Exhibit 99.1
Worthington Reports Second Quarter Results; EPS of $0.44 vs. Record $0.54 is
Second Best Q2
COLUMBUS, Ohio--(BUSINESS WIRE)--Dec. 21, 2005--Worthington
Industries, Inc. (NYSE:WOR) today reported results for the three and
six-month periods ended November 30, 2005.
Highlights
Net sales for the second quarter of fiscal 2006 were $699.5
million, a decrease of 6% from last year's record $745.2 million.
Second quarter net earnings were $39.0 million and earnings per
diluted share were $0.44, compared to the record $47.6 million, or
$0.54 per diluted share, of the same period last year.
Earnings for the quarter include the benefit of a $5.3 million
reduction in insurance reserves. This reserve reduction resulted in an
after tax benefit of $0.04 per share. Worthington maintains reserves
to self-insure for estimated workers compensation, general liability,
property damage and other claims. A majority of the benefit is
attributable to improved loss history for workers compensation claims
which have declined by one-half as a result of facility consolidations
and management focus on and investment in safety initiatives. Emphasis
on property loss prevention and product quality also contributed to
the favorable loss history for property and product liability claims.
For the six-month period, net sales of $1,393.7 million were 8%
below the record $1,514.5 million last year. Net earnings were $67.4
million and earnings per diluted share were $0.76, compared to $105.5
million and $1.19, respectively, for the same period last year.
CEO Comments
"I am very pleased with our performance this quarter," John P.
McConnell, Chairman and CEO, said. "We continued to keep a tight
control on our inventories and a sharp focus on cost. All of our
businesses performed very well." McConnell added, "Our core businesses
are operating better and our development efforts are gaining momentum.
We have focused on creating opportunities to produce sustainable
growth and our efforts are paying off."
Detailed Results
In the Steel Processing segment, quarterly net sales of $364.5
million were 16%, or $71.7 million, lower than $436.2 million in the
comparable quarter of fiscal 2005. The decrease in net sales was
entirely the result of lower selling prices (down 18%) as volumes were
up 2%. Operating income declined from the year ago period when unique
market conditions contributed to record spreads between selling prices
and material costs.
In the Metal Framing segment, net sales increased 1%, or $1.5
million, to $192.2 million from $190.7 million in the comparable
quarter of fiscal 2005. Higher volumes (up 18%) offset the effect of
lower pricing (down 15%) as market pricing decreased from the elevated
levels of last year. A narrower spread between selling prices and
material costs was responsible for the decline in operating income
from last year when unique market conditions contributed to record
spreads and one of the most profitable quarters ever for Dietrich
Metal Framing.
In the Pressure Cylinders segment, net sales increased 13%, or
$12.0 million, to $106.5 million from $94.5 million in the comparable
quarter of fiscal 2005. Unit volumes were up 34%, led by strong sales
in Europe and increased sales of 14.1 oz. and 16.4 oz. disposable
cylinders. European revenues rose $4.8 million which, when combined
with cost improvements, was primarily responsible for a $2.4 million
increase in segment operating income.
Worthington's unconsolidated joint ventures continued to perform
well. Equity in net income of the seven unconsolidated affiliates
totaled $14.2 million, up 21% from $11.7 million in the year ago
quarter. The improvement was due to near record results from
Worthington Armstrong Venture (WAVE).
Other
Organizational changes
During the quarter, there were several changes to Worthington's
organizational and reporting structure.
-- Dietrich Metal Framing acquired the remaining 40% interest in
Dietrich Metal Framing Canada from its partner, Encore Coils.
The former joint venture had been consolidated into the Metal
Framing segment and will remain in that segment as a wholly
owned business serving the Canadian construction market with
Dietrich materials. (See press release of November 30, 2005,
for more details.)
-- The company acquired the remaining 50% interest in Dietrich
Residential Construction (DRC) from its partner, Pacific Steel
Construction. DRC's core market is steel framing for military
residential construction. This former unconsolidated joint
venture is now wholly owned and will be part of the newly
formed Dietrich Construction Group. (See press release of
November 10, 2005, for more details.)
-- Dietrich Construction Group was organized to include Dietrich
Building Systems (DBS), the mid-rise commercial construction
business; Dietrich Residential Construction; and an R&D
project in China. The financial results of DBS and the China
project were formerly included in the Metal Framing segment.
