Worthington Reports Third Quarter Fiscal 2012 Results
03/30/2012 - Worthington Industries, Inc. reported net sales of $611.3 million and net earnings of $25.9 million, or $0.37 per share, for its fiscal 2012 third quarter ended February 29, 2012. In last year's third quarter, the company reported net sales of $569.4 million and net earnings of $26.3 million, or $0.35 per share.
Worthington Industries, Inc. reported net sales of $611.3 million and net earnings of $25.9 million, or $0.37 per share, for its fiscal 2012 third quarter ended February 29, 2012. In last year's third quarter, the company reported net sales of $569.4 million and net earnings of $26.3 million, or $0.35 per share.
"We performed well in our third quarter," said John P. McConnell, Chairman and CEO. "The overall economy continued to strengthen with overall steel volume up 21% led by a strong year-over-year increase in the automotive market. Most importantly, our team is doing an excellent job of managing the reshaping of our company. Although the additions and subtractions have been numerous and make year-over-year comparisons more difficult in the short term, we are confident our decisions and direction have produced a better platform for future success."
Consolidated quarterly results – Net sales for the third quarter were up 7% from the comparable quarter last year, which the company notes is significant as it begins to reflect the replacement of revenues lost from the deconsolidation of the Metal Framing and Automotive Body Panels segments reported in earlier periods. Excluding these deconsolidated operations, net sales rose 32% from the prior year quarter primarily due to acquisitions and higher average selling prices. Steel Processing increased sales by 22% and sales rose by 38% in Pressure Cylinders, aided by recent acquisitions. Additionally, the acquisition of Angus, which is reported as the Engineered Cabs business segment, contributed $40.2 million of sales to the current quarter.
Gross margin for the current quarter was $83.3 million, compared to $88.3 million in the prior year quarter. The $5.0 million decrease resulted from the negative net impact of the acquisition and deconsolidation activity, an unfavorable product mix in Pressure Cylinders, and increased manufacturing expenses, which were partially offset by a favorable spread between selling prices and material costs.
SG&A expense increased $2.7 million over the prior year quarter primarily due to the accrual for certain legal expenses, and increased amortization and transaction fees related to the acquisitions, partially offset by the deconsolidation transactions.
Operating income for the current quarter was $18.1 million, compared to $28.0 million in the prior year quarter. In addition to the factors mentioned above, operating income for the current quarter was adversely affected by increased restructuring charges and joint-venture transaction expenses. Ongoing transformation efforts within Pressure Cylinders resulted in $1.0 million of outside consulting expenses, which is included in the "restructuring and other expense" line on the income statement. The $1.8 million of expense in the "joint venture transactions" line was driven by ongoing activity during the current quarter related to the wind down of the retained Metal Framing facilities and reflects facility exit and other costs partially offset by one-time gains on asset disposals.
Equity in net income from unconsolidated joint ventures was $24.0 million, an increase of $7.0 million from the comparable quarter in the prior year, on sales of $410.0 million. WAVE contributed $16.0 million of earnings in the current quarter, a 14% increase from the prior year quarter. All of the other operating joint ventures were profitable and, with the exception of Serviacero, the joint venture in Mexico, all reported improved results over the prior year quarter.
Balance sheet – At quarter end, total debt was $538.9 million, up $62.5 million from November 30, 2011, as the acquisitions of the Coleman propane fuel cylinders business and Angus Industries raised borrowing needs. During the current quarter, the company increased borrowing capacity under its trade accounts receivable securitization facility by $50.0 million to $150.0 million of which $110.0 million had been utilized as of February 29, 2012. Additionally, $170.9 million was drawn on the company's $400.0 million revolving credit facility.
Outlook – "I remain confident that we will continue to demonstrate improving results as we reshape, improve, and increase shareholder value," said McConnell. "We look for fourth-quarter volumes to reflect a continued, modest improvement in the general economy. While automotive volumes in Steel Processing and related JVs appear to be gaining momentum, other end markets for Pressure Cylinders and Engineered Cabs are also showing some improvement and growth."
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. Worthington employs approximately 9500 people and operates 79 facilities in 12 countries.
