HII Technologies, a development-stage hydrocarbon field services company (with a solid 10-year track record prior to formation on the design/manufacturing side in valves), reported a big move forward today with the signing of a non-binding LOI to acquire the assets of fellow Texas-based oilfield services firm AES.
The Houston-based HIIT, already steeped in the most advanced hardware and methodologies for water handling services, could be strengthened considerably by the vast, high-volume water services expertise accrued by AES during some five decades of domestic operations. AES has some of the best 10-inch aluminum mobile piping solutions available today for this kind of high-volume water handling work and is well known already in the industry for circumspect attention to all the details of environmental safety, with cutting-edge, no-leak systems designed to offer fracking operators optimal throughput.
With some $860k in revenues coming in the door in the last six-month alone (unaudited, period ending in July), were talking a 33% free cash flow from existing customer base on some $300k/month, a superb deal for HIIT shareholders. Closing is projected for within the next sixty days, subject to customary closing conditions (definitive agreement, due diligence, government approvals if any, and approval by the boards of each company), as well as requisite procurement by HIIT of a $1M credit line. An independent audit of extant AES financial data will coincide with the closing and, given the profitability, HIIT sees a solid addition to EPS from the deal.
It’s a perfect fit really; HIIT’s logistical muscle will provide an ample, fertile soil for AES’s anticipated high growth rate, feeding off the bounty of their nationally recognized Texas E&P
customers. The increasing volume of domestic oilfield activity is a gold mine for the resultant, a combined business structure that realizes the potential of each entity, with HIIT acting as an extensibility framework.
CEO of HIIT, Matt Flemming, expressed the rigorous analytical/strategic acquisition efforts that led up to the deal (as per the July 11 press release to this effect) and praised the company’s hard work in evaluating the many candidates vetted thus far. The extensive negotiation efforts and meticulous systems analysis performed by the company has turned up a choice candidate in 50-year industry veteran AES, with awesome target market parallels.
Flemming explained that the some of the target candidates looked at during the massive sensor sweep are debt free and that many have a solid profitability record, granting HIIT considerable structural leverage for further value accumulation, with some really nice acquisition financing metrics. Flemming is clearly tipping his hat to shareholders here and further expressed that acquiring one or more of these targets would allow the firm to utilize their $30M tax loss carry-forward momentum to construct an even more solid value foundation. Something for investors to take note of as this Texas-grown energy services company continues to emerge as a permanent fixture of the sector’s landscape.
To learn more about this nascent energy services success story, please visit the HII Technologies, Inc. website at: www.HIITinc.com
Let us hear your thoughts below: