PowerSecure, a Wake Forest, North Carolina-based vendor of industrial- and commercial-grade electrical equipment, has acquired the data center electrical services business of electrical contractor Power Design Incorporated (PDI) for $13 million cash.
The move is an attempt by PowerSecure to increase its share of the data center infrastructure market. It is a major expansion into the space for the vendor, whose play there has until now consisted of selling switchgear to be used in projects St. Petersburg, Florida-based PDI has done for its data center customers.
“This transaction accelerates this opportunity to serve this very important customer set,” Sydney Hinton, PowerSecure CEO, said in a conference call with analysts Tuesday.
Besides being a strategic move, the deal is a very real opportunity to increase PowerSecure’s revenue. Its management was aware of PDI’s sales pipeline prior to closing the acquisition and the decision to proceed very much rested on that opportunity.
“We have visibility into a lot of potential projects but we do have to do the selling,” Hinton said. “That’s a risk that we’ve assumed.”
The deals in the pipeline amount to $15 million to $20 million of additional 2015 revenue for the vendor that reported $270 million in sales for 2013, Hinton said. If its sales team manages to close the deals in PDI’s pipeline, that revenue will add $0.05 to $0.07 cents to its earnings per share for next year.
PowerSecure leadership does not assume it can convert the entire pipeline, but they are certain a lot of the opportunity is within their grasp. The company knows a lot about the deals in the pipeline because it has given quotes for switchgear on the projects.
“They’re on the green; they’re ready to be putted,” Hinton said.
Most revenue PDI’s data center business generates is concentrated with two big customers, he said. The company designs and deploys electrical infrastructure systems for large enterprise data centers and colocation providers.
Hinton did not specify who those clients were, but PDI’s website lists at least one major data center provider as a customer: CoreSite.
The long-term gain for PowerSecure is the specialized data center electrical infrastructure design skill-set it has gained from the acquisition. “The whole electrical design scheme is a nice pick-up for us,” Hinton said. About 20 PDI employees will join PowerSecure.