- Fourth acquisition in Xebec’s strategy to develop a North American service footprint for renewable natural gas and hydrogen installations
MONTREAL, (QC) – Xebec Adsorption Inc. (TSXV: XBC)(“Xebec”), a global provider of clean energy solutions is pleased to announce that the Company has entered into an agreement effective August 31st, 2020, to acquire all of the outstanding securities of Applied Compression Systems Ltd. (“ACS”). ACS’ principals will remain with ACS after the acquisition to optimize their integration into Xebec’s industrial service and support business and to grow the operation over the coming years.
Xebec’s Cleantech service coverage will increase and now include British Columbia, a province with the country’s most aggressive renewable natural gas and hydrogen mandates and targets. ACS has existing experience and customer relationships for servicing renewable gas installations.
Total consideration payable by Xebec is approximately $4.5M, subject to certain holdbacks, adjustments, and time-based payments. ACS had revenues of over $8.0 million for the last twelve months with an EBITDA margin of approximately 12%. As with other acquisitions in the Industrial Service and Support segment, Xebec expects that ACS’ growth and profitability could be improved with sourcing and back-office synergies.
When customers select a vendor for a multi-million-dollar renewable natural gas or hydrogen installation, service and support figures prominently in their purchasing decision. With its service acquisition strategy Xebec responds to this important customer need and sees it as competitive advantage due to the lack of a similar offering from other vendors. Furthermore, the expansion of its Cleantech Service Network (“CSN”), is set to expand across North America over the coming years. In addition, this strategy will lead to increased recurring aftermarket sales with a positive impact on overall profitability. As a result, Xebec expects revenues of approximately $200 million in its Industrial Service and Support segment by 2025.
“We’ve been a Xebec customer for more than a decade buying both regenerative compressed air dryers and nitrogen generators. We’re happy to now be more involved with Xebec through this acquisition and are excited to help increase the number of sales channels and provide the capability to design and manufacture full compressed air & gas systems. In addition, we’ve worked on a number of waste-to-energy projects in British Columbia and the United States such as renewable natural gas systems. We’re looking forward to being part of Xebec, a worldwide leader in renewable natural gas and hydrogen systems and see the use of renewable gases grow substantially in British Columbia over the coming years,” states Mike Sanderman, President, Applied Compression Systems Ltd.
Applied Compression Systems offers a single-source solution for air & gas compression requirements. The company has a strong focus on custom-designed and fabricated compressor packages for specialized applications in the oil, gas, petrochemical, alternative fuel, waste-to-energy, research, power generation, mining and manufacturing industries. ACS can supply either standard units or design and fabricate equipment that is custom-built to specific requirements from concept to completion.
“ACS is both a customer and supplier and has unique capabilities to design and build compressed air & gas systems. This acquisition will strengthen our Industrial product portfolio as a compressor integrator while simultaneously increasing our service presence in Western Canada. British Columbia is a key province for us as it’s one of two in Canada that specifically mandates supporting renewable natural gas and hydrogen. ACS’ rich experience in compressor system integration and service is well recognized and a great asset to our company.
Given their location on the west coast, it will bode positively with the strong pipeline of projects we are working on in those regions. Having local service and support will continue to be a key part in assuring customers they will be taken care of. We welcome Mike and his team to the growing portfolio of Xebec industrial companies,” says Dr. Prabhu Rao, Chief Operating Officer, Xebec Adsorption Inc.
About Xebec Adsorption Inc.
Xebec is a global provider of gas generation, purification and filtration solutions for the industrial, energy and renewables marketplace. Well-positioned in the energy transition space with proprietary technologies that transform raw gases into clean sources of renewable energy, Xebec’s 1500+ customers range from small to multi-national corporations, governments and municipalities looking to reduce their carbon footprints. Headquartered in Montréal, Quebec, Canada, Xebec has several Sales and Support offices in North America and Europe, as well as two manufacturing facilities in Montréal and Shanghai. Xebec trades on the TSX Venture Exchange under the symbol XBC. For more information, www.xebecinc.com.