Earnings Per Share More Than Triples
COLUMBUS, Ohio--(BUSINESS WIRE)--Sept. 23, 2008--Worthington
Industries, Inc. (NYSE: WOR) today reported results for the three
months ended August 31, 2008.
(U.S. dollars in millions, except per share data)
1Q2009 4Q2008 1Q2008
------ ------ ------
Net sales $913.2 $868.9 $759.0
Operating income 79.7 56.5 20.0
Equity income 25.0 21.9 15.0
Net earnings 68.6 53.9 20.2
Earnings per share $0.86 $0.68 $0.24
EBITDA(a) $120.6 $92.6 $49.6
(a) Earnings before interest, taxes, depreciation and
amortization. See reconciliation on consolidated statement of
earnings.
First Quarter 2009 Highlights
- Quarterly net sales and net earnings were the highest in
company history, despite volume declines.
- Quarterly net sales and operating income in the Steel
Processing segment were a record $459.9 million and $44.4
million, respectively.
- The Metal Framing segment reported a second consecutive
quarter of significant operating income totaling $21.0
million.
- Quarterly net sales and operating income in the Pressure
Cylinders segment represented a first quarter record of $148.4
million and $18.7 million, respectively.
- Equity income from eight unconsolidated joint ventures totaled
$25.0 million led by record quarterly earnings at Worthington
Armstrong Venture (WAVE) and the addition of the new
Serviacero Worthington joint venture in Mexico.
- Cash dividends received from joint ventures totaled $14.5
million for the quarter.
- Cash provided by operating activities was $22.3 million for
the first quarter of fiscal 2009. Capital expenditures were
$14.8 million for the same period.
- Dividends paid to shareholders totaled $13.5 million for the
quarter. Based on the quarter-end stock price, the dividend
yielded a 3.9% annualized return.
- The ratio of total debt to capitalization was 32.5% at quarter
end, compared to 30.1% at the last fiscal year end.
- The June 2, 2008, acquisition of Sharon Stairs, a manufacturer
of steel egress stair systems contributed $5.5 million in
sales to the Construction Services segment in Other.
Consolidated Results
For the first quarter, net sales were $913.2 million, compared to
$759.0 million for the first quarter of fiscal 2008, an increase of
20%. First quarter net earnings of $68.6 million, or $0.86 per diluted
share, rose 240% from first quarter 2008 net earnings of $20.2
million, or $0.24 per diluted share.
Operating income for the first quarter included $8.8 million in
pre-tax restructuring charges, primarily related to previously
announced plant closures in the Metal Framing segment and professional
fees in Other. These charges had a negative impact of $0.08 on
reported earnings per share. Results for the prior year period
included $4.4 million in restructuring charges which had a negative
impact of $0.03 on earnings per share.
"We are pleased with our excellent first quarter which resulted in
the best quarterly sales and earnings in the company's history," said
John McConnell, Chairman and CEO. "While we benefited from a rising
price environment, we have also been very focused on reducing costs,
maximizing asset utilization and driving improvements in our
operations. Unfortunately, the record quarterly sales and net earnings
are not sustainable given current market conditions, particularly in
the Steel Processing and Metal Framing business segments." McConnell
added, "That's why we remain aggressive in our efforts with the
Transformation Plan to create more opportunities for margin
enhancement, restructuring, if necessary, developing new customers,
and improving the supply chain. We also applaud the continued strong
results in our Pressure Cylinders segment, and congratulate them on
their efforts, along with the significant contributions this quarter
from our joint ventures, WAVE and Serviacero Worthington."
Quarterly Segment Results
In the Steel Processing segment, quarterly net sales rose 29%, or
$104.1 million, to $459.9 million from $355.9 million in the
comparable quarter of fiscal 2008. The increase in net sales was the
result of higher average pricing (up 40%) partially offset by lower
volumes (down 7%) relative to the prior year. Operating income
increased because of a much wider spread between average selling
prices and material costs compared to the first quarter of fiscal
2008. In the Metal Framing segment, net sales increased 18%, or $34.9
million, to $232.9 million from $198.1 million in the comparable
quarter of fiscal 2008. Average selling prices rose 35%, more than
offsetting an overall volume decrease of 13%. The wider spread between
selling prices and material costs resulted in much improved
profitability for the quarter.
