COLUMBUS, Ohio--(BUSINESS WIRE)--June 26, 2008--Worthington
Industries, Inc. (NYSE: WOR) today reported results for the three- and
twelve-month periods ended May 31, 2008.
(U.S. dollars in millions, except per share data)
4Q 2008 3Q 2008 4Q 2007 12M 2008 12M 2007
-------- -------- -------- --------- ---------
Net sales $ 868.9 $ 725.7 $ 786.6 $ 3,067.2 $ 2,971.8
Operating income 56.5 18.1 41.7 106.0 129.1
Equity income 21.9 15.7 16.7 67.5 63.2
Net earnings 53.9 18.3 38.2 107.1 113.9
Earnings per share $ 0.68 $ 0.23 $ 0.45 $ 1.31 $ 1.31
EBITDA(1) $ 92.6 $ 48.7 $ 71.4 $ 230.6 $ 249.4
(1) Earnings before interest, taxes, depreciation and amortization.
See reconciliation on consolidated statement of earnings.
For the fourth quarter of fiscal 2008, net sales were a record
$868.9 million, an increase of 10% from $786.6 million last year.
Fourth quarter net earnings were $53.9 million and earnings per
diluted share were $0.68 compared to $38.2 million, or $0.45 per
diluted share, for the same period last year. Operating income for the
fourth quarter included $4.9 million in pre-tax restructuring charges,
$1.1 million of which was non-cash, primarily related to previously
announced plant closures in the Metal Framing segment and professional
fees in Other. These charges had a negative impact of $0.04 on
reported earnings per share.
For fiscal year 2008, net sales of $3,067.2 million, were 3%
higher than the $2,971.8 million reported last year. Net earnings were
$107.1 million, or $1.31 per diluted share, compared to $113.9
million, or $1.31 per diluted share, for fiscal 2007. Annual results
were negatively impacted by $18.1 million in pre-tax restructuring
charges, or $0.15 per share, related to early retirement, severance,
professional fees, and plant closures. Certain professional fees
totaling $3.3 million reported in selling, general and administrative
expense in the previous three quarters have been reclassified to
restructuring charges in each respective quarter to maintain
consistency of treatment with the presentation in the current quarter.
Chairman and CEO comments
We are pleased with our excellent fourth quarter results and the
year-over-year performance of our business segments, particularly the
return to profitability in the fourth quarter for metal framing and
the continued strong results from pressure cylinders, said Chairman
and CEO John P. McConnell. We also had record results from our joint
venture Worthington Armstrong (WAVE) and also a very good quarter from
Serviacero Worthington.
Across the company, we have been focused on cutting costs,
expanding our market reach through new products and services, and
steering through a volatile and demanding steel pricing environment.
We believe these efforts are helping us transform and strengthen the
businesses, but we are aware of the uncertainty in some of our key
markets and the potential for volatility in steel pricing throughout
fiscal 2009.
Fourth Quarter and Year-End Highlights
- The Pressure Cylinders segment set a new quarterly record for
net sales and units shipped and an annual record for net
sales.
- The Metal Framing segment returned to operating profitability
for the quarter.
- Equity income from nine unconsolidated joint ventures totaled
$21.9 million for the quarter and $67.5 million for the year.
Worthington Armstrong Venture (WAVE) had record sales and
earnings for the quarter and the year.
- Cash dividends received from unconsolidated joint ventures
totaled $16.5 million for the quarter and $58.9 million for
the year. WAVE contributed $14.0 million and $54.0 million of
the cash dividends received for those periods.
- Cash provided by operating activities was $180.5 million for
fiscal 2008 compared to $180.4 million for fiscal 2007, while
capital expenditures were $47.5 million and $57.7 million for
the same periods.
- During the fourth quarter, $13.5 million was paid to
shareholders in a regular quarterly dividend. For the year,
dividends paid to shareholders totaled $55.6 million. At year
end, the dividend yielded a 3.4% annualized return.
- During fiscal 2008, the company repurchased 6.5 million common
shares, reducing total outstanding shares to 79.3 million at
year end. Currently 9.1 million shares remain authorized for
repurchase.
Quarterly Segment Results
In the Steel Processing segment, quarterly net sales rose 14%, or
$52.2 million, to $412.7 million from $360.5 million in the comparable
quarter of fiscal 2007. The increase in sales was the result of higher
average selling prices, up 18% relative to the prior year. Volumes
declined 3% as the weakness in toll processing, which is closely tied
to the automotive end markets, was nearly offset by a successful sales
initiative for direct processing business. Operating income increased
because of a wider spread between average selling prices and material
costs.
