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Metals Suffer from Anemic Growth In their latest conference calls with analysts and investors, executives from the industry’s leading publicly held mills reported generally disappointing results from a challenging second quarter. Compiled by the Staff of Metal Center News AK Steel Blast Furnace Outage Leads to Quarterly Loss An unexpected outage at AK Steel’s primary steelmaking facility contributed to a net loss of $40.4 million for the West Chester, Ohio-based mill in the second quarter. The red ink follows on a $9.9 million loss in the previous quarter. The company’s second-quarter performance was still a significant improvement on the $724.2 million lost during the same period last year, however. Net sales for the second quarter of 2013 totaled $1.40 billion on shipments of 1.3 million tons, compared to net sales of $1.54 billion on shipments of 1.4 million tons for the year-ago second quarter. Both sales and tons shipped were basically flat from the first quarter. For the first six months of 2013, AK Steel reported a net loss of $50.3 million on sales of $2.77 billion. This compares to a net loss of $736.0 million on sales of $3.05 billion in the first half of 2012. “Excluding the costs associated with blast furnace repairs, both planned and unplanned, AK Steel’s second-quarter results represented improvement over first-quarter 2013,” said James L. Wainscott, chairman, president and CEO of AK Steel during the company’s quarterly conference call with analysts and investors. In June, the company’s Middletown, Ohio, blast furnace was taken offline, the result of a mechanical failure in the charging furnace. Repairs were completed a few weeks later, and the facility had returned to 90 percent production by the end of July. The outage will continue to be felt in the company’s volumes during the third quarter, primarily in spot-market sales in hot-rolled, cold-rolled and coated products. “We should recover nicely from that as we look out into the fourth quarter,” Wainscott said. The slightly lower shipments for the second quarter were primarily due to declines in the carbon spot and electrical steel markets, partially offset by increased shipments to the automotive sector. AK Steel enjoyed its best quarter of shipments to the auto market since the third quarter of 2007. Auto grew to 50 percent of AK Steel’s revenues through the first half, up from 45 percent in 2012. The company’s average selling price for the second quarter was $1,061 per ton, an 8 percent decrease from the second quarter of 2012, but flat with the first quarter. The spot-market price for hot-rolled steel declined to $560 per ton in the quarter, the lowest pricing level since the fourth quarter of 2010. Since then, the company has announced two carbon steel increases that were realized, and a third in mid-July to $650 per ton. Lead times have also extended for the company’s flat-rolled products. Wainscott said a number of factors contributed to the improved spot-market pricing environment in recent weeks, including AK’s outage. Another key driver was service center flat-rolled inventories, which declined for the fifth straight month to their lowest level in two years, down to an adjusted 2.1 months of supply on hand. Scrap pricing also has been on the rise. “Those are really positive trends for spot-market pricing. It’s a combination of our event and those other items that have bolstered pricing,” Wainscott said. Alcoa Restructuring Leads to Second-Quarter Loss Alcoa reported a net loss of $119 million in the company’s second quarter, following a first quarter that saw $149 million in net income. The New York-based aluminum maker lost $2 million in last year’s second quarter. Alcoa officials cited costs related to restructuring, plus a legacy legal matter, as the cause of the quarterly loss. Excluding the special costs, net income for the quarter totaled $76 million, driven by productivity gains across all business segments and record performance in Engineered Products and Solutions. Lower LME aluminum prices were partially offset by higher volumes. Alcoa’s net sales for the quarter totaled almost $6.0 billion, 1.9 percent better than the second quarter of 2012 and 2.2 percent better than the previous quarter. “Our businesses showed remarkable operating performance in the quarter with solid free cash flow,” said Alcoa Chairman and CEO Klaus Kleinfeld during the company’s quarterly conference call. “In our value-add businesses we reached another milestone, with record profitability in our downstream businesses while acting decisively to defy the headwinds of falling metal prices in our upstream businesses. We improved our competitive position by actively restructuring, curtailing and closing facilities, and made progress addressing legacy legal issues.” Alcoa’s second-quarter net loss included $42 million in charges for the closing of the two Soderberg potlines at its Baie-Comeau smelter in Québec, which