SOURCE: Worthington Industries, Inc.

Worthington Industries, Inc.

June 24, 2015 18:15 ET

Worthington Reports Fourth Quarter and Fiscal Year Results

COLUMBUS, OH--(Marketwired - Jun 24, 2015) - Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $846.0 million and net earnings of $28.9 million, or $0.44 per diluted share, for its fiscal 2015 fourth quarter ended May 31, 2015. Net earnings in the quarter include pre-tax impairment, restructuring and other charges totaling $6.5 million. The after-tax impact of these charges reduced earnings per diluted share by $0.08.

In the fourth quarter of the prior year, the Company reported net sales of $891.0 million and net earnings of $33.2 million, or $0.47 per diluted share. Included in the prior year quarter were several impairment and other non-recurring items which resulted in a net pre-tax charge of $16.1 million. The after-tax impact of this net charge reduced earnings per diluted share by $0.13.

For the fiscal year ended May 31, 2015, the Company reported net sales of $3.4 billion and net earnings of $76.8 million, or $1.12 per diluted share. Net sales were up 8%, or $257.8 million, driven primarily by acquisitions in Steel Processing and Pressure Cylinders. Current year net earnings were adversely affected by pre-tax impairment, restructuring and other charges totaling $107.1 million, including a non-cash impairment charge of $83.9 million related to the Company's Engineered Cabs business. The after-tax impact of these charges reduced earnings per diluted share by $1.00. Impairment and other non-recurring items in the prior year resulted in net pre-tax charge of $36.0 million. The after-tax impact of this net charge reduced earnings per diluted share by $0.22.

Financial highlights for the current and comparative periods are as follows:

(U.S. dollars in millions, except per share data)

                     
  4Q 2015   3Q 2015     4Q 2014   12M2015   12M2014
Net sales $ 846.0   $ 804.8     $ 891.0   $ 3,384.2   $ 3,126.4
Operating income (loss)   27.2     (52.1 )     32.3     60.6     135.8
Equity income   18.4     18.8       22.2     87.5     91.5
Net earnings (loss)   28.9     (25.7 )     33.2     76.8     151.3
Earnings (loss) per share $ 0.44   $ (0.39 )   $ 0.47   $ 1.12   $ 2.11
                               

"We had a solid quarter and we generated solid earnings for fiscal 2015; however, we did not meet our goal of year-over-year growth," said John McConnell, Chairman and CEO. "There were a number of factors that contributed to the softer year-over-year results, including falling steel prices, the downturn in oil and gas markets, and operations issues at certain facilities which are being addressed." McConnell added, "We continue to pursue growth opportunities, organically as well as through acquisitions."

Consolidated Quarterly Results

Net sales for the fourth quarter ended May 31, 2015 were $846.0 million, down 5% from the comparable quarter in the prior year, when net sales were $891.0 million. The decrease was driven by lower volume in Steel Processing and Pressure Cylinders and lower average selling prices in Steel Processing as a result of lower steel prices.

Gross margin declined $20.5 million from the prior year quarter to $110.3 million. The overall positive impact from the recent acquisitions was more than offset by lower volume in Pressure Cylinders and higher inventory holding losses in Steel Processing due to falling steel prices.

Operating income for the current quarter was $27.2 million, a decrease of $5.1 million from the prior year quarter. The decrease in gross margin was partially offset by lower impairment and restructuring charges.

Interest expense was $8.2 million for the current quarter, compared to $8.0 million in the comparable period of the prior year, as average debt levels and average interest rates were relatively unchanged.

Equity in net income from unconsolidated joint ventures decreased $3.8 million from the prior year quarter to $18.4 million on sales of $372.3 million. The overall decrease in earnings was led by a $2.5 million decrease at Serviacero, which was negatively impacted by the falling price of steel.

Income tax expense was $6.2 million in the current quarter compared to $18.4 million in the comparable quarter in the prior year. The decrease was due to lower earnings and a discrete tax adjustment related to foreign tax credits. The current quarter tax expense reflected an effective rate of 17.8% compared to 35.7% for the prior year quarter.

Balance Sheet

At quarter end, total debt was $670.7 million, down $29.1 million from February 28, 2015, due to lower short-term borrowings. The Company had $31.1 million of cash at quarter end.

Quarterly Segment Results

Steel Processing's net sales of $540.0 million were down 4%, or $23.6 million, from the prior year on lower toll volume and lower average selling prices. Operating income of $22.6 million was $10.8 million lower than the prior year quarter due to lower toll volume and higher inventory holding losses.