In the Metal Framing segment, net sales increased 15%, or $29.9
million, to $225.5 million from $195.6 million in the comparable
quarter of fiscal 2007. Relative to the prior year, this sales
increase was the result of higher pricing (up 15%) and a slight
increase in volumes (up 1%). Operating income rose significantly,
primarily as a result of an improved spread between selling prices and
material costs. Reported results were reduced by $2.1 million in
pre-tax restructuring charges related to previously announced plant
closures (see press release dated September 25, 2007, for more
detail).
In the Pressure Cylinders segment, net sales increased 1%, or $1.4
million, to $170.7 million from $169.3 million in the comparable
quarter of fiscal 2007. Stronger foreign currencies relative to the
U.S. dollar positively impacted reported U.S. dollar sales of the
non-U.S. operations by $9.9 million compared to last year. The impact
of improved volumes in the North American market was offset by lower
average pricing, resulting from changes to the product mix, and lower
volumes in the European market. While operating income was lower than
in the year ago record quarter, the results were well above previous
historical levels due to continued strength in both the European and
North American operations.
Worthington's joint ventures added significantly to fourth quarter
results, as equity income from the nine unconsolidated affiliates rose
31% totaling $21.9 million, compared to $16.7 million in the year ago
quarter. Equity income increased due primarily to WAVE and to
Worthington's new Mexican joint venture, Serviacero Worthington. WAVE
continued to contribute the vast majority of equity earnings. Its
earnings set a new record, up 32% from the record set last year.
Fiscal 2008 was the best year in the history of the WAVE joint venture
for both sales and earnings.
Transformation
What began as a cost reduction program has grown into a much
larger transformational initiative. In addition to the previously
announced cost saving efforts, several initiatives are underway that
focus on dramatically improving the operational and financial
performance of the Company. These initiatives include a strategic
search for new growth opportunities, increasing efficiency throughout
the company, from the plant floor to the corporate office, and
improving the supply chain. The intent behind these initiatives is to
significantly transform the Company's earnings potential over the next
three years.
Previously announced cost reduction efforts related to overhead
expense and plant closures continued through the fourth quarter with
the following updates:
1. Overhead expense reductions are targeted to reach $30 million
annually. In the fourth quarter $6.2 million of savings were
realized, bringing the total savings realized in fiscal 2008
to $18.5 million. The balance of the savings will come in
fiscal 2009 with a portion to be realized in fiscal 2010.
2. All five of the Metal Framing facilities previously referenced
have been closed or downsized. In addition, the Metal Framing
corporate offices in Pittsburgh and Blairsville, Pennsylvania,
will be closed and moved to Columbus, Ohio. Of the $9.0
million in annual savings expected from these actions, $2.1
million was realized in fiscal 2008. The balance will be
realized in fiscal 2009. Restructuring charges related to
these closures totaled $9.0 million in fiscal 2008 with an
additional $6.0 million expected in fiscal 2009.
Other
Share Repurchases
During fiscal 2008, 6,451,500 shares were repurchased. A portion
of the shares, 5,551,000, completed a 10 million share authorization
announced on June 13, 2005. The balance, 900,500, was purchased under
a 10 million share authorization announced on September 26, 2007.
Purchases may occur from time to time, on the open market or in
private transactions with consideration given to the market price of
the stock, the nature of other investment opportunities, cash flow
from operations and general economic conditions.
Dividend Declared
On May 19, 2008, the board of directors declared a quarterly cash
dividend of $0.17 per share payable June 29, 2008, to shareholders of
record on June 15, 2008.
Subsequent Acquisition
On June 2, 2008, Worthington Industries acquired the assets of
Sharon Stairs, a designer and manufacturer of steel egress stair
systems for the commercial construction markets. Annual sales are
expected to approximate $30 million and will be included in the
results of Worthington-IBS, which is reported in Other.
Conference Call
Worthington will review fourth quarter and year end results during
its quarterly conference call today, June 26, 2008, at 1:30 p.m.
Eastern Daylight 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 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 67 facilities in 11
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.
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
growth, growth opportunities, performance, sales, operating results
and earnings per share; projected capacity and working capital needs;
pricing trends for raw materials and finished goods, and the impact of
pricing changes; anticipated capital expenditures and asset sales;
projected timing, results, costs, charges and expenditures related to
acquisitions or to facility startups, dispositions, shutdowns and
consolidations; new products, services and markets; expectations for
company and customer inventories, jobs and orders; expectations for
the economy and markets; expected benefits from turnaround plans,
plant closings, cost reduction efforts and other new initiatives;
expectations for improvements in efficiencies or the supply chain;
expectations for improving margins and increasing 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, 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 (particularly steel), supplies,
transportation, utilities and other items required by operations;
effects of facility closures and the consolidation of operations; the
effect of consolidation and other changes within the steel,
automotive, construction and related industries; failure to maintain
appropriate levels of inventories; the ability to realize targeted
expense reductions such as head count reductions, facility closures
and other expense reductions; the ability to realize other cost
savings and operational efficiencies and improvements 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; 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
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 inventories, spending patterns, product choices,
and supplier choices; risks associated with doing business
internationally, including economic, political and social instability,
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.
