COLUMBUS, Ohio--(BUSINESS WIRE)--June 29, 2006--Worthington
Industries, Inc. (NYSE:WOR) today reported results for the three- and
twelve-month periods ended May 31, 2006.
(U.S. dollars in millions, except per share data)
4Q2006 3Q2006 4Q2005 12M2006 12M2005
------ ------ ------ -------- --------
Net sales $822.0 $681.5 $817.0 $2,897.2 $3,078.9
Operating income 54.8 25.6 54.8 157.6 267.4
Equity income 20.8 8.2 14.1 56.3 53.9
Net earnings 59.4 19.2 40.8 146.0 179.4
Earnings per share $0.67 $0.21 $0.46 $1.64 $2.03
For the fourth quarter, net sales were a record $822.0 million,
surpassing last year's record $817.0 million. For the full year, net
sales of $2,897.2 million fell 6% from a record $3,078.9 million last
year.
Fourth quarter 2006 net earnings of $59.4 million, or $0.67 per
diluted share, were up 46% from fourth quarter 2005 net earnings of
$40.8 million, or $0.46 per diluted share. Aided by a $26.6 million
pre-tax gain, or $0.14 per share, on the April 2006 sale of a 50%
partnership interest in a Mexican steel processing joint venture, this
fourth quarter was the second best in the company's history. Even
excluding this gain, earnings per share were up 15%.
Net earnings for the full year of $146.0 million, or $1.64 per
diluted share, were down 19% from the record set for the same period
last year of $179.4 million, or $2.03 per diluted share.
Annual return on equity was 16.5% in fiscal 2006.
Fourth Quarter Highlights
- Quarterly net sales of $822.0 million were the best in the
company's history.
- Quarterly net sales and operating income in the Pressure
Cylinders segment were a record $137.7 million and $20.2
million, respectively.
- Equity income, from five unconsolidated joint ventures,
totaled a record $20.8 million due to record performance at
Worthington Armstrong Venture (WAVE) and TWB. WAVE also had
record sales and earnings for the full year.
- Volumes were up in all three business segments - Steel
Processing, Metal Framing and Pressure Cylinders - compared to
last quarter and in Steel Processing and Metal Framing
compared to the year ago fourth quarter.
- Unit selling prices were up in all three business segments
compared to last quarter.
- Spreads between selling prices and material costs widened in
all three business segments compared to last quarter and in
Metal Framing and Pressure Cylinders compared to the year ago
fourth quarter.
- $142.4 million of 7.125% senior notes were repaid upon
maturity on May 15, 2006, resulting in a total debt to
capitalization ratio of 21.1% at year end, compared to 32.1% a
year ago.
- Cash provided by operating activities and capital expenditures
for fiscal 2006 were $227.1 million and $60.1 million,
respectively, compared to $32.3 million and $46.3 million,
respectively, for fiscal 2005.
CEO Comments
"I am very pleased with our results for the fourth quarter in
providing a strong finish to fiscal 2006," said John P. McConnell,
Chairman and CEO. "Every business segment performed well, with our
Pressure Cylinders segment leading the way by producing a record
performance in both sales and earnings. I am very proud of all 8,000
of our employees as they continue to find innovative ways to lower our
costs, improve our customer service and bring new products to the
market," he added.
"Our results for fiscal 2006 confirm that our strategic decisions
in the late 90's were sound," McConnell noted. "We are executing our
strategy of growth, while aligning these efforts with flat-rolled
steel products and services. We have provided solid performances
during various economic cycles, while generating solid growth and
returns over the past six years."
Quarterly Segment Results
In the Steel Processing segment, quarterly net sales fell 5%, or
$20.3 million, to $418.1 million from $438.5 million in the comparable
quarter of fiscal 2005. The decline in net sales was due to lower
pricing (down 11%) relative to the prior year, as volumes were up 7%.
Operating income declined due to higher zinc costs and a narrowing of
the spread between selling prices and material costs for the fourth
quarter of fiscal 2006 compared to the fourth quarter of fiscal 2005.
Pricing, volume and spread all improved relative to the third quarter
of fiscal 2006 and trended up throughout the quarter.
In the Metal Framing segment, net sales decreased 1%, or $3.0
million, to $219.1 million from $222.1 million in the comparable
quarter of fiscal 2005. Volumes improved 3% but were offset by lower
pricing, down 5% compared to the year ago quarter. Increased demand
for construction products and rising raw material costs, primarily
galvanized steel, have supported a series of industry-wide price
increases beginning in April 2006. Operating income in the month of
May was more than double any other month of the year. For the quarter,
operating income declined $1.9 million, compared to the prior year
period, due to a $2.7 million charge (recorded in cost of goods sold)
associated with the recent closure of the LaPorte, Indiana, facility.
The closure of this facility was one of many efficiencies generated
from the fiscal 2003 acquisition of Unimast and is expected to result
in annual savings of $1.3 million.
