Worthington Reports First Quarter Results
COLUMBUS, Ohio--Sept. 21, 2005--Worthington Industries, Inc. today reported first quarter results for the three months ended August 31, 2005.Sales for the first quarter of fiscal 2006 were $694.1 million, a decrease of 10% from last year's record $769.3 million. First quarter net earnings were $28.4 million and earnings per diluted share were $0.32, compared to record first quarter net earnings of $57.9 million, or $0.66 per diluted share, for the same period last year. Earnings for the first quarter of fiscal 2006 were impacted by a $5.3 million tax reduction, or $0.06 per diluted share, related to the modification of corporate tax laws in the state of Ohio effective July 1, 2005.
Earnings for the first quarter of the prior fiscal year were reduced by a $5.6 million pre-tax charge related to the sale of the Decatur, Alabama, cold mill and related assets. The after-tax impact of that charge was a reduction in net earnings of $3.5 million, or $0.04 per diluted share.
CEO Comments
"I am very pleased to report the second best first quarter results in our company's history," said John P. McConnell, Chairman and CEO. "Rapidly declining steel prices made our opening quarter a challenge. Solid management of our inventories, however, not only contributed to our success this quarter, by limiting the effects of falling prices, but leaves us in a stronger position going forward as steel pricing is rebounding."
Segment Results
In the Processed Steel Products segment, quarterly net sales fell 18%, or $80.4 million, to $373.4 million from $453.8 million in the comparable quarter of fiscal 2005. The decrease in net sales was due to lower volumes (down 13%) and pricing (down 6%). The sale of the Decatur, Alabama, assets contributed to a 6% decline in volume compared to the prior year period. Last year's first quarter of fiscal 2005 represented the most profitable quarter in history for this segment. By comparison, operating income for the first quarter of 2006 was lower due to reduced volumes and a narrower spread between selling prices and material costs. The narrower spread was a direct result of higher priced inventory in a falling price environment compared to the year ago quarter when the reverse was true.
In the Metal Framing segment, volumes rose 3% from the comparable quarter of fiscal 2005 as customers looked to restock depleted inventories. The increase in volume was more than offset by lower selling prices which resulted in a sales decline of 12%, or $29.7 million, to $208.7 million from $238.4 million. The spread between selling prices and material costs contracted due to the impact of higher priced inventory in a falling price environment compared to the year ago quarter when the reverse was true. The narrower spread was responsible for the downturn in operating income compared to the prior year quarter when operating income exceeded that of most years.
In the Pressure Cylinders segment, net sales increased 46%, or $33.9 million, to $107.1 million from $73.2 million in the comparable quarter of fiscal 2005. The propane and specialty gas cylinder assets of Western Industries, acquired on September 17, 2004, contributed $19.2 million to the sales increase. A 25% improvement in European revenues contributed an additional $5.7 million to the sales increase. Operating income rose significantly due to both the European results and the acquisition.
Worthington's joint ventures continued to perform well. Equity in net income of the seven unconsolidated affiliates totaled $13.2 million for the quarter and was nearly equal to record first quarter equity income of $13.3 million in the year ago quarter.
Other
Dividends declared
On August 18, 2005, the board of directors declared a quarterly cash dividend of $0.17 per share payable September 29, 2005, to shareholders of record September 15, 2005. This is the 151st 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 approximately $3 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 7,500 people and operates 65 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.
