NEX Nexans

Mattr Corp. (“Mattr” or the “Company”) (TSX: MATR) announced today that it has agreed to acquire AmerCable Incorporated (“AmerCable”), a globally recognized U.S. manufacturer of highly engineered wire and cable solutions used in mission critical applications. Mattr, through its subsidiary, has entered into a definitive agreement to acquire all of the outstanding shares of AmerCable from Nexans USA Inc. (“Nexans”) (EPA: NEX) for a purchase price of US$280M, or approximately C$390M (the “Transaction”). This purchase price represents a multiple of approximately 5.0 times Adjusted EBITDA1 of the AmerCable business for the trailing twelve-month (“TTM”) period ended June 30, 2024. The Transaction is subject to customary closing conditions including U.S. anti-trust review and approval. Upon closing of the Transaction, which the Company anticipates will occur around year end, AmerCable will be incorporated into Mattr’s Connection Technologies reporting segment and will position the Company as one of the premier, custom engineered cable manufacturers in North America.

“The pending acquisition of AmerCable will be a significant step forward in Mattr’s strategy to enhance our wire and cable business exposure within the large and growing U.S. market,” said Mike Reeves, Mattr’s President and CEO. “This transaction will broaden our existing portfolio of highly engineered low voltage electrical power, control and instrumentation cable solutions, while also adding medium voltage electrical power, control and instrumentation cable solutions and enhancing our North American manufacturing capacity, allowing Mattr to better serve customers in both Canada and the U.S.” Mr. Reeves continued, “Specialized wire and cable products are essential to the continued expansion and modernization of North American critical infrastructure, and this combination will position Mattr as a premier provider in this important sector.”

Mr. Reeves concluded, “Working in partnership with our existing wire and cable business conducted through our Shawflex brand, the pending addition of AmerCable’s talented workforce, differentiated product portfolio, globally recognized brand presence and substantial U.S. manufacturing platform bolsters our mid and long-term wire and cable growth and margin profile outlook.”

“We believe this transaction will create substantial long-term value for shareholders and expect it to be immediately accretive to Mattr’s earnings per share (“EPS”), excluding expected synergies,” said Tom Holloway, Mattr’s CFO. “This is a unique opportunity to acquire a business that is closely aligned with our strategic growth objectives for a compelling valuation, while maintaining Mattr’s attractive balance sheet, transforming the existing breadth and geographic reach of our wire and cable business and adding a successful platform to drive incremental growth of the Connection Technologies segment over time.”

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1. EBITDA, Adjusted EBITDA and Total Net Debt to Adjusted EBITDA, are non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See “ Reconciliation of Non-GAAP Measures” for further details and a reconciliation of these non-GAAP measures.

Strategic Rationale

• Complementary core competencies. The AmerCable business is closely aligned with the innovative and advanced technical capabilities of Mattr’s existing Shawflex wire and cable business. Like Shawflex, AmerCable focuses on bespoke, lower volume, higher margin solutions to address complex challenges for which “off-the-shelf” solutions may not be appropriate. Both Shawflex and AmerCable take a collaborative approach with end-users to design and manufacture highly engineered wire and cable solutions in extreme operating conditions across a variety of critical end-markets where customer cost of failure is highest.
• Enhanced geographic presence. Through this acquisition, Mattr will expand its existing Canada-oriented wire and cable capabilities to include meaningful production capabilities and commercial networks in the U.S., providing the product portfolios of Shawflex and AmerCable with broad access to both Canadian and U.S. electrification markets with significant untapped sales opportunities globally.
• Broadened product offering. While both Shawflex and AmerCable offer highly engineered low voltage electrical power, control and instrumentation cable solutions, AmerCable also brings unique medium voltage wire and cable capabilities to Mattr, allowing the Company to offer this critical electrification solution across North America alongside its existing, predominantly Canadian, low voltage portfolio.
• Expanded end-market access and supply chain efficiency. AmerCable will diversify Mattr’s end market exposure with additional material technologies and certifications while enhancing the Company’s raw material procurement scope and efficiency.
• Cross-selling opportunities. Sharing of best practices and technical expertise across both businesses is expected to drive innovative product development and strengthen Mattr's access to new and existing markets with attractive long-term tailwinds. The combined product portfolios of Shawflex and AmerCable will be unique in the North American market, enabling each organization to offer more comprehensive solutions to their respective customer bases and geographies.
• Platform for future growth. In addition to Shawflex’s newly modernized production site in Vaughan, Ontario, AmerCable’s wire and cable production site in El Dorado, Arkansas and cable assembly site in Katy, Texas will create a highly strategic network of wire and cable manufacturing facilities across North America, providing a platform for future organic and acquisition driven growth opportunities.

