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CPS PERFORMANCE MATERIALS GROUP ACQUIRES GEO SPECIALTY CHEMICALS

BOUND BROOK, NEW JERSEY, September 3, 2019 – CPS Performance Materials (“CPS”), a diversified specialty chemicals manufacturer of performance polymers, fine chemical and chemical illumination solutions, announced today the acquisition of GEO Specialty Chemicals (“GEO”). CPS is a portfolio company of Arsenal Capital Partners (“Arsenal”). The terms of the acquisition were not disclosed.

GEO is a diverse supplier of specialty chemicals and materials to the coatings, adhesives, medical, water treatment and construction markets. The company operates in three divisions – Paints & Coatings, Water Treatment and Specialty & Construction – with leading positions in its primary chemistries from 19 production sites in the U.S. and Europe.
In the recent past, GEO has undertaken a number of expansions to increase its presence in the attractive markets of materials for contact lenses, additives for oil and gas drilling, and municipal and industrial water treatment. This builds upon GEO’s already strong position in methacrylate chemistry where it is a leading supplier to the global coatings and adhesives markets. GEO is also the largest U.S. producer of glycine, a key amino acid used in a variety of nutrition and personal care products.
Jeremy Steinfink, President and CEO of CPS, said, “GEO significantly adds to the scale of CPS and positions us well in a number of growing end markets. Our strategy will focus on investing in GEO’s businesses which complement many of CPS’s existing positions in attractive end markets such as CASE additives, specialty chemicals for pharma and medical uses, nutrition, personal care and a wide range of industrial applications. We see opportunities to expand across the portfolio where we can leverage our chemical expertise and continue to be a reliable commercial partner.”

Ken Ghazey, CEO of GEO who will join the Board of Directors of CPS, said, “CPS is a great fit for our employees and business partners. I look forward to working with Arsenal and the CPS team to continue to build the platform.”

Sal Gagliardo, an Operating Partner of Arsenal and the Chairman of CPS, commented, “The addition of GEO to CPS builds on our strategy to expand the breadth of our specialty chemicals platform with highly complementary capabilities and resources. The acquisition strengthens CPS’s technology offerings to both GEO’s and CPS’s customers and positions CPS for significant growth. We are delighted to have the GEO team join CPS.”

The Valence Group acted as financial advisor to Arsenal and CPS.

About GEO Specialty Chemicals

Founded in 1993, GEO has grown through strategic acquisition and commitment to niche markets to become a leading supplier of specialty chemicals. GEO currently manufactures over 300 products for a broad customer base of more than 1,000. GEO markets include: water treatment; coating and resin additives; specialty acrylic monomers; consumer additives; plus a broad range of dispersants, surfactants, and other additives for the concrete admixtures, synthetic rubber polymerization, gypsum processing and oil well drilling markets. Visit www.geosc.com.

About CPS Performance Materials

CPS Performance Materials is a diversified specialty chemicals manufacturer of coatings additives, pharmaceutical intermediates and API’s, chemical illumination solutions, performance polymers, and fine chemicals and intermediates. For more information visit: www.cpsperformancematerials.com.

About Arsenal Capital Partners

Arsenal is a leading private equity firm that specializes in investments in middle-market specialty industrials and healthcare companies. Since its inception in 2000, Arsenal has raised institutional equity investment funds of $5.3 billion, completed 45 platform investments, and achieved 30 realizations. Arsenal invests in industry sectors in which the firm has significant prior knowledge and experience and seeks companies typically in the range of $100 million to $500 million of initial enterprise value. The firm works with management teams to build strategically important companies with leading market positions, high growth, and high value-add. For more information, visit www.arsenalcapital.com.

Arsenal Capital Partners Completes Acquisition of Cyalume Technologies

NEW YORK, September 18, 2017 – Arsenal Capital Partners (“Arsenal”), a leading New York-based private
equity firm that invests in middle-market specialty industrials and healthcare companies, announced today
the acquisition of Cyalume Technologies (“Cyalume”), a leading specialty chemicals provider to diversified
end markets.

Cyalume produces specialty chemicals and pharmaceutical components, designs and manufactures
unique related products, and manufactures components for use in pharmaceutical, medical, commercial
and military markets. The company is headquartered in Ft. Lauderdale, FL and has manufacturing locations
in West Springfield, MA and Bound Brook, NJ as well as a subsidiary, Cyalume Technologies, SAS located
in Aix-en-Provence, France.

Zivi Nedivi, Cyalume’s President and CEO, commented, “We look forward to the partnership with Arsenal
to enhance our portfolio of technologies and operating capabilities. Cyalume participates in a number of
fragmented markets, such as specialty chemicals and pharmaceutical ingredients, and we expect to
capitalize on our position through a robust acquisition strategy.”

