N E W S R E L E A S E
For Immediate Release
Worthington Reports Record Second Quarter Results
Earnings Per Diluted Share: $0.54 vs. $0.20
COLUMBUS, Ohio, December 16, 2004- Worthington Industries, Inc. (NYSE: WOR) today reported record results for the three and six-month periods ended November 30, 2004.
Highlights
Net sales for the second quarter of fiscal 2005 were $745.2 million, an increase of 38% from last year’s $540.1 million. Second quarter net earnings were $47.6 million and earnings per diluted share were $0.54, compared to $16.9 million, or $0.20 per diluted share, for the same period last year.
For the six-month period, net sales rose 46% to $1,514.5 million from $1,038.1 million last year. Net earnings were $105.5 million and earnings per diluted share were $1.19, compared to $22.8 million and $0.26, respectively, for the same period last year.
“I am pleased to report our third consecutive quarter of record quarterly earnings,” said John McConnell, Chairman and CEO of Worthington Industries. “These excellent results for the second quarter do not include any inventory holding benefit and were obtained when two of our key market segments, automotive and commercial construction, were not at their peak. Our core businesses and joint ventures are running very well. We have also announced several new growth opportunities during the quarter:
| • | We acquired the propane and specialty cylinder assets of Western Industries on September 17, 2004, adding to our product line in the Pressure Cylinders segment. | |||
| • | We formed a joint venture, Dietrich Residential Construction, in our Metal Framing segment with Pacific Steel Construction to construct military housing framed with light gauge steel. | |||
| • | We formed a joint venture, Dietrich Metal Framing Canada, with Encore Coils to enter the Canadian metal framing market. | |||
“We are committed to the prudent use of capital as we grow the company,” concluded McConnell.
-more-
Worthington Industries
December 16, 2004
2-2-2
Detailed Results
In the Processed Steel Products segment, quarterly net sales rose 42%, or $133.4 million, to $454.8 million from $321.4 million in the comparable quarter of fiscal 2004. The increase in net sales was the result of higher selling prices (up 50%). Volumes were down 6% due entirely to the sale of the Decatur cold rolling assets in August 2004. Excluding the impact of the Decatur sale, volumes were up 2%. Operating income improved because of a widening in the spread between selling prices and material costs.
In the Metal Framing segment, net sales increased 35%, or $49.4 million, to $191.8 million from $142.4 million in the comparable quarter of fiscal 2004. The increase was the result of higher pricing. Volumes were down 24% as customers faced higher inventories and delayed construction projects due to increased costs. A wider spread between selling prices and material costs was responsible for a significant improvement in operating income.
In the Pressure Cylinders segment, net sales increased 30%, or $22.1 million, to $94.5 million from $72.4 million in the comparable quarter of fiscal 2004. The propane and specialty cylinder assets of Western Industries, acquired on September 17th, contributed $12.3 million to the sales increase. Excluding sales from the acquired assets, unit volumes were up 9% due to strong sales in most product lines. European revenues rose $4.8 million, of which $2.5 million was due to the weakened dollar. Operating income for the segment increased $2.0 million.
Worthington’s unconsolidated joint ventures continued to perform well. Equity in net income of the seven unconsolidated affiliates totaled $11.7 million, up 40% from $8.4 million in the year ago quarter. The improvement was due to strong results from most of the unconsolidated joint ventures.
Other
Dividend declared
On November 18, 2004, the board of directors declared a quarterly cash dividend of $0.16 per share payable December 29, 2004, to shareholders of record December 15, 2004. This will be the 148th consecutive quarter that Worthington has paid a dividend since it became a public company in 1968.
Corporate Profile
Worthington Industries is a leading diversified metal processing company with annual sales of more than $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 metal framing, pressure cylinders, automotive past model service stampings, metal ceiling grid systems and laser welded blanks. Worthington employs more than 8,000 people and operates 63 facilities in 10 countries.