In the Pressure Cylinders segment, net sales increased 9%, or
$11.8 million, to $148.4 million from $136.6 million in the comparable
quarter of fiscal 2008. The increase in net sales was primarily the
result of higher volumes (up 5%), especially in the 16 ounce camping
gas product line sold in North America. With selling prices keeping
pace with rising material costs, the higher volumes translated to an
increase in operating income from the prior year.
Worthington's joint ventures added significantly to first quarter
results, as equity income from the eight unconsolidated affiliates
rose 67%, totaling a record $25.0 million for the quarter, compared to
$15.0 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, which reached a new record in the quarter.
Transformation Plan
Initial cost reduction efforts, announced in the first quarter of
fiscal 2008, have grown into a broader program called the
Transformation Plan. The Transformation Plan includes a focus on cost
reduction, margin expansion and organizational capability improvements
as well as an effort to drive excellence in three core competencies:
sales, operations and supply chain management. The program is
comprehensive in scope and features aggressive diagnostic and planning
initiatives in the Steel Processing and Metal Framing business
segments. The goal of the Transformation Plan is to increase the
company's sustainable earnings potential over the next three years.
The initial cost reduction effort identified opportunities for $39
million in annual savings in overhead expense reduction, early
retirement and plant closures, exclusive of the expenses related to
achieving these savings. To date, $21.8 million of the $39.0 million
in annual savings have been realized, of which $3.3 million was
realized in the first quarter of fiscal 2009.
Restructuring charges associated with the Transformation Plan
totaled $8.8 million in the first quarter of fiscal 2009. Additional
charges are expected during the life of the plan including charges for
professional fees, facility closures and relocation.
Other
Dividend Declared
On August 19, 2008, the board of directors declared a quarterly
cash dividend of $0.17 per share payable September 29, 2008, to
shareholders of record on September 15, 2008.
Announcements
On June 2, 2008, Worthington announced that its Worthington
Integrated Building Systems subsidiary had acquired the assets of
Sharon Stairs, a designer and manufacturer of steel egress stair
systems for the commercial construction market. Sharon Stairs has
experienced significant growth in recent years and ended 2007 with $32
million in sales. The acquisition offers additional growth
opportunities, higher margin products and synergies with Worthington's
mid-rise product offerings.
On September 23, 2008, U.S. Steel and Worthington Industries
announced a plan to expand their existing Worthington Specialty
Processing joint venture. Under the terms of the agreement, U.S. Steel
will contribute ProCoil Company LLC, its steel processing subsidiary
in Canton, Michigan, and Worthington will contribute its steel
processing subsidiary in Taylor, Michigan. The expanded joint venture
is expected to achieve synergies that will allow the three merged
entities to better serve the automotive and flat-rolled market.
Worthington Industries will own 51% and U.S. Steel will own 49% of the
new joint venture. Worthington will continue as managing partner.
Conference Call
Worthington will review first quarter results during its quarterly
conference call tomorrow, September 24, 2008, at 8:30 a.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 approximately 8,000 people and operates 68 manufacturing
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 charges; 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
August 31,
-------------------
2008 2007
--------- ---------
Net sales $913,222 $758,955
Cost of goods sold 761,320 680,170
--------- ---------
Gross margin 151,902 78,785
Selling, general and administrative expense 63,402 54,345
Restructuring charges 8,752 4,436
--------- ---------
Operating income 79,748 20,004
Other income (expense):
Miscellaneous expense (492) (908)
Interest expense (5,569) (4,638)
Equity in net income of unconsolidated
affiliates 25,010 14,985
--------- ---------
Earnings before income taxes 98,697 29,443
Income tax expense 30,073 9,275
--------- ---------
Net earnings $68,624 $20,168
========= =========
Average common shares outstanding - basic 79,017 84,063
--------- ---------
Earnings per share - basic $0.87 $0.24
========= =========
Average common shares outstanding - diluted 79,498 85,001
--------- ---------
Earnings per share - diluted $0.86 $0.24
========= =========
Common shares outstanding at end of period 78,785 81,034
Cash dividends declared per share $0.17 $0.17
--------------------------------------------------
Reconciliation of net earnings to EBITDA
