"We had a very good quarter driven by improved volumes and spreads in Steel Processing and the benefits of our Transformation efforts," said Chairman and CEO John P. McConnell. "Over the past two years, we have reduced costs, resized our businesses, reduced debt and conserved cash across the Company to produce positive results in a down cycle. Pressure Cylinders had a steady performance driven by good results in North America, where its retail products are performing well. It's a different story in Europe, where depressed industrial markets are holding back Cylinders' overall results." McConnell added, "Volume difficulties continue for our Metal Framing business due to the ongoing downturn in the commercial construction markets. This business continues to make progress in its Transformation efforts and we are focused on remaining cash neutral this fiscal year, by keeping costs low, implementing operational efficiencies, and aggressively pursuing building projects with our value- added products."

Consolidated Results

The financial highlights for the three- and six-month periods are as follows:

Second quarter sales were $448.0 million, down 40% compared to the same quarter last year, primarily due to lower average selling prices and lower sales volumes. However, operating income improved significantly to $19.1 million compared to an operating loss of $211.6 million for the prior year quarter which included $203.7 million of pre-tax charges related to inventory write-down, goodwill impairment and restructuring. The improvement to operating income was driven by a more favorable spread between selling prices and material costs, and lower manufacturing expenses. Earnings per share of $0.29 for the current quarter compares to a loss of $2.09 in the prior year. The special charges mentioned above reduced prior year earnings per share by $2.10.

In the first six months of this fiscal year, sales were down 48% to $865.5 million, driven largely by the reduction in sales volumes due to the decline in the automotive and construction markets, combined with the decline in the market price of steel, which had reached record levels in the first half of fiscal 2009. Operating income was $14.6 million, up 111% from prior year, which had included the previously mentioned charges.

Quarterly Segment Results

In Steel Processing, quarterly net sales were down 36% to $225.6 million compared to the prior year. Direct tons shipped were down 13% compared to prior year due to declines in automotive and construction, however, several market segments were up, including agriculture, heating and cooling, and infrastructure projects. Toll volumes were down 4% year over year, but up substantially, 40%, from the prior quarter. Operating income improved to $14.7 million from the prior year's loss of $71.9 million, which included $57.4 million in charges related to inventory write-downs and restructuring. The fiscal second quarter operating income also showed an improvement over the prior quarter's operating income of $0.8 million.

Metal Framing net sales were down 55% to $80.6 million from the comparable quarter of fiscal 2009. This business has been negatively impacted by dramatically weakened commercial construction markets and pricing pressures. However, operating income improved year over year to $2.8 million, up from the year ago quarter's loss of $154.0 million, which included $139.3 million in charges related to inventory write-downs, goodwill impairments and restructuring. The business segment also saw improvement from the prior quarter operating loss of $4.3 million.

Pressure Cylinders quarterly net sales, which included $11.9 million in net sales from recent acquisitions, were down 26% to $104.9 million from last year. Operating income decreased 80% from the prior year quarter to $4.1 million, and 31% from the prior quarter. The decline in sales and operating income was primarily due to softness in the European industrial gas business, as Pressure Cylinders posted solid volumes in North America including such retail products as camping cylinders, hand torches, helium and propane cylinders.

Equity income from the Company's unconsolidated joint ventures was $15.1 million for the second quarter compared to $11.0 million in the year ago quarter. Worthington Armstrong Venture (WAVE), the Company's joint venture with Armstrong World Industries, continued to perform well, as its income was up slightly despite lower volumes. The joint ventures with ThyssenKrupp (TWB), US Steel (WSP) and Serviacero Planos, S.A. de C.V., also showed improvement over the prior year quarter.

Second Quarter Overview

• The Company continued to pay down debt, $39.2 million during the quarter, to $176.1 million. Interest expense was $2.0 million.
• The Company was in compliance with the covenants under its credit agreement with a debt to capitalization ratio of 26.1% versus a covenant maximum of 55%, and an interest coverage ratio of 10.6X versus a covenant minimum of 3.25X.
• Cash provided by operating activities was $37.9 million for the quarter, and $134.1 million year-to-date.
• Dividends paid to shareholders totaled $7.9 million. Based on the quarter-end stock price, the dividend yielded a 3.4% annualized return.
• Worthington Cylinders purchased California based Structural Composites Industries, LLC (SCI) in September 2009. SCI produces lightweight, aluminum-lined, composite-wrapped, high pressure cylinders including product lines for alternative fuel vehicles using natural gas or hydrogen, which the Company believes will be good additions to the Pressure Cylinders product line.
• Metal Framing entered into a strategic alliance with Bailey Metal Products Limited that includes the sale of its Canadian operations to Bailey. Bailey will exclusively distribute Dietrich's proprietary and vinyl products in Canada and will license its paper faced metal corner bead product to Metal Framing to manufacture and sell in the United States.
• Metal Framing announced the closing of the Joliet, Ill. facility and is consolidating this operation into the Hammond, Ind. facility. This is the fifth Metal Framing facility that has been closed or idled in the past year, reducing its footprint to 14 locations.
• WAVE's ceiling grid production facility in India became fully operational in October. It represents the joint venture's first operations in that market, which has been previously served from WAVE's Shanghai facility.