-more-
Worthington Industries
December 16, 2004
3-3-3
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 second quarter results during its quarterly conference call today, December 16, 2004, at 1:30 p.m. Eastern Standard 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, operating results and earnings per share; projected capacity and working capital needs; pricing trends for raw materials and finished goods; anticipated capital expenditures and asset sales; projected timing, results, costs, charges and expenditures related to facility dispositions, shutdowns and consolidations; new products and markets; expectations for the economy and markets; 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, product demand and pricing, changes in product mix and market acceptance of products; fluctuations in pricing, quality or availability of raw materials (particularly steel),supplies, utilities and other items required by operations; effects of facility closures and the consolidation of operations; the ability to realize cost savings and operational efficiencies on a timely basis; the ability to integrate newly acquired businesses and achieve synergies therefrom; capacity levels and efficiencies within facilities and within the industry as a whole; financial difficulties of customers, suppliers, joint venture partners and others with whom the company does business; the effect of national, regional and worldwide economic conditions generally and within major product markets, including a prolonged or substantial economic downturn; the effect of adverse weather on customers, markets, facilities and shipping operations; changes in customer spending patterns and supplier choices and 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; 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 governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the United States Securities and Exchange Commission.
###
Worthington Industries
December 16, 2004
4-4-4
WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)
| Three Months Ended | Six Months Ended | |||||||||||||||
| November 30, | November 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Net sales | $ | 745,168 | $ | 540,078 | $ | 1,514,508 | $ | 1,038,113 | ||||||||
| Cost of goods sold | 620,650 | 472,836 | 1,230,346 | 921,888 | ||||||||||||
| Gross margin | 124,518 | 67,242 | 284,162 | 116,225 | ||||||||||||
| Selling, general & administrative expense | 56,130 | 45,243 | 120,961 | 86,863 | ||||||||||||
| Impairment charges and other | — | — | 5,608 | — | ||||||||||||
| Operating income | 68,388 | 21,999 | 157,593 | 29,362 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Miscellaneous expense | (2,873 | ) | (114 | ) | (6,332 | ) | (503 | ) | ||||||||
| Interest expense | (5,652 | ) | (5,565 | ) | (11,374 | ) | (11,156 | ) | ||||||||
| Equity in net income of unconsolidated affiliates | 11,740 | 8,391 | 25,036 | 16,327 | ||||||||||||
| Earnings before income taxes | 71,603 | 24,711 | 164,923 | 34,030 | ||||||||||||
| Income tax expense | 23,980 | 7,828 | 59,441 | 11,230 | ||||||||||||
| Net earnings | $ | 47,623 | $ | 16,883 | $ | 105,482 | $ | 22,800 | ||||||||
| Average common shares outstanding — diluted | 88,665 | 86,503 | 88,389 | 86,510 | ||||||||||||
| Earnings per share — diluted | $ | 0.54 | $ | 0.20 | $ | 1.19 | $ | 0.26 | ||||||||
| Common shares outstanding at end of period | 87,811 | 86,134 | 87,811 | 86,134 | ||||||||||||
| Cash dividends declared per common share | $ | 0.16 | $ | 0.16 | $ | 0.32 | $ | 0.32 | ||||||||
Worthington Industries
December 16, 2004
5-5-5
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
| November 30, | May 31, | |||||||
| 2004 | 2004 | |||||||
| (Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 11,143 | $ | 1,977 | ||||
| Receivables, net | 300,051 | 348,833 | ||||||
| Inventories | 465,459 | 362,906 | ||||||
| Deferred income taxes | 3,589 | 3,963 | ||||||
| Other current assets | 34,410 | 115,431 | ||||||
| Total current assets | 814,652 | 833,110 | ||||||
| Investments in unconsolidated affiliates | 136,855 | 109,040 | ||||||
| Goodwill | 168,441 | 117,769 | ||||||
| Other assets | 31,459 | 27,826 | ||||||
| Property, plant and equipment, net | 561,116 | 555,394 | ||||||
| Total assets | $ | 1,712,523 | $ | 1,643,139 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 305,895 | $ | 313,909 | ||||
