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Worthington Reports Second Quarter Fiscal 2012 Results

01/05/2012

COLUMBUS, OH, Jan 05, 2012 (MARKETWIRE via COMTEX) --Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $570.4 million and net earnings of $18.5 million, or $0.27 per share, for its fiscal 2012 second quarter ended November 30, 2011. In last year's second quarter, the Company reported net sales of $580.7 million and net earnings of $14.5 million, or $0.20 per share.

Financial highlights for the current and comparative periods are as follows:

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

                         2Q 2012    1Q 2012    2Q 2011    6M2012     6M2011
                        --------   --------   --------   --------   --------
Net sales               $  570.4   $  602.4   $  580.7   $1,172.8   $1,197.5
Operating income            12.5       21.2       12.9       33.7       34.0
Equity income               21.9       24.7       16.2       46.6       34.5
Net earnings                18.5       25.7       14.5       44.2       36.8
Earnings per share      $   0.27   $   0.35   $   0.20   $   0.62   $   0.49

"Our second quarter results were very good, showing solid incremental growth," said John McConnell, Chairman and CEO. "The Steel Processing and Pressure Cylinders businesses nearly made up for the lost revenue from the exiting of the Metal Framing business in the year-to-year comparison. Worthington Cylinders is strengthening its portfolio and global footprint to achieve our strategic growth goals for that business. We are pleased with the speed of integration in the Cylinders' acquisitions of the BernzOmatic(R) and Coleman(R) product lines, as well as the recent addition of STAKO and their strong European market position in LPG tanks." McConnell added, "Strengthening automotive demand and continued operating improvements produced good results in Steel Processing."

Consolidated Quarterly Results

Net sales for the second quarter ended November 30, 2011, were $570.4 million, down 2% from the comparable quarter in the prior year, when net sales were $580.7 million. The Steel Processing and Pressure Cylinders segments reported an 18% and a 33% increase in sales, respectively, aided by the recent acquisitions. These increases, however, were more than offset by the impact of the deconsolidation of the Company's former Metal Framing and Automotive Body Panels operations, as reported in previous periods. Excluding the deconsolidated operations, net sales rose 19% from the prior year quarter primarily due to the acquisitions and higher average selling prices.

Gross margin for the current quarter was $66.3 million, compared to $69.8 million in the prior year quarter. The decrease was primarily due to higher inventory holding losses for Steel Processing.

SG&A expense was $4.1 million lower than the prior year quarter primarily due to the deconsolidation transactions, partially offset by the impact of the acquisitions.

Operating income for the current quarter was $12.5 million, slightly lower than the $12.9 million reported during the comparable quarter of the prior year. Operating income for the current quarter was adversely affected by restructuring expenses, while gains on the sale of equipment and real estate related to the joint venture transactions had a favorable impact. During the current quarter, ongoing transformation efforts within Pressure Cylinders resulted in $2.0 million of outside consulting expenses, which are included in the "restructuring and other" expense line. The $1.2 million in the "joint venture transactions" line reflects one-time gains on asset disposals offset by facility exit and other costs related to the wind down of the retained Metal Framing facilities during the second quarter of fiscal 2012.

Interest expense was $4.8 million in the quarter, the same as in the prior year. The impact of higher average debt levels was offset by slightly lower interest rates.

Equity in net income from unconsolidated joint ventures was $21.9 million, an increase of $5.7 million from the comparable quarter in the prior year, on sales of $420.1 million. Worthington Armstrong Venture (WAVE) contributed $14.1 million of earnings in the current quarter, a 10% increase from the comparable prior year quarter. In addition, the new joint ventures, ClarkDietrich and ArtiFlex, contributed $2.2 million and $2.1 million of earnings, respectively.

For the current quarter, income tax expense of $9.2 million compared to $7.3 million in the comparable quarter in the prior year. Current quarter income tax expense reflects an estimated annual effective tax rate of 32.9% compared to 32.7% for the prior year quarter.

Balance Sheet

At quarter end, total debt was $476.3 million, up $16.9 million from August 31, 2011, as the acquisition of STAKO and the repurchase of common shares raised short-term borrowing needs. The Company had utilized $85.0 million of its $100.0 million trade accounts receivable securitization facility, and $136.1 million was drawn on its $400.0 million revolving credit facility as of November 30, 2011.

