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Recent Industry Performance
In recent years, the U.S. manufacturing sector has experienced fluctuations in growth. For instance, shipment value declined by 9.2% in 2020 amidst the COVID-19 pandemic and then surged by 16.8% in 2021 and 13.8% in 2022 as the economy recovered. During 2023, the value of U.S. manufacturing shipments was flat compared to 2022.
According to industry analyst Vertical IQ, much of the slower growth trends resulted from both economic uncertainty and declining backlogs. Notably, the fabricated metal products industry saw a similar pattern and registered growth of just 0.3% in 2023 following two years of strong results. However, the U.S. Census Bureau reports that the value of shipments of fabricated metal products grew 2.7% over the first eight months of 2024 compared to the same period one year prior.
Meanwhile, according to The Fabricator, the metal forming industry experienced some countervailing trends in early 2024 that caused growth to be “mildly sluggish.” Some markets softened due to high interest rates, while other markets, such as those related to semiconductors, infrastructure and power generation, experienced more robust growth. Further, supply chain problems have generally lessened but still remain for some metal formers.
Consistent with the industry as a whole, select publicly traded metal forming companies are seeing mixed financial results, as demonstrated by the following:
Mayville Engineering Company (“MEC”)
- During the second quarter of 2024, MEC recorded net sales of $163.6 million, up 17.7% from $139.0 million during the second quarter of 2023. This growth was driven, in part, by an acquisition made during the third quarter of 2023 as well as rising organic volumes in the firm’s powersports, construction and access, and commercial vehicle end markets.
- During the third quarter of 2024, MEC’s net sales totaled $135.4 million, down 14.4% from $158.2 million one year prior. MEC notes that the quarterly decline was driven by falling consumer demand in all of the firm’s key end markets.
“Order activity troughed during the third quarter, as customers took corrective action to de-stock channel inventories amid a period of lower consumption.” – Jag Reddy, president and CEO of MEC
Reddy continues, “Given third quarter softness in customer demand, we have reduced our full year 2024 net sales and Adjusted EBITDA guidance by 7% and 13%, respectively, at the midpoint of the range. Our guidance accounts for reduced order activity during the second half of 2024, partially offset by recent cost actions, operational excellence initiatives, and commercial wins. As end customer equipment financing rates decline over the coming quarters, we anticipate a corresponding normalization in customer order activity and broader-end market demand beginning in the first half of 2025.” Overall, MEC anticipates that net sales will total between $580.0 million and $590.0 million in 2024.
Ryerson
- During the second quarter of 2024, Ryerson’s net sales totaled $1.2 billion, down 1.1% from $1.3 billion in the second quarter of 2023.
- The firm generated net sales of $1.1 billion during the third quarter of 2024, a decline of 9.6% from the same quarter one year prior when net sales totaled $1.2 billion.
- Ryerson notes that net sales fell due to seasonal and weather impacts that contributed to volume declines as well as lower average selling prices.
“Over the third quarter we managed the business effectively through a contractionary industrial metals and manufacturing environment that produced compressed margins, most notably in carbon steels and across the commodity spectrum with lagging OEM customer contract price resets. Despite these challenges, we experienced improvements in key performance indicators including cash flow, expense and working capital management, and most importantly, we are seeing investment related growth pains and disruptions across our network beginning to subside as we move through the balance of 2024 with budding optimism for 2025.” – Eddie Lehner, president and CEO of Ryerson
Moving forward, Ryerson anticipates that net sales during the fourth quarter of 2024 will likely be approximately $1.0 billion.
Worthington Steel, Inc. (“Worthington”)
- During Worthington’s fiscal 2024 fourth quarter—which ended May 31, 2024—net sales totaled $911.0 million, up 3.0% from $884.0 million in the fourth quarter of fiscal 2023.
- During Worthington’s fiscal 2025 first quarter, net sales were $834.0 million, down 8.0% from $905.8 million in the first fiscal quarter of 2024.
- The decline was mainly driven by falling direct selling prices, direct tons and toll tons.
“The first quarter of fiscal year 2025 was solid for Worthington Steel despite some headwinds…Demand is stable and we continue to deliver unique, custom, value-added solutions for our customers by transforming metals, providing lightweighting solutions and supporting electrification.” – Geoff Gilmore, president and CEO of Worthington Steel
Gilmore did not provide an outlook for the firm.
