Glendale-based automotive battery manufacturer Clarios LLC provided more insight on its operations Friday as the former battery unit of Johnson Controls prepares for an initial public offering that could come later this month.
Upon closing its offering, the company’s current owners plan to retain at least a 50% stake in the company, according to a filing with the U.S. Securities and Exchange Commission. However, Clarios has not disclosed how many shares it would offer nor the price range for the proposed offering.
The battery maker has a robust portfolio of battery technologies designed to power virtually every type of passenger, commercial and recreational vehicle, from conventional to fully electric. Its primary customers are global automakers, wholesale distributors, auto retailers and big box stores.
Clarios has the number one market position in both the Americas and EMEA, and the number three market position in Asia. The majority of demand for Clarios products comes from the aftermarket channel, driven by consumer replacements.
A Clarios spokesperson had no comment today regarding a timeline for the IPO. However, Clarios is “likely to go public in July, people familiar with the matter said, aiming for a roughly $20 billion valuation," according to a Wall Street Journal article.
Clarios submitted a registration statement for a proposed IPO with the SEC in May. The company had stated it expects to commence the IPO after the SEC completes its review process, subject to market and other conditions.
Like others in the automotive industry, Clarios wasn’t immune from the economic impact of COVID-19. In 2020, net sales decreased by $926 million to $7.6 billion for the year ending on Sep. 30, primarily due to decreased volumes, impact on lower lead costs on pricing and the unfavorable impact of foreign currency translation, according to the filing.
Clarios attributes approximately $485 million of the decrease in volumes to COVID-19-related challenges, including lower sales volumes to its OEM customers who experienced temporary shutdowns. The company also saw reduced sales volumes for its aftermarket customers, albeit to a lesser extent, due to store closures and stay-at-home orders in 2020.
As of March 31, Clarios had approximately $10.3 billion in debt. Earlier this year, the company decommissioned its lead recycling plant in North America, which could reduce the annual cost of sales in its Americas segment by $50 million as the company optimizes its supply chain network, according to the filing.
Clarios now appears to be rebounding after reaching about $4.5 billion in net sales this year for the six months ending March 31, up from $3.9 billion for the same period in 2020, according to the filing. So far, net sales in 2021 are outpacing 2019 levels, which were approximately $4.4 billion for the same period, according to a Johnson Controls SEC filing.
In May 2019, Johnson Controls completed the $13.2 billion sale of its power solutions business to Brookfield Business Partners, a Canadian private equity firm, and Caisse de dépôt et placement du Québec, an institutional investor that manages public pension plans in Quebec.
Clarios’ headquarters remains on the same corporate campus as Johnson Controls and although new security measures have been added to separate the two businesses’ operations, they still share some services, including a gym, a cafeteria and a nurses’ station.
A 2020 BizTimes Milwaukee cover story took an extensive look at the company.
In fiscal 2018, the then Power Solutions division for Johnson Controls generated approximately $8 billion in annual revenue and produced about 150 million batteries each year. The company now has 16,000 employees across 50 manufacturing, distribution and recycling locations with 500 employees at its headquarters in Glendale.
At the center of the company’s 277,700-square-foot headquarters is a 69,000-square-foot research battery lab where Clarios analyzes, develops and tests its products. Although the lab is one of 10 around the globe, it has several capabilities unique to the facility.