COLUMBUS, Ohio, March 26, 2020 (GLOBE NEWSWIRE) -- Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $764.0 million and net earnings of $15.3 million, or $0.27 per diluted share, for its fiscal 2020 third quarter ended Feb. 29, 2020. In the third quarter of fiscal 2019, the Company reported net sales of $874.4 million and net earnings of $26.8 million, or $0.46 per diluted share. Results in both the current and prior year quarter include the following impairment, restructuring and other items:

(U.S. dollars in millions, except per share amounts)

		3Q 2020								3Q 2019
		Pre-Tax				EPS				Pre-Tax				EPS
Impairment and restructuring (charges) gains		$	(36.0	)		$	(0.48	)		$	11.2			$	0.14
Composite tank replacement program			2.3				0.03				(13.0	)			(0.17		)
Gain on consolidation of Samuel Steel Pickling		$	6.1			$	0.08			$	-			$	-

In addition, the current quarter included estimated inventory holding losses in Steel Processing of $6.0 million, or $0.08 per diluted share, compared to estimated losses in the prior year quarter of $10.8 million, or $0.14 per diluted share. Financial highlights for the current and comparative periods are as follows:

(U.S. dollars in millions, except per share amounts)

		3Q 2020				3Q 2019			9M 2020			9M 2019
Net sales		$	764.0			$	874.4		$	2,447.5		$	2,820.7
Operating income (loss)			(1.4	)			26.0			16.1			112.8
Equity income			25.5				20.8			97.6			71.9
Net earnings			15.3				26.8			62.6			115.7
Earnings per diluted share		$	0.27			$	0.46		$	1.11		$	1.95

“While I’m pleased with our results in the third quarter, today, our top priority is keeping our people safe and managing our businesses through this difficult crisis,” said John McConnell, Chairman and CEO. “I am extremely proud of how our employees have come together, collectively navigating the unprecedented challenges facing our Company and our country.”

Consolidated Quarterly Results

Net sales for the third quarter of fiscal 2020 were $764.0 million, down 13% from the comparable quarter in the prior year, when net sales were $874.4 million. The decrease was driven primarily by lower average selling prices in Steel Processing and lower volume in Pressure Cylinders, partially offset by higher volumes in Steel Processing. Gross margin increased $25.5 million over the prior year quarter to $115.5 million. The increase was driven primarily by higher direct spreads and higher toll volume in Steel Processing combined with a higher contribution from Pressure Cylinders in the current quarter, compared to the prior year quarter that included the unfavorable impact of the tank replacement program.

Operating loss for the current quarter was $1.4 million compared to operating income of $26.0 million in the prior year quarter as the improvement in gross margin was more than offset by higher impairment and restructuring charges in Pressure Cylinders and higher SG&A expense.

Interest expense was $7.4 million for the current quarter, compared to $9.3 million in the prior year quarter. The decrease was due primarily to lower average debt levels and lower average interest rates resulting from the debt refinancing transactions completed earlier in the year.

Equity income from unconsolidated joint ventures increased $4.7 million over the prior year quarter to $25.5 million, primarily due to higher contributions from ClarkDietrich, ArtiFlex and WAVE. The Company received cash distributions of $21.0 million from unconsolidated joint ventures during the quarter.

Income tax expense was $4.8 million in the current quarter compared to $8.4 million in the prior year quarter on lower pre-tax earnings as a result of the significant impairment and restructuring charges recognized in the current quarter. Tax expense in the current quarter reflects an estimated annual effective rate of 24.6%, compared to an estimated rate of 23.3% for the prior year quarter.

Balance Sheet

At quarter-end, total debt was unchanged from Nov. 30, 2019 at $698.8 million and the Company had $103.4 million of cash on hand.

Quarterly Segment Results

Steel Processing’s net sales totaled $491.1 million, down 12%, or $64.7 million, from the comparable prior year quarter driven primarily by lower average selling prices, partially offset by higher volume. Operating income was $19.0 million, up $8.9 million from the prior year quarter on higher direct spreads and the impact of higher toll volume. Direct spreads in the current quarter benefited from lower inventory holding losses. The mix of direct versus toll tons processed was 44% to 56% in the current quarter, compared to 57% to 43% in the prior year quarter. The change in mix was driven primarily by the consolidation of the toll processing joint venture, Samuel Steel Pickling, during the current quarter.