DRC's results were formerly included in equity income of
unconsolidated affiliates. Dietrich Construction Group will be
included in "Other". (See press release of November 10, 2005,
for more details.)
-- Gerstenslager, a stamper of automotive parts focusing on past
model service, has been removed from what was the Processed
Steel Products segment and will report results in "Other". The
former Processed Steel Products segment will be renamed Steel
Processing as the activities in that segment will be
concentrated on the processing of flat rolled steel.
All historical results have been restated to reflect these
changes, none of which were material to any business segment.
Dividend declared
On November 17, 2005, the board of directors declared a quarterly
cash dividend of $0.17 per share payable December 29, 2005, to
shareholders of record December 15, 2005. This will be the 152nd
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 approximately $3 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 7,500 people and operates 65 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 second quarter results during its
quarterly conference call today, December 21, 2005, 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, INC.
EARNINGS HIGHLIGHTS
(Unaudited)
(In Thousands, Except Per Share)
Three Months Ended Six Months Ended
November 30, November 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $699,516 $745,168 $1,393,663 $1,514,508
Cost of goods sold 596,108 620,650 1,214,903 1,230,346
----------- ----------- ----------- -----------
Gross margin 103,408 124,518 178,760 284,162
Selling, general &
administrative
expense 53,747 56,130 101,554 120,961
Impairment charges and
other - - - 5,608
----------- ----------- ----------- -----------
Operating income 49,661 68,388 77,206 157,593
Other income
(expense):
Miscellaneous income
(expense) (163) (2,873) 195 (6,332)
Interest expense (6,555) (5,652) (13,282) (11,374)
Equity in net income
of unconsolidated
affiliates 14,175 11,740 27,387 25,036
----------- ----------- ----------- -----------
Earnings before
income taxes 57,118 71,603 91,506 164,923
Income tax expense 18,090 23,980 24,071 59,441
----------- ----------- ----------- -----------
Net earnings $39,028 $47,623 $67,435 $105,482
=========== =========== =========== ===========
Average common shares
outstanding - diluted 88,986 88,665 88,729 88,389
----------- ----------- ----------- -----------
Earnings per share
- diluted $0.44 $0.54 $0.76 $1.19
=========== =========== =========== ===========
Common shares
outstanding at end of
period 88,285 87,811 88,285 87,811
Cash dividends
declared per common
share $0.17 $0.16 $0.34 $0.32
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands)
November 30, May 31,
2005 2005
-------------- --------------
ASSETS
Current assets
Cash and cash equivalents $108,722 $57,249
Short-term investments 95,254 -
Receivables, net 348,820 404,506
Inventories 389,504 425,723
Deferred income taxes 19,190 19,490
Other current assets 37,618 31,365
-------------- --------------
Total current assets 999,108 938,333
Investments in unconsolidated affiliates 145,140 136,856
Goodwill 175,690 168,267
Other assets 41,190 33,593
Property, plant and equipment, net 544,820 552,956
-------------- --------------
Total assets $1,905,948 $1,830,005
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $314,696 $280,181
Current maturities of long-term debt 142,899 143,432
Other current liabilities 123,141 121,830
-------------- --------------
Total current liabilities 580,736 545,443
Other liabilities 93,687 99,264
Long-term debt 245,000 245,000
Deferred income taxes 118,211 119,462
Shareholders' equity 868,314 820,836
-------------- --------------
Total liabilities and shareholders'
equity $1,905,948 $1,830,005
============== ==============
WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, In Thousands)
Three Months Ended Six Months Ended
November 30, November 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Operating activities
Net earnings $39,028 $47,623 $67,435 $105,482
Adjustments to
reconcile net
earnings to net
cash provided by
operating
activities:
Depreciation and
amortization 15,749 14,448 30,109 28,507
Impairment charges
and other - - - 5,608
Other adjustments (5,659) (12,891) (9,151) (35,090)
Changes in assets
and liabilities:
Accounts
receivable 2,214 61,737 59,914 53,821
Inventories (19,120) (16,963) 36,219 (99,127)
Accounts payable 54,854 2,040 33,078 (12,726)
Other changes (2,719) (16,269) (11,729) (15,831)