Pressure Cylinders' net sales of $251.6 million were down 5%, or $12.6 million, from the comparable prior year quarter driven by lower volume and lower average selling prices. Operating income of $10.3 million was $4.3 million higher than the prior year quarter as a decrease in total impairment and restructuring charges more than offset the declines in oil and gas equipment and industrial products. Operating income in the prior year quarter also benefited from a $4.9 million litigation gain in SG&A.

Engineered Cabs' net sales of $46.5 million were $6.2 million below the prior year quarter due to the January 2015 sale of the assets of Advanced Component Technologies, Inc. and lower volume in the agriculture market. The $3.7 million operating loss in the current quarter showed a $0.5 million improvement over the prior year quarter due to lower SG&A expenses.

The "Other" category includes the Construction Services and Energy Innovations businesses, as well as non-allocated corporate expenses. Operations in the "Other" category reported net sales of $8.0 million, a decrease of $2.6 million from the prior year quarter as both the Construction Services and Energy Innovations businesses reported lower volumes. The operating loss of $1.9 million was driven primarily by losses within the Construction Services business, which the Company is exiting.

Recent Business Developments

  • On April 23, 2015, the Company amended its five-year, revolving credit facility, increasing commitments under the facility by $75.0 million, to a total of $500.0 million, and extending the maturity by three years to April 2020.

  • During the quarter, the Company repurchased a total of 1,095,387 common shares for $29.1 million at an average price of $26.54.

  • On June 24, 2015, the Board of Directors declared a quarterly dividend of $0.19 per share payable on September 29, 2015 to shareholders of record on September 15, 2015.

Outlook

"We are confident in our Company's strategy to drive growth and our continuous improvement initiatives. The economy has shown some resiliency in automotive and an improving construction market, but there are other areas, like agriculture, where it is less than robust," McConnell noted, "We are seeing a more stabilized steel pricing environment."

Conference Call

Worthington will review fourth quarter and full-year results during its quarterly conference call on June 25, 2015, at 10:30 a.m., Eastern Daylight Saving Time. Details regarding the conference call can be found on the Company web site at www.WorthingtonIndustries.com.

About Worthington Industries

Worthington Industries is a leading global diversified metals manufacturing company with 2015 fiscal year sales of $3.4 billion. Headquartered in Columbus, Ohio, Worthington is North America's premier value-added steel processor providing customers with wide ranging capabilities, products and services for a variety of markets including automotive, construction and agriculture; a global leader in manufacturing pressure cylinders for industrial gas and cryogenic applications, CNG and LNG storage, transportation and alternative fuel tanks, oil and gas equipment, and brand consumer products for camping, grilling, hand torch solutions and helium balloon kits; and a manufacturer of operator cabs for heavy mobile industrial equipment; laser welded blanks for light weighting applications; automotive racking solutions; and through joint ventures, complete ceiling grid solutions; automotive tooling and stampings; and steel framing for commercial construction. Worthington employs approximately 11,000 people and operates 83 facilities in 11 countries.

Founded in 1955, the Company operates under a long-standing corporate philosophy rooted in the golden rule. Earning money for its shareholders is the first corporate goal. This philosophy serves as the basis for an unwavering commitment to the customer, supplier, and shareholder, and as the Company's foundation for one of the strongest employee-employer partnerships in American industry.

Safe Harbor Statement

The 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; the ability to correct performance issues at operations; future or expected growth, forward momentum, performance, sales, volumes, cash flows, earnings, balance sheet strengths, debt, financial condition or other financial measures; projected profitability potential, capacity, and working capital needs; demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; pricing trends for raw materials and finished goods and the impact of pricing changes; anticipated capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, newly-created joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to maintain margins and 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; expected benefits from transformation plans, cost reduction efforts and other new initiatives; expectations for increasing volatility or improving and sustaining 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 worldwide economic conditions generally and within major product markets, including a recurrent slowing economy; the effect of conditions in national and worldwide financial markets; 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; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction 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 other 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 industry 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, acts of war or 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 exposure and the acceptance of our products in these markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; the outcome of adverse claims experience with respect to workers' compensation, product recalls or product liability, casualty events or other matters; 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 changes to healthcare laws in the United States which may increase our healthcare and other costs and negatively impact our operations and financial results; 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 our Annual Report on Form 10-K for the fiscal year ended May 31, 2014.