Outlook
According to the Precision Metalforming Association’s (“PMA”) most recent “Business Conditions Report,” published in October 2024, 50.0% of respondents—which include 98 metal forming companies in the U.S. and Canada—anticipate no change in business activity during the months of November 2024, December 2024 and January 2025. At the same time, 37.0% of respondents project that there will be a decline in business activity over the three-month period, which is up from 31.0% of respondents to the September 2024 survey. Just 13.0% predict an increase in business activity (compared to 15.0% in September 2024). Regarding incoming orders during the three-month period, 24.0% expect an increase in orders, while 42.0% predict no change and 34.0% anticipate a decline.
“Metalformers are approaching the next three months with increased caution, partly due to uncertainty surrounding the upcoming presidential election and Congress’s delay in reinstating key tax incentives. That said, I just returned from FABTECH in Orlando, where initial concerns about the impact of two hurricanes were quickly dispelled. Attendance was strong, with 32,000 attendees, and our METALFORM area featured nearly 250 booths. Reports indicated brisk lead generation and even some on-the-spot sales. Overall, the show was very positive and the capital-equipment market continues to be very strong, which is a good sign.” – David Klotz, president of the PMA
Meanwhile, industry analyst First Research anticipates that revenue for the U.S. metal forming industry will grow by 3.6% in 2024. Thereafter, First Research projects that industry revenue will increase at a slightly more subdued pace. Indeed, revenue is forecast to expand by 2.5% in 2025, 2.6% in 2026, 2.4% in 2027, and 2.3% in 2028.
Metal Forming Industry Trends/Drivers
Steel Prices Fall
Steel prices continued their downward trajectory during the first half of 2024, according to the latest information from market analysis and forecasting firm CRU. Indeed, after reaching $1,135 per ton in December 2023, hot-rolled coil (“HRC”) steel prices fell to $931 per ton in March 2024 and $725 per ton in June 2024. Analysts anticipate that HRC steel prices will finish the year at approximately $719 per ton.
Prices have been falling due to a number of factors, including the fact that the market is recovering from pandemic-induced shortages. Josh Spoores, head of Steel Americas Analysis at CRU, notes, “It took multiple quarters to work off those shortages, and we’re now seeing a slowing of momentum as the market moves toward a steadier state.” At the same time, China and the U.S. are using less steel. China’s post-pandemic recovery has been slow, while the construction industry in the U.S. has been hampered by high interest rates. However, Citi Research indicates that steel prices could be affected by several wildcards, including the U.S. election, global conflicts and potential economic stimulus measures taken in China.
Steel and Aluminum Tariffs
In late September 2024, the Biden administration imposed 25.0% tariffs on Chinese steel and aluminum. According to the Office of the U.S. Trade Representative, the tariffs were assessed, in addition to duties on other Chinese imports, due to China’s “…policies, and practices related to technology transfer, intellectual property, and innovation.” Notably, these tariffs are in addition to the Section 232-related tariffs on imported steel (25.0%) and aluminum (10.0%), which were issued by President Trump in 2018.
On September 25, 2024, the Department of Commerce’s International Trade Administration announced that it would begin antidumping duty investigations on corrosion-resistant steel products from several countries, including Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, the United Arab Emirates and Vietnam. The agency also plans to conduct countervailing duty investigations on corrosion-resistant steel products from Brazil, Canada, Mexico and Vietnam. According to The Fabricator, these actions could lead to more tariffs, “as high as 159% in the case of Vietnam and as low as 9% in the case of Turkey.”
Lead Times and Shipping Levels
According to the PMA’s October 2024 “Business Conditions Report,” 9.0% of metal forming companies reported growth in lead times, down from 10.0% in September 2024. Further, the PMA notes that shipping levels at metal forming companies also “trended downward” in October 2024. Just 10.0% of respondents reported a rise in shipping levels (down from 19.0% in September 2024), while 57.0% said that there was no change (up from 45.0%) and 33.0% noted a decline (down from 36.0%).
Heat Rule Proposed by the Occupational Safety and Health Administration (“OSHA”)
In August 2024, OSHA published a Notice of Proposed Rulemaking for Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings. The agency proposes that manufacturing firms have a written plan regarding the evaluation and control of heat hazards in their work environments since heat-generating processes and equipment used in manufacturing can generate hazardous levels of heat for workers. OSHA plans to accept comments on the proposed rule through the end of 2024. As a result, the rule may not take effect until late in 2025 or 2026.
Notably, the Forging Industry Association has concerns with what they call a “one-size-fits-all” tone of the proposed rule. The association also expressed skepticism regarding the feasibility of reducing temperatures indoors to the levels proposed by OSHA.
