Last updated on August 13th, 2019 at 01:02 pm
Milwaukee-based Jason Industries Inc. executives said the company could be for sale after announcing the divestiture of its fiber solutions segment.
The fiber business, comprised primarily of Janesville Acoustics, will be sold to Holland, Michigan-based Motus Integrated Technologies for an expected $85 million, Jason announced Monday. The deal is expected to close during the third quarter.
Brian Kobylinski, chairman and chief executive officer of Jason, said the deal would reduce the company’s exposure to the automotive market, increase liquidity and simplify the remaining portfolio.
“Janesville can achieve its true potential under new ownership,” Kobylinski said. “Our employees have done an outstanding job improving operational and commercial performance and we thank them for their hard work and dedication to the business.”
Janesville has around 1,000 employees in the U.S. and Mexico and contributed $144 million to Jason’s revenue over the past 12 months. None of its manufacturing facilities are in Wisconsin. The business won a BizTimes Innovation Quotient award this year for its Aerotex underbody panels.
In addition to announcing the sale of the Janesville business, Jason announced Monday it has engaged BMO Capital Markets Corp. to explore strategic alternatives, including the potential sale of Jason Industries.
“The remaining core Industrial and Engineered Components are high quality and well managed businesses, presenting opportunity to build upon strong operational foundations with organic growth and tuck-in acquisitions,” said Mitch Quain, lead independent director of Jason’s board.
The company’s board has not set a timeline for a decision on the strategic review. Given the ongoing review and sale of Janesville, the company has stopped providing guidance on its expected results. Executives also did not take questions during Jason’s earnings call Monday.
Kobylinski did acknowledge the company’s second quarter results were below expectations.
Revenues in the quarter dropped $30.1 million to $138.1 million, including a 15% organic decline. The company cited weaker industrial markets in Europe and Asia along with weaker demand for heavy industry equipment, a weak turf care and agricultural season due to a wet spring, lower motorcycle volumes and deteriorating market conditions in rail and safety grating markets.
Jason reported a net loss of $13.9 million in the quarter compared to a $1.1 million loss during the same period last year. Adjusted EBITDA decreased from $21.4 million to $11 million.