Worthington’s Earnings up 27 Percent in Second Quarter
Worthington Industries Inc., Columbus, Ohio, reported net sales of $570.4 million and net earnings of $18.5 million during its fiscal second quarter, which ended Nov. 30. Compared to the second quarter last year, the sales figure was a minor drop from $580.7 million, but earnings were up 27.5 percent.
"Our second quarter results were very good, showing solid incremental growth," said John McConnell, chairman and CEO. "The Steel Processing and Pressure Cylinders businesses nearly made up for the lost revenue from the exiting of the Metal Framing business in the year-to-year comparison.”
Strengthening auto demand and improved operating performance drove strong results in the company’s Steel Processing segment. The business reported an 18 percent increase in sales compared to the same quarter in 2010.
Steel Processing's net sales of $373.5 million were up $56.3 million over the prior-year quarter. Higher average selling prices increased net sales by $35.9 million, while a 12 percent increase in volumes boosted sales by $20.4 million.
The mix of direct vs. toll tons processed was 51 to 49 percent, compared with 54 to 46 percent in the comparable prior-year quarter. Operating income declined $1.0 million as increased volumes were more than offset by the impact of higher manufacturing expenses and inventory holding losses.
“Our Steel Processing segment is operating at a high level, and we have positioned our joint ventures to continue their strong results. Even with the slow economy, we have seen incremental improvements in many of our markets and believe we can continue to grow our bottom line," McConnell said.
Worthington’s inventory is at record low levels, with only 57 days on hand. Despite the low levels, the company still achieved 95 percent on-time delivery performance during the quarter.
Company officials expressed some supply concern over RG Steel’s recent decision to keep its Sparrows Point blast furnace offline for the foreseeable future. The furnace was idled shortly before Christmas in response to issues with its banking partners. Worthington says it has contingency plans to source the material it was getting from Sparrows Point.
“We’re hopeful they will come out of the current challenges they are facing. They’ve been a good supplier for us in the time we’ve been doing business with them and hope they can recover,” McConnell said.
Looking ahead, though the processing segment experienced the typical seasonal slowdown as the year ended, the early signs for 2012 are positive. Strong performance by the automotive industry and a recent uptick in prices may be behind the solid bookings.
“I think there was an increase in bookings as people came to the realization that prices were going up. Prior to that there was some hesitation about where the bottom was,” said Worthington President George Stowe. “As soon as the bottom was reached and prices started escalating, people started moving forward with bookings, and we think that will continue.”