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Worthington Reports Record First Quarter Results; Earnings Per Diluted Share: $0.66 vs. $0.07


COLUMBUS, Ohio--(BUSINESS WIRE)--Sept. 22, 2004--Worthington Industries, Inc. (NYSE:WOR) today reported record first quarter results for the three months ended August 31, 2004.


Sales for the first quarter of fiscal 2005 were $769.3 million, an increase of 54% from last year's $498.0 million. First quarter net earnings were $57.9 million and earnings per diluted share were $0.66, compared to first quarter net earnings of $5.9 million, or $0.07 per diluted share, for the same period last year.

Earnings for the current quarter were reduced by a $5.6 million pre-tax charge related to the sale of the Decatur, Alabama, cold mill and related assets. This charge is mainly due to contract termination costs that could not be accrued until the sale closed, which occurred on August 1, 2004, and other adjustments to the charge recorded at May 31, 2004. The after-tax impact of this charge was a reduction in net earnings of $3.5 million or $0.04 per diluted share.

"I am pleased to report our second consecutive quarter of record results," said John McConnell, Chairman and CEO of Worthington Industries. "We achieved these results even though two of our key market segments, automotive and commercial construction, were not at their peak. While we did experience some benefit from selling lower priced inventory in a higher price environment, that impact has lessened considerably, and this quarter's results would have been record-breaking regardless. I look forward to what our Metal Framing segment can accomplish as commercial construction -- particularly office construction -- continues to pick up from what has been a multi-year low," concluded McConnell.

Segment Results

In the Processed Steel Products segment, quarterly net sales rose 58%, or $166.6 million, to $453.8 million from $287.2 million in the comparable quarter of fiscal 2004. The increase in net sales was due to higher volumes (up 14%) and pricing (up 39%). Excluding the impact of the $5.6 million charge related to the Decatur asset sale, operating income was significantly improved due to higher volumes and a wider spread between selling prices and material costs.

In the Metal Framing segment, net sales increased 69%, or $97.3 million, to $238.4 million from $141.1 million in the comparable quarter of fiscal 2004. The increase was the result of higher pricing as volumes were down 10% from the year ago quarter largely due to weather related and other project delays. The wider spread between selling prices and material costs was responsible for a significant improvement in operating income.

In the Pressure Cylinders segment, net sales increased 10%, or $6.7 million, to $73.2 million from $66.5 million in the comparable quarter of fiscal 2004. Unit volumes were up 2% overall as strength in the European market was partially offset by softer domestic propane cylinder demand. A portion of the increase in European revenues was the result of a weakened U.S. dollar which boosted reported revenues in dollars by $1.6 million. Operating income fell due to costs related to the partial closure of the Portugal facility.

Worthington's joint ventures continued to perform well. Equity in net income of the six unconsolidated affiliates totaled $13.3 million for the quarter, up 68% from $7.9 million in the year ago quarter. Results at all six joint ventures were up significantly from the prior year.


Relative to last year, economic and industry conditions have improved across all customer segments except "Big 3" automotive, Processed Steel's largest customer segment. "Big 3" vehicle production is projected to be down 7% for the coming fiscal quarter compared to the same quarter last year but up 12% from this quarter. In commercial construction, Metal Framing's primary market, the U.S. Census Bureau's Index of Private Construction Spending confirms that commercial construction activity has shown year-over-year improvement during the last six months. This index serves as a leading indicator for the Metal Framing business segment as metal framing products are generally used in the latter stages of commercial construction projects.


Dividends declared

On August 19, 2004, the board of directors declared a quarterly cash dividend of $0.16 per share payable September 29, 2004, to shareholders of record September 15, 2004. This is the 147th consecutive quarter that Worthington has paid a dividend since it became a public company in 1968.

Corporate Profile

Worthington Industries is a leading diversified metal processing company with annual sales of more than $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 metal framing, pressure cylinders, automotive past model service stampings, metal ceiling grid systems and laser welded blanks. Worthington employs more than 8,000 people and operates 61 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.

Conference Call

Worthington will review its first quarter results during its quarterly conference call today, September 22, 2004, at 1:30 p.m. Eastern Daylight Time. Details on the conference call can be found on the company's web site at

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, operating results and earnings per share; projected capacity and working capital needs; pricing trends for raw materials and finished goods; anticipated capital expenditures and asset sales; projected timing, results, costs, charges and expenditures related to facility dispositions, shutdowns and consolidations; new products and markets; expectations for the economy and markets; 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, product demand and pricing, changes in product mix and market acceptance of products; fluctuations in pricing, quality or availability of raw materials (particularly steel), supplies, utilities and other items required by operations; effects of facility closures and the consolidation of operations; the ability to realize cost savings and operational efficiencies on a timely basis; the ability to integrate newly acquired businesses and achieve synergies therefrom; capacity levels and efficiencies within facilities and within the industry as a whole; financial difficulties of customers, suppliers, joint venture partners and others with whom the company does business; 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 adverse weather on customers, markets, facilities and shipping operations; changes in customer spending patterns and supplier choices and risks associated with doing business internationally, including economic, 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; 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 governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the United States Securities and Exchange Commission.

