Worthington Industries Reports Fourth Quarter and Fiscal Year Results
COLUMBUS, Ohio--June 18, 2003--Worthington Industries, Inc.| -- | Quarterly and Annual Sales Set Record |
| -- | Annual Net Earnings Up |
Worthington Industries, Inc. today reported results for the three and twelve-month periods ended May 31, 2003. For the quarter, sales were a record $589.9 million, an increase of 14% from $519.3 million last year. For the year, record sales of $2,219.9 million represent a 27% increase from $1,745.0 million last year.
Fiscal 2003 net earnings were $75.2 million, or $0.87 per diluted share, compared to fiscal 2002 earnings of $6.5 million, or $0.08 per diluted share. Both fiscal years included charges which are described below.
Fiscal 2002 results included the impact of a $64.6 million plant
consolidation restructuring charge and a $21.2 million reserve
for the impairment of certain assets. Together, these charges
negatively impacted reported earnings per share by $0.63.
Fiscal 2003 results were impacted by nearly offsetting items
recorded in the second quarter. A favorable adjustment of $5.6
million was made to the fiscal 2002 plant consolidation
restructuring charge, offset by a $5.4 million charge for
potential liabilities relating to certain workers'
compensation claims of Buckeye Steel Castings for the period
prior to its sale by Worthington in fiscal 1999, when a
Worthington guarantee was in place. Together, these charges
had an immaterial impact on reported earnings per share.
Excluding the charges in both fiscal years which are described above, earnings for fiscal 2003 were $75.0 million, or $0.87 per diluted share, compared to fiscal 2002 earnings of $61.0 million, or $0.71 per diluted share, an increase of 23%.
Fourth quarter net earnings were $15.6 million and earnings per diluted share were $0.18, compared to earnings of $26.8 million, or $0.31 per diluted share, for the same period last year. The decrease in earnings and diluted earnings per share was 42%.
"We are very pleased that despite ongoing weakness in the economy and the manufacturing sector, including two of our largest markets, automotive and commercial construction, we were able to report increased earnings for the year. Regardless of market conditions, Worthington continues to deliver an unbroken record of profitability and dividend payments while investing for the future," said John P. McConnell, Chairman and CEO of Worthington Industries.
Within the Processed Steel Products segment, quarterly net sales increased 6%, or $21.2 million, to $349.9 million from $328.8 million in the comparable quarter of fiscal 2002. The increase in net sales was largely due to higher pricing as direct volumes were relatively flat and tolling volumes were down compared to last year. However, the significant increase in raw material costs, relative to last year's fourth quarter, resulted in a sizeable decline in the spread between selling prices and material costs and in operating margin.
Within the Metal Framing segment, net sales increased 70%, or $57.2 million, to $139.5 million from $82.2 million in the comparable quarter of fiscal 2002. The increase in metal framing sales was due to both the Unimast acquisition and higher selling prices. The combined entity of Dietrich Metal Framing and Unimast has maintained and, in some geographic markets, increased market share, outperforming pre-acquisition market share expectations. Even so, weakness in the commercial construction market has resulted in a 20% decline in the combined tons shipped compared to the fourth quarter last year (prior to the acquisition). The volume decline, coupled with higher material costs and new venture costs, led to nominal operating profitability.
Within the Pressure Cylinders segment, net sales declined 8%, or $8.0 million, to $96.5 million from $104.5 million in the comparable quarter of fiscal 2002. Stronger international activity and refrigerant sales helped offset the anticipated decline in propane cylinder sales from last year's record levels which were driven by regulatory requirements. Despite the decline in net sales, the segment operating margin was strong.
Worthington's joint ventures also contributed positively to fourth quarter results. Equity in net income of five unconsolidated affiliates totaled $7.5 million, in line with the year ago quarter.
Worthington will review its fourth quarter and year end results during its quarterly conference call today, June 18, 2003, at 1:30 p.m. Eastern Daylight Time. Details on the conference call can be found on the company's web site at www.worthingtonindustries.com.
