Exhibit 99.1
Worthington Reports Second Quarter Results
COLUMBUS, Ohio--(BUSINESS WIRE)--Dec. 21, 2006--Worthington
Industries, Inc. (NYSE:WOR) today reported results for the three- and
six-month periods ended November 30, 2006.
(U.S. dollars in millions, except per share data)
2Q2007 1Q2007 2Q2006 6M2007 6M2006
------- ------- ------- --------- ---------
Net sales $729.3 $778.7 $699.5 $1,508.0 $1,393.7
Operating income 30.6 54.7 49.7 85.3 77.2
Equity income 14.8 18.3 14.2 33.1 27.4
Net earnings 26.9 43.2 39.0 70.2 67.4
Earnings per share $ 0.31 $0.48 $0.44 $0.79 $0.76
EBITDA(a) $60.4 $87.6 $79.4 $147.9 $134.9
(a)Earnings before interest, taxes, depreciation and amortization.
See reconciliation on consolidated statement of earnings.
For the second quarter of fiscal 2007, net sales were $729.3
million, an increase of 4% from $699.5 million last year. Second
quarter net earnings were $26.9 million and earnings per diluted share
were $0.31, compared to $39.0 million, or $0.44 per diluted share, for
the same period last year. Net earnings in the prior year period
(2Q2006) included a $0.04 per share after-tax benefit due to a $5.3
million reduction in insurance reserves.
For the six-month period, net sales of $1,508.0 million were 8%
higher than $1,393.7 million for the same period last year. Net
earnings were $70.2 million, or $0.79 per diluted share, up 4% from
$67.4 million, or $0.76 per diluted share, for the same period last
year.
"While we again had strong performances from our Pressure
Cylinders segment and WAVE joint venture, our Steel Processing and
Metal Framing segments had lower volumes as a result of weaker
demand," Chairman and CEO John McConnell stated.
"Volumes in these two segments are expected to reach their lowest
levels in December and result in our third quarter being the weakest
of the year. The degree of weakness will depend on steel pricing and
how quickly our end markets improve." McConnell added, "With excellent
people and improving opportunities, we will make the most of a
difficult third quarter and end the year with a much stronger fourth
quarter."
Second Quarter Highlights
-- Quarterly net sales and operating income in the Pressure
Cylinders segment were a second quarter record $120.3 million
and $20.2 million, respectively.
-- Equity income from six unconsolidated joint ventures, totaled
$14.8 million due to record second quarter performance at
Worthington Armstrong Venture (WAVE).
-- During the second quarter, 3.6 million common shares were
repurchased, reducing total outstanding shares to 85.2 million
at quarter end.
-- During the second quarter, $15.1 million was paid to
shareholders in a regular quarterly dividend. At quarter end,
the dividend yielded a 3.7% annualized return.
Quarterly Segment Results
In the Steel Processing segment, quarterly net sales rose 3%, or
$10.4 million, to $374.9 million from $364.5 million in the comparable
quarter of fiscal 2006. The acquisition of Precision Specialty Metals
(PSM) in August 2006 contributed $13.6 million to the net sales
increase. Pricing improved relative to the prior year (up 19%) as a
result of the acquisition and generally higher steel prices but was
offset by a 14% decline in volume. Operating income fell primarily due
to the lower volumes.
In the Metal Framing segment, net sales decreased 1% or $2.7
million, to $189.5 million from $192.2 million in the comparable
quarter of fiscal 2006. Pricing improved 7% but was offset by lower
volumes (down 8%) compared to the year ago quarter. The increase in
selling prices was not enough to offset sharply higher raw material
costs. The combined impact of a narrower spread between selling prices
and material costs and reduced volumes led to an operating loss.
In the Pressure Cylinders segment, net sales increased 13%, or
$13.8 million, to $120.3 million from $106.5 million in the comparable
quarter of fiscal 2006. Average selling prices improved significantly
due to product mix and price increases in certain product lines. The
product mix improvement, strong results in Europe and plant
consolidation savings led to an 80% improvement in operating income
from the prior year.
Worthington's joint ventures added significantly to second quarter
results. Equity in the net income of six unconsolidated affiliates
totaled $14.8 million for the quarter, compared to $14.2 million in
the year ago quarter. Compared to the year ago quarter, WAVE equity
income was up 16%. WAVE's improvement was offset by weaker results in
the other joint ventures and by changes in the mix of joint ventures.
(Dietrich Residential Construction became a consolidated entity in
October 2005, Acerex was sold in April 2006 and the Dietrich/NOVA
joint venture was formed in July 2006.)
