IEC Electronics announces merger with Creation Technologies; releases 3Q results

IEC Electronics (NASDAQ:IEC) Corp said it has signed a definitive merger agreement with Creation Technologies Inc, that will see the latter acquire all outstanding shares of IEC Electronics (NASDAQ:IEC).  Creation has agreed to pay $15.35 per share in cash, which represents a fully diluted equity value of approximately $173.8 million and an aggregate enterprise value of $242.3 million, based upon net debt of $68.6 million.  The amalgamation received unanimous approval by both boards of directors.  Investors responded well, sending shares nearly 47% higher to $15.30 on the tech-heavy Nasdaq.  READ: IEC Electronics wins contract award valued in excess of $45M from a Tier 2 defense contractor The merger will combine IEC’s high-complexity, low-to-medium volume electronic manufacturing services focused on high-reliability applications within the aerospace and defense, medical and industrial end markets; with Creation’s focus on medium volume, high-reliability customers in the same segments.   Together the new entity will have more than 4,000 employees in facilities located across North America and China. “IEC is excited about joining the Creation family. The transaction presents our stakeholders with immediate value while providing our customers a broader platform for continued growth,” Jeffrey T Schlarbaum, President and CEO of IEC said in a statement.  “[The] combination of IEC and Creation creates a leading medium volume, high-reliability electronics manufacturer with a customer service driven culture,” said Stephen P DeFalco, Chairman and CEO of Creation. “Furthermore, IEC and Creation’s complementary geographic footprints create a premier full-service North American supply chain for both companies’ customers.” The transaction is expected to close by early October 2021. Upon completion of the deal, IEC will become a privately-held company and its common shares will no longer be listed on any public market. Soaring fiscal 3Q revenue Additionally, IEC also released its fiscal 3Q results for the period ended July 2, 2021. The Newark, New York-based company reported revenues of $49.4 million for the ficsal third quarter, up 4.2% compared to revenues of $47.4 million for the same quarter a year earlier.    Year-over-year gross profits fell mildly, coming in at $5.2 million, or 10.6% of sales, compared to $6.6 million, or 14.0% of sales in 2020.  The 3Q also brought in an operating profit of $1.9 million.   Total reported revenue for the first nine months of the company’s fiscal 2021, topped $142.2 million, a 4.4% uptick than the same time frame a year ago.   “We were pleased to have delivered solid revenue growth during the third quarter of fiscal 2021 of $49.4 million, despite headwinds that we, and many in our industry, are experiencing related to ongoing material shortages and labor constraints,” Schlarbaum added. “During the fiscal quarter we continued to ramp multiple exciting new programs. As we noted last fiscal quarter, given the complexity of the programs we service, the ramping process is not linear and frequently includes process development adaptations which continue to impact profitability.”  He went on to note the company’s increased backlog is an encouraging sign of post-pandemic economic recovery, citing a “solid book to bill ratio of 1.76:1 in the third fiscal quarter, which included a contract extension valued at more than $45 million from a long standing customer.”  Schlarbaum added: “Our 100% US-based model positions IEC as the ideal partner for companies seeking the highest levels of intellectual property protection and supply chain management. We are pleased to have made solid progress throughout this challenging year to advance our leadership position and we are excited about the opportunities we are seeing to win new customers and programs as we move toward delivering an expected strong close to fiscal 2021.” Contact the writer at georgia@proactiveinvestors.com Follow her on Twitter @MissInformd