COLUMBUS, Ohio--(BUSINESS WIRE)--June 23, 2004--Worthington
Industries, Inc. (NYSE:WOR) today reported record results for the
three and twelve month periods ended May 31, 2004. For the quarter,
sales were a record $782.9 million, surpassing last year's record
$589.9 million by 33%. For the year, record sales of $2,379.1 million
represent a 7% increase from $2,219.9 million last year.
Fourth quarter net earnings were $39.4 million and earnings per
diluted share were $0.45 compared to net earnings of $15.6 million, or
$0.18 per diluted share, for the same period last year. Net earnings
for the fourth quarter of fiscal 2004 included four special items
which collectively had a negative impact on diluted earnings per share
of $0.39, but still set a company record. Excluding the special items,
earnings per share would have been $0.84, more than double the prior
record for earnings.
"I am proud of the accomplishments of the entire Worthington team
which resulted in record sales and earnings," said John McConnell,
Chairman and CEO of Worthington Industries. "We have done much over
the last several years to improve returns on capital and, ultimately,
shareholder returns by investing in growth markets and products,
consolidating facilities, and divesting non-strategic assets. These
efforts, combined with an improving economy and heightened
productivity, accounted for roughly half of this quarter's results,
excluding special items, and produced a record performance on their
own. Rapidly rising steel prices and lower priced inventory accounted
for the remainder of this quarter's excellent results," McConnell
continued. "While future earnings could be impacted by a reversal of
steel pricing trends, we have yet to realize the full benefit of our
acquisition of Unimast or a recovery in the commercial construction
market," concluded McConnell.
Special Items
Fourth quarter special items include:
A $67.4 million pre-tax charge for the impairment of certain
assets and other related costs at the Decatur, Alabama, steel
processing facility. On May 27, 2004, the company announced an
agreement to sell that facility and its cold rolling assets to
Nucor Corporation (NYSE:NUE) for $82.0 million cash while
retaining its slitting and cut-to-length assets. At that time,
the estimated pre-tax charge of $73.1 million included $5.7
million for certain costs which cannot be recognized until the
closing of the sale, which is anticipated during Worthington's
first quarter of fiscal 2005. The after-tax impact of the
charge taken this quarter is $41.8 million or $0.48 per share.
A $2.0 million pre-tax charge for the impairment of certain
assets related to the European operations of Pressure
Cylinders. The earnings impact of this asset writedown is
$0.01 per share.
A $3.6 million pre-tax gain due to the settlement of a hedge
position with the Enron bankruptcy estate. The earnings impact
of this gain is $0.03 per share.
A $6.3 million credit to income tax expense for the favorable
resolution of certain tax audits. The earnings impact of this
credit is $0.07 per share.
The following table reconciles the reported earnings as required
by generally accepted accounting principles to earnings excluding the
special items noted above. Management believes these adjustments are
appropriate to present a more comparable view of earnings.
Earnings Reconciliation
May 31, 2004
($ millions, except per share)
Quarter-to-Date Year-to-Date
------------------------ ------------------------
Per Per
Pre-Tax After-Tax Share Pre-Tax After-Tax Share
------- --------- ------ ------- --------- ------
Reported earnings $ 54.5 $39.4 $0.45 $127.5 $ 86.8 $1.00
Less amounts included
in earnings:
Impairment of
Decatur assets 67.4 41.8 0.48 67.4 41.8 0.48
Impairment of
Pressure Cylinder
assets 2.0 1.2 0.01 2.0 1.2 0.01
Enron settlement (3.6) (2.3) (0.03) (3.6) (2.3) (0.03)
------- -------
Adjusted pre-tax
earnings $120.3 $193.3
======= =======
Tax liability
adjustments (6.3) (0.07) (7.7) (0.08)
--------- ------ --------- ------
Adjusted after-tax
earnings $73.8 $0.84 $119.8 $1.38
========= ====== ========= ======
Full Year Earnings Highlights
Net earnings for the year, including the special items detailed
previously, were $86.8 million, and earnings per diluted share were
$1.00, compared to $75.2 million and $0.87, respectively, for the same
period last year.
Last year's results were impacted by nearly offsetting special
items recorded in the second quarter of fiscal 2003. Together, these
charges had an immaterial impact on reported earnings per share.
Excluding the impact of special items in both fiscal years, net
earnings were $119.8 million and earnings per diluted share were $1.38
for fiscal 2004 (see chart for reconciliation), compared to $75.0
million and $0.87, respectively, for fiscal 2003. On this basis,
fiscal 2004 results were an all-time record.
Quarterly Segment Results
Within the Processed Steel Products segment, quarterly net sales
rose 25%, or $88.9 million, to $438.8 million from $349.9 million in
the comparable quarter of fiscal 2003. The increase in net sales was
due to both increased volumes (6%) and pricing (18%). Excluding the
impact of the $67.4 million impairment charge taken this quarter for
the Decatur assets, operating income was much improved due to higher
volumes and a wider spread between selling prices and material costs.
