Exhibit 99.1
Worthington Reports Second Quarter Results
COLUMBUS, Ohio--(BUSINESS WIRE)--Dec. 20, 2007--Worthington Industries,
Inc. (NYSE: WOR) today reported results for the three- and six-month periods
ended November 30, 2007.
(U.S. dollars in millions, except per share data)
2Q2008 1Q2008 2Q2007 6M2008 6M2007
------ ------- ------ -------- --------
Net sales $713.7 $759.0 $729.3 $1,472.6 $1,508.0
Operating income 11.5 20.0 30.6 31.5 85.3
Equity income 14.9 15.0 14.8 29.9 33.1
Net earnings 14.7 20.2 26.9 34.9 70.2
Earnings per share $0.18 $0.24 $0.31 $0.42 $0.79
EBITDA (a) $39.7 $49.6 $60.4 $89.3 $147.9
(a) Earnings before interest, taxes, depreciation and amortization. See
reconciliation on consolidated statement of earnings.
For the second quarter of fiscal 2008, net sales were $713.7 million, a
decrease of 2% from $729.3 million last year. Second quarter net earnings were
$14.7 million and earnings per diluted share were $0.18, compared to $26.9
million, or $0.31 per diluted share, for the same period last year. Net earnings
for the second quarter included $3.5 million in pre-tax restructuring charges,
$2.7 million of which was non-cash, primarily related to previously announced
plant closures in the Metal Framing segment. These charges had a negative impact
of $0.03 on reported earnings per share.
For the six-month period, net sales of $1,472.6 million were 2% lower than
$1,508.0 million for the same period last year. Net earnings were $34.9 million,
or $0.42 per diluted share, compared to $70.2 million, or $0.79 per diluted
share, for the same period last year. Year-to-date results were negatively
impacted by $7.3 million in pre-tax restructuring charges, or $0.06 per share,
related to early retirement, severance and plant closure charges.
"Second quarter and first half performance reflects market weakness
particularly in our two primary end markets, automotive and construction; the
resulting cost/price squeeze across our businesses; and the significant
challenge in Metal Framing. The second quarter likely reflects the low point in
Metal Framing results," said Chairman and CEO, John McConnell.
"Aggressive countermeasures - including a corporate-wide cost reduction
program and a restructuring of Metal Framing - are underway and are expected to
benefit the second half of fiscal 2008 and show material impact in fiscal 2009.
Moreover, our underlying performance is bolstered by near record results from
Pressure Cylinders and our joint ventures, especially WAVE." McConnell
continued, "We expect the major contribution from these businesses to continue,
while Steel Processing is working to enhance margins and volume. Our mission
over the next few quarters is to restore the earning power of our inherently
good portfolio and create a strong platform for future growth."
Second Quarter Highlights
-- Quarterly net sales in the Pressure Cylinders segment were a second
quarter record of $133.2 million. Approximately half, or $6.8 million,
of the $12.9 million increase from last year's record sales was due to
stronger foreign currencies relative to the dollar. Operating income
fell 14% from last year's second quarter record but remained well
above historical levels.
-- Equity income from nine unconsolidated joint ventures totaled $14.9
million due to record second quarter earnings at Worthington Armstrong
Venture (WAVE) and to the addition of the new Serviacero Worthington
joint venture in Mexico.
-- Cash dividends received from joint ventures totaled $14.7 million for
the quarter.
-- Cash provided by operating activities was $21.9 million for the second
quarter of fiscal 2008 and $96.7 million for the year to date. Capital
expenditures, excluding acquisitions and investments, were $10.1
million and $26.6 million for the same periods.
-- During the second quarter, $13.8 million was paid to shareholders in a
regular quarterly dividend. At quarter end, the dividend yielded a
3.2% annualized return.
-- The ratio of total debt to capitalization was 27.9% at quarter end
compared to 32.7% at quarter end last year.
