DCC Regulatory News (DCC)

25 March 2020

DCC Healthcare announces the acquisition of Amerilab Technologies

DCC plc, the leading international sales, marketing and support services group, announces that DCC Health & Beauty Solutions has acquired Amerilab Technologies, Inc ('Amerilab'), a specialist provider of contract manufacturing and related services in effervescent nutritional products, based near Minneapolis, in Plymouth, Minnesota. The acquisition of Amerilab is DCC Health & Beauty Solutions' third acquisition in the US market, following the acquisition of Ion Labs in November 2019 and Elite One Source in February 2018. It is a further significant step in the execution of the strategy to build a business of scale in the world's largest health supplements and nutritional products market.

Amerilab specialises in the manufacture of effervescent nutritional products in powder and tablet formats, which are packed in stickpacks, sachets and tubes. Its service offering includes product development, formulation, manufacturing, packaging and regulatory services. Amerilab operates from a large, well-invested facility, which complies with FDA cGMP (current Good Manufacturing Practices) and is certified by leading international regulatory bodies, NSF and the TGA (Australia's Therapeutic Goods Association). In recent years Amerilab has invested in high-speed, automated equipment, enhancing its operational efficiency and increasing manufacturing capacity. Amerilab's customer base consists of high-quality consumer healthcare companies, specialty brand owners and direct sales organisations. Effervescents are a higher growth product segment within the US nutritional market, with attractive demographic characteristics and environmental credentials. Amerilab's complementary effervescent capability will create opportunities for cross-selling and other synergies with DCC Health & Beauty Solutions. 

The business, which employs 125 people and has revenues of approximately $68 million, will continue to be led by its experienced management team. DCC is acquiring Amerilab based on an enterprise value of approximately $85 million (£72 million) and the business is expected to generate returns consistent with the existing Health & Beauty business within two years. The majority of the consideration was paid in cash on completion from DCC's extensive resources, with the balance representing contingent and earn-out related consideration.

An integral part of DCC's strategy since foundation has been the maintenance of a strong and liquid balance sheet. DCC will shortly close the financial year ending 31 March 2020 with a very modest level of net debt, substantial cash resources in excess of £1.5 billion, a long-term debt profile with an average term of approximately six years and committed debt facilities of £400 million. This significant financial strength, alongside DCC's diversified, robust business model, leaves DCC very well placed to continue its growth and development into the future.

Donal Murphy, Chief Executive of DCC plc, said today:

"DCC Health & Beauty Solutions provides high-quality services to leading health and beauty brand owners and direct sales organisations. The acquisition of Amerilab significantly enhances our existing presence in the US market. Amerilab will work closely with Ion, Elite One Source and the businesses in Europe to cross-sell the full breadth of DCC Health & Beauty Solutions' comprehensive service offering.

The US is the world's largest health supplements and nutritional products market. It is also an innovative, high-growth market, with a fragmented contract manufacturing base. We continue to be excited by the significant opportunities for organic and acquisitive growth in this market. We believe this market will benefit from current events as consumers are likely to be increasingly conscious of their health and wellbeing.

In just two years, DCC has built a substantial presence in North America, across three of our four divisions, representing approximately 18% of the Group's capital employed and employing 1,800 people. Notwithstanding this significant growth in the region, our market shares remain low and DCC has created ideal platforms for further growth and development in these growing, fragmented, markets."

For reference:

Donal Murphy, Chief Executive

Fergal O'Dwyer, Chief Financial Officer

Conor Costigan, Managing Director, DCC Healthcare

Telephone: +353 1 2799400

Email: investorrelations@dcc.ie

Web: www.dcc.ie

Powerscourt (Media)

Lisa Kavanagh / Victoria Palmer-Moore

Telephone: +44 20 7250 1446

Email: DCC@powerscourt-group.com

About DCC plc

DCC is a leading international sales, marketing and support services group with a clear focus on performance and growth. It operates through four divisions: LPG, Retail & Oil, Technology and Healthcare.

DCC is an ambitious and entrepreneurial business operating in 20 countries, supplying products and services used by millions of people every day. Building strong routes to market, driving for results, focusing on cash conversion and generating superior sustainable returns on capital employed enable the Group to reinvest in its business, creating value for its stakeholders.

Headquartered in Dublin, employing approximately 13,000 people, DCC's four divisions are:

· DCC LPG - a leading LPG sales and marketing business with operations in Europe, the US and Asia and a developing business in the retailing of natural gas and electricity;

· DCC Retail & Oil - a leader in the sales, marketing and retailing of transport fuels and commercial fuels, heating oils and related products and services in Europe;

· DCC Technology - a leading route-to-market and supply chain partner for global technology brands and customers; and

· DCC Healthcare - a leading healthcare business, providing products and services to healthcare providers and health and beauty brand owners.

DCC plc is listed on the London Stock Exchange and is a constituent of the FTSE 100. In its financial year ended 31 March 2019, DCC generated revenue of £15.2 billion and operating profit of £460 million.

DCC has an excellent record, delivering compound annual growth of 14% in operating profit and generating an average return on capital employed of approximately 19% over 25 years as a public company.

About DCC Healthcare

DCC Healthcare is a leading healthcare business, providing products and services to healthcare providers and health and beauty brand owners. DCC Healthcare operates through two businesses, DCC Vital and DCC Health & Beauty Solutions. DCC Vital is involved in sales, marketing and distribution of medical products to healthcare providers in the UK, Ireland and international markets; and agency distribution and related services in Ireland. DCC Health & Beauty Solutions builds long-term partnerships with international brand owners, providing specialist services including product development, formulation, manufacturing and packaging in Europe and the US.