Exhibit 99.1
Worthington Reports First Quarter Results
COLUMBUS, Ohio--(BUSINESS WIRE)--Sept. 25, 2007--Worthington
Industries, Inc. (NYSE:WOR) today reported results for the three
months ended August 31, 2007.
(U.S. dollars in millions, except per share data)
1Q2008 4Q2007 1Q2007
--------- --------- ----------
Net sales $759.0 $786.6 $778.7
Operating income 20.0 41.7 54.7
Equity income 15.0 16.7 18.3
Net earnings 20.2 38.2 43.2
Earnings per share $0.24 $0.45 $0.48
EBITDA (a) $49.6 $71.4 $87.6
(a) Earnings before interest, taxes, depreciation and
amortization. See reconciliation on consolidated statement of
earnings.
First Quarter 2008 Highlights
-- Quarterly net sales and operating income in the Pressure
Cylinders segment represented a first quarter record of $136.6
million and $18.0 million, respectively.
-- Cash dividends received from joint ventures totaled $14.7
million for the quarter.
-- Cash provided by operating activities was $74.8 million for
the first quarter of fiscal 2008. Capital expenditures were
$16.5 million for the same period.
-- Dividends paid to shareholders totaled $14.5 million for the
quarter. At quarter end, the dividend yielded a 3.2%
annualized return.
-- During the first quarter, the company repurchased 4.2 million
common shares, reducing total outstanding shares to 81.0
million at quarter end.
-- The ratio of total debt to capitalization was 27.9% at quarter
end, unchanged from the year ago time period.
Consolidated Results
For the first quarter, net sales were $759.0 million, compared to
$778.7 million for the first quarter of fiscal 2007, a decline of 3%.
First quarter net earnings of $20.2 million, or $0.24 per diluted
share, fell 53% from first quarter 2007 net earnings of $43.2 million,
or $0.48 per diluted share.
First quarter 2008 earnings included $3.8 million in
severance-related costs which had a negative impact of $0.03 on
reported earnings per share. The severance charges were associated
with a reduction of 63 employees, 44 of whom have taken advantage of a
voluntary retirement offer and will be retiring by October 31, 2007.
"We are focused on implementing actions throughout the company
that position us to increase our operating margins and drive
shareholder value," said John McConnell, Chairman and CEO of
Worthington Industries. "Our company has always believed in lean and
efficient operations. The early retirement packages and the
consolidation of metal framing locations are initial steps that we
have taken to enhance our performance. Efforts to reduce costs are
continuing across the company and we remain comfortable with our
announced target of $35 million to $40 million of annual savings once
the initiatives are fully implemented and one-time charges are taken,"
McConnell added.
Quarterly Segment Results
In the Steel Processing segment, quarterly net sales fell 11%, or
$45.1 million, to $355.9 million from $401.0 million in the comparable
quarter of fiscal 2007. The decline in net sales was the result of
lower average pricing (down 2%), due to a greater mix of tolling
business, and lower volumes (down 9%) relative to the prior year.
Operating income decreased because of the combination of lower volumes
and a narrower spread between selling prices and material costs
compared to the first quarter of fiscal 2007.
In the Metal Framing segment, net sales decreased 7%, or $14.3
million, to $198.1 million from $212.3 million in the comparable
quarter of fiscal 2007. Average selling prices fell 12%, more than
offsetting an overall volume increase of 5%. Product mix worsened in
the quarter as volumes increased in lower margin product lines and
decreased significantly in higher margin lines, many of which serve
the residential housing sector. The much narrower spread between lower
selling prices and higher material costs resulted in an operating loss
for the quarter.
In the Pressure Cylinders segment, net sales increased 12%, or
$15.1 million, to $136.6 million from $121.5 million in the comparable
quarter of fiscal 2007. Increased volumes across most product lines in
North America and Europe led to an increase 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 $15.0 million for the quarter, compared to a record $18.3
million in the year ago quarter. While profitability at the WAVE joint
venture continued to be very good, it was down from last year's record
quarter, and several automotive-related joint ventures were impacted
by weakness in that end market.
Cost Reduction Initiative
As part of the company's ongoing program to reduce its cost
structure, the following steps have been taken or announced which are
expected to result in $20 million in annual savings once fully
implemented:
1. An early retirement program resulted in 44 retirements and $2
million in annual run rate savings beginning November 1, 2007.
