Select Interiors Group Streamlined
ATLANTA – Select Interiors Concepts Inc. (SIC) effectively halved itself on June 30, selling its Residential Design Services (RDS) segment for $215 million to a subsidiary of the Blackstone investment firm.
SIC retains its Architectural Surfaces Group (ASG), which includes more than 20 stone distribution and fabrication facilities across the United States.
The deal should close this summer, subject to closing conditions and regulatory approval. SIC will use the proceeds to repay all its outstanding indebtedness and capital-lease obligations.
“When I joined SIC last June, I promised that my highest priority would be to focus on building shareholder value and this transaction is a significant accomplishment towards that objective,” said Bill Varner, SIC’s CEO. “It unlocks significant value for SIC shareholders and provides us with a clean balance sheet to focus our management on further building shareholder value with our remaining high-margin, fast growing ASG segment.”
The sale ends a seven-year effort that eventually merged RDS, an interior-design service deeply rooted in California, with the assets of fabrication-based ASG.
Both companies operated under Dallas-based private equity firm Trive Capital after it financed the buyouts of RDS in 2014 and ASG in 2015. ASG originally included the assets of Architectural Granite and Marble LLC of Spicewood, Texas, and added buyouts of, among other companies, Modul Marble & Granite in 2016 and Pental Granite and Marble in early 2017.
SIC brought the two companies together in November 2017 in a publicly traded company and initially reported steady financial growth, although a larger part came from acquiring more companies than from regular organic growth. From 2017 through the end of last year, the company only reported a positive net profit in one year (2019).
At least one major stockholder – ADW Capital Partners — questioned its build-by-buying strategy and company-executive performance early in 2019. The company announced new strategic efforts, but SIC stock took a major fall from more than $13 per share in September 2019 to the $9 level at the start of 2020.
The bottom literally fell out as the coronavirus pandemic spread and chilled the U.S. economy, with SIC share price plummeting to $1.67 in early April 2020. Tyrone Johnson, SIC’s founding CEO, resigned in June 2020 with a severance package valued at approximately $1.4 million, and was replaced by Varner, the former CEO of United Subcontractors Inc.
SIC reported a net revenue of $137.7 million for this year’s first quarter, with RDS accounting for 58.3% of the total. However, in operating income, ASG recorded $5.2 million, while RDS noted only $73,000.
he company showed a total net loss of $1.8 million for the first three months of 2021.
Much of the revenue from the RDS sale will cover long-term borrowing and financing. SIC reported $134.3 million in long-term debt and nearly $4.9 million in long-term lease obligations.
The streamlined SIC will operate 21 locations in Arizona, California, Colorado, Iowa, Maryland, Massachusetts, Missouri, North Carolina, Oklahoma, Tennessee and Texas. The company also stated in its first-quarter 2021 earnings presentation that it planned an expansion into Florida in the second half of this year.
ILG is a provider of interior design, supply chain and installation management solutions to several of the nation’s largest single-family homebuilders. Utilizing technology, data, design expertise and supplier relationships to help enable buyers to complete home purchases. ILG operates across 37 states and helped enable the completion of nearly 100,000 homes per year.
Private-equity investment firm Blackstone acquired ILG this February for approximately $1.6 billion.
Select Interior Concepts is traded on the NASDAQ under the ticker symbol SIC.
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