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

                                                Three Months Ended
                                                    August 31,
                                                  2004        2003
                                             ----------- -----------
                                             (Unaudited) (Unaudited)

Net sales                                      $769,340    $498,035
Cost of goods sold                              609,696     449,052
                                             ----------- -----------
       Gross margin                             159,644      48,983

Selling, general & administrative expense        64,831      41,620
Impairment charges and other                      5,608           -
                                             ----------- -----------

       Operating income                          89,205       7,363

Other income (expense):
    Miscellaneous income (expense)               (3,459)       (389)
    Interest expense                             (5,722)     (5,591)
    Equity in net income of unconsolidated
      affiliates                                 13,296       7,936
                                             ----------- -----------
       Earnings before income taxes              93,320       9,319
Income tax expense                               35,461       3,402
                                             ----------- -----------

       Net earnings                             $57,859      $5,917
                                             =========== ===========

Average common shares outstanding - diluted      88,112      86,517
                                             ----------- -----------

       Earnings per share - diluted               $0.66       $0.07
                                             =========== ===========

Common shares outstanding at end of period       87,325      86,054

Cash dividends declared per common share          $0.16       $0.16

                     WORTHINGTON INDUSTRIES, INC.
                            (In Thousands)

                                               August 31,   May 31,
                                                  2004       2004
                                              ----------- -----------
                                              (Unaudited)  (Audited)

Current assets
   Cash and cash equivalents                     $10,932      $1,977
   Receivables, net                              355,023     348,833
   Inventories                                   445,070     362,906
   Deferred income taxes                           3,869       3,963
   Other current assets                           32,803     115,431
                                              ----------- -----------

        Total current assets                     847,697     833,110

Investments in unconsolidated affiliates         122,265     109,040
Goodwill                                         117,882     117,769
Other assets                                      27,734      27,826
Property, plant and equipment, net               552,356     555,394
                                              ----------- -----------

        Total assets                          $1,667,934  $1,643,139
                                              =========== ===========


Current liabilities
   Accounts payable                             $299,143    $313,909
   Current maturities of long-term debt            1,013       1,346
   Other current liabilities                     159,536     159,805
                                              ----------- -----------

        Total current liabilities                459,692     475,060

Other liabilities                                 99,600      95,067
Long-term debt                                   287,915     288,422
Deferred income taxes                             91,212     104,216

Shareholders' equity                             729,515     680,374
                                              ----------- -----------

        Total liabilities and shareholders'
         equity                               $1,667,934  $1,643,139
                                              =========== ===========

                     WORTHINGTON INDUSTRIES, INC.
                            (In Thousands)

                                                  Three Months Ended
                                                      August 31,
                                                    2004        2003
                                               ----------- -----------
                                               (Unaudited) (Unaudited)
Operating activities
  Net earnings                                    $57,859      $5,917
  Adjustments to reconcile net earnings to net
   cash provided by operating activities:
      Depreciation and amortization                14,059      16,952
      Impairment charges and other                  5,608           -
      Other adjustments                           (21,137)     (4,485)
      Changes in current assets and
       liabilities                               (105,470)     (1,348)
                                               ----------- -----------
      Net cash provided (used) by operating
       activities                                 (49,081)     17,036

Investing activities
  Investment in property, plant and equipment,
   net                                            (11,484)     (5,816)
  Investment in unconsolidated affiliate                -        (490)
  Proceeds from sale of assets                     81,960       2,880
                                               ----------- -----------
      Net cash provided (used) by investing
       activities                                  70,476      (3,426)

Financing activities
  Proceeds from short-term borrowings                   -      (1,077)
  Principal payments on long-term debt             (1,851)       (556)
  Dividends paid                                  (13,915)    (13,754)
  Other                                             3,326       1,236
                                               ----------- -----------
      Net cash used by financing activities       (12,440)    (14,151)

Increase (decrease) in cash and cash
 equivalents                                        8,955        (541)
Cash and cash equivalents at beginning of
 period                                             1,977       1,139
                                               ----------- -----------

Cash and cash equivalents at end of period        $10,932        $598
                                               =========== ===========

                     WORTHINGTON INDUSTRIES, INC.
                           SUPPLEMENTAL DATA
                            (In Thousands)

This supplemental information is provided to assist in the
analysis of the results of operations.

                                              Three Months Ended
                                                  August 31,
                                                2004         2003
                                          ------------ ------------
                                           (Unaudited)  (Unaudited)

  Processed Steel Products (tons)                 964          849
  Metal Framing (tons)                            178          198
  Pressure Cylinders (units)                    3,191        3,123

Net sales:
  Processed Steel Products                   $453,827     $287,198
  Metal Framing                               238,391      141,064
  Pressure Cylinders                           73,227       66,535
  Other                                         3,895        3,238
                                          ------------ ------------
    Total net sales                          $769,340     $498,035
                                          ============ ============

Material cost:
  Processed Steel Products                   $309,749     $188,985
  Metal Framing                               118,104       92,954
  Pressure Cylinders                           32,975       29,020

Operating income:
  Processed Steel Products                    $35,795       $8,169
  Metal Framing                                51,512       (3,654)
  Pressure Cylinders                            3,189        3,538
  Other                                        (1,291)        (690)
                                          ------------ ------------
    Total operating income                    $89,205       $7,363
                                          ============ ============

The following provides detail of the impairment charges and other
included in the operating income by segment presented above.

                                              Three Months Ended
                                                  August 31,
                                                2004         2003
                                          ------------ ------------
                                           (Unaudited)  (Unaudited)
Pre-tax impairment charges and other by
  Processed Steel Products                     $5,608           $-
  Metal Framing                                     -            -
  Pressure Cylinders                                -            -
  Other                                             -            -
                                          ------------ ------------

    Total impairment charges and other         $5,608           $-
                                          ============ ============

CONTACT: Worthington Industries, Inc.
Cathy Mayne Lyttle, 614-438-3077
Allison McFerren Sanders, 614-840-3133

SOURCE: Worthington Industries, Inc.

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