This article
was first published by Seeking Alpha on July 1, 2015
By Sarfaraz
A. Khan
Summary: Worthington
Industries has a great business model, but it is at the mercy of the market. The
company’s top and bottom-line is shrinking due to weakness in the macro
environment. The future outlook of steel processing is looking better, but the
other two segments might continue to struggle.
Worthington
Industries, one of North America's leading steel processors and the
world's biggest supplier of pressure tanks and cylinders, has a solid business
model. Thanks to a diverse customer base, the Columbus, Ohio-based company does
not rely on any single sector for most of its revenues. But there's little the
company can do in the face of weakness in prices of various commodities and
sluggish economic growth.
Earnings
Recap
As per the
recently announced fourth quarter results, Worthington gets 63% of its revenues
from steel processing segment in which the company provides its products to
automakers, including General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler.
Nearly 30% of the revenues come from the pressure cylinders segment in which Worthington
primarily serves the energy industry. Most of the remaining revenues come from
the engineered cabs division.