Quarterly Segment Results
In the Steel Processing segment, quarterly net sales fell 8%, or $30.6
million, to $344.2 million from $374.8 million in the comparable quarter of
fiscal 2007. Volumes rose 6% as a significant increase in tolling business more
than offset a decline in direct business. Tolling volumes in the prior year
period were negatively impacted while capacity was increased in the operations
of the Spartan Steel Coating consolidated joint venture. The resulting change in
product mix contributed to the decrease in net sales and the lower average
selling prices (down 14%) for the current quarter. Operating income decreased
because of a narrower spread between average selling prices and material costs,
especially at Precision Specialty Metals (PSM), a stainless steel processing
facility.
In the Metal Framing segment, net sales decreased 4%, or $7.1 million, to
$182.4 million from $189.5 million in the comparable quarter of fiscal 2007.
Pricing remained extremely competitive despite realization of a portion of the
mid-quarter price increase. Average selling prices fell 7% from the prior year
period, more than offsetting an overall volume increase of 4%. Product mix
continued to negatively impact earnings, 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 resulting from
lower selling prices and higher material costs resulted in an operating loss for
the quarter. In addition, results were hurt by $3.6 million in pre-tax
restructuring charges related to announced plant closures (see press release
dated September 25, 2007, for more detail on plant closures). The plant closures
are expected to be substantially complete by fiscal year end. Measurable cost
savings related to these closures, estimated at $9 million annually, are not
expected until fiscal 2009.
In the Pressure Cylinders segment, net sales increased 11%, or $12.9
million, to $133.2 million from $120.3 million in the comparable quarter of
fiscal 2007. Stronger foreign currencies relative to the U.S. dollar positively
impacted reported U.S. dollar sales of the non-U.S. operations by $6.8 million
compared to last year. Improved North American volumes across most product lines
combined with stable pricing resulted in a $5.8 million increase in sales.
Improved steel high pressure cylinder volumes resulting from a capacity
expansion at the Austrian facility were substantially offset by an 8% decline in
average selling prices. Capacity increases by European high pressure cylinder
producers and increased imports into Europe from the U.S. and China drove the
pricing decline. Operating income remained near record levels as a result of
continued strength in both the European and North American operations.
Worthington's joint ventures added significantly to second quarter results
as equity income from the nine unconsolidated affiliates totaled $14.9 million,
compared to $14.8 million in the year ago quarter. WAVE continued to contribute
the vast majority of equity earnings. Its earnings were a second quarter record,
up slightly from the record set last year. Compared to the year ago quarter,
equity income increased due primarily to Worthington's new Mexican joint
venture, Serviacero Worthington, offset by a decline in earnings from TWB
Company and start-up expenses at two newer joint ventures.
Cost Reduction Initiative Update
Annual savings related to the company's cost reduction program, which
includes early retirement, plant closures and hundreds of company-wide
initiatives impacting all expense categories, are expected to total $35 million.
All initiatives have been identified, and implementation is underway. Realized
cost savings are expected to increase for the balance of fiscal 2008 and into
fiscal 2009, reaching the full $35 million annual savings run rate in fiscal
2010.
Other
Dividend Declared
On November 16, 2007, the board of directors declared a quarterly cash
dividend of $0.17 per share payable December 29, 2007, to shareholders of record
on December 15, 2007.
