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Worthington Reports Second Quarter Results

01/06/2012 - Worthington Industries, Inc. reported net sales of $570.4 million and net earnings of $18.5 million, or $0.27 per share, for its fiscal 2012 second quarter ended November 30, 2011, compared to last year's reported net sales of $580.7 million and net earnings of $14.5 million, or $0.20 per share.

Worthington Industries, Inc. reported net sales of $570.4 million and net earnings of $18.5 million, or $0.27 per share, for its fiscal 2012 second quarter ended November 30, 2011. In last year's second quarter, the company reported net sales of $580.7 million and net earnings of $14.5 million, or $0.20 per share.
 
"Our second quarter results were very good, showing solid incremental growth," said John McConnell, Chairman and CEO. "The Steel Processing and Pressure Cylinders businesses nearly made up for the lost revenue from the exiting of the Metal Framing business in the year-to-year comparison. Worthington Cylinders is strengthening its portfolio and global footprint to achieve our strategic growth goals for that business. We are pleased with the speed of integration in the Cylinders' acquisitions of the BernzOmatic and Coleman product lines, as well as the recent addition of STAKO and their strong European market position in LPG tanks. Strengthening automotive demand and continued operating improvements produced good results in Steel Processing."
 
Consolidated Quarterly Results – The Steel Processing and Pressure Cylinders segments reported an 18% and a 33% increase in sales, respectively, aided by the recent acquisitions. These increases, however, were more than offset by the impact of the deconsolidation of the company's former Metal Framing and Automotive Body Panels operations, as reported in previous periods. Excluding the deconsolidated operations, net sales rose 19% from the prior year quarter primarily due to the acquisitions and higher average selling prices.
 
Gross margin for the current quarter was $66.3 million, compared to $69.8 million in the prior year quarter. The company says the decrease was primarily due to higher inventory holding losses for Steel Processing.
 
SG&A expense was $4.1 million lower than the prior year quarter primarily due to the deconsolidation transactions, partially offset by the impact of the acquisitions.
 
Operating income for the current quarter was $12.5 million, slightly lower than the $12.9 million reported during the comparable quarter of the prior year. Operating income for the current quarter was adversely affected by restructuring expenses, while gains on the sale of equipment and real estate related to the joint venture transactions had a favorable impact.
 
Equity in net income from unconsolidated joint ventures was $21.9 million, an increase of $5.7 million from the comparable quarter in the prior year, on sales of $420.1 million. Worthington Armstrong Venture (WAVE) contributed $14.1 million of earnings in the current quarter, a 10% increase from the comparable prior year quarter. In addition, the new joint ventures, ClarkDietrich and ArtiFlex, contributed $2.2 million and $2.1 million of earnings, respectively.
 
At quarter end, total debt was $476.3 million, up $16.9 million from August 31, 2011, as the acquisition of STAKO and the repurchase of common shares raised short-term borrowing needs. The company had utilized $85.0 million of its $100.0 million trade accounts receivable securitization facility, and $136.1 million was drawn on its $400.0 million revolving credit facility as of November 30, 2011.
 
Outlook – "Our company continues to leverage our core competency as a diversified metals manufacturer by acquiring high return and high value-added businesses that serve attractive end markets," McConnell said. "The acquisition of Angus Industries is a result of that focus, and we are pleased to have this market leader in the design and manufacturing of high quality, custom-engineered cabs in the Worthington family.
 
"We are aggressively positioning Worthington Industries for growth. Our focus over the last three years has been on improving our existing businesses or exiting them, and finding new, complementary businesses to help us achieve our strategic goal of decreasing earnings volatility. We are strengthening our brand offerings and added new growth opportunities in Cylinders. Our Steel Processing segment is operating at a high level and we have positioned our joint ventures to continue their strong results. Even with the slow economy, we have seen incremental improvements in many of our markets and believe we can continue to grow our bottom line."
 
Worthington Industries is a leading diversified metals manufacturing company with 2011 fiscal year sales of $2.4 billion. The Columbus, Ohio-based company is a value-added steel processor and a leader in manufactured pressure cylinders, such as propane, oxygen and helium tanks, hand torches, and compressed natural gas storage cylinders; custom-engineered open and enclosed cabs and operator stations for heavy mobile equipment; framing systems and stairs for mid-rise buildings; steel pallets and racks; and through joint ventures, suspension grid systems for concealed and lay-in panel ceilings, current and past model automotive service stampings; laser welded blanks, and light gauge steel framing for commercial and residential construction. Worthington employs more than 9500 people and operates 80 facilities in 12 countries.