Worthington Reports Record First Quarter Results
COLUMBUS, Ohio--Sept. 22, 2004--Worthington Industries, Inc. today reported record first quarter results for the three months ended August 31, 2004.Highlights
Sales for the first quarter of fiscal 2005 were $769.3 million, an increase of 54% from last year's $498.0 million. First quarter net earnings were $57.9 million and earnings per diluted share were $0.66, compared to first quarter net earnings of $5.9 million, or $0.07 per diluted share, for the same period last year.
Earnings for the current quarter were reduced by a $5.6 million pre-tax charge related to the sale of the Decatur, Alabama, cold mill and related assets. This charge is mainly due to contract termination costs that could not be accrued until the sale closed, which occurred on August 1, 2004, and other adjustments to the charge recorded at May 3, 20041, 2004. The after-tax impact of this charge was a reduction in net earnings of $3.5 million or $0.04 per diluted share.
"I am pleased to report our second consecutive quarter of record results," said John McConnell, Chairman and CEO of Worthington Industries. "We achieved these results even though two of our key market segments, automotive and commercial construction, were not at their peak. While we did experience some benefit from selling lower priced inventory in a higher price environment, that impact has lessened considerably, and this quarter's results would have been record-breaking regardless. I look forward to what our Metal Framing segment can accomplish as commercial construction -- particularly office construction -- continues to pick up from what has been a multi-year low," concluded McConnell.
Segment Results
In the Processed Steel Products segment, quarterly net sales rose 58%, or $166.6 million, to $453.8 million from $287.2 million in the comparable quarter of fiscal 2004. The increase in net sales was due to higher volumes (up 14%) and pricing (up 39%). Excluding the impact of the $5.6 million charge related to the Decatur asset sale, operating income was significantly improved due to higher volumes and a wider spread between selling prices and material costs.
In the Metal Framing segment, net sales increased 69%, or $97.3 million, to $238.4 million from $141.1 million in the comparable quarter of fiscal 2004. The increase was the result of higher pricing as volumes were down 10% from the year ago quarter largely due to weather related and other project delays. The wider spread between selling prices and material costs was responsible for a significant improvement in operating income.
In the Pressure Cylinders segment, net sales increased 10%, or $6.7 million, to $73.2 million from $66.5 million in the comparable quarter of fiscal 2004. Unit volumes were up 2% overall as strength in the European market was partially offset by softer domestic propane cylinder demand. A portion of the increase in European revenues was the result of a weakened U.S. dollar which boosted reported revenues in dollars by $1.6 million. Operating income fell due to costs related to the partial closure of the Portugal facility.
Worthington's joint ventures continued to perform well. Equity in net income of the six unconsolidated affiliates totaled $13.3 million for the quarter, up 68% from $7.9 million in the year ago quarter. Results at all six joint ventures were up significantly from the prior year.
Outlook
Relative to last year, economic and industry conditions have improved across all customer segments except "Big 3" automotive, Processed Steel's largest customer segment. "Big 3" vehicle production is projected to be down 7% for the coming fiscal quarter compared to the same quarter last year but up 12% from this quarter. In commercial construction, Metal Framing's primary market, the U.S. Census Bureau's Index of Private Construction Spending confirms that commercial construction activity has shown year-over-year improvement during the last six months. This index serves as a leading indicator for the Metal Framing business segment as metal framing products are generally used in the latter stages of commercial construction projects.
Other
Dividends declared
On August 19, 2004, the board of directors declared a quarterly cash dividend of $0.16 per share payable September 29, 2004, to shareholders of record September 15, 2004. This is the 147th consecutive quarter that Worthington has paid a dividend since it became a public company in 1968.
Corporate Profile
Worthington Industries is a leading diversified metal processing company with annual sales of more than $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 metal framing, pressure cylinders, automotive past model service stampings, 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.
WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)
Three Months Ended
August 31,
-----------------------
2004 2003
----------- -----------
(Unaudited) (Unaudited)
Net sales $769,340 $498,035
Cost of goods sold 609,696 449,052
----------- -----------
Gross margin 159,644 48,983
Selling, general & administrative expense 64,831 41,620
Impairment charges and other 5,608 -
----------- -----------
Operating income 89,205 7,363
Other income (expense):
Miscellaneous income (expense) (3,459) (389)
Interest expense (5,722) (5,591)
Equity in net income of unconsolidated
affiliates 13,296 7,936
----------- -----------
Earnings before income taxes 93,320 9,319
Income tax expense 35,461 3,402
----------- -----------
Net earnings $57,859 $5,917
=========== ===========
Average common shares outstanding - diluted 88,112 86,517
----------- -----------
Earnings per share - diluted $0.66 $0.07
=========== ===========
Common shares outstanding at end of period 87,325 86,054
Cash dividends declared per common share $0.16 $0.16
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
August 31, May 31,
2004 2004
----------- -----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $10,932 $1,977
Receivables, net 355,023 348,833
Inventories 445,070 362,906
Deferred income taxes 3,869 3,963
Other current assets 32,803 115,431
----------- -----------
Total current assets 847,697 833,110
Investments in unconsolidated affiliates 122,265 109,040
Goodwill 117,882 117,769
Other assets 27,734 27,826
Property, plant and equipment, net 552,356 555,394
----------- -----------
Total assets $1,667,934 $1,643,139
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $299,143 $313,909
Current maturities of long-term debt 1,013 1,346
Other current liabilities 159,536 159,805
----------- -----------
Total current liabilities 459,692 475,060
Other liabilities 99,600 95,067
Long-term debt 287,915 288,422
Deferred income taxes 91,212 104,216
Shareholders' equity 729,515 680,374
----------- -----------
Total liabilities and shareholders'
equity $1,667,934 $1,643,139
=========== ===========
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months Ended
August 31,
-----------------------
2004 2003
----------- -----------
(Unaudited) (Unaudited)
Operating activities
Net earnings $57,859 $5,917
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 14,059 16,952
Impairment charges and other 5,608 -
Other adjustments (21,137) (4,485)
Changes in current assets and
liabilities (105,470) (1,348)
----------- -----------
Net cash provided (used) by operating
activities (49,081) 17,036
Investing activities
Investment in property, plant and equipment,
net (11,484) (5,816)
Investment in unconsolidated affiliate - (490)
Proceeds from sale of assets 81,960 2,880
----------- -----------
Net cash provided (used) by investing
activities 70,476 (3,426)
Financing activities
Proceeds from short-term borrowings - (1,077)
Principal payments on long-term debt (1,851) (556)
Dividends paid (13,915) (13,754)
Other 3,326 1,236
----------- -----------
Net cash used by financing activities (12,440) (14,151)
Increase (decrease) in cash and cash
equivalents 8,955 (541)
Cash and cash equivalents at beginning of
period 1,977 1,139
----------- -----------
Cash and cash equivalents at end of period $10,932 $598
=========== ===========
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
August 31,
-------------------------
2004 2003
------------ ------------
(Unaudited) (Unaudited)
Volume:
Processed Steel Products (tons) 964 849
Metal Framing (tons) 178 198
Pressure Cylinders (units) 3,191 3,123
Net sales:
Processed Steel Products $453,827 $287,198
Metal Framing 238,391 141,064
Pressure Cylinders 73,227 66,535
Other 3,895 3,238
------------ ------------
Total net sales $769,340 $498,035
============ ============
Material cost:
Processed Steel Products $309,749 $188,985
Metal Framing 118,104 92,954
Pressure Cylinders 32,975 29,020
Operating income:
Processed Steel Products $35,795 $8,169
Metal Framing 51,512 (3,654)
Pressure Cylinders 3,189 3,538
Other (1,291) (690)
------------ ------------
Total operating income $89,205 $7,363
============ ============
The following provides detail of the impairment charges and other
included in the operating income by segment presented above.
Three Months Ended
August 31,
-------------------------
2004 2003
------------ ------------
(Unaudited) (Unaudited)
Pre-tax impairment charges and other by
segment
Processed Steel Products $5,608 $-
Metal Framing - -
Pressure Cylinders - -
Other - -
------------ ------------
Total impairment charges and other $5,608 $-
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