COLUMBUS, Ohio--(BUSINESS WIRE)--Sept. 17, 2003--Worthington
Industries, Inc. (NYSE:WOR) today reported results for the three
months ended August 31, 2003.
Highlights
Sales for the first quarter of fiscal 2004 were $498.0 million, a
decrease of 5% from last year's record $525.5 million. Earnings were
$5.9 million and earnings per diluted share were $0.07 compared to
record first quarter earnings of $27.5 million, or $0.32 per diluted
share, for the same period last year.
First quarter results for fiscal 2003 included just one month of
operations for Unimast Incorporated which was acquired on July 31,
2002. Unimast generated $47.6 million of sales and $5.0 million in
earnings during June and July 2002, prior to Worthington's ownership.
"This was a particularly difficult quarter for our two largest
business segments, Processed Steel Products and Metal Framing," said
John P. McConnell, Chairman and CEO of Worthington Industries.
"Overall volume in Processed Steel Products declined by 13% largely
tied to an estimated 14% production decrease among the 'Big 3' auto
producers. While our direct tons were off only 7%, we saw a 20%
decline in our tolling tons." McConnell explained, "Although we
believe we maintained our market share during the quarter, weak
overall demand, a significant mix change between our direct and tolled
tons and rising steel costs, all contributed to weaker earnings in
Processed Steel Products."
"Our Metal Framing business suffered a modest loss as several
adverse factors converged during this quarter," McConnell continued.
"The commercial construction market and, in particular, commercial
office space construction, continue to be very soft. As a result,
competitive pricing pressures have been mounting throughout the past
six months at a time when we continued to carry additional expenses
associated with the acquisition of Unimast. During the quarter, we
also continued to incur the additional costs of our increasingly
successful efforts to broaden our base of business into several niche
markets ranging from single and multi-family residential, midrise
commercial and mixed use facilities to kit packages and emergency
shelter designs. Although we expect the commercial construction market
to remain soft for some time, other issues that negatively affected
this quarter are subsiding, and we expect a better second quarter in
Metal Framing," McConnell said.
During the quarter, the company generated enough cash to reduce
the utilization of its accounts receivable securitization facility by
$70 million and fund the quarterly dividend. "I am proud of our
unbroken record of profitability and dividend payments," concluded
McConnell.
Segment Results
Within the Processed Steel Products segment, quarterly net sales
fell 10%, or $31.7 million, to $287.2 million from $318.9 million in
the comparable quarter of fiscal 2003. The decrease in net sales was
due to declines in both direct and tolling volumes. Lower volumes and
a reduction in the spread between selling prices and material costs
resulted in a depressed operating margin.
Within the Metal Framing segment, net sales increased 17%, or
$20.2 million, to $141.0 million from $120.8 million in the comparable
quarter of fiscal 2003 due to the Unimast acquisition. However,
weakness in the commercial construction market contributed to a 9%
decline in the combined tons shipped during the quarter on a proforma
basis. The volume decline, coupled with higher material costs and
severe pricing pressure, led to an operating loss. Dietrich Metal
Framing initiated product price increases effective September 1, 2003.
Within the Pressure Cylinders segment, net sales decreased 19%, or
$15.6 million, to $66.5 million from $82.1 million in the comparable
quarter of fiscal 2003. Sales of propane cylinders in North America
fell from last year's record levels due to the diminishing impact of
the April 2002 regulations that require overfill prevention devices on
certain propane cylinders. The volume decline resulted in a reduced
operating margin.
Worthington's joint ventures contributed positively to first
quarter results. Equity in net income of six unconsolidated affiliates
totaled $7.9 million, in line with the year ago quarter.
Outlook
Although the economy appears to have reached a bottom and there
are indications that the deterioration in demand and end customer
pricing have stabilized, there are no indications of meaningful
improvement. In fact, conditions in automotive and commercial
construction - two of the company's major markets - will continue to
be challenging.
"Big 3" vehicle production is projected to be down at least 8% for
the coming fiscal quarter relative to last year, but up 18% over this
quarter. Additionally, the U.S. Census Bureau's index of private
construction spending confirms that commercial construction activity
remains near five-year lows.
Other
Dividends declared
On August 21, 2003, the board of directors declared a quarterly
cash dividend of $0.16 per share payable September 29, 2003, to
shareholders of record September 15, 2003.
Corporate Profile
Worthington Industries is a leading diversified metal processing
company with annual sales of approximately $2 billion. The Columbus,
Ohio, based company is North America's premier value-added steel
processor and a leader in manufactured metal products such as
automotive aftermarket stampings, pressure cylinders, metal framing,
metal ceiling grid systems and laser welded blanks. Worthington
employs more than 7,500 people and operates 62 facilities in 10
countries.
Founded in 1955, the company operates under a long-standing
corporate philosophy rooted in the golden rule, with earning money for
its shareholders as the first corporate goal. This philosophy, an
unwavering commitment to the customer, and one of the strongest
employee/employer partnerships in American industry serve as the
company's foundation.
Conference Call
Worthington will review its first quarter results during its
quarterly conference call today, September 17, 2003, at 1:30 p.m.
