COLUMBUS, Ohio, Dec. 17, 2019 (GLOBE NEWSWIRE) — Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $827.6 million and net earnings of $52.1 million, or $0.93 per diluted share, for its fiscal 2020 second quarter ended November 30, 2019. Net earnings for the current quarter benefited from a pre-tax gain of $23.1 million, or $0.33 per share, recorded in equity income related to the sale of the international operations of the WAVE joint venture. Estimated current quarter inventory holding losses in Steel Processing were $6.5 million, or $0.09 per share. In the second quarter of fiscal 2019, the Company reported net sales of $958.2 million and net earnings of $34.0 million, or $0.57 per diluted share. Estimated inventory holding gains of $0.8 million in the prior year quarter were largely offset by pre-tax restructuring charges of $0.4 million.
Financial highlights for the current and comparative periods are as follows:(U.S. dollars in millions, except per share amounts)“We delivered solid results for the quarter despite some market softness and challenging conditions in steel pricing,” said John McConnell, Chairman and CEO. “Pressure Cylinders volumes were up, led by strong demand in the consumer products and oil and gas businesses. Overall, we returned to year-over-year earnings growth for the quarter and I’m pleased with the way our teams continue to perform in markets that are being impacted by trade wars and economic uncertainty.”
Consolidated Quarterly Results
Net sales for the second quarter of fiscal 2020 were $827.6 million, down 14% from the comparable quarter in the prior year, when net sales were $958.2 million. The decrease was primarily driven by lower average direct selling prices due to a decline in the market price of steel and lower direct volume in Steel Processing.
Gross margin decreased $0.3 million from the prior year quarter to $120.6 million as higher contributions from Pressure Cylinders were largely offset by declines at Steel Processing.Operating income for the current quarter was down $3.7 million from the prior year quarter to $32.1 million. The combined impact of lower gross margin and higher SG&A expense drove the decline. Interest expense was $7.3 million for the current quarter, compared to $9.5 million in the prior year quarter. The decrease was due primarily to lower average debt levels and lower average interest rates resulting from the debt refinancing transactions completed earlier in the year.Equity income from unconsolidated joint ventures increased $26.3 million over the prior year quarter to $47.3 million. The current quarter included a pre-tax gain of $23.1 million at WAVE related to the sale of the international operations. The remaining increase was primarily due to a $5.4 million increase in equity income from ClarkDietrich, driven by improved margins and increased volumes, but was partially offset by lower results at Serviacero. The current quarter was also negatively impacted by $1.5 million of losses related to our retained interest in the newly-formed Cabs company, which consisted primarily of transaction-related expenses incurred at the new company. The Company received cash distributions of $27.5 million from unconsolidated joint ventures during the quarter.Income tax expense was $15.9 million in the current quarter compared to $11.1 million in the prior year quarter. The increase was due primarily to higher earnings associated with the $23.1 million gain recognized at WAVE. Tax expense in the current quarter reflects an estimated annual effective income tax rate of 24.8% versus 23.4% in the prior year quarter.Balance SheetTotal debt was down slightly from August 31, 2019 to $698.8 million and the Company had $72.3 million of cash on hand at quarter-end. Quarterly Segment ResultsSteel Processing’s net sales totaled $516.9 million, down 19%, or $118.1 million, from the comparable prior year quarter driven by lower average selling prices and lower direct volume, partially offset by higher toll volume. Operating income of $17.2 million was $7.8 million less than the prior year quarter due to the unfavorable impact of inventory holding losses and lower direct volume, partially offset by improved direct spreads and higher toll volume. The mix of direct versus toll tons processed was 49% to 51% in the current quarter, compared to 56% to 44% in the prior year quarter.Pressure Cylinders’ net sales totaled $290.1 million, down 1%, or $4.3 million, from the comparable prior year quarter due to the impact of divestitures and lower volumes in the industrial products business, partially offset by higher volumes in both the consumer products and oil and gas equipment businesses. Operating income of $15.6 million was $0.9 million higher than the prior year quarter as the impact of higher volumes in consumer products and overall improvements in oil and gas equipment more than offset the unfavorable impact of lower volumes in the industrial products business.Recent DevelopmentsOn Sept. 30, 2019, WAVE completed the sale of its international operations to Knauf International GmbH resulting in a pre-tax gain of $23.1 million in equity income.On Oct. 7, 2019, the Company purchased the operating assets of Heidtman’s pickling and slitting facility in Cleveland, Ohio for $29.6 million. On Nov. 1, 2019, the Company contributed substantially all of the net assets of the former Engineered Cabs segment to a newly-formed company that simultaneously acquired another cabs manufacturer. In exchange for the contributed net assets, the Company received a 20% minority ownership interest in the new company. Outlook“The Company is operating well, and we are optimistic about our momentum going forward,” McConnell said. “We believe most of our markets should remain steady but do anticipate