NAUGATUCK, Conn.--(BUSINESS WIRE)--The Eastern Company (NASDAQ-EML) today filed on Form 8K/A the unaudited pro forma condensed combined financial statements for the year ended December 31, 2016 and the audited consolidated financial statements of Velvac Holdings, Inc. (“Velvac”) for the year ended December 31, 2016, pursuant to its acquisition of Velvac on April 3, 2017.
Velvac serves diverse markets within the heavy and medium duty truck, motorhome and bus markets. Velvac is a Tier 1 supplier of mirrors and camera-enabled vision systems, representing approximately two-thirds of its revenue. In addition, Velvac sells its aftermarket components and vision systems through its aftermarket channels as well as directly to original equipment manufacturer dealers and original equipment manufacturer parts distribution centers.
“We believe Velvac represents an outstanding fit for Eastern for a number of reasons,” said August Vlak, President & CEO of Eastern. Mr. Vlak added that:
- In our view, Velvac is an excellent strategic fit. Velvac builds scale in our primary end-markets, including truck, motorhome and specialty vehicle markets. Velvac is a leader in many of these markets and competes on the basis of exceptional engineering capabilities.
- Velvac increases our aftermarket and recurring revenue opportunity. Velvac supplies a broad range of truck parts to the independent wholesale distribution channel, as well as the body-builder and original equipment dealer channels. Velvac provides 4,500 part numbers sold to 4,000 “ship to” locations.
- We believe that Velvac represents a platform for growth. Velvac is a leading innovator of proprietary vision systems. Velvac introduced its first camera-enabled vision system in 2006 and sells approximately 45 thousand camera-enabled units. Velvac has invested more than $6.0 million in its Road-iQTM 360-degree view camera, recording and communication system, between 2014 and 2016.
- We also believe that Velvac’s established business and its Road-iQTM business can generate attractive returns. In fiscal year 2016, Velvac’s established business and Road-iQTM business generated gross profits of $15.3 million and $0.5 million, respectively, representing gross margins of 25.6% and 75.1%, respectively. During that same period, Velvac’s established business delivered operating profits of $3.6 million, adjusted for non-recurring 2016 transaction expenses and management fees.
- In our opinion Velvac’s management team has the right capabilities and remains committed to the business. Jeff Porter, who acquired Velvac with Prospect Partners in 2005, continues as its President & CEO.
Safe Harbor for Forward-Looking Statements
Statements in this document about the Company’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” “opinion” and similar expressions) should also be considered to be forward-looking statements. These forward looking statements involve a number of risks and uncertainties, and actual future results and trends may differ materially depending on a variety of factors, including those discussed from time to time in the Company’s reports and filings with the U.S. Securities and Exchange Commission. Forward-looking statements reflect the expectations of the Company at the time they are made, and investors should rely on them only as expressions of opinion about what my happen in the future and only at the time they are made. The Company is not obligated to update or revise any forward-looking statements as a result of developments occurring after the date of this document. Although the Company believes it has an appropriate business strategy and the resources necessary for its operations, future revenue and margin trends cannot be reliably predicted and the Company may alter it business strategies to address changing conditions.