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Worthington Reports Third Quarter Fiscal 2012 Results

03/29/2012

COLUMBUS, OH, Mar 29, 2012 (MARKETWIRE via COMTEX) --Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $611.3 million and net earnings of $25.9 million, or $0.37 per share, for its fiscal 2012 third quarter ended February 29, 2012. In last year's third quarter, the Company reported net sales of $569.4 million and net earnings of $26.3 million, or $0.35 per share.

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

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

                     3Q 2012    2Q 2012    3Q 2011    9M2012     9M2011
                   ---------- ---------- ---------- ---------- ----------
Net sales              $611.3     $565.7     $569.4   $1,779.3   $1,766.9
Operating income         18.1        2.8       28.0       42.1       62.0
Equity income            24.0       21.9       17.0       70.6       51.5
Net earnings             25.9       12.0       26.3       63.5       63.1
Earnings per share      $0.37      $0.17      $0.35      $0.90      $0.83


"We performed well in our third quarter," said John P. McConnell, Chairman and CEO. "The overall economy continued to strengthen with overall steel volume up 21% led by a strong year over year increase in the automotive market. Most importantly, our team is doing an excellent job of managing the reshaping of our Company. Although the additions and subtractions have been numerous and make year over year comparisons more difficult in the short term, we are confident our decisions and direction have produced a better platform for future success."

Consolidated Quarterly Results

Net sales for the third quarter ended February 29, 2012, were $611.3 million, up 7% from the comparable quarter in the prior year, when net sales were $569.4 million. This is significant for the Company as it begins to reflect the replacement of revenues lost from the deconsolidation of the Metal Framing and Automotive Body Panels segments reported in earlier periods. Excluding these deconsolidated operations, net sales rose 32% from the prior year quarter primarily due to acquisitions and higher average selling prices. Steel Processing increased sales by 22% and sales rose by 38% in Pressure Cylinders, aided by recent acquisitions. Additionally, the acquisition of Angus, which is reported as the Engineered Cabs business segment, contributed $40.2 million of sales to the current quarter.

Gross margin for the current quarter was $83.3 million, compared to $88.3 million in the prior year quarter. The $5.0 million decrease resulted from the negative net impact of the acquisition and deconsolidation activity, an unfavorable product mix in Pressure Cylinders and increased manufacturing expenses, which were partially offset by a favorable spread between selling prices and material costs.

SG&A expense increased $2.7 million over the prior year quarter primarily due to the accrual for certain legal expenses, and increased amortization and transaction fees related to the acquisitions, partially offset by the deconsolidation transactions.

Operating income for the current quarter was $18.1 million, compared to $28.0 million in the prior year quarter. In addition to the factors mentioned above, operating income for the current quarter was adversely affected by increased restructuring charges and joint venture transaction expenses. Ongoing transformation efforts within Pressure Cylinders resulted in $1.0 million of outside consulting expenses, which is included in the "restructuring and other expense" line on the income statement. The $1.8 million of expense in the "joint venture transactions" line was driven by on-going activity during the current quarter related to the wind down of the retained Metal Framing facilities and reflects facility exit and other costs partially offset by one-time gains on asset disposals.

Interest expense was $5.1 million in the quarter, compared to $4.5 million in the comparable period in the prior year. The impact of higher average debt levels was substantially offset by lower interest rates.

Equity in net income from unconsolidated joint ventures was $24.0 million, an increase of $7.0 million from the comparable quarter in the prior year, on sales of $410.0 million. WAVE contributed $16.0 million of earnings in the current quarter, a 14% increase from the prior year quarter. All of the other operating joint ventures were profitable and, with the exception of Serviacero, the joint venture in Mexico, all reported improved results over the prior year quarter.

For the current quarter, income tax expense of $9.3 million compared to $11.9 million in the comparable quarter in the prior year. Current quarter income tax expense reflects an estimated annual effective tax rate of 31.9% compared to 32.0% for the prior year quarter. The current year estimated rate includes $1.7 million in one-time adjustments.

