Good morning, ladies and gentlemen, and welcome to the conference call to discuss the combination of Essendant and S. P. Richards. My name is Andrea, and I'll be your conference coordinator for today. Your hosts are Mr.
Rick Phillips, Ascendant President and Chief Executive Officer Mr. Paul Donahue, Genuine Parts Company President and Chief Executive Officer and Ms. Janet Zylenko, Ascendant Chief Financial Officer. They are also joined by Ms. Carol Yancey, Genuine Parts Company, Chief Financial Officer and Mr.
Rick Toppin, S. P. Richard's President and Chief Executive Officer, who will be available for the Q and A portion of today's call. During the call, all participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions.
Please note this event is being recorded. It is being webcast live on our website and a replay will be made available after the call. Before we begin, the management teams of Ascendant and GPC have asked me to remind you that information shared on this call may include forward looking statements. Forward looking statements involve significant risks and uncertainties and events or results could differ materially from those discussed today. Information concerning these risks and the factors that could cause actual results to differ from the forward looking statements.
Information we provide today can be found in the company's Form 10 ks and Form 10 Q filings with the Securities and Exchange Commission, which are available at sec.gov. The slide presentation and other information relating to this call can be found on the Investors section of the company's websites at investors. Ascendant.com and genuineparts. Investorroom.com. I would now like to turn the call over to Mr.
Rick Phillips. Please go ahead, sir.
Thank you, Andrea, and thank you all for joining us on short notice this morning. Janet and I are pleased to be here with Paul, Carol and Rick to talk about the combination of Ascendant and GPC's SP Richards business. We are excited about this combination and the opportunities it creates to better serve our customers, support our suppliers, partners and employees and deliver value to Ascendant shareholders. I'll start with some overall comments about why we are so enthusiastic about what we are creating. Then Paul will share his perspective on the benefits of the transaction to GPC and SP Richards and Janet will cover the financial implications.
We will leave time at the end to take your questions. Ascendant has been hard at work evolving our business to support our customers and address the rapidly changing landscape facing our industry. The combination with S. P. Richards provides us with a tremendous opportunity to accelerate the initiatives already underway through the execution of our strategic drivers and to create a fundamentally stronger and more competitive company.
As we continue our work, I'm excited to lead the combined company as the CEO. Janet Zelinka will remain CFO and Harry Decelli, Ascendant's President of Office and Facilities will also remain in
a senior leadership role going forward.
We will be joined by SP combination
of
The combination of Ascendant and SP Richards creates a stronger, more competitive national player in business products, well placed to capitalize on expanded set of opportunities with a stronger financial profile and a compelling value proposition. By leveraging our complementary strengths, greater scale and expanded service capabilities, we will help our customers compete by delivering 4 key benefits. 1st, with greater resources to support and partner with the independent dealer channel and other customers, we will be better positioned to invest to drive enhanced value for customers, consumers and shareholders alike. 2nd, we will optimize our assortment of branded and private label products across a broad set of categories. 3rd, we will enhance our capabilities to develop and offer innovative solutions such as value added marketing and analytics to help drive demand.
And 4th, we will create a consolidated distribution network with greater efficiencies throughout the entire supply chain. As we have discussed in the past, the independent dealer channel has been under pressure over the last few years in an increasingly crowded marketplace with Amazon and other e commerce players, distributors, club and big box stores and national resellers. The independent dealer channel relies on a strong wholesale channel to make investments and provide capabilities and infrastructure. This combination of our customer centric companies creates a stronger partner to support those dealers and help them to be more competitive with all the other options available to customers in the industry. Turning to Slide 6 of the investor presentation.