Financial Highlights

• Compelling valuation. The purchase price represents a multiple of approximately 5.0 times TTM Adjusted EBITDA for the period ended June 30, 2024, representing a compelling shareholder value creation opportunity relative to other capital allocation options currently available to Mattr.
• Enhanced financial performance with lower volatility. The combination of AmerCable and Shawflex is expected to enhance the Company’s full-cycle margin profile and accelerate Mattr’s achievement of its previously communicated longer-term financial performance aspirations. Giving pro forma effect to the Transaction, the Connection Technologies segment will represent 54% of consolidated revenue on a TTM basis as of June 30, 2024 (an increase from 37% of consolidated revenue previously reported by Mattr for the same time period).
• Adds meaningful relative scale. Giving pro forma effect, the contemplated Transaction is expected to add >C$75 million of TTM Adjusted EBITDA for the period ended June 30, 2024 and will position Connection Technologies as the largest segment within Mattr’s portfolio.
• Strengthens financial profile. AmerCable's global brand presence, mission critical product offering, and in-house custom design and engineering capabilities have enabled the establishment of long-term relationships with leading blue-chip customers, resulting in strong backlog visibility and a highly recurring revenue profile. In conjunction with the material increase in the relative scale of the Connection Technologies segment, the Transaction is expected to improve Mattr's overall earnings cyclicality and revenue predictability.
• Margin enhancing. AmerCable has a track record of generating Adjusted EBITDA margins at or above Mattr’s long-term target of 20%, enhancing margin resiliency within the Connection Technologies segment.
• Highly accretive before synergies. On a TTM basis through June 30, 2024 and giving pro forma effect to the Transaction, this acquisition would be more than 40% accretive to EPS, with accretion in the coming twelve months expected to be similar in magnitude, before synergies.

Mattr intends to finance the Transaction through a mix of cash on its balance sheet and its existing credit facility. The Transaction will increase the Company’s total net debt to Adjusted EBITDA1 ratio modestly above its normal course target of 2.0 times in the near term. The Company will retain ample financial flexibility and access to capital to pursue its near-term capital allocation priorities, including organic growth initiatives and ongoing share repurchases under the existing normal course issuer bid (“NCIB”). Based on the Company’s continued confidence in its cash flow generation and growth outlook, the Company repurchased 1.4 million shares during the third quarter of 2024 for a repurchase price of approximately C$22.2 million and remains active under the NCIB.

Transaction Approvals, Timing and Fees

The Transaction, which has received unanimous approval from both Mattr’s and Nexans’ Board of Directors, is subject to regulatory approvals and customary closing conditions. The Company currently anticipates closing will occur around the end of 2024. Transaction fees are anticipated to be in the range of C$8-9 million with most to be recorded in the fourth quarter of 2024.

Advisors

TD Securities Inc. and Dentons LLP are serving as the exclusive financial and legal advisors respectively to Mattr for the Transaction.

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1. EBITDA, Adjusted EBITDA and Total Net Debt to Adjusted EBITDA, are non-GAAP measures. Non-GAAP measures do not have standardized meanings under GAAP and are not necessarily comparable to similar measures provided by other companies. See “ Reconciliation of Non-GAAP Measures” for further details and a reconciliation of these non-GAAP measures.

Conference call and webcast

Mattr will be hosting a Shareholder and Analyst Conference Call and Webcast on Friday November 8th, 2024 at 9:00 AM ET, which will discuss the Transaction. To participate via telephone, please register at https://register.vevent.com/register/BI1e203c6a23ac4841ab2dde8c9f1f6f88 and a telephone number and pin will be provided.

Alternatively, please go to the following website address to participate via webcast: https://edge.media-server.com/mmc/p/28zy9jb5. The webcast recording will be available within 24 hours of the live presentation and will be accessible for 90 days.

