That they were able to acquire a large competitor for minimal cost, well below book value and at a low multiple of three year historical EBITDA. The acquisition of Hodges is a counter-cyclical acquisition at distressed asset prices with a payback period of less than a six months. Seems like solid capital allocation to me.
"The Company incurred US$42.0 million (US$27.0 million from the Note and US$15.0 million from Company's senior secured facility) in debt to complete the Acquisition. Through the US$22.0 million Asset Sale, the Company has recovered over 52% of its initial investment. The Acquisition included US$17.5 million in working capital which the Company expects to convert into cash within 90 to 120 days. Accordingly, the Company expects to receive approximately US$38.8 million in cash (or over 92%) of its initial US$42.0 million investment in the next 90 to 120 days."
"Expects to recover over 92% of its initial investment within the next 90 to 120 days through the Asset Sale and the conversion of US$17.5 million working capital into cash. Further, the Company expects to recover all of its investment including acquisition related expenses within six months through increased revenue from Hodges' customers and reduced pricing pressure. Accordingly Aveda expects a 100% payback on its investment within six months."
"Hodges' gross revenue peaked at approximately US$166.0 million in 2012, dropping to US$139.4 million in 2013 and $123.7 million in 2014. EBITDA was US$34.0 million in 2012, US$13.6 million in 2013 and US$14.1 million in 2014. On a combined basis, Hodges' and Aveda's 2014 gross revenue would make it the largest rig moving company in North America (by gross revenue)."