# USM bought out



## grandview (Oct 9, 2005)

Emcor Group Acquires USM Services

Emcor Group Acquires USM Services

EMCOR GROUP, INC. ANNOUNCES AGREEMENT TO ACQUIRE USM SERVICES HOLDINGS, INC.

Press Release

- USM is a Leading North American Provider of Facilities Maintenance Services to National and Multi-Site Commercial Customers

- Combination of USM and EMCOR's Services Business Creates Premier
Nationwide Provider of Facilities Maintenance Services -

NORWALK, CONNECTICUT, May 18, 2011 - EMCOR Group, Inc. (NYSE: EME) today announced that it has entered into a definitive agreement to acquire USM Services Holdings, Inc. ("USM"), a leading provider of facilities maintenance solutions in North America, from Transfield Services Limited (ASE: TSE) in an all-cash transaction for $255 million, representing $225 million for the base USM business plus $30 million for the net present value of a USM tax benefit. Transfield Services Limited is an Australian-based global provider of operations, asset management and project management services. The transaction is expected to close towards the end of June, subject to customary closing conditions. EMCOR will utilize available cash to finance the acquisition.

Headquartered in Norristown, Pennsylvania and with annual revenues of approximately $375 million, USM is a leading provider of essential facilities maintenance services, including interior and exterior services and electrical, mechanical and plumbing services, to national and regional commercial customers that typically maintain more than 100 sites across wide geographic areas. With its highly-developed proprietary network of over 11,000 service partners, USM delivers consistent facilities maintenance services across a nationwide footprint for approximately 150 customers in over 75,000 locations in all 50 states and Canada.

EMCOR Announces Agreement to Acquire USM Services Holdings
Tony Guzzi, President and Chief Executive Officer of EMCOR, commented, "We are excited to be acquiring USM, which further strengthens EMCOR's market leading position in facilities and maintenance services. Led by an outstanding and experienced management team, USM is a highly respected provider of facilities maintenance services to some of the most prominent retail, banking, and other commercial companies across the country. Our two businesses are highly complementary to each other, as USM is a leader in predictive, scheduled interior and exterior maintenance services, while EMCOR leads the market in providing site-based and mechanical services and other electrical and mechanical trades services. In an environment in which customers are increasingly looking to centralize their outsourcing with a quality provider, we will together offer a compelling, comprehensive value proposition that is unmatched in the marketplace."

Mr. Guzzi continued, "Our combination with USM, a leader in a very large, growing and highly fragmented market, will offer access to potential new customers for EMCOR's capabilities in energy efficiency, retrofit projects, building controls upgrades, monitoring and maintenance management, and will enable us to bring new services to our existing customers. USM also has excellent revenue visibility and solid margin performance, and by combining aspects of our businesses, we expect to gain greater operational efficiencies and scale that will translate into reduced costs for the benefit of both EMCOR and our customers."

"We look forward to joining the EMCOR team," stated Ivan Dubow, Chief Operating Officer of USM. "Both companies are industry leaders with strong commitments to customer relationships, margin, cash generation and employee development. These shared values speak to a promising future, and we look forward to working together."

For the balance of 2011, the acquisition of USM is expected to add approximately $160 million in revenues and be slightly accretive to EMCOR's diluted earnings per share, after transaction expenses of approximately $6 million. For 2012 and annual periods thereafter, USM is expected to be accretive to EMCOR's diluted earnings per share and generate operating income margin, excluding intangible amortization expenses, in excess of EMCOR's historical peak operating income margins.

Operating efficiencies are expected to be generated from the combination of USM and EMCOR's facilities businesses, resulting in targeted annualized expense reductions of approximately $5 - $6 million over the next two years.

About Transfield Services:
Transfield Services delivers essential services to key industries in the resources and industrial, property and infrastructure sectors. A leading global provider of operations, maintenance, and asset and project management services, Transfield Services has more than 28,000 employees in Australia, New Zealand, the United States, Canada, the United Arab Emirates, Qatar, India, Malaysia, Chile and New Caledonia. Transfield Services Limited is listed on the Australian Securities Exchange.