The combination will also improve our ability to deliver additional value for both company shareholders as we are creating a company that will have greater scale and an improved financial profile through unlocking significant cost synergies and increased cash flow. Janet will provide some more detail in a moment, but I want to cover some of the financial highlights. Our 2017 pro form a estimates show a combined company with approximately $7,000,000,000 in net sales and approximately 300,000,000 in adjusted EBITDA, including more than $75,000,000 in run rate cost synergies we expect to achieve. In addition to the cost synergies, we also expect to realize over $100,000,000 in working capital improvements. Beyond greater scale, profitability and cash flow, we will also have a stronger, more flexible balance sheet and lower debt to EBITDA leverage.
This combination of compelling strategic and financial benefits will enable shareholders of the combined company, which will be owned 49% by current Ascendant holders and 51% by current GPC holders to realize significant value going forward. For those of you who are unfamiliar with Ascendant, allow me to give a brief overview of the business, which we summarize on Slide 7. We are a leading distributor of business products, including janitorial, food service and breakroom supplies, office products, technology products, industrial supplies, automotive products and office furniture. Last year, we had $5,000,000,000 in sales. We distribute over 170,000 products through more than 29,000 resellers and reach millions of customers through a nationwide network of 66 distribution centers.
In the past, Ascendant has grown by acquiring companies that expanded our product portfolio and supply chain. We align well with S. P. Richards, which will allow the combined company to capture the significant cost synergies I just highlighted while providing enhanced value to our customers. I'm now going to turn the call over to Paul Donahue, who will give you an overview of the SP Richards business and some perspective on what this transaction means for GPC shareholders.
And then I'll come back to dig deeper into the value proposition. Paul?
Thank you, Rick, and good morning, everyone. I'd first like to say how excited we are about this announcement and the strategic and financial benefits for the future combined company and GPP shareholders. Before highlighting these benefits, we'd like to provide an overview of our S. P. Richards business as outlined in the right hand column of Slide 7 of the slide deck.
S. P. Richards represents GPC's Business Products Group and is the leading business products wholesaler in North America with a more than 160 year history. S. P.
Richards equips reseller customers with an expansive offering of general business products, including everyday essentials like copy paper, office and printer supplies as well as office furniture, business technology products and facilities, break room and safety supplies. Virtually everything they need to become the one stop shop for all of their end user customers' needs. S. P. Richards also provides a comprehensive offering of value added program and services to help our customers succeed in today's competitive business environment.
The business distributes more than 98,000 items to more than 9,700 resellers and distributors throughout the U. S. And Canada from a network of 54 distribution centers. Our vast and growing product offering includes major national brands as well as a variety of proprietary brands. Last year, S.
B. Richards delivered approximately $2,000,000,000 in net sales. Turning now to Slide 8, this transaction is a result of a comprehensive process to maximize the value of SP Richards and represents a win win for GPC shareholders. Over the last several quarters, we have noted in our earnings calls that GPC has been evaluating all options and carefully considering the go forward strategy for our business products group. Ultimately, our Board determined that this transaction represents the greatest opportunity for value creation for our investors both as continuing GPC shareholders and future shareholders of the combined company.
As separate companies, both S. B. Richards merged with Ascendant as well as GPC will be better positioned to effectively allocate resources to achieve our long term objectives. With respect to the benefits provided by combining S. P.
Richards and Ascendant, as Rick mentioned, current GPC shareholders will receive newly issued shares representing 51% of the new stronger company and will have the opportunity to participate in the upside potential through the significant value proposition of the combined businesses. As Rick discussed, together, SB Richards and Ascendant will be better equipped to succeed in a dynamic and changing marketplace, enhance our scale, our depth of our product offering and customer service while executing a clear strategy. The combined company will be led by a best in class executive team from both S. P. Richard and Ascendant, including S.
P. Richard's President and CEO, Rick Toppin. We also will have significant representation on the Board with 4 directors chosen by GPC and 4 to be mutually appointed by both GPC and Ascendant. In addition to these strategic benefits and to which Rick and Janet will speak in greater detail in just a few minutes, we expect to generate significant synergies during the integration process that will provide even greater value for shareholders of the combined company following close. Importantly, this transaction is consistent with GPC's long term portfolio enhancement strategy.
