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Worthington Reports Quarterly Loss

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Worthington Industries Inc., Columbus, Ohio, reported a net loss of $4.8 million in its second quarter, a significant decline from both the fourth quarter and the prior-year quarter. The company reported earnings of $37.7 million in the prior quarter and $54.9 million in first-quarter 2018.

Net sales totaled $855.9 million in the quarter. That was down 8.8 percent from the previous quarter and 13.4 percent from the same quarter last year. The decrease was primarily driven by lower direct volume and lower average direct selling prices in Steel Processing due to a decline in the market price of steel.

"Despite softness in several of our end markets and a lot of noise in the numbers, the overall health of the company is good," said John McConnell, chairman and CEO. “Steel Processing continues to deal with steel price declines and market softness in automotive and agricultural demand, but our steel team is managing that business well with a focus on long-term growth.”

The company's gross margin decreased $25.7 million from the prior year quarter to $117.3 million.  The decrease was driven primarily by compressed direct spreads in Steel Processing, which were negatively impacted by inventory holding losses in the current quarter versus prior year holding gains, combined with lower direct volumes.

Steel Processing’s net sales totaled $523.4 million, down 21 percent from the comparable prior-year quarter, driven by lower direct volume and lower average direct selling prices.  Operating income of $6.2 million was $33.5 million less than the prior year quarter on the combined impact of a compressed pricing spread driven by current quarter inventory holding losses versus prior year holding gains and lower direct volumes. The mix of direct versus toll tons processed was 54 to 46 percent, compared with 58 to 42 percent in the prior-year quarter.

"We made significant progress in the quarter, continuing to address underperforming and non-core businesses, positioning us well for the remainder of the fiscal year," said McConnell.  “While steel price declines remain a headwind for Steel Processing, overall our businesses are executing well and taking advantage of market opportunities.”

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