Exhibit 99.1
Worthington Reports First Quarter Results
Earnings Per Share up 50%
COLUMBUS, Ohio--(BUSINESS WIRE)--Sept. 26, 2006--Worthington
Industries, Inc. (NYSE:WOR) today reported results for the three
months ended August 31, 2006.
(U.S. dollars in millions, except per share data)
1Q2007 4Q2006 1Q2006
---------- ---------- ----------
Net sales $778.7 $822.0 $694.1
Operating income 54.7 54.8 27.5
Equity income 18.3 20.8 13.2
Net earnings 43.2 59.4 28.4
Earnings per share $0.48 $0.67 $0.32
Net sales of $778.7 million were a first quarter record,
increasing 12% from first quarter 2006 net sales of $694.1 million.
First quarter 2007 net earnings of $43.2 million, or $0.48 per diluted
share, were up 52% from first quarter 2006 net earnings of $28.4
million, or $0.32 per diluted share.
"This first quarter reflects good results -- in some cases, great
results -- at all three business segments and our joint ventures. As
key segments of the economy began to slow during the quarter, our
management team performed well in balancing volumes and margins," said
John P. McConnell, Chairman and CEO.
First Quarter Highlights
-- Quarterly net sales of $778.7 million were the best first
quarter sales in the company's history.
-- Operating income doubled compared to the year ago first
quarter.
-- Quarterly net sales and operating income in the Pressure
Cylinders segment represented a first quarter record of $121.5
million and $16.7 million, respectively.
-- Quarterly equity income, from six unconsolidated joint
ventures, totaled $18.3 million due to record performance at
Worthington Armstrong Venture (WAVE) and record first quarter
performance at TWB and Aegis.
-- Volumes were up in Steel Processing compared to the year ago
first quarter.
-- Unit selling prices were up in all three business segments --
Steel Processing, Metal Framing and Pressure Cylinders --
compared to the year ago first quarter, and in Steel
Processing and Metal Framing compared to last quarter.
-- Spreads between selling prices and material costs widened in
all three business segments compared to the year ago first
quarter, and in Steel Processing and Metal Framing compared to
last quarter.
-- The August 16, 2006, acquisition of Precision Specialty Metals
(PSM), a processor of stainless steel located in Los Angeles,
California, contributed $2.5 million in sales to the Steel
Processing segment for the time it was owned during the
quarter.
-- The ratio of total debt to capitalization was 27.9% at quarter
end compared to 31.6% a year ago.
-- Annualized return on equity was 18.0% in the first quarter of
fiscal 2007 compared to 13.7% in the first quarter of fiscal
2006.
Quarterly Segment Results
In the Steel Processing segment, quarterly net sales rose 14%, or
$49.4 million, to $401.0 million from $351.6 million in the comparable
quarter of fiscal 2006. The increase in net sales was due to higher
pricing (up 6%) and higher volumes (up 7%) relative to the prior year.
Operating income more than doubled due to the combination of higher
volumes and a wider spread between selling prices and material costs
compared to depressed spreads in the first quarter of fiscal 2006.
In the Metal Framing segment, net sales increased 3% or $7.0
million, to $212.3 million from $205.3 million in the comparable
quarter of fiscal 2006. Average selling prices improved 15%, more than
offsetting an overall volume decline of 10%, as measured in tons. A
portion of the tonnage decline was attributable to increased sales of
the new Ultrasteel product which is lighter than traditional framing
products per linear foot. Operating income for the quarter rose 71%
compared to the prior year as a result of a better spread between
selling prices and material costs.
In the Pressure Cylinders segment, net sales increased 13%, or
$14.4 million, to $121.5 million from $107.1 million in the comparable
quarter of fiscal 2006. Average selling prices improved significantly
due to product mix and price increases in certain product lines, to
cover increased material costs. Strong results in Europe, improved
volumes in several North American product lines, and plant
consolidation savings led to a doubling in operating income from the
prior year.
