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Worthington Reports Q4 and Fiscal Year Results
06/30/2010 - Worthington Industries reported net sales of $626.4 million and net earnings of $33.1 million, or $0.42 per share, for the fiscal 2010 fourth quarter ended May 31, 2010. For the fiscal year ended May 31, the company posted net earnings of $45.2 million, or $0.57 per share.
Worthington Industries, Inc. reported net sales of $626.4 million, and net earnings of $33.1 million, or $0.42 per share, for the fiscal 2010 fourth quarter ended May 31, 2010. For the same period last year, the company reported a net loss of $13.7 million, or $0.17 per share. The prior-year fourth quarter included a $6.3 million pre-tax inventory write-down and $6.0 million of pre-tax restructuring charges, for a combined negative impact of $0.15 per share.
For the fiscal year ended May 31, 2010, the company posted net earnings of $45.2 million, or $0.57 per share, driven by the strong fourth quarter. Sales were down 26% from the prior year to $1,943.0 million, primarily due to the reduction in sales volumes in the Metal Framing segment and a 24% decrease in the average market price of steel, the company reports.
Fiscal 2010 earnings were reduced by goodwill impairment, restructuring, and certain legal charges totaling $31.0 million, or $0.39 per share. The prior year net loss of $108.2 million was impacted by inventory write-downs, goodwill impairment, restructuring charges, and a gain on the sale of the Aegis joint venture, reducing net earnings by $175.7 million, or $2.23 per share.
Management Comments — “I am very pleased with our strong fourth quarter results,” said John P. McConnell, Chairman and CEO. “The recession has made the past two years very difficult, but I believe we are a better company today because of the way we have responded. I am proud of all Worthington employees for their hard work and commitment in putting us on a much improved track.
“While our sales were down compared to last year, we improved our bottom line,” McConnell continued. “We are growing the profit potential of existing businesses, investing in higher value-added businesses, and working to reduce our earnings volatility.
“Steel Processing continues to show marked improvement in its operations, despite lower but improving volumes. Pressure Cylinders had a very strong quarter in North America across many of its product lines with some modest improvements showing up in results from the European operations.”
McConnell added, “Metal Worthington Industries Framing has worked diligently to remain cash neutral while market conditions continue to deteriorate. While we expect additional operating improvements to match existing market conditions in our traditional markets for Metal Framing, we have separately launched efforts to identify opportunities in new markets abroad.”
Quarterly Consolidated Results — Net sales for the fourth quarter were $626.4 million, a 33% increase from the comparable quarter last year, primarily due to increased volumes in the Steel Processing and Pressure Cylinders segments.
Gross margin for the current quarter was $105.8 million, or 17% of net sales, representing a $68.5 million increase over the prior year quarter’s gross margin of $37.3 million, or 8% of net sales. An improved spread, primarily in Steel Processing, between the average selling price and the cost of steel, improved the margin by $56.7 million. While volumes were up in both Steel Processing and Pressure Cylinders, the favorable impact was partially offset by volume declines in Metal Framing and the other construction-related segments.
Operating income for the quarter was $42.6 million, driven by the increase in volume and improved spreads. This compares to the prior year quarter loss of $19.2 million, which included $6.0 million of pre-tax restructuring charges, and a $6.3 million pre-tax inventory write-down.
Steel Processing Segment Results — Steel Processing’s net sales of $349.6 million were up 95%, or $170.5 million, over the prior year quarter. Higher volumes increased sales by $146.9 million while higher average selling prices increased sales by $23.6 million. Sales volumes grew 74% over the prior year quarter and 26% vs. the third quarter due to increased sales to the automotive, agricultural, and construction markets and the contribution from the Gibraltar strip steel assets acquired in February 2010.
Steel Processing’s mix of direct versus toll tons processed was 58% to 42% this quarter, the same as the year-ago quarter. Operating income improved $50.4 million to $28.3 million, from the prior year’s operating loss of $22.1 million. Higher spreads and volumes offset by increased variable manufacturing expenses drove the increase.
Company Outlook — “We began to recover from the global recession this fiscal year, rebounding from the only year with an earnings loss in company history in fiscal year 2009,” McConnell said. “We have optimized our existing businesses and captured growth opportunities that fit our strategy.
“As we begin our new fiscal year, we will stay focused on growing the business both organically and through new acquisitions,” he continued. “Our operational efficiency improvement, consolidated sourcing, and customer service will continue to be the drivers that lead us to sustainable earnings. We believe the economic environment in which we operate will continue to improve, though not linearly, over the next 24 months.”
Worthington Industries is a leading diversified metals manufacturing company. Founded in 1955, the Columbus, Ohio-based company is North America’s premier value-added steel processor and a leader in manufactured pressure cylinders products such as propane, oxygen and helium tanks, hand torches, camping cylinders, and scuba tanks; light gauge steel framing for commercial and residential construction; framing systems and stairs for mid-rise buildings; metal ceiling grid systems; current and past model automotive service stampings; steel pallets and racks; and laser welded blanks. Worthington employs approximately 6400 people and operates 64 facilities in 11 countries.
