Worthington's Quarterly Sales Down 17.9 Percent
By Metal Center News Staff
on Sep 24, 2020
Worthington Industries Inc., Columbus, Ohio, reported net sales of $702.9 in its first quarter, which ended Aug. 31. Net sales were down 17.9 percent compared with the same quarter the previous year.
Despite the sales decline, the company reported net earnings of $616.7 million in the quarter, primarily due to a net pre-tax gain of $746.6 million from its investment in Nikola Corp.
“We are pleased with our first-quarter results and with how our teams have continued to operate safely and effectively despite the challenging environment,” said Andy Rose, president and CEO, who succeeded long-time CEO John McConnell on Sept. 1. “We saw improvement in many of our end markets during the quarter, most notably automotive in Steel Processing, along with consumer products in Pressure Cylinders.”
The quarter-over-quarter decline in sales was driven by a combination of lower average selling prices and lower direct volume in Steel Processing, lower overall sales in Pressure Cylinders and the divestiture of the engineered cabs business in the prior year.
Gross margin decreased $3.9 million from the prior year quarter to $113.4 million, as higher gross margin in Steel Processing was more than offset by the $12.8 million benefit recognized in the prior year quarter related to the cancellation of a customer take-or-pay contract in Pressure Cylinders. The operating loss for the quarter was $30.1 million, $15.5 million higher than the prior-year quarter.
Steel Processing’s net sales totaled $431.0 million, down 18 percent, from the comparable prior-year quarter driven by lower average selling prices and lower direct volume. Operating income of $13.6 million was $7.4 million higher than the prior-year quarter as the impact of lower direct volume was more than offset by improved spreads and lower conversion costs. The mix of direct versus toll tons processed was 49 to 51 percent in the current quarter, compared to 54 to 46 percent in the prior-year quarter. The change in mix was driven primarily by the consolidation of the toll processing joint venture, Worthington Samuel Coil Processing, in the third quarter of fiscal 2020.
“Demand remains solid across many of our markets with the exception of oil and gas and a few industrial markets. However, the current economy makes it difficult to predict with confidence how the balance of our fiscal year will play out,” Rose said.