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Worthington's steel, metal framing divisions eye building uptick

Keywords: Tags  Worthington Industries, construction market, residential, commercial, steel, metal buildings, Andy Rose, Mark Russell John McConnell

CHICAGO — When construction activity finally heats up, it should be a boon for Worthington Industries Inc.’s steel business and its metal framing and metal ceiling grid joint ventures, according to company executives.

"Building and construction (have) shown signs of life, though still much more on the residential side than commercial," president Mark A. Russell said during a March 21 earnings call.

"We have a fair amount of leverage" heading into the 2013 construction season, vice president and chief financial officer Andy Rose added.

Worthington still owns 25 percent of West Chester, Ohio-based metal framing business Clarkwestern Dietrich Building Systems LLC, commonly known as ClarkDietrich, and "that business is making money once again," Rose said.

"We still have exposure in our steel (processing and distribution) company," he added. "Our sales exposure there is around 11 percent. But that used to represent over 20 percent of the steel company’s volume, so there’s a significant upside potential there."

The Malvern, Pa.-based Worthington Armstrong Venture (Wave), which makes metal ceiling grids, also stands to benefit from construction growth. "The interesting thing that’s happened to Wave in the downturn is their business mix had shifted to 80-percent remodeling work as opposed to new construction. But when new construction comes back, we would expect Wave to benefit," Rose said.

"Construction is traditionally our second-largest market," according to Russell. "If we were a 4-cylinder engine, we’ve been running on half or one cylinder down. When construction comes back, it should give us substantial upside in all of the businesses that Andy mentioned."

An uptick could also benefit the Columbus, Ohio-based company’s cylinders division because new housing tracts in rural areas often use propane tanks, chairman and chief executive officer John P. McConnell added.

Worthington, which is tracking indicators such as the Architectural Billings Index, sees "a lot of healthy signs out there," McConnell said. "The residential and multifamily strength is well under way now, and the question now turns to commercial. ABI is evidence of some activity there. So we are cautiously optimistic."

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