Quarterly Segment Results

Steel Processing's net sales of $373.5 million were up 18%, or $56.3 million, over the prior year quarter. Higher average selling prices increased net sales by $35.9 million and a 12% increase in volumes favorably impacted sales by $20.4 million. The mix of direct versus toll tons processed was 51% to 49% this quarter, compared with 54% to 46% in the comparable quarter in the prior year. Operating income declined $1.0 million as increased volumes were more than offset by the impact of higher manufacturing expenses and inventory holding losses.

Pressure Cylinders' net sales of $181.5 million were up 33% from the comparable prior year quarter. Net sales in the North American operations increased 33% over prior year, aided by the Bernz acquisition. Net sales for the European operations were higher primarily due to the STAKO acquisition and a more favorable product mix, but overall volumes were down. Worthington Nitin Cylinders, the Company's Indian consolidated joint venture, contributed $1.9 million to net sales. Pressure Cylinders' operating income increased $0.7 million, or 7%, from the prior year quarter to $10.2 million. The improvement in operating income was driven by higher overall volumes and an increased spread between selling prices and material costs. However, higher SG&A expenses of $5.5 million, driven primarily by the impact of acquisitions and the absorption of a larger portion of corporate allocated expenses resulting from the deconsolidated operations offset the improvement.

Metal Framing's net sales were $1.3 million during the quarter, reflecting two months of operations for the vinyl business, which was sold on October 31, 2011. The prior year quarter included the full Metal Framing operations, which were contributed into the new ClarkDietrich joint venture on March 1, 2011.

Noteworthy Developments

--  On September 30, 2011, the Company completed the acquisition of
    Poland-based STAKO, a leading European producer of automotive
    liquefied propane gas and compressed natural gas tanks. The acquired
    net assets are now a part of the Pressure Cylinders business segment.
    The purchase price was $41.5 million.


--  On December 1, 2011, the propane fuel business of The Coleman Company,
    Inc. became part of the Pressure Cylinders segment. The Company also
    licensed the Coleman name, adding the Coleman brand to the Cylinders
    growing retail portfolio. The purchase price was $23.4 million.


--  A quarterly dividend of $0.12 was declared by the Company's Board of
    Directors on December 14, 2011, payable on March 29, 2012 to
    shareholders of record March 15, 2012.


--  The Company repurchased 1.2 million shares for $16.7 million during
    the quarter.


--  In December, the Company received a non-recurring distribution of
    $50.0 million from WAVE, the ceiling grid joint venture, as WAVE
    expanded its revolving credit facility to $225.0 million and issued a
    $50.0 million 10-year senior unsecured note.


--  On December 29, 2011, the Company acquired the stock of Angus
    Industries for $180.0 million. Angus designs and manufacturers OEM
    cabs for mobile equipment in industries serving the agriculture,
    construction and mining industries. For its fiscal year ended December
    31, 2011, Angus recognized approximately $200.0 million of revenue.
    Post-closing, the Company has approximately $569.0 million of funded
    debt and availability under its revolving credit facilities of $184.0
    million.

Outlook

"Our Company continues to leverage our core competency as a diversified metals manufacturer by acquiring high return and high value-added businesses that serve attractive end markets," McConnell said. "The acquisition of Angus Industries is a result of that focus and we are pleased to have this market leader in the design and manufacturing of high quality, custom-engineered cabs in the Worthington family.

"We are aggressively positioning Worthington Industries for growth. Our focus over the last three years has been on improving our existing businesses or exiting them, and finding new, complementary businesses to help us achieve our strategic goal of decreasing earnings volatility. We are strengthening our brand offerings and added new growth opportunities in Cylinders. Our Steel Processing segment is operating at a high level and we have positioned our joint ventures to continue their strong results. Even with the slow economy, we have seen incremental improvements in many of our markets and believe we can continue to grow our bottom line."

Conference Call

Worthington will review second quarter results during its quarterly conference call on January 5, 2012, at 1:30 p.m., Eastern Time. Details regarding the conference call can be found on the Company website at www.WorthingtonIndustries.com.

