EX-99.1 2 l09661aexv99w1.htm EX-99.1 Exhibit 99.1
 

Exhibit 99.1

For Immediate Release

Worthington Reports Record First Quarter Results
Earnings Per Diluted Share: $0.66 vs. $0.07

COLUMBUS, Ohio, September 22, 2004 – Worthington Industries, Inc. (NYSE: WOR) today reported record first quarter results for the three months ended August 31, 2004.

Highlights

Sales for the first quarter of fiscal 2005 were $769.3 million, an increase of 54% from last year’s $498.0 million. First quarter net earnings were $57.9 million and earnings per diluted share were $0.66, compared to first quarter net earnings of $5.9 million, or $0.07 per diluted share, for the same period last year.

Earnings for the current quarter were reduced by a $5.6 million pre-tax charge related to the sale of the Decatur, Alabama, cold mill and related assets. This charge is mainly due to contract termination costs that could not be accrued until the sale closed, which occurred on August 1, 2004, and other adjustments to the charge recorded at May 31, 2004. The after-tax impact of this charge was a reduction in net earnings of $3.5 million or $0.04 per diluted share.

“I am pleased to report our second consecutive quarter of record results,” said John McConnell, Chairman and CEO of Worthington Industries. “We achieved these results even though two of our key market segments, automotive and commercial construction, were not at their peak. While we did experience some benefit from selling lower priced inventory in a higher price environment, that impact has lessened considerably, and this quarter’s results would have been record-breaking regardless. I look forward to what our Metal Framing segment can accomplish as commercial construction — particularly office construction — continues to pick up from what has been a multi-year low,” concluded McConnell.

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Segment Results

In the Processed Steel Products segment, quarterly net sales rose 58%, or $166.6 million, to $453.8 million from $287.2 million in the comparable quarter of fiscal 2004. The increase in net sales was due to higher volumes (up 14%) and pricing (up 39%). Excluding the impact of the $5.6 million charge related to the Decatur asset sale, operating income was significantly improved due to higher volumes and a wider spread between selling prices and material costs.

In the Metal Framing segment, net sales increased 69%, or $97.3 million, to $238.4 million from $141.1 million in the comparable quarter of fiscal 2004. The increase was the result of higher pricing as volumes were down 10% from the year ago quarter largely due to weather related and other project delays. The wider spread between selling prices and material costs was responsible for a significant improvement in operating income.

In the Pressure Cylinders segment, net sales increased 10%, or $6.7 million, to $73.2 million from $66.5 million in the comparable quarter of fiscal 2004. Unit volumes were up 2% overall as strength in the European market was partially offset by softer domestic propane cylinder demand. A portion of the increase in European revenues was the result of a weakened U.S. dollar which boosted reported revenues in dollars by $1.6 million. Operating income fell due to costs related to the partial closure of the Portugal facility.

Worthington’s joint ventures continued to perform well. Equity in net income of the six unconsolidated affiliates totaled $13.3 million for the quarter, up 68% from $7.9 million in the year ago quarter. Results at all six joint ventures were up significantly from the prior year.

Outlook

Relative to last year, economic and industry conditions have improved across all customer segments except “Big 3” automotive, Processed Steel’s largest customer segment. “Big 3” vehicle production is projected to be down 7% for the coming fiscal quarter compared to the same quarter last year but up 12% from this quarter. In commercial construction, Metal Framing’s primary market, the U.S. Census Bureau’s Index of Private Construction Spending confirms that commercial construction activity has shown year-over-year improvement during the last six months. This index serves as a leading indicator for the Metal Framing business segment as metal framing products are generally used in the latter stages of commercial construction projects.

Other

Dividends declared

On August 19, 2004, the board of directors declared a quarterly cash dividend of $0.16 per share payable September 29, 2004, to shareholders of record September 15, 2004. This is the 147th consecutive quarter that Worthington has paid a dividend since it became a public company in 1968.

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Corporate Profile

Worthington Industries is a leading diversified metal processing company with annual sales of more than $2 billion. The Columbus, Ohio, based company is North America’s premier value-added steel processor and a leader in manufactured metal products such as metal framing, pressure cylinders, automotive past model service stampings, metal ceiling grid systems and laser welded blanks. Worthington employs more than 8,000 people and operates 61 facilities in 10 countries.