----------- ----------- ----------- -----------
Net cash provided
by operating
activities 84,347 79,725 205,875 30,644
Investing activities
Investment in
property, plant and
equipment, net (12,137) (7,847) (25,013) (19,331)
Acquisitions, net of
cash acquired (6,770) (64,889) (6,770) (64,889)
Investment in
unconsolidated
affiliate - (1,500) - (1,500)
Proceeds from sale
of assets 1,848 1,844 2,782 83,804
Purchases of short-
term investments (175,255) - (243,254) -
Sales of short-term
investments 117,999 - 147,999 -
----------- ----------- ----------- -----------
Net cash used by
investing
activities (74,315) (72,392) (124,256) (1,916)
Financing activities
Principal payments
on long-term debt 23 (167) (490) (2,018)
Dividends paid (14,970) (13,986) (29,920) (27,901)
Other 888 7,031 263 10,357
----------- ----------- ----------- -----------
Net cash used by
financing
activities (14,059) (7,122) (30,147) (19,562)
----------- ----------- ----------- -----------
Increase in cash and
cash equivalents (4,027) 211 51,472 9,166
Cash and cash
equivalents at
beginning of period 112,748 10,932 57,249 1,977
----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period $108,721 $11,143 $108,721 $11,143
=========== =========== =========== ===========
WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(Unaudited, In Thousands)
This supplemental information is provided to assist in the analysis of
the results of operations. As required by the changes in our
reporting segments, we have restated the year-to-date information for
fiscal 2006 and all the information for fiscal 2005 to conform with
the current reporting of our segment information. For comparative
purposes, we have also presented the previously reported information
for fiscal 2005 under the heading "As Reported".
Three Months Ended
November 30,
-----------------------------------
2004
-----------------------
2005 Restated As Reported
----------- ----------- -----------
Volume:
Steel Processing (tons) 919 905 911
Metal Framing (tons) 171 145 145
Pressure Cylinders (units) (1) 12,005 8,987 8,987
Net sales:
Steel Processing $364,458 $436,158 $454,831
Metal Framing 192,197 190,685 191,772
Pressure Cylinders 106,463 94,482 94,482
Other 36,398 23,843 4,083
----------- ----------- -----------
Total Net Sales $699,516 $745,168 $745,168
=========== =========== ===========
Material cost:
Steel Processing $264,234 $320,471 $327,900
Metal Framing 119,988 110,158 110,381
Pressure Cylinders 50,270 44,307 44,307
Operating income:
Steel Processing (2) $24,661 $34,571 $34,610
Metal Framing 13,857 26,100 25,208
Pressure Cylinders 11,214 8,827 8,827
Other (71) (1,110) (257)
----------- ----------- -----------
Total Operating Income $49,661 $68,388 $68,388
=========== =========== ===========
Six Months Ended
November 30,
-----------------------------------
2004
-----------------------
2005 Restated As Reported
----------- ----------- -----------
Volume:
Steel Processing (tons) 1,756 1,863 1,875
Metal Framing (tons) 355 324 324
Pressure Cylinders (units) (1) 25,550 12,178 12,178
Net sales:
Steel Processing $716,085 $866,290 $908,658
Metal Framing 397,519 428,073 430,163
Pressure Cylinders 213,516 167,708 167,708
Other 66,543 52,437 7,979
----------- ----------- -----------
Total Net Sales $1,393,663 $1,514,508 $1,514,508
=========== =========== ===========
Material cost:
Steel Processing $541,396 $619,570 $637,650
Metal Framing 256,797 227,909 228,485
Pressure Cylinders 105,319 77,282 77,282
Operating income:
Steel Processing (2) $33,027 $70,554 $70,404
Metal Framing 24,252 80,208 76,720
Pressure Cylinders 19,168 12,017 12,017
Other 759 (5,186) (1,548)
----------- ----------- -----------
Total Operating Income $77,206 $157,593 $157,593
=========== =========== ===========
(1) The propane and specialty cylinder assets acquired from Western
Industries effective September 17, 2004, contributed 8,935 and 6,017
units for the three months ended November 30, 2005 and 2004,
respectively. On a year-to-date basis, as of November 30, 2005 and
2004, these assets contributed 18,986 and 6,017 units, respectively.
(2) The $5,608 "impairment charge and other" recorded in the first
quarter of fiscal 2004 relates to the sale of the Decatur facility
and is included in Steel Processing's segment operating income above.
CONTACT: Worthington Industries, Inc.
Corporate Communications:
Cathy Mayne Lyttle, 614-438-3077
cmlyttle@WorthingtonIndustries.com
or
Investor Relations:
Allison McFerren Sanders, 614-840-3133
asanders@WorthingtonIndustries.com