Corporate Profile

Worthington Industries is a leading diversified metals manufacturing company with 2011 fiscal year sales of $2.4 billion. The Columbus, Ohio based company is North America's premier value-added steel processor and a leader in manufactured pressure cylinders, such as propane, oxygen and helium tanks, hand torches, refrigerant and industrial cylinders, camping cylinders, scuba tanks, and compressed natural gas storage cylinders; custom-engineered open and enclosed cabs and operator stations for heavy mobile equipment; framing systems and stairs for mid-rise buildings; steel pallets and racks; and through joint ventures, suspension grid systems for concealed and lay-in panel ceilings, current and past model automotive service stampings; laser welded blanks, and light gauge steel framing for commercial and residential construction. Worthington employs more than 9,500 people and operates 80 facilities in 12 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, balance sheet strengths, debt, financial condition or other financial measures; projected profitability potential, capacity, and 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 costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, newly-created joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to maintain margins and capture and maintain market share and to develop or take advantage of future opportunities, new products and new 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 increasing volatility or improving and sustaining earnings, earnings potential, 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 the 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 and other expected benefits therefrom; the overall success of newly-created joint ventures, including the demand for their products, and the ability to achieve the anticipated benefits therefrom; capacity levels and efficiencies, within facilities, within major product markets and within the industry as a whole; the effect of disruption in the 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, foreign currency exposure and the acceptance of our products in new markets; 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 worker's compensation, product recalls or product 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, including those adopted by the United States Securities and Exchange Commission and other governmental agencies as contemplated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 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, including those described in "Part I - Item 1A. - Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended May 31, 2011.

                        WORTHINGTON INDUSTRIES, INC.
                    CONSOLIDATED STATEMENTS OF EARNINGS
                      (In thousands, except per share)


                               Three Months Ended       Six Months Ended
                                  November 30,            November 30,
                             ----------------------  ----------------------
                                2011        2010        2011        2010
                             ----------  ----------  ----------  ----------
Net sales                    $  570,389  $  580,687  $1,172,776  $1,197,492
Cost of goods sold              504,112     510,868   1,035,037   1,048,759
                             ----------  ----------  ----------  ----------
  Gross margin                   66,277      69,819     137,739     148,733
Selling, general and
 administrative expense          52,901      56,971      98,262     113,749
Restructuring and other
 expense (income)                 2,048         (76)      3,751         988
Joint venture transactions       (1,192)          -       2,023           -
                             ----------  ----------  ----------  ----------
  Operating income               12,520      12,924      33,703      33,996
Other income (expense):
  Miscellaneous income
   (expense)                        279         (94)        680        (137)
  Interest expense               (4,756)     (4,838)     (9,444)     (9,546)
  Equity in net income of
   unconsolidated affiliates     21,912      16,223      46,609      34,512
                             ----------  ----------  ----------  ----------
  Earnings before income
   taxes                         29,955      24,215      71,548      58,825
Income tax expense                9,207       7,332      22,459      17,689
                             ----------  ----------  ----------  ----------
Net earnings                     20,748      16,883      49,089      41,136
Net earnings attributable to
 noncontrolling interest          2,216       2,414       4,904       4,313
                             ----------  ----------  ----------  ----------
Net earnings attributable to
 controlling interest        $   18,532  $   14,469  $   44,185  $   36,823
                             ==========  ==========  ==========  ==========

Basic
Average common shares
 outstanding                     69,350      74,062      70,440      75,870
                             ----------  ----------  ----------  ----------
Earnings per share
 attributable to controlling
 interest                    $     0.27  $     0.20  $     0.63  $     0.49
                             ==========  ==========  ==========  ==========

Diluted
Average common shares
 outstanding                     69,356      74,077      70,925      75,882
                             ----------  ----------  ----------  ----------
Earnings per share
 attributable to controlling
 interest                    $     0.27  $     0.20  $     0.62  $     0.49
                             ==========  ==========  ==========  ==========


Common shares outstanding at
 end of period                   68,937      74,108      68,937      74,108

Cash dividends declared per
 share                       $     0.12  $     0.10  $     0.24  $     0.20




                        WORTHINGTON INDUSTRIES, INC.
                         CONSOLIDATED BALANCE SHEETS
                               (In thousands)

