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Worthington Reports First Quarter Fiscal 2010 EPS of $0.08


COLUMBUS, Ohio--(BUSINESS WIRE)--Sep. 29, 2009-- Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $417.5 million and net earnings of $6.7 million, or $0.08 per diluted share for the fiscal 2010 first quarter ended August 31, 2009, showing improvement from fourth quarter results when the company reported a net loss of $13.7 million, or $0.17 per diluted share. In last year’s first quarter, the Company posted record sales of $913.2 million and record net earnings of $68.6 million, or $0.86 per diluted share.

“I am pleased to see improvements in our performance as we begin to move forward from a difficult and challenging period,” stated John P. McConnell, Chairman and CEO. “Despite lower volumes in Steel Processing and Metal Framing, we are benefiting from our work to increase operational efficiencies and from new selling strategies. The Steel Processing business received a temporary lift from the Cash for Clunkers program, and the Pressure Cylinders business saw strength in many of its business lines. Metal Framing is focused on keeping costs in line with low demand which is a condition we expect to continue into 2010.”

First Quarter Results

Financial highlights for the first quarter:


(U.S. dollars in millions, except per share data)








Net sales $ 417.5 $ 471.6 $ 913.2
Operating income (loss) (4.5 ) (19.2 ) 79.7
Equity income 16.1 8.7 25.0
Net earnings (loss) 6.7 (13.7 ) 68.6
Earnings (loss) per share $ 0.08 $ (0.17 ) $ 0.86

Operating income for the first quarter included $3.6 million in pre-tax restructuring charges, primarily related to the announced facility closures in Metal Framing. These charges had a negative impact of $0.03 on earnings per share. Results for the first quarter of the prior year included $8.8 million in restructuring charges, which had a negative impact of $0.08 on earnings per share.

In the Steel Processing segment, volumes continue to be down substantially, 47% lower than last fiscal year’s first quarter. This year’s quarterly net sales of $181.6 million are down compared to the record $459.9 million from the same quarter in fiscal 2009, when volumes and pricing were substantially higher. Net sales were up slightly from the fourth quarter, helped by increased demand from the Cash for Clunkers program and customers advancing orders ahead of announced steel price increases. Versus last quarter, direct and toll volume improved 10% and 7%, respectively, and operating income is up $22.9 million.

In Metal Framing, quarterly net sales were $95.4 million compared to $232.9 million in last year’s first quarter, as volumes were down 46%. Demand remains weak and, despite price increase announcements to keep up with rising material costs, the average selling price is down 24% from the year ago quarter, primarily due to higher steel costs in the prior year. The selling price in this low demand environment remains very competitive. As a result, the Metal Framing segment reported a $4.3 million operating loss compared to a $3.5 million operating loss in the previous quarter.

In the Pressure Cylinders segment, net sales declined 32% to $101.3 million from a record $148.4 million in the comparable quarter of fiscal 2009. Units shipped increased 15% due in part to the addition of the high-volume, low priced products from the Piper acquisition. While 16.4 oz. camping cylinders and LPG cylinders were strong performers, net sales declined due to significantly lower industrial and refrigerant gas cylinder volumes resulting from the steep declines in these global markets.

Income from Worthington’s joint ventures was $16.1 million from the six unconsolidated affiliates, compared to $25.0 million for the year ago quarter. Despite sales volume being down 32% for the quarter, WAVE continued to contribute the vast majority of equity earnings.

First Quarter Highlights

  • Dividends paid to shareholders totaled $7.9 million for the quarter. Based on the quarter-end stock price, the dividend yielded a 3.0% annualized return.
  • The Company continued to pay down debt, reducing it from $239.4 million at May 31, the end of the fiscal year, to $215.3 million on August 31, 2009. Availability under the revolving credit facility totaled $339.6 million at quarter’s end.
  • The ratio of total debt to capitalization was 22.4% at quarter end, compared to 24.4% at May 31, 2009.
  • Cash provided by operating activities was $96.2 million for the first quarter of fiscal 2010. Capital expenditures were $7.7 million for the same period.
  • Dietrich announced a joint venture with ClarkWestern to develop a new ProSTUD™ drywall framing system.
  • The Serviacero Worthington joint venture opened its greenfield steel processing facility in the Monterrey region of Mexico.


“Looking forward, we anticipate a normal seasonal drop in demand beginning in November and bottoming in December,” McConnell said. “We are optimistic that volumes will begin to trend higher next year, but we will watch the opening months of 2010 closely. They should provide foreshadowing for the remainder of the year.”