EMCOR Announces Agreement to Acquire USM Services Holdings
EMCOR Group, Inc. is a Fortune 500 worldwide leader in mechanical and electrical construction services, energy infrastructure and facilities services. This press release and other press releases may be viewed at the Company's Web site at www.emcorgroup.com.


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## Mick76 (Aug 2, 2009)

grandview;1284841 said:


> Emcor Group Acquires USM Services
> 
> USM also has excellent revenue visibility and solid margin performance, and by combining aspects of our businesses, we expect to gain greater operational efficiencies and scale that will translate into reduced costs for the benefit of both EMCOR and our customers."


Anyone else catch this?


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## grandview (Oct 9, 2005)

Mick76;1284843 said:


> Anyone else catch this?


Sounds like a pay cut.


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## 1olddogtwo (Aug 6, 2007)

seen this earlier....a new low baller?


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## csi.northcoast (Aug 7, 2010)

i will bit my tongue on the many ways i could go with this post... but if someone feel they can do the job and take on the "liability risk" for the money they want to pay and wait for the money to be paid......then go for it... 

they are only ALLOWED to lowball if someone agrees to do the work for the price
'


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## northernsweeper (Aug 26, 2004)

So now the furnace rapair truck will have a plow. Same crap,different name.


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## Rc2505 (Feb 5, 2007)

The 5 to 6 million cut in annualized expense reductions, sound a whole lot like more contractors aren't going to get paid.


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## buckwheat_la (Oct 11, 2009)

I think this might be a good thing, unlike USM this company provides a service that is not very forgiving so maybe they well have the same additude towards exterior maintenance.


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## hoskm01 (Oct 17, 2008)

buckwheat_la;1284940 said:


> I think this might be a good thing, unlike USM this company provides a service that is not very forgiving so maybe they well have the same additude towards exterior maintenance.


At least theyre American. GO USA, buy American! ussmileyflag


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## swtiih (Nov 30, 2008)

time will tell.


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## snowman5313 (Jun 19, 2009)

I'm with hoskm01...If your going to get screwed get screwed by an American.


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## snowbrothers101 (Jul 27, 2009)

http://www.theaustralian.com.au/bus...k-us-service-arm/story-e6frg8zx-1226059261198

Great article. Even Transfield knew USM sucked!! So funny. Their words, not mine.


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## Kramer (Nov 13, 2004)

snowman5313;1285004 said:


> I'm with hoskm01...If your going to get screwed get screwed by an American.


This is the amazing part to me.

You guys do all the work, you don't get paid, you take all the liability and after several years USM gets $200 million off your sweat. Most of you on here have been complaining for years about getting screwed in several ways. Then you come on plowsite almost begging the next guy not to screw you. "Maybe it will be better now".

Then to justify it all, you say that at least its an American compnay now.

Open your eyes gentlemen.

How much of the $200 million did you get? Now go fix your truck, forget about the thousands they owe you, make sure you're in court on time to plead your case. Don't forget to wake up at 3am to make sure you're on time to wreck your truck in the next big storm. 
When you're done, call the new company hotline to ask why you haven't been paid for the last three storms or they held back money cause you didn't cross the last T.

You people are gluttons for punishment. You are giving away this industry one contract at a time and you're content in begging these people for work. Look ahead 5 years...if you just want to beg for work go to a local plowguy who needs a driver. Stop pretending you're in business. These companies have no work without you...why can you not understand this??


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## snowbrothers101 (Jul 27, 2009)

$200 million? Read the income statements that Transfield put out. They bought USM (and the components that made up USM, including Whelans and Horizon) for $485 million. They sold for $225 million. Transfield lost over $250 million in 5 years just on the sale price (not to mention year after year losses on bad debt and load repayments on the original purchase. As the article states, this was Transfield's worst acquisition in their history. Losing over $200 million in revenue in the last 120 days didn't help either. This is not a bad thing for us. Emcor has a very solid reputation and things can't get any worse at USM as it relates to us vendors.


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## hoskm01 (Oct 17, 2008)

snowbrothers101;1285413 said:


> $200 million? Read the income statements that Transfield put out. They bought USM (and the components that made up USM, including Whelans and Horizon) for $485 million. They sold for $225 million. Transfield lost over $250 million in 5 years just on the sale price (not to mention year after year losses on bad debt and load repayments on the original purchase. As the article states, this was Transfield's worst acquisition in their history. Losing over $200 million in revenue in the last 120 days didn't help either. This is not a bad thing for us. Emcor has a very solid reputation and things can't get any worse at USM as it relates to us vendors.