   
   
WORTHINGTON INDUSTRIES, INC.  
CONSOLIDATED STATEMENTS OF EARNINGS  
(In thousands, except per share amounts)  
   
    Three Months Ended     Twelve Months Ended  
    May 31,     May 31,  
    2015     2014     2015     2014  
Net sales   $ 846,023     $ 891,005     $ 3,384,234     $ 3,126,426  
Cost of goods sold     735,711       760,169       2,920,701       2,633,907  
  Gross margin     110,312       130,836       463,533       492,519  
Selling, general and administrative expense     76,593       74,781       295,920       300,396  
Impairment of goodwill and long-lived assets     2,344       22,871       100,129       58,246  
Restructuring and other expense (income)     4,023       869       6,514       (2,912 )
Joint venture transactions     139       (12 )     413       1,036  
  Operating income     27,213       32,327       60,557       135,753  
Other income (expense):                                
  Miscellaneous income (expense)     (961 )     3,066       795       16,963  
  Interest expense     (8,227 )     (7,977 )     (35,800 )     (26,671 )
  Equity in net income of unconsolidated affiliates     18,433       22,233       87,476       91,456  
  Earnings before income taxes     36,458       49,649       113,028       217,501  
Income tax expense     6,232       18,401       25,772       57,349  
Net earnings     30,226       31,248       87,256       160,152  
Net earnings (loss) attributable to noncontrolling interest     1,361       (1,915 )     10,471       8,852  
Net earnings attributable to controlling interest   $ 28,865     $ 33,163     $ 76,785     $ 151,300  
                                 
Basic                                
Average common shares outstanding     64,217       67,980       66,309       68,944  
Earnings per share attributable to controlling interest   $ 0.45     $ 0.49     $ 1.16     $ 2.19  
                                 
Diluted                                
Average common shares outstanding     65,767       70,441       68,483       71,664  
Earnings per share attributable to controlling interest   $ 0.44     $ 0.47     $ 1.12     $ 2.11  
                                 
                                 
Common shares outstanding at end of period     64,141       67,408       64,141       67,408  
                                 
Cash dividends declared per share   $ 0.18     $ 0.15     $ 0.72     $ 0.60  
                                 
 
 
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
         
    May 31,   May 31,
    2015   2014
Assets            
Current assets:            
  Cash and cash equivalents   $ 31,067   $ 190,079
  Receivables, less allowances of $3,085 and $3,043 at May 31, 2015 and May 31, 2014, respectively     474,292     493,127
  Inventories:            
    Raw materials     181,975     213,173
    Work in process     107,069     105,872
    Finished products     85,931     90,957
      Total inventories     374,975     410,002
  Income taxes receivable     12,119     5,438
  Assets held for sale     23,412     32,235
  Deferred income taxes     22,034     24,272
  Prepaid expenses and other current assets     54,294     43,769
    Total current assets     992,193     1,198,922
             
Investments in unconsolidated affiliates     196,776     179,113
Goodwill     238,999     251,093
Other intangible assets, net of accumulated amortization of $47,547 and $35,506 at May 31, 2015 and May 31, 2014, respectively     119,117     145,993
Other assets     24,867     22,399
Property, plant & equipment:            
  Land     16,017     15,260
  Buildings and improvements     218,182     213,848
  Machinery and equipment     872,986     848,889
  Construction in progress     40,753     32,135
    Total property, plant & equipment     1,147,938     1,110,132
    Less: accumulated depreciation     634,748     611,271
Property, plant and equipment, net     513,190     498,861
Total assets   $ 2,085,142   $ 2,296,381
             
Liabilities and equity            
Current liabilities:            
  Accounts payable   $ 294,129   $ 333,744
  Short-term borrowings     90,550     10,362
  Accrued compensation, contributions to employee benefit plansand related taxes     66,252     78,514
  Dividends payable     12,862     11,044
  Other accrued items     56,913     49,873
  Income taxes payable     2,845     4,953
  Current maturities of long-term debt     841     101,173
    Total current liabilities     524,392     589,663
             
Other liabilities     58,269     76,426
Distributions in excess of investment in unconsolidated affiliate     61,585     59,287
Long-term debt     579,352     554,790
Deferred income taxes     21,495     71,333
    Total liabilities     1,245,093     1,351,499
             
Shareholders' equity - controlling interests     749,112     850,812
Noncontrolling interests     90,937     94,070
    Total equity     840,049     944,882
Total liabilities and equity   $ 2,085,142   $ 2,296,381
             
