Worthington Reports Fiscal Year Results
06/27/2008 - Worthington Industries reports net earnings of $53.9 million on record net sales of $868.9 million for the fourth quarter, and net earnings of $107.1 million on net sales of $3,067.2 million for the twelve-month period ended May 31, 2008.
Worthington Industries, Inc. reported net earnings of $53.9 million on record net sales of $868.9 million for the fourth quarter, and net earnings of $107.1 million on net sales of $3,067.2 million for the twelve-month period ended May 31, 2008.
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Steel Processing Segment Results
Worthington’s Steel Processing segment reported quarterly net sales of $412.7 million, an increase of $52.2 million (14%) compared to net sales of $360.5 million in the comparable quarter of fiscal 2007.
Worthington said the increase in sales was the result of higher average selling prices, which were 18% higher compared to the prior year.
Volumes declined 3% as the weakness in toll processing, which is closely tied to the automotive end markets, was nearly offset by a successful sales initiative for direct processing business.
Operating income increased because of a wider spread between average selling prices and material costs.
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Operating income included $4.9 million in pre-tax restructuring charges, $1.1 million of which was non-cash, primarily related to plant closures in the Metal Framing segment and professional fees. These charges had a negative impact of $0.04 on reported earnings per share.
Full Year Results—The $107.1-million net earnings ($1.31 per diluted share) compares to net earnings of $113.9 million ($1.31 per diluted share) for fiscal 2007. Net sales of $3,067.2 million were 3% higher than the $2,971.8 million reported last year.
Results were negatively impacted by $18.1 million ($0.15 per share) in pre-tax restructuring charges related to early retirement, severance, professional fees, and plant closures. Certain professional fees totaling $3.3 million reported in selling, general and administrative expense in the previous three quarters have been reclassified to restructuring charges in each respective quarter to maintain consistency of treatment with the presentation in the current quarter.
Management Comments—“We are pleased with our excellent fourth quarter results and the year-over-year performance of our business segments, particularly the return to profitability in the fourth quarter for metal framing and the continued strong results from pressure cylinders,” said Chairman and CEO John P. McConnell. “We also had record results from our joint venture Worthington Armstrong (WAVE) and also a very good quarter from Serviacero Worthington.”
“Across the company, we have been focused on cutting costs, expanding our market reach through new products and services, and steering through a volatile and demanding steel pricing environment. We believe these efforts are helping us transform and strengthen the businesses, but we are aware of the uncertainty in some of our key markets and the potential for volatility in steel pricing throughout fiscal 2009.”
Transformation Initiative—What began for Worthington as a cost reduction program has grown into a much larger transformational initiative. In addition to the previously announced cost saving efforts, several initiatives are underway that focus on dramatically improving the operational and financial performance of the company. These initiatives include a strategic search for new growth opportunities, increasing efficiency throughout the company, from the plant floor to the corporate office, and improving the supply chain. The intent behind these initiatives is to significantly transform the Company’s earnings potential over the next three years.
Worthington provided the following updates regarding previously announced cost reduction efforts related to overhead expense and plant closures:
- Overhead expense reductions are targeted to reach $30 million annually. In the fourth quarter $6.2 million of savings were realized, bringing the total savings realized in fiscal 2008 to $18.5 million. The balance of the savings will come in fiscal 2009 with a portion to be realized in fiscal 2010.
- All five of the Metal Framing facilities previously referenced have been closed or downsized. In addition, the Metal Framing corporate offices in Pittsburgh and Blairsville, Pennsylvania, will be closed and moved to Columbus, Ohio. Of the $9.0 million in annual savings expected from these actions, $2.1 million was realized in fiscal 2008. The balance will be realized in fiscal 2009. Restructuring charges related to these closures totaled $9.0 million in fiscal 2008 with an additional $6.0 million expected in fiscal 2009.
Worthington Industries is a leading diversified metal processing company with annual sales of approximately $3 billion. The Columbus, Ohio, based company is a 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 8000 people and operates 67 facilities in 11 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.
