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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