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Manufacturer of Concrete Water Tanks: 620+ International Retail Locations

CASH FLOW
$271,839

Specifications

  • Price
    $900,000

  • Revenue
    $2,241,017

  • Cash Flow
    $271,839

  • Equipment
    $512,248

  • Inventory
    $598,942

  • Down Payment
    15%

  • Location
    United States (Nebraska) and Canada (Alberta)

  • Account Receivable
    $313,861

  • Service Area
    All of North America

  • Reason for Sale
    Retirement

  • Industry
    Manufacturing/Fabrication

  • Employees
    Fully Staffed in both locations

Seller is willing to train for up to 2 years (if desired) to ensure a smooth transition. With a proprietary concrete formulation of 9,000 PSI, this business has carved a niche in the market for feedlots, cow/calf operations, zoos, and oilfields looking for a superior, hardy product to water their animals. Stocked in over 620 retail locations between Canada and the U.S., the products are manufactured at their Nebraska plant and distributed across North America. There are offices in each country, with sales and management staff in place that are equipped to handle cross border documents and transactions.

Over 50% of sales are throughout retail stores in North America, with the majority of the remaining sales made up through direct sales to feedlots and cow/calf operations. No one customer/distributor makes up more than 10% of sales, and this company is the exclusive distributor for the largest rodeo equipment manufacturer in the world!

Already established in Canada, a new owner would save millions and shorten the 5-year learning curve required to get up and running in Canada. Knowledgeable staff can handle Canadian taxes and payroll, and having a Canadian location opens up business with Canadian oilfields that are rapidly growing and can profit 3x what can be made just servicing agribusiness.

Proprietary products are used by both large and small operations, making it the most effective water tank in North America. A new buyer assumes ownership of concrete forms, tools, equipment, inventory, A/R, trademarks and vehicles totaling over $1.4M – allowing the bank loan to be fully collateralized!

Business Highlights

  • Established 18 years in Canada, 11 years in the United States

  • Products manufactured in Nebraska and shipped all over North America

  • 50% of sales are through the 620+ retail distributors in Canada and the United States

  • No one customer makes up more than 10% of sales

  • Stock sale ensures the ability for a new owner to maintain import/export rights

  • 5,000 – 6,000 water tanks made per year

  • Huge growth potential in product diversity and a 10-year vision the sellers are willing to share!

Financial Highlights

  • List Price: $900,000
  • 2016 Gross Sales: $2,241,017 (combined US and Canada)      **this is reflected in the Cash Flow Analysis
  • 2 Year Average Cash Flow: $271,839 (combined US and Canada)                  section to follow
  • Inventory of $598,942 combined
  • Over $1.4m worth of assets included in the purchase
    • $425,094 in Equipment
      • Concrete forms ranging from 5 gal to 320 gal, tools and more!
    • $87,154 in Vehicles
      • Cement trucks, pickups, trailers and a truck box
    • Inventory worth $493,608 between Canada and the United States
    • A/R worth $313,861 between both offices
  • Intangible Assets
    • Proprietary concrete blend and water agitator
    • Established import/export privilege
  • Trademarks – they stay with the company!
    • 3 trademarks in Canada
    • 2 trademarks in the United State

*amounts may vary

Please note: Buyer will assume $288,671 in A/P

2017 Work in Progress and Signed Contracts: $1,075,384

 

A Brief Overview

We formed this company to create an outlet for our expertise in manufacturing, wholesale sales and retail sales.  Our feeling from the start is that the people in this world that have the most to benefit from the internet are rural people that can’t just jump in a vehicle and go get what they need or shop for it properly.

 

We have our own product which we have developed over 30 years, and we supply North America’s largest feed yards, dairies, ranch operations, wildlife parks and zoos.  

 

In addition, we are a very large supplier of wholesale products and have our line in a few hundred ag retail stores in Canada and the USA. Our company is the only company that has taken the time to develop a proper retails sales program for replacement parts which go in livestock water tanks, bowls, troughs and any homemade livestock watering system.

The Canadian Advantage

  • The cost of establishing business in Canada can be a 5-year learning curve and cost millions of dollars

  • Stock sale ensures the ability for a new owner to maintain import/export rights

  • Canadian location is in the middle of Canada’s ag industrial activity

  • Automatic leg up for Canada-based company bids

  • Staff in place to handle cross border issues, work visas, and import/export, banking, accounting

  • Have a working relationship with Canadian oilfields that have concrete storage facilities, and they pay a great deal more to have them serviced by ag people!