                                                   November 30,    May 31,
                                                       2011         2011
                                                   ------------ ------------
Assets
Current assets:
  Cash and cash equivalents                        $     53,806 $     56,167
  Receivables, less allowances of $3,254 and
   $4,150 at November 30, 2011 and May 31, 2011         333,375      388,550
  Inventories:
    Raw materials                                       165,232      189,450
    Work in process                                      85,175       98,940
    Finished products                                    85,764       82,440
                                                   ------------ ------------
      Total inventories                                 336,171      370,830
  Income taxes receivable                                10,001        1,356
  Assets held for sale                                   22,962        9,681
  Deferred income taxes                                  22,290       28,297
  Prepaid expenses and other current assets              32,744       36,754
                                                   ------------ ------------
    Total current assets                                811,349      891,635

Investments in unconsolidated affiliates                233,187      232,149
Goodwill                                                102,379       93,633
Other intangible assets, net of accumulated
 amortization of $12,715 and $12,688 at November
 30, 2011 and May 31, 2011                               43,235       19,958
Other assets                                             23,150       24,540
Property, plant and equipment, net                      398,989      405,334
                                                   ------------ ------------
Total assets                                       $  1,612,289 $  1,667,249
                                                   ============ ============

Liabilities and equity
Current liabilities:
  Accounts payable                                 $    177,194 $    253,404
  Short-term borrowings                                 226,086      132,956
  Accrued compensation, contributions to employee
   benefit plans and related taxes                       43,155       72,312
  Dividends payable                                       8,391        7,175
  Other accrued items                                    30,160       52,023
  Income taxes payable                                      502        7,132
                                                   ------------ ------------
    Total current liabilities                           485,488      525,002

Other liabilities                                        71,522       67,309
Long-term debt                                          250,263      250,254
Deferred income taxes                                    88,126       83,981
                                                   ------------ ------------
    Total liabilities                                   895,399      926,546

Shareholders' equity - controlling interest             670,110      689,910
Noncontrolling interest                                  46,780       50,793
                                                   ------------ ------------
    Total equity                                        716,890      740,703
                                                   ------------ ------------
Total liabilities and equity                       $  1,612,289 $  1,667,249
                                                   ============ ============


                        WORTHINGTON INDUSTRIES, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In thousands)

                                  Three Months Ended     Six Months Ended
                                     November 30,          November 30,
                                 --------------------  --------------------
                                    2011       2010       2011       2010
                                 ---------  ---------  ---------  ---------
Operating activities
Net earnings                     $  20,748  $  16,883  $  49,089  $  41,136
Adjustments to reconcile net
 earnings to net cash provided
 (used) by operating activities:
  Depreciation and amortization     13,119     15,646     25,973     31,470
  Restructuring and other
   expense (income), non-cash            -        (32)         -        225
  Provision for deferred income
   taxes                               500     (1,365)     8,178     (4,464)
  Bad debt expense (income)           (140)       776       (111)       781
  Equity in net income of
   unconsolidated affiliates,
   net of distributions              2,782     (2,160)    (2,287)    (3,816)
  Net loss (gain) on sale of
   assets                           (1,653)       354     (2,068)      (329)
  Stock-based compensation           2,578      1,579      5,779      3,033
Changes in assets and
 liabilities:
  Receivables                       23,981      8,100     51,355    (15,122)
  Inventories                       47,809     31,799     53,724     26,330
  Prepaid expenses and other
   current assets                    6,063      1,437      6,674        695
  Other assets                       1,567        107      2,840        807
  Accounts payable and accrued
   expenses                        (54,164)   (15,158)  (151,012)   (94,143)
  Other liabilities                  1,165      1,491      1,381      3,658
                                 ---------  ---------  ---------  ---------
Net cash provided (used) by
 operating activities               64,355     59,457     49,515     (9,739)
                                 ---------  ---------  ---------  ---------

Investing activities
  Investment in property, plant
   and equipment, net               (3,559)    (4,477)   (10,031)   (10,810)
  Acquisitions, net of cash
   acquired                        (38,782)         -    (79,782)   (12,175)
  Investments in unconsolidated
   affiliates                            -          -       (785)         -
  Proceeds from sale of assets       6,306      4,366     11,347      6,508
                                 ---------  ---------  ---------  ---------
Net cash used by investing
 activities                        (36,035)      (111)   (79,251)   (16,477)
                                 ---------  ---------  ---------  ---------