Founded in 1955, the company operates under a long-standing corporate philosophy rooted in the golden rule, with earning money for its shareholders as the first corporate goal. This philosophy, an unwavering commitment to the customer, and one of the strongest employee/employer partnerships in American industry serve as the company’s foundation.

Conference Call

Worthington will review its first quarter results during its quarterly conference call today, September 22, 2004, at 1:30 p.m. Eastern Daylight Time. Details on the conference call can be found on the company’s web site at www.WorthingtonIndustries.com

Safe Harbor Statement

The company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “Act”). Statements by the company relating to future sales, operating results and earnings per share; projected capacity and working capital needs; pricing trends for raw materials and finished goods; anticipated capital expenditures and asset sales; projected timing, results, costs, charges and expenditures related to facility dispositions, shutdowns and consolidations; new products and markets; expectations for the economy and markets; and other non-historical matters constitute “forward looking statements” within the meaning of the Act. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, product demand and pricing, changes in product mix and market acceptance of products; fluctuations in pricing, quality or availability of raw materials (particularly steel), supplies, utilities and other items required by operations; effects of facility closures and the consolidation of operations; the ability to realize cost savings and operational efficiencies on a timely basis; the ability to integrate newly acquired businesses and achieve synergies therefrom; capacity levels and efficiencies within facilities and within the industry as a whole; financial difficulties of customers, suppliers, joint venture partners and others with whom the company does business; the effect of national, regional and worldwide economic conditions generally and within major product markets, including a prolonged or substantial economic downturn; the effect of adverse weather on customers, markets, facilities and shipping operations; changes in customer spending patterns and supplier choices and risks

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associated with doing business internationally, including economic, political and social instability and foreign currency exposure; acts of war and terrorist activities; the ability to improve processes and business practices to keep pace with the economic, competitive and technological environment; deviation of actual results from estimates and/or assumptions used by the company in the application of its significant accounting policies; level of imports and import prices in the company’s markets; the impact of governmental regulations, both in the United States and abroad; and other risks described from time to time in filings with the United States Securities and Exchange Commission.

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WORTHINGTON INDUSTRIES, INC.
EARNINGS HIGHLIGHTS
(In Thousands, Except Per Share)

                 
    Three Months Ended
    August 31,
    2004   2003
    (Unaudited)   (Unaudited)
Net sales
   $ 769,340     $ 498,035  
Cost of goods sold
     609,696       449,052  
 
    
 		      
 		  
Gross margin
     159,644       48,983  
 
                
Selling, general & administrative expense
     64,831       41,620  
Impairment charges and other
     5,608       —  
 
    
 		      
 		  
Operating income
     89,205       7,363  
 
                
Other income (expense):
                
Miscellaneous income (expense)
     (3,459 )     (389 )
Interest expense
     (5,722 )     (5,591 )
Equity in net income of unconsolidated affiliates
     13,296       7,936  
 
    
 		      
 		  
Earnings before income taxes
     93,320       9,319  
Income tax expense
     35,461       3,402  
 
    
 		      
 		  
 
                
Net earnings
   $ 57,859     $ 5,917  
 
    
 		      
 		  
 
                
Average common shares outstanding — diluted
     88,112       86,517  
 
    
 		      
 		  
 
                
Earnings per share — diluted
   $ 0.66     $ 0.07  
 
    
 		      
 		  
Common shares outstanding at end of period
     87,325       86,054  
 
                
Cash dividends declared per common share
   $ 0.16     $ 0.16  

 

 

WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

                 
    August 31,   May 31,
    2004   2004
    (Unaudited)   (Audited)
ASSETS
                
Current assets
                
Cash and cash equivalents
   $ 10,932     $ 1,977  
Receivables, net
     355,023       348,833  
Inventories
     445,070       362,906  
Deferred income taxes
     3,869       3,963  
Other current assets
     32,803       115,431  
 
    
 		      
 		  
 
                
Total current assets
     847,697       833,110  
 
                
Investments in unconsolidated affiliates
     122,265       109,040  
Goodwill
     117,882       117,769  
Other assets
     27,734       27,826  
Property, plant and equipment, net
     552,356       555,394  
 