Conference Call
WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)
Three Months Ended
Aug. 31,
-----------------------
2005 2004
----------- -----------
(Unaudited) (Unaudited)
Net sales $694,147 $769,340
Cost of goods sold 618,795 609,696
----------- -----------
Gross margin 75,352 159,644
Selling, general & administrative expense 47,807 64,831
Impairment charges and other - 5,608
----------- -----------
Operating income 27,545 89,205
Other income (expense):
Miscellaneous income (expense) 358 (3,459)
Interest expense (6,727) (5,722)
Equity in net income of unconsolidated
affiliates 13,212 13,296
----------- -----------
Earnings before income taxes 34,388 93,320
Income tax expense 5,981 35,461
----------- -----------
Net earnings $28,407 $57,859
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Average common shares outstanding - diluted 88,470 88,112
----------- -----------
Earnings per share - diluted $0.32 $0.66
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Common shares outstanding at end of period 88,045 87,325
Cash dividends declared per common share $0.17 $0.16
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
Aug. 31, May 31,
2005 2005
----------- -----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $112,748 $57,249
Short-term investments 37,999 -
Receivables, net 349,567 404,506
Inventories 370,384 425,723
Deferred income taxes 19,386 19,490
Other current assets 32,392 31,365
----------- -----------
Total current assets 922,476 938,333
Investments in unconsolidated affiliates 137,430 136,856
Goodwill 168,619 168,267
Other assets 36,486 33,593
Property, plant and equipment, net 551,203 552,956
----------- -----------
Total assets $1,816,214 $1,830,005
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $258,833 $280,181
Current maturities of long-term debt 142,922 143,432
Other current liabilities 111,832 121,830
----------- -----------
Total current liabilities 513,587 545,443
Other liabilities 102,250 99,264
Long-term debt 245,000 245,000
Deferred income taxes 116,702 119,462
Shareholders' equity 838,675 820,836
----------- -----------
Total liabilities and shareholders'
equity $1,816,214 $1,830,005
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WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months Ended
August 31,
-----------------------
2005 2004
----------- -----------
(Unaudited) (Unaudited)
Operating activities
Net earnings $28,407 $57,859
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Depreciation and amortization 14,360 14,059
Impairment charges and other - 5,608
Other adjustments (1,096) (21,137)
Changes in current assets and liabilities 79,857 (105,470)
----------- -----------
Net cash provided (used) by operating
activities 121,528 (49,081)
Investing activities
Investment in property, plant and equipment,
net (12,876) (11,484)
Proceeds from sale of assets 934 81,960
Purchases of short-term investments (67,999) -
Sales of short-term investments 30,000 -
----------- -----------
Net cash provided (used) by investing
activities (49,941) 70,476
Financing activities
Principal payments on long-term debt (513) (1,851)
Dividends paid (14,950) (13,915)
Other (625) 3,326
----------- -----------
Net cash used by financing activities (16,088) (12,440)
----------- -----------
Increase in cash and cash equivalents 55,499 8,955
Cash and cash equivalents at beginning of
period 57,249 1,977
----------- -----------
Cash and cash equivalents at end of period $112,748 $10,932
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WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(In Thousands, Except Per Share)
This supplemental information is provided to assist in the analysis of
the results of operations.
Three Months Ended
August 31,
-----------------------
2005 2004
----------- -----------
(Unaudited) (Unaudited)
Processed Steel Products
Volume (tons) 842 964
Net sales $373,437 $453,827
Material cost $286,493 $309,749
Operating income $9,014 $35,795
Metal Framing
Volume (tons) 184 178
Net sales $208,665 $238,391
Material cost $138,534 $118,104
Operating income $10,243 $51,512
Pressure Cylinders
Volume (units)
Without acquisition 3,494 3,191
Acquisition (a) 10,051 -
----------- -----------
13,545 3,191
Net sales
Without acquisition $87,810 $73,227
Acquisition (a) 19,243 -
----------- -----------
$107,053 $73,227
Material cost $55,049 $32,975
Operating income $7,954 $3,189
(a) Acquisition of propane and specialty cylinder assets from
Western Industries effective September 17, 2004
The following provides detail of Impairment charges and other included
in the operating income by segment presented above.
Three Months Ended
August 31,
-----------------------
2005 2004
----------- -----------
(Unaudited) (Unaudited)
Pre-tax impairment charges and other by
segment
Processed Steel Products $- $5,608
Metal Framing - -
Pressure Cylinders - -
Other - -
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Total impairment charges and other $- $5,608
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