Within the Metal Framing segment, net sales increased 66%, or
$92.0 million, to $231.5 million from $139.5 million in the comparable
quarter of fiscal 2003. Despite continued weakness in the commercial
construction market, volumes were up 11% and pricing was up 49% over
the year ago quarter. The wider spread between selling prices and
material costs was primarily responsible for the significant
improvement in operating income.
Within the Pressure Cylinders segment, net sales increased 12%, or
$11.8 million, to $108.3 million from $96.5 million in the comparable
quarter of fiscal 2003. Unit volumes were up 7% overall as strength in
the domestic market was partially offset by weaker European demand.
European revenues rose despite much lower volumes as the weakened
dollar boosted reported revenues in dollars by $2.3 million. Excluding
the impact of the $2.0 million charge taken this quarter for the
impairment of certain European assets, operating income increased as a
result of stronger domestic volumes and a shift in mix to higher
margin products.
Worthington's joint ventures contributed positively to fourth
quarter results. Equity in net income of the six unconsolidated
affiliates totaled $16.5 million for the quarter, up 120% from $7.5
million in the year ago quarter. All six affiliates had stronger
earnings including records at Worthington Armstrong Venture (WAVE),
TWB Company, Acerex and Aegis Metal Framing.
Outlook
The first quarter is typically weaker than Worthington's fourth,
which represents a seasonal peak for the company.
Economic and industry conditions appear to be improving across all
customer segments. In automotive, Processed Steel's largest customer
segment, "Big 3" vehicle production is projected to be up 1% for the
coming fiscal quarter relative to last year but down 19% 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 remains near five-year
lows, but office construction showed some year-over-year improvement
during Worthington's fourth quarter.
Other
Dividends declared
On May 22, 2004, the board of directors declared a quarterly cash
dividend of $0.16 per share payable June 29, 2004, to shareholders of
record June 15, 2004.
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 automotive past
model service stampings, pressure cylinders, metal framing, 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 fourth quarter results during its
quarterly conference call today, June 23, 2004, at 1:30 p.m. Eastern
Daylight Time. Details on the conference call can be found on the
company's web site at www.WorthingtonIndustries.com
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 our
operations; effects of facility closures and the consolidation of
operations; our ability to realize price increases, cost savings and
operational efficiencies on a timely basis; our ability to integrate
newly acquired businesses and achieve synergies therefrom; our ability
to close the asset sale to Nucor; capacity levels and efficiencies
within our facilities and within the industry as a whole; financial
difficulties of customers, suppliers, joint venture partners and
others with whom we do business; the effect of national, regional and
worldwide economic conditions generally and within our major product
markets, including a prolonged or substantial economic downturn; the
effect of adverse weather on facility 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 our filings with the United States Securities and Exchange
Commission.
WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)
Three Months Ended Twelve Months Ended
May 31, May 31,
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net sales $ 782,924 $ 589,946 $2,379,104 $2,219,891
Cost of goods sold 610,312 522,322 2,003,734 1,916,990
----------- ----------- ----------- -----------
Gross margin 172,612 67,624 375,370 302,901
Selling, general &
administrative expense 59,876 42,884 195,785 182,692
Impairment charges and
other 69,398 - 69,398 (5,622)
----------- ----------- ----------- -----------
Operating income 43,338 24,740 110,187 125,831
Other income
(expense):
Miscellaneous income
(expense) 172 (1,604) (1,589) (7,240)
Nonrecurring loss - - - (5,400)
Interest expense (5,461) (6,006) (22,198) (24,766)
Equity in net income
of unconsolidated
affiliates 16,449 7,461 41,064 29,973
----------- ----------- ----------- -----------
Earnings before
income taxes 54,498 24,591 127,464 118,398
Income tax expense 15,075 8,976 40,712 43,215
----------- ----------- ----------- -----------
Net earnings $ 39,423 $ 15,615 $ 86,752 $ 75,183
=========== =========== =========== ===========
Average common shares
outstanding - diluted 87,587 86,285 86,950 86,537
----------- ----------- ----------- -----------
Earnings per
share - diluted $ 0.45 $ 0.18 $ 1.00 $ 0.87
=========== =========== =========== ===========
Common shares
outstanding at end of
