Info Aqualung Financial Troubles

[attack33]

It seems like Aqualung has some financial troubles that puts it at some degree of risk of bankruptcy. They have been given a hard timeline to implement a 'get-well' plan . I am just throwing this out there for discussion. I am mostly interested in the old heads that have seen this situation before with other manufacturers and their assessment of what the fall out typically looks like. I sure do enjoy my Apeks regulators, but they are overpriced in the US and under Aqualung's umbrella that ultimately falls under a private equity firm's ownership that seems to be super distant from shops/regular divers. Sounds like they set their hat on blaming the supply chain for their financial woes. I feel that may be partly the case, but given the nature of private equity firms, the second someone else wants to try and polish their turd they made, they will sell and that shakes things up even worse for the end user. It definitely gives me pause when considering regulator choices with long term ownership as a factor.

 

[PEDiver]

When I worked in PE (hence my username), we usually underwrote 4-6x EBITDA for most deals (mostly services and manufacturing). Multiples range across industries, but if the article is correct, >13x is pretty high for what I imagine the industry average is. Most likely contributing factors were the pandemic, supply chain disruptions, bad management, and questionable leverage (but we probably won't know what the PE firm originally underwrote). Could be a prime target for acquisition, especially for the IP. Would not shock me if this continues. We had some similar situations occur during 2020 when all business essentially grinded to a halt. We never had a business go under, and luckily we picked lenders who wouldn't take the keys and who were willing to work/waive covenants. They will most likely restructure the capital stack or get acquired. Curious to see how this plays out...

 

[PEDiver]

Speak of the devil…just saw this.

Barings set to acquire Aqualung Group

Barings, one of the world's leading investment managers, has entered into exclusive discussions to acquire 100% of the Aqualung Group.

www.scubadivermag.com

 

[BoltSnap]

Seems Scubapro is miles ahead of AL

 

[Rick Brant]

Not a surprise to me. I've found AL's customer support to be non-existent. PE is death to cool companies IMO.

 

[attack33]

Speak of the devil…just saw this.

Barings set to acquire Aqualung Group

Barings, one of the world's leading investment managers, has entered into exclusive discussions to acquire 100% of the Aqualung Group.

www.scubadivermag.com

@PEDiver We called it! I feel this isn't great news, but that is my natural inclination. We will have to wait and see.

 

[PEDiver]

PE is death to cool companies IMO.

People are quick to blame PE if a company gets into trouble, but those same people never praise PE when a company is able to become more successful / expand operations / hire more people by having a financial partner (which is usually the case). Sure, there is a tradeoff since any time you purchase something you need capital, and with PE it's a split of equity and debt. Even without a financial partner, you still need funding, and a business can easily get into trouble or go BK. PE gives the company more options.

 

[PEDiver]

@PEDiver We called it! I feel this isn't great news, but that is my natural inclination. We will have to wait and see.

If they are smart they will leave operations to AL and just be a financial partner. That's my hope anyway.

 

[USdiver1]

Aqualung / US Divers / Apeks is possibly scuba's most storied company, but it has really never been one of the better managed manufacturers of dive gear. The industry is full of one time leaders who are shells of their former selves or are no more: Dacor, Voit, Nemrod, Healthways, Sportsways, the list goes on and on.

Modern competitors to AL such as Huish, Mares and ScubaPro have gobbled up smaller manufacturers or merged with others to keep economies of scale and innovations going. I can't help but think that the dive computer aspect of today's equipment market is what makes / breaks the majority of manufacturers. A poorly designed console, wrist mounted or heads up mask version unit or faulty deco algorithms in a design and you are through.

Something like 28 of my regulators are Aqualung / US Divers, from a 1953 Green Label Trademark Double Hose to a 2005 Special Edition Carbon Fiber New Mistral Double Hose, and from an early 1960s Calypso through many iterations of the Conshelf. Even my forum name is reflective of how much I appreciate my USD.

 

[cerich]

If they are smart they will leave operations to AL and just be a financial partner. That's my hope anyway.

if they are smart they will figure out what management needs to go and get them gone. Obviously, AquaLung does a LOT right, and obviously some wrong that lead to this position.
It's far to easy to blame it on cuts when acquired from AirLiquid but that would actually shock me if that was the case.
My 2psi as a guy with dive industry experience and a MBA