HOUSTON, Texas, June 15, 2023 (GLOBE NEWSWIRE) — via NewMediaWire – SMG Industries Inc. (OTCQB: SMGI), a growth-oriented transportation services company focused on the domestic logistics infrastructure market, is excited to announce that it has entered into a non-binding letter of intent to acquire a diversified transportation business located in the northeastern United States. The potential transaction, if completed, is estimated to approximately double SMGI's annual revenue, increasing Adjusted EBITDA[1], bring operational diversification, strengthen the Company's balance sheet and add valuable expertise to its leadership team. The target company specializes in full truckload, dry bulk, liquid, intermodal, LTL, heavy haul, drain and transshipment, as well as an “asset lite” brokerage business. The proposed acquisition is expected to close this summer and contribute to SMGI's revenue diversification and expansion efforts.
Based on audited pro forma 2022 combined revenue of $153 million and pro forma adjusted EBITDA1 of $18.2 million (which includes $2.5 million in cost synergies), this acquisition will create a larger regional transportation and logistics player in multiple markets in the United States. This strategic move is also expected to provide SMGI and the target company with enhanced cross-selling opportunities and enhanced penetration into new end markets, as well as strengthen the Company's balance sheet post-closing.
Commenting on the proposed acquisition, Mr. Matt Flemming, Chairman of SMGI, said: “SMGI's acquisition of the target company would create an attractive and diversified platform. I expect the combined entity to establish itself as a larger, scalable and more diversified transportation business, becoming a regional leader in Texas, the Southwest and the Eastern Seaboard, in addition to improving customer relationships and reducing circularity and customer concentration. SMGI's due diligence review of the target acquisition has already commenced and upon satisfactory completion, we intend to proceed with the execution of a definitive acquisition agreement and the closing of the transaction once all closing conditions have been met by all parties involved.”
Highlights of strategic agreement:
The proposed acquisition is expected to deliver several strategic and financial benefits, positioning the combined entity for further growth:
- SMGI and the target company will benefit from significant cross-selling opportunities, with the transaction providing a broader mix of services to meet the needs of key customers.
- By incorporating the target company's expertise in the transportation of dry bulk cargo and non-hazardous liquid cargo, the combined business will be able to scale and expand its service offerings.
- There is limited customer overlap and no significant customer aggregation as both SMGI and the target company bring unique customer relationships to the table.
- Anticipated cross-selling revenue synergies and cost savings, with projected annual cost savings of $2.5 million as a result of eliminating corporate and real estate cost redundancies.
- The target company has an experienced management team committed to the success of the combined entity after closing.
- SMGI's public company structure will serve as an acquisition platform, providing access to liquidity for current operations and future M&A transactions. After closing, SMGI intends to list on a national stock exchange to improve access to public capital markets and create a more attractive capital structure.
The letter of intent described above is non-binding and, therefore, there can be no assurance that the Company will enter into a definitive acquisition agreement or that the proposed acquisition will be completed.
For additional information regarding the proposed acquisition, please see the Company's Current Report on Form 8-K filed on June 8, 2023.
About SMG Industries Inc.: SMG Industries is a growth-oriented transportation services company focused on the domestic logistics infrastructure market. Through several of the Company's wholly-owned subsidiaries under the “5J Transportation Group” brand, it offers specialized long-haul, ultra-heavy freight, flatbed, brokerage and rig services. 5J's technically permitted operations can support loads up to 500 thousand pounds, including infrastructure loads associated with bridge girders, wind power, power generation components, compressors, refinery and construction equipment. SMG Industries is headquartered in Houston, Texas and has facilities in Floresville, Hempstead, Henderson, Houston, Odessa, PA, Victoria, TX and Fort Mill, SC. Read more at www.5J-Group.com and www.SMGindustries.com