About AmerCable

AmerCable is a manufacturer of highly engineered, low and medium voltage electrical power, control and instrumentation cables designed to reliably enable electrification in harsh environments. AmerCable serves a broad customer base within the critical infrastructure sector, including the mineral extraction, renewable power generation, general industrial and energy end markets.

About Mattr

Mattr is a growth-oriented, global materials technology company broadly serving critical infrastructure markets, including transportation, communication, water management, energy and electrification. Its two business segments, Composite Technologies and Connection Technologies, enable responsible renewal and enhancement of critical infrastructure while lowering risk.

For further information, please contact:

Meghan MacEachernVP, External Communications & ESGTel: 437-341-1848Email: meghan.maceachern@mattr.comWebsite: www.mattr.com

Source: Mattr Corp.Mattr.ER

Caution Regarding AmerCable Incorporated’s Financial Information

This press release contains certain selected financial information regarding AmerCable for the trailing twelve months ended June 30, 2024. This selected financial information has been derived from AmerCable’s preliminary unaudited financial statements and related information for the relevant period. Such unaudited financial statements have been prepared using International Financial Reporting Standards (“IFRS”) as adopted by the European Union, which is a different accounting basis than IFRS as issued by the International Accounting Standards Board, which is what the Company uses to prepare its own financial statements. The Company has not independently verified this financial information relating to AmerCable and does not assume any responsibility or liability for the verification, accuracy or completeness of such information. Undue reliance should not be placed on the financial information related to AmerCable contained herein.

Forward Looking Information

This news release includes certain statements that reflect management’s expectations and objectives for the Company’s future performance, opportunities and growth, which statements constitute “forward-looking information” and “forward-looking statements” (collectively “forward-looking information”) under applicable securities laws. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Forward-looking information involves estimates, assumptions, judgements and uncertainties. These statements may be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “anticipate”, “expect”, “believe”, “predict”, “estimate”, “continue”, “intend”, “plan” and variations of these words or other similar expressions. Specifically, this news release includes forward-looking information in respect of, among other things: the closing of and timing for closing of the Transaction; the incorporation of AmerCable into one of Mattr’s existing reporting segments; the anticipated positioning of the Company in the North American market following the Transaction; the resulting exposure of Mattr’s wire and cable business to the U.S. market; Mattr’s positioning in the sector following the closing of the Transaction; the impact of the addition of AmerCable’s workforce, product portfolio and manufacturing platform of Mattr’s growth and margin profile outlook; the creation of long-term value for shareholders; the growth of the Connection Technologies segment following the Transaction; the expected lowering of the Company’s volatility, enhanced full-cycle margin profile and accelerated achievement of the Company’s 2030 financial performance aspirations; the expected percentage of revenue that AmerCable will represent following the Transaction; the expansion of Mattr’s wire and cable capabilities to the U.S.; the expected impact of the Transaction on the Company’s expertise, innovation, and product development, and the impact on Mattr’s access to markets; the impact of AmerCable’s production site in El Dorado, Arkansas on future growth for the Company; the expected addition of TTM Adjusted EBITDA and its corresponding impact on the Company’s Connection Technologies segment; the impact of the Transaction on Mattr’s overall earnings cyclicality revenue predictability, and added margin resiliency in the Connection Technologies segment; the impact of the Transaction on EPS; the expected EPS over the next twelve months; the financing structure for the Transaction; the impact of the Transaction on the Company’s net-debt-to-Adjusted EBITDA ratio; the expected free cash flow generation from the combined businesses and reduced net-debt-to-Adjusted-EBITDA ratio in the 18 months following the closing of the Transaction; the anticipated transaction fees for the Transaction and the timing for realizing the Transaction fees; the retention of financial flexibility and access to capital; share repurchases through the Company’s NCIB; the anticipated timing for regulatory approvals and closing of the Transaction.

Forward-looking information involves known and unknown risks and uncertainties that could cause actual results to differ materially from those predicted by the forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information as a number of factors could cause actual events, results and prospects to differ materially from those expressed in or implied by the forward-looking information. Significant risks facing the Company include, but are not limited to: the satisfaction or waiver of all applicable closing conditions for the Transaction on a timely basis, including but not limited to regulatory approvals, third-party consents and lack of material adverse changes with respect to AmerCable, all as more particularly set forth in the Agreement; risks relating to the value of the consideration to be issued in connection with the Transaction; the diversion of management time on pending Transaction-related issues; the synergies expected from the Transaction not being realized; business integration risks; the risks and uncertainties described in the Company’s Management’s Discussion & Analysis under “Risks and Uncertainties” and in the Company’s Annual Information Form under “Risk Factors”.