By separating our business products group, we'll be able to increase our focus on GPC's larger core global automotive and industrial businesses. This strategy is further supported by our international expansion of both of these core businesses in 2017 with the acquisition of Alliance Automotive Group, the 2nd largest automotive parts distributor in Europe and our investment in Anenco Group, a leading industrial distributor in Australia. Among our many initiatives to grow these core businesses, we will continue to expand our global footprint with additional acquisitions in the future. The one time cash payments of approximately $347,000,000 that GPC will receive upon the close of the transaction will also be effectively utilized as part of our disciplined capital allocation strategy, which is focused on our dividend, reinvestment in our businesses, share repurchase and strategic acquisitions to drive substantial value for GPT shareholders. We have employed this capital allocation strategy for many years, including 62 consecutive years of increasing our dividend, and we expect this winning strategy to continue.
We have tremendous respect for Ascendant and believe the combination with S. P. Richard's strong diversified business and the talented team will bring together 2 highly complementary cultures with a shared commitment to serving customers. We look forward to supporting the S. P.
Richards and Ascendant teams in facilitating a seamless integration. Thank you. And I'll now turn the call back over to Rick to walk through the strategic drivers in more detail.
Thanks, Paul. Taking a step back and viewing the combination in terms of the broader market, as I alluded to earlier, the landscape has shifted considerably over the last few years. Slide 9 highlights just some of the range of participants, which include larger, more diversified companies that have increased their offerings of business products in what has become a truly crowded marketplace. At Ascendant, our actions are focused on how we can best support our customers as the marketplace evolves. We are confident that together with SP Richards, we will be better positioned to offer a differentiated and enhanced value proposition for our customers and advance our strategic goals.
Those of you who are familiar with Ascendant have likely heard me talk about our focus on 3 key strategic drivers. Number 1, improve efficiency across the distribution network and reduce the cost base. Number 2, drive sales performance in key channels where we are well positioned to grow. And number 3, enhance supplier partnerships that leverage Ascendant's network and capabilities. We believe this transaction supports and aligns with each of these drivers.
On the efficiency front, this combination will create meaningful synergies and working capital improvements and enable us to drive significant efficiencies across the entire supply chain. We previously shared that we expect to achieve more than $50,000,000 of cost savings by 2020 as we execute our plans. It's important to note that the $75,000,000 plus in cost synergies are incremental to those savings. In terms of sales performance, we believe this combination will support sales growth as our combined team will have access to a broader optimized portfolio of products as well as additional capabilities, resources and value added services to enable our customer partners. We also believe that our supplier partnerships will be enhanced through this combination.
We will continue to focus our merchandising excellence efforts, including our preferred supplier program, and we'll be able to offer suppliers expanded customer reach and the improved operational efficiency of dealing with 1 stronger partner. We also intend to work closely with suppliers to help strengthen and sustain the independent channel. Together, we have meaningful opportunities to accelerate these strategic initiatives and create significant long term value for our customers and shareholders alike. I will now turn the call over to Janet to provide an overview of the transaction.
Thank you, Rick. Let me echo your comments regarding how excited we are about the opportunities this transaction creates. Turning to Slide 11, I'll begin my comments by providing more detail on the transaction, which will be structured as what is known as Reverse Morris Trust, where GPC will spin off SP Richards into a standalone entity and immediately afterward, Ascendant will merge with SP Richards, with SP Richards becoming a wholly owned subsidiary of Ascendant. As Paul mentioned, GPC will receive one time cash payments of approximately $347,000,000 in connection with the spin off, subject to adjustments upon closing. That transaction implies a valuation of S.
P. Richards of approximately $680,000,000 equal to the one time cash payments plus the current value of Ascendant shares to be issued at closing. Upon closing, GPC shareholders will own approximately 51% and Ascendant shareholders will own approximately 49% of the combined company. The transaction is expected to be tax free to both Ascendant and GPC shareholders. The combined company will retain the Ascendant name and maintain the Ascendant stock symbol on the NASDAQ and we'll maintain headquarters in Deerfield, Illinois and Atlanta, Georgia.