Outlook
While the outlook for the Pressure Cylinders segment and the WAVE
joint venture continues to be positive, the Steel Processing and Metal
Framing segments will likely generate losses early in the third
quarter due to a combination of higher priced inventory and lower
volumes. Both margins and volume should begin to improve somewhat in
January, with the volume recovery in Steel Processing being more
predictable, but consolidated results for the third quarter may be
very weak. The depth of the weakness in the third quarter will largely
depend on pricing and the pace at which demand recovers in Metal
Framing. It is expected that both Metal Framing and Steel Processing
will deplete their higher priced inventories during the third quarter
and will be well positioned for a recovery as the seasonally strong
fourth quarter begins in March.
Other
Share Repurchases
During the second quarter, 3.6 million shares were repurchased
under a 10 million share authorization originally announced June 13,
2005, leaving approximately 6.4 million shares. Purchases may occur
from time to time, on the open market or in private transactions, with
consideration given to the market price of the stock, the nature of
other investment opportunities, cash flows from operations and general
economic conditions.
Dividend Declared
On November 15, 2006, the board of directors declared a quarterly
cash dividend of $0.17 per share payable December 29, 2006, to
shareholders of record on December 15, 2006.
Conference Call
Worthington will review second quarter results during its
quarterly conference call today, December 21, 2006, at 1:30 p.m.
Eastern 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 63 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 company and 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, product substitution 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 Six Months Ended
November 30, November 30,
------------------- -----------------------
2006 2005 2006 2005
--------- --------- ----------- -----------
Net sales $729,262 $699,516 $1,507,982 $1,393,663
Cost of goods sold 645,164 596,108 1,302,533 1,214,903
--------- --------- ----------- -----------
Gross margin 84,098 103,408 205,449 178,760
Selling, general and
administrative expense 53,531 53,747 120,157 101,554
--------- --------- ----------- -----------
Operating income 30,567 49,661 85,292 77,206
Other income (expense):
Miscellaneous income
(expense) (704) (163) (1,069) 195
Interest expense (6,022) (6,555) (10,367) (13,282)
Equity in net income of
unconsolidated
affiliates 14,802 14,175 33,081 27,387
--------- --------- ----------- -----------
Earnings before income
taxes 38,643 57,118 106,937 91,506
Income tax expense 11,698 18,090 36,765 24,071
--------- --------- ----------- -----------
Net earnings $26,945 $39,028 $70,172 $67,435
========= ========= =========== ===========
Average common shares
outstanding - basic 87,234 88,194 88,004 88,082
--------- --------- ----------- -----------
Earnings per share - basic $0.31 $0.44 $0.80 $0.77
========= ========= =========== ===========
Average common shares
outstanding - diluted 87,611 88,986 88,555 88,729
--------- --------- ----------- -----------
Earnings per share -
diluted $0.31 $0.44 $0.79 $0.76
========= ========= =========== ===========
Common shares outstanding
at end of period 85,203 88,285 85,203 88,285
Cash dividends declared per
share $0.17 $0.17 $0.34 $0.34
- ---------------------------
Reconciliation of net
earnings to EBITDA
Net earnings $26,945 $39,028 $70,172 $67,435
Interest expense 6,022 6,555 10,367 13,282
Income taxes 11,698 18,090 36,765 24,071
Depreciation & amortization 15,690 15,749 30,621 30,109
--------- --------- ----------- -----------
EBITDA $60,355 $79,422 $147,925 $134,897
========= ========= =========== ===========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
November 30, May 31,
2006 2006
------------ -----------
Assets
Current assets:
Cash and cash equivalents $22,527 $56,216
Short-term investments - 2,173
Receivables, less allowances of $5,112 and
$4,964 at November 30, 2006 and May 31,
2006 379,219 404,553
Inventories:
Raw materials 309,270 266,818
Work in process 109,111 104,244
Finished products 113,010 88,295
------------ -----------
Total inventories 531,391 459,357
Assets held for sale 6,875 23,535
Deferred income taxes 15,451 15,854
Prepaid expenses and other current assets 38,547 34,553
------------ -----------
Total current assets 994,010 996,241
Investments in unconsolidated affiliates 126,135 123,748
Goodwill 178,703 177,771
Other assets 48,970 55,733
Property, plant & equipment, net 570,302 546,904
------------ -----------
Total assets $1,918,120 $1,900,397
