SMG’s original business plans came to fruition in 2014 through the sale of its stockpile of indium assets. Thereafter, SMG returned most of that capital to its shareholders via special dividends and stock buy backs. Today, SMG’s remaining cash and its status as a fully reporting public company provides MG Cleaners access to the public markets by being acquired by SMG which should further help to drive its growth plans organically or through possible additional acquisitions.
Acquisition strategy supported by:
- Established oilfield services company with proprietary branded products for soaps, surfactants and degreasers, including Miracle Blue™,
- Market & Markets independent research firm expects surfactants market to be almost $40 billion by 2021,
- Company management team with MG has over 50 years cumulative experience serving oilfield,
- 2016 audited financials include revenues of $1.6 million and $178 thousand net income,
- 2017 six months unaudited revenues of $1.18 million, up 68% from the six month period ending June 2016, and $70 thousand in net income,
- Significant growth potential from West Texas Permian Basin expansion,
- Broad customer base including industry leaders, and,
- Additional acquisitions sought.
Headquartered in Houston, Texas, with offices in Carthage (East Texas) and Midland (West Texas), MG Cleaners LLC (“MG”) is an oilfield services company that operates throughout Texas. MG’s focus is selling proprietary branded products including soaps, surfactants and degreasers, such as Miracle Blue™, to oilfield drilling rig contractors and oilfield companies. In addition to MG’s proprietary products, the company sells equipment and parts, and has service crews that perform repairs, maintenance and drilling rig wash services for customers such as Nabors Industries, Patterson-UTI, H&P, Cactus Drilling and others.
Matthew Flemming, the Chief Executive Officer of SMG stated, “MG Cleaners believes its growth will accelerate from the capital provided with this acquisition by increasing West Texas inventory and adding service crews, addressing current demand. Management at MG will remain in place to execute the plan incentivized for growth. MG’s focus on the drilling rig side of the business may allow the Company to add additional products that fit our current customer needs. While MG sells its branded products throughout Texas and other domestic oilfield areas, the first goal is to further grow our Permian Basin and Delaware Basin customer base with direct sales. To support our organic growth plans, the Company may also look for additional acquisitions to leverage our customer base and sales channels. However, there can be no assurances of any future acquisitions, and if completed, that they will be of value to the business.”
Ailon Grushkin, SMG’s former Chief Executive Officer who resigned in connection with the acquisition’s closing, stated, “As previously reported within the Company’s Quarterly Reports on Form 10-Q, SMG has been reviewing its strategic alternatives. SMG was pleased to identify an acquisition such as MG. We believe MG’s management team, longevity in business, branded product lines, and reference customers will be a good combination with SMG.”
The following are MG Cleaners selected financial highlights.
|Selected Financial Results|
|Six Months Ended||Year Ended|
|June 30, 2017||December 31, 2016|
|Revenues||$1.18 million||$1.60 million|
|Income from Operations||$123,371||$219,647|
1 A reconciliation table of the Adjusted EBITDA is provided below
Shareholders are requested to read the Current Report on Form 8-k filed with the SEC on or about September 19, 2017, which includes exhibits attached of MG Cleaners Audited Financial Statements for the year ended 2015 and 2016, the unaudited six month results ended June 30, 2016 and 2017, pro forma financial information, risk factors, management discussion and analysis, business description and other disclosures.
Stephen Christian, MG Cleaners President stated, “We have major expansion plans and organic growth for the Company in the Permian and Delaware basins of West Texas. Having recently hired key strategic employees from West Texas, we are now complementing our legacy sales through distributors and suppliers with a direct sales approach. Regarding industry activity levels, at present, the domestic US Rig Count, as measured by Baker Hughes, stands at 936, an increase of 131% from the May 2016 lows. MG’s competition is highly fragmented, usually owner/operator businesses that do not offer the full suite of products and services MG provides its customers. Because of favorable industry economics, approximately 49% of the rigs operating in the domestic United States are concentrated in Texas which allows more efficient distribution of the Company’s products.”
SMG issued 4,578,276 shares for the acquisition of MG, and currently its total shares outstanding, post-acquisition, are 6,672,845. There are options to purchase 375,000 shares at an average exercise price of $.72 and no warrants presently outstanding.
About SMG Indium Resources Ltd.
SMG Indium Resources Ltd. was formed under the laws of the State of Delaware on January 7, 2008. Since inception, SMG’s primary business purpose has been to stockpile indium, a specialty metal that is being increasingly used as a raw material in a wide variety of consumer electronics manufacturing applications. In December 2013, our Board of Directors authorized management to sell our entire stockpile in 2014 based on prevailing market conditions. SMG sold all of the indium held by December 31, 2014. After determining and evaluating its strategic options, the Board of Directors concluded that the acquisition (reverse acquisition) of MG Cleaners, a Texas based oilfield services company, is a good strategy and that our stockholders will have an opportunity to participate with the future oilfield and MG business. SMG’s sole operations are currently those of its wholly-owned subsidiary MG Cleaners LLC.
About MG Cleaners LLC
MG Cleaners is a growth-oriented oilfield service company focused on the drilling rig operator market segment in the domestic United States pursuant to which we offer the following products and services: (i) product sales such as Miracle Blue™, Luma Brite™ and Wicked Green™ for the oilfield industry used in drilling rig wash, oilfield cleaning, industrial cleaning, fleet and equipment cleaning; (ii) equipment sales for the oilfield industry including, industrial pressure washers; (iii) parts sales for our installed base on equipment, including water guns, hoses and fittings, and (iv) service crews for the oilfield industry related to rig wash and repairing drilling rigs on location. MG Cleaners was organized as a limited liability company in Texas in 2005. Read more at www.mgcleanersllc.com.
This press release may contain certain statements of a forward-looking nature. Such statements are made pursuant to the “forward-looking statements” and “safe harbor” provisions within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange of 1934, as amended. The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws. Such forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to them. The Company has no obligation to update such forward-looking statements. Actual results may vary significantly from these forward-looking statements.
Source: SMG Indium Resources Ltd.
Contact: Matthew Flemming, CEO 713-821-3153
1Adjusted EBITDA Reconciliation Table
The following is a reconciliation of income from continuing operations attributable to the Company as presented in accordance with United States generally accepted accounting principles (GAAP) to adjusted EBITDA.
|MG Cleaners, LLC|
|Adjusted EBITDA Reconciliation Table|
|For the six months ended June 30, 2017 and year ended December 31, 2016|
|Six Months Ended||Year Ended|
|June 30, 2017||December 31, 2016|
|Net income||$ 70,209||$ 178,015|
|One-time non-op items||97,908||–|
|EBITDA||$ 259,478||$ 332,981|