FCG Acquisitions Inc.

Overview Key strengths Key risks Highly engineered product offering. Negligible market share within the fragmented and highly competitive industrial distribution industry. Value-add through technical knowledge and service capabilities. Relatively narrow focus on flow control and automation space. Persistent high leverage resulting from acquisition-based growth strategy. The company?s end markets are performing well, as life sciences and automation markets continue to grow, and industrial end markets have rebounded from pandemic-related weakness. Demand remains solid. However, industry-wide supply chain constraints are delaying some shipments from suppliers, and the company?s backlog has grown due to higher demand and extended supplier lead times. While the company is experiencing product cost inflation, FCG can immediately pass on rising product costs to customers through price increases,

...We expect continued good operating performance and above-average EBITDA margins over the next 12 months, supported by a broad-based end market recovery and the company's ongoing pricing initiatives. The company's end markets are performing well, as life sciences and automation markets continue to grow, and industrial end markets have rebounded from pandemic-related weakness. Demand remains solid. However, industry-wide supply chain constraints are delaying some shipments from suppliers, and the company's backlog has grown due to higher demand and extended supplier lead times. While the company is experiencing product cost inflation, FCG can immediately pass on rising product costs to customers through price increases, which should protect its gross margin. In addition, the company is starting to make progress on its initiative to increase pricing across targeted stock- keeping units (SKUs). However, we expect selling, general and administrative (SG&A) expenses to increase as labor costs...

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