Pressure Cylinders’ net sales totaled $271.0 million, down 7%, or $19.7 million, from the comparable prior year quarter due to lower volumes in both the industrial products and consumer products businesses. Operating loss of $19.9 million in the current quarter compared to operating income of $19.0 million in the prior year quarter. The decline was due primarily to higher impairment and restructuring charges, which were up $45.3 million over the gain recognized in the prior year quarter, partially offset by the favorable impact of the change in reserves for the tank replacement program initiated in the prior year quarter. Excluding the impact of these items, operating income was down $8.8 million on lower contributions from both the industrial products and consumer products businesses, partially offset by improvements in the oil and gas equipment business.

Recent Developments

• On Dec. 31, 2019, the Company contributed the recently acquired assets of Heidtman Steel to the Samuel Steel Pickling joint venture, increasing the Company’s total ownership interest in the joint venture to 63%, resulting in a pre-tax gain of $6.1 million during the quarter.
• On Feb. 12, 2020, the Company announced a plan to consolidate its oil and gas equipment manufacturing operation in Wooster, Ohio, into its existing facility in Bremen, Ohio, resulting in pre-tax impairment and restructuring charges of $33.9 million during the quarter. The closure of the Wooster facility is expected to be completed by May 29, 2020.
• On March 18, 2020, the Company’s Worthington Specialty Processing joint venture announced a plan to consolidate its manufacturing operations in Canton, Mich., into its existing facilities in Jackson and Taylor, Mich., resulting in pre-tax impairment and restructuring charges to the joint venture of $1.6 million during the quarter. The closure of the Canton facility is expected to be completed by May 29, 2020.
• On March 25, 2020, the Board declared a quarterly dividend of $0.24 per share payable on June 29, 2020 to shareholders of record on June 15, 2020.
• During the quarter, the Company repurchased a total of 550,000 common shares for $21.4 million at an average price of $38.86.

Outlook

“There are still many unknowns regarding the spread of COVID-19 and how the measures to control it will impact the economy and our Company,” McConnell said. “Many of our facilities are considered ‘essential businesses’ under the various state and federal guidelines and will continue to operate based on customer demand. I am especially grateful to our production workforce who are leading our effort to serve our customers and our country by continuing to make products.”

Conference Call

Worthington will review fiscal 2020 third quarter results during its quarterly conference call on March 26, 2020, at 10:30 a.m., Eastern Time. Details regarding the conference call can be found on the Company website at www.WorthingtonIndustries.com.

About Worthington Industries

Worthington Industries (NYSE: WOR) is a leading industrial manufacturing company delivering innovative solutions to customers that span many industries including transportation, construction, industrial, agriculture, retail and energy. Worthington is North America’s premier value-added steel processor and producer of laser welded products; and a leading global supplier of pressure cylinders and accessories for applications such as fuel storage, water systems, outdoor living, tools and celebrations. The Company’s brands, primarily sold in retail stores, include Coleman®, Bernzomatic®, Balloon Time®, Mag Torch® and Well-X-Trol®. Worthington’s WAVE joint venture with Armstrong is the North American leader in innovative ceiling solutions. Headquartered in Columbus, Ohio, Worthington operates 57 facilities in 15 states and six countries, sells into over 90 countries and employs approximately 9,000 people. Founded in 1955, the Company follows a people-first philosophy with earning money for its shareholders as its first corporate goal. Relentlessly finding new ways to drive progress and practicing a shared commitment to transformation, Worthington makes better solutions possible for customers, employees, shareholders and communities.