Balance Sheet

At quarter end, total debt was $538.9 million, up $62.5 million from November 30, 2011, as the acquisitions of the Coleman propane fuel cylinders business and Angus Industries raised borrowing needs. During the current quarter, the Company increased borrowing capacity under its trade accounts receivable securitization facility by $50.0 million to $150.0 million of which $110.0 million had been utilized as of February 29, 2012. Additionally, $170.9 million was drawn on the Company's $400.0 million revolving credit facility.

Quarterly Segment Results

Steel Processing's net sales of $367.3 million were up 22%, or $65.5 million, over the prior year quarter. Volumes increased 21%, favorably impacting net sales by $37.4 million, while higher average selling prices increased net sales by $28.1 million. The mix of direct versus toll tons processed was split evenly this quarter, compared with a 54% to 46% mix in the comparable quarter of the prior year. Operating income increased $1.2 million as increased volumes more than offset the impact of higher manufacturing and SG&A expenses.

Pressure Cylinders' net sales of $187.7 million were up 38% from the comparable prior year quarter aided by the BernzOmatic, STAKO and Coleman fuel cylinders acquisitions and higher average selling prices. Pressure Cylinders' operating income was $10.9 million, essentially flat from the prior year quarter as the impact of increased volumes from the acquisitions and higher selling prices were offset by higher manufacturing and SG&A expenses.

Engineered Cabs, acquired on December 29, 2011, reported net sales of $40.2 million for the two months included in the current quarter. The segment reported an operating loss for the quarter of $1.4 million. These results, however, included $4.2 million in one-time expenses related to purchase price adjustments and various transaction fees.

The entities included in "Other" are the Global Group and Steel Packaging operating segments, as well as other non-allocated expenses. In the prior year, "Other" also included the operations of the Automotive Body Panels segment, which was deconsolidated in May 2011. Operations in "Other" reported net sales of $16.1 million, which was $34.3 million lower than in the prior year quarter. This decrease was primarily due to the deconsolidation of Automotive Body Panels and the prior year results of a project concluded by the Global Group in Mozambique. These operations reported a combined loss of $4.7 million for the quarter resulting from additional accrued legal expenses and losses generated in the Global Group.

Noteworthy Third Quarter Developments

--  On December 1, 2011, Worthington acquired the propane fuel cylinders
    business of The Coleman Company.


--  On December 29, 2011, Worthington acquired Angus Industries. Angus
    manufactures OEM cabs for heavy mobile equipment from its main
    operations in Watertown, S.D. and facilities in Northwood, Iowa,
    Greeneville, Tenn. and Florence, S.C. It is a new business segment for
    the Company.


--  On January 10, 2012, Worthington Cylinders announced a voluntary
    recall of the 14 oz. MAP-PRO(TM), propylene and MAAP(R) cylinders
    and related hand torch kits. A third-party supplied valve had the
    potential of leaking when a torch or hose was disconnected from the
    cylinder. The recall included the removal of the old product from
    store shelves and replacing it with new product containing a new
    valve. The Company is not aware of any reported injuries or incidents
    related to this defective valve.


--  The Company declared a third quarter dividend of $0.12 per share
    payable on March 29, 2012 to shareholders of record on March 15, 2012.

Outlook

"I remain confident that we will continue to demonstrate improving results as we reshape, improve and increase shareholder value," said McConnell. "We look for fourth quarter volumes to reflect a continued, modest improvement in the general economy. While automotive volumes in Steel Processing and related JVs appear to be gaining momentum, other end markets for Pressure Cylinders and Engineered Cabs are also showing some improvement and growth."