Rick highlighted the senior leaders of the combined company. Beyond that team, we are committed to bringing together the best talent from both organizations. As a management team, we will benefit from the guidance of a Board that will include 4 Ascendant Directors, 4 GPC chosen Directors and 4 Directors who will be mutually agreed upon by Ascendant and GPC. The transaction is subject to Ascendant's shareholder approval and other customary regulatory approvals and closing conditions, and we expect it will close before the end of 2018. Turning to Slide 12, let me provide more color on the $75,000,000 plus in annual run rate cost synergies and $100,000,000 in working capital improvements we expect to realize through the transaction.
We expect to realize approximately 90% of the cost synergies within 2 years post closing, primarily across 3 key areas: sourcing, supply chain and SG and A. We have clearly identified a path to realizing those very achievable targets and we'll be appointing an integration team with leaders from both businesses to ensure we seamlessly reach our objective. I want to reiterate that these savings are in excess of the $50,000,000 in cost savings we expect to achieve by 2020 that we discussed in our last Ascendant earnings call. We will provide an update on the restructuring efforts associated with this cost savings in Ascendant's earnings call on April 26. As Rick mentioned earlier, the 2017 pro form a revenues for the combined company would have been approximately $7,000,000,000 in sales as compared to $5,000,000,000 for Ascendant on a standalone basis.
2017 pro form a adjusted EBITDA, including synergies, would have been approximately $300,000,000 compared to $121,000,000 for Ascendant
on a standalone basis. And 2017 pro form
a adjusted EBITDA non GAAP operating income of $1,000,000 for Ascendant Turning to the balance sheet on a pro form a combined basis, excluding synergies, net leverage was 3.9x at the end of 2017, which was in line with Ascendant's standalone net leverage. Including run rate synergies, pro form a net leverage is 2.9 times, well below our current leverage level, which will provide us with balance sheet flexibility to invest in the business and continue to return capital to Ascendant shareholders to our quarterly dividend. From a financing perspective, we have obtained a committed $1,400,000,000 asset based financing facility to fund the one time cash payments to GPC and to refinance Ascendant's existing debt in connection with the transaction. We will have strong balance sheet flexibility and pro form a liquidity of more than $400,000,000 So as you can see, this transaction creates a stronger company with significant scale and an improved margin profile that will generate superior cash flow. I will now return the call to Rick to close.
Thanks, Janet. Before we open it up to Q and A, I just want to reiterate our excitement around this transaction. We believe this is a tremendous step forward for our 2 businesses and an opportunity to create significant value for all our major stakeholders. Customers will be able to do business with a larger, more competitive company with a streamlined distribution network, optimized product assortment and enhanced service capabilities and the ability to invest in a channel to promote further growth. Suppliers will appreciate the efficiency of partnering with 1 larger organization with expanded customer reach, a broader network and enhanced capabilities.
Employees of the combined company will benefit from our best of both approach to integration and building out the leadership team and will surely appreciate the mutual core values of the two businesses and the opportunities to advance as part of a stronger larger company. By bringing together the leadership and operational expertise from Ascendant and SP Richards and combining the best elements of each company's operations, we will create an even stronger company, well positioned to capitalize on value creating opportunities across products, solutions and our distribution network. Shareholders will benefit from ownership in a stronger and more competitive company with a more diverse product channel and customer mix and an enhanced financial profile with substantial cost and working capital synergy opportunities. Importantly, this combination will allow us to harness each organization's unique and complementary strengths and brings together 2 businesses with a shared customer centric approach. And finally, from a financial perspective, our combined organization will have a stronger profile, including a more flexible balance sheet, which will enhance our ability to deliver increased value for both customers and shareholders.
Thank you again for joining us today. We're now happy to take any initial questions you may have. Operator?