is part of the 460,000 metric tons of smelting capacity Alcoa has under review. In addition to the smelting capacity review, Alcoa also announced its intention to permanently close its Fusina smelter in Italy, which resulted in a $34 million charge. Alcoa completed the expansion of aluminum-lithium capacity at its Kitts Green facility in the United Kingdom and also expanded capacity by 30 percent at the Alcoa Technical Center outside Pittsburgh. Construction is progressing on the $90 million greenfield aluminum-lithium alloy casting facility in Lafayette, Ind., to be online by the end of 2014. Alcoa projects its aluminum-lithium revenues will quadruple over the next six years to nearly $200 million. After-tax operating income in the Engineered Products and Solutions segment totaled $193 million in the second quarter, up 12 percent from the first quarter and 23 percent from second-quarter 2012. Favorable productivity and higher volumes across all market segments drove the improvement, the company said. Conversely, after-tax operating income in Global Rolled Products declined by 2.5 percent to $79 million compared to the previous quarter, and was up only slightly compared to the same quarter last year. Lower metal prices were largely offset by strong demand from the aerospace, automotive and packaging businesses. Alcoa continues to project 7 percent global aluminum demand growth in 2013 and essentially balanced alumina and aluminum markets. Among its end markets, Alcoa projects global growth this year in aerospace, up 9-10 percent; automotive, up 1-4 percent; commercial transportation, up 3-8 percent; packaging, up 1-2 percent; building and construction, up 4-5 percent; and industrial gas turbine, up 3-5 percent. Allegheny Technologies ATI’s Profits Dip in Second Quarter Allegheny Technologies Inc., Pittsburgh, reported net income of $4.4 million in the second quarter, down substantially from the $56.4 million posted in the same period in 2012. For the first half, ATI’s net income totaled $14.4 million, down 87.2 percent from last year. Net sales totaled $1.14 billion during the quarter, 16.2 percent behind last year’s figure. Net sales for the first six months totaled $2.31 billion, 14.8 percent below the first half of 2012. “Challenging conditions in many of our end markets continued during second-quarter 2013,” said Rich Harshman, chairman, president and CEO. “Lackluster global demand for standard stainless and grain-oriented electrical steel products, combined with excess global supply and falling raw material surcharges for stainless, resulted in continuing pricing pressure and reduced margins on these products.” ATI executives said market fundamentals remained strong in the commercial aerospace, oil and gas, medical and automotive markets. However, consistently falling raw material prices, especially for nickel and titanium scrap, contributed to weak demand from the jet engine aftermarket. Additionally, aggressive inventory management actions throughout the supply chain, combined with relatively short lead times, continued to hurt short-term demand and prices for many products. Among ATI’s business segments, Flat-Rolled Products showed a profit of just $1.4 million, reflecting the challenging market conditions for standard stainless and grain-oriented electrical steel products. Weak global economic conditions added to lower overall demand and pricing pressures on high-value flat-rolled products, including industrial grade titanium. Operating profit in ATI’s Engineered Products segment improved sequentially to $3.1 million from breakeven levels in the first quarter, due primarily to improved demand for tungsten-based products. ATI has accelerated its cost reduction efforts, resulting in more than $79 million in savings in the first six months of 2013. This pace is well above the 2013 target of $100 million in cuts for the full year. On the expenditure side, the company’s $1.2 billion investment in a new hot-rolling and processing facility remains on schedule and on budget. ATI expects the HRPF to be production-ready by the end of the year, with commissioning throughout 2014. By 2015, ATI plans to idle the company’s older hot-strip mill, producing all ATI flat-rolled products using the HRPF. “It is designed to significantly expand our product offering capabilities, shorten manufacturing cycle times, reduce inventory requirements, and improve the cost structure and profitability of our flat-rolled products business,” says Harshman. Looking ahead, ATI executives expect more of the same. The historically softer third quarter may prove even more challenging than the first and second. “We are encouraged by recent signs of stabilization in nickel and titanium scrap prices. If this continues, we may begin to see an improvement in demand and stabilization of selling prices beginning in the fourth quarter 2013,” Harshman said. Carpenter Technology Solid Quarter for Specialty Steelmaker Carpenter Technology