Conference Call

Worthington will review third quarter results during its quarterly conference call on March 29, 2012, at 1:30 p.m., Eastern Daylight Saving 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 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, 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 approximately 9,500 people and operates 79 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 and governmental agency 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; adverse impacts associated with the recent voluntary recall of the Company's MAP-PRO(TM), propylene and MAPP(R) cylinders, including recall costs, legal and notification expenses, lost sales and potential negative customer perceptions of certain pressure cylinder products; 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 headcount 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 and growth 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 workers' 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 and governmental agency rulings as well as the impact of 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)


                         Three Months Ended           Nine Months Ended
                     --------------------------  --------------------------
                     February 29,  February 28,  February 29,  February 28,
                         2012          2011          2012          2011
                     ------------  ------------  ------------  ------------
Net sales            $    611,255  $    569,439  $  1,779,294  $  1,766,931
Cost of goods sold        527,923       481,185     1,567,894     1,529,944
                     ------------  ------------  ------------  ------------
  Gross margin             83,332        88,254       211,400       236,987
Selling, general and
 administrative
 expense                   62,489        59,769       160,751       173,518
Restructuring and
 other expense                956           464         4,707         1,452
Joint venture
 transactions               1,812             -         3,835             -
                     ------------  ------------  ------------  ------------
  Operating income         18,075        28,021        42,107        62,017
Other income
 (expense):
  Miscellaneous
   income (expense)           728          (219)        1,408          (356)
  Interest expense         (5,073)       (4,533)      (14,517)      (14,079)
  Equity in net
   income of
   unconsolidated
   affiliates              24,005        16,958        70,614        51,470
                     ------------  ------------  ------------  ------------
  Earnings before
   income taxes            37,735        40,227        99,612        99,052
Income tax expense          9,337        11,893        28,673        29,582
                     ------------  ------------  ------------  ------------
Net earnings               28,398        28,334        70,939        69,470
Net earnings
 attributable to
 noncontrolling
 interest                   2,518         2,008         7,422         6,321
                     ------------  ------------  ------------  ------------
Net earnings
 attributable to
 controlling
 interest            $     25,880  $     26,326  $     63,517  $     63,149
                     ============  ============  ============  ============

Basic
Average common
 shares outstanding        68,972        74,171        69,952        75,306
                     ------------  ------------  ------------  ------------
Earnings per share
 attributable to
 controlling
 interest            $       0.38  $       0.35  $       0.91  $       0.84
                     ============  ============  ============  ============

Diluted
Average common
 shares outstanding        69,509        75,001        70,481        75,687
                     ------------  ------------  ------------  ------------
Earnings per share
 attributable to
 controlling
 interest            $       0.37  $       0.35  $       0.90  $       0.83
                     ============  ============  ============  ============


Common shares
 outstanding at end
 of period                 69,014        74,195        69,014        74,195

Cash dividends
 declared per share  $       0.12  $       0.10  $       0.36  $       0.30


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

                                                  February 29,    May 31,
                                                      2012          2011
                                                 ------------- -------------
Assets
Current assets:
  Cash and cash equivalents                      $      35,266 $      56,167
  Receivables, less allowances of $3,432 and
   $4,150 at February 29, 2012 and May 31, 2011,
   respectively                                        373,487       388,550
  Inventories:
    Raw materials                                      188,288       189,450
    Work in process                                    112,640        98,940
    Finished products                                   94,189        82,440
                                                 ------------- -------------
      Total inventories                                395,117       370,830
  Income taxes receivable                                4,290         1,356
  Assets held for sale                                  19,707         9,681
  Deferred income taxes                                 24,297        28,297
  Prepaid expenses and other current assets             36,465        36,754
                                                 ------------- -------------
    Total current assets                               888,629       891,635

Investments in unconsolidated affiliates               237,968       232,149
Goodwill                                               154,895        93,633
Other intangible assets, net of accumulated
 amortization of $14,307 and $12,688 at February
 29, 2012 and May 31, 2011, respectively                99,519        19,958
Other assets                                            23,229        24,540
Property, plant and equipment, net                     455,130       405,334
                                                 ------------- -------------
Total assets                                     $   1,859,370 $   1,667,249
                                                 ============= =============

