Worthington Industries Inc. has seen steel cylinders used to
pressurize gases and liquids grow immensely as a profitable
business due to key acquisitions in recent years.
"We have acquired 12
companies in the past four years for $585 million, (and) these
businesses will contribute $140 million of Ebitda (earnings
before interest, taxes, depreciation and amortization) in the
coming year," vice president and chief financial officer Andy
Rose said during a June 27 earnings conference call. "Several
of these companies are in fast-growing markets such as
alternative fuels, energy production and storage."
The integration and
financial performance of Palmer Manufacturing & Tank Inc.,
acquired in April (
amm.com, April 10), is proceeding to plan, Rose
said. "We are already investing in new production capacity to
meet current market demands."
The next step is to
"add liquid cryogenics to our product offering," Worthington
president and chief operating officer Mark Russell said. "We
introduced industrial gas customers to our first-ever cryogenic
cylinder prototype during the quarter. Regular production will
begin in a few months and similar natural gas cryogenic
products are in our development pipeline."
Chairman and chief
executive officer John McConnell expressed confidence in the
products commercial potential. "It was one of the only
holes in the cylinder lineup we thought was important to
close," he said. "We looked at a number of opportunities to get
into this market, and the best way to do it is to develop our
Ohio-based company will develop a full line of cryogenic tanks
"and just do a methodical march until we got them across the
board," McConnell said.
Worthingtons sales growth in energy production tanks and
separators "continues to be nearly off the charts," Russell
said. "To give you some idea about the potential for the
upside, both Palmer and (September acquisition) Westerman
(Cos.) were using only about one-third of their capacity. We
immediately plugged them into our commercial machine ... and
saw immediate order increases.
alternative fuels continue to be among our best growth ideas,"
he said, noting that the two end markets alone "will represent
more than one-fourth of total revenue (at Worthington) in
Russell said the shale
gas "revolution is also driving impressive and sustainable
growth" in cylinders. Products for those applications produce
"some of our best margins, and that (business) is not yet
global," he said.