DALLAS — CECO Environmental Corp., an environmentally-focused, diversified industrial company whose solutions protect people, the environment, and industrial equipment, announced Jan. 10 it has agreed to acquire industrial flow control leader GRC. The acquisition will be integrated into the company's Effox-Flextor-Mader, Inc. joint venture with Chartwell Investments Entrepreneur & Founder Capital, LLC. The transaction is expected to close by April 2022, subject to customary closing conditions, and will be financed with a mix of cash, debt, and equity from the joint venture.
GRC is a worldwide leader in the engineering and manufacturing of non-metallic (rubber) expansion joints and flow control products with a highly diversified industrial customer base. With the acquisition, CECO expands its existing offering of EFM dampers and metallic expansion joints to include rubber expansion joints, ducting expansion joints, and industrial pinch and duck bill valves. The addition of GRC expands the addressable market size for CECO from $200 million to $500 million.
"CECO is in the business of protecting people, the environment and industrial equipment, and the acquisition of GRC allows us to significantly enhance these efforts," said Todd Gleason, CEO of CECO Environmental. "With this acquisition, we will be able to bring turnkey, environmentally-friendly solutions that protect critical infrastructure, piping, and flow controls for the water, wastewater and storm water markets."
Gleason continued, "The acquisition of GRC also advances CECO's strategic growth plan to expand into adjacent industrial markets. Additionally, we are excited to work with the GRC management team who will make a strong impact on our focus to deliver environmental solutions for the general infrastructure and water and wastewater sectors."
Lloyd Aanonsen, president and CEO, GRC, will be joining CECO as its new vice president and general manager of the newly formed damper and expansion joints platform. "We are excited to join the global and diverse family of CECO companies. With this combination, the platform will offer a full suite of solutions that will benefit from significant investments in infrastructure and well positions us for long-term global growth," said Aanonsen.
Key highlights of the transaction include:
- Brands Maxi-Joint®, Flex-Valve® and SoundZorber® are leaders in infrastructure flow control markets
- With an average order size of ~$100K, GRC increases CECO's short cycle mix to 27% from 22%
- GRC more than doubles platform addressable market size
- Recent $500 billion US Infrastructure Bill to be a significant tailwind for water and pipeline markets
- Strong and predictable free cash flow at >90% EBITDA to free cash flow conversion
As noted earlier in this release, under the terms of the agreement, GRC is to be acquired by EFM, a joint venture between CECO Environmental and Chief Capital formed in July 2020 to enhance the profitability and diversify the dampers and expansion joints platform. GRC adds accretive EBITDA margins, greater recurring cash flows and will leverage CECO's international footprint to broaden industrial and water, wastewater and storm water end markets.
ABOUT CECO ENVIRONMENTALCECO is a global leader in industrial air quality and fluid handling serving a broad landscape of industrial and other niche markets. Providing innovative technology and application expertise, CECO helps companies grow their business with safe, clean, and more efficient solutions that help protect our shared environment. In regions around the world, CECO works to improve air quality, optimize the energy value chain, and provide custom Engineered Systems for applications including power generation, petrochemical processing, general industrial, refining, midstream oil & gas, electric vehicle production, poly silicon fabrication, battery recycling, beverage can, and water/wastewater treatment along with a wide range of other applications. CECO is listed on Nasdaq under the ticker symbol "CECE". For more information, please visit www.cecoenviro.com.
ABOUT GRCGRC is a worldwide leader in the engineering, manufacturing, and sales of non-metallic (rubber) expansion joints and other rubber flow control products for a worldwide customer base. The company, otherwise known as General Rubber LLC, is widely recognized for its ability to provide engineered solutions for challenging piping and ducting system applications across multiple industries, executing on large-scale new construction capital works projects, as well as facility improvements on a small, medium, and large scale. The company was the first U.S. manufacturer of rubber expansion joints to become ISO 9001 certified. For more information, please visit www.general-rubber.com.