Second'd.

No one is walking around with 200 milskies in their pocket.

The change goes on...


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## tjlands (Sep 29, 2005)

Instead of some buffoons in the US you will now deal with a bunch of cronies surrounded by Roos on the other side of the planet.

sounds about right


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## hoskm01 (Oct 17, 2008)

tjlands;1285439 said:


> Instead of some buffoons in the US you will now deal with a bunch of cronies surrounded by Roos on the other side of the planet.
> 
> sounds about right


I think you've got it backwards there Chief.


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## tjlands (Sep 29, 2005)

hoskm01;1285452 said:


> I think you've got it backwards there Chief.


nope got it right


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## buckwheat_la (Oct 11, 2009)

tjlands;1285512 said:


> nope got it right


UMMM, you know the company that is SELLING USM is Australian and the company that is BUYING USM is American, right.


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## hoskm01 (Oct 17, 2008)

tjlands;1285512 said:


> nope got it right


Nope, nope. Buckwheat has it right. No more Roos.


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## Kramer (Nov 13, 2004)

snowbrothers101;1285413 said:


> $200 million? Read the income statements that Transfield put out. They bought USM (and the components that made up USM, including Whelans and Horizon) for $485 million. They sold for $225 million. Transfield lost over $250 million in 5 years just on the sale price (not to mention year after year losses on bad debt and load repayments on the original purchase. As the article states, this was Transfield's worst acquisition in their history. Losing over $200 million in revenue in the last 120 days didn't help either. This is not a bad thing for us. Emcor has a very solid reputation and things can't get any worse at USM as it relates to us vendors.


It appears that USM does about $375MM annual revenue with 150 customers. I haven't seen their financials, but If they were doing approximately the same revenue when Transfield bought them then its not that far out of line--- 1.3 times revenue. With a good growth story, this would be a relatively easy sell.

As for their income in general, it appears that they do plumbing/electrical and so forth. With the downturn in construction in the past few years its not surprising to see a loss. Ditto for lawncare. I assume they're commercial only and target big stores. I don't see a lot of new home depots lately. Doing an average of $5000 per location (375MM/75000 locations stated) that's not a lot of ching per location considering snow removal alone per location is probably $20000 avg or so.

So emcore picks them up cheap because the near term outlook sucks and then as things come back, they have an installed base of customers. They see a lot of synergy and want the installed customer base. They're paying cash so they will slash and burn to trim the fat. But until things pick up, they will cut all they need to as to achieve their margin targets.

Make no mistake, outstanding debt was likely the first meeting. In a cash deal they would clean that up at the get go. If they determine that the debt is due to lousy management of contractors, then they will review terms and also look hard at contracts. Its not likely that they go to walmart and say---I'm the new guy and next yr it will cost you 30% less. And if USM is losing money on all their business then there's a root cause...in their case its probably marketing cost. That being said, I don't see a bonus for contractors--- maybe they will pay or adjust the contract structure but its unlikely the pay/site will increase. USM already set the bar.

I still see it as hard working people getting taken advantage of. It might be a good bet that there's a few plumbers and electricians with the same horror stories we've seen on plowsite.

You said things can't get worse--- it would be easy to make a case that they indeed can. I'd bet emcore views it as bad management. Time will tell, but show me a case where the deal for the average plow guy improves? You think the new guy wants to take on the liability part? I'd bet no. They might pay on time with less hassle...but they will still control you---the man with the gold makes the rules.


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## dfd9 (Aug 18, 2010)

I find these statements interesting:

Dr Goode said Transfield wanted to sell the business because the retail customers served by USM were facing weak economic conditions.

\"With the US, retail spending hasn\'t recovered and we don\'t see any imminent recovery to pre-financial crisis levels,\" he said.

\"What you see is that big-box retailers have been insourcing their facilities management needs.\"

and:

In late 2009, Transfield revealed USM\'s revenue had been falling short of assumptions by about $US100m and it chose to book a writedown of about 32 per cent, devaluing the business to $US283m.