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share)
Three Months Ended Twelve Months Ended
May 31, May 31,
------------------- -----------------------
2008 2007 2008 2007
--------- --------- ----------- -----------
Net sales $868,875 $786,576 $3,067,161 $2,971,808
Cost of goods sold 737,650 686,712 2,711,414 2,610,176
--------- --------- ----------- -----------
Gross margin 131,225 99,864 355,747 361,632
Selling, general and
administrative expense 69,836 58,171 231,602 232,487
Restructuring charges 4,894 - 18,111 -
--------- --------- ----------- -----------
Operating income 56,495 41,693 106,034 129,145
Other income (expense):
Miscellaneous expense (2,191) (2,530) (6,348) (4,446)
Interest expense (5,742) (4,892) (21,452) (21,895)
Equity in net income of
unconsolidated
affiliates 21,882 16,669 67,459 63,213
--------- --------- ----------- -----------
Earnings before income
taxes 70,444 50,940 145,693 166,017
Income tax expense 16,577 12,717 38,616 52,112
--------- --------- ----------- -----------
Net earnings $ 53,867 $ 38,223 $ 107,077 $ 113,905
========= ========= =========== ===========
Average common shares
outstanding - basic 79,305 84,662 81,232 86,351
--------- --------- ----------- -----------
Earnings per share - basic $ 0.68 $ 0.45 $ 1.32 $ 1.32
========= ========= =========== ===========
Average common shares
outstanding - diluted 79,623 85,672 81,898 87,002
--------- --------- ----------- -----------
Earnings per share -
diluted $ 0.68 $ 0.45 $ 1.31 $ 1.31
========= ========= =========== ===========
Common shares outstanding
at end of period 79,308 84,908 79,308 84,908
Cash dividends declared per
share $ 0.17 $ 0.17 $ 0.68 $ 0.68
---------------------------
Reconciliation of net
earnings to EBITDA
Net earnings $ 53,867 $ 38,223 $ 107,077 $ 113,905
Interest expense 5,742 4,892 21,452 21,895
Income taxes 16,577 12,717 38,616 52,112
Depreciation & amortization 16,423 15,597 63,413 61,469
--------- --------- ----------- -----------
EBITDA $ 92,609 $ 71,429 $ 230,558 $ 249,381
========= ===================== ===========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
May 31, May 31,
2008 2007
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 73,772 $ 38,277
Short-term investments - 25,562
Receivables, less allowances of $4,849 and
$3,641 at May 31, 2008 and May 31, 2007 384,354 400,916
Inventories:
Raw materials 350,256 261,849
Work in process 123,106 97,633
Finished products 119,599 88,382
---------- ----------
Total inventories 592,961 447,864
Assets held for sale 1,132 4,600
Deferred income taxes 17,966 13,067
Prepaid expenses and other current assets 34,785 39,098
---------- ----------
Total current assets 1,104,970 969,384
Investments in unconsolidated affiliates 119,808 57,540
Goodwill 183,523 179,442
Other assets 53,329 43,551
Property, plant & equipment, net 549,944 564,265
---------- ----------
Total assets $2,011,574 $1,814,182
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 356,129 $ 263,665
Notes payable 135,450 31,650
Accrued compensation, contributions to employee
benefit plans and related taxes 59,619 46,237
Dividends payable 13,487 14,440
Other accrued items 68,545 45,519
Income taxes payable 31,665 18,983
---------- ----------
Total current liabilities 664,895 420,494
Other liabilities 49,785 57,383
Long-term debt 245,000 245,000
Deferred income taxes 124,354 105,983
---------- ----------
Total liabilities 1,084,034 828,860
Minority interest 42,163 49,321
Shareholders' equity 885,377 936,001
---------- ----------
Total liabilities and shareholders' equity $2,011,574 $1,814,182
========== ==========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended Twelve Months Ended
May 31, May 31,
-------------------- ---------------------
2008 2007 2008 2007
---------- --------- ---------- ----------
Operating activities
Net earnings $ 53,867 $ 38,223 $ 107,077 $ 113,905
Adjustments to reconcile net
earnings to net cash
provided by operating
activities:
Depreciation and
amortization 16,423 15,597 63,413 61,469
Restructuring charges,
non-cash 1,061 - 5,169 -
Provision for deferred
income taxes 465 (2,242) (3,228) (3,068)
Equity in net income of
unconsolidated
affiliates, net of
distributions (5,362) 28,089 (8,539) 68,510
Minority interest in net
income of consolidated
