Cemtrex Acquires Well-Known Advanced Industrial Services Inc.
Cemtrex Inc. (CETX – 2.99) acquired Advanced Industrial Services Inc. (AIS), a well-known industrial services provider with over 120 employees, which is based in York, Pennsylvania.
Cemtrex paid approximately $7,500,000 with $5,000,000 in cash, $1,500,000 in a seller’s note, and $1,000,000 in the form of 315,458 shares of Cemtrex shares. As mentioned in our previous update AIS averaged approximately $23 million in annual revenue and $2.4 million in annual normalized EBITDA over the two calendar years 2013 and 2014. The Company expects AIS to be immediately accretive.
AIS offers one-source expertise and capabilities in plant and equipment erection, relocation, and disassembly, and is in fact a very complimentary business for Cemtrex.
Advanced Industrial Services is one of the market leaders in installing high precision equipment in a wide variety of industrial markets such as automotive, printing & graphics, industrial automation, packaging, and chemicals. AIS also has experience in installing industrial air filtration equipment, similar to the equipment sold by Cemtrex through its existing business operations.
Acquiring AIS basically fulfills three primary objectives for Cemtrex:
- The combined entity can compete collaboratively for larger opportunities by providing contracting and installation services as part of the existing equipment sale contracts;
- The acquisition also allows the two companies to leverage each other’s customer portfolio for cross-pollination of equipment sales and services; and
- It fulfills the Company’s on-going efforts to grow its domestic business and diversify its revenue streams so as not to be solely dependent on a few industries for long term growth.
Cemtrex expects to close the acquisition within 90 days.
Another Acquisition in the Pipeline
Late October 2015, Cemtrex also signed a Letter of Intent to acquire a provider of clean air products and services for industrial, commercial, and municipal facilities in the western United States. The target company had revenues and EBITDA in 2014 of approximately $5 million and $0.5 million respectively. Cemtrex will pay approximately $1.55 million for the air filtration solutions provider.
Cemtrex’ CEO, Saagar Govil, commented, “We are extremely pleased about this acquisition as it will greatly enhance our domestic competitiveness in our industrial filtration business. California typically sets the standard when it comes to environmental practices so acquiring a leader in this market significantly advances our long term strategy in this business. Additionally, we see a lot of room for value addition and cross-selling from our existing filtration and monitoring businesses.”
Growing Demand For Products & Services
Also in October, Cemtrex secured new orders worth over $3 million. The Company received approximately $1.8M in new environmental products sales with deliveries expected over the next twelve months for new projects in South and East Asia. And the Company also received approximately $1.2M in new electronics products orders for a diverse set of existing European customers in wearable, medical, and industrial markets with deliveries expected over the next twelve months.
India’s Lucrative Renewable Energy Market
Furthermore, Cemtrex is committed to participate in India’s emerging renewable energy sector, which is expected to grow from 1,500 Megawatts in 2014 to 100,000 Megawatts in 2022.
The Company’s ultimate goal is to construct and operate a 100 MW solar power plant in India. In order to do so, it has already started preliminary discussions with several state agencies in India who are giving incentives to independent developers for the procurement of energy.
The energy goal of the Indian government is to reinforce the country’s energy security. Prime Minister Narendra Modi has targeted renewable energy as the most likely route to energy independence. The goal is to hit 175 GW of solar PV, wind, and biomass generation by 2022, and the country has earmarked around $200 billion in investment required.
We’re very pleased with the progress that Cemtrex has made the past few quarters. This is clearly a Company that is managed well and that is going into the right direction.
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