“We look forward to supporting the company’s organic and acquisition initiatives. Consistent with other
Arsenal investments, Cyalume will pursue a buy and build strategy in its core and adjacent markets while
continuing its focus on customers and innovation,” said Sal Gagliardo, Industry and Operations Partner at
Arsenal and Chairman of Cyalume.

Cyalume represents Arsenal’s second Specialty Industrials investment in 2017 following its acquisition of
PolyOne Corporation’s Designed Structures and Solutions business in July 2017.

About Arsenal Capital Partners
Established in 2000, Arsenal Capital Partners is a leading New York based private equity firm that
specializes in investments in middle market specialty industrials and healthcare companies. Since
inception, Arsenal has raised institutional equity investment funds of approximately $3 billion. Arsenal
invests in industry sectors in which the firm has significant prior knowledge and experience and seeks
companies typically in the range of $100 – $500 million of initial enterprise value. The firm works with
management teams to build strategically important companies with leading market positions, high growth,
and high value-add. For additional information on Arsenal Capital Partners, please visit
www.arsenalcapital.com.

Cyalume Technologies Holdings, Inc. Reports Continued Strong Improvement in Third Quarter 2015 Financial Results

FORT LAUDERDALE, FL — (Marketwired) — 11/16/15
Cyalume Technologies Holdings, Inc. (OTCQB: CYLU) (“the Company” or “Cyalume”) today reported its financial results for the third quarter ended September 30, 2015.

$ in thousands

3 Months Ended

Change

9/30/15 9/30/14
Revenues $ 10,541 $ 8,387 25.7 %
Gross profit $ 5,255 $ 3,872 35.7 %
Gross margin 49.9 % 46.2 % 370 bps
Net income (loss) $ 1,144 $ (10,273 ) NM***
Net income (loss) excluding “other non-operating income” * $ 637 $ (430 ) NM***
Adjusted EBITDA ** $ 2,280 $ 1,195 90.8 %

* A reconciliation of net income (loss) excluding “other non-operating income” to GAAP net income is contained later in this release.

** The Company views Adjusted EBITDA as an important measure in its analysis of the Company’s business because it presents a view of the Company’s performance on an ongoing basis without regard to capital structure, capital investment cycles and corresponding ages of related assets among comparable companies. A more detailed description of Adjusted EBITDA and a reconciliation to GAAP net income (loss) is contained later in this release.

*** NM – Not meaningful

Cyalume’s President & CEO, Zivi Nedivi, stated, “We are pleased to again report improved performance over the prior year, on both the top and bottom lines. Along with the increase in revenues, helped considerably by the start-up of the M1110 training ammunition contract this year, we also experienced higher product margins in other parts of our business. We expect both revenues and product margins to again improve over the prior year when we report our Q4 results.”

Dale Baker, Chief Operating Officer, noted, “Cost reductions in both production and administrative areas significantly contributed to our 90% plus increase in EBITDA year over year. While ensuring we continue to operate cost effectively we have recently added key executives to strengthen our team that we anticipate will make key contributions as we continue to expand our presence in the various Specialty Chemistry markets. These team members will continue to build on our pattern of improved performance, as well as contributing to our future innovation and new product growth plans.”

About Cyalume Technologies Holdings, Inc.

Cyalume designs and manufactures non-pyrotechnic tactical products and training solutions for the world’s militaries and law enforcement agencies, as well as for certain safety markets. Cyalume is the exclusive supplier to the U.S. and NATO-country militaries for all of their chemical light needs and operates manufacturing facilities in the U.S. and France. Through its subsidiary Cyalume Specialty Products, Cyalume also manufactures specialty chemical components for various markets.

Forward-Looking Statements

This press release includes forward-looking statements, including statements concerning anticipated future financial results. These forward-looking statements are based upon management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company and which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to: the effect of regional and global economic and industrial market conditions including our expectations concerning their impact on the markets we serve; the effect of conditions in the financial and credit markets and their impact on the Company and our customers and suppliers; the impact of the Company’s cost reduction initiatives; the Company’s ability to
execute its business plan to meet its sales, operating income, cash flow and capital expenditure guidance; the impact on the Company’s gross profit margins as a result of changes in product mix; the Company’s vulnerability to industry conditions and competition; the effect of any interruption in the Company’s supply of raw materials or a substantial increase in the price of raw materials; ongoing capital expenditures and investment in research and development; compliance with any changes in government regulations and environmental and health and safety laws; the effect on the Company’s international operations of unexpected changes in legal and regulatory requirements, export restrictions, currency controls, tariffs and other trade barriers, difficulties in staffing and managing foreign operations, political and economic instability, difficulty in accounts receivable collection and
potentially adverse tax consequences; the effect of foreign currency exchange rates as the Company’s non-U.S. sales continue to increase; reliance for a significant portion of the Company’s total revenues on a limited number of large organizations and the continuity of business relationships with major customers; the loss of key personnel; the nature and extent of military operations being conducted by customers.