Cash Flow Analysis

Description of Financial StatementTax Return
Combined US & Canada
Tax Return
Combined US & Canada
Tax Return
Combined US & Canada
Tax Return
Combined US & Canada
Notes
2016201520142013
GROSS SALES$2,246,739$2,783,672$2,995,665$2,980,850
% Change Over Prev. Year-19.29 %-7.08 %0.50 %
Net Income Shown on Financial Statement$55,924$157,676$92,515$141,653
ADDBACKS
Compensation to Owner$86,400$92,800$79,200$36,600Per W-2 & T4 (Canada)
11% Tax on Total W2 Salaries & 5% for Canada$8,064$7,664$6,984$2,646
Interest on Debt$7,452$9,016$10,983$20,640Non-onward going expense
Interest on Grant$275$644$918$1,188Grant through Nebraska town for growth
Bank Interest$24,916$31,829$33,454$15,753Non-onward going expense
Depreciation$2,441$0$12,544$45,514
Auto Gas & Oil$9,089$16,462$18,087$17,208
Owner's Health/Life/Auto$7,331$9,292$10,817$10,212$278/mo ($3,336/year)
Contributions/Donations$150$2,250$2,675$2,098
Non-Business Telephone$2,400$2,400$2,400$2,400Personal cell payments/$200 per month
Leasehold Write Off$21,923$0$0$0
Rent$-6,000$-6,000$-6,000$-6,000Onward-going rent at $6,000/year
Owner's Consult Fee$-45,000$-45,000$-45,000$-45,0002-year agreement (paid through US Entity)
TOTAL ADDBACKS$119,441$121,357$127,062$103,259
Seller's Cash Flow = Total Addbacks + Net Income$175,365$279,033$219,577$244,912
Profit Margin7.81 %10.02 %7.33 %8.22 %


  • 2-year average cash flow of $286,715

  • The Grant Interest through the US entity is due to a grant awarded by the Nebraska town that is home to the company’s plant, and was awarded to help increase growth

  • Current owner is paid through the US entity and will negotiate a consultant fee for 2 years – owner is a seasoned salesman and a veteran of the trade show scene

Customers

Wholesale Supply:

  • The majority of the client base is wholesale purchasers

  • wheatbelt logoOrders from these sources are poured, drop-shipped and received by the client within a 2-week period

  • Retail locations are net 45 day for accounts receivable

  • Stocked in a few hundred retail stores in Canada and the US

    • Image result for federated co-opCabela’s – 66 stores

    • Mid States Distributing – 750 stores

    • Wheatbelt – 364 stores

    • Runnings – 5 stores

    • Image result for mid states distributingUnited Farms of Alberta Co-Op – 32 stores

    • Federated Co-Op – 350 stores

    • Independent dealers - 72

  • Exclusive Distributor for the largest manufacturer of cattle, equine and rodeo equipment in the world!

 

 

The remaining client sales are direct to consumer:

  • North America’s largest feed yards, dairies and ranch operations (from goats to horses)

  • Wildlife parks and zoos (elephants, rhinos, musk ox, hippos, buffalo, etc.)

Image result for cow calf* These customers are usually supplied directly or through retail distribution centers.

Sales Percentages by Customer Type:

  • Image result for oilfieldRetail Locations – 50%

  • Feedlots – 27%

  • Cow/Calf Operations – 14%

  • Trade Shows – 5%

  • Oilfields – 3%

  • Zoos & Wildlife Parks– 1%

Sales Analysis

  • Average 2016 sales

    • Internet - $200

    • Parts - $60

    • Water tanks - $1,000

US Non-Cattle Sales Clients:

  • Balzer

  • Nuhn

  • Hydro

  • Koca

  • VTI

  • Better Air

Canada Non-Cattle Sales Clients:

  • Nuhn

  • Temple Tag

  • Chrystal Springs Koca

  • Monoflo

  • Valco

  • Better Air

Assets

  • Vehicles ($87,154)

    • Cement Truck – 2

    • Chevy 1500 Pickup

    • Dodge Truck

    • Trailers - 3

    • Truck Box

  • Tools and Equipment ($87,971)

    • Air compressors, saws, hammer drill, fuel stand, crane & trolley, spreader beam, paint sprayer and more!

  • Office Equipment ($18,892)

    • Computers, scanners, furniture and display equipment

  • http://cancrete.com/us/Images/gallery/7.jpgConcrete Forms ($318,321)

    • Forms ranging from 5 gallons to 210 gallons

Concrete Water Tanks

  • The Special Process:

    • Air entrained concrete – produces microscopic air pockets that allow any moisture in the concrete to expand and contract in these pockets and not the concrete itself

      • Makes for a super strong hull that can weather the freeze/thaw cycle without cracking (can withstand -50 Fahrenheit)

    • Precast hulls made from steel reinforced, 6000 PSI, sulfate-resistant concrete

    • Bowls are epoxy coated and provide chemical protection from sodium, manure, acid and silage

    • Heavy gauge stainless steel used on valve cover, service door, ball float and all hardware

