Worthington Industries, Inc. (WOR - Free Report) announced on Oct 7 that it acquired the pickling and slitting facility of Heidtman Steel Products, Inc. The financial terms of the transaction were not disclosed.
Notably, the company’s share price has decreased roughly 1.5% in the past two days, closing the trading session at $34.87.
Heidtman Steel’s pickling and slitting facility is located in Cleveland and its area is approximately 278,000 square feet. The facility employees 100 people and serves customers in the heavy equipment, heavy truck, automotive and agriculture markets.
As noted, Worthington will integrate the acquired assets with its Steel Processing segment and strengthen the segment’s capacity in value-added steel processing. The company also pointed out that the buyout will add more value to its northeast Ohio-based facilities — including Cleveland-based steel processing facility (cold rolled) and Samuel Steel Pickling Company.
In the first quarter of fiscal 2020 (ended Aug 31, 2019), the Steel Processing segment accounted for 61.2% of Worthington’s revenues. On a year-over-year basis, the segment’s revenues represented a decline of 21% from the year-ago quarter.
Worthington’s Inorganic Initiatives
We believe that the above-mentioned transaction is consistent with the company’s policy of strengthening portfolio through inorganic moves, including divestments and acquisitions.
In July 2019, Worthington divested its Turkey-based manufacturer of cryogenic pressure vessels. The company received net cash proceeds of approximately $8.3 million from the divestment.
Zacks Rank & Key Picks
With a market capitalization of nearly $2 billion, Worthington currently carries a Zacks Rank #5 (Strong Sell). In the past three months, the company’s share price has dipped 10.4% compared with the industry’s decline of 7.1%.
In the past 60 days, the Zacks Consensus Estimate for Worthington’s earnings has been lowered by 14.2% to $2.72 for fiscal 2020 (ending May 2020) and declined 19.7% to $3.34 for fiscal 2021 (ending May 2021).
Worthington Industries, Inc. Price and Consensus