Liabilities and equity
Current liabilities:
  Accounts payable                               $     264,273 $     253,404
  Short-term borrowings                                285,756       132,956
  Accrued compensation, contributions to
   employee benefit plans and related taxes             51,629        72,312
  Dividends payable                                      8,506         7,175
  Other accrued items                                   46,161        52,023
  Income taxes payable                                     102         7,132
  Current maturities of long-term debt                     598             -
                                                 ------------- -------------
    Total current liabilities                          657,025       525,002

Other liabilities                                       58,589        56,594
Distributions in excess of investment in
 unconsolidated affiliate                               64,263        10,715
Long-term debt                                         252,541       250,254
Deferred income taxes                                   89,265        83,981
                                                 ------------- -------------
    Total liabilities                                1,121,683       926,546

Shareholders' equity - controlling interest            690,833       689,910
Noncontrolling interest                                 46,854        50,793
                                                 ------------- -------------
    Total equity                                       737,687       740,703
                                                 ------------- -------------
Total liabilities and equity                     $   1,859,370 $   1,667,249
                                                 ============= =============


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

                         Three Months Ended           Nine Months Ended
                     --------------------------  --------------------------
                     February 29,  February 28,  February 29,  February 28,
                         2012          2011          2012          2011
                     ------------  ------------  ------------  ------------
Operating activities
Net earnings         $     28,398  $     28,334  $     70,939  $     69,470
Adjustments to
 reconcile net
 earnings to net
 cash provided by
 operating
 activities:
  Depreciation and
   amortization            14,653        15,789        40,626        47,259
  Restructuring and
   other expense,
   non-cash                     -             -             -           225
  Provision for
   deferred income
   taxes                     (667)        7,778         7,511         3,314
  Bad debt expense            316           215           205           996
  Equity in net
   income of
   unconsolidated
   affiliates, net
   of distributions         3,998        (2,997)        1,711        (6,813)
  Net loss (gain) on
   sale of assets             143        (1,191)       (1,925)       (1,521)
  Stock-based
   compensation             2,797         1,603         8,576         4,635
Changes in assets
 and liabilities:
  Receivables             (28,643)      (24,591)       27,449       (39,713)
  Inventories             (31,049)      (21,601)       23,726         4,729
  Prepaid expenses
   and other current
   assets                   9,576        (5,435)       13,126        (4,740)
  Other assets             (1,046)       (2,020)        1,794        (1,212)
  Accounts payable
   and accrued
   expenses                90,258        68,840       (56,871)      (25,302)
  Other liabilities        (1,296)          354            86         4,012
                     ------------  ------------  ------------  ------------
Net cash provided by
 operating
 activities                87,438        65,078       136,953        55,339
                     ------------  ------------  ------------  ------------

Investing activities
  Investment in
   property, plant
   and equipment,
   net                     (5,769)       (5,101)      (15,800)      (15,911)
  Acquisitions, net
   of cash acquired      (152,389)      (19,515)     (232,171)      (31,690)
  Distributions from
   unconsolidated
   affiliates, net
   of investments          44,023             -        43,238             -
  Proceeds from sale
   of assets                3,178           183        14,525         6,690
                     ------------  ------------  ------------  ------------
Net cash used by
 investing
 activities              (110,957)      (24,433)     (190,208)      (40,911)
                     ------------  ------------  ------------  ------------