  • The Concrete Recipe:

    • The average concrete/Redi-Mix PSI is 1500, but this company’s proprietary blend is 9000+ PSI

    • The PSI recipe is only known by 3 people: the two current owners and the concrete mixer who is under strict confidentiality

    • The formulation recipe is held in a safe deposit box

    • The business owns 2 concrete trucks which are batched twice a day, and the staff tests every other batch to ensure accuracy

  • Proprietary Coating:

    • typical coating is power or spray, but this company does something different

    • 6 -step process

      • http://cancrete.com/cdn/Images/products-technology.jpg2 coats of proprietary blend

      • Shine spray

      • Spotting spray to hide future blemishes

      • Dry for 2 days

      • 1 day for electrical

      • Shipped out on pallets – 2 pallets shipped each week

  • Auto Flow System:

    • keep your continuous flow livestock water bowl from freezing

    • New auto flow system can be added to any waterer with or without a new valve

    • No adjustments to make; brass and steel components

    • No Petcocks to seize or valves to set

    • Dual system monitoring air temperature under the hood and a separate sensor to monitor water temperature

Competitors

  • Ritchie Bros. Auctioneers

    • World’s largest industrial auctioneer

    • Global leader in asset management and disposition

      • Appraise, sell, inspect, buy, refurbish, ship and finance heavy equipment

    • 45 permanent auction sites in North America, Europe, the Middle East, Asia and Australia

    • USA headquarters in Lincoln, NE

    • Buy and sell equipment for

      • Construction

      • Mining

      • Transportation

      • Agriculture

      • Oil & gas

      • Lifting & material handling

      • Forestry

  • Hawke & Company Ag

    • Located in Alton, IA

    • JCB Construction Equipment

    • Tractors, loadalls, skid loaders, wheel loaders, hay & forage, manure equipment

  • Miraco Livestock Water Systems

    • Division of Ahrens Agricultural Industries

    • Located in Grinnell, IA

    • Distributors in 17 countries

    • Mira-Fount is the competing product

  • Petersen Ag Systems

    • Located in Norfolk, Osmond and Fremont in Nebraska, and in Onawa, IA

    • Industry leader in irrigation sales and service

  • Bohlmann Quality Products

    • Concrete drinking fountains

    • Based in Denison, IA

    • 100+ dealers and distributors

Fun Facts

  • The Nebraska plant is the only location that does manufacturing and distributing

    • 5,000 – 6,000 tanks are made each year

  • The Canadian location is strictly for Canada-based sales

  • There is a phone system in place between the two locations so staff is able to instantly communicate without any issues

  • Parts account or 33% of business, with 20,000 sold per year

  • The company has a universal barcoding license for nearly 10,000 products

  • Water tanks have a 10-year warranty, and only 16 have been replaced in nearly 20 years

  • 30+ forms of steel and fiberglass are used in making water bowls

    • 25-30 bowls are made per day

Frequently Asked Questions – Answered!

  • ASTM Standards

    • There are no cast-in-stone rules for Agribusiness to follow.  We maintain a standard set by us to ensure that we can guarantee product longevity.

  • E-Commerce

    • We are the only company that has properly made a retail display program for livestock water tank parts that are easy to use and follow in retail stores.  We’ve also create an e-commerce program that is a website for selling parts.

  • Grain Silos, Grain Handling, Manure Handling

    • We are somewhat diverse and do business in all these areas with different lines of equipment.  Our company has 55 lines of hog equipment in Canada (manure handling).  We have built grain handling systems and service them in Canada, and we live in the middle of oilfields and sell large reel and hose units for that industry.

       

  • Sales Breakout

    • Canada

      • Trademarked products: 63%

      • http://cancrete.com/cdn/Images/picture6.jpgExclusive Rodeo Distributor: 18%

      • All else (manure tanks, hog equipment): 19%

    • US

      • Trademarked products: 67%

      • Exclusive Rodeo Distributor: 19%

      • All else (manure tanks, hog equipment): 14%

    • No one customer makes up more than 10% of sales

    • Dealer markup – 40%

    • Direct to customer markup – 25%

  • Trademarks and Patents

    • 3 trademarks in Canada, 2 trademarks in US

    • 400+ SKU’s

    • The actual product is not patented and does not need to be

    • Employees are not bound by non-compete contracts as they are not privy to the concrete blends and chemical additives

    • Proprietary coating is not patented and doesn’t need to be

      • Pigments, etc. are specific to the customer base

  • Finances

    • Canadian taxes are included in the cost of wages

      • In Canada, we pay Canada Pension and Unemployment Services

    • All payroll and accounting is handled/supervised through the Nebraska office

      • Credentialed staff are able to bill and collect Canadian and US Dollars and deal with Canadian tax law

    • AR percentages from retail chains

      • Canada – 45%

      • US – 51%

  • Business Cycle

    • In the spring, we see new customers whose old water tanks have broken during thaws

    • In December many customers make big purchases for tax deductions

Growth Opportunities

  • Develop ability to batch at the facility to eliminate the need for cement trucks

    • Increases profitability by eliminating margin used to batch the concrete paid now

  • Create product diversity

    • There is no end to items that need to be precast in the Midwest and Canada

    • Tool up to create them

  • Erect a building to house pouring, curing and coating

  • http://cancrete.com/cdn/Images/picture-easypad.jpgCurrent owners have a 10-year vision they are willing to share with a buyer!