Financing activities
  Net proceeds from short-term
   borrowings                       16,881    (41,375)    93,131    123,735
  Proceeds from issuance of
   common shares                       315      1,036      8,523      1,338
  Payments to noncontrolling
   interest                         (3,456)    (3,457)    (6,576)    (6,577)
  Repurchase of common shares      (16,715)   (12,137)   (52,120)   (75,092)
  Dividends paid                    (8,414)    (7,408)   (15,583)   (15,334)
                                 ---------  ---------  ---------  ---------
Net cash provided (used) by
 financing activities              (11,389)   (63,341)    27,375     28,070
                                 ---------  ---------  ---------  ---------

Increase (decrease) in cash and
 cash equivalents                   16,931     (3,995)    (2,361)     1,854
Cash and cash equivalents at
 beginning of period                36,875     64,865     56,167     59,016
                                 ---------  ---------  ---------  ---------
Cash and cash equivalents at end
 of period                       $  53,806  $  60,870  $  53,806  $  60,870
                                 =========  =========  =========  =========

                        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       Six Months Ended
                                  November 30,            November 30,
                             ----------------------  ----------------------
                                2011        2010        2011        2010
                             ----------  ----------  ----------  ----------
Volume:
  Steel Processing (tons)           681         608       1,385       1,224
  Pressure Cylinders (units)     14,585      13,684      29,178      27,953
  Metal Framing (tons)                1          60           1         125

Net sales:
  Steel Processing           $  373,462  $  317,147  $  781,636  $  672,011
  Pressure Cylinders            181,454     136,218     350,283     272,292
  Metal Framing                   1,257      77,084       4,402     161,588
  Other                          14,216      50,238      36,455      91,601
                             ----------  ----------  ----------  ----------
    Total net sales          $  570,389  $  580,687  $1,172,776  $1,197,492
                             ==========  ==========  ==========  ==========

Material cost:
  Steel Processing           $  281,784  $  232,845  $  588,434  $  494,032
  Pressure Cylinders             89,410      62,784     175,962     126,301
  Metal Framing                   1,003      55,128       1,946     111,845

Operating income (loss):
  Steel Processing           $    7,387  $    8,429  $   23,664  $   25,047
  Pressure Cylinders             10,202       9,523      22,117      19,077
  Metal Framing                     372      (6,684)     (3,315)    (10,613)
  Other                          (5,441)      1,656      (8,763)        485
                             ----------  ----------  ----------  ----------
    Total operating income   $   12,520  $   12,924  $   33,703  $   33,996
                             ==========  ==========  ==========  ==========


The following provides detail of the restructuring and other expense
 (income) and joint venture transactions included in the operating income
 by segment presented above.

                                Three Months Ended       Six Months Ended
                                   November 30,            November 30,
                              ----------------------  ---------------------
                                 2011        2010        2011       2010
                              ----------  ----------  ---------- ----------
Pre-tax restructuring and
 other expense (income):
  Steel Processing            $        -  $     (270) $        - $     (373)
  Pressure Cylinders                   -           -           -          -
  Metal Framing                        -          56           -        976
  Other                            2,048         138       3,751        385
                              ----------  ----------  ---------- ----------
    Total restructuring and
     other expense (income)   $    2,048  $      (76) $    3,751 $      988
                              ==========  ==========  ========== ==========

                                 Three Months Ended      Six Months Ended
                                    November 30,           November 30,
                              ----------------------  ---------------------
                                  2011        2010        2011       2010
                              ----------  ----------  ---------- ----------
Pre-tax joint venture
 transactions:
  Steel Processing            $        -  $        -  $        - $        -
  Pressure Cylinders                   -           -           -          -
  Metal Framing                   (1,192)          -       2,023          -
  Other                                -           -           -          -
                              ----------  ----------  ---------- ----------
    Total joint venture
     transactions             $   (1,192) $        -  $    2,023 $        -
                              ==========  ==========  ========== ==========

CONTACTS:
Cathy M. Lyttle
VP, Corporate Communications and Investor Relations
Phone: (614) 438-3077
E-mail: Email Contact

Sonya L. Higginbotham
Director, Corporate Communications
Phone: (614) 438-7391
E-mail: Email Contact


SOURCE: Worthington Industries, Inc.

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