Financing activities
  Net proceeds from
   (repayments of)
   short-term
   borrowings              15,329       (42,957)      108,460        80,778
  Principal payments
   on long-term debt          (95)            -           (95)            -
  Proceeds from
   issuance of
   common shares            1,186         1,077         9,709         2,415
  Payments to
   noncontrolling
   interest                (3,168)       (2,496)       (9,744)       (9,072)
  Repurchase of
   common shares                -             -       (52,120)      (75,092)
  Dividends paid           (8,273)       (7,413)      (23,856)      (22,747)
                     ------------  ------------  ------------  ------------
Net cash provided by
 (used in) financing
 activities                 4,979       (51,789)       32,354       (23,718)
                     ------------  ------------  ------------  ------------

Decrease in cash and
 cash equivalents         (18,540)      (11,144)      (20,901)       (9,290)
Cash and cash
 equivalents at
 beginning of period       53,806        60,870        56,167        59,016
                     ------------  ------------  ------------  ------------
Cash and cash
 equivalents at end
 of period           $     35,266  $     49,726  $     35,266  $     49,726
                     ============  ============  ============  ============


                        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           Nine Months Ended
                     --------------------------  --------------------------
                     February 29,  February 28,  February 29,  February 28,
                         2012          2011          2012          2011
                     ------------  ------------  ------------  ------------
Volume:
  Steel Processing
   (tons)                     716           590         2,101         1,815
  Pressure Cylinders
   (units)                 16,696        14,617        45,874        42,570
  Metal Framing
   (tons)                       -            59             1           184


Net sales:
  Steel Processing   $    367,259  $    301,752  $  1,148,894  $    973,763
  Pressure Cylinders      187,737       135,921       533,283       408,213
  Engineered Cabs          40,173             -        40,173             -
  Metal Framing                 -        81,382         4,402       242,970
  Other                    16,086        50,384        52,542       141,985
                     ------------  ------------  ------------  ------------
    Total net sales  $    611,255  $    569,439  $  1,779,294  $  1,766,931
                     ============  ============  ============  ============

Material cost:
  Steel Processing   $    265,185  $    210,654  $    853,619       704,686
  Pressure Cylinders       92,553        61,073       269,567       187,374
  Engineered Cabs          22,116             -        22,116             -
  Metal Framing                 -        48,041         1,946       159,886

Operating income
 (loss):
  Steel Processing   $     15,405  $     14,213  $     39,069  $     39,260
  Pressure Cylinders       10,887        10,849        23,333        29,926
  Engineered Cabs          (1,447)            -        (1,447)            -
  Metal Framing            (2,053)        2,723        (5,368)       (7,890)
  Other                    (4,717)          236       (13,480)          721
                     ------------  ------------  ------------  ------------
    Total operating
     income          $     18,075  $     28,021  $     42,107  $     62,017
                     ============  ============  ============  ============


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

                             Three Months Ended        Nine Months Ended
                         ------------------------  ------------------------
                           February     February     February     February
                              29,          28,          29,          28,
                             2012         2011         2012         2011
                         -----------  -----------  -----------  -----------
Restructuring and other
 expense (income):
  Steel Processing       $         -  $        70  $         -  $      (303)
  Pressure Cylinders               -            -            -            -
  Engineered Cabs                  -            -            -            -
  Metal Framing                    -          411            -        1,387
  Other                          956          (17)       4,707          368
                         -----------  -----------  -----------  -----------
    Total restructuring
     and other expense   $       956  $       464  $     4,707  $     1,452
                         ===========  ===========  ===========  ===========

                             Three Months Ended        Nine Months Ended
                         ------------------------  ------------------------
                           February     February     February     February
                              29,          28,          29,          28,
                             2012         2011         2012         2011
                         -----------  -----------  -----------  -----------
Joint venture
 transactions:
  Steel Processing       $         -  $         -  $         -  $         -
  Pressure Cylinders               -            -            -            -
  Engineered Cabs                  -            -            -            -
  Metal Framing                1,812            -        3,835            -
  Other                            -            -            -            -
                         -----------  -----------  -----------  -----------
    Total joint venture
     transactions        $     1,812  $         -  $     3,835  $         -
                         ===========  ===========  ===========  ===========


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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