Exhibit 99.1
Worthington Reports Third Quarter Results
COLUMBUS, Ohio--(BUSINESS WIRE)--March 29, 2007--Worthington
Industries, Inc. (NYSE:WOR) today reported results for the three and
nine-month periods ended February 28, 2007.
(U.S. dollars in millions, except per share data)
3Q2007 2Q2007 3Q2006 9M2007 9M2006
------- ------- ------- --------- ---------
Net sales $677.3 $729.3 $681.5 $2,185.2 $2,075.2
Operating income 2.2 30.6 25.6 87.5 102.8
Equity income 13.5 14.8 8.2 46.5 35.6
Net earnings 5.5 26.9 19.2 75.7 86.6
Earnings per share $0.06 $0.31 $0.21 $0.87 $0.97
EBITDA(a) $30.0 $60.4 $47.5 $178.0 $182.4
(a)Earnings before interest, taxes, depreciation and amortization. See
reconciliation on consolidated statement of earnings.
Net sales for the third quarter of fiscal 2007 were $677.3
million, in line with net sales of $681.5 million for the third
quarter of fiscal 2006. Third quarter net earnings were $5.5 million
and earnings per diluted share were $0.06, compared to $19.2 million,
or $0.21 per diluted share, for the same period last year.
For the nine-month period, net sales increased 5% to $2,185.2
million compared to $2,075.2 million last year. Net earnings were
$75.7 million and earnings per diluted share were $0.87, compared to
$86.6 million and $0.97, respectively, for the same period last year.
"As we anticipated, this was a difficult quarter. Although we are
not satisfied with the overall results, we are confident that growth
opportunities exist in each of our business segments and joint
ventures in the near and long term," said John P. McConnell, Chairman
and CEO. "Despite the challenges in Steel Processing and Metal
Framing, we did have record earnings in Pressure Cylinders and our
WAVE joint venture. Both Steel Processing and Metal Framing are
positioned to improve greatly during our seasonally strong fourth
quarter. The improved performance in Steel Processing and Metal
Framing, combined with continued strong performance in Pressure
Cylinders and WAVE, should provide much better results in the fourth
quarter," said McConnell.
Third Quarter Highlights
-- Quarterly net sales and operating income in the Pressure
Cylinders segment set records. Net sales of $133.7 million
were a third quarter record and quarterly operating income of
$21.8 million was the best ever.
-- Equity income from six unconsolidated joint ventures totaled
$13.5 million due to record third quarter performance at
Worthington Armstrong Venture (WAVE).
-- Cash dividends received from joint ventures totaled $54.4
million for the quarter and $87.0 million for the year-to-date
period. WAVE contributed $50.0 million and $81.0 million,
respectively, of the dividends.
-- During the third quarter, 831,600 common shares were
repurchased, reducing total outstanding shares to 84.4 million
at quarter end.
-- During the third quarter, $14.5 million was paid to
shareholders in a regular quarterly dividend. At quarter end,
the dividend yielded a 3.4% annualized return.
Quarterly Segment Results
In the Steel Processing segment, quarterly net sales of $324.3
million were 8%, or $27.6 million, lower than $351.9 million in the
comparable quarter of fiscal 2006. The decrease in net sales was the
result of much lower volumes (down 14%) partially offset by higher
average selling prices (up 7%). The average spread between selling
prices and material costs was up 5% from the year ago period, but
significantly lower volume at automotive and construction related
customers resulted in a decline in operating income in this seasonally
slow quarter.
In the Metal Framing segment, net sales of $173.9 million were 3%,
or $5.8 million, lower than $179.7 million in the comparable quarter
of fiscal 2006. Higher selling prices (up 5%) partially offset the
effect of lower volumes (down 8%). Selling prices rose from the year
ago period but not enough to offset significantly higher material
costs. Material costs climbed 32% due to high galvanized steel
material expense driven by record zinc prices and an unfavorable mix
of prime and secondary steel inventory. Selling prices were
constrained by weak demand which was the result of: reduced
residential and commercial construction activity, especially in the
significant Florida market; product substitution, as steel remained
higher priced than alternative building materials, such as wood;
increased competition; and delays in commercial construction projects
as developers anticipated lower material prices. The much narrower
spread between selling prices and material costs resulted in an
operating loss in the quarter. The quarterly loss included a $1.7
million asset write-down for a closed facility in Laporte, Indiana.
In the Pressure Cylinders segment, net sales increased 21%, or
$23.1 million, to $133.7 million from $110.6 million in the comparable
quarter of fiscal 2006. Average selling prices improved significantly
due to product mix and price increases in certain product lines.
Strong performance in North America and Europe is the result of a
series of well-executed plans over several years to cut costs, exit
unprofitable product lines, introduce new product lines, consolidate
facilities and grow profitable lines through capacity and geographic
expansion. These actions, along with a strong overall sales effort,
led to a doubling in operating income from the prior year.