Corp. Wyomissing, Pa., reported net income of $40.9 million on net sales of $611.8 million for its fiscal fourth quarter ended June 30, about the same as the prior-year quarter. “We finished the fiscal year with a solid fourth quarter in a challenging environment,” said William A. Wulfsohn, president and CEO, in his quarterly conference call with analysts and investors. “A great team effort in the continued integration of the Latrobe operation, which exceeded our targeted deal synergies by almost two times, helped contribute to the quarterly performance.” In fiscal 2013, Carpenter took steps to strengthen its foundation and align its cost structure with current market conditions, including a 3 percent reduction in its salaried workforce. Carpenter’s net sales, excluding surcharge, increased by $25.4 million or 5 percent from the previous quarter. The higher sales were primarily driven by increased shipments of nickel-based alloy materials used in aerospace applications. Additionally, continued market penetration of nickel-based alloys used in completion equipment for the oil and gas market added to the sales increase. In the aggregate, however, year-over-year sales declined by $10.1 million or 2 percent. The lower level of sales was attributable to a reduction in demand from the transportation, medical, industrial and consumer markets, the company said. “We enter fiscal 2014 optimistic about the year, although shorter lead times and low nickel prices provide less visibility about underlying demand,” Wulfsohn said. “We do anticipate that our first quarter will experience a seasonal earnings decline similar to last year. Additionally, our first quarter will be impacted by a planned major outage and continued supply chain adjustments. However, we have seen an increase in order activity and expect to see demand improvement in our business as the year progresses.” Century Aluminum Century Suffers Loss During 'Challenging' Second Quarter Century Aluminum Co., Chicago, reported a net loss of $34.6 million during the second quarter, a decline from the $12.3 million lost in last year’s second quarter. The company had reported earnings of $8.3 million in the first quarter. Sales for the second quarter totaled $331.9 million, 2.5 percent better than second-quarter 2012. Shipments of primary aluminum in the second quarter totaled 176,270 tons, 9.6 percent better than last year’s second quarter. Sales in the first six months of 2013 totaled $653.2 million, nearly flat with the 2012 period. Shipments of primary aluminum for the first six months totaled 335,046 tons, up 4.4 percent from last year’s first half. “We are managing through a period of uncertainty in our industry,” said Michael Bless, president and CEO. “The slowing in China's economy, the extent and impact of which remain difficult to determine, has clearly begun to impact European and other developed and developing economies. In contrast, our U.S. customer markets remain generally sound, with particular strength in the transportation and construction sectors.” Company executives said the relative strength of the U.S. dollar, caused in part by the recent rise in interest rates, has pressured the price of all commodities. Additionally, industry participants are trying to assess the potential impact of the recent proposal by the London Metals Exchange for changes in the warehousing rules. “In summary, we are prepared to operate through this challenging environment in the near-term, but remain confident that attractive demand coupled with constrained supply outside of China will push aluminum prices upward over time,” Bless said. During the quarter, Century reached a definitive agreement with the power supplier at its Hawesville smelter in Kentucky. Under the agreement, Century will buy power at market terms and pay a small fee to the power company to cover its direct costs. Century also acquired a second smelter in Sebree, Ky., during the quarter, for which the company expects to reach a similar power agreement. “With these developments, we believe we have significantly improved the competitive dynamic of our U.S. system,” Bless said. Kaiser Value-Added Revenue Down Slightly in First Half Kaiser Aluminum Corp., Foothill Ranch, Calif., reported net income of $19 million on net sales of $329 million for the second quarter, down slightly from $21 million earned in second-quarter 2012. Value-added revenue (net sales less the hedged cost of alloyed metal) totaled $184 million for the second quarter, comparable to the $185 million in the prior-year period. For the first six months of 2013, Kaiser reported value-added revenue of $371 million, down 2.5 percent compared to the first half of last year, reflecting a modest inventory overhang in the aerospace supply chain, soft demand from general industrial applications, and lower volume of automotive extrusions for anti-lock braking systems. “As we had anticipated, our first-half 2013 value-added revenue and adjusted EBITDA margin, while reflecting