    
 		      
 		  
 
                
Total assets
   $ 1,667,934     $ 1,643,139  
 
    
 		      
 		  
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current liabilities
                
Accounts payable
   $ 299,143     $ 313,909  
Current maturities of long-term debt
     1,013       1,346  
Other current liabilities
     159,536       159,805  
 
    
 		      
 		  
 
                
Total current liabilities
     459,692       475,060  
 
                
Other liabilities
     99,600       95,067  
Long-term debt
     287,915       288,422  
Deferred income taxes
     91,212       104,216  
 
                
Shareholders’ equity
     729,515       680,374  
 
    
 		      
 		  
 
                
Total liabilities and shareholders’ equity
   $ 1,667,934     $ 1,643,139  
 
    
 		      
 		  

 

 

WORTHINGTON INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

                 
    Three Months Ended
    August 31,
    2004   2003
    (Unaudited)   (Unaudited)
Operating activities
                
Net earnings
   $ 57,859     $ 5,917  
Adjustments to reconcile net earnings to net cash
                
  provided by operating activities:
                
Depreciation and amortization
     14,059       16,952  
Impairment charges and other
     5,608       —  
Other adjustments
     (21,137 )     (4,485 )
Changes in current assets and liabilities
     (105,470 )     (1,348 )
 
    
 		      
 		  
Net cash provided (used) by operating activities
     (49,081 )     17,036  
 
                
Investing activities
                
Investment in property, plant and equipment, net
     (11,484 )     (5,816 )
Investment in unconsolidated affiliate
     —       (490 )
Proceeds from sale of assets
     81,960       2,880  
 
    
 		      
 		  
Net cash provided (used) by investing activities
     70,476       (3,426 )
 
                
Financing activities
                
Proceeds from short-term borrowings
     —       (1,077 )
Principal payments on long-term debt
     (1,851 )     (556 )
Dividends paid
     (13,915 )     (13,754 )
Other
     3,326       1,236  
 
    
 		      
 		  
Net cash used by financing activities
     (12,440 )     (14,151 )
 
                
Increase (decrease) in cash and cash equivalents
     8,955       (541 )
Cash and cash equivalents at beginning of period
     1,977       1,139  
 
    
 		      
 		  
Cash and cash equivalents at end of period
   $ 10,932     $ 598  
 
    
 		      
 		  

 

 

WORTHINGTON INDUSTRIES, INC.
SUPPLEMENTAL DATA
(In Thousands)

This supplemental information is provided to assist in the analysis of the results of operations.

                 
    Three Months Ended
    August 31,
    2004   2003
    (Unaudited)   (Unaudited)
Volume:
                
Processed Steel Products (tons)
     964       849  
Metal Framing (tons)
     178       198  
Pressure Cylinders (units)
     3,191       3,123  
 
                
Net sales:
                
Processed Steel Products
   $ 453,827     $ 287,198  
Metal Framing
     238,391       141,064  
Pressure Cylinders
     73,227       66,535  
Other
     3,895       3,238  
 
    
 		      
 		  
Total net sales
   $ 769,340     $ 498,035  
 
    
 		      
 		  
 
                
Material cost:
                
Processed Steel Products
   $ 309,749     $ 188,985  
Metal Framing
     118,104       92,954  
Pressure Cylinders
     32,975       29,020  
 
                
Operating income:
                
Processed Steel Products
   $ 35,795     $ 8,169  
Metal Framing
     51,512       (3,654 )
Pressure Cylinders
     3,189       3,538  
Other
     (1,291 )     (690 )
 
    
 		      
 		  
Total operating income
   $ 89,205     $ 7,363  
 
    
 		      
 		  

The following provides detail of the impairment charges and other included in the operating income by segment presented above.

                 
    Three Months Ended
    August 31,
    2004   2003
    (Unaudited)   (Unaudited)
Pre-tax impairment charges and other by
segment
                
Processed Steel Products
   $ 5,608     $ —  
Metal Framing
     —       —  
Pressure Cylinders
     —       —  
Other
     —       —  
 
    
 		      
 		  
 
                
Total impairment charges and other
   $ 5,608     $ —