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Nucor (NUE) Inks Deal With KKR to Acquire C.H.I. for $3 Billion

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Nucor Corporation NUE entered into an agreement with an affiliate of investment funds managed by Kohlberg Kravis Roberts & Co. L.P. (“KKR”) to acquire C.H.I. Overhead Doors (C.H.I.). C.H.I. is a leading manufacturer of overhead doors for residential and commercial markets in the United States and Canada.

The deal is valued at $3 billion, which reflects roughly 13x C.H.I.'s estimated trailing 12-month EBITDA at the close. The deal is anticipated to be completed in June or soon thereafter, pending regulatory approvals and customary closing conditions. The deal will be immediately accretive to earnings in the first year of ownership.

C.H.I. is involved in producing overhead door products for residential and commercial applications and rolling steel and rubber doors for commercial and industrial customers. The entity can maintain minimal inventory levels and realize industry-leading fulfilment times while providing direct delivery to customers leveraging a highly diversified national customer network of professional garage door dealers.

The overhead door market is a growing $5-billion market with exposure in both residential and non-residential through new builds and repairs and remodel applications. The commercial overhead doors are used in warehousing and retail. These are the areas in which Nucor has focused its attention lately through other value-added products such as insulated metal panels and steel racking solutions. It is projected that the C.H.I. acquisition will also benefit from Nucor's recent paint line investments at its Hickman, AR, and Crawfordsville, IN, sheet mills.

Shares of Nucor have gained 15.7% in the past year against a 14.2% decline of the industry.

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In its last earnings call, the company stated that demand remains strong for steel and steel products in its end-use markets and expects 2022 will be another year of strong earnings and cash flow.

Nucor envisions second-quarter 2022 as the most profitable quarter in its history, surpassing the earlier record set in the fourth quarter of 2021. Earnings are projected to be driven by higher profitability in the steel products segment on the back of strong demand in non-residential construction markets.

The company also expects earnings in the steel mills segment to strengthen in the second quarter due to higher profitability at its sheet and plate mills. The raw materials segment is also forecast to deliver higher profits, driven by relatively higher selling prices for raw materials.

Nucor Corporation Price and Consensus

Nucor Corporation Price and Consensus
Nucor Corporation Price and Consensus

Nucor Corporation price-consensus-chart | Nucor Corporation Quote

Zacks Rank & Other Key Picks

Nucor currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space are Nutrien Ltd. NTR, Albemarle Corporation ALB and Cabot Corporation CBT.

Nutrien has a projected earnings growth rate of 161.9% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 38.8% upward in the past 60 days.

Nutrien’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, while missing once. It has delivered a trailing four-quarter earnings surprise of roughly 5.9%, on average. NTR has rallied around 66.1% in a year and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle has a projected earnings growth rate of 175% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 85.8% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has gained 42.1% in a year. The company flaunts a Zacks Rank #1.

Cabot, currently carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 19.5% for the current year. The Zacks Consensus Estimate for CBT's earnings for the current year has been revised 3.4% upward in the past 60 days.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 10.4% over a year.


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