LONGVIEW, TX, May 2, 2022 (GLOBE NEWSWIRE) — Friedman Industries, Incorporated (“Friedman”) (NYSE American: FRD), a Texas-headquartered company through its Texas Division Tubular Products, is engaged in steel processing and distribution , and The Pipe Manufacturing Company announced today the acquisition of two strategically located premium properties from Plateplus, Inc. (“Plateplus”), making Friedman the leading structural steel service center in North America and expanding geographic distribution, scale and processing capacity. In addition to the acquired facility, Friedman acquired steel stock and established customer relationships at two other Plateplus locations. The parties signed an agreement on the transaction on April 26, 2022, the transaction comes into force from the moment of closing on April 30, 2022.
Friedman purchased real estate, buildings, equipment, inventory, and other assets from Plateplus businesses in East Chicago, Indiana, and Granite City, Illinois. In addition, Friedman has access to steel inventory and customer relationships at the Plateplus plants in Loudoun, Tennessee and Houston, Texas. Business previously conducted at the Plateplus offices in Loudon and Houston will move to Friedman’s facilities in Decatur, Alabama and Sinton, Texas, respectively, providing immediate and meaningful operational efficiencies and cost synergies.
“Over the last several years, we have strategically invested in enhanced processing capabilities to meet virtually all customer needs, including our new stretcher leveler at our Decatur, AL facility and our new facility in Sinton, TX, that is expected to open later this year,” said Mike Taylor, President & Chief Executive Officer of Friedman. “Over the last several years, we have strategically invested in enhanced processing capabilities to meet virtually all customer needs, including our new stretcher leveler at our Decatur, AL facility and our new facility in Sinton, TX, that is expected to open later this year ,” said Mike Taylor, President & Chief Executive Officer of Friedman. “Over the past few years, we have invested strategically in advanced processing capabilities to meet virtually every customer need, including our new leveler at our Decatur, Alabama facility and our new facility in Sinton, Texas, expected to open in end of this year. said Mike Taylor, President and CEO of Friedman. “Over the past few years, we have invested strategically in expanding our manufacturing capacity to meet the needs of virtually every customer, including our facilities in Decatur, Alabama and our new facility in Hinton, Texas, expected to open later this year. . “said Mike Taylor, president and chief executive officer of Friedman. “This transaction and the processing power it provides greatly add strategic value to this short-term investment. We are transforming our company with cutting-edge technology and a broader geographic footprint that will enable us to lead with greater product leadership. The combination serves more customers.” This takes Friedman to new levels of quality, reliability and the ability to deliver the best products on the market so we can serve customers in North America more effectively.”
Under the terms of the agreement, Friedman purchased the assets for $63.8 million in cash and 516,041 Friedman shares of common stock. Fixed assets accounted for about $18 million of the purchase price, with the remainder being stocks of steel. The final purchase price will be adjusted to reflect final inventory and commitments. Friedman financed the deal by expanding an asset-based line of credit provided by JPMorgan from $75 million to $150 million. After financing the deal, Friedman’s leveraged balance on the loan was $72.5 million.
The acquired business offers hardened and cut-to-length sheets in capacities ranging from 16 gauge to 5/8-inch thick and 36-inch to 72-inch wide. The facilities will operate as part of the Friedman Coil Products division. The transformational acquisition is expected to more than double annual roll sales. In the twelve months ended March 31, 2022, the Friedman coil segment sold 152,000 tons. In the same twelve-month period, the volume of purchased capacity sales was 163,000 tons. Friedman is convinced that production at the acquired facility can be expanded. During the same 12-month period, sales in the Loudon and Houston area totaled 113,000 tons. Friedman is confident he can transfer most of these volumes to his plants in Decatur and Hinton. Friedman expects the deal to have an immediate impact on operating results.
The acquired facility provides efficient freight routes that allow Friedman to communicate more effectively with customers with shorter delivery times, which is expected to improve customer satisfaction and Friedman’s competitiveness. It is important to note that all of Friedman’s sites are on or near water, and five of the six sites are rail-capable. This logistics helps with supply choice, which Friedman says is critical to success. With the Plateplus assets, Friedman will have a presence in North America’s largest steel consumer market with operations in East Chicago, Indiana; Granite City, Illinois; Hickman, Arkansas; Decatur, Alabama; Texas Lone Star, Texas; and Hinton, Texas. .