Net earnings $68,624 $20,168
Interest expense 5,569 4,638
Income taxes 30,073 9,275
Depreciation & amortization 16,368 15,486
--------- ---------
EBITDA $120,634 $49,567
========= =========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
August 31, May 31,
2008 2008
----------- ----------
Assets
Current assets:
Cash and cash equivalents $74,775 $73,772
Receivables, less allowances of $6,300 and
$4,849 at August 31, 2008 and May 31, 2008 378,645 384,354
Inventories:
Raw materials 377,421 350,256
Work in process 137,879 123,106
Finished products 154,681 119,599
----------- ----------
Total inventories 669,981 592,961
Assets held for sale 1,092 1,132
Deferred income taxes 18,330 17,966
Prepaid expenses and other current assets 36,154 34,785
----------- ----------
Total current assets 1,178,977 1,104,970
Investments in unconsolidated affiliates 130,040 119,808
Goodwill 201,333 183,523
Other assets 41,560 29,786
Property, plant & equipment, net 549,747 549,944
----------- ----------
Total assets $2,101,657 $1,988,031
=========== ==========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $360,515 $356,129
Notes payable 199,568 135,450
Accrued compensation, contributions to
employee benefit plans and related taxes 55,742 59,619
Dividends payable 13,400 13,487
Other accrued items 74,278 68,545
Income taxes payable 42,104 31,665
----------- ----------
Total current liabilities 745,607 664,895
Other liabilities 48,941 49,785
Long-term debt 245,400 245,000
Deferred income taxes 99,719 100,811
----------- ----------
Total liabilities 1,139,667 1,060,491
Minority interest 38,851 42,163
Shareholders' equity 923,139 885,377
----------- ----------
Total liabilities and shareholders' equity $2,101,657 $1,988,031
=========== ==========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
August 31,
------------------
2008 2007
--------- --------
Operating activities
Net earnings $68,624 $20,168
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 16,368 15,486
Provision for deferred income taxes 744 1,747
Equity in net income of unconsolidated
affiliates, net of distributions (10,510) (285)
Minority interest in net income of consolidated
subsidiaries 654 1,998
Net (gain) loss on sale of assets (142) 2,392
Stock-based compensation 1,284 934
Excess tax benefits - stock-based compensation (355) (560)
Changes in assets and liabilities:
Accounts receivable 15,276 13,363
Inventories (69,650) 2,703
Prepaid expenses and other current assets (1,967) 1,718
Other assets (1,830) 207
Accounts payable and accrued expenses 5,805 16,324
Other liabilities (1,958) (1,362)
--------- --------
Net cash provided by operating activities 22,343 74,833
--------- --------
Investing activities
Investment in property, plant and equipment, net (14,784) (16,505)
Acquisitions, net of cash acquired (40,225) -
Investment in unconsolidated affiliate (288) -
Proceeds from sale of assets 3,450 46
Sales of short-term investments - 25,562
--------- --------
Net cash provided (used) by investing activities (51,847) 9,103
--------- --------
Financing activities
Net proceeds from short-term borrowings 56,203 55,350
Principal payments on long-term debt (248) -
Proceeds from issuance of common shares 1,762 4,734
Excess tax benefits - stock-based compensation 355 560
Payments to minority interest (1,680) (2,400)
Repurchase of common shares (12,402) (87,310)
Dividends paid (13,483) (14,461)
--------- --------
Net cash provided (used) by financing activities 30,507 (43,527)
--------- --------
Increase in cash and cash equivalents 1,003 40,409
Cash and cash equivalents at beginning of period 73,772 38,277
--------- --------
Cash and cash equivalents at end of period $74,775 $78,686
========= ========
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,
-------------------
2008 2007
--------- ---------
Volume:
Steel Processing (tons) 751 810
Metal Framing (tons) 153 174
Pressure Cylinders (units) 12,147 11,539
Net sales:
Steel Processing $459,914 $355,854
Metal Framing 232,932 198,071
Pressure Cylinders 148,399 136,598
Other 71,977 68,432
--------- ---------
Total net sales $913,222 $758,955
========= =========
Material cost:
Steel Processing $330,926 $270,221
Metal Framing 152,794 145,501
Pressure Cylinders 69,960 64,278
Operating income (loss):
Steel Processing $44,397 $9,979
Metal Framing 20,959 (8,003)
Pressure Cylinders 18,654 17,965
Other (4,262) 63
--------- ---------
Total operating income $79,748 $20,004
========= =========
The following provides detail of the restructuring charges included
in the operating income by segment presented above.
Three Months Ended
August 31,
-------------------
2008 2007
--------- ---------
Pre-tax restructuring charges by segment:
Steel Processing $12 $1,201
Metal Framing 1,280 882
Pressure Cylinders 7 -
Other 7,453 2,353
--------- ---------
Total restructuring charges $8,752 $4,436
========= =========
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.