Revolution Lighting Technologies, Inc. ("Revolution Lighting" or the "Company"), a leader in advanced LED lighting technology solutions, today announced that it has entered a purchase agreement to acquire TNT Energy, LLC, a comprehensive "full-turnkey" services provider, addressing energy savings projects within the commercial, industrial, hospitality, retail, education and municipal sectors. TNT Energy's headquarters are located in Raynham, Massachusetts with additional offices located in Westfield, Massachusetts. The closing of the transaction is subject to customary closing conditions and is expected to close on or prior to May 6, 2016.
The acquisition of TNT Energy expands the Company's footprint within key lighting retrofit markets in the northeast, delivering comprehensive energy savings projects. The acquisition is expected to be accretive to earnings per share in the second half of 2016. The Company believes TNT Energy provides a direct complimentary fit with the Company's division, Energy Source, based in Providence, RI, combining resources, while utilizing more Revolution Lighting product to drive long term goals to successfully expand Revolution Lighting's capabilities to other utilities and regions throughout the U.S.
In addition to its broad existing customer base, TNT Energy is a contract vendor for the Small C&I Business Programs of three northeast utility companies with a defined territory of 120 municipalities throughout Massachusetts. As a contract vendor, TNT Energy identifies and supports small business customers within commercial and industrial sectors, offering cost-effective energy efficiency turnkey solutions, addressing lighting and lighting controls.
Project incentives play a key role within the Small C&I Business Programs, contributing up to 70% of the qualified project costs as incentives to significantly increase an energy efficiency project's return on investment, offering attractive paybacks in as low as one year. Incentives for the Small C&I Business Programs are funded through the recent approval of the Massachusetts Energy Efficiency plan (2016 - 2018) by the Massachusetts Department of Public Utilities (DPU), known as "Mass Save," securing $2.4B in funding for energy efficiency programs.
TNT Energy's revenue and adjusted EBITDA were approximately $25 million and $2.3 million, respectively, for the 2015 full year. In addition to the immediate accretive effect of TNT Energy's existing business, Revolution Lighting is expected to provide its LED solutions, including linear tubes, in order to meet TNT Energy's customer demand for high quality LED products and solutions.
"We are excited to welcome TNT Energy as the latest addition to our company, expanding our comprehensive "full turnkey" service capabilities throughout Massachusetts and the northeast to drive future growth and incremental revenue," said Robert V. LaPenta, CEO and Chairman of Revolution Lighting. "TNT's extensive market experience in lighting and energy management solutions will allow Revolution Lighting to continue to provide leading services to customers, partnering to maximize project benefits including energy savings, environmental and individual well-being."
Under the terms of the purchase agreement, Revolution Lighting will pay a total purchase price of $10 million for 100 percent of the outstanding membership interests of TNT Energy: comprised of $8 million in cash, and $2 million in the form of promissory notes ($1 million due each on the respective twelve (12) month and eighteen (18) month anniversaries, with an annual interest rate of 5%) together with a 2 year earn-out based on revenue and Adjusted EBITDA of TNT Energy.
A significant portion of the purchase price will be amortizable and deductible for federal and state income taxes.
"We are pleased to join Revolution Lighting, utilizing our extensive experience within retrofit and energy management solutions to deliver successful lighting and energy efficiency retrofit solutions," said Tim Blanchard, Founder, TNT Energy. "As a Small Business C&I Program contract vendor for three northeast utilities, we will continue to deliver cost effective retrofit opportunities, combined with offering Revolution Lighting's extensive line of industry leading LED products, to drive high-impact sales."