Worthington Industries Steel Processing Spinoff Notes

October 9, 2023 Update

Worthington Industries filed its Form 10 for its upcoming steel processing spin-off

September 4, 2023 Update

– Good write-up that highlights an opportunity in the RemainCo

September 30, 2022 Update

Worthington Industries (WOR) announced on September 29, 2022 that its plans to spin-off its steel processing business with the expectations that the separation will be completed by early 2024.

As of 8/31/2022, on a TTM basis, “New Worthington” (the RemainCo) generated $1.39BN of sales (25% of total) and $347MM of adjusted EBITDA (64% of total). It will retain and focus on the Consumer Products, Building Products and Sustainable Energy Solutions.

The spin-off (Worthington Steel) is a steel processor and serves the Automotive, Construction, Agriculture, and Heavy Truck markets. On a TTM basis, the spin-off generated $4.1BN of sales (75% of total) and $192MM of adjusted EBITDA (36% of total).

Both businesses look quite decent but are cyclical. On a consolidated basis, the stock looks attractively valued at 6.7x forward EBITDA and 6.0x forward free cash flow. I will dig in more, but I imagine this transaction will unlock value.