In the Pressure Cylinders segment, net sales increased 7%, or $9.5
million, to a record $137.7 million from $128.2 million in the
comparable quarter of fiscal 2005. Excluding 14.1 oz. disposable
cylinders, which declined 1.1 million units, unit volumes increased
5%. Average selling prices improved due to price increases in certain
product lines, to cover increased material costs, and due to product
mix. Strong results in Europe, where profitability more than doubled,
and plant consolidation savings, realized from the Wisconsin
operations acquired in the prior fiscal year, led to an 82%
improvement in operating income from the prior year. Operating income
set a record for both the quarter and the year.
Worthington's joint ventures added significantly to fourth quarter
results. Equity in the net income of five unconsolidated affiliates
totaled a record $20.8 million for the quarter, compared to $14.1
million in the year ago quarter, a 48% increase. Both WAVE and TWB had
record quarters and WAVE had a record year.
Other
Dividend Declared
On May 22, 2006, the board of directors declared a quarterly cash
dividend of $0.17 per share payable June 29, 2006, to shareholders of
record June 15, 2006.
Corporate Profile
Worthington Industries is a leading diversified metal processing
company with annual sales of approximately $3 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 62 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
America's Most Admired Companies and one of the 100 Best Companies to
Work For in America by Fortune magazine.
Worthington will review its fourth quarter results during its
quarterly conference call today, June 29, 2006, at 1:30 p.m. Eastern
Daylight Time. Details on the conference call can be found on the
company 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 or expected
performance, 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 customer
inventories, jobs and orders; expectations for the economy and
markets; expected benefits from new initiatives; 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 the company's
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 effect of consolidation within the
steel and related industries; 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 (including bankruptcy filings) 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 suppliers, customers, markets, facilities and
shipping operations; changes in customer inventories, spending
patterns, product choices, and supplier choices; 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 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.
WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)
Three Months Ended Twelve Months Ended
May 31, May 31,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net sales $821,968 $816,962 $2,897,179 $3,078,884
Cost of goods sold 707,996 711,403 2,525,545 2,580,011
----------- ----------- ----------- -----------
Gross margin 113,972 105,559 371,634 498,873
Selling, general &
administrative expense 59,131 50,794 214,030 225,915
Impairment charges and
other - - - 5,608
----------- ----------- ----------- -----------
Operating income 54,841 54,765 157,604 267,350
Other income (expense):
Miscellaneous expense (1,464) (847) (1,524) (7,991)
Gain on sale of
Acerex 26,609 - 26,609 -
Interest expense (6,122) (6,638) (26,279) (24,761)
Equity in net income
of unconsolidated
affiliates 20,774 14,063 56,339 53,871
----------- ----------- ----------- -----------
Earnings before
income taxes 94,638 61,343 212,749 288,469
Income tax expense 35,240 20,535 66,759 109,057
----------- ----------- ----------- -----------
Net earnings $59,398 $40,808 $145,990 $179,412
=========== =========== =========== ===========
Average common shares
outstanding - diluted 89,292 88,535 88,976 88,503
----------- ----------- ----------- -----------
Earnings per share
- diluted $0.67 $0.46 $1.64 $2.03
=========== =========== =========== ===========
Common shares
outstanding at end of
period 88,691 87,933 88,691 87,933
Cash dividends declared
per common share $0.17 $0.17 $0.68 $0.66
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
May 31, May 31,
2006 2005
----------- -----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $56,216 $57,249
Short-term investments 2,173 -
Receivables, net 404,553 404,506
Inventories 459,357 425,723
Deferred income taxes 15,854 19,490
Other current assets 58,088 31,365
----------- -----------
Total current assets 996,241 938,333
Investments in unconsolidated affiliates 123,748 136,856
Goodwill 177,771 168,267
Other assets 55,733 33,593
Property, plant and equipment, net 546,904 552,956
----------- -----------
Total assets $1,900,397 $1,830,005
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $362,883 $280,181
Notes payable 7,684 -
Current maturities of long-term debt - 143,432
Other current liabilities 120,219 121,830
----------- -----------
Total current liabilities 490,786 545,443
Other liabilities 104,695 99,264
Long-term debt 245,000 245,000
Deferred income taxes 114,610 119,462
Shareholders' equity 945,306 820,836
----------- -----------
Total liabilities and shareholders'
equity $1,900,397 $1,830,005
=========== ===========
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months Ended Twelve Months Ended
May 31, May 31,
---------------------- --------------------
2006 2005 2006 2005
---------- ----------- ---------- ---------