Dividend Declared

On August 27, 2009, the board of directors declared a quarterly cash dividend of $0.10 per share payable September 29, 2009, to shareholders of record on September 15, 2009.


On September 3, 2009, Worthington acquired Structural Composites Industries, LLC (SCI). SCI is a leading manufacturer of DOT-approved lightweight, aluminum-lined, composite-wrapped high pressure cylinders used in commercial, military, marine and aerospace applications. Revenues were approximately $36 million in calendar year 2008.

Conference Call

Worthington will review first quarter results during its quarterly conference call tomorrow, September 30, 2009, at 10:30 a.m. Eastern Daylight Time. Details regarding the conference call can be found on the company web site at

Corporate Profile

Worthington Industries is a leading diversified metal processing company with annual sales of approximately $2.6 billion. The Columbus, Ohio based company is North America’s premier value-added steel processor and a leader in manufactured metal products such as light gauge steel framing for commercial and residential construction; framing systems and stairs for mid-rise buildings; pressure cylinder products such as propane, oxygen and helium tanks, hand torches, camping cylinders, and scuba tanks; current and past model automotive service stampings; metal ceiling grid systems; steel pallets and racks; and laser welded blanks. Worthington employs approximately 6,400 people and operates 63 facilities in 10 countries.

Founded in 1955, the Company operates under a long-standing corporate philosophy rooted in the golden rule. Earning money for its shareholders is the first corporate goal. This philosophy serves as an unwavering commitment to the customer, supplier, and shareholder, and it serves as the Company’s foundation for one of the strongest employee-employer partnerships in American industry.

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 business plans or future or expected growth, performance, sales, volumes, cash flows, earnings, financial condition or other financial measures; projected working capital needs; demand trends for the company or its markets; pricing trends for raw materials and finished goods and the impact of pricing changes; anticipated capital expenditures and asset sales; anticipated improvements and efficiencies in operations, sales, sourcing and the supply chain; projected timing, results, benefits, costs, charges and expenditures related to acquisitions, headcount reductions and facility dispositions, shutdowns and consolidations; the alignment of operations with demand; the ability to develop or take advantage of future opportunities, new products and markets; expectations for company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expected benefits from transformation plans, cost reduction efforts and other new initiatives; expectations for improving earnings, margins or 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, 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 conditions in national and worldwide financial markets; 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 financial difficulties, consolidation and other changes within the steel, automotive, construction and other industries in which the company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the company does business; the ability to realize targeted expense reductions from head count reductions, facility closures and other cost reduction efforts; the ability to realize other cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives 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; 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 demand, 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.

(In thousands, except per share)
Three Months Ended
August 31,
2009 2008
Net sales $ 417,527 $ 913,222
Cost of goods sold   368,327     761,320  
Gross margin 49,200 151,902
Selling, general and administrative expense 50,025 63,402
Restructuring charges   3,626     8,752  
Operating income (loss) (4,451 ) 79,748
Other income (expense):
Miscellaneous income 1,695 162
Interest expense (2,511 ) (5,569 )
Equity in net income of unconsolidated affiliates   16,144     25,010  
Earnings before income taxes 10,877 99,351
Income tax expense   3,282     30,073  
Net earnings 7,595 69,278
Net earnings attributable to noncontrolling interest   920     654  
Net earnings attributable to controlling interest $ 6,675   $ 68,624  


Average common shares outstanding   79,065     79,017  
Earnings per share attributable to controlling interest $ 0.08   $ 0.87  


Average common shares outstanding   79,081     79,498  
Earnings per share attributable to controlling interest $ 0.08   $ 0.86  
Common shares outstanding at end of period 79,074 78,785
Cash dividends declared per share $ 0.10 $ 0.17
(In thousands)
August 31, May 31,
2009 2009
Current assets:
Cash and cash equivalents $ 102,401 $ 56,319

Receivables, less allowances of $10,834 and $12,470 at
 August 31, 2009 and May 31, 2009

178,508 182,881
Raw materials 107,180 141,082
Work in process 53,857 57,612
Finished products   71,900   71,878
Total inventories 232,937 270,572
Income taxes receivable 20,503 29,749
Assets held for sale 1,842 707
Deferred income taxes 25,664 24,868
Prepaid expenses and other current assets   33,320   33,839
Total current assets 595,175 598,935
Investments in unconsolidated affiliates 101,091 100,395
Goodwill 101,741 101,343
Other intangibles 22,703 23,642
Other assets 18,050 18,009
Property, plant & equipment, net   515,330   521,505
Total assets $ 1,354,090 $ 1,363,829
Liabilities and equity
Current liabilities:
Accounts payable $ 154,019 $ 136,215
Notes payable 95,440 980

