CMC to Acquire Concrete Pipe & Precast, LLC

Expands CMC’s commercial portfolio in early-stage construction solutions; leverages complementary geographic footprint and customer relationships

Deepens CMC’s exposure to structural demand tailwinds in construction; enhances ability to address construction pain points such as labor scarcity and project timelines

Establishes a significant and scalable new growth platform with a strong regional leader in an attractive industry

Enhances CMC’s financial profile; expected to be accretive to earnings per share and free cash flow per share in the first year

Commercial Metals Company (“CMC”) announced it has entered into a definitive agreement to acquire Concrete Pipe & Precast, LLC (“CP&P”), a leading supplier of precast concrete solutions to the U.S. Mid-Atlantic and South Atlantic regions, from Eagle Corporation and ECPP, LLC for a cash purchase price of $675 million, subject to customary adjustments. The purchase price represents a multiple of 9.5x CP&P’s forecasted 2025 EBITDA. When anticipated cash tax benefits are included, the effective multiple is reduced to approximately 8.5x. The transaction is expected to be immediately accretive to earnings per share and free cash flow per share, and by year three annual run-rate synergies, primarily related to optimization initiatives, are expected in a range of $5 million to $10 million.

“The acquisition of CP&P is an exciting step forward as we advance our strategy of delivering value-accretive growth by expanding CMC’s commercial portfolio in early-stage construction and increasing the breadth of our participation on the job site,” said Peter Matt, President and Chief Executive Officer. “CP&P is a leader in a large and attractive industry with strong, stable margins and cash flows. Through this transaction we will immediately establish a meaningful and highly scalable growth platform that enhances our ability to provide valuable solutions to our customers and positions CMC to better capitalize on the powerful long-term structural trends that we expect will drive construction activity for years to come.”

Compelling Strategic and Financial Rationale

• Broadens CMC portfolio of early-stage construction solutions: Precast capabilities will expand CMC’s commercial portfolio of value-added early-stage construction solutions with targeted customer groups and bring CMC onto the construction site earlier in the life of a project. The addition of these solutions meaningfully enhances CMC’s ability to participate in construction activity from site preparation to structural erection.
• Increases exposure to long-term structural trends: Precast concrete is expected to benefit from the same powerful structural demand trends as CMC’s existing construction focused portfolio – these trends include infrastructure investment, industrial re-shoring, energy generation, and addressing the U.S. housing shortage. In addition, precast capabilities enhance CMC’s ability to address construction industry challenges such as labor scarcity and project timelines, and win greater adoption over time.
• Establishes a meaningful platform for growth: The acquisition establishes a highly scalable platform in a fragmented industry with strong margin characteristics. The top 10 precast suppliers comprise less than 25% of the domestic market, with only two national players and a relatively small number of sizable regional producers. These market dynamics provide CMC with a long-term runway for self-directed organic and inorganic growth by establishing regional operational footprints that benefit from scale in local markets.
• Entry into a large and attractive industry: The domestic precast concrete industry generates approximately $30 billion of revenue annually. Market growth is projected to outpace the broader concrete sector, driven by positive adoption trends toward labor and time saving capabilities that precast solutions offer. EBITDA margins generally exceed 20% and are reinforced by the value-added and engineered characteristics of the products.
• Enhances CMC’s financial profile: The acquisition strengthens CMC’s core business and adds a complementary earnings driver with higher, more stable margin characteristics. The precast business is also less capital intensive than CMC’s traditional steel operations, providing greater cash flow conversion on the EBITDA generated.

Transaction Details

The transaction has been approved by the board of directors of Commercial Metals Company and the board of managers or directors of each of CP&P, Eagle Corporation and ECPP, LLC, as applicable. The closing of the transaction is expected to occur in a timely manner following customary regulatory review and subject to customary closing conditions. The transaction will be funded with cash on hand and is not contingent on any financing arrangements. CP&P financial results will be reported within CMC’s Emerging Businesses Group operating segment.

Advisors

Moelis & Company LLC served as the exclusive financial advisor and Willkie Farr & Gallagher LLP served as legal counsel to CMC for this transaction.

About CP&P

CP&P is a leading supplier of precast concrete and pipe products to the Mid-Atlantic and South Atlantic regions, selling into seven core states from 17 strategically located facilities. The company offers a complete line of standard and highly engineered precast and reinforced concrete pipe solutions to infrastructure, non-residential, and residential construction markets, and is well positioned to benefit from the structural demand tailwinds in its core regions, including data center construction, stormwater management, industrial re-shoring and infrastructure investment. CP&P has established a strong competitive position through scale in local geographies, a track record of superior customer service, and unique design and engineering capabilities. CP&P was formed in 2012 as a joint venture between Americast, Inc. (a former subsidiary of Eagle Corporation) and Hanson Pipe and Precast LLC. Since 2022, all of the equity assets of CP&P have been fully owned by Eagle Corporation and ECPP, LLC.

About Precast Concrete and Concrete Pipe Products

Precast concrete and concrete pipe products are construction components formed by pouring concrete into a reusable mold, then curing it in a controlled manufacturing environment. The component is then transported in its final form to a construction site for installation. This process produces durable, ready-to-use components of reliable quality that can be installed quickly, saving time, and requiring less labor than pour-in-place techniques. Precast concrete and concrete pipe serve mission-critical applications often for site infrastructure such as utility connections, water supply, or stormwater management. Precast solutions are used widely across each region of the United States, with domestic industry revenues of approximately $30 billion.

About CMC

CMC is an innovative solutions provider helping build a stronger, safer, and more sustainable world. Through an extensive manufacturing network principally located in the United States and Central Europe, we offer products and technologies to meet the critical reinforcement needs of the global construction sector. CMC’s solutions support early-stage construction across a wide variety of applications, including infrastructure, non-residential, residential, industrial, and energy generation and transmission.

Source: Commercial Metals Company