Description of Worthington Enterprises Inc's Business Segments
Processed Steel Products
Our Processed Steel Products segment consists of two business units, Worthington
Steel and Gerstenslager.
Both Worthington Steel and Gerstenslager are intermediate processors of flat-rolled
steel. Worthington Steel occupies a niche in the steel industry by focusing
on products requiring exact specifications. These products typically cannot
be supplied as efficiently by steel mills or steel end-users. We believe that
Worthington Steel is one of the largest independent flat-rolled steel processors
in the United States. Gerstenslager is a leading independent supplier of automotive
quality exterior body panels to the North American automotive original equipment
and past model service markets. Gerstenslager's strength is its ability to handle
a large number of past model service and current model production automotive
and heavy-duty truck body parts.
Worthington Steel buys coils of steel from major integrated steel mills and
mini-mills and processes them to the precise type, thickness, length, width,
shape, temper and surface quality required by customer specifications. Our computer-aided
processing capabilities include, among others:
pickling, a chemical process using an acidic solution to remove surface oxide
which develops on hot-rolled steel;
slitting, which cuts steel to specific widths;
cold reduction, which achieves close tolerances of thickness and temper by
rolling;
hot-dipped galvanizing, which coats steel with zinc and zinc alloys through
a hot-dipped process;
hydrogen annealing, a thermal process that changes the hardness and certain
metallurgical characteristics of steel;
cutting-to-length, which cuts flattened steel to exact lengths;
tension leveling, a method of applying pressure to achieve precise flatness
tolerances for steel;
edging, which conditions the edges of the steel by imparting round, smooth
or knurled edges;
CleanCoat', a dry lubrication process; and
configured blanking, by which steel is stamped into specific shapes.
Worthington Steel also 'toll processes' steel for steel mills, large end-users,
service centers and other processors. Toll processing is different from our
typical steel processing because the mill or end-user retains title to the steel
and has the responsibility for selling the end product. Toll processing enhances
Worthington's participation in the market for wide sheet steel and large standard
orders, which is a market generally served by steel mills rather than by intermediate
steel processors.
Gerstenslager stamps, assembles, primes and packages exterior automotive body
parts and panels. We primarily own the steel used in our Gerstenslager operations
but occasionally process consigned material, similar to toll processing. Gerstenslager
processes a large number of past model service and current model production
automotive and heavy-duty truck parts, managing over 3,000 finished good part
numbers and over 25,000 die/fixture sets.
The Processed Steel Products industry is fragmented and highly competitive.
We compete with many other independent intermediate processors and, with respect
to automotive stamping, captive processors owned by the automotive companies,
independent tier-one suppliers of current model components and a number of smaller
competitors. We compete primarily on the basis of product quality, our ability
to meet delivery requirements and price. Our technical service and support for
material testing and customer specific applications enhance the quality of our
products.
We use our 'Worthington Steel' and 'Gerstenslager' trade names in our Processed
Steel Products segment, and we use the unregistered trademark 'CleanCoat'' in
connection with our dry lubrication process. We intend to continue the use of
our intellectual property. The 'CleanCoat'' trademark is important to our Processed
Steel Products segment, but we do not consider it material.
Metal Framing
Our Metal Framing segment consists of one business unit, Dietrich, which designs
and produces metal framing components and systems and related accessories for
the commercial and residential construction markets within the United States.
Our Metal Framing segment has 27 operating facilities located throughout the
United States. We believe that Dietrich is the largest national supplier of
metal framing products and supplies, supplying approximately halfAssumed to
be a 1.25-1.3B market. of the metal framing products sold in the United States.
We have over 2,400 customers, primarily consisting of wholesale distributors,
commercial and residential building contractors, and big box material retailers.
The light gauge metal framing industry is very competitive. We compete with
five large regional competitors and numerous small, more localized competitors.
We compete primarily on the basis of quality, service and price. Similar to
our Processed Steel Products segment, the proximity of our facilities to our
customers and their project sites provides us with a service advantage and impacts
our freight and shipping costs. Our products are transported almost exclusively
by common carrier. We have not quantified the extent to which facility location
has impacted our competitive position.
Dietrich uses the registered trademarks 'Spazzer'', 'TradeReady'' and 'Clinch-On'.'
The 'Spazzer'' trademark is used in connection with wall component products
that are the subject of two United States patents, four pending United States
patent applications and several pending foreign patent applications. The trademark
'TradeReady'' is used in connection with floor system products that are the
subject of two United States patents, three foreign patents, three pending United
States patent applications and five pending foreign patent applications. The
'Clinch-On'' trademark is used in connection with corner bead and metal trim
products for gypsum wallboard that are subject to United States patents. Aegis,
an unconsolidated joint venture, uses the 'Ultra-Span'' registered trademark
in connection with certain patents for proprietary roof trusses. We intend to
continue to use and renew each of our registered trademarks. Dietrich also has
a number of other patents and trade names relating to specialized products.
Although trademarks, trade names and patents are important to our Metal Framing
segment, none is considered material.
Pressure Cylinders
Our Pressure Cylinders segment consists of one business unit, Worthington Cylinders.
Worthington Cylinders operates six manufacturing facilities, three in Ohio
and one each in Austria, Canada and Portugal. The segment also operates one
consolidated joint venture, Worthington Cylinders a.s., in the Czech Republic.
Our Pressure Cylinders segment produces a diversified line of pressure cylinders,
including low-pressure liquefied petroleum gas ('LPG') and refrigerant gas cylinders,
and high-pressure and industrial/specialty gas cylinders. Our LPG cylinders
are sold to manufacturers, distributors and/or mass merchandisers and are used
for gas barbecue grills, recreational vehicle equipment, residential heating
systems, industrial forklifts and commercial/residential cooking (the latter,
generally outside North America).
Refrigerant cylinders are sold primarily to major refrigerant gas producers
and distributors and are used to hold refrigerant gases for commercial and residential
air conditioning and refrigeration systems and for automotive air conditioning
systems. High-pressure and industrial/specialty gas cylinders are sold primarily
to gas producers and distributors as containers for gases used in: cutting and
welding metals; breathing (medical, diving and firefighting); semiconductor
production; beverage delivery; and compressed natural gas systems. Worthington
Cylinders also produces recovery tanks for refrigerant gases, air reservoirs
for truck and trailer original equipment manufacturers, and non-refillable cylinders
for 'Balloon Time'' helium kits. While a large percentage of our cylinder sales
are made to major accounts, Worthington Cylinders has over 3,450 customers.
Worthington Cylinders' primary low-pressure cylinder products are steel cylinders
with refrigerant gas capacities of 15 to 1,000 lbs. and steel and aluminum cylinders
with LPG capacities of 4-1/4 to 420 lbs. In the United States and Canada, our
high-pressure and low-pressure cylinders are manufactured in accordance with
U.S. Department of Transportation and Transport Canada safety requirements,
respectively. Outside the United States and Canada, we manufacture cylinders
according to European Union specifications, as well as various other international
requirements and standards. Low-pressure cylinders are produced by precision
stamping, drawing and welding component parts to customer specifications. They
are then tested, painted and packaged as required. Our high-pressure cylinders
are manufactured by several processes, including deep drawing, tube spinning
and billet piercing.
Worthington Cylinders has two principal domestic competitors and several smaller
foreign competitors in its major low-pressure cylinder markets; however we believe
that we have the largest domestic market share. In our high-pressure cylinder
market, we compete against two principal domestic competitors and nine European
competitors. We believe that we have the leading market share of the European
industrial gas cylinder market and the European non-refillable refrigerant cylinder
market. As with our other segments, we compete on the basis of service, price
and quality.
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