Sun’s Return Rock Solid on Sale of StonePoint

Sun Capital Partners has agreed to sell StonePoint Materials to publicly traded Arcosa for $375 million. Sun Capital acquired StonePoint through a $205 million carve out of the VantaCore construction aggregates business from publicly traded Natural Resource Partners in December 2018

StonePoint provides crushed stone, sand and gravel that is used in commercial and residential construction, infrastructure and energy projects. The company is a top-25 US aggregates company and operates across nine states in the Gulf Coast, Midwest and Southeast regions.

StonePoint produces approximately 9 million tons of aggregates each year and it also offers asphalt production and paving services in Tennessee and Kentucky. The company operates through several subsidiaries including Laurel Aggregates, Winn Materials, Southern Aggregates, and McIntosh Construction. StonePoint has an estimated 380 million tons of reserves with an expected life of more than 40 years.

Through the first quarter of 2021, StonePoint had TTM revenues of about $117 million and TTM EBITDA of $28 million. According to Arcosa, StonePoint is expected to generate at least $30 million of Adjusted EBITDA in 2021 and return to 2019’s pre-pandemic level of $33 million by 2022. Based on a $375 million purchase price, this results in a TTM EBITDA valuation multiple of 13.4x. A copy of Arcosa’s 13-page review of the StonePoint acquisition is available HERE.

“Our work with StonePoint underscores our strength in partnering with outstanding management teams to drive market share growth, enhance operations and capitalize on new opportunities,” said Marc Leder, a co-CEO of Sun Capital. “We worked closely with the StonePoint team to complete three strategic acquisitions that provided substantial financial and operating synergies and strengthened the company’s competitive position.”

The three add-on acquisitions include River Aggregates, a Texas-based operator of two sand and gravel facilities, in September 2020; Road Builders, a Kentucky-based operator of two quarries and three asphalt plants, in December 2019; and Standard Gravel Company, a Louisiana-based operator of four sand and gravel facilities, in September 2019.

“Sun Capital has been a great partner, not just in building StonePoint as a standalone business, but also in accelerating our growth over the past three years,” said Colin Oerton, the chief executive officer of StonePoint. “The expansion of our footprint and the healthy pipeline of projects we have developed made us a very attractive acquisition target for strategic buyers.”

“We are very pleased that we were able to apply our extensive experience in industrial businesses to grow StonePoint and achieve this positive outcome for the company and our investors,” said Jeremy Stone, a managing director at Sun Capital. “We continue to actively pursue opportunities in the infrastructure and building products sectors, where we can partner with outstanding management teams to accelerate value creation.”

Sun Capital invests in leveraged buyouts, equity, and debt in companies that can benefit from its in-house operating professionals and experience. The firm has invested in and managed more than 420 companies worldwide with combined sales in excess of $50 billion since its inception in 1995. Sun Capital has offices in Boca Raton, Los Angeles and New York, and an affiliate office in London.

Dallas-headquartered Arcosa (NYSE: ACA) is a provider of infrastructure-related products and services to the construction, energy and transportation sectors.

© 2021 Private Equity Professional | March 25, 2021

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