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to create long-term value

May 14, 2013
Altus Sees Railroad Tie On Its Track Toward Profits – The Advocate by Richard Lee

Altus Capital Partners II, a Wilton-based private equity firm, has acquired Rocla Concrete Tie, the leading U.S. manufacturer of pre-stressed concrete railroad ties, making an investment in an essential infrastructure ingredient of the nation’s rail freight industry and high-speed passenger rail service.

Rocla supplies ties to freight lines including Burlington Northern and Union Pacific, as well as Amtrak, the nation’s major passenger service provider.

Altus, along with Rocla management, bought the business for an undisclosed amount from AH Belco, a Belgian holding company. Founded in 1986, Rocla is headquartered in Denver.

“We recognize and value management’s depth of capabilities, which has earned Rocla its industry leadership position, ” Russell Greenberg, Altus managing partner, said in a statement.

The company’s annual revenue is about $55 million, but Greenberg said in a telephone interview last week that he expects the business to expand as freight lines grow and demand for high-speed service increases. “High speed rail will happen, ” he said. “Rocla is the sole provider of concrete ties to Amtrak.”

Commenting that 90 percent of the market uses wooden ties, Greenberg said Rocla has great potential because concrete ties provide greater stability for heavy freight and high-speed rail.

“Concrete ties are highly engineered, technical products. They aren’t easy to make, and that’s one of the things that attracted us, ” he said. “Rocla has three very good plants. Their Pueblo (Colo.) plant is brand new. They have a great management team, and now they own some of the company.”

The company, which has about 220 employees, has other plants in Bear, Del., and Amarillo, Texas, and more are planned in United States and internationally, including Mexico, which uses only concrete ties, Greenberg said.

Political gridlock in Congress could impact passenger rail infrastructure improvements, said Craig Barner, a reporter with Mergermarket, but Rocla has ready customers in the rail freight companies.

There may be new opportunities for Rocla in passenger rail in the long-term, he said.

Concrete ties are a good option for nations that have little access to usable timber, said David Clarke, director of the Rail Transportation Committee of the American Society of Civil Engineers, and in North America, concrete ties are making inroads into timber ties in maintenance of the nation’s 140,000 miles of track.

“The U.S. freight rail industry is in excellent shape. They are investing a lot of money in infrastructure. That’s why Rocla may have a bright future, ” Clarke said. “They definitely have a good market.”

Concrete ties are more costly than timber ties, he said, but they can last 60 years — about three times the life of a timber tie. They also provide a smoother ride for travelers, Clarke said.

“Concrete ties are almost always used for high-speed rails, ” he said. “You get good ride quality, and they hold the alignment of the rails well.”

Altus Capital Partners invests alongside management in profitable small- to medium-sized manufacturing companies domiciled in the U.S.

Laura Brophy
Marketcom PR
212-537-5177, Ext 2