Worthington Industries Reports Third Quarter Results
COLUMBUS, Ohio--March 19, 2003--Worthington Industries, Inc. today reported results for the three and nine-month periods ended February 28, 2003. For the quarter, sales were $536.6 million, an increase of 32% from $405.7 million last year. For the nine-month period, sales were $1,629.9 million, a 33% increase from $1,225.7 million in the comparable year ago period.Third quarter net income increased to $11.3 million compared to a net loss of $45.9 million for the same period a year ago, and diluted earnings per share increased to $0.13 compared to a loss of $0.53 last year. The year ago time period was impacted by one-time charges including a $64.6 million pre-tax restructuring charge and a $21.2 million pre-tax reserve for the potential impairment of certain assets. Together these charges totaled $54.5 million on an after-tax basis, or $0.63 per share.
Year-to-date earnings increased to $59.6 million from a net loss of $20.3 million for the same period a year ago, and diluted earnings per share increased to $0.69 compared to a loss of $0.24 last year. The year ago time period was impacted by the same one-time charges discussed above, totaling $54.5 million after-tax, or $0.63 per share.
"The seasonal slowdown that we normally see in the third quarter was exacerbated by tightening margins in Processed Steel Products and continued contraction in the commercial construction market served by our Metal Framing business segment. Elevated inventory levels were also an issue during the quarter as pricing fell from recent highs," said John P. McConnell, Chairman and CEO of Worthington Industries. "Short term economic and business conditions have deteriorated noticeably; however, we are well positioned for a stronger economic environment and have yet to realize the full benefits of the Unimast acquisition and our consolidation plan," concluded McConnell.
Within the Processed Steel Products segment, net sales increased 22% or $59.1 million to $321.9 million from $262.8 million in the comparable quarter of fiscal 2002. Although volumes were up over the prior year, the significant increase in raw material costs contributed to a sizeable decline in the spread between selling prices and material costs. As a result, the segment operating margin was well below historical levels.
Within the Metal Framing segment, net sales increased 97% or $66.5 million to $135.0 million from $68.5 million in the comparable quarter of fiscal 2002. The increase in metal framing sales is due both to the Unimast acquisition and to higher selling prices, driven by raw material increases. Combined sales for Dietrich Metal Framing and Unimast for the third quarter last year (prior to the acquisition) were $120.5 million. Thus, current quarter sales for the Metal Framing segment were up $14.5 million from the combined sales of the prior year period, but combined pounds shipped were down 17% due to weakness in commercial construction activity and severe weather. The volume decline, coupled with Unimast integration costs and higher material costs, contributed to a segment operating margin well below historical averages.
Within the Pressure Cylinders segment, net sales increased 7%, or $5.0 million, to $75.7 million from $70.7 million in the comparable quarter of fiscal 2002. The increase was generated by significantly greater international activity as well as elevated demand for heating tanks. As a result, the segment operating margin was much improved.
Worthington's joint ventures also contributed positively to third quarter results. Equity in the net income of five unconsolidated affiliates totaled $6.9 million, up 28% from $5.4 million in the year ago quarter.
Worthington Industries is a leading diversified metal processing company with annual sales of approximately $2 billion. The Columbus, Ohio, based company is North America's premier value-added steel processor and a leader in manufactured metal products such as automotive aftermarket stampings, pressure cylinders, metal framing, metal ceiling grid systems and laser welded blanks. Worthington employs more than 8,000 people and operates 62 facilities in 10 countries.
Founded in 1955, the company operates under a long-standing corporate philosophy rooted in the golden rule, with earning money for its shareholders as the first corporate goal. This philosophy, an unwavering commitment to the customer, and one of the strongest employee/employer partnerships in American industry serve as the company's foundation.
Safe Harbor Statement
The company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 ("the Act"). Statements by the company relating to future sales and operating results; projected capacity levels; anticipated capital expenditures; projected timing, results, costs, charges and expenditures related to plant closures and consolidations; and other non-historical information constitute "forward-looking statements" within the meaning of the Act. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, product demand, changes in product mix and market acceptance of products; changes in pricing or availability of raw materials, particularly steel; effects of plant closures and the consolidation of operations; capacity restraints and efficiencies; conditions in major product markets; delays in construction or equipment supply; financial difficulties of customers, suppliers and others with whom we do business; the effect of national, regional and worldwide economic conditions; risks associated with doing business internationally, including economic, political and social instability, and foreign currency exposure; acts of war and terrorist activities; the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment; the business environment and impact of governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the SEC.
WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)
Three Months Ended Nine Months Ended
Feb. 28, Feb. 28,
--------------------- -----------------------
2003 2002 2003 2002
-------- -------- ---------- ----------
(Unaudited)(Unaudited)(Unaudited) (Unaudited)
Net sales:
Processed Steel
Products $321,880 $262,840 $ 993,481 $ 803,946
Metal Framing 134,992 68,515 399,908 223,752
Pressure Cylinders 75,739 70,710 225,324 188,375
Other 3,973 3,675 11,232 9,604
-------- -------- ---------- ----------
Total net sales 536,584 405,740 1,629,945 1,225,677
Cost of goods sold 471,101 354,889 1,394,668 1,053,532
-------- -------- ---------- ----------
Gross margin 65,483 50,851 235,277 172,145
Selling, general &
administrative expense 46,253 36,753 139,808 115,367
Restructuring
adjustment - 64,575 (5,622) 64,575
-------- -------- ---------- ----------
Operating income
(loss):
Processed Steel
Products 8,994 (41,760) 63,311 (13,319)
Metal Framing 4,012 (507) 22,284 9,320
Pressure Cylinders 7,189 (5,784) 21,016 (1,446)
Other (965) (2,426) (5,520) (2,352)
-------- -------- ---------- ----------
Total operating
income (loss) 19,230 (50,477) 101,091 (7,797)
Other income (expense):
Miscellaneous expense (1,979) (117) (5,636) (1,245)
Nonrecurring loss - (21,223) (5,400) (21,223)
Interest expense (6,317) (5,815) (18,760) (17,000)
Equity in net income of
unconsolidated
affiliates 6,910 5,404 22,512 15,365
-------- -------- ---------- ----------
Earnings (loss)
before taxes 17,844 (72,228) 93,807 (31,900)
Income tax expense
(benefit) 6,513 (26,363) 34,239 (11,643)
-------- -------- ---------- ----------
Net earnings (loss) $ 11,331 $(45,865) $ 59,568 $ (20,257)
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Average common shares
outstanding - diluted 86,531 85,985 86,621 85,853
-------- -------- ---------- ----------
Earnings (loss) per
share - diluted $ 0.13 $ (0.53) $ 0.69 $ (0.24)
======== ======== ========== ==========
Common shares
outstanding at end of
period 85,896 85,418 85,896 85,418
Cash dividends declared
per common share $ 0.16 $ 0.16 $ 0.48 $ 0.48
Net earnings excluding restructuring adjustment and nonrecurring
loss:
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Restructuring adjustment by segment
----------------------------------
Processed Steel
Products $ - $ 52,126 $ (8,717) $ 52,126
Metal Framing - 910 1,574 910
Pressure Cylinders - 10,666 1,420 10,666
Other - 873 101 873
--------- -------- ---------- ----------
Total restructuring
adjustment $ - $ 64,575 $ (5,622) $ 64,575
======== ======== ========== ==========
Reported net earnings
(loss) $ 11,331 $(45,865) $ 59,568 $ (20,257)
Add back: restructuring
adjustment, net of tax - 41,005 (3,570) 41,005
Add back: nonrecurring
loss, net of tax - 13,477 3,429 13,477
--------- -------- ---------- ----------
Net earnings excluding
restructuring adjustment
and nonrecurring loss $ 11,331 $ 8,617 $ 59,426 $ 34,225
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WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
Feb. 28, May 31,
2003 2002
---------- ----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 553 $ 496
Accounts receivable, net 122,062 197,240
Inventories 329,903 219,950
Deferred income taxes 45,204 43,538
Other current assets 34,216 29,116
---------- ----------
Total current assets 531,938 490,340
Investments in unconsolidated affiliates 96,384 91,759
Goodwill 104,012 75,400
Other assets 31,837 33,219
Property, plant and equipment, net 760,970 766,596
---------- ----------
Total assets $1,525,141 $1,457,314
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 224,039 $ 233,181
Notes payable 48,664 5,281
Current maturities of long-term debt 790 1,082
Other current liabilities 86,680 99,807
---------- ----------
Total current liabilities 360,173 339,351
Other liabilities 84,972 73,731
Long-term debt 295,999 289,250
Deferred income taxes 150,974 148,726
Shareholders' equity 633,023 606,256
---------- ----------
Total liabilities and shareholders'
equity $1,525,141 $1,457,314
========== ==========
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
Feb. 28,
-----------------------
2003 2002
--------- --------
(Unaudited) (Unaudited)
Operating activities
Net earnings (loss) $ 59,568 $(20,257)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating
activities:
Depreciation and amortization 53,203 51,413
Restructuring adjustment (5,622) 64,575
Nonrecurring loss 5,400 21,223
Other adjustments 14,353 (32,680)
Changes in current assets and liabilities (11,897) 3,564
--------- --------
Net cash provided by operating activities 115,005 87,838
Investing activities
Investment in property, plant and equipment,
net (18,973) (33,119)
Acquisitions, net of cash acquired (113,740) -
Investment in equity affiliates - (21,000)
Proceeds from sale of assets 17,171 10,037
--------- --------
Net cash used by investing activities (115,542) (44,082)
Financing activities
Proceeds from short-term borrowings 40,179 15,246
Proceeds from long-term debt 674 -
Principal payments on long-term debt (588) (18,004)
Dividends paid (41,124) (40,986)
Other 1,453 404
--------- --------
Net cash provided (used) by financing
activities 594 (43,340)
--------- --------
Increase in cash and cash equivalents 57 416
Cash and cash equivalents at beginning of
period 496 194
--------- --------
Cash and cash equivalents at end of period $ 553 $ 610
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