Thank you. We will now begin the question and answer session. Our first question comes from Chris Horvers of JPMorgan. Please go ahead.
Thanks. Good morning and congratulations everybody. So I really had just two questions from our perspective. First, do you anticipate seeing any regulatory issues with getting this transaction approved given the B2B focus here as well as on the independent side? And then the close date by the end of this year, is that just a conservative estimate and reflect or is it reflective of any potential regulatory concerns?
Thank you for the question. This is Rick Phillips. I can respond to that. To your point, this transaction is subject to customary regulatory and also ascendant shareholder approval. I'd say we've been well advised in planning this transaction and we're quite confident in the complementary nature of this combination and the benefits that it will provide to customers and really to the overall marketplace.
So we're confident that we will receive the necessary approvals and be able to close by year end.
And Chris, this is Paul. I would totally concur with Rick's comments. I would also add you had asked about a close date and whether or not that's a conservative date. As of today, that is a bit conservative, we think, but we are very hopeful that we will have this closed and optimistic we'll have this closed by end of year.
And just one follow-up, are you in terms of being you mentioned being advised about the deal being able to be approved. Is there a way that you can was there any discussions with regulators to get some initial thoughts on their side?
We did not speak with regulators. We did obviously leverage our counsel and a broader set of advisors around transactions like this, and that's what's the source of our confidence.
Understood. Thanks and congratulations and best of luck.
Thank you, Chris.
Our next question comes from Bret Jordan of Jefferies. Please go ahead.
Hey, good morning, guys.
Good morning, Bret.
Hey, Paul, is there a thought about sort of continuing the process and taking a look at Electrical 2 as sort of non core? Or is this sort of where we stop? And then I guess on the proceeds, you talked about dividend and acquisition and debt repayment. Could you sort of handicap where you see the greatest focus of putting the money?
So I'll tackle your first question, Brett, as it relates to our electrical business and EIS. If you recall at our last conference call, we announced that we had moved EIS, the EIS business up under our industrial business, under Motion Industries, where it fits quite well. We have an ongoing electrical core business inside of Motion today. So the EIS business fits quite nicely under Motion and is now part of our overall industrial offering. So we think that's going to work quite well and we are well down the path of driving some synergy savings as a part of that move.
The second question, Brett, could you repeat the second question, please?
Well, you talked about dividends or acquisition or debt reduction for the $347,000,000 I guess. Is there a priority there where you sort of look to spend it first?
So right now, and this is Carol. I would mention, Brett, that we're going to stay pretty consistent with our disciplined capital allocation strategy and that's returning capital to our shareholders through our dividend, share repurchase, investing in our businesses through CapEx and then M and A. And Paul mentioned in his comments about our recent expansion of our global footprint, both in Europe as well as Australia with an ENCO. So I think you're going to see us use that as part of our disciplined capital allocation. And we did have an enhanced dividend.
We've enhanced our CapEx and certainly we've been more aggressive in the M and A. So not too different than what you've seen in the past.
Okay, great. Thank you.
Thank you, Brett.
Our next question comes from Scot Ciccarelli of RBC Capital Markets. Please go ahead.
Good morning, Scot Ciccarelli. Couple of clarifications, if I could. The $300,000,000 of adjusted EBITDA, I'm assuming that's not a 1st year number because that includes a full $75,000,000 of assumed synergies, which is actually going to be captured a few years down the road, correct?
Yes. This that was based this is Janet. Good morning. That was based on if you were trying to create a pro form a based on our 2017 results to give an example of what that would look like on a 2017 basis. But you are correct, that $75,000,000 is down the road.
However, we expect to have 90% of that captured by the 2nd year.
Okay. So the $75,000,000 is part of the $300,000,000 that assumes once it's fully rolled out. Got it. And then a question on the GPC side specifically, it does appear that the S and P Richards business is more profitable than that of Ascendant on a standalone basis. So is the gross margin profile for S.
