New Enterprise Stone & Lime Completes Strategic Acquisitions

New Enterprise Stone & Lime Co. Inc. (NESL) has acquired the core assets of Berks Products Corp. and EJB Paving & Materials Co. The strategic acquisitions consist of two aggregate plants, two hot mix asphalt plants, four ready mixed concrete plants, and a construction supply center in Berks County, Pa.

The facilities are ideally situated between NESL’s existing Lehigh Valley and Lancaster, Pa., locations, expanding its operating footprint and market scope into the Reading, Pa., market. NESL believes both businesses are highly-regarded in the community, with outstanding assets and attractive operating characteristics.

The total purchase price of the two acquisitions was approximately $46.3 million, net of a working capital adjustment, funded using existing cash and bank facilities. NESL will leverage its new shared service center and the scalability of its infrastructure to seamlessly integrate the nine acquired facilities into the broader NESL operations.

NESL expects to be selling, producing and accounting for all products almost immediately with minimal additional SG&A, outside of the costs associated with maintaining a portion of the salesforce of the acquired businesses.

On the heels of NESL’s strong third quarter 2017 earnings, the company advised that it believes fiscal year ended Feb. 28, 2018, will be the fifth consecutive year of expanding operating profit.

The company expects that both acquisitions will provide significant synergies to NESL’s primary business next fiscal year and believes the incremental profit from the acquisitions will more than offset any lost profit from the recent divestiture of NESL’s PSI traffic and safety business.

Speaking of the acquisition, Paul Detwiler III, chief executive officer of NESL, commented, “Together with our $46.5 million of debt reduction in the previous two quarters, the Berks County acquisitions demonstrate the viability of our profit enhancement plan initiated five years ago. The acquisitions were completed with no additional long-term debt and will push our operating profit to record highs. We have now shown our ability to grow operating profit while reducing debt – a cornerstone of our operating plan going forward.”

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