Worthington's joint ventures added significantly to first quarter
results. Equity in the net income of six unconsolidated affiliates
totaled $18.3 million for the quarter, compared to $13.2 million in
the year ago quarter, a 38% increase. The improvement was due to
record first quarter earnings at WAVE, TWB and Aegis.
Outlook
Demand in two of Worthington's key end markets, commercial
construction (especially office buildings) and automotive, may
continue to soften. Recent announcements of production cuts by General
Motors, Ford and Chrysler will create a more challenging environment
for the Steel Processing segment. Uncertainty regarding the economy
and interest rates, coupled with relatively high material prices, has
contributed to delays in planned commercial construction starts by
customers of the Metal Framing segment. Other end markets served by
the Pressure Cylinders segment and certain of the company's joint
ventures continue to be strong and stable.
Other
Dividend Declared
On August 23, 2006, the board of directors declared a quarterly
cash dividend of $0.17 per share payable September 29, 2006, to
shareholders of record on September 15, 2006.
Conference Call
Worthington will review first quarter results during its quarterly
conference call tomorrow, September 27, 2006, at 8:30 a.m. Eastern
Daylight Time. Details on the conference call can be found on the
company web site at www.WorthingtonIndustries.com
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 8,000 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. Worthington Industries is listed as one of
America's Most Admired Companies and one of the 100 Best Companies to
Work For in America by Fortune magazine.
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 or expected
performance, 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 acquisitions or to facility dispositions,
shutdowns and consolidations; new products and markets; expectations
for customer inventories, jobs and orders; expectations for the
economy and markets; expected benefits from new initiatives; 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, product demand and pricing; changes in product mix and
market acceptance of the company's 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 effect of
consolidation and other changes within the steel, automotive,
construction and related industries; failure to maintain appropriate
levels of inventories; the ability to realize cost savings and
operational efficiencies on a timely basis; the overall success of,
and 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
(including bankruptcy filings) 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 disruption in 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 inventories, spending
patterns, product choices, and supplier choices; risks associated with
doing business internationally, including economic, political and
social instability, and foreign currency exposure; the ability to
improve and maintain processes and business practices to keep pace
with the economic, competitive and technological environment; adverse
claims experience with respect to workers compensation, product
recalls or 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; and other risks described from time to time in the
company's filings with the United States Securities and Exchange
Commission.
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share)
Three Months Ended
August 31,
-------------------
2006 2005
--------- ---------
Net sales $778,720 $694,147
Cost of goods sold 657,369 618,795
--------- ---------
Gross margin 121,351 75,352
Selling, general and administrative expense 66,626 47,807
--------- ---------
Operating income 54,725 27,545
Other income (expense):
Miscellaneous income (expense) (365) 358
Interest expense (4,345) (6,727)
Equity in net income of unconsolidated
affiliates 18,279 13,212
--------- ---------
Earnings before income taxes 68,294 34,388
Income tax expense 25,067 5,981
--------- ---------
Net earnings $43,227 $28,407
========= =========
Average common shares outstanding - basic 88,765 87,971
--------- ---------
Earnings per share - basic $0.49 $0.32
========= =========
Average common shares outstanding - diluted 89,415 88,470
--------- ---------
Earnings per share - diluted $0.48 $0.32
========= =========
Common shares outstanding at end of period 88,817 88,045
Cash dividends declared per common share $0.17 $0.17
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
August 31, May 31,
2006 2006
----------- -----------
Assets
Current assets:
Cash and cash equivalents $17,009 $56,216