period 86,856 85,949 86,856 85,949
Cash dividends
declared per common
share $ 0.16 $ 0.16 $ 0.64 $ 0.64
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
May 31, May 31,
2004 2003
----------- -----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 1,977 $ 1,139
Accounts receivable, net 348,833 169,967
Inventories 362,906 268,983
Income taxes receivable - 11,304
Deferred income taxes 3,963 20,783
Other current assets 115,431 34,070
----------- -----------
Total current assets 833,110 506,246
Investments in unconsolidated affiliates 109,040 81,221
Goodwill 117,769 116,781
Other assets 27,826 30,777
Property, plant and equipment, net 555,394 743,044
----------- -----------
Total assets $1,643,139 $1,478,069
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 313,909 $ 222,987
Notes payable - 1,145
Current maturities of long-term debt 1,346 1,194
Other current liabilities 159,805 92,845
----------- -----------
Total current liabilities 475,060 318,171
Other liabilities 95,067 90,471
Long-term debt 288,422 289,689
Deferred income taxes 104,216 143,444
Shareholders' equity 680,374 636,294
----------- -----------
Total liabilities and shareholders'
equity $1,643,139 $1,478,069
=========== ===========
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Twelve Months Ended
May 31,
-----------------------
2004 2003
----------- -----------
(Unaudited) (Audited)
Operating activities
Net earnings $ 86,752 $ 75,183
Adjustments to reconcile net earnings to net
cash
provided by operating activities:
Depreciation and amortization 67,302 69,419
Impairment charges and other 69,398 (5,622)
Nonrecurring loss - 5,400
Other adjustments (49,945) 41,326
Changes in current assets and
liabilities (94,140) (4,985)
----------- -----------
Net cash provided by operating
activities 79,367 180,721
Investing activities
Investment in property, plant and equipment,
net (29,598) (24,970)
Acquisitions, net of cash acquired - (114,703)
Investment in unconsolidated affiliate (490) -
Proceeds from sale of assets 5,661 27,814
----------- -----------
Net cash used by investing activities (24,427) (111,859)
Financing activities
Proceeds from short-term borrowings (1,145) (7,340)
Proceeds from long-term debt - 735
Principal payments on long-term debt (1,235) (6,883)
Dividends paid (55,167) (54,869)
Other 3,445 138
----------- -----------
Net cash used by financing activities (54,102) (68,219)
Increase in cash and cash equivalents 838 643
Cash and cash equivalents at beginning of
period 1,139 496
----------- -----------
Cash and cash equivalents at end of period $ 1,977 $ 1,139
=========== ===========
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 Twelve Months Ended
May 31, May 31,
--------------------- -----------------------
2004 2003 2004 2003
---------- ---------- ----------- -----------
(Unaudited)(Unaudited)(Unaudited) (Unaudited)
Volume:
Processed Steel
Products (tons) 1,030 969 3,806 3,890
Metal Framing (tons) 208 187 781 694
Pressure Cylinders
(units) 5,257 4,895 14,670 15,235
Net sales:
Processed Steel
Products $438,801 $349,916 $1,373,145 $1,343,397
Metal Framing 231,519 139,450 661,999 539,358
Pressure Cylinders 108,279 96,466 328,692 321,790
Other 4,325 4,114 15,268 15,346
---------- ---------- ----------- -----------
Total net sales $782,924 $589,946 $2,379,104 $2,219,891
========== ========== =========== ===========
Material cost:
Processed Steel
Products $281,857 $239,218 $ 893,743 $ 883,532
Metal Framing 105,121 90,031 364,643 315,472
Pressure Cylinders 49,173 43,409 142,601 142,008
Operating income:
Processed Steel
Products $(21,757) $ 17,687 $ 18,036 $ 80,998
Metal Framing 53,605 253 63,778 22,537
Pressure Cylinders 11,019 11,257 29,376 32,273
Other 471 (4,457) (1,003) (9,977)
---------- ---------- ----------- -----------
Total operating
income $ 43,338 $ 24,740 $ 110,187 $ 125,831
========== ========== =========== ===========
The following provides detail of the impairment charges and other
included in the operating income by segment presented above.
Three Months Ended Twelve Months Ended
May 31, May 31,
--------------------- ----------------------
2004 2003 2004 2003
---------- ---------- ----------- -----------
(Unaudited)(Unaudited) (Unaudited)(Unaudited)
Pre-tax impairment
charges and other by
segment
Processed Steel
Products $ 67,400 $ - $ 67,400 $ (8,717)
Metal Framing - - - 1,574
Pressure Cylinders 1,998 - 1,998 1,420
Other - - - 101
---------- ---------- ----------- -----------
Total impairment
charges and other $ 69,398 $ - $ 69,398 $ (5,622)
========== ========== =========== ===========
CONTACT: Worthington Industries, Inc.
Corporate Communications:
Cathy Mayne Lyttle, 614-438-3077
cmlyttle@WorthingtonIndustries.com
or
Worthington Industries, Inc.
Investor Relations:
Allison McFerren Sanders, 614-840-3133
asanders@WorthingtonIndustries.com
SOURCE: Worthington Industries, Inc.