Outlook

"Reiterating what we stated at the end of our first quarter, we continue to operate in a historically low demand environment. While we are generally optimistic about the gradual return of the economy, we do not believe we will know how quickly our markets will rebound until the end of the third quarter, at the earliest," McConnell stated. "We feel very good about Steel Processing's position and the positive back-to-back quarterly performances it has delivered, as our operational improvements continue to gain momentum. However, we do not anticipate any near term improvement in Metal Framing end markets. The Pressure Cylinders segment is performing well in the U.S., but we expect its European markets will remain challenging through this next quarter. WAVE will continue its focus on maintaining margin and market share despite anticipated lower volumes. We also expect to launch its new DC FlexZone product in the first part of 2010. We will continue to manage our strong balance sheet, while examining attractive opportunities for market share gains and high return acquisitions."

Other

Dividend Declared

On November 23, 2009, the board of directors declared a quarterly cash dividend of $0.10 per share payable December 29, 2009, to shareholders of record on December 15, 2009.

Conference Call

Worthington will review second quarter results during its quarterly conference call today, January 6, 2010, at 1:30 p.m. Eastern Standard Time. Details regarding the conference call can be found on the Company web site at www.WorthingtonIndustries.com.

Corporate Profile

Worthington Industries is a leading diversified metals manufacturing company with 2009 fiscal year sales of approximately $2.6 billion. The Columbus, Ohio based company is North America's premier value-added steel processor and a leader in manufactured metal products such as light gauge steel framing for commercial and residential construction; framing systems and stairs for mid-rise buildings; pressure cylinders products such as propane, oxygen and helium tanks, hand torches, camping cylinders, and scuba tanks; current and past model automotive service stampings; metal ceiling grid systems; steel pallets and racks; and laser welded blanks. Worthington employs approximately 6,300 people and operates 61 facilities in 11 countries.

Founded in 1955, the Company operates under a long-standing corporate philosophy rooted in the golden rule. Earning money for its shareholders is the first corporate goal. This philosophy serves as an unwavering commitment to the customer, supplier, and shareholder, and it serves as the Company's foundation for one of the strongest employee-employer partnerships in American industry.

Safe Harbor Statement

The Company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements by the Company relating to business plans or future or expected growth, performance, sales, volumes, cash flows, earnings, balance sheet strengths, debt, financial condition or other financial measures; projected working capital needs; demand trends for the Company or its markets; pricing trends for raw materials and finished goods and the impact of pricing changes; anticipated capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain; projected timing, results, benefits, costs, charges and expenditures related to acquisitions, headcount reductions and facility dispositions, shutdowns and consolidations; the alignment of operations with demand; the ability to operate profitably and generate cash in down markets, the ability to capture and maintain margins and market share and to develop or take advantage of future opportunities, new products and markets; expectations for company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expected benefits from Transformation plans, cost reduction efforts and other new initiatives; expectations for improving earnings, margins or shareholder value; effects of judicial rulings and other non-historical matters constitute "forward-looking statements" within the meaning of the Act. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, the effect of national, regional and worldwide economic conditions generally and within major product markets, including a prolonged or substantial economic downturn; the effect of conditions in national and worldwide financial markets; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company's products; fluctuations in pricing, quality or availability of raw materials (particularlysteel), supplies, transportation, utilities and other items required by operations; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from head count reductions, facility closures and other cost reduction efforts; the ability to realize other cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives on a timely basis; the overall success of, and the ability to integrate, newly-acquired businesses and achieve synergies therefrom; capacity levels and efficiencies, within facilities and within the industry as a whole; the effect of disruption in business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, acts of war or terrorist activities or other causes; changes in customer demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doingbusiness internationally, including economic, political and socialinstability, and foreign currency exposure; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; adverse claims experience with respect to workers compensation, product recalls or liability, casualty events or other matters; deviation of actual results from estimates and/or assumptions used by the Company in the application of its significant accounting policies; level of imports and import prices in the Company's markets; the impact of judicial rulings and governmental regulations, both in the United States and abroad; and other risks described from time to time in the Company's filings with the United States Securities and Exchange Commission.

SOURCE: Worthington Industries, Inc.

Worthington Industries, Inc.
Cathy M. Lyttle, 614-438-3077
VP, Corporate Communications and Investor Relations
E-mail: cmlyttle@WorthingtonIndustries.com
or
Sonya L. Higginbotham, 614-438-7391
Director, Corporate Communications
E-mail: slhiggin@WorthingtonIndustries.com