Conference Call
Worthington will review second quarter results during its quarterly
conference call today, December 20, 2007, 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 68
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; new products and markets; expectations for company
and customer inventories, jobs and orders; expectations for the economy and
markets; expected benefits from turnaround plans, cost reduction efforts and
other 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 Six Months Ended
November 30, November 30,
------------------ ----------------------
2007 2006 2007 2006
-------- --------- ---------- -----------
Net sales $713,664 $729,262 $1,472,619 $1,507,982
Cost of goods sold 643,654 645,164 1,323,824 1,302,533
-------- --------- ---------- -----------
Gross margin 70,010 84,098 148,795 205,449
Selling, general and
administrative expense 55,051 53,531 110,000 120,157
Restructuring charges 3,478 - 7,310 -
-------- --------- ---------- -----------
Operating income 11,481 30,567 31,485 85,292
Other income (expense):
Miscellaneous expense (2,431) (704) (3,339) (1,069)
Interest expense (5,370) (6,022) (10,008) (10,367)
Equity in net income of
unconsolidated affiliates 14,927 14,802 29,912 33,081
-------- --------- ---------- -----------
Earnings before income
taxes 18,607 38,643 48,050 106,937
Income tax expense 3,867 11,698 13,142 36,765
-------- --------- ---------- -----------
Net earnings $14,740 $26,945 $34,908 $70,172
======== ========= ========== ===========
Average common shares
outstanding - basic 81,366 87,234 82,722 88,004
-------- --------- ---------- -----------
Earnings per share - basic $0.18 $0.31 $0.42 $0.80
======== ========= ========== ===========
Average common shares
outstanding - diluted 82,358 87,611 83,717 88,555
-------- --------- ---------- -----------
Earnings per share - diluted $0.18 $0.31 $0.42 $0.79
======== ========= ========== ===========
Common shares outstanding at
end of period 81,567 85,203 81,567 85,203
Cash dividends declared per
share $0.17 $0.17 $0.34 $0.34
- -----------------------------
Reconciliation of net
earnings to EBITDA
Net earnings $14,740 $26,945 $34,908 $70,172
Interest expense 5,370 6,022 10,008 10,367
Income taxes 3,867 11,698 13,142 36,765
Depreciation & amortization 15,736 15,690 31,222 30,621
-------- --------- ---------- -----------
EBITDA $39,713 $60,355 $89,280 $147,925
======== ========= ========== ===========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
November 30, May 31,
2007 2007
------------ ----------
Assets
Current assets:
Cash and cash equivalents $39,554 $38,277
Short-term investments - 25,562
Receivables, less allowances of $4,241 and
$3,641 at November 30, 2007 and May 31, 2007 370,031 400,916
Inventories:
Raw materials 248,498 261,849
Work in process 84,896 97,633
Finished products 114,455 88,382
------------ ----------
Total inventories 447,849 447,864
Income taxes receivable 8,851 -
Assets held for sale 4,546 4,600
Deferred income taxes 19,487 13,067
Prepaid expenses and other current assets 43,134 39,097
------------ ----------
Total current assets 933,452 969,383
Investments in unconsolidated affiliates 106,832 57,540
Goodwill 181,903 179,441
Other assets 33,576 43,553
Property, plant & equipment, net 558,477 564,265
------------ ----------
Total assets $1,814,240 $1,814,182
============ ==========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $266,007 $263,665
Notes payable 93,200 31,650
Accrued compensation, contributions to
employee benefit plans and related taxes 42,382 46,237
Dividends payable 13,869 14,440
Other accrued items 55,219 45,519
Income taxes payable 16,959 18,983
------------ ----------
Total current liabilities 487,636 420,494
Other liabilities 73,543 57,383
Long-term debt 245,000 245,000
Deferred income taxes 90,324 105,983
------------ ----------
Total liabilities 896,503 828,860
Minority interest 45,075 49,321
Shareholders' equity 872,662 936,001
------------ ----------
Total liabilities and shareholders' equity $1,814,240 $1,814,182
============ ==========
WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended Six Months Ended
November 30, November 30,
------------------ ------------------
2007 2006 2007 2006
--------- -------- -------- ---------
Operating activities
Net earnings $14,740 $26,945 $34,908 $70,172
