Nucor Expands Portfolio With $565M Acquisition of Rytec

Nucor Corporation NUE announced an agreement to acquire Rytec Corporation, a leading manufacturer and seller of high-speed, high-performance commercial doors, for $565 million in an all-cash transaction. This represents approximately 12.5 times Rytec's projected 2024 EBITDA. Rytec, with more than 300 employees and two manufacturing facilities in Wisconsin, is renowned for its high-performance commercial doors.

Rytec is a leader in high-performance commercial doors and serves several growing end-user markets. This acquisition further executes NUE's strategy to expand beyond core steelmaking businesses into related downstream businesses. Adding high-performance doors is expected to create cross-selling opportunities with other Nucor businesses and significantly expand Nucor's product portfolio serving the commercial space.

Rytec specializes in producing high-speed Spiral rigid rolling doors for various applications, including warehouses, manufacturing facilities, auto dealerships and parking garages. It also manufactures durable fabric doors for cold storage, food and beverage industries, manufacturing and clean room environments. The company is known for its commitment to product development, technology, and automation, aiming to enhance quality, efficiency and safety.

NUE expressed enthusiasm about the acquisition, highlighting its excitement to collaborate with the exceptional team at Rytec. NUE noted that Rytec's products provide a natural platform for expanding Nucor's overhead door product suite. Recognized as the premier brand in high-performance commercial doors, Rytec built a strong reputation for quality and best-in-class customer service. The integration of Rytec with C.H.I. Overhead Doors is expected to create an overhead door platform that will offer superior product variety and solutions to Nucor's commercial customers.

Nucor's shares have moved up 18.4% in a year compared with the industry's 12.7% rise.

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In its first-quarter call, Nucor anticipated a decline in earnings in second-quarter 2024 from the previous quarter's levels, primarily due to lower earnings in the steel mills segment driven by reduced average selling prices despite slightly higher volumes. The steel products segment is also anticipated to see a moderate decline in earnings due to lower selling prices, partially offset by increased volumes. However, the company expects an uptick in earnings for the raw materials segment in second-quarter 2024, attributed to higher profitability from its direct reduced iron facilities and scrap processing operations.

Zacks Rank & Key Picks

Nucor currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, sporting a Zacks Rank #1 (Strong Buy), and ATI Inc. ATI and Ecolab Inc. ECL, each carrying a Zacks Rank #2 (Buy).

CRS' earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 15.1%. The company's shares have soared 127.2% in the past year.

ATI's earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the earnings surprise being 8.34%, on average. The stock has surged 62% in the past year.

The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.59, indicating a year-over-year rise of 26.5%. The Zacks Consensus Estimate for ECL's current-year earnings has moved up in the past 30 days. ECL beat the consensus estimate in each of the last four quarters, with the earnings surprise being 1.3%, on average. The stock has rallied nearly 34.3% in the past year.

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