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 61 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 Twelve Months Ended
May 31, May 31,
----------------------- -----------------------
2003 2002 2003 2002
----------- ----------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net sales:
Processed Steel
Products $349,916 $328,751 $1,343,397 $1,132,697
Metal Framing 139,450 82,242 539,358 305,994
Pressure Cylinders 96,466 104,454 321,790 292,829
Other 4,114 3,837 15,346 13,441
-------- -------- ---------- ----------
Total net sales 589,946 519,284 2,219,891 1,744,961
Cost of goods sold 522,322 426,652 1,916,990 1,480,184
-------- -------- ---------- ----------
Gross margin 67,624 92,632 302,901 264,777
Selling, general &
administrative
expense 42,884 50,518 182,692 165,885
Restructuring
adjustment - - (5,622) 64,575
-------- -------- ---------- ----------
Operating income:
Processed Steel
Products 17,687 26,929 80,998 13,610
Metal Framing 253 9,819 22,537 19,139
Pressure Cylinders 11,257 12,466 32,273 11,020
Other (4,457) (7,100) (9,977) (9,452)
-------- -------- ---------- ----------
Total operating
income 24,740 42,114 125,831 34,317
Other income
(expense):
Miscellaneous
expense (1,604) (1,979) (7,240) (3,224)
Nonrecurring losses - - (5,400) (21,223)
Interest expense (6,006) (5,740) (24,766) (22,740)
Equity in net income of
unconsolidated
affiliates 7,461 7,745 29,973 23,110
-------- -------- ---------- ----------
Earnings before
taxes 24,591 42,140 118,398 10,240
Income tax expense 8,976 15,381 43,215 3,738
-------- -------- ---------- ----------
Net earnings $ 15,615 $ 26,759 $ 75,183 $ 6,502
======== ======== ========== ==========
Average common shares
outstanding - diluted 86,285 86,155 86,537 85,929
-------- -------- ---------- ----------
Earnings per
share - diluted $ 0.18 $ 0.31 $ 0.87 $ 0.08
======== ======== ========== ==========
Common shares
outstanding at end of
period 85,949 85,512 85,949 85,512
Cash dividends
declared per common
share $ 0.16 $ 0.16 $ 0.64 $ 0.64
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
May 31, May 31,
2003 2002
---------- ----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 1,139 $ 496
Accounts receivable, net 169,967 197,240
Inventories 268,983 219,950
Income taxes receivable 11,304 -
Deferred income taxes 20,783 43,538
Other current assets 34,070 29,116
---------- ----------
Total current assets 506,246 490,340
Investments in unconsolidated affiliates 81,221 91,759
Goodwill 116,781 75,400
Other assets 30,777 33,219
Property, plant and equipment, net 743,044 766,596
---------- ----------
Total assets $1,478,069 $1,457,314
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 222,987 $ 233,181
Notes payable 1,145 5,281
Current maturities of long-term debt 1,194 1,082
Other current liabilities 92,845 99,807
---------- ----------
Total current liabilities 318,171 339,351
Other liabilities 90,471 73,731
Long-term debt 289,689 289,250
Deferred income taxes 143,444 148,726
Shareholders' equity 636,294 606,256
---------- ----------
Total liabilities and shareholders'
equity $1,478,069 $1,457,314
========== ==========
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Twelve Months Ended
May 31,
---------------------
2003 2002
---------- ---------
(Unaudited) (Audited)
Operating activities
Net earnings $ 75,183 $ 6,502
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 69,419 68,887
Restructuring adjustment (5,622) 64,575
Nonrecurring losses 5,400 21,223
Other adjustments 41,326 (19,634)
Changes in current assets and liabilities (4,985) (6,296)
--------- --------
Net cash provided by operating activities 180,721 135,257
Investing activities
Investment in property, plant and equipment,
net (24,970) (39,100)
Acquisitions, net of cash acquired (114,703) -
Investment in equity affiliates - (21,000)
Proceeds from sale of assets 27,814 10,459
--------- --------
Net cash used by investing activities (111,859) (49,641)
Financing activities
Payments on short-term borrowings (7,340) (8,513)
Proceeds from long-term debt 735 -
Principal payments on long-term debt (6,883) (20,872)
Dividends paid (54,869) (54,655)
Other 138 (1,274)
--------- --------
Net cash used by financing activities (68,219) (85,314)
--------- --------
Increase in cash and cash equivalents 643 302
Cash and cash equivalents at beginning of period 496 194
--------- --------
Cash and cash equivalents at end of period $ 1,139 $ 496
========= ========
WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(In Thousands)
I. The information in the table is being provided to assist in the
analysis of the results of operations and is based on the best
information available to management.
Three Months Ended Twelve Months Ended
May 31, May 31,
--------------------- -----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
(Unaudited)(Unaudited)(Unaudited) (Unaudited)
Processed Steel
Products
Tons shipped
Direct 621 605 2,311 2,053
Toll 348 464 1,580 1,674
Net sales
Direct $332,974 $308,049 $1,265,767 $1,059,522
Toll $ 16,942 $ 20,702 $ 77,630 $ 73,175
Material cost
Direct $239,218 $192,193 $ 883,532 $ 658,824
Toll n/a n/a n/a n/a
Metal Framing
Tons shipped 187 140 694 532
Net sales $139,450 $ 82,242 $ 539,358 $ 305,994
Material cost $ 90,031 $ 37,335 $ 315,472 $ 153,811
Pressure Cylinders
Units shipped 4,895 5,701 15,235 14,280
Net sales $ 96,466 $104,454 $ 321,790 $ 292,829
Material cost $ 43,409 $ 47,950 $ 142,008 $ 130,855
n/a - not
applicable
II. The following provides detail of the restructuring adjustments by
segment.
Three Months Ended Twelve Months Ended
May 31, May 31,
--------------------- -----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
(Unaudited)(Unaudited)(Unaudited) (Unaudited)
Pre-tax restructuring
adjustment by segment
Processed Steel
Products $ - $ - $ (8,717) $ 52,126
Metal Framing - - 1,574 910
Pressure
Cylinders - - 1,420 10,666
Other - - 101 873
-------- -------- ---------- ----------
Total restructuring
adjustments $ - $ - $ (5,622) $ 64,575
======== ======== ========== ==========
III. The following reconciles reported net earnings excluding
restructuring adjustments and nonrecurring losses. Management
believes that earnings excluding these charges provides a better
comparison of operating results.
Three Months Ended Twelve Months Ended
May 31, May 31,
--------------------- -----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
(Unaudited)(Unaudited)(Unaudited) (Unaudited)
Net earnings $ 15,615 $ 26,759 $ 75,183 $ 6,502
Add back:
restructuring
adjustments, net
of tax - - (3,570) 41,005
Add back:
nonrecurring
losses, net of
tax - - 3,429 13,477
-------- -------- ---------- ----------
Net earnings excluding
restructuring adjustments
and nonrecurring
losses $ 15,615 $ 26,759 $ 75,042 $ 60,984
======== ======== ========== ==========