Worthington Reports 1st Quarter Results
09/30/2009 - Worthington Industries reports net earnings of $6.7 million on net sales of $417.5 million for its fiscal 2010 first quarter ended August 31, 2009.
Worthington Industries, Inc. reported net earnings of $6.7 million on net sales of $417.5 million for the fiscal 2010 first quarter ended August 31, 2009.
First Quarter Results—The $6.7 million net earnings ($0.08 per diluted share) reflects improvement from the company’s fourth quarter net loss of $13.7 million ($0.17 per diluted share), but compares to year-ago record net earnings of $68.6 million ($0.86 per diluted share). The $417.5 million net sales compares to previous-quarter sales of $471.6, and year-ago record sales of $913.2 million.
Operating income included $3.6 million in pre-tax restructuring charges (primarily related to facility closures in Metal Framing), which had a negative impact of $0.03 on earnings per share. Results for the year-ago first quarter included $8.8 million in restructuring charges, which had a negative impact of $0.08 on earnings per share.
“I am pleased to see improvements in our performance as we begin to move forward from a difficult and challenging period,” stated John P. McConnell, Chairman and CEO. “Despite lower volumes in Steel Processing and Metal Framing, we are benefiting from our work to increase operational efficiencies and from new selling strategies. The Steel Processing business received a temporary lift from the Cash for Clunkers program, and the Pressure Cylinders business saw strength in many of its business lines. Metal Framing is focused on keeping costs in line with low demand which is a condition we expect to continue into 2010.”
Segment Performance—The company’s Steel Processing segment continued to experience substantially lower volumes that were 47% lower than last fiscal year’s first quarter. Net sales of $181.6 million are down compared to the record $459.9 million sales in the year-ago quarter, when volumes and pricing were substantially higher. Net sales were up slightly from the previous quarter, helped by increased demand from the Cash for Clunkers program and customers advancing orders ahead of announced steel price increases. As compared to the previous quarter, direct and toll volume improved 10% and 7%, respectively, and operating income is up $22.9 million.
The company’s Metal Framing business reported net sales of $95.4 million for the quarter, which compares to sales of $232.9 million in the year-ago first quarter, as volumes were down 46%. Demand remains weak and, despite price increase (announcements to keep up with rising material costs), the average selling price is down 24% from the year-ago quarter, primarily due to higher steel costs in the prior year. Selling prices have remained very competitive in this low-demand environment, and the segment reported a $4.3-million operating loss, which compares to a $3.5-million operating loss in the previous quarter.
The company’s Pressure Cylinders segment reported net sales of $101.3 million, a 32% decline from record sales of $148.4 million in the year-ago quarter. Units shipped increased 15% due in part to the addition of the high-volume, low priced products from the Piper acquisition.
Income from Worthington’s joint ventures was $16.1 million from the six unconsolidated affiliates, compared to $25.0 million for the year-ago quarter. Despite sales volume being down 32% for the quarter, WAVE continued to contribute the vast majority of equity earnings.
First Quarter Highlights—The company continued to pay down debt in the first quarter, reducing it from $239.4 million at May 31 (the end of the fiscal year) to $215.3 million on August 31, 2009. Availability under the revolving credit facility totaled $339.6 million at quarter’s end.
At quarter end, Worthington’s ratio of total debt to capitalization was 22.4%, which compares to 24.4% at May 31, 2009. Cash provided by operating activities was $96.2 million, and capital expenditures were $7.7 million.
During the quarter, Dietrich announced a joint venture with ClarkWestern to develop a new ProSTUD™ drywall framing system, and the company’s Serviacero Worthington joint venture opened its greenfield steel processing facility in the Monterrey region of Mexico.
During the quarter, Worthington acquired Structural Composites Industries, LLC, a leading manufacturer of DOT-approved lightweight, aluminum-lined, composite-wrapped high pressure cylinders used in commercial, military, marine and aerospace applications. Revenues were approximately $36 million in calendar year 2008.
Outlook—“Looking forward, we anticipate a normal seasonal drop in demand beginning in November and bottoming in December,” said McConnell. “We are optimistic that volumes will begin to trend higher next year, but we will watch the opening months of 2010 closely. They should provide foreshadowing for the remainder of the year.”
Worthington Industries is a leading diversified metal processing company with annual sales of approximately $2.6 billion. The Columbus, Ohio-based company is employs approximately 6400 people and operates 63 facilities in 10 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.