Recent M&A Trends for the Metal Forming Industry
Dealmaking in the metal forming industry has been much more robust in 2024 than it was throughout 2023. According to The Fabricator, “Private equity and other investors are pumping money into this industry and consolidating what used to be small (and some not-so-small), privately held, often family-run businesses.”
Following are some of the deals that occurred in the metal forming industry in recent months:
Ward Manufacturing Co. Acquires The Line Group, Inc.
In June 2024, Chicago, IL-based Ward Manufacturing, which specializes in metal stamping, announced the acquisition of Arlington Heights, IL-based The Line Group, a manufacturer of precision metal stampings, electro-mechanical assemblies and metal fabrications.
“We continue to aggressively invest in our company’s future, and this acquisition is consistent with our focus on strategic growth by expanding our customer base, diversifying the industries we serve, and expanding our capabilities and expertise.” – Tom Ward, president of Ward Manufacturing
JK Tool Acquires Precise Tool & Die
JK Tool, a precision stamping tool manufacturer and division of Weiss-Aug Group based in New Kensington, PA, acquired the assets of Precise Tool & Die, a manufacturer of precision progressive stamping tools based in Leechburg, PA, in July 2024.
“With tool making at the heart of our business, we are invested in continuing to grow our capabilities and capacity for progressive dies, spares and components.” – Dieter Weissenrieder, president and CEO of Weiss-Aug Group
“There is a great synergy between our two businesses, and joining with the JK Tool division of Weiss-Aug Group really will elevate our capability to support customers with best-in-class technology.” – Evan Slee, president of Precise Tool & Die
Russel Metals Acquires Seven Samuel, Son & Co. Service Centers
In August 2024, Canadian metals distribution and processing company Russel Metals acquired seven service centers from Ontario-based Samuel, Son & Co. The locations of the service centers acquired are Winnipeg, Manitoba; Calgary, Alberta; Nisku, Alberta; Langley, British Columbia; Surrey, British Columbia; Buffalo, NY; and Pittsburgh, PA. Samuel, Son & Co. will retain its Delta, British Columbia, location to conduct an orderly shut-down of the facility.
“Over the past several years, we’ve reviewed a significant number of potential acquisition opportunities and are excited to announce this transaction, as our respective businesses are very complementary from both geographic and product mix perspectives. We look forward to having the approximately 340 Samuel employees join the Russel family.” – John Reid, president and CEO of Russel Metals\
Wilson Tool International Acquires PASS Stanztechnik AG (“PASS AG”)
Wilson Tool International, the largest independent manufacturer of tooling systems for press brakes, punch presses and punch and die components, acquired PASS AG, a provider of punching tools and custom solutions, in September 2024. Wilson Tool International’s global headquarters are located in White Bear Lake, MN, while PASS AG is located in Creuβen, Germany.
“This acquisition underscores our ongoing commitment to the punching industry and ushers in a new era of growth and innovation for both companies. As family-owned businesses, Wilson Tool and PASS AG share foundational values centered on customer service, quality, innovation, and the well-being of our employees.” – Paul Johnson, CEO of Wilson Tool Enterprises
“By joining the Wilson Group, PASS Stanztechnik AG gains access to a larger global distribution network, which in turn enables support for our OEM partners and customers around the world.” – Michael Bauer, CEO of PASS AG
Notable M&A Transactions
Foundries, Forging & Castings
| Year Closed | Target Name | Acquirer Name | Target Business Description |
|---|---|---|---|
| 2024 | ATEK Companies, Inc. | Wisconsin Aluminum Foundry Company, Inc. | Supplies aluminum castings |
| 2024 | Renaissance Manufacturing Group – Waukesha LLC | The Lawton Standard Co. | Provides metal casting services |
| 2024 | Cast-Rite Corporation | ADC Aerospace | Manufactures and supplies die casting and injection molding parts |
| 2024 | Concast Metal Products Company/Randall Bearings, Inc. | Wieland-Werke Aktiengesellschaft | Manufactures continuous cast alloy products |
