BLOOMINGTON, Minn. – The Toro Co. has entered into a definitive agreement to acquire privately-held Charles Machine Works, the parent company of Ditch Witch and several other brands in the underground construction market, for $700 million in cash subject to certain adjustments set forth in the definitive agreement.
The transaction is subject to regulatory approvals and other customary closing conditions, and is anticipated to close before the end of Toro’s fiscal 2019 third quarter.
Headquartered in Perry, Oklahoma, Charles Machine Works designs and sells a range of products to cover the full life cycle of underground pipe and cable, including horizontal directional drills, walk and ride trenchers, utility loaders, vacuum excavators, asset locators, pipe rehabilitation solutions and after-market tools.
The company generated 2018 revenues of approximately $725 million.
“The addition of Charles Machine Works will further strengthen our portfolio of market-leading brands supported by talented employees, a commitment to innovation, a best-in-class dealer network and long-standing customer relationships,” said Richard M. Olson, Toro’s chairman and CEO.
“As an organization, Charles Machine Works aligns well with and will contribute to our own strategic priorities of profitable growth, operational excellence and empowering people,” Olson said. “The company expands our business in a meaningful way in an adjacent category we know well through our own specialty construction business and in a market that is attractive given the potential for growth in addressing both aging infrastructure that is currently in place and new infrastructure that will be needed to support next generation technologies like 5G.”
“Our success is the result of years of hard work and an unwavering commitment to developing innovative solutions for customers,” said Rick Johnson, CEO of Charles Machine Works. “From developing the world’s first service line trencher in Perry, Oklahoma, to today’s robust Ditch Witch dealer network, our family of companies is well-positioned to join The Toro Company’s family of brands. We look forward to building upon our founder’s legacy of best-in-class offerings in the expanding underground construction market.”
Toro expects to finance the transaction with a combination of cash on hand and debt, including from additional financing arrangements and borrowings under its existing credit facility.
The all-cash purchase price of $700 million represents a multiple of approximately eight times Charles Machine Works’ calendar year 2018 EBITDA, including $30 million of anticipated annual run-rate cost synergies phased in over three years. Toro intends to achieve that through opportunities in purchasing, manufacturing best practices and administrative efficiencies.
Toro expects the transaction to be immediately accretive to EPS excluding purchase accounting adjustments and transaction related expenses.
BrightView acquires Benchmark Landscapes
Benchmark made Lawn & Landscape’s Top 100 list in 2018 and has six branches in four markets.
PLYMOUTH MEETING, Pa. – BrightView Holdings has acquired Benchmark Landscapes, a commercial landscaping company headquartered in Austin, Texas. Terms of the transaction were not disclosed.
Benchmark was founded in 2002 and provides landscape maintenance, design, installation, hardscapes, irrigation and tree care. It ranked No. 82 on Lawn & Landscape's Top 100 list last year and reported a 2017 revenue of over $23 million. Benchmark’s 240 employees cover a service area from Austin to San Antonio, inclusive of the San Marcos and New Braunfels areas, and Corpus Christi. The company operates six branches in four markets.
“With the acquisition of Benchmark, we expand our footprint in one of the country’s fastest-growing markets and bring passionate and skilled team members into the BrightView family,” said BrightView President and CEO Andrew Masterman. “This transaction further strengthens our position in Texas and supports our ‘strong-on-strong’ acquisition strategy.”
“I am proud of the business and relationships our team at Benchmark has built," said Benchmark founder and owner Casey Vickrey. “We are excited to join the BrightView team and continue to grow the business, strengthen relationships and make new ones, all while taking care of the team that has been instrumental to making us who we are.”
The acquisition was announced in BrightView's first quarter fiscal results presentation. The company reported total revenues at $526 million, which is down 4.6 percent from the same time period last year. BrightView also reported a net loss of $8.8 million, or $0.09 a share, and an adjusted EBITDA of $50.1 million.
Masterman said the company's new net sales are stronger than the last three years and their development project bookings are ahead of last year's pace. He also pointed to BrightView's other recent acquisitions, which include Emerald Landscape and Russo Lawn & Landscape.
“Our financial results reflect the challenging prior-year hurricane comparisons, our strategic Managed Exit initiative ... as well as a slow start to the season for our snow removal services,” Masterman said. “Since we planned for these seasonal and episodic factors, we are not changing our outlook for full fiscal 2019.”
Avant Tecno showcases largest wheel loader yet
The 800 series is capable of more lifting power than any previous Avant machine. By Lauren Rathmell
TAMPERE, Finland – At a press conference at Avant Tecno’s Finnish headquarters, Lawn & Landscape got a first look at the 800 series equipment expected to be in production in September.
Two models round out the 800 series: The Avant 860i featured a Kohler KDI 1903 TCR 42 kW/57 hp common rail turbocharged diesel engine and is Tier 4 final compliant.