Actual results and events may differ significantly from those projected in the forward-looking statements. Reference is made to Cyalume’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K, its quarterly reports on Form 10-Q, and other periodic filings, for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

The footnotes and other disclosures contained in the Company’s annual report on Form 10-K, its quarterly reports on Form 10-Q, and other periodic filings are an integral part of its financial statements and should be read in conjunction with any review of its financial statements.

Cyalume Technologies Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except shares and per share information)
Three Three Nine Nine
Months Ended Months Ended Months Ended Months Ended
September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014
Revenues $ 10,541 $ 8,387 $ 27,399 $ 24,543
Cost of revenues 5,286 4,515 14,416 14,243
Gross profit 5,255 3,872 12,983 10,300
Other expenses (income):
Sales and marketing 559 966 1,667 2,831
General and administrative 2,049 1,641 5,535 5,114
Research and development 287 432 886 1,186
Interest expense, net 840 526 2,200 1,563
Interest expense – related party 0 68 100 291
Amortization of intangible assets 238 564 715 1,557
Legal Settlement 0 0 (1,381 ) 0
Change in warrant liability fair value (12 ) 197 (7 ) (4,844 )
Impairment loss on intangible assets 0 9,100 0 9,100
Loss on extinguishment of related party debt 0 527 0 527
Other expenses, net (12 ) 12 (143 ) 363
Total other expenses, net 3,949 14,033 9,572 17,688
Income (loss) before income taxes 1,306 (10,161 ) 3,411 (7,388 )
Provision for income taxes 162 112 281 287
Net income (loss) 1,144 (10,273 ) 3,130 (7,675 )
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments 36 (246 ) (232 ) (298 )
Other comprehensive income (loss) 36 (246 ) (232 ) (298 )
Comprehensive income (loss) $ 1,180 $ (10,519 ) $ 2,898 $ (7,973 )
Net income (loss) $ 1,144 $ (10,273 ) $ 3,130 $ (7,675 )
Series A convertible preferred stock dividends (146 ) (130 ) (422 ) (375 )
Series C preferred stock dividends (67 ) (41 ) (194 ) (41 )
Series A deemed dividend 0 (2,422 ) 0 (2,422 )
Series B deemed dividend 0 (1,098 ) 0 (1,098 )
Series C deemed dividend 0 (1,401 ) 0 (1,401 )
Net income (loss) available to common stockholders – basic 931 (15,365 ) 2,514 (13,012 )
Change in fair value of warrant liability (12 ) 0 (7 ) 0
Convertible related party promissory note 0 0 45 0
Series A convertible preferred stock dividends 146 0 422 0
Net income (loss) available to common stockholders – diluted $ 1,065 $ (15,365 ) $ 2,974 $ (13,012 )
Earnings per common share:
Basic $ 0.04 $ (0.72 ) $ 0.12 $ (0.61 )
Diluted $ 0.01 $ (0.72 ) $ 0.03 $ (0.61 )
Weighted average shares to compute net earnings per common share:
Basic 21,400,244 21,400,244 21,400,244 21,258,011
Diluted 101,875,913 21,400,244 101,579,116 21,258,011
Cyalume Technologies Holdings, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except shares and per share information)
Assets September 30, 2015 December 31, 2014
Current assets:
Cash $ 1,631 $ 2,358
Accounts receivable, net of allowance for doubtful accounts of $7 and $22, respectively 4,307 3,622
Inventories, net 7,970 7,826
Income taxes refundable 213 0
Prepaid expenses and other current assets 2,034 648
Total current assets 16,155 14,454
Property, plant and equipment, net 6,858 7,120
Goodwill 7,992 7,992
Other intangible assets, net 5,908 6,591
Debt issue costs, noncurrent 854 0
Other noncurrent assets 0 18
Total assets $ 37,767 $ 36,175
Liabilities and Stockholders’ Equity
Current liabilities:
Line of credit $ 2,000 $ 2,050
Current portion of notes payable 655 5,775
Accounts payable 1,349 2,144
Accrued expenses 3,202 2,690
Deferred revenue and deferred rent 180 181
Income taxes payable 464 644
Capital lease obligation 0 7
Warrants liability 18 25
Total current liabilities 7,868 13,516
Notes payable, net of current portion 16,388 10,214
Note payable due to related parties 0 2,100
Deferred income taxes 382 430
Legal obligation 0 2,781
Other noncurrent liabilities 284 282
Total liabilities 24,922 29,323
Series C preferred stock, $0.001 par value; 1,000,000 shares authorized; 1,000 shares issued and outstanding 2,297 2,103
Series D convertible preferred stock, $0.001 par value; 1,000,000 shares authorized; 10 shares issued and outstanding 2,751 0
Series A convertible preferred stock, $0.001 par value; 1,000,000 shares authorized; 123,097 shares issued and outstanding 4,987 4,564
Stockholders’ equity:
Series B convertible preferred stock, $0.001 par value; 1,000,000 shares authorized; 1,000 shares issued and outstanding 1,401 1,401
Common stock, $0.001 par value; 150,000,000 shares authorized; 21,400,244 shares issued and outstanding 21 21
Additional paid-in capital 102,741 103,014
Accumulated deficit (100,460 ) (103,590 )
Accumulated other comprehensive loss (893 ) (661 )
Total stockholders’ equity 2,810 185
Total liabilities and stockholders’ equity $ 37,767 $ 36,175