Worthington's unconsolidated joint ventures contributed $13.5
million in equity income, compared to $8.2 million in the year ago
quarter. Continued strong performance at the largest of six joint
ventures, Worthington Armstrong Venture (WAVE), which manufactures
ceiling grid for the commercial and residential construction markets,
was offset somewhat by weaker results at TWB, WSP and VWS, which are
closely tied to automotive end markets. The prior year period was
negatively impacted by a $6.1 million income tax adjustment at Acerex,
a Mexican steel processing venture which has since been sold.
Outlook
The outlook for fourth quarter earnings is expected to be much
improved from the third quarter for several reasons:
-- Metal Framing is expected to return to profitability as higher
priced inventory has been depleted and demand and selling
prices are improving.
-- Positive trends at Pressure Cylinders and WAVE are expected to
continue.
-- Seasonal strength typically benefits all of the business
segments and joint ventures in the fourth quarter compared to
seasonal weakness in the third quarter (which includes the
month of December).
Other
Share Repurchases
During the third quarter, 831,600 shares were repurchased under a
10 million share authorization originally announced June 13, 2005,
leaving a net authorized amount of approximately 5.6 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 February 20, 2007, the board of directors declared a quarterly
cash dividend of $0.17 per share payable March 29, 2007, to
shareholders of record on March 15, 2007.
Announcements
On March 6, 2007, the company announced that its TWB Company laser
welded blanking joint venture with ThyssenKrupp Steel AG will begin
operating a new manufacturing facility in Prattville, Alabama, to
serve the automotive market in the south. The 50,000 square foot
facility will be ready for production in May 2007.
On February 28, 2007, the company announced that Dietrich Metal
Framing obtained three key code endorsements for its UltraSTEEL(R)
Framing product from the International Code Conference Evaluation
Services, American Society for Testing and Materials International,
and Architectural Testing, Inc. All three bodies determined that
UltraSTEEL(R) is a compliant building product and is approved for
construction use even when not specifically named.
Conference Call
Worthington will review third quarter results during its quarterly
conference call today, March 29, 2007, at 1:30 p.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 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 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,
transportation, 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 Nine Months Ended
February 28, February 28,
------------------- -----------------------
2007 2006 2007 2006
--------- --------- ----------- -----------
Net sales $677,250 $681,548 $2,185,232 $2,075,211
Cost of goods sold 620,931 602,646 1,923,464 1,817,549
--------- --------- ----------- -----------
Gross margin 56,319 78,902 261,768 257,662
Selling, general and
administrative expense 54,159 53,345 174,316 154,899
--------- --------- ----------- -----------
Operating income 2,160 25,557 87,452 102,763
Other income (expense):
Miscellaneous expense (847) (255) (1,916) (60)
Interest expense (6,636) (6,875) (17,003) (20,157)
Equity in net income of
unconsolidated
affiliates 13,463 8,178 46,544 35,565
--------- --------- ----------- -----------
Earnings before income
taxes 8,140 26,605 115,077 118,111
Income tax expense 2,630 7,448 39,395 31,519
--------- --------- ----------- -----------
Net earnings $5,510 $19,157 $75,682 $86,592
========= ========= =========== ===========
Average common shares
outstanding - basic 84,733 88,361 86,918 88,174
--------- --------- ----------- -----------
Earnings per share - basic $0.07 $0.22 $0.87 $0.98
========= ========= =========== ===========
Average common shares
outstanding - diluted 85,309 89,152 87,473 88,870
--------- --------- ----------- -----------
Earnings per share -
diluted $0.06 $0.21 $0.87 $0.97
========= ========= =========== ===========
Common shares outstanding
at end of period 84,430 88,523 84,430 88,523
Cash dividends declared
per share $0.17 $0.17 $0.51 $0.51
- ---------------------------
Reconciliation of net
earnings to EBITDA
Net earnings $5,510 $19,157 $75,682 $86,592
Interest expense 6,636 6,875 17,003 20,157
Income taxes 2,630 7,448 39,395 31,519
Depreciation &
amortization 15,251 14,024 45,872 44,133
--------- --------- ----------- -----------
EBITDA $30,027 $47,504 $177,952 $182,401
========= ========= =========== ===========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
February 28, May 31,
2007 2006
------------ -----------
Assets
Current assets:
Cash and cash equivalents $38,968 $56,216
Short-term investments - 2,173
Receivables, less allowances of $4,809 and
$4,964 at February 28, 2007 and May 31,
2006 371,360 404,553
Inventories:
Raw materials 285,299 266,818
Work in process 95,012 104,244
Finished products 102,916 88,295
------------ -----------
Total inventories 483,227 459,357
Assets held for sale 5,193 23,535
Deferred income taxes 16,550 15,854