subsidiaries 1,770 1,848 6,969 5,409
Net loss on sale of assets 929 1,283 3,756 826
Stock-based compensation 1,208 927 4,173 3,480
Excess tax benefits -
stock-based compensation 257 (2,170) (2,035) (2,370)
Changes in assets and
liabilities:
Accounts receivable 19,979 (28,404) 6,967 8,312
Inventories (102,259) 35,362 (144,474) 19,588
Prepaid expenses and other
current assets 5,215 1,892 8,252 (2,078)
Other assets (1,415) 1,578 (1,546) 4,898
Accounts payable and
accrued expenses 81,976 40,339 138,822 (99,283)
Other liabilities (1,773) (290) (4,255) 833
---------- --------- ---------- ----------
Net cash provided by
operating activities 72,341 132,032 180,521 180,431
---------- --------- ---------- ----------
Investing activities
Investment in property,
plant and equipment, net (10,287) (13,557) (47,520) (57,691)
Acquisitions, net of cash
acquired - - (2,225) (31,727)
Investment in
unconsolidated affiliate (29) - (47,598) (1,000)
Proceeds from sale of
assets 223 146 1,025 18,237
Purchases of short-term
investments - (25,562) - (25,562)
Sales of short-term
investments - - 25,562 2,173
---------- --------- ---------- ----------
Net cash used by investing
activities (10,093) (38,973) (70,756) (95,570)
---------- --------- ---------- ----------
Financing activities
Proceeds from (payments
on) short-term borrowings (27,850) (80,230) 103,800 31,650
Principal payments on
long-term debt - (7,684) - (7,691)
Proceeds from issuance of
common shares 25 7,308 13,171 9,866
Excess tax benefits -
stock-based compensation (257) 2,170 2,035 2,370
Payments to minority
interest (1,344) (960) (11,904) (3,360)
Repurchase of common
shares - - (125,785) (76,617)
Dividends paid (13,482) (14,354) (55,587) (59,018)
---------- --------- ---------- ----------
Net cash used by financing
activities (42,908) (93,750) (74,270) (102,800)
---------- --------- ---------- ----------
Increase (decrease) in cash
and cash equivalents 19,340 (691) 35,495 (17,939)
Cash and cash equivalents at
beginning of period 54,432 38,968 38,277 56,216
---------- --------- ---------- ----------
Cash and cash equivalents at
end of period $ 73,772 $ 38,277 $ 73,772 $ 38,277
========== ========= ========== ==========
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,
------------------- -----------------------
2008 2007 2008 2007
--------- --------- ----------- -----------
Volume:
Steel Processing (tons) 827 851 3,286 3,282
Metal Framing (tons) 172 171 666 644
Pressure Cylinders
(units) 14,383 13,601 48,058 44,891
Net sales:
Steel Processing $412,716 $360,486 $1,463,202 $1,460,665
Metal Framing 225,513 195,633 788,788 771,406
Pressure Cylinders 170,709 169,301 578,808 544,826
Other 59,937 61,156 236,363 194,911
--------- --------- ----------- -----------
Total net
sales $868,875 $786,576 $3,067,161 $2,971,808
========= ========= =========== ===========
Material cost:
Steel Processing $306,508 $268,764 $1,105,664 $1,106,471
Metal Framing 143,574 140,415 557,310 547,583
Pressure Cylinders 81,805 80,022 273,141 251,052
Operating income (loss):
Steel Processing $ 25,523 $ 14,732 $ 55,799 $ 55,382
Metal Framing 15,395 (540) (16,215) (9,159)
Pressure Cylinders 20,719 26,053 70,004 84,649
Other (5,142) 1,448 (3,554) (1,727)
--------- --------- ----------- -----------
Total
operating
income $ 56,495 $ 41,693 $ 106,034 $ 129,145
========= ========= =========== ===========
The following provides detail of the restructuring charges included in
the operating income by segment presented above.
Three Months Ended Twelve Months Ended
May 31, May 31,
------------------- -----------------------
2008 2007 2008 2007
--------- --------- ----------- -----------
Pre-tax restructuring
charges by segment:
Steel Processing $ - $ - $ 1,096 $ -
Metal Framing 2,074 - 8,979 -
Pressure Cylinders - - 103 -
Other 2,820 - 7,933 -
--------- --------- ----------- -----------
Total
restructuring
charges $ 4,894 $ - $ 18,111 $ -
========= ========= =========== ===========
CONTACT: Worthington Industries, Inc.
Media Contact:
Cathy M. Lyttle, 614-438-3077
VP, Corporate Communications
E-mail: cmlyttle@WorthingtonIndustries.com
or
Investor Contact:
Allison M. Sanders, 614-840-3133
Director, Investor Relations
E-mail: asanders@WorthingtonIndustries.com
or
www.WorthingtonIndustries.com
SOURCE: Worthington Industries, Inc.