COLUMBUS, OH--(Marketwired - Mar 22, 2016) - Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $647.1 million and net earnings of $29.6 million, or $0.46 per diluted share, for its fiscal 2016 third quarter ended February 29, 2016. In the third quarter of fiscal 2015, the Company reported net sales of $804.8 million and a net loss of $25.7 million, or a loss of $0.39 per diluted share. Net earnings in the third quarter of fiscal 2015 included pre-tax impairment and restructuring charges totaling $83.8 million, which reduced earnings per diluted share by $0.78.

Financial highlights for the current and comparative periods are as follows:

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

Consolidated Quarterly Results

Net sales for the third quarter of fiscal 2016 were $647.1 million, down 19.6% from the comparable quarter in the prior year, when net sales were $804.8 million. The decrease was the result of lower volume in Pressure Cylinders and Engineered Cabs, combined with lower average selling prices in Steel Processing due to a decline in the market price of steel.

Gross margin declined $2.6 million from the prior year quarter to $95.9 million due to lower volume, partially offset by a favorable pricing spread.

Operating income for the current quarter was $25.1 million, an increase of $77.1 million from the operating loss in the prior year quarter. The increase was due to significantly lower impairment and restructuring charges, offset by higher SG&A expenses and a decrease in gross margin, as explained above.

Interest expense was $7.9 million for the current quarter, compared to $8.4 million in the prior year. The decline resulted from lower average debt levels, primarily due to the lower market price of steel, which favorably impacts working capital.

The Company's portion of equity income from unconsolidated joint ventures increased $6.2 million from the prior year quarter to $25.0 million. Joint venture sales totaled $376.4 million for the current quarter. Higher contributions from WAVE, Serviacero and ClarkDietrich accounted for the majority of the increase in equity income. The Company received cash distributions of $25.4 million from unconsolidated joint ventures during the quarter.

Income tax expense was $11.6 million in the current quarter compared to a benefit of $18.2 million in the prior year quarter. The increase was primarily due to higher net earnings. The current quarter tax expense reflects an estimated annual effective rate of 30.1% compared to 30.9% for the prior year third quarter.

Balance Sheet

At quarter-end, total debt was $611.1 million, down $18.3 million from November 30, 2015, due to lower short-term borrowings. As of February 29, 2016, $22.7 million was drawn on the Company's $500 million revolving credit facility and $5.0 million was outstanding under the Company's trade accounts receivable securitization facility. The Company had $25.4 million of cash at quarter-end.

Quarterly Segment Results

Steel Processing's net sales of $419.0 million were down 16%, or $81.7 million, from the comparable prior year quarter driven primarily by lower average selling prices. Operating income of $21.3 million was $4.9 million higher than the prior year quarter due to a higher spread between average selling prices and material cost and contributions from the January 2015 acquisition of Rome Strip Steel. Inventory holding losses, comparable to the prior year quarter, also impacted margins. The mix of direct versus toll tons processed was 60% to 40% in the current quarter, compared to 57% to 43% in the prior year quarter.

Pressure Cylinders' net sales of $200.7 million were down 19%, or $47.4 million, from the comparable prior year quarter. The decline was driven primarily by a 75% volume decrease in the Oil & Gas Equipment business. Operating income of $9.0 million was $9.6 million lower than the prior year operating income of $18.6 million. The decline in the Oil & Gas Equipment business was partially offset by improvements in Industrial Products, which like many of the businesses is benefiting from lower raw material input costs. Operating income also included $3.9 million of one-time expenses for indemnification, purchase accounting and transition service fees for recent acquisitions in the Cryogenics and Alt Fuels businesses.

Engineered Cabs' net sales of $25.6 million were $19.8 million, or 44%, below the prior year quarter due to declines in market demand and the September 2015 closure of the Florence, S.C. facility. Adjusting for impairment and restructuring charges, the operating loss improved $0.9 million from the prior year quarter.

