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Worthington Industries Reports Second Quarter Results Quarterly Sales Set Record

12/18/2002

Second Quarter EPS up 85%; Six Months EPS up 87%

COLUMBUS, Ohio, Dec. 18 /PRNewswire-FirstCall/ --

                                 FlashResults
                         Worthington Industries (WOR)
                        (Numbers in Thousands, Except
                               Per Share Data)
                2nd quarter ended           2nd quarter ended
                    11/30/2002       YTD         11/30/2001           YTD
    Sales             $567,897   $1,093,361       $410,379         $819,937
    Net Income         $20,747      $48,237        $11,323          $25,608
    Average Shares      86,834       86,666         85,775           85,787
    EPS                  $0.24        $0.56          $0.13            $0.30

Worthington Industries, Inc. (NYSE: WOR) today reported results for the three and six month periods ended November 30, 2002. For the quarter, net income increased 83% to $20.7 million compared to $11.3 million for the same period a year ago, and diluted earnings per share increased 85% to $0.24 compared to $0.13 last year. Sales were a record $567.9 million, an increase of 38% from $410.4 million last year.

For the six-month period, earnings increased 88% from the prior year to $48.2 million from $25.6 million, and diluted earnings per share increased 87% to $0.56 from $0.30. Sales increased 33% to $1,093.4 million from $819.9 million.

Both the three and six month periods were impacted by nearly offsetting one-time items recorded in the second quarter. A favorable adjustment of $5.6 million was made to the restructuring charge originally recorded during the third quarter of fiscal 2002 for the consolidation and closure of facilities. The credit was the net result of higher-than-estimated proceeds from the sale of real estate at our former Malvern, Pennsylvania, steel processing facility and higher than estimated costs related to our consolidation, including the closure of three additional facilities. Offsetting the restructuring adjustment was a $5.4 million charge for potential liability relating to certain workers' compensation claims of Buckeye Steel Castings for the period prior to its sale by Worthington in fiscal 1999, when a Worthington guarantee was in place. The buyer had assumed these liabilities and agreed to indemnify Worthington, but economic conditions forced Buckeye to close its doors, calling into question its ability to pay.

Second quarter results include a full quarter of operations for Unimast Incorporated which was acquired on July 31, 2002. Unimast generated approximately $54 million in sales and $2 million in operating income during the quarter. Its operating income covered financing costs and thus the transaction was accretive to second quarter earnings per share by approximately $0.01. The integration of Unimast into Dietrich Metal Framing is well underway, and it will not be possible to segregate financial results going forward. The integration effort is expected to be completed during calendar 2003.

"The second quarter of fiscal 2003 has been strong due, primarily, to increased demand in Processed Steel Products and Pressure Cylinders offsetting a severe decline in commercial construction activity that has negatively impacted Metal Framing," said John P. McConnell, Chairman and CEO of Worthington Industries. "We enter the normal seasonal slowdown of our business in the third quarter with confidence in our ability to maximize every opportunity," concluded McConnell.

Within the Processed Steel Products business segment, net sales increased 28% or $77.2 million to $352.7 million from $275.5 million in the comparable quarter of fiscal 2002. Sales to the automotive sector, the largest end market for this business segment, were up. Direct volumes were up over the prior year offsetting a decline in the spread between selling prices and material costs. Although much improved from the prior year, the segment operating margin is still below historical levels and includes an $8.7 million one time benefit from the favorable adjustment to the restructuring charge.

Within the Metal Framing business segment, net sales increased 90% or $68.4 million to $144.1 million from $75.7 million in the comparable quarter of fiscal 2002. The increase in metal framing sales is due both to the Unimast acquisition and to higher selling prices, driven by raw material increases. Excluding Unimast, sales increased $14.4 million or 19% but pounds shipped were down 13% due to weakness in commercial construction activity. The volume decline, coupled with Unimast integration costs, higher material costs and a $1.6 million charge for the closure of two Dietrich facilities, contributed to a segment operating margin well below historical averages.