2. Phase 1 of the SG&A reduction program has resulted in $2
million in savings in the first quarter of fiscal 2008. For
fiscal 2008, annual savings are estimated at $9 million.
3. Plant closures or downsizings at five metal framing facilities
are expected to result in $9 million in annual savings once
fully implemented. Possible charges will be recognized in the
next few quarters as the facilities are closed or downsized.
These restructuring charges are estimated at approximately $15
million for the five facilities and 165 employees that will be
impacted. The plant closure process has begun and should be
substantially completed by fiscal year end. The vast majority
of the approximately $125 million in annual net sales of these
locations is expected to be handled by the remaining 22 metal
framing facilities.
Other
Share Repurchases
During the first quarter, 4,180,200 shares were repurchased under
a 10 million share authorization originally announced June 13, 2005,
leaving a net authorized amount of approximately 1.4 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 August 17, 2007, the board of directors declared a quarterly
cash dividend of $0.17 per share payable September 29, 2007, to
shareholders of record on September 15, 2007.
Announcements
On August 20, 2007, the company announced that its Worthington
Steel Company had signed an agreement to acquire a 50% interest in
Serviacero Planos. The joint venture became effective September 17,
2007, and will be known as Serviacero Worthington. It owns and
operates the two existing Serviacero Planos steel service centers in
Leon and Queretaro in central Mexico. Annual sales for the joint
venture are expected to be $125 million initially.
On August 20, 2007, the company also announced that its
Worthington Steel Company had signed an agreement to form a joint
venture with The Magnetto Group of Turin, Italy, to construct and
operate a Class 1 steel processing facility in Kosice, Slovakia. The
joint venture will be known as Canessa Worthington and operations are
scheduled to begin early in calendar 2008.
On September 25, 2007, the company announced a plan to close or
downsize five metal framing facilities. The action is expected to
result in annualized savings of $9 million. Restructuring charges
related to the closures, including severance for affected employees,
is projected at $15 million and will be recognized in the next few
quarters.
Conference Call
Worthington will review first quarter results during its quarterly
conference call tomorrow, September 26, 2007, 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 67 manufacturing
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.
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 startups,
dispositions, shutdowns and consolidations; targeted and expected
savings through head count reductions, facility closures and other
expense reductions; new products and markets; expectations for company
and customer inventories, jobs and orders; expectations for the
economy and markets; expected benefits from new initiatives;
expectations for improving margins and increasing shareholder value;
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 targeted
expense reductions such as head count reductions, facility closures
and other expense reductions; the ability to realize other 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
(In thousands, except per share)
Three Months Ended
August 31,
------------------------
2007 2006
------------- ----------
Net sales $758,955 $778,720
Cost of goods sold 680,170 657,369
------------- ----------
Gross margin 78,785 121,351
Selling, general and administrative expense 54,949 66,626
Restructuring charges 3,832 -
------------- ----------
Operating income 20,004 54,725
Other income (expense):
Miscellaneous expense (908) (365)
Interest expense (4,638) (4,345)
Equity in net income of unconsolidated
affiliates 14,985 18,279
------------- ----------
Earnings before income taxes 29,443 68,294
Income tax expense 9,275 25,067
------------- ----------
Net earnings $20,168 $43,227
============= ==========
Average common shares outstanding - basic 84,063 88,765
------------- ----------
Earnings per share - basic $0.24 $0.49
============= ==========
Average common shares outstanding - diluted 85,001 89,415
------------- ----------
Earnings per share - diluted $0.24 $0.48
============= ==========
Common shares outstanding at end of period 81,034 88,817
Cash dividends declared per share $0.17 $0.17
- -------------------------------------------
Reconciliation of net earnings to EBITDA
Net earnings $20,168 $43,227
Interest expense 4,638 4,345
Income taxes 9,275 25,067
Depreciation & amortization 15,486 14,931
------------- ----------
EBITDA $49,567 $87,570
============= ==========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
August 31, May 31,
2007 2007
