WOR Worthington Enterprises Inc

COLUMBUS, OH--(Marketwired - Mar 27, 2014) - Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $773.2 million and net earnings of $40.6 million, or $0.57 per diluted share, for its fiscal 2014 third quarter ended February 28, 2014. In the third quarter of the prior year, the Company reported net sales of $619.5 million and net earnings of $37.1 million, or $0.52 per diluted share.

Financial highlights for the current and comparative periods are as follows:

"We had a strong quarter, the best third quarter earnings per share in our history, with solid earnings growth despite enduring extreme weather conditions which hampered some of our business activity," said John McConnell, Chairman and CEO. "Steel Processing had a very good quarter with strong volume from the automotive and construction markets. Pressure Cylinders had strong contributions from our branded consumer products, oilfield products, and the heating tank business."

Consolidated Quarterly Results

Net sales for the third quarter ended February 28, 2014 were $773.2 million, up 25% from the comparable quarter in the prior year, when net sales were $619.5 million. The increase resulted from higher overall volumes, which were aided by the impact of acquisitions.

Gross margin for the current quarter was $122.5 million, compared to $97.0 million in the prior year quarter. The $25.5 million increase was primarily the result of an increase in volumes and to a lesser extent an improved spread between average selling prices and material costs.

Operating income for the current quarter was $45.3 million, compared to $33.4 million in the prior year quarter, due to the improvement in gross margin which was partially offset by a $12.5 million increase in SG&A expenses primarily from the impact of acquisitions and higher profit sharing and bonus expense. Operating income in the current quarter also included restructuring charges of $1.5 million mainly due to a $1.4 million severance accrual for the recently announced closure of the Baltimore, Md. steel facility.

Interest expense of $6.2 million in the quarter was essentially flat versus the prior year quarter.

Equity in net income from unconsolidated joint ventures decreased $4.5 million from the prior year quarter to $21.2 million on sales of $340.6 million. The decrease was primarily from the consolidation of TWB and lower income at ClarkDietrich and WAVE. Since July 31, 2013, TWB's results have been consolidated rather than reported as equity income. Equity income from ClarkDietrich and WAVE was lower by $2.1 million and $1.6 million, respectively, on lower volumes related to severe weather conditions. However, all joint ventures posted positive results, led by WAVE, Serviacero and ClarkDietrich, which contributed $15.5 million, $3.1 million, and $1.0 million of equity income, respectively.

Income tax expense increased slightly from $16.2 million in the prior year quarter to $16.6 million in the current quarter, as the impact of higher net earnings was substantially offset by certain favorable discrete tax adjustments. The current quarter income tax expense reflects an estimated annual effective tax rate of 27.3% compared to 31.8% for the prior year quarter.

Balance Sheet

At quarter end, total debt was $441.8 million, down $8.4 million from November 30, 2013 due to lower short-term borrowings. As of February 28, 2014, the Company had utilized $20.0 million of its $100.0 million trade accounts receivable securitization facility, and $9.7 million was drawn on the Company's $425.0 million revolving credit facility.

Quarterly Segment Results

Steel Processing's net sales of $478.0 million were up 35%, or $124.1 million, from the prior year quarter, on higher volumes resulting primarily from the consolidation of TWB and increased sales in the automotive, construction and agriculture markets. Operating income increased by $10.6 million to $28.3 million due primarily to higher overall volumes. The overall improvement in operating income was partially offset by $1.4 million of severance costs accrued in connection with the previously announced closure of the Baltimore steel facility.

Pressure Cylinders' net sales of $233.3 million were up 14%, or $28.1 million, from the comparable prior year quarter driven by the recently acquired oilfield equipment and strong retail product volumes. Operating income was $21.3 million, up $3.4 million from the prior year quarter, due to the increase in volumes combined with an improvement in operating margins.

Engineered Cabs' net sales of $51.5 million were up 6%, or $2.9 million, from the comparable prior year quarter driven by higher volumes. Operating loss of $1.1 million represents a $1.2 million decrease from the operating income in the prior year quarter, as the increase in net sales was more than offset by higher manufacturing and SG&A expenses.

