Vertically Integrated, Market Leading Compounder, Manufacturer, and Distributor of Branded Plastic Products in Mexico

AS-308904

Exceptional Investment Opportunity

The Company, founded in 1972, is a family owned vertically integrated plastics company, whose operations range from the compounding of raw materials to production and distribution. The Company has created a unique proprietary transferable technology unlike any other recycling process used today that successfully converts pre-consumer waste product into two saleable products, cellulose and a high quality recycled resin. The resulting resin produces high quality plastic housewares and furniture with special product coloration capabilities. The recycled resin has an average cost of 50% below market cost for virgin resins. This differential grows as the price of oil rises. Thus, the Company can compete with quality importers at a much reduced price. The Company is the number one manufacturer and distributor of plastic furniture and housewares in Mexico and is poised to become a global leader in this industry.

Overview

The Company has the ability to manufacture 250 products, virtually matching every product offering of its 2 major competitors in Latin America. The Company's 70 injection molding machines range from 50 tons to 2,200 tons, giving the Company the ability to manufacture a range of products from 30 grams to 10 kilograms through its 699 molds. In addition, the Company's own tool shop gives it the ability to design and produce new molds expeditiously and cost effectively, as well as the capability to produce spare parts for the machines, reducing down time.

The Company sells through well-established distribution channels to a variety of distributors and retail stores. The recycled formulation gives the Company's products high durability and long life, making them clearly superior to any competing products in the market. The Company's products will last two to three times longer than their competitor's products.

Financial

 

The Company has strong historical EBITDA and margin growth, even growing slightly in the recession year 2009.

Forecasted EBITDA and margin grows to $14.1 and 30.2% respectively. This growth is organic growth and does not reflect what an acquirer can accomplish using this facility as a platform to produce and import additional products into Mexico and the U.S.

Key Investment Considerations

Strengths and Competitive Advantages

• Proprietary technology, unlike any other in the industry, allowing compounding of resins from recycled plastic industrial scrap, resulting in low material costs and special product coloration capabilities. The resulting resin has an average cost of 50% below market cost for virgin resins. This differential grows as the price of oil rises.
• 30 year market presence with a well-known brand name and mark
• Significant market share
• Large base of big box retail customers with no customer concentration
• Well-trained, competent, technically knowledgeable workforce
• On-site tool and die shop minimizing down time as well as cost effectively designing new molds
• Company-owned land and buildings with ample room for growth

Advantageous Growth and Expansion Capabilities

• The Company's proprietary technology is transferable allowing the acquirer to create an international presence with an extremely effective and low cost model
• The Company's distribution channels allow the acquirer to produce and distribute products previously too expensive to import to Mexico and the United States
• A technology platform that can be replicated to other manufacturing facilities

Strong Financial Indicators

• The Company's cost effective processes along with well-trained, efficient employees and expansion capabilities provide a platform for adding products and distribution channels
• The Company is currently constrained by capital requirements and could significantly  increase sales to large chain stores 

Request Transaction Analysis