(Unaudited)(Unaudited) (Unaudited)(Audited)
Operating activities
Net earnings $59,398 $40,808 $145,990 $179,412
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Depreciation and
amortization 14,983 15,295 59,116 57,874
Impairment charges
and other - - - 5,608
Gain on sale of
Acerex (26,609) - (26,609) -
Other adjustments 8,034 13,379 223 (15,242)
Changes in assets and
liabilities:
Accounts receivable (34,871) (5,610) 11,616 (50,661)
Inventories (13,718) 54,417 (33,788) (59,236)
Accounts payable 41,836 (39,061) 81,693 (38,161)
Other changes 16,097 (13,679) (11,175) (47,323)
----------- ---------- ----------- --------
Net cash provided by
operating activities 65,150 65,549 227,066 32,271
Investing activities
Investment in property,
plant and equipment, net (17,027) (15,439) (60,128) (46,318)
Investment in aircraft (185) - (16,435) -
Acquisitions, net of cash
acquired - (149) (6,776) (65,119)
Investment in
unconsolidated affiliate - - - (1,500)
Proceeds from sale of
assets 171 5,512 3,225 89,488
Proceeds from sale of
Acerex 44,604 - 44,604 -
Purchases of short-term
investments (50,115) - (493,860) (72,875)
Sales of short-term
investments 90,013 9,400 491,687 72,875
----------- ---------- ----------- --------
Net cash provided
(used) by investing
activities 67,461 (676) (37,683) (23,449)
Financing activities
Proceeds from short-term
borrowings 7,684 - 7,684 -
Proceeds from long-term
debt - (71) - 99,409
Principal payments on
long-term debt (142,405) 179 (143,416) (2,381)
Dividends paid (15,050) (14,938) (59,982) (56,891)
Other 2,006 1,069 5,298 6,313
----------- ---------- ----------- --------
Net cash provided
(used) by financing
activities (147,765) (13,761) (190,416) 46,450
----------- ---------- ----------- --------
Increase (decrease) in cash
and cash equivalents (15,154) 51,112 (1,033) 55,272
Cash and cash equivalents
at beginning of period 71,370 6,137 57,249 1,977
----------- ---------- ----------- --------
Cash and cash equivalents
at end of period $56,216 $57,249 $56,216 $57,249
=========== ========== =========== ========
WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(Unaudited, In Thousands)
This supplemental information is provided to assist in the analysis of
the results of operations. As required by the changes in our reporting
segments during the second quarter of fiscal 2006, we have restated
the year-to-date information for fiscal 2006 and all the information
for fiscal 2005 to conform with the current reporting of our segment
information. For comparative purposes, we have also presented the
previously reported information for fiscal 2005 under the heading "As
Reported".
Three Months Ended
May 31,
------------------------------------
2005
------------------------
2006 Restated As Reported
----------- ----------- ------------
Volume:
Steel Processing (tons) 994 930 935
Metal Framing (tons) 186 180 180
Pressure Cylinders (units) (1) 12,392 13,122 13,122
Net sales:
Steel Processing $418,147 $438,465 $460,661
Metal Framing 219,094 222,120 223,256
Pressure Cylinders 137,730 128,216 128,216
Other 46,997 28,161 4,829
----------- ----------- ------------
Total Net Sales $821,968 $816,962 $816,962
=========== =========== ============
Material cost:
Steel Processing $317,304 $339,709 $349,217
Metal Framing 138,030 147,502 148,305
Pressure Cylinders 64,584 66,133 66,133
Operating income:
Steel Processing (2) $18,118 $25,328 $24,648
Metal Framing 16,715 18,587 17,709
Pressure Cylinders 20,226 11,108 11,108
Other (218) (258) 1,300
----------- ----------- ------------
Total Operating Income $54,841 $54,765 $54,765
=========== =========== ============
Twelve Months Ended
May 31,
------------------------------------
2005
------------------------
2006 Restated As Reported
----------- ----------- ------------
Volume:
Steel Processing (tons) 3,611 3,663 3,685
Metal Framing (tons) 704 657 657
Pressure Cylinders (units) (1) 48,621 36,704 36,704
Net sales:
Steel Processing $1,486,165 $1,719,312 $1,805,023
Metal Framing 796,272 843,866 848,029
Pressure Cylinders 461,875 408,271 408,271
Other 152,867 107,435 17,561
----------- ----------- ------------
Total Net Sales $2,897,179 $3,078,884 $3,078,884
=========== =========== ============
Material cost:
Steel Processing $1,128,553 $1,267,928 $1,305,039
Metal Framing 508,588 497,991 499,872
Pressure Cylinders 221,756 197,516 197,516
Operating income:
Steel Processing (2) $61,765 $127,090 $125,964
Metal Framing 46,735 113,747 108,517
Pressure Cylinders 49,275 33,575 33,575
Other (171) (7,062) (706)
----------- ----------- ------------
Total Operating Income $157,604 $267,350 $267,350
=========== =========== ============
----------------------------------
(1) The propane and specialty cylinder assets acquired from Western
Industries effective September 17, 2004, contributed 7,757 and 8,599
units for the three months ended May 31, 2006 and 2005, respectively.
On a year-to-date basis, as of May 31, 2006 and 2005, these assets
contributed 33,859 and 22,135 units, respectively.
(2) The $5,608 "impairment charge and other" recorded in the first
quarter of fiscal 2005 relates to the sale of the Decatur facility and
is included in Steel Processing's segment operating income above.
CONTACT: Worthington Industries, Inc.
Cathy M. Lyttle, 614-438-3077
cmlyttle@WorthingtonIndustries.com
or
Allison M. Sanders, 614-840-3133
asanders@WorthingtonIndustries.com
SOURCE: Worthington Industries, Inc.