the impact of mild headwinds, were solid when compared to a record first-half 2012," said Jack A. Hockema, Kaiser president, CEO and chairman. “During the second quarter, we continued to experience an inventory overhang for our aerospace applications resulting from supply chain over-reaction in late 2011 and early 2012 to the airframe manufacturer's rate readiness initiatives. We expect the situation to begin to abate somewhat in the second half of 2013 as overall aerospace demand remains strong.” Looking forward, Hockema said Kaiser remains very optimistic. “As we look to the second half 2013, we anticipate that strengthening underlying demand for our aerospace and automotive applications will offset normal seasonal demand weakness.” Nucor Corp. Nucor’s Earnings Remain Flat Nucor Corp., Charlotte, N.C., reported net earnings of $85 million during its second quarter, nearly flat with its first-quarter performance. Net earnings for the minimill company were down 24.2 percent compared to the same quarter of 2012. For the first half, Nucor’s net earnings of $169.9 million were down 34.0 percent compared to the previous year. Nucor's second-quarter net sales totaled $4.67 billion, an increase of 3 percent compared to the first quarter, but a decrease of 8 percent from the same period in 2012. Second-quarter shipments were down 3 percent compared with the same period last year, and 1 percent compared with the previous quarter. Nucor’s average scrap and scrap substitute cost per ton used in the second quarter was $377, a slight decrease from the previous quarter, and a 12 percent drop from the cost paid in last year’s second quarter. Overall operating rates at Nucor’s steel mills in the second quarter averaged 73 percent, up slightly from the first quarter, but down from the 76 percent in the second quarter of 2012. Steel mill utilization decreased from 77 percent in the first half of 2012 to 73 percent in the first half of 2013. Construction is nearing completion on Nucor’s 2.5-million-ton DRI facility in Louisiana, which is on schedule for start-up in the third quarter. The company expects to begin hot-commissioning in August and production by the end of September. “Given the scope of this project, start-up hiccups are to be expected. However, our confidence is extremely high in the process technology,” said John Ferriola, Nucor president and CEO. “Combining Louisiana's capacity with the two million tons of annual capacity at our existing Trinidad DRI plant will bring us to two-thirds of our long-term goal to control six million to seven million tons of annual capacity in high-quality scrap substitutes.” Nucor is engaged in a number of other investments this year, including the addition of a normalizing line at its North Carolina plate mill; expansion of its South Carolina flat-rolled mills product portfolio to include wider and lighter-gauge sheet steel; and expanding the sheet piling products offered through Nucor-Yamato. These projects, which will be completed either this year or early in 2014, will result in much lower capital expenditures in 2014, to near maintenance levels, Nucor executives said. In the third quarter, Nucor anticipates improvements in sheet steel pricing, which dropped to its lowest level since November 2010 in June, but has since begun to rebound. Margins have followed a similar trend and are slowly recovering from lows in the second quarter. The automotive and energy markets remain strong, while the construction market remains challenged. Nucor expects to see increased earnings from its downstream businesses in the third quarter, continuing the upward trend observed in the second quarter. “Overall, the outlook continues to be challenged by anemic economic growth and excess global steel capacity,” said James Frias, chief financial officer. Steel Dynamics Inc. SDI’s Income Falls in Second Quarter Steel Dynamics Inc., Fort Wayne, Ind., reported net income of $29 million during it second quarter, down 34.8 percent from the same period in 2012. Net income was also down from the $48 million in the first quarter. Quarterly net sales totaled $1.8 billion, down 5.6 percent from last year but up slightly from the first quarter. For the first half, net sales of $3.6 billion were down 7.5 percent from the same period in 2012. "Slower anticipated economic growth in China coupled with suppressed economic growth in the European community influenced near-term market sentiment. The persistent uncertainty in the domestic economic environment continued to influence customer buying patterns as they maintained low inventory levels,” said President and CEO Mark Millett. “Domestic oversupply, coupled with increased quarter-over-quarter steel imports, resulted in decreased quarterly selling values.” Compared to the first quarter, operating income from steel operations decreased 28 percent, driven by compressed margins. Lower pricing in the steel sheet and structural markets was responsible for the lower margins. During