   
   
WORTHINGTON INDUSTRIES, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
   
    Three Months Ended     Twelve Months Ended  
    May 31,     May 31,  
    2015     2014     2015     2014  
Operating activities                                
Net earnings   $ 30,226     $ 31,248     $ 87,256     $ 160,152  
Adjustments to reconcile net earnings to net cash provided by operating activities:                                
  Depreciation and amortization     21,760       19,967       85,089       79,730  
  Impairment of goodwill and long-lived assets     2,344       22,871       100,129       58,246  
  Benefit (provision) for deferred income taxes     1,401       (5,660 )     (39,960 )     (25,916 )
  Bad debt expense     365       462       259       32  
  Equity in net income of unconsolidated affiliates, net of distributions     (3,925 )     (6,960 )     (12,299 )     (15,333 )
  Net loss (gain) on sale of assets     (204 )     (352 )     3,277       (11,212 )
  Stock-based compensation     5,005       8,810       17,916       22,017  
  Excess tax benefits - stock-based compensation     (762 )     (1,586 )     (7,178 )     (8,880 )
  Gain on previously held equity interest in TWB     -       -       -       (11,000 )
Changes in assets and liabilities, net of impact of acquisitions:                                
  Receivables     21,097       (34,207 )     32,011       (49,206 )
  Inventories     98,033       21,573       54,108       (38,010 )
  Prepaid expenses and other current assets     (4,113 )     (7,057 )     (15,295 )     (2,921 )
  Other assets     (4,014 )     (5,091 )     1,617       (5,278 )
  Accounts payable and accrued expenses     (93,245 )     (38,503 )     (83,190 )     69,682  
  Other liabilities     743       2,924       (9,365 )     6,943  
Net cash provided by operating activities     74,711       8,439       214,375       229,046  
                                 
Investing activities                                
  Investment in property, plant and equipment     (22,990 )     (19,181 )     (96,255 )     (71,338 )
  Investment in notes receivable     -       -       (7,300 )     -  
  Acquisitions, net of cash acquired     191       (29,151 )     (105,291 )     (11,517 )
  Distributions from (investments in) unconsolidated affiliates     -       -       (8,230 )     9,223  
  Proceeds from sale of assets and insurance     10,194       3,125       14,007       27,438  
Net cash used by investing activities     (12,605 )     (45,207 )     (203,069 )     (46,194 )
                                 
Financing activities                                
  Net proceeds from (repayments of) short-term borrowings     (33,597 )     (24,994 )     79,047       (103,618 )
  Proceeds from long-term debt     4,176       247,566       30,572       247,566  
  Principal payments on long-term debt     (207 )     (364 )     (102,852 )     (1,219 )
  Proceeds from (payments for) issuance of common shares     1,283       (628 )     2,910       4,618  
  Excess tax benefits - stock-based compensation     762       1,586       7,178       8,880  
  Payments to noncontrolling interest     (1,312 )     (1,819 )     (13,379 )     (40,969 )
  Repurchase of common shares     (32,945 )     (37,140 )     (127,360 )     (128,218 )
  Dividends paid     (11,667 )     (10,246 )     (46,434 )     (31,198 )
Net cash provided (used) by financing activities     (73,507 )     173,961       (170,318 )     (44,158 )
                                 
Increase (decrease) in cash and cash equivalents     (11,401 )     137,193       (159,012 )     138,694  
Cash and cash equivalents at beginning of period     42,468       52,886       190,079       51,385  
Cash and cash equivalents at end of period   $ 31,067     $ 190,079     $ 31,067     $ 190,079  
                                 
                                 
                                 
WORTHINGTON INDUSTRIES, INC.  
SUPPLEMENTAL DATA  
(In thousands, except Pressure Cylinders units)  
   
This supplemental information is provided to assist in the analysis of the results of operations.  
   
