Nolato AB (publ) (NOLAB) Earnings Call Transcript & Summary

Welcome, everybody, to the presentation of Nolato's acquisition of GW Plastics. We are very pleased that we can inform that we have been able to take an important step in the Nolato development and inform about the acquisition. If you have the presentation in front of you, we will start on Page 2, showing the Nolato geographical presence before this acquisition. And on this slide, you will see our very good strong footprint in Europe, a good footprint in Asia, but somewhat comparable, weaker footprint in North America. If we then turn to Page 3, summarizing up GW Plastics a little bit. We have been following this company for many years and been intrigued by the success and the performance of GW Plastics. It's a very well-managed company, with an excellent fit with Nolato's corporate culture. The GW Plastics was founded in mid-'50s and has been under the same ownership since 1983. So it's a family-controlled company previous to our acquisition. GW Plastics has headquarters in Bethel, Vermont and have a total of 7 production facilities in United States, Mexico, China and Ireland. GW has established a position as an excellent industrial leader, specializing in complex injection molding of thermoplastic and silicon solutions which is an excellent fit for the Nolato offering to the market. We found in GW Plastics a very high degree of innovation, very good extensive engineering and technology know-how, and in combination with the world-class scientific molding expertise in this company, that we see have a great fit together with the Nolato offering. So we can get synergies from the 2 parts, on the market side and on the offering to our customers. Turning to the next page, showing a slide where we put in the GW Plastics facilities around the globe. So with the combination of the 2 companies, we have solid global positions on the 3 important continents, with significant market synergies across all business areas. So the U.S. footprint is good, we have an excellent footprint in Europe, and of course, a strong footprint in Asia. On next slide, we show some pictures of the 7 facilities within GW Plastics. It's well-invested production facilities on a very, very high standard. Total of 50,000 square meters of production area, including 12 state-of-the-art medical cleanrooms. So it's very much similar to the Nolato standards in the facilities. It's world-class and good cleanrooms and good production footprint. Next slide, we show some of the GW Plastics -- the most important customers of GW. It's a very small overlap with the existing Nolato customer base. So we see very good growth opportunities with both GW Plastics customers and the existing Nolato customer relationships. Approximately, 85% of GW Plastics sales is within pharma and medical device. And the rest, 15%, is within automotive and general industry, fitting very good into our Industrial Solutions business area.

Good afternoon. Ola Holmström presenting some of the numbers from this acquisition, showing size, focus and the geographic presence making an ideal strategic combination. Annual net sales of around SEK 1.8 billion, with an EBITDA margin of around 7%. The company has 1,100 employees at 7 production plants. The sales of the company will have -- has about 4/5 of the business related to medical devices, and the remainder is relating to the automotive industry. The company has a diverse customer base. The largest single customer accounts for around 20% of the total sales. And even that concentration, it is spread among a lot of different projects and products. It's a growth-oriented company. It has achieved average annual growth of about 10% over the past 10 years. Turning to Page 8, financial effects of the acquisition. The acquisition price, including contingent considerations of a maximum around SEK 400 million, is estimated to about SEK 2 billion. And the initial payment will be SEK 1.8 billion at closing, and the rest is then the assessed contingent consideration. The business is expected to be consolidated into the Nolato Group from September and having a marginal positive effect on Nolato's earnings per share for the current year. We are waiting for approvals from U.S. authorities, and when those have been achieved, the closing will take place. And as I've said, we are estimating that for September. The transaction will be financed with our own cash funds, and about 1/3 of the initial purchase price will be from our own cash, and new credit agreements will pay for the rest of the remaining 2/3. Even if closing has not taken place and we don't have the final balance sheet numbers, and we haven't made the final purchase price allocation, we assess the goodwill and total group values to be about SEK 1.5 billion from this acquisition. The full and final acquisition analysis will be disclosed in our Q3 report.

We will now open up for questions.

[Operator Instructions] And we have no questions on the line at this time. Please go ahead, speakers.

Thank you for your interest in Nolato's acquisition of GW Plastics, and I hope you have a great rest of your day. Thank you.