Adjustments to reconcile net
earnings to net cash provided
(used) by operating activities:
Depreciation and amortization 15,736 15,690 31,222 30,621
Restructuring charges, non-cash 2,730 - 2,730 -
Provision for deferred income
taxes 4,729 (670) 6,476 174
Equity in net income of
unconsolidated affiliates, net
of distributions (227) 10,123 (512) (537)
Minority interest in net income
of consolidated subsidiaries 1,989 965 3,987 2,581
Net loss on sale of assets 550 (2,852) 2,942 (2,027)
Stock-based compensation 828 859 1,762 1,650
Excess tax benefits - stock-
based compensation (1,688) - (2,248) (200)
Changes in assets and
liabilities:
Accounts receivable 12,201 24,223 25,564 32,793
Inventories (2,066) 23,597 637 (63,938)
Prepaid expenses and other
current assets (1,846) (865) (128) (3,246)
Other assets (559) 3,494 (352) 3,988
Accounts payable and accrued
expenses (26,069) (93,964) (9,745) (166,575)
Other liabilities 868 3,393 (494) 1,765
--------- -------- -------- ---------
Net cash provided (used) by
operating activities 21,916 10,938 96,749 (92,779)
--------- -------- -------- ---------
Investing activities
Investment in property, plant
and equipment, net (10,116) (16,684) (26,621) (33,507)
Acquisitions, net of cash
acquired (2,241) (577) (2,241) (31,727)
Investments in unconsolidated
affiliates (47,043) (364) (47,043) (1,000)
Proceeds from sale of assets 246 17,072 292 17,956
Sales of short-term investments - - 25,562 2,173
--------- -------- -------- ---------
Net cash used by investing
activities (59,154) (553) (50,051) (46,105)
--------- -------- -------- ---------
Financing activities
Proceeds from short-term
borrowings 6,200 72,726 61,550 195,816
Principal payments on long-term
debt - (2) - (2)
Proceeds from issuance of
common shares 8,314 15 13,048 1,865
Excess tax benefits - stock-
based compensation 1,688 - 2,248 200
Payments to minority interest (4,320) - (6,720) -
Repurchase of common shares - (62,508) (87,310) (62,508)
Dividends paid (13,776) (15,098) (28,237) (30,176)
--------- -------- -------- ---------
Net cash provided (used) by
financing activities (1,894) (4,867) (45,421) 105,195
--------- -------- -------- ---------
Increase (decrease) in cash and
cash equivalents (39,132) 5,518 1,277 (33,689)
Cash and cash equivalents at
beginning of period 78,686 17,009 38,277 56,216
--------- -------- -------- ---------
Cash and cash equivalents at end
of period $39,554 $22,527 $39,554 $22,527
========= ======== ======== =========
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 Six Months Ended
November 30, November 30,
------------------- -----------------------
2007 2006 2007 2006
--------- --------- ----------- -----------
Volume:
Steel Processing (tons) 840 791 1,650 1,688
Metal Framing (tons) 163 157 338 323
Pressure Cylinders
(units) 10,677 9,379 22,215 21,321
Net sales:
Steel Processing $344,230 $374,879 $700,084 $775,867
Metal Framing 182,415 189,515 380,486 401,855
Pressure Cylinders 133,214 120,300 269,812 241,811
Other 53,805 44,568 122,237 88,449
--------- --------- ----------- -----------
Total net sales $713,664 $729,262 $1,472,619 $1,507,982
========= ========= =========== ===========
Material cost:
Steel Processing $262,117 $287,934 $532,338 $585,763
Metal Framing 138,218 138,522 283,719 268,708
Pressure Cylinders 60,780 53,329 125,059 110,495
Operating income (loss):
Steel Processing $10,267 $17,774 $20,246 $38,571
Metal Framing (16,045) (4,862) (24,048) 12,919
Pressure Cylinders 17,431 20,166 35,396 36,836
Other (172) (2,511) (109) (3,034)
--------- --------- ----------- -----------
Total operating
income $11,481 $30,567 $31,485 $85,292
========= ========= =========== ===========
The following provides detail of the restructuring charges included in
the operating income by segment presented above.
Three Months Ended Six Months Ended
November 30, November 30,
------------------- -----------------------
2007 2006 2007 2006
--------- --------- ----------- -----------
Pre-tax restructuring
charges by segment:
Steel Processing $(106) $- $1,096 $-
Metal Framing 3,557 - 4,439 -
Pressure Cylinders - - - -
Other 27 - 1,775 -
--------- --------- ----------- -----------
Total restructuring
charges $3,478 $- $7,310 $-
========= ========= =========== ===========
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