Calabasas Company Takes Growth Plan on Trial Run

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National Technical Systems Inc.’s recent acquisition of an Illinois testing company is a clear indication of how it wants to grow: by scooping up firms that expand its geographic reach and customer base.

The Calabasas company, which does engineering and testing for aerospace, defense, telecommunications, automotive and high-tech companies, acquired Rockford, Ill.-based Ingenium Testing for $12.5 million in cash July 21.

Ingenium’s business is concentrated in the aerospace, heavy industry and automotive markets.

NTS acquired all of the business and assets of Ingenium and two affiliated companies. The acquisition expands NTS’ presence to the Midwest.

“It’s a good strategic acquisition,” said Michael Lowell, a managing director at West L.A.’s B. Riley & Co., which helped finance the deal. “Through this acquisition, NTS makes its presence in the Chicago region and also they can add more customers.”

NTS can use Ingenium to offer more services to its clients, said Erik Choy, vice president of Costa Mesa’s McGladrey Capital Markets LLC. Choy was a financial adviser on the deal.

“Thanks to the acquisition of Ingenium, NTS can further augment … testing capabilities and increase its access to more customers,” he said.

NTS anticipates the acquisition will contribute at least $3 million in earnings before interest, taxes, depreciation and amortization in the first full fiscal year after the acquisition.

Ingenium’s work force and operations will remain in Rockford; NTS will operate the company as part of NTS Technical Systems.

Growth and expansion have been goals of NTS for five years, but the company has just begun to put its plan into action.

Last November, the company signed an amended credit agreement that included $20 million for acquisitions. The following month, it bought Mechatronic Solutions in Albuquerque, N.M. Mechatronic is a consultant to aerospace and defense companies.

Planning for other acquisitions, NTS completed a $14 million private placement of debt and equity with Greenwich, Conn.-based Mill Road Capital in June. Most of that money covered the cost of the Ingenium deal, which sets the stage for others.

“The acquisition of Ingenium is a significant step in our strategic plan to grow NTS into a larger, more diverse and more comprehensive provider of testing and engineering services,” said William C. McGinnis, president and chief executive of NTS. “We will continue to seek additional opportunities.”

Revenue has almost doubled since 2005, from $73.9 million to $144 million in fiscal 2011.

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