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Worthington Acquires Majority Stake in Samuel Steel Pickling

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Worthington Industries, Inc. (WOR - Free Report) announced yesterday that it acquired the majority stake in its joint venture with Samuel, Son & Co., known as Samuel Steel Pickling Company. The company has 63% interest in the joint venture, while the rest is with Samuel, Son & Co.

The financial terms of the transaction were not disclosed.

Samuel Steel Pickling specializes in providing pickling services — including side trimming, pickling, in-line roller leveling and in-line slitting. Also, the company provides narrower packaging capabilities and slit products. Prime end markets served include appliance, automotive and fabrication.

Inside the Headline

Worthington will integrate its Cleveland-based pickling and slitting facility to the aforementioned joint venture. The move will enhance the joint venture’s pickling capabilities and will help Worthington offer better services to customers.

Notably, Worthington acquired the Cleveland-based pickling and slitting facility from Heidtman Steel in October 2019. The 278,000-square-feet facility employees 100 people and serves customers in the heavy equipment, heavy truck, automotive and agriculture markets.

The resultant joint venture after the integration of Cleveland pickling and slitting facility will be known as Worthington Samuel Coil Processing, LLC. The new joint venture will employ 170 people and will have one facility based in Twinsburg and two in Cleveland.

Worthington Samuel Coil Processing’s results will be consolidated with Worthington’s Steel Processing segment.

In the second quarter of fiscal 2020 (ended Nov 30, 2019), the Steel Processing segment accounted for 62.5% of Worthington’s revenues. On a year-over-year basis, the segment’s revenues represented a decline of 18.6% 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 addition to the acquisition of Heidtman Steel’s Cleveland-based pickling and slitting facility in October 2019, Worthington divested its Turkey-based manufacturer of cryogenic pressure vessels in July 2019. The company received net cash proceeds of $8.3 million from the divestment.

Zacks Rank, Share Price Performance and Estimate Trend

With a market capitalization of nearly $2.3 billion, Worthington currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s share price has increased 18.8% compared with the industry’s growth of 17.7%.

In the past 60 days, the Zacks Consensus Estimate for Worthington’s earnings has been raised by 5.9% to $2.88 for fiscal 2020 (ending May 2020) and 1.8% to $3.36 for fiscal 2021 (ending May 2021).

Worthington Industries, Inc. Price and Consensus


Worthington Industries, Inc. Price and Consensus

Worthington Industries, Inc. price-consensus-chart | Worthington Industries, Inc. Quote

Key Picks

Some better-ranked stocks in the Zacks Industrial Products sector are Hickok Inc. , Cintas Corporation (CTAS - Free Report) and DXP Enterprises, Inc (DXPE - Free Report) . While Hickok currently sports a Zacks Rank #1 (Strong Buy), Cintas and DXP Enterprises carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these stocks have improved for the current year. Further, positive earnings surprise for the last reported quarter was 15.56% for Hickok, 11.27% for Cintas and 16.39% for DXP Enterprises.

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