Moody's eyes Worthington for downgrade

Moody's Investors Service said it placed Worthington Industries, Inc.'s Baa2 issuer and its senior unsecured ratings under review for downgrade. The outlook, previously stable, was also changed to rating under review.

The review follows the company’s announcement that it plans to complete the separation of its steel processing business, Worthington Steel, by early 2024, the agency said. The remaining company, New Worthington, will include the consumer products, building products and sustainable energy solutions segments.

"The review for downgrade reflects the anticipated negative credit impact of the separation of Worthington Steel which will result in reduced scale, weaker end market and customer diversity, a loss of the natural hedge against rising steel prices, an increased reliance on joint venture earnings and cash flows and higher acquisition risks considering the company's inconsistent track record and its smaller scale post separation," said Michael Corelli, a Moody’s senior vice president, in a press release.

Worthington Steel accounts for about 35%-40% of the consolidated company’s EBITDA.

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