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 the impacts from COVID-19 and the actions taken by governmental authorities and others related thereto, including the ability of the Company to continue operating facilities in connection therewith; outlook, strategy or business plans; future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures; pricing trends for raw materials and finished goods and the impact of pricing changes; the ability to improve or maintain margins; expected demand or demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; expected benefits from Transformation and innovation efforts; the ability to improve performance and competitive position at the Company’s operations; anticipated working capital needs, capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; projected profitability potential; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; projected capacity and the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets; expectations for Company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value; effects of judicial rulings; 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, the risks, uncertainties and impacts related to actual or potential public health emergencies such as COVID-19 and actions taken by governmental authorities or others in connection therewith; the effect of national, regional and global economic conditions generally and within major product markets, including significant economic disruptions from COVID-19 and the actions taken in connection therewith; the effect of conditions in national and worldwide financial markets; the impact of tariffs, the adoption of trade restrictions affecting the Company’s products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; lower oil prices as a factor in demand for products; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company’s products; fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities and other items required by operations; the outcome of adverse claims experience with respect to workers’ compensation, product recalls or product liability, casualty events or other matters; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction, oil and gas, and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts; the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from Transformation initiatives, on a timely basis; the overall success of, and the ability to integrate, newly-acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom; capacity levels and efficiencies, within facilities, within major product markets and within the industries in which the Company participates as a whole; the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, interruption in utility services, civil unrest, international conflicts, terrorist activities or other causes; changes in customer demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability, foreign currency exchange rate exposure and the acceptance of the Company’s products in global markets; the ability to improve and maintain 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; the level of imports and import prices in the Company’s markets; the impact of judicial rulings and governmental regulations, both in the United States and abroad, including those adopted by the United States Securities and Exchange Commission and other governmental agencies as contemplated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of healthcare laws in the United States and potential changes for such laws which may increase the Company’s healthcare and other costs and negatively impact the Company’s operations and financial results; cyber security risks; the effects of privacy and information security laws and standards; and other risks described from time to time in the Company’s filings with the United States Securities and Exchange Commission, including those described in “Part I – Item 1A. – Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2019.

Contacts:SONYA L. HIGGINBOTHAMVP, CORPORATE COMMUNICATIONS AND BRAND MANAGEMENT614.438.7391 | [email protected]

MARCUS A. ROGIERTREASURER AND INVESTOR RELATIONS OFFICER614.840.4663 | [email protected]

200 Old Wilson Bridge Rd. | Columbus, Ohio 43085WorthingtonIndustries.com

WORTHINGTON INDUSTRIES, INC.CONSOLIDATED STATEMENTS OF EARNINGS(In thousands, except per share amounts)
	Three Months Ended								Nine Months Ended
	February 29,2020				February 28,2019				February 29,2020				February 28,2019
Net sales	$	763,996			$	874,381			$	2,447,492			$	2,820,714
Cost of goods sold		648,451				784,360				2,094,045				2,466,762
Gross margin		115,545				90,021				353,447				353,952
Selling, general and administrative expense		80,928				75,220				260,294				250,529
Impairment of goodwill and long-lived assets		34,627				-				75,228				2,381
Restructuring and other expense (income), net		1,376				(11,176	)			1,781				(11,710	)
Operating income (loss)		(1,386	)			25,977				16,144				112,752
Other income (expense):
Miscellaneous income, net		6,985				525				8,316				2,222
Interest expense		(7,362	)			(9,341	)			(24,157	)			(28,541	)
Loss on extinguishment of debt		-				-				(4,034	)			-
Equity in net income of unconsolidated affiliates		25,479				20,802				97,592				71,897
Earnings before income taxes		23,716				37,963				93,861				158,330
Income tax expense		4,828				8,415				20,506				34,032
Net earnings		18,888				29,548				73,355				124,298
Net earnings attributable to noncontrolling interests		3,577				2,775				10,734				8,581
Net earnings attributable to controlling interest	$	15,311			$	26,773			$	62,621			$	115,717
Basic
Average common shares outstanding		54,930				56,478				55,078				57,650
Earnings per share attributable to controlling interest	$	0.28			$	0.47			$	1.14			$	2.01
Diluted
Average common shares outstanding		55,898				57,974				56,164				59,389
Earnings per share attributable to controlling interest	$	0.27			$	0.46			$	1.11			$	1.95
Common shares outstanding at end of period		54,598				56,181				54,598				56,181
Cash dividends declared per share	$	0.24			$	0.23			$	0.72			$	0.69