The "Other" category includes the Energy Innovations businesses, as well as non-allocated corporate expenses. Net sales in the "Other" category were $1.8 million, a decrease of $8.8 million from the prior year quarter as the Construction Services business has essentially ceased operations. The Construction Services business reported a $0.9 million loss for the quarter as operations wind down.

Recent Business Developments

• On December 7, 2015, the Company completed the acquisition of the global CryoScience business of Taylor Wharton, including a manufacturing facility in Theodore, Ala., for $31.4 million. The asset purchase was made pursuant to the Chapter 11 bankruptcy proceedings of Taylor Wharton.
• During the quarter, the Company repurchased a total of 1,000,000 common shares for $28.4 million at an average price of $28.35.
• On March 1, 2016, Worthington obtained operating control of the WSP joint venture with United States Steel Corporation. Worthington's ownership will remain at 51% and U.S. Steel at 49%. WSP earnings will be consolidated within the Steel Processing segment beginning March 1, 2016.

Outlook

"Steel pricing appears to be stabilizing, automotive markets remain strong and construction markets are strengthening," McConnell said. "As we kick off our Transformation 2.0 efforts, we are encouraged by the initial results of our lean activities in our Pressure Cylinders and Steel Processing operations. Transformation 2.0 enhances our efforts that were so successful in Steel Processing, by accelerating this work through kaizen activities using the same fundamental principles we have used in improving operations, sales and purchasing. While it will take some time to reach all locations, we are focusing on the facilities where we think we can have the highest potential outcomes."

Conference Call

Worthington will review fiscal 2016 third quarter results during its quarterly conference call on March 23, 2016, at 3:00 p.m., Eastern Daylight Time. Details regarding the conference call can be found on the Company web site at www.WorthingtonIndustries.com.

About Worthington Industries

Worthington Industries is a leading global diversified metals manufacturing company with 2015 fiscal year sales of $3.4 billion. Headquartered in Columbus, Ohio, Worthington is North America's premier value-added steel processor providing customers with wide ranging capabilities, products and services for a variety of markets including automotive, construction and agriculture; a global leader in manufacturing pressure cylinders for industrial gas and cryogenic applications, CNG and LNG storage, transportation and alternative fuel tanks, oil and gas equipment, and brand consumer products for camping, grilling, hand torch solutions and helium balloon kits; and a manufacturer of operator cabs for heavy mobile industrial equipment; laser welded blanks for light weighting applications; automotive racking solutions; and through joint ventures, complete ceiling grid solutions; automotive tooling and stampings; and steel framing for commercial construction. Worthington employs approximately 10,000 people and operates 83 facilities in 11 countries.

Founded in 1955, the Company operates under a long-standing corporate philosophy rooted in the golden rule. Earning money for its shareholders is the first corporate goal. This philosophy serves as the basis for an unwavering commitment to the customer, supplier, and shareholder, and as the Company's foundation for one of the strongest employee-employer partnerships in American industry.

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 outlook, strategy or business plans; the ability to correct performance issues at operations; future or expected growth, forward momentum, performance, sales, volumes, cash flows, earnings, balance sheet strengths, debt, financial condition or other financial measures; pricing trends for raw materials and finished goods and the impact of pricing changes; demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; expected benefits for Transformation efforts; anticipated 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, capacity, and working capital needs; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, newly-created joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to maintain margins and 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 increasing volatility or 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 effect of national, regional and worldwide economic conditions generally and within major product markets, including a recurrent slowing economy; the effect of conditions in national and worldwide financial markets; 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; 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 other 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 industry 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, acts of war or 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 exposure and the acceptance of our products in these markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; the outcome of adverse claims experience with respect to workers' compensation, product recalls or product liability, casualty events or other matters; 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 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 changes to healthcare laws in the United States which may increase our healthcare and other costs and negatively impact our operations and financial results; 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 our Annual Report on Form 10-K for the fiscal year ended May 31, 2015.