Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - SPARTON CORP | d477616d8k.htm |
| EX-99.2 - PRESS RELEASE - SPARTON CORP | d477616dex992.htm |
 Onyx
Acquisition Update Conference Call
February 1, 2012
Exhibit 99.1 |
 2
Safe Harbor Statement
Safe Harbor Statement
Certain statements herein constitute forward-looking statements within the
meaning of the Securities Act
of
1933,
as
amended
and
the
Securities
Exchange
Act
of
1934,
as
amended.
When
used
herein,
words
such
as
“believe,”
“expect,”
“anticipate,”
“project,”
“plan,”
“estimate,”
“will”
or
“intend”
and similar words or expressions as they relate to the Company or its management
constitute forward-looking statements. These forward-looking
statements reflect our current views with respect to
future
events
and
are
based
on
currently
available
financial,
economic
and
competitive
data
and
our current business plans. The Company is under no obligation to, and expressly
disclaims any obligation to, update or alter its forward-looking
statements whether as a result of such changes, new information, subsequent
events or otherwise. Actual results could vary materially depending on
risks
and
uncertainties
that
may
affect
our
operations,
markets,
prices
and
other
factors.
Important
factors that could cause actual results to differ materially from those
forward-looking statements include
those
contained
under
the
heading
of
risk
factors
and
in
the
management’s
discussion
and
analysis contained from time-to-time in the Company’s filings with the
Securities and Exchange Commission.
The
reconciliation
and
adjusted
EBITDA
presented
here
represents
operating
income
before
depreciation and amortization as adjusted for pro forma incremental corporate cost
savings under Sparton ownership and elimination of inventory and accounts
receivable write-downs relating to Augustine,
a
customer
excluded
from
the
acquisition.
The
Company
believes
Adjusted
EBITDA
is
commonly
used
by
financial
analysts
and
others
in
the
industries
in
which
the
Company
operates
and,
thus,
provides
useful
information
to
investors.
The
Company
does
not
intend,
nor
should
the
reader
consider,
Adjusted
EBITDA
an
alternative
to
operating
income,
net
income,
net
cash
provided by operating activities or any other items calculated in accordance with
GAAP. The Company's definition of Adjusted EBITDA may not be comparable with
Adjusted EBITDA as defined by other companies. Accordingly, the measurement
has limitations depending on its use. |
 3
•
Strategic Rationale
•
Financial Discussion
•
Outlook
•
Schedules
•
Q & A
Today’s Agenda
Today’s Agenda |
 4
•
Regional expansion into the Minneapolis medical device corridor.
•
Diversifies our customer base and continues to increase the number of
complex sub-assembly and full device programs within Sparton.
•
Strong business development pipeline.
•
Sparton’s Viet Nam facility is an viable option for some of Onyx’s
customers.
•
Sparton can provide full engineering design capabilities to Onyx’s
customers.
•
Sparton can provide design, engineering, integration, and
manufacturing capabilities of highly complex & sophisticated large
devices.
Strategic Rationale
Strategic Rationale |
 5
•
$43.25 million purchase price, all-cash transaction
•
Working capital adjustment of $2.2 million
–
Should not be included as consideration
–
Elevated days of working capital at closing: days normalized by 12/31/12
•
As of September 30, 2012
–
$51 million of revenue at 17% gross profit (TTM as of Sept. 30, 2012)
–
Add backs of $1,169k:
•
$745k: Customer write-down (not part of the deal)
•
$424k: Previous parent corporate charges
–
Depreciation and amortization of $1,348k
–
Purchase multiple of 7.3x EBITDA
•
Medical device contract manufacturing businesses typically have higher
multiples than traditional contract manufacturing businesses
•
Sparton’s internal IRR hurdle rate for acquisitions is no less than 20%
on a 5-year discounted cash flow
Financial Discussion
Financial Discussion |
 6
•
The Onyx facility has higher gross margins than Sparton’s current
medical segment
•
Estimated annual earnings growth:
–
$500k-$1,000k in earnings from increased sales growth
–
$250k-$500k in earnings from yet to be realized operational synergies
•
Sales
backlog
at
$30.5
million
(firm
orders
as
of
December
31,
2012)
•
New business development funnel
–
Acquired a solid funnel of near and long term opportunities
–
Expect funnel enhancements based on the interest shown towards Sparton’s full
offering of capabilities in recent Onyx customer visits
Outlook
Outlook |
   7
Financial Schedules
Financial Schedules
Onyx Fiscal
TTM
Year Ended
Ended
11/30/2011
9/30/2012
Sales
52,000
50,680
O.I.
3,711
3,376
O.I. %
7.1%
6.7%
Depr
1,149
1,348
EBITDA
4,860
4,724
Add-backs
Augustine
745
745
Corp
388
424
1,133
1,169
Adjusted EBITDA
5,993
5,893
11.5%
11.6%
Acquisition Price
43,250
43,250
Multiple
7.2
7.3
|
 8
Q & A |