WORTHINGTON INDUSTRIES, INC.CONSOLIDATED BALANCE SHEETS(In thousands)
	February 29,				May 31,
	2020				2019
Assets
Current assets:
Cash and cash equivalents	$	103,430			$	92,363
Receivables, less allowances of $1,678 and $1,150 at February 29, 2020
and May 31, 2019, respectively		472,741				501,944
Inventories:
Raw materials		177,400				268,607
Work in process		91,585				113,848
Finished products		107,886				101,825
Total inventories		376,871				484,280
Income taxes receivable		11,152				10,894
Assets held for sale		14,032				6,924
Prepaid expenses and other current assets		74,974				69,508
Total current assets		1,053,200				1,165,913
Investments in unconsolidated affiliates		222,724				214,930
Operating lease assets		35,230				-
Goodwill		321,128				334,607
Other intangible assets, net of accumulated amortization of $89,763 and
$87,759 at February 29, 2020 and May 31, 2019, respectively		191,052				196,059
Other assets		33,479				20,623
Property, plant and equipment:
Land		24,212				23,996
Buildings and improvements		294,307				310,112
Machinery and equipment		1,057,947				1,049,068
Construction in progress		51,223				49,423
Total property, plant and equipment		1,427,689				1,432,599
Less: accumulated depreciation		855,419				853,935
Total property, plant and equipment, net		572,270				578,664
Total assets	$	2,429,083			$	2,510,796
Liabilities and equity
Current liabilities:
Accounts payable	$	361,356			$	393,517
Accrued compensation, contributions to employee benefit plans and
related taxes		53,787				78,155
Dividends payable		14,427				14,431
Other accrued items		48,797				59,810
Current operating lease liabilities		10,757				-
Income taxes payable		423				1,164
Current maturities of long-term debt		296				150,943
Total current liabilities		489,843				698,020
Other liabilities		71,815				69,976
Distributions in excess of investment in unconsolidated affiliate		95,291				121,948
Long-term debt		698,552				598,356
Noncurrent operating lease liabilities		27,841				-
Deferred income taxes, net		73,548				74,102
Total liabilities		1,456,890				1,562,402
Shareholders' equity - controlling interest		821,495				831,246
Noncontrolling interests		150,698				117,148
Total equity		972,193				948,394
Total liabilities and equity	$	2,429,083			$	2,510,796

WORTHINGTON INDUSTRIES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
	Three Months Ended								Nine Months Ended
	February 29,2020				February 28,2019				February 29,2020				February 28,2019
Operating activities:
Net earnings	$	18,888			$	29,548			$	73,355			$	124,298
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		22,780				23,625				69,553				71,643
Impairment of goodwill and long-lived assets		34,627				-				75,228				2,381
Provision for (benefit from) deferred income taxes		(5,006	)			(730	)			(1,661	)			21,493
Bad debt expense		273				201				584				454
Equity in net income of unconsolidated affiliates, net of distributions		(4,474	)			(865	)			(19,271	)			3,298
Net gain on sale of assets		(5,838	)			(12,606	)			(5,237	)			(10,203	)
Stock-based compensation		2,725				1,143				10,000				7,755
Loss on extinguishment of debt		-				-				4,034				-
Changes in assets and liabilities, net of impact of acquisitions:
Receivables		5,992				1,546				15,517				55,793
Inventories		3,024				(1,054	)			90,907				(38,525	)
Accounts payable		29,630				19,002				(28,347	)			(51,158	)
Accrued compensation and employee benefits		(9,144	)			(11,391	)			(22,740	)			(38,769	)
Other operating items, net		(6,156	)			3,619				(6,072	)			(21,273	)
Net cash provided by operating activities		87,321				52,038				255,850				127,187
Investing activities:
Investment in property, plant and equipment		(21,219	)			(19,379	)			(71,774	)			(60,554	)
Acquisitions		(500	)			-				(29,783	)			-
Distributions from unconsolidated affiliate		-				1,492				-				56,693
Proceeds from sale of assets		119				27,843				9,318				48,290
Net cash provided (used) by investing activities		(21,600	)			9,956				(92,239	)			44,429
Financing activities:
Proceeds from long-term debt, net of issuance costs		-				-				101,464				-
Principal payments on long-term obligations and debt redemption costs		(344	)			(303	)			(154,811	)			(1,104	)
Proceeds from issuance of common shares, net of tax withholdings		429				104				(6,595	)			(4,645	)
Payments to noncontrolling interests		-				-				(1,453	)			(6,327	)
Repurchase of common shares		(21,373	)			(28,587	)			(50,972	)			(129,020	)
Dividends paid		(13,263	)			(13,119	)			(40,177	)			(39,371	)
Net cash used by financing activities		(34,551	)			(41,905	)			(152,544	)			(180,467	)
Increase (decrease) in cash and cash equivalents		31,170				20,089				11,067				(8,851	)
Cash and cash equivalents at beginning of period		72,260				93,027				92,363				121,967
Cash and cash equivalents at end of period	$	103,430			$	113,116			$	103,430			$	113,116