B. Richards similar to that of Ascendant or is there significant differences on that growth on the growth line?
So I'll take that. I would mention what we would you're right, pretty comparable. The valuation that was implied that Janet mentioned, the valuation of $680,000,000 that was really derived from an ascendant multiple that was more consistent with of equals. There's a lot of moving parts in the valuation, but it was really looked at more from an earnings basis and a consistent multiple with Ascendant. And SPR is part of a larger organization.
We really won't comment on specific gross margin SG and A, but I think we've given you enough information to get to the valuation.
But is it fair to assume that the P and L is kind of similar in structure at least to what Ascendiant is given the similarities of the business lines?
Bye.
When all the pieces can come together. So, great team at Ascendant. We've got a great team at SPR. And when we put the 2 together, we're excited what they can do together.
So you didn't have a did you have a banker shopping ST Richards?
Well, Brian, our Board conducted a pretty comprehensive process. And as Paul mentioned in our previous calls, we've been kind of looking at various options for this business for some time. So we looked at various strategic options. This was actually the best option to maximize the value for the GPC shareholders. So not specifically commenting on that except to say we looked at a comprehensive process.
Okay. And then just wanted to clarify, the $300,000,000 of combined EBITDA, that is based solely on 2017 and is not inclusive of $75,000,000 of synergies, right? So if you were to generate those synergies, it would be $375,000,000 correct?
No. If you look Go ahead, Carol.
No. Go ahead, Janet.
No. I was going to say, if you look at Page 13 in the deck, it shows that the $300,000,000 is a $27,000,000 view with the synergy the run rate cost synergies built in.
Okay. So ex synergies, this is the $225,000,000 EBITDA business ish?
Correct. Okay.
All right. Thank you for the clarification. Thanks, Brian.
Thank you.
Our next question comes from Chris McGinnis of Sidoti and Company. Please go ahead.
Good morning. Thanks for taking my questions and congratulations on the transaction.
Thank you, Chris. Thanks, Chris.
I guess, can you just maybe talk a little bit about the S. P. Richard maybe business and maybe the national account presence that it has and maybe the percentage of sales offhand?
Yes, sure. You know what I would do here at this point, Chris, I've got Rick Toppin in the room with us here and Rick is the current President and CEO of S. B. Richards. And as mentioned in the call, Rick will be joining the new team as Chief Operating Officer.
I would tee this one up for Rick. We do have a significant presence with the big national accounts, but I'll let Rick touch on that maybe a little bit more detail. Yes. So this is Rick. The national accounts represent roughly 20% of our sales activity.
And as we look at this and Yes. I think we've spoken quite a bit about,
the Yes. I think we've spoken quite a bit about our relationships in the national reseller channel and they similarly remain important customers for our business as well. So I think that's complementary between the 2 organizations.
And you mentioned, I think, one of the highlights is just that, I guess, just a better product for the independents. Was there any difference in terms of the offerings, the way that either Ascendant or SP Richard serves the market and I guess a better product going forward? What is that offhand? Thanks.
Sure. I can speak to that. And Rick, if you want to chime in. I guess I'd take one step back and talk about the benefits to the customer base because we do feel that they are significant and they include products and they include some others as well. One of those is that this combination allows for additional resources to invest in the combined company's capabilities and to invest in our customers.
It does lead also to an optimized assortment across national and private brands across a broad range of categories. And I think if you look at the 2 companies' assortments, I think they're complementary in many ways. And I think as we look at this in detail, they'll provide many opportunities for us to optimize and really focus on customer needs and what's going to help customers to grow. In addition to the assortment, this combination will allow for capacity to develop value added services that include analytics and marketing tools to help customers grow and will also allow them to leverage an efficient, broad distribution network that we think will serve them very well. So we're really excited about what this combination does to help customers.
And we think, as mentioned earlier in the script that this does help to strengthen and sustain the independent channel.