the quarter, SDI shipped 307,000 tons of hot-rolled product, 102,000 tons of pickled and oiled, 24,000 tons of cold-rolled, 119,000 tons of hot-rolled galvanized, 53,000 tons of cold-rolled galvanized, 89,000 tons of painted product and 26,000 tons of Galvalume. The company’s capacity utilization rate was 83 percent during the quarter, down from 89 percent in the first quarter. Planned maintenance outages in the Flat-Rolled and Engineered Bars divisions were the primary cause of the decrease. The Structural and Rail Division continued a positive utilization trend as standard rail volume increased 20 percent over the sequential quarter. The average selling price for the company's steel operations per ton shipped decreased by $8 to $781 in the second quarter, while the average ferrous scrap cost per ton melted increased $3 per ton. Operating income attributable to the company's long products operations decreased 20 percent when compared to the sequential quarter, while earnings from sheet operations decreased 34 percent. Operating income from the company’s metals recycling operations decreased 37 percent to $16 million, when compared to the first quarter. While ferrous volumes and metal spreads remained somewhat flat, nonferrous volumes and margins contracted in the quarter, as both copper and stainless steel prices decreased significantly. SDI’s planned expansion of its SBQ division remained on schedule for commissioning later in the year with ramp-up throughout 2014. The project will add 325,000 tons of high-precision, smaller-diameter bars to broaden the company’s product portfolio and create the largest single-site producer of engineered bar and SBQ products in North America. "We remain optimistic as the demand for high-quality steel products has not abated," Millett said. "The automotive market remains strong and manufactured goods is strengthening. Housing start data continues to suggest increasingly higher potential for a sustainable recovery in residential construction. We remain cautiously optimistic about the nonresidential construction market in 2013, as the most recent key market indices showed upward improvements.” Timken Sales Suffer from Weak Demand The Timken Company, Canton, Ohio, reported sales of $1.1 billion for the second quarter, a decrease of 16 percent from the prior year due primarily to lower off-highway, industrial distribution, and oil and gas demand. Timken generated net income in the second quarter of $82.8 million, down from $183.6 million during the same period a year ago. “We continue to perform very well, maintaining double-digit operating margins despite weak demand lingering in many global markets,” said James W. Griffith, Timken president and CEO. “Although our outlook for the year now reflects a more modest market recovery in the second half, we continue to expect strong financial performance for the remainder of the year.” Among recent developments, the company: expanded its industrial services capabilities through the acquisition of the Standard Machine business; started up a second ladle refining station at the Faircrest Steel Plant, part of a plan that includes installing a new vertical continuous caster; and formed a strategy committee to evaluate a potential separation of the company's steel business from its other businesses. In the first half of 2013, Timken posted sales of $2.2 billion, down 20 percent from the same period in 2012. The company generated first-half net income of $157.9 million, down from $339.3 million last year. Timken’s steel segment sales in the second quarter totaled $354.1 million, a decrease of 29 percent from $499.8 million for the same period last year. The results reflect reduced shipments to the industrial and oil and gas market sectors, partially offset by improved sales to the mobile on-highway sector. Raw-material surcharges decreased $49 million. Steel sales for the first half totaled $700.2 million, a 32 percent decrease compared with the same period a year ago. First-half EBIT was $78.1 million, or 11.2 percent of sales, down from $176.9 million, or 17.1 percent of sales, in the prior-year period. Timken has revised its outlook for the full year based on a slower-than-expected economic recovery in the second half. The company now expects 2013 sales to be 10 percent lower year-over-year, with Mobile Industries sales down 7 to 12 percent, Process Industries sales down 2 to 7 percent, Aerospace sales up 3 to 8 percent, and Steel sales down 15 to 20 percent. U.S. Steel Lockout Affects 2Q Results U.S. Steel Corp., Pittsburgh, reported a second-quarter 2013 net loss of $78 million on sales of $4.43 billion. That compares to a loss of $73 million on sales of $4.6 billion in the previous quarter and net income of $101 million on sales of $5.02 billion in last year’s second quarter. “Total reportable segment and Other Businesses operating results of $47 million reflect the effects of the ongoing lockout at our Lake Erie Works and a deceleration in