 

Employees

  • Canada (3)

    • Branch Manager

      • sales and marketing

        • trade shows and direct sales

        • price lists and promotional materials

      • http://cancrete.com/us/Images/turner_bison.jpgsupervise office

    • Inside Sales/Shipping and Receiving

      • Inside order desk calls

      • Maintain inventory in building and yard

      • Prepare orders and invoice shipment

    • Part-Time Bookkeeper (2-3 days per week)

      • Payroll, A/R and A/P

      • GST and Revenue Canada reporting

      • Coordinate with US office on all payables

  • Nebraska (11)

    • http://cancrete.com/cdn/Images/gallery/13.jpgOffice Manager

      • All accounting and bookkeeping

        • Oversees Canada’s bookkeeping

      • Central purchasing for both branches

      • US payroll and tax reporting

    • Accounts Receivable and Logistics Coordinator

      • All A/R invoicing

      • Arrange incoming and outgoing shipments

    • Office Clerk

      • Control and maintain all inventory levels for production

      • Automate purchase orders in accounting system

    • Outside Salesman

      • All outside sales to feedlots

    • http://cancrete.com/cdn/Images/Wylee%20Park,%20SD%201.jpgAssembly Technician

      • Assembly and inspection of all waterers

      • Supervise assembly staff

    • Plant Supervisor

      • Supervise all manufacturing procedures/yard employees

      • Hire and train staff for pouring, painting and assembly

    • Pour Bay Supervisor

      • Prepare & pour forms for pouring water bowls

    • Laborer/Painter

      • Prepare & paint cured hulls for painting

      • Maintain paint bay and paint supplies

    • Laborer/Cement Pouring

      • Prepare forms for cement pouring

      • Inspect and repair imperfections

    • Laborer/Assembly

      • Assemble painted water bowls

    • Laborer/CDL Truck Driver

      • Drive cement truck to pick up cement

      • Assist pouring concrete on site

A Word from the Sellers

In thinking about buying a company, the first question in my mind would be, “Why do these people want to sell?”  That’s a perfectly good question, and here are a few reasons why.

My wife and I have owned businesses for 35 years and we don’t do things half way, but we are getting worn out.

Our company is poised to expand.  We’d like to build onto our plant, add on-site batching, build a larger production building and create new pre-cast products that compliment what we already make.  We feel that at 60 it’s time to introduce younger, more dynamic management to make this happen.

We are an international company with offices in Canada and in Nebraska, so our business focus has been a bit more extensive.  Agri-business in Canada has come a long way in the past five years and is expanding rapidly.  We’d like to increase our sales force in Canada to reach out for even more business.  We have also spent years breaking into the supply of liquid handling products with oilfield companies, and that area has profits that are three times what agri-business offers.

Valuation Details

The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business. 

The formula used is as follows:

2 Year Avg Combined US/Canada Cash Flow          x          Prescribed Multiple     =          Fair Market Value

Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.

With this information, the computation is as follows:

$271,839         x          3.35       =          $910,660

The Fair Market Value found above positions the business List Price at $900,000 to account for a portion of the $598,942 in inventory that will be marked up 25-40% when sold.

http://cancrete.com/cdn/Images/Wylee%20Park,%20SD.jpg

http://cancrete.com/cdn/Images/gallery/19.jpghttp://cancrete.com/Images/IM002433.JPG

 

 

 

Funding Example

 

Purchase Price:                           $900,000

15% Buyer Down Payment:     $135,000

11% Seller Financing:               $99,000

74% Bank Loan:                      $666,000

Seller Financing 6-year term at a rate of 4.0% equals a monthly loan payment of $1,549.

Bank Loan 8-year term at a rate of 5.25% equals a monthly loan payment of $8,511.

 

Enclosed

  • Business Summary
      • Identifies important business information in an organized quick-reference format

  • Organizational Chart
    • Flowchart of employees in each location with a few notes on the Nebraska plant

  • Combined Cash Flow Analysis
      • Side-by-side comparison of US and Canadian cash flow based on income statements from 2013-2015

Purchase Price:

$900,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2015-2016 Average Cashflow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2015-2016 Average Cashflow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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