Barnhart Transportation
Barnhart Transportation Truck 64b039f96a1a4

SMGI adds Barnhart, Route 20 Tank Wash

July 13, 2023
$53.25M deal for Pennsylvania-based Barnhart group includes Barnhart Transportation’s diverse operation, which provides liquid and dry bulk services from three terminal locations

SMG Industries recently acquired the Barnhart Transportation group of companies, which includes Barnhart Transportation—a diversified carrier that provides liquid and dry bulk pneumatic tank services—and the Route 20 Tank Wash, for $53.25 million.

The deal, which approximately doubles SMGI’s annual revenue, also includes Barnhart Fleet Maintenance, Lake Shore Logistics, Lake Shore Global Solutions, and Legend Equipment Leasing, the company reported.

“The acquisition of Barnhart by SMGI creates an attractive and diversified platform,” Matt Flemming, SMGI chairman, said in a news release. “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."

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), the addition positions SMGI as a leading regional transportation and logistics player across multiple markets in the United States, SMGI said. With the transaction’s completion, 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, and debt service costs have been reduced, resulting in enhanced equity value, and accelerating the company’s plans to list its common stock on a national securities exchange.

Tim and Bryan Barnhart, the leaders behind Barnhart Transportation, bring experience, expertise, and leadership to SMGI. Over the past two decades, they diversified the company’s footprint to meet evolving customer needs. “Anticipating market trends and making strategic investments have been key to staying ahead in the dynamic global logistics market,” explained Tim, the company’s new chief financial officer and board member.

“Within the combined entity, we see tremendous opportunities for growth and success.”

See also: Route 20 Tank Wash celebrates opening

Leveraging the expertise of the entire team at SMG Industries, Barnhart aims to “establish a robust financial foundation, implement cost-saving measures, and capitalize on attractive growth opportunities” in transportation and logistics, the company said.

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

Together, management plans to leverage the partnership to create a larger, more diversified transportation business. The merger unlocks attractive growth opportunities, strengthens customer relationships, and increases market capitalization, the company said.

“We are excited to join forces with Barnhart Transportation,” said Steven Madden, SMGI’s chief transition officer and board member. “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) 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.”

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