global economic growth during the quarter. Our plants operated well, even with increased repairs and maintenance costs,” said U.S. Steel Chairman and CEO John P. Surma, in his remarks to analysts and investors. The $47 million, or $9 per ton, of income from operations for the second quarter was down from income from operations of $94 million, or $17 per ton, in the first quarter, and income from operations of $330 million in second-quarter 2012. Flat-rolled segment results were lower than the first quarter primarily due to increased operating costs and decreased shipments. Operating costs increased due to higher repair and maintenance costs as well as higher natural gas costs, partially offset by lower raw materials costs. Maintenance projects at Gary Works and Lake Erie Works added $30 million to repair costs versus the first quarter, the company reported. U.S. Steel’s flat-rolled shipments decreased from the first quarter primarily due to the maintenance projects and the continuing lockout at the Lake Erie Works that began on April 28. The company incurred $70 million in idle facility carrying costs at its Hamilton and Lake Erie operations in the second quarter. Second-quarter results for U.S. Steel’s European segment declined compared to the first quarter due to higher iron ore costs and lower average realized euro-based prices. A general price deterioration in the spot market occurred during the second quarter as service centers and distributors completed their restocking. Total shipments were comparable to the first quarter. Second-quarter results for the Tubular segment were lower than the first quarter. Total shipments were higher, but average realized prices decreased reflecting lower prices for line pipe product, continued elevated levels of imports and OCTG mix effects. Commenting on U.S. Steel's outlook for the third quarter, Surma said: "Results for our Flat-rolled and Tubular segments are projected to improve compared to the second quarter. However, we expect lower results from our European segment due to a planned blast furnace outage. Total reportable segment and Other Businesses results are expected to be comparable to the second quarter.” Flat-rolled shipments in the third quarter are projected to decrease significantly due to a blast furnace outage at the Great Lakes Works and the Lake Erie Works labor dispute. Lake Erie Works employees were scheduled to vote on the company's contract offer July 31. “If the contract is approved, we plan to restart operations as soon as possible,” Surma said. Second-Quarter Report: Service Centers Mixed Results for Distributors In their quarterly reports to analysts and investors, leading service centers reported progress in a challenging environment. A.M. Castle Castle Reports Quarterly Loss, But Completes Restructuring A.M. Castle & Co., Oak Brook, Ill., reported a net loss of $3.8 million during its second quarter, similar to the $3.0 million loss in the same quarter of 2012, but an improvement on the first quarter. Net sales for the second quarter totaled $273.4 million, 17.0 percent behind last year’s figure. For the first six months, Castle reported a net loss of $14.4 million, almost double last year’s first-half loss. Net sales through the first six months totaled $566.1 million, 18.2 percent below 2012. “While our top-line performance trailed industry benchmarks due to the late-cycle nature of our business, I am pleased with our execution during the quarter, in particular the continuation of our strong cash flow generation, the completion of our announced restructuring activities on schedule and within budget and improvements in our customer service,” said Scott Dolan, A.M. Castle CEO, during the company’s quarterly conference call. “We achieved the structural cost improvements contemplated for the first half of this year, and we started to see those cost improvements benefit our financial results later in the second quarter, in line with our expectations.” In the company’s Metals segment, second-quarter net sales of $239.5 million were 20.7 percent lower, on a per-day basis, than the second quarter of last year and 10.2 percent lower than the first quarter, primarily due to lower volumes. Metals segment tons sold per day for the second quarter were down 20.1 percent from 2012 and down 6.7 percent compared to the first quarter. During the second quarter, the company completed its anticipated restructuring activities, including the consolidation of five warehouse facilities and the realignment of targeted corporate functions. “With our announced restructuring activities now complete, we are focused on continuous improvement while transforming A.M. Castle into a more profitable enterprise,” Dolan said. The company’s outlook for the second half is similar to what it experienced in the first half. Reliance Metals USA Acquisition Helps Reliance to Quarterly Profit Reliance Steel & Aluminum Co. remained profitable during the challenging second quarter, reporting net