Insourcing because of weakened economic conditions? That is the whole (alleged) reason for using the likes of USM, to save money. So they admitted that USM didn\'t save the customers money and that revenue fell far short of assumptions. 

I think we can take that to mean that they could see the writing on the wall regarding WallyWorld bailing on USM. 

As for EMCOR, I\'ve worked for one of their subsidiaries for quite a number of years and things have been fine. Sure, they try to find the cheapest companies out there, but the contract is well written and not one-sided as USM\'s and pay is regular, less than 30 days.


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## Kramer (Nov 13, 2004)

dfd9;1285670 said:


> I find these statements interesting:
> 
> Dr Goode said Transfield wanted to sell the business because the retail customers served by USM were facing weak economic conditions.
> 
> ...


A lot of companies outsource for various reasons,They only save money if they don't have to increase the payroll. If they have a slow time, a company will always try to bring whatever they can back inside as opposed to laying off employees. They'd rather they cut the lawn then collect off them.

In most large corporations, they try to one stop shop as much as they can as it reduces accounting.

So they aren't going to pay USM or anyone else while their full time employees stand around and collect UE. That part makes sense, but we all know that's the party line. We also know that transfield was shopping them around and no doubt when they took a big write-down that accelerated the interest. I'd bet dollars to donuts Emcore could have got them even cheaper.

I believe Emcore is looking down the road and preparing for a growth stage. If they didn't believe the customer baser was there, USM would be completely worthless. They have no technology, no patents, no property plant or equipment of their own. The only thing USM has is a customer base. That's what Emcore purchased for their money. That, and the fact that its easier to buy your competition when they are down and out then it is to try and expand your own when the competitor has good market share.

I just went through this with a major corporation. They offered great money to buy us because we had great market share in an area they wanted to expand into. They were buying the brand and installed customer base. And, companies will spend an enormous amount of money based on this principle. Lets just say they offered a ****load more than 1.3 times annual revenue like emcore got away with. We turned them down and got an even better deal 3 months later with a better company.

Wallyworld will be right there for emcore. Scratch them off the customer list and then look at the valuation.


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## hoskm01 (Oct 17, 2008)

dfd9;1285670 said:


> I find these statements interesting:
> 
> Dr Goode said Transfield wanted to sell the business because the retail customers served by USM were facing weak economic conditions.
> 
> ...


USM is nearly 100% "maintenance and management" based in it's service offerings. The construction industry being down would have no effect on USM's business, but for perhaps stifling growth as their customers aren't adding new sites.

Emcor is another story... they are heavy in to both maintenance and construction in their trades.


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## snowbrothers101 (Jul 27, 2009)

I think it is clear that USM was mismanaged by Transfield, hence the significant losses over the last 5 years and especially over the last 120 days ($200 million lost revenue). USM also announced 150 layoffs (with 550 employees in their corporate office) three weeks ago so the trimming of fat has already begun. I think Emcor will make a positive improvement as they do care about their perception in the marketplace (US publicly traded company). Not saying money will be flowing to us vendors, only that I think we will be treated better.


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## whsiii2000 (Mar 8, 2011)

hope this new company gets smart and backsout the deal and lets usm go bankrupt because noones going to work for either one next year. we have talked to several other contractors from east coast and we all have same story. Remember you can put lipstick on a pig and its still a pig.


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## lawnangel1 (Oct 15, 2009)

Kramer;1285410 said:


> This is the amazing part to me.
> 
> You guys do all the work, you don't get paid, you take all the liability and after several years USM gets $200 million off your sweat. Most of you on here have been complaining for years about getting screwed in several ways. Then you come on plowsite almost begging the next guy not to screw you. "Maybe it will be better now".
> 
> ...


Well said!


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## Italiano67 (Feb 16, 2005)

That is good advice if everyone thought the same or had the same business acumen. Most contractors I know are only thinking about their own situation and and trying to gain cash flow. In the back of their mind they probably know they work too cheap etc but the alternative is not working at all and the chance of getting ahead is gone.


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## lawnsrusinc. (Nov 30, 2003)

Well wally world is hiring within this year here in WI. All managers are accepting bids but the wining bids i have seen so far are right in line with what they got paid threw USM $700.00 to push 2" at a super walmart come on!!


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