The "Other" category includes the Construction Services and Energy Innovations operating segments, as well as non-allocated corporate expenses. Operations in the "Other" category reported net sales of $10.5 million, a decrease of $1.3 million from the prior year quarter, mostly due to the Construction Services business. The "Other" category reported a loss of $3.2 million driven by losses within Construction Services. The Military and Mid-Rise businesses within construction services are no longer core to the Company's strategy and are in the process of being exited.

Recent Business Developments

• On January 24, 2014, the Company acquired a 75% interest in Aritas Basincli Kaplar Sanayi A.S., one of Europe's leading LNG (liquefied natural gas) and cryogenic technology companies. The remaining 25% stake was retained by the previous owners.
• During the quarter, the Company purchased a total of 1,000,000 common shares for $40.8 million at an average price of $40.76.
• On March 26, 2014, the board of directors declared a quarterly dividend of $0.15 per share payable on June 27, 2014 to shareholders of record on June 13, 2014.

Outlook

"We anticipate the fourth quarter, historically our strongest, to yield a solid performance to finish out our fiscal year," McConnell said. "We will continue to pursue our strategy of growth with our existing businesses as well as through acquisition opportunities in growing markets."

Conference Call

Worthington will review third quarter results during its quarterly conference call on March 27, 2014, at 1:30 p.m., Eastern Daylight Time. Details regarding the conference call can be found on the Company web site at www.WorthingtonIndustries.com.

Corporate Profile

Worthington Industries is a leading diversified metals manufacturing company with 2013 fiscal year sales of $2.6 billion. The Columbus, Ohio based company is North America's premier value-added steel processor and a leader in manufactured metal products, such as propane, oxygen, refrigerant and industrial cylinders, hand torches, camping cylinders, scuba tanks, compressed natural gas storage cylinders, helium balloon kits and exploration, recovery and production tanks for global energy markets; custom-engineered open and enclosed cabs and operator stations for heavy mobile equipment; laser welded blanks; steel pallets and racks; and through joint ventures, suspension grid systems for concealed and lay-in panel ceilings, current and past model automotive service stampings and light gauge steel framing for commercial and residential construction. Worthington employs approximately 10,000 people and operates 82 facilities in 11 countries.

Founded in 1955, the Company operates under a long-standing corporate philosophy rooted in the golden rule. Earning money for its shareholders is the first corporate goal. This philosophy serves as an unwavering commitment to the customer, supplier, and shareholder, and it serves as the Company's foundation for one of the strongest employee-employer partnerships in American industry.

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 outlook, strategy or business plans; or future or expected growth, performance, sales, volumes, cash flows, earnings, balance sheet strengths, debt, financial condition or other financial measures; projected profitability potential, capacity, and working capital needs; demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; pricing trends for raw materials and finished goods and the impact of pricing changes; anticipated capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing or the supply chain and the results thereof; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, newly-created joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to maintain margins and capture and maintain market share and to develop or take advantage of future opportunities, new products and new markets; expectations for Company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expected benefits from transformation plans, cost reduction efforts and other new initiatives; expectations for increasing volatility or improving and sustaining earnings, earnings potential, margins or 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, 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 legislation or regulations relating to the United States debt and budget, which may be adverse due to its impact on tax increases, governmental spending, and customer confidence and spending; the effect of conditions in national and worldwide financial markets; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company's products; fluctuations in the 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 financial difficulties, consolidation and other changes within the steel, automotive, construction and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts; the ability to realize other cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives, on a timely basis; the overall success of, and the ability to integrate, newly-acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom; capacity levels and efficiencies, within facilities, within major product markets and within the industry as a whole; the effect of disruption in the 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 demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability, foreign currency exposure and the acceptance of our products in new markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; the outcome of adverse claims experience with respect to workers' compensation, product recalls or product 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 and governmental agency rulings as well as the impact of governmental regulations, both in the United States and abroad, including those adopted by the United States Securities and Exchange Commission and other governmental agencies as contemplated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of changes to healthcare laws in the United States, which may increase our healthcare and other costs and negatively impact our operations and financial results; and other risks described from time to time in the Company's filings with the United States Securities and Exchange Commission, including those described in "Part I - Item 1A. - Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended May 31, 2013.

CONTACTS: Cathy M. Lyttle VP, Corporate Communications and Investor Relations Phone: (614) 438-3077 E-mail: Email Contact Sonya L. Higginbotham Director, Corporate Communications Phone: (614) 438-7391 E-mail: Email Contact

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