| Current maturities of long-term debt | 1,104 | 1,346 | ||||||
| Other current liabilities | 151,094 | 159,805 | ||||||
| Total current liabilities | 458,093 | 475,060 | ||||||
| Other liabilities | 99,745 | 95,067 | ||||||
| Long-term debt | 287,961 | 288,422 | ||||||
| Deferred income taxes | 89,526 | 104,216 | ||||||
| Shareholders’ equity | 777,198 | 680,374 | ||||||
| Total liabilities and shareholders’ equity | $ | 1,712,523 | $ | 1,643,139 | ||||
Worthington Industries
December 16, 2004
6-6-6
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
| Six Months Ended | ||||||||
| November 30, | ||||||||
| 2004 | 2003 | |||||||
| (Unaudited) | (Unaudited) | |||||||
Operating activities | ||||||||
| Net earnings | $ | 105,482 | $ | 22,800 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 28,507 | 33,706 | ||||||
| Impairment charges and other | 5,608 | — | ||||||
| Other adjustments | (37,001 | ) | (3,775 | ) | ||||
| Changes in current assets and liabilities | (71,952 | ) | (8,823 | ) | ||||
| Net cash provided by operating activities | 30,644 | 43,908 | ||||||
Investing activities | ||||||||
| Investment in property, plant and equipment, net | (19,331 | ) | (14,268 | ) | ||||
| Acquisitions, net of cash acquired | (64,889 | ) | — | |||||
| Investment in unconsolidated affiliate | (1,500 | ) | (490 | ) | ||||
| Proceeds from sale of assets | 83,804 | 2,937 | ||||||
| Net cash used by investing activities | (1,916 | ) | (11,821 | ) | ||||
Financing activities | ||||||||
| Proceeds from short-term borrowings | — | (896 | ) | |||||
| Principal payments on long-term debt | (2,018 | ) | (608 | ) | ||||
| Dividends paid | (27,901 | ) | (27,525 | ) | ||||
| Other | 10,357 | (2,189 | ) | |||||
| Net cash used by financing activities | (19,562 | ) | (31,218 | ) | ||||
| Increase in cash and cash equivalents | 9,166 | 869 | ||||||
| Cash and cash equivalents at beginning of period | 1,977 | 1,139 | ||||||
| Cash and cash equivalents at end of period | $ | 11,143 | $ | 2,008 | ||||
Worthington Industries
December 16, 2004
7-7-7
WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(In Thousands)
This supplemental information is provided to assist in the analysis of the results of operations.
| Three Months Ended | Six Months Ended | |||||||||||||||
| November 30, | November 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Processed Steel Products | ||||||||||||||||
| Volume (tons) | 911 | 966 | 1,875 | 1,816 | ||||||||||||
| Net sales | $ | 454,831 | $ | 321,378 | $ | 908,658 | $ | 608,576 | ||||||||
| Material cost | $ | 327,900 | $ | 212,841 | $ | 637,650 | $ | 401,826 | ||||||||
| Operating income | $ | 34,610 | $ | 13,762 | $ | 70,404 | $ | 21,931 | ||||||||
| Metal Framing | ||||||||||||||||
| Volume (tons) | 145 | 192 | 324 | 390 | ||||||||||||
| Net sales | $ | 191,772 | $ | 142,417 | $ | 430,163 | $ | 283,481 | ||||||||
| Material cost | $ | 110,381 | $ | 86,225 | $ | 228,485 | $ | 179,179 | ||||||||
| Operating income | $ | 25,208 | $ | 871 | $ | 76,720 | $ | (2,783 | ) | |||||||
| Pressure Cylinders | ||||||||||||||||
| Volume (units) | ||||||||||||||||
| Without acquisition | 2,970 | 2,718 | 6,161 | 5,841 | ||||||||||||
| Acquisition * | 6,017 | — | 6,017 | — | ||||||||||||
| 8,987 | 2,718 | 12,178 | 5,841 | |||||||||||||
| Net sales | ||||||||||||||||
| Without acquisition | $ | 82,210 | $ | 72,434 | $ | 155,436 | $ | 138,969 | ||||||||
| Acquisition * | 12,272 | — | 12,272 | — | ||||||||||||
| $ | 94,482 | $ | 72,434 | $ | 167,708 | $ | 138,969 | |||||||||
| Material cost | $ | 44,307 | $ | 30,094 | $ | 77,282 | $ | 59,114 | ||||||||
| Operating income | $ | 8,827 | $ | 6,855 | $ | 12,017 | $ | 10,393 | ||||||||
| * | Acquisition of propane and specialty cylinder assets from Western Industries effective September 17, 2004 |
The following provides detail of impairment charges and other included in the operating income by segment presented above.
| Three Months Ended | Six Months Ended | |||||||||||||||
| November 30, | November 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Pre-tax impairment charges and other by segment Processed Steel Products | $ | — | $ | — | $ | 5,608 | $ | — | ||||||||
| Metal Framing | — | — | — | — | ||||||||||||
| Pressure Cylinders | — | — | — | — | ||||||||||||
| Total impairment charges and other | $ | — | $ | — | $ | 5,608 | $ | — | ||||||||