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USG to Acquire Ceilings Plus, Expand Ceilings Product Line
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USG Corporation (USG - Free Report) entered into an agreement to acquire Ceilings Plus, a leading maker of specialty ceiling product, for $52 million in cash. The deal is expected to close by the end of this year. Notably, Ceilings Plus is expected to generate sales in excess of $45 million in 2017.
Shares of the company did not witness any significant movement following the announcement, increasing to $34.10 on Nov 15 from $34.09 on Nov 13.
Buyout Benefits
Ceilings Plus is expected to add a broad range of products to USG’s portfolio and also accelerate innovation. Also, Ceilings Plus is expected to fortify USG’s presence in the high-growth specialty ceilings market.
The buyout is also likely to facilitate cross-selling opportunities for USG’s existing tile and grid ceiling products along with increased penetration into architectural specifications.
The Ceilings segment is a leading supplier of interior ceiling products primarily for commercial applications. The company is also estimated to be the second-largest manufacturer of ceiling grid and acoustical ceiling tiles worldwide. Though segment sales were down 3.1% year over year in the first nine months of 2017, the addition of Ceilings Plus is expected to boost sales to some extent.
The company plans to continue to pursue M&A activities through which it can enhance returns on invested capital and drive core business growth.
Quick Glance at Q3 Results
The company reported third-quarter adjusted earnings of 47 cents, compared with 46 cents in the third quarter of 2016. Net sales of $795 million increased 3.7% year over year. On a year-over-year basis, operating profits declined to $93 million from $97 million, and overall adjusted operating profit fell to $111 million from $127 million. Higher input costs in the Gypsum and Ceilings businesses primarily led to the declines.
Stock Price Movement
USG’s shares have gained 21.2% in the last one year, outperforming the industry’s rally of 14.8%. The company surpassed the Zacks Consensus Estimate for earnings in only one of the trailing four quarters. Current-year earnings estimates moved down by 0.6%, while next year estimates moved up 2.4% over the last 30 days. While investors may expect slight short-term troubles, this Zacks Rank #3 (Hold) is a solid investment proposition for the long haul.
Stocks to Consider
A few better-ranked stocks in the industry are Patrick Industries, Inc. (PATK - Free Report) , United Rentals, Inc. (URI - Free Report) and Armstrong World Industries Inc (AWI - Free Report) .
Patrick earnings are expected to grow 24.5%, while United Rentals is expected to see a 21.3% rise in 2017.
Armstrong World Industries carries a Zacks Rank #2 (Buy). The company’s earnings are expected to improve 23% in 2017.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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USG to Acquire Ceilings Plus, Expand Ceilings Product Line
USG Corporation (USG - Free Report) entered into an agreement to acquire Ceilings Plus, a leading maker of specialty ceiling product, for $52 million in cash. The deal is expected to close by the end of this year. Notably, Ceilings Plus is expected to generate sales in excess of $45 million in 2017.
Shares of the company did not witness any significant movement following the announcement, increasing to $34.10 on Nov 15 from $34.09 on Nov 13.
Buyout Benefits
Ceilings Plus is expected to add a broad range of products to USG’s portfolio and also accelerate innovation. Also, Ceilings Plus is expected to fortify USG’s presence in the high-growth specialty ceilings market.
The buyout is also likely to facilitate cross-selling opportunities for USG’s existing tile and grid ceiling products along with increased penetration into architectural specifications.
The Ceilings segment is a leading supplier of interior ceiling products primarily for commercial applications. The company is also estimated to be the second-largest manufacturer of ceiling grid and acoustical ceiling tiles worldwide. Though segment sales were down 3.1% year over year in the first nine months of 2017, the addition of Ceilings Plus is expected to boost sales to some extent.
The company plans to continue to pursue M&A activities through which it can enhance returns on invested capital and drive core business growth.
Quick Glance at Q3 Results
The company reported third-quarter adjusted earnings of 47 cents, compared with 46 cents in the third quarter of 2016. Net sales of $795 million increased 3.7% year over year. On a year-over-year basis, operating profits declined to $93 million from $97 million, and overall adjusted operating profit fell to $111 million from $127 million. Higher input costs in the Gypsum and Ceilings businesses primarily led to the declines.
Stock Price Movement
USG’s shares have gained 21.2% in the last one year, outperforming the industry’s rally of 14.8%. The company surpassed the Zacks Consensus Estimate for earnings in only one of the trailing four quarters. Current-year earnings estimates moved down by 0.6%, while next year estimates moved up 2.4% over the last 30 days. While investors may expect slight short-term troubles, this Zacks Rank #3 (Hold) is a solid investment proposition for the long haul.
Stocks to Consider
A few better-ranked stocks in the industry are Patrick Industries, Inc. (PATK - Free Report) , United Rentals, Inc. (URI - Free Report) and Armstrong World Industries Inc (AWI - Free Report) .
Patrick and United Rentals sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Patrick earnings are expected to grow 24.5%, while United Rentals is expected to see a 21.3% rise in 2017.
Armstrong World Industries carries a Zacks Rank #2 (Buy). The company’s earnings are expected to improve 23% in 2017.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>