These statements of forward-looking information are based on assumptions, estimates and analysis made by management in light of its experience and perception of trends, current conditions and expected developments as well as other factors believed to be reasonable and relevant in the circumstances. These assumptions include those in respect of: the stability of U.S. market trends in the wire and cable business; the continued expansion and modernization of North American critical infrastructure; the continued demand for specialized wire and cable products; and the continued relationships with customers following the Transaction.

When considering the forward-looking information in making decisions with respect to the Company, readers should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not assume the obligation to revise or update forward-looking information after the date of this document or to revise it to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

To the extent any forward-looking information in this document constitutes future oriented financial information or financial outlooks, within the meaning of securities laws, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future oriented financial information and financial outlooks, as with forward-looking information generally, are based on the assumptions and subject to the risks noted above.

Reconciliation of Non-IFRS Measures and Other Financial Measures

The Company reports on certain non-GAAP measures that are used to evaluate its performance and segments, as well as to determine compliance with debt covenants and to manage its capital structure. These non-GAAP measures do not have standardized meanings under IFRS and are not necessarily comparable to similar measures provided by other companies. The Company discloses these measures because it believes that they provide further information and assist readers in understanding the results of the Company’s operations and financial position. These measures should not be considered in isolation or used in substitution for other measures of performance prepared in accordance with GAAP. The following is a reconciliation of the non-GAAP measures reported by the Company. For more details, please consult the Company's Management’s Discussion & Analysis ("MD&A") for the second quarter of fiscal year 2024

EBITDA and Adjusted EBITDA

Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA is also a non-GAAP measure defined as EBITDA adjusted for items which do not impact day to day operations. Adjusted EBITDA is calculated by adding back to EBITDA the sum of impairments, costs associated with refinancing of long-term debt and credit facilities, gain on sale of land and other, gain on sale of investment in associates, gain on sale of operating unit, acquisition costs, restructuring costs, share-based incentive compensation cost, foreign exchange (gain) loss and other, net and hyperinflationary adjustments. The Company believes that EBITDA and Adjusted EBITDA are useful supplemental measures that provide a meaningful indication of the Company’s results from principal business activities prior to the consideration of how these activities are financed or the tax impacts in various jurisdictions and for comparing its operating performance with the performance of other companies that have different financing, capital or tax structures. The Company presents Adjusted EBITDA as a measure of EBITDA that excludes the impact of transactions that are outside the Company’s normal course of business or day to day operations. Adjusted EBITDA is used by many analysts as one of several important analytical tools to evaluate financial performance and is a key metric in business valuations. It is also considered important by lenders to the Company and is included in the financial covenants of the Credit Facility.

Financial information related to AmerCable was prepared using AmerCable’s preliminary unaudited financial statements and related information for the relevant period. Such unaudited financial statements have been prepared using IFRS as adopted by the European Union, which is a different accounting basis than IFRS as issued by the International Accounting Standards Board, which is what the Company uses to prepare its own financial statements. AmerCable's Adjusted EBITDA was adjusted by Mattr to reflect its own definition to the best of its knowledge. Mattr has presented in this press release a multiple of purchase price based on the estimated TTM Adjusted EBITDA of the business being acquired, not including projected synergies. Mattr’s estimation of the TTM Adjusted EBITDA of the business being acquired is based on financial information that was provided by the current management of AmerCable.

Total Net debt-to-Adjusted EBITDA

Total Net debt-to-Adjusted EBITDA is a non-GAAP measure defined as the sum of long-term debt, current lease liabilities and long-term lease liabilities, less cash and cash equivalents, divided by the Consolidated (Continuing and Discontinued Operations) Adjusted EBITDA, as defined within the Company's MD&A for the second quarter of 2024, for the trailing twelve-month period. The Company believes Total Net debt-to-Adjusted EBITDA is a useful supplementary measure to assess the borrowing capacity of the Company. Total Net debt-to-Adjusted EBITDA is used by many analysts as one of several important analytical tools to evaluate how long a company would need to operate at its current level to pay of all its debt. It is also considered important by credit rating agencies to determine the probability of a company defaulting on its debt.

Source: Mattr Corp.