| 2024 | Polytorx, LLC | FORTA Corporation | Manufactures twisted steel micro rebar products |
| 2023 | BP Metals, LLC | Generation Growth Capital, Inc. | Produces custom-designed industrial castings and other metal products |
| 2023 | Cast Products, Inc. | NSI Industries, LLC | Manufactures zinc die-casting products |
| 2023 | Rane Light Metal Castings Inc. | Kentucky Industrial Holdings, Inc. | Manufactures high pressure light metal casting for automotive industry |
| 2023 | Turbo Components, Inc. | P&THE Manufacturing Michigan, LLC | Manufactures aluminum casting products |
| 2023 | Tooling Technology, LLC | GenNx360 Capital Partners | Supplies cast aluminum thermoform tooling products |
| 2023 | Horizon Metals Inc. | Victaulic Company | Operates as an iron and steel foundry |
| 2023 | Dart Casting, Inc. | General Die Casters, Inc. | Manufacturers high-pressure aluminum die castings |
| 2023 | TCI Texarkana, Inc. | Ta Chen International, Inc. | Manufacturers aluminum coil and sheet |
| 2022 | Standard Locknut, LLC | Tonka Bay Equity Partners LLC | Machined components |
| 2022 | Northern Iron & Machine | The Lawton Standard Co. | Manufactures grey castings and ductile castings |
| 2022 | Wellman Dynamics Corporation | TRM Equity | Produces aluminum and magnesium sand castings |
| 2022 | Tenere Inc. | CGI Automated Manufacturing, LLC | Manufacturers metal fabrication and injection molding products |
| 2022 | Neenah Enterprises, Inc. | Charolette Pipe and Foundry Company | Provides metal castings & steel forgings |
| 2022 | Monofrax LLC | Saint-Gobain Ceramics & Plastics, Inc. | Manufactures fused cast refractories |
| 2022 | DEE Inc. | Wisconsin Aluminum Foundry Company, Inc. | Manufactures aluminum castings |
| 2022 | TDE Group, Inc. | BrightView Holdings, Inc. (NYSE:BV) | Provides die casting services |
| 2022 | Cast Corporation | Métal 7 Inc. | Manufactures furnace and alloy castings |
| 2022 | R & B Grinding Co., Inc. | Willis & Smith Capital, LLC | Manufacturer of precision metal components |
| 2021 | Assets of US Foundry & Manufacturing Corporation | Neenah Enterprises, Inc. | Produces municipal casting products |
| 2021 | Midwest Die Corporation | Lateral Industries, LLC | Manufactures molds for the die casting industry |
| 2021 | Assets of Omaha Steel | Owen Industries, Inc. | Provides steel casting solutions |
| 2021 | Grossman Iron & Steel Co. | Advantage Metals Recycling LLC | Processor of ferrous and non-ferrous scrap metals |
Metal Stamping
| Year Closed | Target Name | Acquirer Name | Target Business Description |
|---|---|---|---|
| 2024 | Hobson & Motzer, Inc. | Vantedge Medical | Manufactures precision metal stamping components |
| 2024 | Wolverine Advanced Materials, LLC | Center Rock Capital Partners, LP | Develops, manufactures, and supplies elastomer coated metals |
| 2024 | The LINE Group, Inc. | Ward Manufacturing Co. | Manufactures precision metal stampings and metal fabrications |
| 2024 | Samtan Engineering Corporation | Fairbanks Morse Defense | Diversified metals and mining company |
| 2023 | Connor Manufacturing Services, Inc. | Amphenol Corporation | Provides precision metal stamping solutions |
| 2023 | Performance Stamping Co., Inc. | Willis & Smith Capital, LLC | Provides metal stamping services |
| 2023 | Gem Manufacturing Co., Inc. | CORE Industrial Partners, LLC | Manufacturers metal products, stampings, and mechanical assemblies |
| 2023 | Utitec, Inc. | Cadence, Inc. | Offers flat stamping services and manufacturer of metal components |
| 2021 | Precision Tool & Die, Inc. | CORE Industrial Partners LLC | Offers metal stamping services |
| 2021 | Taggard Enterprises, Inc. | Phoenix Stamping Group, LLC | Manufacturer of metal stampings |
| 2020 | Incodema Inc. | CORE Industrial Partners LLC | Manufacturer of prototype sheet metal stampings |
| 2020 | Precision Industries, Inc. | Live Ventures Incorporated (NasdaqCM:LIVE) | Manufacturer of stampings and assemblies |
| 2020 | Traverse City Products, Inc. | Charter Capital Partners, Investment Arm; Colfax Creek Capital, LLC | Manufacturer of roll forms, stampings and assemblies |
Metal Machining
| Year Closed | Target Name | Acquirer Name | Target Business Description |
|---|---|---|---|
| 2024 | Premier Precision Machining PA, LLC | Rand Machine Products, Inc. | Provides plating, grinding, heat treating, painting, and welding services |