continued weakness in Europe and will remain focused on driving future improvement through solid execution of our strategies.”Conference CallWorthington will review fiscal 2020 second quarter results during its quarterly conference call on December 17, 2019, at 2:00 p.m., Eastern Time. Details regarding the conference call can be found on the Company website at www.WorthingtonIndustries.com.About Worthington Industries Worthington Industries (NYSE:WOR) is a leading industrial manufacturing company delivering innovative solutions to customers that span many industries including transportation, construction, industrial, agriculture, retail and energy. Worthington is North America’s premier value-added steel processor and producer of laser welded products; and a leading global supplier of pressure cylinders and accessories for applications such as fuel storage, water systems, outdoor living, tools and celebrations. The Company’s brands, primarily sold in retail stores, include Coleman®, Bernzomatic®, Balloon Time®, Mag Torch® and Well-X-Trol®. Worthington’s WAVE joint venture with Armstrong is the North American leader in innovative ceiling solutions.Headquartered in Columbus, Ohio, Worthington operates 54 facilities in 15 states and six countries, sells into over 90 countries and employs approximately 9,000 people. Founded in 1955, the Company follows a people-first philosophy with earning money for its shareholders as its first corporate goal. Relentlessly finding new ways to drive progress and practicing a shared commitment to transformation, Worthington makes better solutions possible for customers, employees, shareholders and communities. Safe Harbor StatementThe Company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “Act”). Statements by the Company relating to outlook, strategy or business plans; future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures; pricing trends for raw materials and finished goods and the impact of pricing changes; the ability to improve or maintain margins; expected demand or demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; expected benefits from Transformation and innovation efforts; the ability to improve performance and competitive position at the Company’s operations; anticipated working capital needs, capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; projected profitability potential; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; projected capacity and the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets; expectations for Company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value; effects of judicial rulings; and other non-historical matters constitute “forward-looking statements” within the meaning of the Act. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, the effect of national, regional and global economic conditions generally and within major product markets, including a recurrent slowing economy; the effect of conditions in national and worldwide financial markets; the impact of tariffs, the adoption of trade restrictions affecting the Company’s products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; lower oil prices as a factor in demand for products; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company’s products; fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities and other items required by operations; the outcome of adverse claims experience with respect to workers’ compensation, product recalls or product liability, casualty events or other matters; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction, oil and gas, and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts; the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from Transformation initiatives, on a timely basis; the overall success of, and the ability to integrate, newly-acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom; capacity levels and efficiencies, within facilities, within major product markets and within the industries in which the Company participates as a whole; the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, interruption in utility services, civil unrest, international conflicts, terrorist activities or other causes; changes in customer demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability, foreign currency exchange rate exposure and the acceptance of the Company’s products in global markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; deviation of actual results from estimates and/or assumptions used by the Company in the application of its significant accounting policies; level of imports and import prices in the Company’s markets; the impact of judicial rulings and governmental regulations, both in the United States and abroad, including those adopted by the United States Securities and Exchange Commission and other governmental agencies as contemplated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of healthcare laws in the United States and potential changes for such laws which may increase the Company’s healthcare and other costs and negatively impact the Company’s operations and financial results; cyber security risks; the effects of privacy and information security laws and standards; and other risks described from time to time in the Company’s filings with the United States Securities and Exchange Commission, including those described in “Part I – Item 1A. – Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2019.
Contacts:
SONYA L. HIGGINBOTHAM
VP, CORPORATE COMMUNICATIONS AND BRAND MANAGEMENT
614.438.7391 | [email protected]MARCUS A. ROGIER
TREASURER AND INVESTOR RELATIONS OFFICER
614.840.4663 | [email protected]200 Old Wilson Bridge Rd. | Columbus, Ohio 43085
WorthingtonIndustries.com
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