Understanding the Worthington Pressure Cylinder Segment



Pressure cylinder operations

Previously, we learned about Worthington Industries’ (WOR) Steel segment operations. Here, we’ll look at its Pressure Cylinder segment. This segment accounts for almost one-sixth of its operating income. WOR produces several industrial products.

Kennametal (KMT) and Danaher (DHR) also supply the industrial sector. Danaher currently forms 1.95% of the iShares U.S. Industrials ETF (IYJ).

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Major industries

The Pressure Cylinder segment supplies four major industries, as you can see in the graphic above. Industrial products are the biggest contributor to this segment’s revenues. Worthington supplies liquefied petroleum gas gas tanks, industrial gas tanks, and refrigerant and other specialty tanks that are used in diverse industrial and commercial applications.

Consumer products account for a little over a quarter of this segment’s revenues. Worthington manufactures handheld torches, solders, helium kits, et cetera.

Oil and gas equipment

Oil and gas equipment accounts for another quarter of this segment’s revenues. Worthington provides custom solutions for energy storage, processing, and transportation. Its cylinders and cabs find several uses in the energy industry.

The energy industry has been hit hard by the recent decline in crude oil prices. Worthington supplies products to several shale plays in the United States. The company’s sales to the energy sector could also come under pressure, as leading energy companies like ConocoPhillips (COP) have reduced their capital expenditure budget.

COP currently forms 1.1% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

The alternate fuels segment accounts for 7% of the Pressure Cylinder segment’s revenues. Worthington supplies cylinders to store alternate fuels such as compressed natural gas.

Engineered Cabs is Worthington’s third business segment. This segment has generated operating losses for the last few quarters, as we’ll learn in the next part of this series.


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