============ ===========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $218,467 $362,883
Notes payable 203,500 7,684
Accrued compensation, contributions to
employee benefit plans and related taxes 41,135 49,784
Dividends payable 14,486 15,078
Other accrued items 41,731 36,483
Income taxes payable 7,614 18,874
------------ -----------
Total current liabilities 526,933 490,786
Other liabilities 57,811 55,249
Long-term debt 245,000 245,000
Deferred income taxes 112,329 114,610
------------ -----------
Total liabilities 942,073 905,645
Minority interest 52,281 49,446
Shareholders' equity 923,766 945,306
------------ -----------
Total liabilities and shareholders' equity $1,918,120 $1,900,397
============ ===========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended Six Months Ended
November 30, November 30,
------------------ -------------------
2006 2005 2006 2005
-------- --------- --------- ---------
Operating activities
Net earnings $26,945 $39,028 $70,172 $67,435
Adjustments to reconcile net
earnings to net cash provided
(used) by operating
activities:
Depreciation and amortization 15,690 15,749 30,621 30,109
Provision for deferred income
taxes (670) (737) 174 (5,202)
Equity in net income of
unconsolidated affiliates,
net of distributions 10,123 (8,171) (537) (8,820)
Minority interest in net
income of consolidated
subsidiaries 965 1,753 2,581 2,534
Other adjustments (1,993) 1,496 (577) 2,337
Changes in assets and
liabilities:
Accounts receivable 24,223 2,214 32,793 59,914
Inventories 23,597 (19,120) (63,938) 36,219
Prepaid expenses and other
current assets (865) (6,093) (3,246) (7,194)
Other assets 3,494 729 3,988 (630)
Accounts payable and accrued
expenses (93,964) 64,776 (166,575) 32,695
Other liabilities 3,393 (7,277) 1,765 (3,522)
-------- --------- --------- ---------
Net cash provided (used) by
operating activities 10,938 84,347 (92,779) 205,875
-------- --------- --------- ---------
Investing activities
Investment in property, plant
and equipment, net (16,684) (12,137) (33,507) (25,013)
Acquisitions, net of cash
acquired (577) (6,770) (31,727) (6,770)
Investment in unconsolidated
affiliate (364) - (1,000) -
Proceeds from sale of assets 17,072 1,848 17,956 2,782
Purchases of short-term
investments - (175,254) - (243,253)
Sales of short-term
investments - 117,999 2,173 147,999
-------- --------- --------- ---------
Net cash used by investing
activities (553) (74,314) (46,105) (124,255)
-------- --------- --------- ---------
Financing activities
Proceeds from short-term
borrowings 72,726 - 195,816 -
Principal payments on long-
term debt (2) 23 (2) (490)
Proceeds from issuance of
common shares 15 2,808 1,865 4,103
Excess tax benefits - stock-
based compensation - - 200 -
Payments to minority interest - (1,920) - (3,840)
Repurchase of common shares (62,508) - (62,508) -
Dividends paid (15,098) (14,970) (30,176) (29,920)
-------- --------- --------- ---------
Net cash provided (used) by
financing activities (4,867) (14,059) 105,195 (30,147)
-------- --------- --------- ---------
Increase (decrease) in cash and
cash equivalents 5,518 (4,026) (33,689) 51,473
Cash and cash equivalents at
beginning of period 17,009 112,748 56,216 57,249
-------- --------- --------- ---------
Cash and cash equivalents at
end of period $22,527 $108,722 $22,527 $108,722
======== ========= ========= =========
WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(Unaudited, 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,
2006 2005 2006 2005
--------- --------- ----------- -----------
Volume:
Steel Processing (tons) 791 919 1,688 1,756
Metal Framing (tons) 157 171 323 355
Pressure Cylinders
(units) 9,379 12,005 21,321 25,550
Net sales:
Steel
Processing $374,879 $364,458 $775,867 $716,085
Metal Framing 189,515 192,197 401,855 397,519
Pressure Cylinders 120,300 106,463 241,811 213,516
Other 44,568 36,398 88,449 66,543
--------- --------- ----------- -----------
Total net
sales $729,262 $699,516 $1,507,982 $1,393,663
========= ========= =========== ===========
Material cost:
Steel
Processing $287,934 $266,428 $585,763 $545,001
Metal Framing 138,522 119,988 268,708 256,797
Pressure Cylinders 53,329 50,270 110,495 105,319
Operating income (loss):
Steel Processing $17,774 $24,661 $38,571 $33,027
Metal Framing (4,862) 13,857 12,919 24,252
Pressure Cylinders 20,166 11,214 36,836 19,168
Other (2,511) (71) (3,034) 759
--------- --------- ----------- -----------
Total
operating
income $30,567 $49,661 $85,292 $77,206
========= ========= =========== ===========
CONTACT: Worthington Industries, Inc.
Cathy M. Lyttle, 614-438-3077
VP, Corporate Communications
cmlyttle@WorthingtonIndustries.com
or
Allison M. Sanders, 614-840-3133
Director, Investor Relations
asanders@WorthingtonIndustries.com