Accrued compensation, contributions to employee
 benefit plans and related taxes

29,848 34,503
Dividends payable 7,932 7,916
Other accrued items 47,181 49,488
Income taxes payable 4,391 4,965
Current maturities of long-term debt   19,465   138,013
Total current liabilities 358,276 372,080
Other liabilities 65,459 65,400
Long-term debt 100,400 100,400
Deferred income taxes   84,665   82,986
Total liabilities 608,800 620,866
Shareholders' equity - controlling interest 709,540 706,069
Noncontrolling interest   35,750   36,894
Total equity   745,290   742,963
Total liabilities and equity $ 1,354,090 $ 1,363,829
(In thousands)
Three Months Ended
August 31,
2009 2008
Operating activities
Net earnings attributable to controlling interest $ 6,675 $ 68,624

Adjustments to reconcile net earnings attributable to controlling
 interest to net cash provided by operating activities:

Depreciation and amortization 15,896 16,368
Restructuring charges, non-cash 2,823 -
Provision for deferred income taxes 2,393 744
Equity in net income of unconsolidated affiliates, net of distributions (520 ) (10,510 )
Net earnings attributable to noncontrolling interest 920 654
Net loss (gain) on sale of assets 149 (142 )
Stock-based compensation 974 1,284
Excess tax benefits - stock-based compensation - (355 )

Gain on acquisition of Piper

(1,123 ) -
Changes in assets and liabilities:
Receivables 7,259 15,276
Inventories 41,777 (69,650 )
Prepaid expenses and other current assets 967 (1,967 )
Other assets 119 (1,830 )
Accounts payable and accrued expenses 17,312 5,805
Other liabilities   606     (1,958 )
Net cash provided by operating activities   96,227     22,343  
Investing activities
Investment in property, plant and equipment, net (7,749 ) (14,784 )
Acquisitions, net of cash acquired (9,713 ) (40,225 )
Distributions from (investments in) unconsolidated affiliates, net 264 (288 )
Proceeds from sale of assets   19     3,450  
Net cash used by investing activities   (17,179 )   (51,847 )
Financing activities
Net proceeds from short-term borrowings 94,460 56,203
Principal payments on long-term debt (118,548 ) (248 )
Proceeds from issuance of common shares 1,092 1,762
Excess tax benefits - stock-based compensation - 355
Payments to noncontrolling interest (2,064 ) (1,680 )
Repurchase of common shares - (12,402 )
Dividends paid   (7,906 )   (13,483 )
Net cash provided (used) by financing activities   (32,966 )   30,507  
Increase in cash and cash equivalents 46,082 1,003
Cash and cash equivalents at beginning of period   56,319     73,772  
Cash and cash equivalents at end of period $ 102,401   $ 74,775  
(In thousands)

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

Three Months Ended
August 31,
2009 2008
Steel Processing (tons) 401 751
Metal Framing (tons) 83 153
Pressure Cylinders (units) 13,920 12,147
Net sales:
Steel Processing $ 181,586 $ 459,914
Metal Framing 95,437 232,932
Pressure Cylinders 101,312 148,399
Other   39,192     71,977  
Total net sales $ 417,527   $ 913,222  
Material cost:
Steel Processing $ 130,084 $ 330,926
Metal Framing 58,546 152,794
Pressure Cylinders 45,806 69,960



Operating income (loss):
Steel Processing $ 808 $ 44,397
Metal Framing (4,289 ) 20,959
Pressure Cylinders 5,891 18,654
Other   (6,861 )   (4,262 )
Total operating income (loss) $ (4,451 ) $ 79,748  

The following provides detail of the restructuring charges included in the 
 operating income (loss) by segment presented above.

Three Months Ended
August 31,
2009 2008
Pre-tax restructuring charges by segment:
Steel Processing $ 479 $ 12
Metal Framing 3,576 1,280
Pressure Cylinders 288 7
Other   (717 )   7,453  
Total restructuring charges $ 3,626   $ 8,752  

Source: Worthington Industries, Inc.

Worthington Industries, Inc.
Cathy M. Lyttle, 614-438-3077
VP, Corporate Communications and Investor Relations
Sonya L. Higginbotham, 614-438-7391
Director, Corporate Communications

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