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Successful Joint Ventures Drive Worthington Earnings

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Apr. 3 2015, Published 1:09 p.m. ET

Worthington earnings

Previously in this series, we looked at some of Worthington Industries’s (WOR) major joint ventures, or JVs. These JVs serve the automobile, energy, and steel industries. Its oil and gas equipment sales grew 84% in 2Q 2015.

Worthington’s fiscal year ends on May 31. Commercial Metals Company (CMC) runs its financial year from July to August.

Oil and gas equipment now make up 8% of Worthington’s net sales. The automobile sector is its most important customer base, accounting for 39% of total sales. The construction sector is the second-largest sales contributor, bringing in 12% of total sales last quarter.

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Nucor (NUE) and Steel Dynamics (STLD) are major suppliers to the construction industry. Each of these companies form ~3.7% of the SPDR S&P Metals and Mining ETF (XME). Currently, XME is ~35% invested in steel plays. You might consider investing in XME as an alternate way to play the diversified metals and mining industry.

Joint venture earnings

The chart above shows Worthington’s joint venture earnings, which constitute almost one-third of its total pretax earnings. Income from these joint ventures has boosted the company’s earnings and cash flow. This has helped Worthington withstand its losses from the Engineered Cabs segment.

Consolidated earnings

Investors should watch Worthington’s joint venture earnings and its earnings from other business segments. As previously noted, Worthington operates three business segments:

  1. Steel
  2. Pressure Cylinders
  3. Engineered Cabs

In the next part of our series on Worthington Industries, we’ll see how these segments have contributed to its consolidated earnings.

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