income of $81 million. Net income was down slightly from the first quarter, and down 25.5 percent from the same period in 2012 for the Los Angeles-based service center company. Through six months, Reliance’s earnings totaled $164.7 million, a decline of 26.8 percent from the same period last year. “While macroeconomic factors have hampered organic growth in recent quarters, Reliance continues to extend its track record of successful M&A activity. Most recently, the acquisition of Metals USA, our largest to date, was completed early in the second quarter and has helped the company generate profitable growth in a challenging environment,” said David Hannah, chairman and CEO. Reliance completed the $1.25 billion acquisition of North America’s eighth-largest service center company in April. Reliance’s net sales for the quarter totaled $2.45 billion, up 10.8 percent from the second quarter last year, and an increase of 20.9 percent from the first quarter. Net sales for the first half totaled $4.47 billion, down slightly from the first six months of 2012. Tons sold increased 24.2 percent from the second quarter of 2012 and 28.7 percent from this year’s first quarter, due largely to the Metals USA acquisition. Second-quarter same store-sales increased 3.7 percent compared to the prior quarter, due in part to an extra shipping day in addition to a slight improvement in overall demand levels. However, a weak pricing environment led to a 2.7 percent decline in same-store average price per ton sold. “In general for the 2013 second quarter, both demand and pricing were a bit weaker than we anticipated at the end of the previous quarter,” said Hannah. “Inventory turns improved somewhat compared to the prior quarter and gross margins declined slightly but were solid in light of the weak pricing we experienced—each indicative of the strong operational performance of our managers in the field.” Among end markets, Reliance enjoyed strong demand in automotive and energy markets, and decent results in aerospace and heavy industry. Non-residential construction continued to show signs of a slow but steady recovery, although still at significantly reduced demand levels from its peak, executives said. Reliance predicts that global economic uncertainty will continue to present challenges to industrial growth in the third quarter and expects only slight improvements in demand, with pricing remaining relatively unchanged from second-quarter levels. While Reliance is still working to integrate Metals USA, the company remains on the lookout for additional opportunities. “We expect to continue to selectively acquire companies that are well-managed, complement our product offerings, grow our presence in targeted end-markets and fit our strategy for profitable growth. We believe Reliance is the acquirer of choice in our industry and our proven, well-executed acquisition strategy has consistently enhanced the performance of our acquired companies,” Hannah said. Worthington Steel Worthington’s Earnings Grow Despite Weak Quarter Worthington Industries Inc., Columbus, Ohio, reported fourth-quarter net earnings of $33.5 million, a 35.7 percent decline from the same period in its previous fiscal year. The company’s quarterly net sales declined by 7.0 percent to $704.1 million. For the full year, Worthington reported net earnings of $136.4 million, up 17.6 percent from fiscal year 2012. Net sales for the year totaled $2.6 billion, up 3 percent primarily due to acquisitions. Net sales were offset by lower average selling prices, a byproduct of the declining market price of steel. "We had a solid performance this quarter and an excellent fiscal year. Excluding impairment and restructuring charges, we achieved the highest annual earnings per share in our history," said John McConnell, chairman and CEO. "There was some softening in Steel Processing's volumes, largely attributable to one tolling customer, but the results were strong from Cylinders as the segment increased sales in retail products and alternative fuels, and found new markets in oil and gas through our acquisitions and product development.” Steel Processing's fourth-quarter net sales of $374.6 million were down 13 percent, or $55.0 million, from the prior-year quarter. Lower average selling prices negatively affected net sales by $30.9 million, while lower direct and toll processing volumes reduced sales by $24.1 million. During the quarter, Worthington acquired Palmer Mfg. & Tank Inc., a manufacturer of steel and fiberglass tanks, for a purchase price of $113.5 million. Worthington also announced the consolidation of BernzOmatic hand torch manufacturing operations in Medina, N.Y., into its existing facility in Chilton, Wis. “Our outlook remains positive. We are positioned for growth both organically and from our acquisitions," said McConnell. "There is continued strength in automotive with shortened or eliminated summer shutdowns, and we anticipate some improvement in commercial construction."