Metal processor Worthington Industries (WOR) has agreed to buy Rome, N.Y-based Rome Strip Steel Company, Inc. Financial terms of the deal were not divulged.
Rome Strip Steel makes cold rolled strip steel mainly for the automotive industry. The entity, which had sales of around $70 million in 2013, owns a warehouse facility in Walhalla, S.C. Its capabilities include rolling, annealing and slitting a vast spectrum of cold rolled alloy, high carbon, low carbon close tolerance strip steels and a number of grades of high and low strength alloy steels.
The buyout is a strategic fit for Worthington and complements its focus on growing its high value-added products. The acquisition is expected to enhance Worthington’s ability to process close-tolerance material with custom surface finishes.
The Rome Strip Steel acquisition will also boost Worthington’s overall production capacity and increase its cold rolled strip steel production capacity to three facilities including Columbus and Cleveland, OH. The transaction is expected to consummate in late Jan 2015.
Worthington’s adjusted earnings of 55 cents per share for second-quarter fiscal 2015 (ended Nov 30, 2014), reported on Dec 17, 2014, missed the Zacks Consensus Estimate of 68 cents.
Revenues rose 13% year over year to $871 million on higher volumes in the Steel Processing division and contributions from recent acquisitions in the Pressure Cylinders unit. It came ahead of the Zacks Consensus Estimate of $867 million. Gross margin, however, fell due to higher manufacturing costs.
Worthington sees growth opportunities in the automotive space and expects its steel processing segment to continue to perform well. However, the company is faced with weak demand across a few markets including agriculture.
Worthington currently holds a Zacks Rank #5 (Strong Sell).
Better-ranked steel and metals companies include Century Aluminum Co. (CENX), Noranda Aluminum Holding Corp. (NOR) and LB Foster Co. (FSTR). While both Century Aluminum and Noranda retain a Zacks Rank #1 (Strong Buy), LB Foster holds a Zacks Rank #2 (Buy).
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