. These advanced materials find
application in hybrid microcircuits and multilayer
microelectronics, electronic components such as
inductors, capacitors and transformers, heaters on steel or
other substrates, plus low and high temperature co-fired
ceramics (LTCC and HTCC). ESL delivers on-time, low-cost,
high-reliability, stable and reproducible materials in an ISO
9001:2008 environment, scaling up from laboratory and pilot-scale
quantities to high-volume production.
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:
- Ferro's ability to complete
acquisitions, effectively integrate the businesses and achieve the
expected synergies (including the ESL, Cappelle Pigments, Delta,
Pinturas Benicarló, Ferer, and Al Salomi transactions), as
well as the acquisitions being accretive and Ferro achieving the
expected returns on invested capital;
- Ferro's ability to successfully
implement and/or administer its cost-saving initiatives, including
its restructuring programs, and to produce the desired
results;
- demand in the industries into which
Ferro sells its products may be unpredictable, cyclical, or heavily
influenced by consumer spending;
- the effectiveness of the Company's
efforts to improve operating margins through sales growth, price
increases, productivity gains, and improved purchasing
techniques;
- currency conversion rates and economic,
social, political, and regulatory conditions around the world;
- 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;
- sale of products into highly regulated
industries;
- limited or no redundancy for certain of
the Company's manufacturing facilities and possible interruption of
operations at those facilities;
- competitive factors, including intense
price competition;
- Ferro's ability to protect its
intellectual property or to successfully resolve claims of
infringement brought against it;
- the impact of operating hazards and
investments made in order to meet stringent environmental, health
and safety regulations;
- 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, 2015.
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version on businesswire.com: http://www.businesswire.com/news/home/20161101005957/en/
Ferro CorporationInvestors:Kevin Cornelius Grant,
216-875-5451Manager of Investor
Relationskevincornelius.grant@ferro.comorMedia:Mary Abood,
216-875-5401Director, Corporate
Communicationsmary.abood@ferro.com
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