Note N – Segment Data

Our operations are managed principally on a products and services basis and include three reportable business segments: Steel Processing, Pressure Cylinders and Engineered Cabs, each of which is comprised of a similar group of products and services. Factors used to identify reportable business segments include the nature of the products and services provided by each business, the management reporting structure, similarity of economic characteristics and certain quantitative measures, as prescribed by authoritative guidance. A discussion of each of our reportable business segments is outlined below.

Effective June 1, 2017, we made certain organizational changes impacting the internal reporting and management structure of Worthington Steelpac Systems, LLC (“Packaging Solutions”). As a result of these organizational changes, management responsibilities and internal reporting were realigned, moving Packaging Solutions from the Steel Processing operating segment to the Engineered Cabs operating segment. Previously reported segment information has not been restated to conform to this new presentation and is immaterial for all periods presented.

Steel Processing: The Steel Processing reportable segment consists of the Worthington Steel business unit and includes three consolidated joint ventures: Spartan, TWB and WSP. Spartan operates a cold-rolled, hot-dipped galvanizing line and TWB operates a laser welded blanking business. WSP serves primarily as a toll processor for United States Steel Corporation and others. Its services include slitting, blanking, cutting-to-length, laser blanking, laser welding, tension leveling and warehousing. Worthington Steel is an intermediate processor of flat-rolled steel. This operating segment’s processing capabilities include cold reducing, configured blanking, coil fed laser blanking, cutting-to-length, dry-lube, hot-dipped galvanizing, hydrogen annealing, laser welding, pickling, slitting, oscillate slitting, temper rolling, tension leveling, and non-metallic coating, including acrylic and paint coating. Worthington Steel sells to customers principally in the automotive, aerospace, agricultural, appliance, construction, container, hardware, HVAC, lawn and garden, leisure and recreation, office furniture and office equipment markets. Worthington Steel also toll processes steel for steel mills, large end-users, service centers and other processors. Toll processing is different from typical steel processing in that the mill, end-user or other party retains title to the steel and has the responsibility for selling the end product. Steel Processing also includes the results of Packaging Solutions through May 31, 2017. The percentage of our consolidated net sales generated by Steel Processing was approximately 63%, 69% and 65%, in fiscal 2018, fiscal 2017 and fiscal 2016, respectively.

Pressure Cylinders: The Pressure Cylinders reportable segment consists of the Worthington Cylinders business unit and Worthington Aritas. Worthington Aritas is a Turkish manufacturer of cryogenic pressure vessels for LNG and other gas storage applications. During the fourth quarter of fiscal 2018, management committed to a plan to sell the Company’s cryogenics business in Turkey and the net assets of the asset group have been presented separately as assets held for sale in our consolidated balance sheets. The percentage of our consolidated net sales generated by Pressure Cylinders was approximately 34%, 28% and 30% in fiscal 2018, fiscal 2017 and fiscal 2016, respectively. We acquired AMTROL on June 2, 2017, which has been included in the Pressure Cylinders reportable segment since that date, and accounted for approximately 7% of our consolidated net sales in fiscal 2018.

Pressure Cylinders manufactures and sells filled and unfilled pressure cylinders, tanks, hand torches, well water and expansion tanks, and oil and gas equipment along with various accessories and related products for diversified end-use market applications. The following is a description of these markets:

•

Industrial Products: This market sector includes high pressure and acetylene cylinders for industrial gases, refrigerant and certain propane gas cylinders, cryogenic equipment, and systems and services for handling liquid gasses, and other specialty products. Cylinders in this market sector are generally sold to gas producers, cylinder exchangers and industrial distributors. Industrial cylinders hold fuel for uses such as cutting, brazing and soldering, semiconductor production, and beverage delivery. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential and automotive air conditioning and refrigeration systems. LPG cylinders hold fuel for barbeque grills, recreational vehicle equipment, residential and light commercial heating systems, industrial forklifts and commercial/residential cooking (the latter, generally outside North America). Cryogenic equipment and systems include LNG systems for marine and mining applications, liquid nitrogen storage freezers and shipping containers for organic specimens in healthcare markets, and tanks, trailers, and regasification plants for liquefied nitrogen, oxygen, argon, hydrogen, and natural gas. Specialty products include a variety of fire suppression and chemical tanks.

•

Consumer Products: This market sector includes propane-filled cylinders for torches, camping stoves and other applications, hand held torches and accessories such as solder and brazing rods, and Balloon Time® helium-filled balloon kits, well water tanks and expansion tanks. These products are sold primarily to mass merchandisers and distributors.

•

Alternative Fuels: This market sector includes composite and steel cylinders used to hold CNG and hydrogen for automobiles, buses, and light-duty trucks, and to hold propane/autogas for automobiles and light- and medium-duty trucks, as well as CNG fuel systems for heavy duty, refuse and other trucks.