    Three Months Ended   Twelve Months Ended  
    May 31,   May 31,  
    2015   2014   2015   2014  
Volume:                          
  Steel Processing (tons)     875     949     3,510     3,282  
  Pressure Cylinders (units)     22,082,614     22,503,087     81,112,610     82,859,488  
                           
Net sales:                          
  Steel Processing   $ 539,954   $ 563,515   $ 2,145,744   $ 1,936,073  
  Pressure Cylinders     251,613     264,184     1,001,402     928,396  
  Engineered Cabs     46,469     52,714     192,953     200,528  
  Other     7,987     10,592     44,135     61,429  
    Total net sales   $ 846,023   $ 891,005   $ 3,384,234   $ 3,126,426  
                           
Material cost:                          
  Steel Processing   $ 396,142   $ 412,183   $ 1,567,325   $ 1,392,009  
  Pressure Cylinders     122,832     124,442     474,319     426,856  
  Engineered Cabs     22,774     24,639     89,309     90,854  
                           
Selling, general and administrative expense:                          
  Steel Processing   $ 33,872   $ 33,755   $ 123,372   $ 129,669  
  Pressure Cylinders     37,026     30,000     141,092     125,984  
  Engineered Cabs     5,903     7,995     26,128     30,620  
  Other     (208 )   3,031     5,328     14,123  
    Total selling, general and administrative expense   $ 76,593   $ 74,781   $ 295,920   $ 300,396  
                           
Operating income (loss):                          
  Steel Processing   $ 22,555   $ 33,312   $ 108,707   $ 119,025  
  Pressure Cylinders     10,316     5,997     58,113     55,004  
  Engineered Cabs     (3,726 )   (4,232 )   (97,260 )   (26,516 )
  Other     (1,932 )   (2,750 )   (9,003 )   (11,760 )
    Total operating income   $ 27,213   $ 32,327   $ 60,557   $ 135,753  
                           
                           
The following provides detail of Pressure Cylinders volume and net sales by principal class of products.  
   
    Three Months Ended   Twelve Months Ended  
    May 31,   May 31,  
    2015   2014   2015   2014  
Volume (units):                          
  Consumer Products     13,550,943     12,886,257     48,964,578     48,785,465  
  Industrial Products     8,414,576     9,493,075     31,705,116     33,623,049  
  Alternative Fuels     115,105     121,160     431,954     442,685  
  Oil and Gas Equipment     1,717     2,520     10,246     8,201  
  Cryogenics     273     75     716     88  
    Total Pressure Cylinders     22,082,614     22,503,087     81,112,610     82,859,488  
                           
Net sales:                          
  Consumer Products   $ 57,158   $ 60,013   $ 219,355   $ 219,423  
  Industrial Products     118,361     129,383     438,050     455,296  
  Alternative Fuels     26,141     24,038     94,157     93,029  
  Oil and Gas Equipment     46,080     44,990     231,097     153,541  
  Cryogenics     3,873     5,760     18,743     7,107  
    Total Pressure Cylinders   $ 251,613   $ 264,184   $ 1,001,402   $ 928,396  
                           
   
   
WORTHINGTON INDUSTRIES, INC.  
SUPPLEMENTAL DATA  
(In thousands)  
   
The following provides detail of impairment of goodwill and long-lived assets, restructuring and other expense (income), and joint venture transactions included in operating income by segment presented above.  
   
    Three Months Ended     Twelve Months Ended  
    May 31,     May 31,  
    2015     2014     2015     2014  
Impairment of goodwill and long-lived assets:                                
  Steel Processing   $ -     $ 2,500     $ 3,050     $ 7,141  
  Pressure Cylinders     2,344       20,371       11,911       32,005  
  Engineered Cabs     -       -       83,989       19,100  
  Other     -       -       1,179       -  
    Total impairment of goodwill and long-lived assets   $ 2,344     $ 22,871     $ 100,129     $ 58,246  
                                 
Restructuring and other expense (income):                                
  Steel Processing   $ 130     $ -     $ 72     $ (3,382 )
  Pressure Cylinders     3,482       289       6,408       (745 )
  Engineered Cabs     (19 )     -       (332 )     -  
  Other     430       580       366       1,215  
    Total restructuring and other expense (income)   $ 4,023     $ 869     $ 6,514     $ (2,912 )
                                 
Joint venture transactions:                                
  Steel Processing   $ -     $ -     $ -     $ -  
  Pressure Cylinders     -       -       -       -  
  Engineered Cabs     -       -       -       -  
  Other     139       (12 )     413       1,036  
    Total joint venture transactions   $ 139     $ (12 )   $ 413     $ 1,036  
                                     

Contact Information

  • Cathy M. Lyttle
    VP, Corporate Communications and Investor Relations
    614.438.3077
    Email Contact

    Sonya L. Higginbotham
    Director, Corporate Communications
    614.438.7391
    Email Contact

    200 Old Wilson Bridge Rd.
    Columbus, Ohio 43085
    WorthingtonIndustries.com