Adjusted EBITDA (a Non-GAAP Financial Measure)

Cyalume defines Adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization, non-cash stock-based compensation, foreign currency gains or losses and certain other income or expense items. Management uses Adjusted EBITDA for establishing internal budgets, goals and certain performance bonuses. Internal financial reports, including those provided to the Board of Directors, focus on Adjusted EBITDA. Since Adjusted EBITDA is not necessarily an indicator of overall cash flows of Cyalume, management reviews capital budgets and cash flow forecasts in parallel with Adjusted EBITDA analysis. Because Adjusted EBITDA eliminates interest expense, income taxes and depreciation, amortization, non-cash stock-based compensation, foreign currency gains
or losses and one-time income or expense items, Cyalume considers this financial measure an important indicator of Cyalume’s liquidity, operational strength and performance. Investors may find Adjusted EBITDA useful as it illustrates underlying operating trends in Cyalume’s business. In addition, components of Adjusted EBITDA are a key component in the determination of Cyalume’s compliance with certain covenants under its credit agreements. Adjusted EBITDA is not a measure of financial performance under GAAP. Adjusted EBITDA should not be considered in isolation, or as a substitute for net income, cash flows, or other consolidated income or cash flow data presented in accordance with
GAAP or as a measure of our liquidity or financial condition. Because Adjusted EBITDA is not a measure determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as discussed may not be comparable to other similarly titled measures of other companies.

The following table sets forth a reconciliation of Adjusted EBITDA to net loss for the periods presented.

Cyalume Technologies Holdings, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(in thousands)
For the Three For the Three
Months Ended Months Ended
September 30, September 30,
2015 2014
Net Income (loss) $ 1,144 $ (10,273 )
Adjustments to arrive at EBITDA:
Interest expense, net 840 594
Provision for (benefit from) income taxes 162 112
Depreciation 318 309
Amortization 238 564
EBITDA 2,702 (8,694 )
Adjustments to arrive at Adjusted EBITDA:
Stock based compensation 88 51
Foreign currency loss (gain) (3 ) (5 )
Accounts Payable credits (495 ) 0
Loss on intangible asset impairment 0 9,100
Loss on related party debt extinguishment 0 527
Change in warrant liability fair value & other (12 ) 216
Adjusted EBITDA $ 2,280 $ 1,195

Net income (loss) excluding “other non-operating income” (a Non-GAAP Financial Measure)

Cyalume believes the Non-GAAP Financial Measure of Net Income (Loss) excluding “other non-operating income” to be meaningful as it serves to exclude two significant non-cash, non-operating line items which may otherwise obscure financial results from actual Company operations.

The following table sets forth a reconciliation of net income (loss) excluding “other non-operating income” to net income (loss) for the periods presented.

Cyalume Technologies Holdings, Inc.
Reconciliation of Net Income (Loss) to Net Income (Loss) excluding “other non-operating income”
(in thousands)
For the Three For the Three
Months Ended Months Ended
September 30, September 30,
2015 2014
Net Income (loss) $ 1,144 $ (10,273 )
Gain from Accounts Payable credits (495 ) 0
Loss on intangible asset impairment 0 9,100
Loss on related party debt extinguishment 0 527
Change in warrant liability fair value & other (12 ) 216
Net income (loss) excluding “other non-operating income” $ 637 $ (430 )

Contact:
Cyalume Technologies Holdings, Inc. Michael Bielonko Chief Financial Officer
(413) 858-2516
www.cyalume.com

Investor Relations Counsel:
The Equity Group Inc. Lena Cati (212) 836-9611
lcati@equityny.com
www.theequitygroup.com

Source: Cyalume Technologies Holdings, Inc.

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