Within the Pressure Cylinders business segment, net sales increased 20% or $11.4 million to $67.5 from $56.1 million in the comparable quarter of fiscal 2002. The increase was generated by significantly greater international activity as well as continuing demand resulting from U.S. regulatory requirements mandating that all propane cylinders have overfill prevention devices. As a result, the segment operating margin was much improved from the prior year period, despite a $1.4 million one-time charge for the closure of a facility in Citronelle, Alabama.

Excluding the $5.6 million restructuring adjustment, second quarter operating income of $33.9 million, and the related operating margin, were up significantly from the same quarter last year. Worthington's joint ventures also contributed positively to second quarter results. Equity in the net income of our five unconsolidated affiliates totaled $7.2 million, up 41% from $5.1 million in the year ago quarter.

Worthington Industries is a leading diversified metal processing company with annual sales of approximately $2 billion. The Columbus, Ohio, based company is North America's premier value-added steel processor and a leader in manufactured metal products such as automotive aftermarket stampings, pressure cylinders, metal framing, metal ceiling grid systems and laser welded blanks. Worthington employs more than 8,000 people and operates 64 facilities in 10 countries.

Founded in 1955, the company operates under a long-standing corporate philosophy rooted in the golden rule, with earning money for its shareholders as the first corporate goal. This philosophy, an unwavering commitment to the customer, and one of the strongest employee/employer partnerships in American industry serve as the company's foundation. Worthington Industries is listed as one of the 100 Best Companies to Work For in America by Fortune Magazine.

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 future sales and operating results; projected capacity levels; anticipated capital expenditures; projected timing, results, costs, charges and expenditures related to plant closures and consolidations; and other non-historical information 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, product demand, changes in product mix and market acceptance of products; changes in pricing or availability of raw materials, particularly steel; effects of plant closures and the consolidation of operations; capacity restraints and efficiencies; conditions in major product markets; delays in construction or equipment supply; financial difficulties of customers, suppliers and others with whom we do business; the effect of national, regional and worldwide economic conditions; risks associated with doing business internationally, including economical, political and social instability, and foreign currency exposure; acts of war and terrorist activities; the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment; the business environment and impact of governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the SEC.

                         WORTHINGTON INDUSTRIES, INC.
                             EARNINGS HIGHLIGHTS
                       (In Thousands, Except Per Share)

                                   Three Months Ended    Six Months Ended
                                         Nov. 30,            Nov. 30,
                                    2002        2001     2002         2001
                                (Unaudited) (Unaudited)(Unaudited) (Unaudited)

    Net sales:
      Processed Steel Products    $352,680  $275,535   $671,601  $541,106
      Metal Framing                144,078    75,691    264,916   155,237
      Pressure Cylinders            67,449    56,063    149,585   117,665
      Other                          3,690     3,090      7,259     5,929
        Total net sales            567,897   410,379  1,093,361   819,937

    Cost of goods sold             487,527   349,082    923,567   698,643
        Gross margin                80,370    61,297    169,794   121,294

    Selling, general &
     administrative expense         46,452    41,203     93,555    78,614
    Restructuring adjustment        (5,622)      -       (5,622)      -

    Operating income:
      Processed Steel Products      32,000    14,903     54,317    28,441
      Metal Framing                  1,908     3,261     18,272     9,827
      Pressure Cylinders             6,633     2,521     13,827     4,338
      Other                         (1,001)     (591)    (4,555)       74
        Total operating income      39,540    20,094     81,861    42,680

    Other income (expense):
      Miscellaneous expense         (2,316)   (1,655)    (3,657)   (1,128)
      Nonrecurring loss             (5,400)      -       (5,400)      -
      Interest expense              (6,340)   (5,688)   (12,443)  (11,185)
      Equity in net income of
       unconsolidated
       affiliates                    7,187     5,081     15,602     9,961
        Earnings before taxes       32,671    17,832     75,963    40,328
    Income tax expense              11,924     6,509     27,726    14,720