Eastern Daylight Time. Details on the conference call can be found on
the company's web site at www.WorthingtonIndustries.com
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 future sales and
operating results; projected capacity levels; anticipated capital
expenditures; projected timing, results, costs, charges and
expenditures related to plant closures and consolidations; and other
non-historical information 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, product demand,
changes in product mix and market acceptance of products; changes in
pricing or availability of raw materials, particularly steel; effects
of plant closures and the consolidation of operations; capacity
restraints and efficiencies; conditions in major product markets;
delays in construction or equipment supply; financial difficulties of
customers, suppliers and others with whom we do business; the effect
of national, regional and worldwide economic conditions; risks
associated with doing business internationally, including economic,
political and social instability, and foreign currency exposure; acts
of war and terrorist activities; the ability to improve processes and
business practices to keep pace with the economic, competitive and
technological environment; the business environment and impact of
governmental regulations, both in the United States and abroad; and
other risks described from time to time in filings with the SEC.
WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)
Three Months Ended
August 31,
-----------------------
2003 2002
----------- -----------
(Unaudited) (Unaudited)
Net sales:
Processed Steel Products $287,198 $318,921
Metal Framing 141,064 120,838
Pressure Cylinders 66,535 82,136
Other 3,238 3,569
-------- --------
Total net sales 498,035 525,464
Cost of goods sold 449,052 436,040
-------- --------
Gross margin 48,983 89,424
Selling, general & administrative expense 41,620 47,103
-------- --------
Operating income:
Processed Steel Products 8,169 22,317
Metal Framing (3,654) 16,364
Pressure Cylinders 3,538 7,194
Other (690) (3,554)
-------- --------
Total operating income 7,363 42,321
Other income (expense):
Miscellaneous expense (389) (1,341)
Interest expense (5,591) (6,103)
Equity in net income of unconsolidated
affiliates 7,936 8,415
-------- --------
Earnings before taxes 9,319 43,292
Income tax expense 3,402 15,802
-------- --------
Net earnings $ 5,917 $ 27,490
======== ========
Average common shares outstanding - diluted 86,517 86,499
-------- --------
Earnings per share - diluted $ 0.07 $ 0.32
======== ========
Common shares outstanding at end of period 86,054 85,624
Cash dividends declared per common share $ 0.16 $ 0.16
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
August 31, May 31,
2003 2003
---------- ----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 598 $ 1,139
Accounts receivable, net 172,934 169,967
Inventories 256,217 268,983
Income taxes receivable - 11,304
Deferred income taxes 20,714 20,783
Other current assets 32,678 34,070
---------- ----------
Total current assets 483,141 506,246
Investments in unconsolidated affiliates 83,256 81,221
Goodwill 115,433 116,781
Other assets 30,591 30,777
Property, plant and equipment, net 728,802 743,044
---------- ----------
Total assets $1,441,223 $1,478,069
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 207,963 $ 222,987
Notes payable 68 1,145
Current maturities of long-term debt 1,113 1,194
Other current liabilities 83,996 92,845
---------- ----------
Total current liabilities 293,140 318,171
Other liabilities 91,497 90,471
Long-term debt 288,978 289,689
Deferred income taxes 140,251 143,444
Shareholders' equity 627,357 636,294
---------- ----------
Total liabilities and shareholders'
equity $1,441,223 $1,478,069
========== ==========
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months Ended
August 31,
-----------------------
2003 2002
----------- -----------
(Unaudited) (Unaudited)
Operating activities
Net earnings $ 5,917 $ 27,490
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 16,952 17,510
Other adjustments (4,485) 9,626
Changes in current assets and
liabilities (1,348) 75,785
-------- ---------
Net cash provided by operating
activities 17,036 130,411
Investing activities
Investment in property, plant and equipment,
net (5,816) (6,421)
Acquisitions, net of cash acquired - (113,740)
Investment in unconsolidated affiliate (490) -
Proceeds from sale of assets 2,880 175
-------- ---------
Net cash used by investing activities (3,426) (119,986)
Financing activities
Proceeds from (payments on) short-term
borrowings (1,077) 5,667
Principal payments on long-term debt (556) (241)
Dividends paid (13,754) (13,683)
Other 1,236 (209)
-------- ---------
Net cash used by financing activities (14,151) (8,466)
-------- ---------
Increase (decrease) in cash and cash
equivalents (541) 1,959
Cash and cash equivalents at beginning of
period 1,139 496
-------- ---------
Cash and cash equivalents at end of period $ 598 $ 2,455
======== =========
WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(In Thousands)
The information in the table is being provided to assist in the
analysis of the results of operations and is based on the best
information available to management.
Three Months Ended
August 31,
-----------------------
2003 2002
----------- -----------
(Unaudited) (Unaudited)
Processed Steel Products
Tons shipped
Direct 518 558
Toll 332 415
Net sales
Direct $271,892 $298,885
Toll $ 15,306 $ 20,036
Material cost
Direct $188,985 $194,482
Toll n/a n/a
Metal Framing
Tons shipped 198 158
Net sales $141,064 $120,838
Material cost $ 92,954 $ 60,272
Pressure Cylinders
Units shipped 3,123 4,033
Net sales $ 66,535 $ 82,136
Material cost $ 29,020 $ 37,502
n/a - not applicable
SOURCE: Worthington Industries, Inc.