WORTHINGTON INDUSTRIES, INC.SUPPLEMENTAL DATA(In thousands, except volume)
This supplemental information is provided to assist in the analysis of the results of operations.
	Three Months Ended								Nine Months Ended
	February 29,2020				February 28,2019				February 29,2020				February 28,2019
Volume:
Steel Processing (tons)		1,139,280				839,939				3,035,514				2,774,006
Pressure Cylinders (units)		17,381,319				21,295,052				59,173,363				63,237,461
Net sales:
Steel Processing	$	491,136			$	555,871			$	1,531,448			$	1,851,401
Pressure Cylinders		270,995				290,690				865,527				885,490
Other		1,865				27,820				50,517				83,823
Total net sales	$	763,996			$	874,381			$	2,447,492			$	2,820,714
Material cost:
Steel Processing	$	342,620			$	430,807			$	1,109,822			$	1,391,809
Pressure Cylinders		119,285				135,186				373,267				407,372
Selling, general and administrative expense:
Steel Processing	$	36,001			$	29,651			$	109,000			$	103,647
Pressure Cylinders		45,417				42,503				140,631				134,081
Other		(490	)			3,066				10,663				12,801
Total selling, general and administrative expense	$	80,928			$	75,220			$	260,294			$	250,529
Operating income (loss):
Steel Processing	$	19,021			$	10,166			$	42,361			$	74,842
Pressure Cylinders		(19,865	)			18,953				25,405				48,444
Other		(542	)			(3,142	)			(51,622	)			(10,534	)
Total operating income (loss)	$	(1,386	)		$	25,977			$	16,144			$	112,752
Equity income (loss) by unconsolidated affiliate:
WAVE	$	20,074			$	18,768			$	85,729			$	59,195
ClarkDietrich		4,909				1,742				13,916				4,756
Serviacero Worthington		797				527				2,354				6,783
ArtiFlex		1,688				(41	)			3,028				1,122
Other		(1,989	)			(194	)			(7,435	)			41
Total equity income	$	25,479			$	20,802			$	97,592			$	71,897

WORTHINGTON INDUSTRIES, INC.SUPPLEMENTAL DATA(In thousands, except volume)
The following provides detail of Pressure Cylinders volume and net sales by principal class of products.
	Three Months Ended								Nine Months Ended
	February 29,2020				February 28,2019				February 29,2020				February 28,2019
Volume (units):
Consumer products		14,096,440				17,718,604				49,669,887				52,428,516
Industrial products		3,284,605				3,576,129				9,501,983				10,807,688
Oil & gas equipment		274				319				1,493				1,257
Total Pressure Cylinders		17,381,319				21,295,052				59,173,363				63,237,461
Net sales:
Consumer products	$	113,258			$	118,006			$	360,803			$	352,023
Industrial products		129,042				148,018				411,994				452,883
Oil & gas equipment		28,695				24,666				92,730				80,584
Total Pressure Cylinders	$	270,995			$	290,690			$	865,527			$	885,490
The following provides detail of impairment of goodwill and long-lived assets and restructuring and other expense (income), net included in operating income by segment.
	Three Months Ended								Nine Months Ended
	February 29,2020				February 28,2019				February 29,2020				February 28,2019
Impairment of goodwill and long-lived assets:
Steel Processing	$	1,274			$	-			$	1,274			$	-
Pressure Cylinders		33,353				-				33,353				2,381
Other		-				-				40,601				-
Total impairment of goodwill and long-lived assets	$	34,627			$	-			$	75,228			$	2,381
Restructuring and other expense (income), net:
Steel Processing	$	728			$	-			$	702			$	(9	)
Pressure Cylinders		747				(11,176	)			747				(11,701	)
Other		(99	)			-				332				-
Total restructuring and other expense (income), net	$	1,376			$	(11,176	)		$	1,781			$	(11,710	)

Source: Worthington Industries, Inc.

Globe Newswire Press Releases

Worthington Industries (WOR) Reports Q3 EPS of $0.27March 26, 2020 6:57 AM