Worthington Reports 4th Quarter, Full-Year Results
07/16/2009 - Worthington Industries reports a net loss of $13.7 million on net sales of $471.6 million for the quarter and a net loss of $108.2 million on net sales of $2.6 billion for the year ended May 31, 2009.
Worthington Industries, Inc. reported a net loss of $13.7 million on net sales of $471.6 million for the quarter and a net loss of $108.2 million on net sales of $2.6 billion for the year ended May 31, 2009.
Fourth Quarter Results — The $13.7-million net loss ($0.17 per diluted share) compares to net earnings of $53.9 million ($0.68 per diluted share) for the same period last year. Net sales of $471.6 million reflect a 46% decrease from net sales of $868.9 million last year.
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Worthington’s Steel Processing segment reported quarterly net sales of $179.1 million, a 57% decrease from $412.7 million in the year-ago quarter. Volumes declined 55% due to drastically reduced demand caused by the recession and the difficulties at GM and Chrysler. The continued decline in the price of steel also negatively impacted average selling prices and resulted in an additional inventory write-down of $5.0 million. The segment reported a $22-million operating loss for the quarter, which compares to operating income of $25.5 million in the year-ago quarter.
The company’s Metal Framing segment reported net sales of $110.5 million, a 51% decrease from $225.5 million in the year-ago quarter. The decrease was the result of a precipitous drop in demand due to weakness in the commercial construction market. The segment reported a $3.5-million operating loss for the quarter, which compares to operating income of $15.4 million for the year-ago quarter.
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Full-Year Results —The $108.2-million net loss ($1.37 per diluted share) compares to net earnings of $107.1 million ($1.31 per diluted share) for fiscal 2008. Net sales of $2.6 billion were 14% lower than the $3.1 billion reported last year.
Annual results were negatively impacted by $105.0 million in pre-tax inventory write-downs, a $96.9-million pre-tax goodwill impairment charge, and $43.0 million in pre-tax restructuring charges, partially offset by an $8.3-million pre-tax gain on the sale of Aegis, which in total reduced earnings per share by $2.23. The prior year was also negatively impacted by $18.1 million of pre-tax restructuring charges ($0.15 per share). Restructuring charges in both periods were associated with ongoing Transformation Plan efforts.
“The last nine months of our fiscal year were very difficult as the global economy plunged into deep recession,” said John P. McConnell, Chairman and CEO. “We were very fortunate to have been focused on changing the way we work for over a year and had developed a clear path toward significant improvement before the recession began. This allowed us to act quickly and confidently in our Steel Processing and Metal Framing businesses to meet staggering declines in market volume. I am proud of our employees who have stepped up and made sacrifices to get us through this unprecedented period.
“Pressure Cylinders and our WAVE joint venture have continued to produce good earnings during the recession,” continued McConnell. “While not immune, both have performed well. Sales for many of Cylinders’ product lines, including our gas grill cylinders and Balloon Time® helium kits, remained strong, while our newer products, camping cylinders and hand torches, continue to gain share. WAVE, bolstered by its new products and focus on refurbishing projects, continued to generate solid results despite declining volumes.
“In Steel Processing, volume contraction appears to be at or near bottom. Metal Framing is likely to face continued declines in its market, but we remain focused on keeping this business cash neutral in the coming year,” continued McConnell. “We look for Cylinders and WAVE to produce solid results and to continue product innovation and expansion.
McConnell added, “A primary focus since the recession began has been to strengthen our balance sheet and maintain our current credit facilities. Our thoughtful, but quick actions to cut costs and transform the company have positioned us well to meet both objectives. Our goal is not just to maintain our business, but to be in a position to gain share, make selective acquisitions and capture opportunities as they present themselves.”
Fiscal 2009 Actions — As part of a focused effort to reduce costs and shrink its operational footprint, Worthington has undertaken a number of significant actions during the year, including the closure of its Louisville, Ky., Steel Processing facility; closure of Metal Framing facilities in Renton, Wash. and Lunenburg, Mass.; and the idling of Metal Framing facilities in Miami, Fla., and Phoenix, Ariz. The company also closed an under-performing joint venture (Viking-Worthington Steel) and sold its interests at three others (ABT, Aegis and Canossa).
Over the course of the year, Worthington reduced employee headcount in its core businesses by over 1200 (nearly 20%), and reduced salaries for the first quarter of fiscal 2010 ranging from 3% to 20% (25% for the CEO). The company also implemented a hiring freeze, reduced hourly work schedules, and suspended merit pay increases and the 401K match.
Worthington also reduced its inventory by 54%, from $593.0 million at the end of fiscal 2008 to $270.6 million at the end of fiscal 2009. The company also reduced its fourth quarter dividend from $0.17 per share to $0.10 per share, a 41% decrease
Worthington Industries is a leading diversified metal processing company with annual sales of approximately $2.6 billion. The Columbus, Ohio based company is a premier value-added steel processor and a leader in manufactured metal products such as light gauge steel framing for commercial and residential construction; framing systems and stairs for mid-rise buildings; pressure cylinder products such as propane, oxygen and helium tanks, hand torches, camping cylinders, and scuba tanks; current and past model automotive service stampings; metal ceiling grid systems; steel pallets and racks; and laser welded blanks. Worthington employs approximately 6400 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. 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.
