Worthington Expands Role in Bakken, Williston Regions in Fiscal 2014, Looks East to China's Steel Market

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Researched by Industrial Info Resources (Sugar Land, Texas)--Diversified metals manufacturer Worthington Industries Incorporated (NYSE:WOR) (Columbus, Ohio) reported solid overall gains for the company's 2014 fiscal year, citing improving market conditions, especially in the Steel Processing segment, and an acquisition that strengthened its role in North Dakota's booming oil and gas markets. Net income was reported to be $151.3 million, a 10.89% increase from fiscal 2013.

Among the company's major achievements during the fourth quarter was its $28.9 million acquisition of Steffes Corporation's tank-manufacturing division, based in Dickinson, North Dakota. Steffes' Dickinson plant produces oilfield storage tanks for customers drilling in the Bakken Shale and Williston Basin regions. The acquisition complements Worthington's production of gas separators, gas production units and related wellhead equipment for oil and gas companies exploring the Bakken and Williston, as well as the Marcellus and Utica shales.

As part of its North American Metals & Minerals Project Database, Industrial Info is following progress at 21 operational plants owned by Worthington, including 11 in Ohio and two in Maryland. The Ohio-based facilities include a 70,000-ton-per-month steel-galvanizing plant in Monroe, which is undergoing a $3.6 million maintenance program. Minor monthly and as-needed maintenance will be performed to improve pickling, slitting, blanking and dry-lubing operations, running through June 2015.

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Net sales stood at $3.13 billion, a 19.68% increase from fiscal 2013. The Steel Processing segment nearly reached pre-downturn sales volumes and benefited from the consolidation of Tailor Welded Blanks (TWB), a laser-welded blanking joint venture, in which Worthington acquired a majority interest early in the fiscal year. Sales volumes also improved in the Pressure Cylinders segment, although unusually harsh winter weather negatively impacted the energy-related businesses. The Engineered Cabs segment saw a slight dip in sales amid flat market conditions.

"The integration of Palmer Tank, our second acquisition in the oil and gas energy-production space, has been completed, but the business had underperformed in the last two quarters, as a result of weather delays and production issues with the addition of a second shift," said Andy Rose, the executive vice president and chief financial officer for Worthington, in a conference call. "The business is performing better as of late, and we remain confident that it is well-positioned to capitalize on the growth in the energy markets in the U.S."

"We are now focused on integrating our newest energy platform in North Dakota as we complete our ability to deliver products and services to our customers in all of the key energy regions."

Worthington also sees a strong future in the Chinese market, where it reached an agreement with Nisshin Steel Company Limited and Marubeni-Itochu Steel Incorporated to form Zhejiang Nisshin Worthington Precision Specialty Steel Company Limited, which will produce cold-rolled strip steel at a plant that is to be constructed in Pinghu City, in the Zhejiang province. The plant will have an annual capacity of about 130,000 tons, and its product will be geared toward the automotive industry.

"We recently received anti-trust approval from Beijing, and remain on track for a start-up there in the first half of 2015," said Mark Russell, the president and chief operating officer for Worthington, in the conference call. "Most of our other joint ventures had a solid quarter, with most performances as good or better than a year ago or previous quarters. As is often the case with us, WAVE led the way. ClarkDietrich is a notable exception with a softer quarter, but we think that will prove to be temporary."

Worthington executives expect to see another year of growth in 2015, with automotive-related businesses leading the Steel Processing segment and construction-related businesses continuing to rebound. The Pressure Cylinders segment is expected to see a stronger market environment, with driven by demand for energy, industrial, retail and alternative fuels products.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.