Ambitious Goals for Worthington Industries Require Caution
The company is more than a play on traditional steel markets, but higher returns may be difficult to sustain.
Diversified metal processor Worthington Industries (WOR) has spent the past several years reducing its exposure to the anemic construction markets while expanding its product offerings, acquiring higher-margin businesses, and implementing a transformation plan to generate greater efficiency and sustainably improve returns. While we commend management's call to action, we see a few hurdles in achieving margin and growth targets, particularly as the landscape of the company looks quite different today following plant closures and divestitures alongside numerous acquisitions in the past few years.
Acquisitions, Transformation Efforts Fundamental to Earnings Growth Strategy
Worthington launched its transformation plan in 2008 to produce cost reduction, higher asset efficiency, and process improvement, with the ultimate goal of increasing margins over the long term. On a plant-by-plant basis, the transformation plan involved identifying areas with room for performance improvement and implementing solutions, as well as methods to track and measure performance from inventory management to operating processes to sales channels. Steel processing has completed the transformation, while the process is under way in pressure cylinders and just launched in engineered cabs (acquired in January).
Bridget Freas does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.