| 2024 | Golden Harvest, Inc. | Atlas-Ssi, Inc. | Processes aluminum and stainless steel water control gates |
| 2024 | Versatile Mold and Design, Inc. | The Heico Companies LLC | Offers molding, tooling, polishing, stamping dies, and injection services |
| 2024 | Vickers Engineering, Inc. | Metal Forming and Coining, LLC | Offers precision machining, assembly, and supply chain management services |
| 2023 | Cremach Tech, Inc. | Brooks Instrument, LLC | Provides precision CNC machining services |
| 2023 | Precision Industries, Inc. | Drivetrain, LLC. | Provides hard chrome plating services |
| 2023 | Buffalo Tungsten Inc. | Sandvik Machining Solutions AB | Offers metal machining services |
| 2023 | H.C. Starck Solutions Services, Inc. | Elmet Technologies, LLC | Engages in metal fabrication and manufacturing of machined products |
| 2023 | Forged Components, Inc. | Westbrook Energy Group | Manufactures and machines integral connections for pressure vessels |
| 2023 | Dynamac, Inc. | Continuim Equity Management, LP | Engages in precision machining of aluminum, stainless, and copper |
| 2023 | Coining Technologies Inc. | Gem Manufacturing Co., Inc. | Manufactures precision metal components |
| 2023 | JKS Machine, Inc. | Compass Precision, LLC | Manufacturers Inconel, Monel and titanium metals |
| 2022 | Caliber Precision, Inc. | Northwest Metalcraft Inc. | Provides CNC machining and related services |
| 2022 | Evans Industries Inc./Little Enterprises, LLC | Momentum Manufacturing Group | Provides precision machining services |
| 2022 | George Industries LLC | Behrman Brothers Management Corp. | Engages in machining and sheet metal fabrication |
| 2022 | Nexus Automation | Hudson Street Solutions, Inc. | Engages in CNC machining and box assembly service |
| 2022 | Fabrication Concepts Corporation, Inc. (dba Fabcon) | Tide Rock Holdings LLC | Precision sheet metal fabrication and contract manufacturing company |
| 2022 | Casey Tool And Machine Co., Inc. | Milton Industries, INC. | Prototype, hard tooling, and production run manufacturer |
| 2022 | BendTec Inc. | United Weld Holdings | Provides steel bending and fabrication services |
| 2022 | Mistequay Group, Ltd. | Textron Aviation Inc. | Provides manufacturing services in high end machining |
| 2022 | Haven Manufacturing LLC | CGI Automated Manufacturing, LLC | Provides machined parts for medical devices and equipment |
| 2021 | Harliss Specialties Corporation | Vahterus Oy | Provides welding, machining and fabrication services |
Metal Fabrication
| Year Closed | Target Name | Acquirer Name | Target Business Description |
|---|---|---|---|
| 2024 | Hobson & Motzer, Inc. | Vantedge Medical | Manufactures precision metal stamping components |
| 2024 | Wolverine Advanced Materials, LLC | Center Rock Capital Partners, LP | Develops, manufactures, and supplies elastomer coated metals |
| 2024 | The LINE Group, Inc. | Ward Manufacturing Co. | Manufactures precision metal stampings and metal fabrications |
| 2024 | Samtan Engineering Corporation | Fairbanks Morse Defense | Diversified metals and mining company |
| 2023 | Connor Manufacturing Services, Inc. | Amphenol Corporation | Provides precision metal stamping solutions |
| 2023 | Performance Stamping Co., Inc. | Willis & Smith Capital, LLC | Provides metal stamping services |
| 2023 | Gem Manufacturing Co., Inc. | CORE Industrial Partners, LLC | Manufacturers metal products, stampings, and mechanical assemblies |
| 2023 | Utitec, Inc. | Cadence, Inc. | Offers flat stamping services and manufacturer of metal components |
| 2021 | Precision Tool & Die, Inc. | CORE Industrial Partners LLC | Offers metal stamping services |
| 2021 | Taggard Enterprises, Inc. | Phoenix Stamping Group, LLC | Manufacturer of metal stampings |
| 2020 | Incodema Inc. | CORE Industrial Partners LLC | Manufacturer of prototype sheet metal stampings |
| 2020 | Precision Industries, Inc. | Live Ventures Incorporated (NasdaqCM:LIVE) | Manufacturer of stampings and assemblies |
| 2020 | Traverse City Products, Inc. | Charter Capital Partners, Investment Arm; Colfax Creek Capital, LLC | Manufacturer of roll forms, stampings and assemblies |
Performance of Metal Forming Indices vs. S&P 500
Publicly-Traded Metal Forming Companies
Terry Bressler is a Managing Director and can be contacted at 312.348.1323 or by email, tbressler@prairiecap.com.
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