The Avant 850 with Kubota V2403 36 kW/49 hp diesel engine is designed for markets outside the scope of Tier 4 final emission standards.
With these larger compact articulating wheel loaders, the machines reach speeds of about 18 miles per hour and have an increased lift and tow capacity. Each 800 series unit has a lift capacity of about 4,188 pounds. Compared to Avant’s 700 series, the new loaders are capable of roughly 1,300 more pounds of lift capacity. The telescopic lift feature has been enhanced to make it easier to load and unload materials onto trucks. With the new models, the lift extends roughly 11 feet and the hydraulic system gives an additional 32 inches of lift height.
“These can still run on your turf and even over newly laid stone,” said Jani Käkelä, executive vice president of Avant. Käkelä said the turf-friendly design was well-liked in smaller models, and although the 800 series is Avant’s largest, customers can still expect the same feature.
Each loader can be transported on a 3-ton trailer and can be used with any of Avant’s existing attachments.
Production is scheduled to begin in September and testing is being carried out through March.
Avant recently began to expand its factory space with an overall $11-million investment into factory operations. The factory is on track to produce 120 units a week by the spring and 150 machines by 2020 with the increased space. The expansion will boost Avant’s personnel at its Finnish headquarters from 200 to 250.
In the newly purchased wing of the factory, which was formerly a glass factory, the company has plans to create larger automated assembly lines to begin producing the 800-series machines. Currently, the line is about 230 feet long. With the expansion, the new line will be more than 420 feet.
Avant’s electric line, which features the E5 and E6 machines, has also received a series of updates, including a new digital display system. Export sales manager Jukka Vaattovaara said the company has noticed that the demand for its electric machines has increased recently. The electric models make up about 5 percent of Avant’s production.
Lessons to take home from the desert
The inaugural Aspire Client Conference featured business advice, education about the company’s software and the launch of its latest version. By Brian Horn
From business management to mergers and acquisitions, the Aspire 2019 Client Conference featured a number of topics to help educate owners.
This is the first year for the event, which took place in February at the Tempe Mission Palms Hotel in Tempe, Arizona. While most sessions centered around Aspire’s software, presenters shared general tips on how contractors can better operate their businesses. Below are some ideas shared at the conference:
Mike Rorie, CEO of GIS Dynamics, the company behind Go iLawn property measurement software, and board member of Cincinnati-based landscaping company GroundSystems, spoke about how he struggled with his first landscaping company, GroundMasters, which he sold to then Brickman in 2006. He said before putting systems in place, he worked very long hours and didn’t earn revenue. Here are his four steps on building a systems-driven business:
1. Adopt a systems mindset
2. Learn the three types of systems:
- Hard systems: refer to the physical, tangible aspects of your company: Tools, trucks, machines, etc.
- Soft systems: refer to the intangible aspects of your company. Often created as checklists, flow charts, manuals, documents.
- Information systems: refer to inputting, tracking, measuring, and reporting systems in your company.
3. Build or buy systems
4. Do 80/20 audits to prioritize and optimize your systems. “Go look at your customers from high to low … the 20 are your golden nuggets,” he said.
Jeff Harkness, principal at Three Point Group, a consulting firm based in Atlanta, gave attendees an overview of private equity’s interest in the industry. He said the green industry is seeing unprecedented interest from outside private equity firms, and that momentum should carry through 2019. However, tighter monetary policy combined with a heavy dose of political intrigue could make 2020 a different place. He said private equity is interested in this industry because it’s highly fragmented, and the owners of the companies are still heavily involved. The investor doesn’t normally want to bring in their own people. “When this stuff happens on the outside, they don’t run everyone out of town,” he said.
Greg Herring from Herring Group, a consulting group based in Austin, Texas, focused on what to do if you don’t want to make profits at your company. He said companies that sell hours aren’t factoring in everything they should be when it comes to their prices. Cost is made up of dollars, time and uncertainty. He used Uber as an example of a service that eliminated uncertainty: The days of calling for a cab and waiting for their estimated time of arrival is gone now that you can see where your Uber driver is on the app.
Lawn & Landscape columnist Bruce Wilson gave attendees an overview of how peer groups work. Wilson has been organizing peer groups since 2004 and said the groups serve as a board of directors for each company. The groups allow you to discuss problems you have that similar, non-competing owners have experienced and resolved. “These other owners help you see your blind spots,” Wilson said.
Aspire also rolled out its latest update, Version 5.0, at the event.
The enhancements include full fleet management, GPS, route optimization and shop/equipment tracking to drive on those expenses. In addition, Version 5.0 also adds a customer portal where contractor customers approve and sign proposals, communicate requests and pay invoices all on line.
“Version 5.0 is a big step for our clients,” said Kevin Kehoe, managing partner. “We continue to add features that help contractors operate more efficiently and service their customers better. These are game changers we think.”