Great. And then one last question. Obviously, one of the initiatives at Ascendance drive private label. Can you maybe give a little bit of color around SP Richard's business on the private label side? Thank you.
Yes, this is Rick. We have a number of key brands, including Business Source, L'Oreal, Genuine Joe that we've had a lot of success with as well as they're roughly 15% of our sales with our private label brands. So we look to expand those as we go forward.
Thanks again for taking the time today.
Thanks, Chris.
Our next question comes from Chris Battlebrief of Wolfe Research. Please go ahead.
Hi, thanks for taking the question. I had a question, I guess, one is this will be just to confirm is the reclassified and discontinued ops until it closes?
No. Chris, actually on the advice with our advisors, there's really going to be nothing that's done at this point, because of the nature of the RMT transaction. There'll be nothing that's done until we get to closing. And at that point of closing, we would remove the net assets. So, we'll obviously have more information on our Q1 earnings, but you could expect it to be business as usual right now.
Got you. Okay. And I wanted to ask about stranded cost. I guess, what effect does the spin off have on other segments? Are there stranded costs from shared services that are currently allocated to S.
B. Richards that would then be reallocated to S. B. Richards? And then I guess the Westridge Yes.
Yes. Yes.
So again, I think it's Genuine Parts question. We obviously are working together, both within Genuine Parts and within Ascendant. We're going to have integration teams, integration planning. We've got TSAs that are being discussed. There's a number of things that have to come into play.
Obviously, top of mind for us are the stranded costs and you certainly alluded to that, but there's a number of factors that will go into that as well as the timing. So we'll certainly have integration teams involved that would be working towards that and we would advise on that as we got closer to closing.
Got you. Okay. And just one final question, kind of a rephrase of Brent's earlier question. You've had the benefit of going through this process, presumably speaking to bankers, maybe even some consultants. How do you think how do you holistically think about your RemainCo?
Do you think that the industrial business and the autos business still belong together and why?
We do, Chris. Look, our strategy and our focus here going forward is and our long term strategy has been to really zero in on our 2 core global businesses, which is automotive aftermarket and our industrial business as they complement one another. We have many of the same suppliers in both businesses. Both are both can maximize value, we believe better together than broken apart. So we're very bullish on our long term strategy both here in the U.
S. As well as abroad.
Got you. Okay. Thank you for the questions. Good luck today.
Yes. Thank you.
Thank you.
Thank you.
And we have time for one final question from Seth Basham of Wedbush Securities. Please go ahead.
Thanks. Good morning and congratulations.
Good morning.
Thanks, Seth.
My first question is just a
clarification, a housekeeping question.
I was getting to No,
Chris, if you look at
our Seth, sorry, if you look at our
No, Chris, if you look at our sorry, if you look at our annual report, their D and A is around $11,000,000 So there's an if you look at the breakdown of the pro form a $300,000,000 it's around 1 $105,000,000 to $110,000,000 in total. So the D and A is about $11,000,000
Okay.
Thank you. And then secondly, Paul, as you continue to focus the business on geographic expansion within auto and industrial, Previously, you've been low to go towards China. One of your larger suppliers in the auto aftermarket earlier this week talked about the massive opportunity in China. Would you reconsider approaching that market over the next few years?
Well, Seth, we never say never. But at this point, our focus is North America and Asia Pac and then certainly our newest acquisition in Europe, the Alliance Automotive Group. We have so much opportunity for growth in those markets. And if you look at our market share by each of those geographical regions, we've got tremendous opportunity to continue to grow. So at this point, we don't have any immediate plans to look at China.
We'll focus in on where we currently are and really expand our presence in those markets.
Thank you very much.
Thank you, Seth.
This concludes our question and answer session. I would like to turn the conference back over to Mr. Rick Soods for any closing remarks.
Thank you, Andrea. I would just say as discussed today, as you can hear from both sides, we're very excited about this combination and the value that it will create for all stakeholders. So thank you again for joining us this morning and have a great day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.