---------- ----------
Assets
Current assets:
Cash and cash equivalents $78,686 $38,277
Short-term investments - 25,562
Receivables, less allowances of $4,002 and
$3,641 at August 31, 2007 and May 31, 2007 384,224 400,916
Inventories:
Raw materials 251,427 261,849
Work in process 98,168 97,633
Finished products 95,567 88,382
---------- ----------
Total inventories 445,162 447,864
Assets held for sale 4,546 4,600
Deferred income taxes 13,259 13,067
Prepaid expenses and other current assets 40,328 39,097
---------- ----------
Total current assets 966,205 969,383
Investments in unconsolidated affiliates 58,178 57,540
Goodwill 179,839 179,441
Other assets 36,694 43,553
Property, plant & equipment, net 563,753 564,265
---------- ----------
Total assets $1,804,669 $1,814,182
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $284,309 $263,665
Notes payable 87,000 31,650
Accrued compensation, contributions to employee
benefit plans and related taxes 40,962 46,237
Dividends payable 13,783 14,440
Other accrued items 46,880 45,519
Income taxes payable 18,249 18,983
---------- ----------
Total current liabilities 491,183 420,494
Other liabilities 72,855 57,383
Long-term debt 245,000 245,000
Deferred income taxes 88,554 105,983
---------- ----------
Total liabilities 897,592 828,860
Minority interest 47,899 49,321
Shareholders' equity 859,178 936,001
---------- ----------
Total liabilities and shareholders' equity $1,804,669 $1,814,182
========== ==========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
August 31,
------------------
2007 2006
-------- ---------
Operating activities
Net earnings $20,168 $43,227
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization 15,486 14,931
Restructuring charges 3,832 -
Provision for deferred income taxes 1,747 844
Equity in net income of unconsolidated affiliates,
net of distributions (285) (10,660)
Minority interest in net income of consolidated
subsidiaries 1,998 1,616
Net loss on sale of assets 2,392 825
Stock-based compensation 934 791
Excess tax benefits - stock-based compensation (560) (200)
Changes in assets and liabilities:
Accounts receivable 13,363 8,570
Inventories 2,703 (87,535)
Prepaid expenses and other current assets 1,718 (2,381)
Other assets 207 494
Accounts payable and accrued expenses 12,492 (72,611)
Other liabilities (1,362) (1,628)
-------- ---------
Net cash provided (used) by operating activities 74,833 (103,717)
-------- ---------
Investing activities
Investment in property, plant and equipment, net (16,505) (16,823)
Acquisitions, net of cash acquired - (31,150)
Investment in unconsolidated affiliate - (636)
Proceeds from sale of assets 46 884
Sales of short-term investments 25,562 2,173
-------- ---------
Net cash provided (used) by investing activities 9,103 (45,552)
-------- ---------
Financing activities
Proceeds from short-term borrowings 55,350 123,090
Proceeds from issuance of common shares 4,734 1,850
Excess tax benefits - stock-based compensation 560 200
Payments to minority interest (2,400) -
Repurchase of common shares (87,310) -
Dividends paid (14,461) (15,078)
-------- ---------
Net cash provided (used) by financing activities (43,527) 110,062
-------- ---------
Increase (decrease) in cash and cash equivalents 40,409 (39,207)
Cash and cash equivalents at beginning of period 38,277 56,216
-------- ---------
Cash and cash equivalents at end of period $78,686 $17,009
======== =========
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
August 31,
-------------------
2007 2006
--------- ---------
Volume:
Steel Processing (tons) 810 896
Metal Framing (tons) 174 166
Pressure Cylinders (units) 11,539 11,942
Net sales:
Steel Processing $355,854 $400,988
Metal Framing 198,071 212,340
Pressure Cylinders 136,598 121,511
Other 68,432 43,881
--------- ---------
Total net sales $758,955 $778,720
========= =========
Material cost:
Steel Processing $270,221 $297,875
Metal Framing 145,501 130,186
Pressure Cylinders 64,278 57,166
Operating income (loss):
Steel Processing $9,979 $20,797
Metal Framing (8,003) 17,781
Pressure Cylinders 17,965 16,670
Other 63 (523)
--------- ---------
Total operating income $20,004 $54,725
========= =========
The following provides detail of the restructuring charges included in
the operating income by segment presented above.
Three Months Ended
August 31,
-------------------
2007 2006
--------- ---------
Pre-tax restructuring charges by segment:
Steel Processing $1,201 $-
Metal Framing 882 -
Pressure Cylinders - -
Other 1,749 -
--------- ---------
Total restructuring charges $3,832 $-
========= =========
CONTACT: Worthington Industries, Inc.
Media:
Cathy M. Lyttle, 614-438-3077
VP, Corporate Communications
E-mail: cmlyttle@WorthingtonIndustries.com
or
Investor:
Allison M. Sanders, 614-840-3133
Director, Investor Relations
E-mail: asanders@WorthingtonIndustries.com
or
www.WorthingtonIndustries.com