Prepaid expenses and other current assets 39,680 34,553
------------ -----------
Total current assets 954,978 996,241
Investments in unconsolidated affiliates 85,356 123,748
Goodwill 178,556 177,771
Other assets 44,307 55,733
Property, plant & equipment, net 565,265 546,904
------------ -----------
Total assets $1,828,462 $1,900,397
============ ===========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $256,880 $362,883
Notes payable 119,564 7,684
Accrued compensation, contributions to
employee benefit plans and related taxes 38,635 49,784
Dividends payable 14,357 15,078
Other accrued items 29,853 36,483
Income taxes payable 8,553 18,874
------------ -----------
Total current liabilities 467,842 490,786
Other liabilities 57,214 55,249
Long-term debt 245,000 245,000
Deferred income taxes 111,100 114,610
------------ -----------
Total liabilities 881,156 905,645
Minority interest 48,707 49,446
Shareholders' equity 898,599 945,306
------------ -----------
Total liabilities and shareholders' equity $1,828,462 $1,900,397
============ ===========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended Nine Months Ended
February 28, February 28,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Operating activities
Net earnings $5,510 $19,157 $75,682 $86,592
Adjustments to reconcile net
earnings to net cash provided
(used) by operating
activities:
Depreciation and
amortization 15,251 14,024 45,872 44,133
Provision for deferred
income taxes (1,000) (2,984) (826) (8,186)
Equity in net income of
unconsolidated affiliates,
net of distributions 40,958 2,423 40,421 (6,397)
Minority interest in net
income of consolidated
subsidiaries 980 1,645 3,561 4,179
Other adjustments 2,473 256 1,896 2,593
Changes in assets and
liabilities:
Accounts receivable 3,923 (13,427) 36,716 46,487
Inventories 48,164 (56,289) (15,774) (20,070)
Prepaid expenses and other
current assets (724) (2,033) (3,970) (9,227)
Other assets (668) 238 3,320 (392)
Accounts payable and accrued
expenses 26,953 (10,684) (139,622) 22,011
Other liabilities (642) 3,715 1,123 193
--------- --------- --------- ---------
Net cash provided (used) by
operating activities 141,178 (43,959) 48,399 161,916
--------- --------- --------- ---------
Investing activities
Investment in property,
plant and equipment, net (10,627) (18,088) (44,134) (43,101)
Investment in aircraft - (16,250) - (16,250)
Acquisitions, net of cash
acquired - (6) (31,727) (6,776)
Investment in unconsolidated
affiliate - - (1,000) -
Proceeds from sale of assets 135 272 18,091 3,054
Purchases of short-term
investments - (200,492) - (443,745)
Sales of short-term
investments - 253,675 2,173 401,674
--------- --------- --------- ---------
Net cash provided (used) by
investing activities (10,492) 19,111 (56,597) (105,144)
--------- --------- --------- ---------
Financing activities
Proceeds from (payments on)
short-term borrowings (83,936) - 111,880 -
Principal payments on long-
term debt (5) (521) (7) (1,011)
Proceeds from issuance of
common shares 693 3,029 2,558 7,132
Excess tax benefits - stock-
based compensation - - 200 -
Payments to minority
interest (2,400) - (2,400) (3,840)
Repurchase of common shares (14,109) - (76,617) -
Dividends paid (14,488) (15,012) (44,664) (44,932)
--------- --------- --------- ---------
Net cash used by financing
activities (114,245) (12,504) (9,050) (42,651)
--------- --------- --------- ---------
Increase (decrease) in cash
and cash equivalents 16,441 (37,352) (17,248) 14,121
Cash and cash equivalents at
beginning of period 22,527 108,722 56,216 57,249
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $38,968 $71,370 $38,968 $71,370
========= ========= ========= =========
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 Nine Months Ended
February 28, February 28,
------------------- -----------------------
2007 2006 2007 2006
--------- --------- ----------- -----------
Volume:
Steel Processing
(tons) 744 863 2,431 2,618
Metal Framing (tons) 150 163 473 518
Pressure Cylinders
(units) 9,970 10,679 31,291 36,229
Net sales:
Steel Processing $324,312 $351,933 $1,100,179 $1,068,018
Metal Framing 173,918 179,659 575,773 577,178
Pressure Cylinders 133,714 110,629 375,525 324,145
Other 45,306 39,327 133,755 105,870
--------- --------- ----------- -----------
Total net
sales $677,250 $681,548 $2,185,232 $2,075,211
========= ========= =========== ===========
Material cost:
Steel Processing $251,946 $272,245 $837,708 $817,246
Metal Framing 138,459 113,762 407,167 370,558
Pressure Cylinders 60,536 51,853 171,030 157,172
Operating income (loss):
Steel Processing $2,079 $10,621 $40,650 $43,647
Metal Framing (21,538) 5,768 (8,619) 30,020
Pressure Cylinders 21,760 9,881 58,596 29,049
Other (141) (713) (3,175) 47
--------- --------- ----------- -----------
Total
operating
income $2,160 $25,557 $87,452 $102,763
========= ========= =========== ===========
CONTACT: Worthington Industries, Inc.
Media Contact:
Cathy M. Lyttle, 614-438-3077
VP, Corporate Communications
E-mail: cmlyttle@WorthingtonIndustries.com
or
Investor Contact:
Allison M. Sanders, 614-840-3133
Director, Investor Relations
E-mail: asanders@WorthingtonIndustries.com