March 30, 2016
Worthington Reports Positive Quarterly Earnings
Worthington Industries, Columbus, Ohio, reported net earnings of $29.6 million on sales of $647.1 million for its fiscal third quarter ended Feb. 29. That compares favorably to a loss of $25.7 million on sales of $804.8 million in third-quarter 2015. “Third-quarter results were good in the face of market headwinds in oil and gas markets and declining prices in Steel Processing,” said John McConnell, chairman and CEO. “Our joint ventures performed well.”
The 19.6 percent decline in sales from the comparable quarter were the result of lower volume in Pressure Cylinders and Engineered Cabs, combined with a lower average selling price in Steel Processing due to the decline in the market price of steel. Quarterly operating income totaled $25.1 million, an increase of $77.1 million from the operating loss in the prior-year quarter. Restructuring and impairment charges contributed to last year’s loss, the company noted.
Net sales by the company’s Steel Processing operation totaled $419.0 million, down 16 percent from the prior-year quarter driven primarily by lower average selling prices. Operating income of $21.3 million was $4.9 million higher than last year’s quarter, driven by a higher spread between average selling prices and material cost and contributions from the January 2015 acquisition of Rome Strip Steel. Pressure Cylinders’ net sales of $200.7 million were down 19 percent, primarily as a result of a 75 percent volume decrease in the company’s Oil & Gas Equipment business.
In other recent developments, the company obtained operating control of the Worthington Special Processing joint venture with U.S. Steel Corp. Worthington’s ownership will remain at 51 percent and U.S. Steel at 49 percent. WSP earnings will be consolidated within the Steel Processing segment. The company also completed the acquisition of the global CryoScience business of Taylor Wharton, including a manufacturing facility in Theodore, Ala., for $31.4 million.
“Steel pricing appears to be stabilizing, automotive remains strong and construction markets are strengthening,” McConnell said. “As we kick off our Transformation 2.0 efforts, we are encouraged by the initial results of our lean activities in our Pressure Cylinders and Steel Processing operations. Transformation 2.0 enhances our efforts that were so successful in Steel Processing by accelerating the work through kaizen activities using the same fundamental principles we have used in improving operations, sales and purchasing. While it will take some time to reach all facilities, we are focusing on the facilities where we think we can have the highest potential outcomes.”