May 10, 2018   SOURCE: BusinessWire

New Enterprise Stone & Lime Co., Inc. Completes Strategic Acquisition and Divestiture

New Enterprise Stone & Lime Co., Inc. (“NESL” or the “Company”) announced that on May 4, 2018 it acquired certain assets of Popple Construction, Inc. and Pioneer Aggregates, Inc. (“Laflin Acquisition”), consisting primarily of one aggregate plant, one hot mix asphalt plant and a paving laydown business. The acquired facilities are situated between NESL’s existing Clifford and Allentown locations, allowing the company to expand its operating footprint and market scope into the Wilkes-Barre /Scranton, Pennsylvania market.

The purchase price for the Laflin Acquisition was approximately $22.3 million, net of a working capital adjustment, which was funded using existing cash and our Senior Secured Credit Facilities. The company intends to leverage its shared service center and the scalability of its infrastructure to seamlessly integrate the facilities. On May 7th, the first day of sales, NESL commenced selling, producing and accounting for all transactions from the newly acquired facilities. The company expects minimal additional selling, administrative and general expenses relating to the acquisition.

On May 8, 2018, the Company and its wholly-owned subsidiary Work Area Protection Corp., and its associated affiliates (“WAPCO”), entered into an Asset Purchase Agreement with Hill & Smith Holdings PLC (“Hill & Smith”), to sell substantially all of the assets of the WAPCO business. This sale constituted the remaining component of the Company’s traffic safety services and equipment business, effectively exiting the Company from this business segment. The cash purchase price for the WAPCO assets was $42.0 million. NESL utilized the net proceeds of the sale of the WAPCO assets to repay the Senior Secured Credit Facility amounts borrowed to fund the Laflin acquisition and further reduce existing debt.

Excerpts from a Hill & Smith press release dated May 9, 2018 included the following:

“Based in Illinois and Texas, USA, WAPCO was a business of New Enterprise Stone & Lime Co. Inc., and specialises in the development, manufacture, and distribution of a wide range of road work zone safety products, including crash attenuators, temporary variable message signs, smart work zone systems and traffic control products such as drums, channelizers and cones. Representative of ongoing trading, in the two years ended 28 February 2018, WAPCO recorded average revenue of $47.7m and adjusted EBITDA of $4.8m. The consideration paid represents a multiple of 8.7 times average adjusted EBITDA of the preceding two financial years.”

Paul Detwiler, III, NESL’s President and Chief Executive Officer commented:

“The two transactions represent a key step in our strategic alignment as a construction materials Company focusing on aggregate sales. We believe the Laflin Acquisition, after a full year of cost savings and synergies, will generate a similar adjusted EBITDA as the WAPCO Assets, allowing us to further de-leverage and de risk NESL.”

About New Enterprise Stone & Lime Co., Inc.

New Enterprise Stone & Lime Co., Inc. is a leading privately held, vertically integrated construction materials supplier and heavy/highway construction contractor in Pennsylvania and western New York. Our core businesses include: (i) construction materials (aggregate production (crushed stone and construction sand and gravel), hot mix asphalt production and ready mixed concrete production) and (ii) heavy/highway construction (heavy construction, blacktop paving and other site preparation services). For more information, please visit the Company’s website at www.nesl.com.

Forward-Looking Statements

Statements included herein may constitute forward looking statements, including statements relating to the new credit facility. These statements are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in the Company’s reports filed with the Securities and Exchange Commission. The Company undertakes no duty to update any forward looking statements made herein.