•

Oil & Gas Equipment: This market sector includes steel and fiberglass storage tanks, separation equipment, controls and other products primarily used in the energy markets, including oil and gas and nuclear. This market sector also includes hoists and other marine products which are used principally in shipyard lift systems. This market sector also leverages its manufacturing competencies to produce pressure vessels, atmospheric tanks, controls and various custom machined components for other industrial and agricultural end markets.

Engineered Cabs: The Engineered Cabs reportable segment consists of the Worthington Industries Engineered Cabs business unit, a non-captive designer and manufacturer of high-quality, custom-engineered open and enclosed cabs and operator stations and custom fabrications for heavy mobile equipment used primarily in the agricultural, construction, forestry, military and mining industries. Engineered Cabs’ product design, engineering support and broad manufacturing capabilities enable it to produce cabs and structures used in products ranging from small utility equipment to large earthmovers. Engineered Cabs also includes Packaging Solutions, effective June 1, 2017. Packaging Solutions designs and manufactures reusable custom steel platforms, racks and pallets for supporting, protecting and handling products throughout the shipping process. For fiscal 2018, fiscal 2017 and fiscal 2016, the percentage of our consolidated net sales generated by the Engineered Cabs operating segment was approximately 3%, 3%, and 4%, respectively.

Other: The Other category includes the former Worthington Energy Innovations operating segment, as it did not meet the quantitative thresholds for separate disclosure prior to disposal of a 65% stake effective March 31, 2018. Certain income and expense items not allocated to our operating segments are also included in Other, including costs associated with our captive insurance company. The Other category also includes the results of our former Construction Services operating segment, on a historical basis, through May 31, 2016.

The accounting policies of the reportable business segments and other operating segments are described in “Note A – Summary of Significant Accounting Policies.” We evaluate operating segment performance based on operating income (loss). Inter-segment sales are not material.

The following table presents summarized financial information for our reportable business segments as of, and for the fiscal years ended, May 31:

(in thousands)	2018			2017			2016
Net sales
Steel Processing	$	2,252,771		$	2,074,869		$	1,843,661
Pressure Cylinders		1,206,183			829,846			844,898
Engineered Cabs		116,631			101,388			121,946
Other		6,035			8,005			9,209
Total net sales	$	3,581,620		$	3,014,108		$	2,819,714

Operating income (loss)
Steel Processing	$	152,690		$	170,481		$	112,001
Pressure Cylinders		23,396			54,098			28,375
Engineered Cabs		(11,305	)		(7,685	)		(19,331	)
Other		(23,171	)		(3,773	)		1,007
Total operating income	$	141,610		$	213,121		$	122,052

Depreciation and amortization
Steel Processing	$	43,331		$	42,861		$	38,523
Pressure Cylinders		46,691			31,052			32,403
Engineered Cabs		5,415			5,197			6,205
Other		7,922			7,683			7,568
Total depreciation and amortization	$	103,359		$	86,793		$	84,699

Impairment of goodwill and long-lived assets
Steel Processing	$	-		$	-		$	-
Pressure Cylinders		53,883			-			22,962
Engineered Cabs		-			-			3,000
Other		7,325			-			-
Total impairment of goodwill and long-lived assets	$	61,208		$	-		$	25,962

Restructuring and other expense (income), net
Steel Processing	$	(10,087	)	$	1,828		$	4,110
Pressure Cylinders		2,365			3,411			392
Engineered Cabs		(78	)		1,219			3,570
Other		379			(47	)		(895	)
Total restructuring and other expense (income), net	$	(7,421	)	$	6,411		$	7,177

Total assets
Steel Processing	$	999,238		$	882,863		$	819,853
Pressure Cylinders		1,147,268			766,611			787,786
Engineered Cabs		66,456			62,141			75,124
Other		408,825			613,729			378,501
Total assets	$	2,621,787		$	2,325,344		$	2,061,264

Capital expenditures
Steel Processing	$	31,966		$	40,775		$	42,063
Pressure Cylinders		32,697			24,798			29,916
Engineered Cabs		2,067			755			6,945
Other		9,358			2,058			18,112
Total capital expenditures	$	76,088		$	68,386		$	97,036

The following table presents net sales by geographic region for the fiscal years ended May 31:

(in thousands)	2018		2017		2016
North America	$	3,275,090	$	2,805,182	$	2,662,196
International		306,530		208,926		157,518
Total	$	3,581,620	$	3,014,108	$	2,819,714

The following table presents property, plant and equipment, net, by geographic region as of May 31:

(in thousands)	2018		2017
North America	$	512,439	$	501,776
International		72,531		68,713
Total	$	584,970	$	570,489