Steel Dynamics Inc. (SDI), Fort Wayne, Indiana, has announced that it purchased a number of steel decking facilities and net working capital of approximately $30 million from Consolidated Systems Inc. (CSi), Columbia, South Carolina. The $45 million total purchase price, which SDB paid in cash, is valued below asset replacement cost, and is expected to be accretive to 2015 earnings and cash flow per share, SDI says. The company says these assets will become a part of SDI’s fabrication operations through its wholly owned subsidiary, New Millennium Building Systems LLC (NMBS).
Mark Millett, president and CEO of SDI, says, “Based on our past strategic geographic growth in our fabrication platform, combined with the steadily improving construction sector, our fabrication operations achieved record profitability in the second quarter 2015 and have already surpassed 2014 record setting annual profits.”
Millett continues, “This purchase will further support the success of this platform and create shareholder value. The transaction is a further step in our growth strategy, and will enhance New Millennium’s position as a leading North American provider of steel joist and decking, while also providing an accelerated avenue to new steel deck product offerings and additional cold roll and galvanized flat roll steel pull-through volume for our Columbus Flat Roll Division.”
“We are excited about the combination of the CSi decking business with New Millennium,” says Jim Anderson, chief operating officer of NMBS. “CSi is a well-regarded market participant and will provide us with the opportunity for unique product, market and business synergies. We enthusiastically welcome our new CSi employees and customers into our family.”
The purchased assets include three decking facilities located in Memphis, Tennessee; Terrell, Texas; and Phoenix. Producing both standard and premium specialty deck profiles, these assets represented more than 8 percent of 2014 domestic steel decking market share, according to SDI. The company says the new locations will allow for enhanced geographic reach into the Southwestern and Western markets, while the higher-margin specialty deck profiles will further diversify NMBS product offerings. The production of specialty deck is currently planned to be concentrated in Memphis, where a paint line is already in place, the company says. Business and commercial integration with NMBS will begin immediately.
SDI is one of the largest domestic steel producers and metals recyclers in the United States based on estimated annual steelmaking and metals recycling capability, with annual sales of $8.8 billion in 2014. The company employs more than 7,400 employees and has manufacturing facilities primarily located throughout the United States, including six steel mills, eight steel coating facilities, an iron production facility, approximately 90 metals recycling locations and six steel fabrication plants.
NMBS says it is the second largest provider of steel joists and metal decking to the U.S. market. The company says its more than 50 specially trained representatives are available to help reduce tonnage from commercial steel construction projects, achieve cost reductions and realize a broad range of revenue and performance improvements.
CSi is comprised of three business units—Metal Dek Group, Consolidated Metal Products Group and Consolidated Components Group—which the company says are focused on metal coating and processing on the company’s state-of-the-art coil and spray paint lines and precision fabricators.