Taking Stock of Worthington Industries’ Risk Factors

Industrial manufacturing company Worthington Industries (WOR) provides value-added steel processing and laser-welded products. It caters to customers across transportation, construction, industrial, agriculture, retail, and energy industries through brands like Coleman, Bernzomatic, Balloon Time, Mag Torch, Garden-Weasel, and Hawkeye.

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Let’s take a look at the company’s financial performance and what’s changed in its key risk factors that investors should know.

Driven by higher volume in Steel Processing and Pressure Cylinders, along with higher selling prices in Steel Processing, Worthington’s revenue increased 60% year-over-year to $978.3 million in Q4 2021.

Improved direct spreads in Steel Processing and increased volumes helped the company increase gross margin by $136.3 million year-over-year to $226.1 million, which, in turn, boosted earnings per share to $2.15 versus $0.29 a year ago.

The President and CEO of Worthington, Andy Rose, said, “We had an exceptional fiscal 2021 generating record fourth quarter and annual earnings per share. While we benefitted from rising steel prices, we also saw robust demand across most of our businesses and joint ventures.” (See Worthington Industries stock chart on TipRanks)

Looking ahead to Fiscal Year 2022, Rose said, “As we enter our new fiscal year, demand levels and backlogs are quite good across our key end markets. We expect results will be positively impacted by our recent acquisitions and actions we have taken to divest underperforming assets.”

Now, let’s look at what has changed in the company’s key risk factors profile.

According to the new Tipranks’ Risk Factors tool, Worthington Industries’ main risk category is Finance & Corporate, which accounts for 27% of the total 26 risks identified. Since May, the company has changed one key risk factor under the Production category.

The company acknowledges that a loss in volume or decrease in business from any of its key customers could negatively impact Worthington’s sales and financial condition. Due to consolidation in Worthington’s end markets, its performance is increasingly sensitive to the financial conditions of its top customers.

Additionally, amidst the current market dynamics, steelmakers have lowered their production capacities, and the number of facilities from which Worthington can source steel has decreased. Therefore, if there is a supply disruption, especially for certain types of specialty steel, it may affect Worthington.

The Finance & Corporate risk factor’s sector average is at 40%, compared to Worthington’s 27%. Shares are up 60% over the past year.