Short-term investments - 2,173
Receivables, less allowances of $4,850 and
$4,964 at August 31, 2006 and May 31, 2006 399,993 404,553
Inventories:
Raw materials 334,439 266,818
Work in process 118,744 104,244
Finished products 101,841 88,295
----------- -----------
Total inventories 555,024 459,357
Assets held for sale 23,334 23,535
Deferred income taxes 15,563 15,854
Prepaid expenses and other current assets 37,172 34,553
----------- -----------
Total current assets 1,048,095 996,241
Investments in unconsolidated affiliates 135,575 123,748
Goodwill 193,238 177,771
Other assets 48,856 55,733
Property, plant & equipment, net 555,057 546,904
----------- -----------
Total assets $1,980,821 $1,900,397
=========== ===========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $288,942 $362,883
Notes payable 130,782 7,684
Accrued compensation, contributions to
employee benefit plans and related taxes 47,316 49,784
Dividends payable 15,099 15,078
Other accrued items 36,261 36,483
Income taxes payable 26,791 18,874
----------- -----------
Total current liabilities 545,191 490,786
Other liabilities 54,152 55,249
Long-term debt 245,001 245,000
Deferred income taxes 113,565 114,610
----------- -----------
Total liabilities 957,909 905,645
Minority interest 50,088 49,446
Shareholders' equity 972,824 945,306
----------- -----------
Total liabilities and shareholders' equity $1,980,821 $1,900,397
=========== ===========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended
August 31,
-------------------
2006 2005
--------- ---------
Operating activities
Net earnings $43,227 $28,407
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization 14,931 14,360
Provision for deferred income taxes 844 (4,464)
Equity in net income of unconsolidated
affiliates, net of distributions received (10,660) (649)
Minority interest in net income of consolidated
subsidiaries 1,616 781
Net loss on sale of assets 825 840
Stock based compensation 791 -
Excess tax benefits - stock based compensation (200) -
Changes in assets and liabilities:
Accounts receivable 8,570 57,700
Inventories (87,535) 55,339
Prepaid expenses and other current assets (2,381) (1,101)
Other assets 494 (1,359)
Accounts payable and accrued expenses (72,611) (32,081)
Other liabilities (1,628) 3,755
--------- ---------
Net cash provided (used) by operating activities (103,717) 121,528
--------- ---------
Investing activities
Investment in property, plant and equipment, net (16,823) (12,876)
Acquisitions, net of cash acquired (31,150) -
Investment in unconsolidated affiliate (636) -
Proceeds from sale of assets 884 934
Purchases of short-term investments - (67,999)
Sales of short-term investments 2,173 30,000
--------- ---------
Net cash used by investing activities (45,552) (49,941)
--------- ---------
Financing activities
Proceeds from short-term borrowings 123,090 -
Principal payments on long-term debt - (513)
Proceeds from issuance of common shares 1,850 1,295
Excess tax benefits - stock based compensation 200 -
Payments to minority interest - (1,920)
Dividends paid (15,078) (14,950)
--------- ---------
Net cash provided (used) by financing activities 110,062 (16,088)
--------- ---------
Increase (decrease) in cash and cash equivalents (39,207) 55,499
Cash and cash equivalents at beginning of period 56,216 57,249
--------- ---------
Cash and cash equivalents at end of period $17,009 $112,748
========= =========
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 in the prior year, we have reclassified the
information for the quarter ended August 31, 2005 to conform with
the current reporting of our segment information.
Three Months Ended August 31,
------------------------------
2006 2005
--------------- --------------
Volume:
Steel Processing (tons) 896 836
Metal Framing (tons) 166 184
Pressure Cylinders (units) 11,942 13,545
Net sales:
Steel Processing $400,988 $351,627
Metal Framing 212,340 205,322
Pressure Cylinders 121,511 107,053
Other 43,881 30,145
--------------- --------------
Total net sales $778,720 $694,147
=============== ==============
Material cost:
Steel Processing $297,875 $278,597
Metal Framing 130,186 136,809
Pressure Cylinders 57,166 55,049
Operating income (loss):
Steel Processing $20,797 $8,366
Metal Framing 17,781 10,396
Pressure Cylinders 16,670 7,954
Other (523) 829
--------------- --------------
Total operating income $54,725 $27,545
=============== ==============
CONTACT: Worthington Industries, Inc.
Cathy M. Lyttle, 614-438-3077
cmlyttle@WorthingtonIndustries.com
or
Allison M. Sanders, 614-840-3133
asanders@WorthingtonIndustries.com