Operations and Facilities - Worthington Industries operates 74 manufacturing facilities across 22 states and 7 countries, with 26 facilities operated by wholly-owned subsidiaries[21]. - The company operates 16 manufacturing facilities across the United States and Europe, including locations in Alabama, California, and Poland[50]. - The company operates 26 manufacturing facilities and 9 warehouses, with a total of approximately 9,600,000 square feet of operational space[134]. - The Steel Processing segment operates eight manufacturing facilities, while the Pressure Cylinders segment has 16 facilities across various states and countries[137]. Financial Performance - Worthington Industries reported net sales of $3,059,119,000 for the fiscal year ended May 31, 2020, a decrease of 18.6% compared to $3,759,556,000 in 2019[165]. - The company's gross margin for 2020 was $443,337,000, down from $479,955,000 in 2019, reflecting a decline of 7.5%[165]. - Net earnings attributable to controlling interest decreased to $78,796,000 in 2020, a decline of 48.6% from $153,455,000 in 2019[165]. - Earnings per share (diluted) dropped to $1.41 in 2020, down 46% from $2.61 in the previous year[165]. - Total current assets decreased to $983,179,000 in 2020 from $1,165,913,000 in 2019, a decline of 15.7%[165]. - Total debt was reported at $699,665,000, down from $749,299,000 in 2019, indicating a reduction of 6.9%[165]. - Cash dividends declared increased slightly to $53,721,000 in 2020 from $53,391,000 in 2019, reflecting a growth of 0.6%[165]. - The company experienced an impairment of goodwill and long-lived assets amounting to $82,690,000 in 2020, compared to $7,817,000 in 2019[165]. - Worthington Industries' total assets decreased to $2,331,515,000 in 2020 from $2,510,796,000 in 2019, a decline of 7.1%[165]. - The company reported capital expenditures of $126,251,000 in 2020, an increase from $94,901,000 in 2019, representing a growth of 33%[165]. Market and Customer Dynamics - For fiscal 2020, Steel Processing generated approximately 61% of consolidated net sales, while Pressure Cylinders accounted for about 37%[39][46]. - Steel Processing served around 800 customers, while Pressure Cylinders served approximately 3,700 customers, primarily in the United States[25]. - The top three customers in Steel Processing represented approximately 23% of the segment's total net sales in fiscal 2020[42]. - In fiscal 2020, Pressure Cylinders served approximately 3,700 customers, with no single customer representing more than 10% of net sales[50]. - The automotive market accounted for approximately 53% of net sales in the Steel Processing segment, significantly impacted by North American vehicle production declines[180]. Impacts of COVID-19 - The COVID-19 pandemic has had significant adverse effects on the company's business, financial position, and results of operations[71]. - Sales are generally strongest in the fourth quarter, but fiscal 2020 saw weaker demand due to the COVID-19 pandemic[61]. - The company took measures to right-size its workforce, including furloughs and permanent reductions, in response to decreased demand due to COVID-19[176]. Acquisitions and Investments - The company completed the acquisition of Heidtman Steel Products' Cleveland facility for $29.6 million, enhancing its pickling and slitting capabilities[30]. - Capital expenditures totaled $95.5 million in fiscal 2020, with significant investments in Pressure Cylinders including $9.9 million for new production lines[205]. Risks and Challenges - Intense competition in the market may result in decreased demand, market share, and pricing pressures, adversely affecting financial outcomes[77]. - Financial difficulties and bankruptcy filings by customers could lead to reduced demand and changes in purchasing behavior, negatively impacting sales and cash flows[78]. - Volatility in natural gas and oil prices may adversely affect demand for oil and gas equipment products, impacting overall financial performance[79]. - The company faces risks from volatility in capital and credit markets, which could restrict access to credit and negatively affect customer purchasing capabilities[81]. - Fluctuations in raw material prices, particularly steel, could significantly impact costs and financial results if price increases cannot be passed on to customers[83]. - Interruptions in the supply of key raw materials could adversely affect manufacturing capabilities and financial performance[84]. - A significant loss of business from key automotive customers could negatively impact sales, as over half of net sales in Steel Processing are to automotive-related customers[90]. - Rising freight and energy costs could increase operating expenses, negatively impacting financial results if these costs cannot be fully recovered through price increases[100]. - The company relies on third parties for freight services, and any increase in transportation costs or lack of availability could adversely affect operations and customer relationships[101]. Shareholder and Governance - The principal shareholder, John P. McConnell, beneficially owns approximately 31% of the outstanding common shares, which may allow him to exert significant influence over shareholder votes[117]. - The company has maintained a revolving trade accounts receivable securitization facility, reducing its borrowing capacity from $50.0 million to $10.0 million as of January 13, 2020[213]. - The company has paid a dividend every quarter since becoming public in 1968, although future payments are not guaranteed[217]. Legal and Compliance - The company is subject to various legal and compliance risks, which could negatively impact results of operations and liquidity[111]. - The company is involved in various legal proceedings but does not expect any to have a material adverse effect on its financial position[141]. Economic Environment - The U.S. GDP growth rate for fiscal 2020 was 1.9%, down from 2.8% in fiscal 2019, indicating a weaker economic environment[183]. - Economic instability could result in future asset impairments, negatively affecting reported earnings and net worth[132].
Worthington Industries(WOR_V) - 2020 Q4 - Annual Report