The deal also brings together the two companies’ extensive customer and supplier networks, opening up new opportunities to drive sales growth for a broader customer base and improve supply chain efficiency. By merging the Granite City and East Chicago plants with existing Friedman operations and moving volumes from the Plateplus plants in Loudoun and Houston to Friedman’s plants, Friedman hopes to operate with cost and operational efficiency. The new structure will have a direct impact on profitability. Friedman also expects more room for efficiency gains from the expected additional capacity.
Friedman’s management is familiar with Plateplus’s acquired assets, clients and key metal suppliers. When the acquired facility was part of Cargill’s metal service center portfolio, Taylor was president of Cargill’s metal service center division.
“I work closely with these assets and talent teams at the East Chicago and Granite City facilities and welcome these employees to Friedman,” Taylor continued. “We also look forward to working with the current owner of Plateplus, Metal One Corporation, which will become a major shareholder in Friedman and bring its expertise to the metal supply chain at home and abroad.”
More details about the deal are available in the investor section of Friedman’s website.
Montrose Advisors acted as financial advisor on the transaction and Norton Rose Fulbright acted as legal advisor to Friedman Industries.
About Friedman Industries, Inc. Friedman Industries Inc. (the “Company”) headquartered in Longview, Texas, is a steel products manufacturer and processor with facilities in Hickman, Arkansas, Ala Decatur, Bama, East Chicago, Indiana; Granite City, Illinois and Lone Star, Texas. The company has two reportable segments: Coil Products and Tube Products. The Coil Products segment includes the company’s facilities in Hickman, Decatur, East Chicago and Granite City, where the company processes hot rolled coil. The plants in Hickman, East Chicago and Granite City operate hardening mills and cut-to-length lines. The Decatur factory has a coupler for the cut-to-length line. The company is building an additional coil pack in Hinton, Texas, which is expected to be operational in August 2022. The Tubular Products segment includes operations at Lone Star, where the company manufactures resistance welded tubing and distributes tubular products through its Texas Tubing segment.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that involve risks and uncertainties. Forward-looking statements include before, after or include “will”, “foresee”, “intend”, “anticipate”, “believe”, “project”, “forecast”, “propose”, “plan”, “estimate”, “Include” and similar expressions, including, for example, statements about our business strategy, our industry, our future profitability, the growth of the industry sectors we serve, our expectations, beliefs, plans, strategies, goals, prospects and assumptions, future power , future hedging activity, the expected opening of our Sinton facility, the timing of the completion of the transition from Plateplus operations in Loudon and Houston to Friedman operations in Decatur and Sinton, the impact of this transaction on future sales, product quality, and estimates and projections regarding future performance and trends in the oil and gas industry These forward-looking statements may include, but are not limited to, future changes in the company’s financial condition or results of operations, future production capacity, quality products and proposed expansion plans. Forward-looking statements, whether oral or written, including but not limited to this press release.
Forward-looking statements are not guarantees of future results. These statements are based on management’s expectations and are subject to a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. While forward-looking statements reflect our current beliefs, they should not be relied upon as they involve known and unknown risks, uncertainties and other factors that could cause our actual results, results or achievements to differ from those expected with respect to future results. , results or achievements. the achievements expressed or implied by such forward-looking statements differ materially. Actual future results and trends may differ materially due to a number of factors, including, but not limited to, changes in demand and prices for the Company’s products, the ongoing impact of the COVID-19 pandemic, changes in government steel policy, changes in steel, and changes in overall demand for steel products and the company’s success in meeting its internal operating plans, including costs, timing and successful commissioning of new stretchers, Sinton straightening lines, changes and availability of raw materials, our ability to meet demand or pay certain obligations under supply agreements herein, unplanned the closure of our manufacturing facilities due to equipment failure or other problems, the results of our hedging activities, increased competition from alternative materials, and the risks associated with increased innovation, new technologies, products and consumer demand. Accordingly, undue reliance should not be placed on our forward-looking statements. Such risks and uncertainties are also discussed by our management when discussing and analyzing the financial position and results of operations, and in other parts of the company’s filings with the United States Securities and Exchange Commission (“SEC”) in accordance with the Securities Act of 1933, as amended. and the Securities Exchange Act of 1934, as amended (the “Exchanges Act”), including the company’s annual return on Form 10-K and other quarterly returns on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changes in circumstances or otherwise, except as required by law.
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Post time: Oct-24-2022