SMG Industries Inc. (SMGI), a transportation services company focused on the domestic infrastructure logistics market, recently announced the successful merger of the Barnhart Transportation group of companies (Barnhart), a 20 year-old established logistics service provider based in Pennsylvania with the 5J Group, a heavy haul, super heavy haul, and crane and rigging transportation company based in Houston, TX. According to a press release, the successful closing of this strategic merger not only approximately doubles SMGI's annual revenue and increase its adjusted EBITDA, but also brings operational and revenue diversification, strengthens the Company's balance sheet and adds exceptional expertise to its leadership team. The total acquisition consists of Barnhart Transportation, LLC, Barnhart Fleet Maintenance, LLC, Lake Shore Logistics, LLC, Lake Shore Global Solutions, LLC, Legend Equipment Leasing, LLC and Route 20 Tank Wash, LLC, which specializes in a wide range of transportation services, including full truck load, dry bulk, liquids, intermodal, LTL, heavy haul, drayage, transload, and an "asset lite" brokerage business. The consummation of this acquisition significantly contributes to SMGI’s revenue diversification and expansion efforts, as well as creates valuable cross-selling opportunities.

Based on audited pro forma 2022 combined revenues of $153 million and pro forma 2022 estimated adjusted EBITDA of $18.2 million (including $2.5 million in estimated cost saving synergies), this acquisition positions SMGI as a leading regional transportation and logistics player across multiple markets in the United States. With the completion of this transaction, SMGI’s balance sheet is significantly improved, including a large increase in the book value of the combined company. Additionally, overall leverage defined as debt as a multiple of adjusted EBITDA is reduced significantly, debt service costs have been reduced significantly, resulting in enhanced equity value, and accelerating our plans to list our common stock on a national securities exchange.

Matt Flemming, chairman of SMGI, expressed his enthusiasm for the deal, stating, "The acquisition of Barnhart by SMGI creates an attractive and diversified platform. We anticipate that the combined entity will establish itself as a larger, scalable, and more diversified transportation business, emerging as a regional leader in Texas, the Southwest and the Eastern Seaboard. Furthermore, the combination will enhance customer relationships, reduce cyclicality and decrease customer concentration. With more than 500 non-overlapping customers, the cross-selling opportunities from a broader range of assets, capabilities, and services offers exciting opportunities for the growth of the combined company. We are thrilled to welcome Barnhart’s talented employees to the SMGI team and believe this transaction positions us well to deliver enhanced growth and significant value creation for employees, customers and shareholders.

" Brothers Tim and Bryan Barnhart, the leaders behind Barnhart Transportation, bring a wealth of experience, expertise and leadership to SMGI. Over the past two decades, they have successfully diversified the company's footprint to meet evolving customer needs. Their commitment to operational excellence and financial prudence has established a foundation of fiscal responsibility and sustainability.

"Anticipating market trends and making strategic investments have been key to staying ahead in the dynamic global logistics market," explained Tim Barnhart, the company's new chief financial officer and Board member. 

According to the press release, with Tim's financial acumen guiding prudent decision-making and capital allocation, and Bryan's operational focus optimizing processes and driving efficiency, the company is well-positioned for continued growth and success.

"Within the combined entity, we see tremendous opportunities for growth and success," emphasized Tim Barnhart. As CFO and Board member, Tim's dedication lies in fostering fiscal discipline, capitalizing on operational efficiencies, and cultivating a culture of continuous improvement. Leveraging the expertise of the outstanding team at SMG Industries, the company aims to establish a robust financial foundation, implement cost-saving measures, and capitalize on attractive growth opportunities within the transportation and logistics industry.

Bryan Barnhart, the newly appointed CEO and Board member, brings extensive experience in the transportation industry, making him well-suited to lead the combined entity towards a new era of success. "The acquisition of Barnhart Transportation by SMG Industries is a significant milestone for both companies," stated Bryan Barnhart.

  Together, management will leverage the transformative partnership to create a larger, more diversified transportation business, solidifying its position as a global leader. The merger unlocks attractive growth opportunities, strengthens customer relationships, and increases market capitalization. Combining its collective vision and strategic approach, the companies are poised to propel the company to new heights and set new benchmarks within the industry.

Steven Madden, SMGI’s chief transition officer and Board member, stated “We are excited to join forces with Barnhart Transportation. We believe this merger creates value of 1+1=3 immediately. We have worked hard since those difficult COVID days to transform SMGI along with the help of Jimmy Frye (president of 5J Trucking and Board member) into a healthier, more profitable, turn-key, customer-focused, diversified, domestic infrastructure transportation company force. This acquisition and merger is just the beginning, and the Barnhart’s are a perfect fit culturally, operationally, and financially. It provides the necessary platform to springboard us organically and inorganically giving us more capacity for expansion while gaining experienced, proven industry leaders and managers. This merger will also provide additional strategic business units for both geographic regions. Most importantly, this acquisition helps our customers, employees and increases value to our shareholders.”