LED lighting manufacturer Revolution Lighting Technologies Inc., Stamford, Conn., has acquired Energy Source, LLC, Providence, R.I., a turnkey provider of LED lighting based energy savings projects within the commercial, industrial, hospitality, retail, education and municipal sectors.
The addition of an energy service company (ESCO) to Revolution Lighting’s offering combines Revolution’s lighting technology with Energy Source’s preferred partnership position among utility companies across the Northeast, including National Grid and Eversource (formerly NStar), Revolution Lighting said in a release. “These partnerships, along with its customer base — including Citizens Bank, CVS Caremark and International Packaging — that covers facilities throughout the United States has enabled Energy Source to grow its revenues at a CAGR of over 45% since 2011,” the release said.
Energy Source is expected to produce earnings (EBITDA) of $4.5 million on revenues of $30 million for the 2015 full year. Under the terms of the agreement, Revolution paid $30 million for 100% of the outstanding ownership interests of Energy Source, which comprises $10 million in cash, $10 million in RVLT common stock (approximately 8.8 million shares) and $10 million in the form of a promissory note (due on the one year anniversary of the acquisition with an annual interest rate of 5%) together with a three-year earnout based on the adjusted EBITDA of Energy Source. The $10 million upfront cash portion has been financed through the issuance of RVLT common shares (approximately 8.7 million shares) to a non-affiliated investor. Revolution said the transaction has been structured so that the entire purchase price will be tax deductible for federal and state income tax purposes.
Energy Source leadership including Mike Lemoi, president, and Ron Sliney, vice president, will continue in their current positions at Energy Source and take on active roles within Revolution Lighting.
“We are very happy to officially join the Revolution Lighting team as we share a similar full-service approach to develop and implement cost-effective, energy-efficient solutions for our growing list of clients,” said Lemoi in the release. “Revolution Lighting’s LED product line and network platform combined with our comprehensive offering of LED based energy programs will allow Energy Source the ability to offer turn-key installations with superior LED products.”
The vision going forward includes helping Revolution distributors provide the same kind of turnkey services Energy Source has developed, said Sliney. “RVLT distributor partners will now also have the opportunity to offer full turn-key energy services to their existing customer base,” he said. “We see this as a real win for all parties. Energy Source will have the ability to bring a turnkey service to RVLT distributors helping them to increase LED product sales within their markets. This also will allow Energy Source to drive core RVLT products and services throughout the country and into many different market segments.”