        Net earnings               $20,747   $11,323    $48,237   $25,608

    Average common shares
     outstanding - diluted          86,834    85,775     86,666    85,787

        Earnings per share - diluted $0.24     $0.13      $0.56     $0.30

    Common shares outstanding at end
     of period                      85,838    85,392     85,838    85,392

    Cash dividends declared per
     common share                    $0.16     $0.16      $0.32     $0.32

    Restructuring adjustment by segment
       Processed Steel Products    $(8,717)    $-       $(8,717)    $-
       Metal Framing                 1,574      -         1,574      -
       Pressure Cylinders            1,420      -         1,420      -
       Other                           101      -           101      -

       Total restructuring
        adjustment                 $(5,622)    $-       $(5,622)    $-


                         WORTHINGTON INDUSTRIES, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In Thousands)

                                                  Nov. 30,            May 31,
                                                    2002               2002
                                                 (Unaudited)         (Audited)
                                    ASSETS

    Current assets
      Cash and cash equivalents                       $714               $496
      Accounts receivable, net                     110,536            197,240
      Inventories                                  345,086            219,950
      Deferred income taxes                         35,473             43,538
      Other current assets                          30,163             29,116

        Total current assets                       521,972            490,340

    Investments in unconsolidated
     affiliates                                     95,151             91,759
    Goodwill                                       101,766             75,400
    Other assets                                    32,020             33,219
    Property, plant and equipment, net             781,287            766,596

        Total assets                            $1,532,196         $1,457,314

                     LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Accounts payable                            $271,284           $233,181
      Notes payable                                 17,743              5,281
      Current maturities of long-term
       debt                                            725              1,082
      Other current liabilities                     81,302             99,807

        Total current liabilities                  371,054            339,351

    Other liabilities                               81,483             73,731
    Long-term debt                                 295,267            289,250
    Deferred income taxes                          150,706            148,726

    Shareholders' equity                           633,686            606,256

        Total liabilities and
         shareholders' equity                   $1,532,196         $1,457,314


                         WORTHINGTON INDUSTRIES, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In Thousands)

                                                       Six Months Ended
                                                            Nov. 30,
                                                     2002               2001
                                                 (Unaudited)       (Unaudited)
    Operating activities
      Net earnings                                  $48,237           $25,608
      Adjustments to reconcile net
       earnings to net cash provided
       by operating activities:
          Depreciation and amortization              35,705            34,406
          Restructuring adjustment                   (5,622)              -
          Nonrecurring loss                           5,400               -
          Other adjustments                          17,191            (4,484)
          Changes in current assets and
           liabilities                               31,654            13,562
          Net cash provided by operating
           activities                               132,565            69,092

    Investing activities
      Investment in property, plant and
       equipment, net                               (13,657)          (25,147)
      Acquisitions, net of cash acquired           (113,740)              -
      Proceeds from sale of assets                   12,956             9,651
          Net cash used by investing
           activities                              (114,441)          (15,496)

    Financing activities
      Proceeds from (payments on) short-
       term borrowings                                9,258            (8,361)
      Principal payments on long-term
       debt                                            (464)          (17,488)
      Dividends paid                                (27,366)          (27,323)
      Other                                             666               201
          Net cash used by financing
           activities                               (17,906)          (52,971)

    Increase in cash and cash equivalents               218               625
    Cash and cash equivalents at
     beginning of period                                496               194

    Cash and cash equivalents at end of
     period                                            $714              $819

SOURCE Worthington Industries, Inc.

/CONTACT: Cathy Mayne Lyttle, VP, Corporate Communications, +1-614-438-3077, or cmlyttle@WorthingtonIndustries.com, or Allison McFerren Sanders, Director, Investor Relations, +1-614-840-3133, or asanders@WorthingtonIndustries.com, both of Worthington Industries/

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