/EINPresswire.com/ -- Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $737.5 million and net earnings of $65.6 million, or $1.02 per diluted share, for its fiscal 2017 first quarter ended August 31, 2016. Net earnings in the quarter included pre-tax restructuring charges totaling $1.3 million. The after-tax impact of these charges reduced earnings per diluted share by $0.01. In the first quarter of fiscal 2016, the Company reported net sales of $758.1 million and net earnings of $32.0 million, or $0.48 per diluted share. Net earnings in the first quarter of fiscal 2016 included pre-tax impairment and restructuring charges totaling $6.1 million, which reduced earnings per diluted share by $0.06.

For the fiscal year ended May 31, 2017, the Company reported net sales of $0.7 billion and net earnings of $65.6 million, or $1.02 per diluted share, up from net earnings of $32.0, or $0.48 per diluted share, in the prior year. Net sales were down 3% year over year, or $20.6 million, driven primarily by lower average selling prices in Steel Processing and lower volume in Pressure Cylinders and Engineered Cabs. Fiscal year 2017 net earnings were adversely affected by pre-tax impairment and restructuring charges in the net amount of $33.1 million, which when combined with the $6.9 million pre-tax gain related to the consolidation of the WSP joint venture reduced earnings per diluted share by $0.26. Impairment and restructuring charges in the prior year resulted in a net pre-tax charge of $107.1 million, which reduced earnings per diluted share by $1.00.

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

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

		1Q 2017			4Q 2016			1Q 2016
Net sales		$	737.5		$	714.7		$	758.1
Operating income			64.9			54.0			31.0
Equity income			34.5			34.1			26.6
Net earnings			65.6			58.5			32.0
Earnings per diluted share		$	1.02		$	0.92		$	0.48

"We had a strong performance in our first quarter and delivered record earnings per share thanks to great results from our Steel Processing business segment and our joint venture ClarkDietrich," said John McConnell, Chairman and CEO. "We benefitted from rising steel prices and strong demand in the automotive and construction markets while the agriculture and oil and gas markets remained weak."

Consolidated Quarterly Results

Net sales for the first quarter of fiscal 2017 were $737.5 million, down 3% from the comparable quarter in the prior year, when net sales were $758.1 million. The decrease was the result of lower volume in certain Pressure Cylinders businesses and Engineered Cabs, partially offset by contributions from recent acquisitions.

Gross margin increased $34.3 million from the prior year quarter to $147.3 million on a favorable pricing spread in Steel Processing due primarily to inventory holding gains in the current quarter compared to inventory holding losses in the prior year quarter, partially offset by lower volume in Pressure Cylinders.

Operating income for the current quarter was $64.9 million, an increase of $33.9 million from the prior year quarter. The increase was due to higher gross margin and the favorable impact of lower impairment and restructuring charges, partially offset by higher SG&A expense. SG&A expense increased as a result of the impact of acquisitions and higher profit sharing and bonus expense.

Interest expense was unchanged from the prior year quarter at $7.9 million.

The Company's portion of equity income from unconsolidated joint ventures increased $8.0 million from the prior year quarter to $34.5 million on a $6 million higher contribution from ClarkDietrich, and improvements at ArtiFlex and Serviacero. The Company received cash dividends of $38.4 million from unconsolidated joint ventures during the quarter.

Income tax expense was $23.9 million in the current quarter compared to $14.2 million in the prior year quarter. The increase was primarily due to higher earnings, partially offset by $5.8 million in favorable discrete items recorded in the quarter. Tax expense in the current quarter reflects an estimated annual effective rate of 31.2% compared to 31.7% for the prior year quarter.

Balance Sheet

At quarter-end, total debt was $579.8 million, down $1.2 million from May 31, 2016, due to lower short-term borrowings. The Company had $181.5 million of cash at quarter-end.

Quarterly Segment Results

Steel Processing's net sales of $505.7 million were up 3%, or $14.9 million, from the comparable prior year quarter driven by higher volume due to the consolidation of the WSP joint venture effective March 1, 2016. Operating income of $54.8 million was $31.1 million higher than the prior year quarter on favorable spreads from inventory holding gains in the current quarter compared to inventory holding losses in the prior year quarter. The mix of direct versus toll tons processed was 52% to 48% in the current quarter, compared to 60% to 40% in the prior year quarter. The change in mix was primarily the result of the consolidation of the WSP joint venture.

Pressure Cylinders' net sales of $205.2 million were down 9%, or $19.2 million, from the comparable prior year quarter. The decline was driven by lower volume in the oil & gas equipment and industrial products businesses. Operating income of $14.1 million was $2.7 million lower than the prior year quarter primarily due to declines in oil & gas equipment, as improvement in consumer products offset smaller declines in industrial products and cryogenics.

Engineered Cabs' net sales of $25.6 million were down $13.0 million, or 34%, from the prior year quarter due to declines in market demand. The operating loss of $1.8 million was $7.4 million less than the prior year quarter due to lower impairment and restructuring charges, improved gross margin and lower SG&A expense.

The "Other" category includes the energy innovations business, as well as non-allocated corporate expenses. Net sales in the "Other" category were $1.1 million, a decrease of $3.3 million from the prior year quarter, as the construction services business has ceased operations. The operating loss of $2.1 million for the quarter was driven primarily by a $1.5 million increase in accrued legal expense.

Outlook

"We believe that most of our markets will remain steady as we finish calendar year 2016 with normal seasonal slowdowns in automotive production," McConnell said. "Our Transformation efforts are gaining traction in Pressure Cylinders, new product design is advancing in consumer products and its industrial products business is expanding the professional wholesale market into Europe this quarter." McConnell added, "We're off to a great start for fiscal 2017 and will to continue to navigate the ups and downs of the economy."

Conference Call

Worthington will review fiscal 2017 first quarter and full-year results during its quarterly conference call on September 28, 2016, at 2:30 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 2016 fiscal year sales of $2.8 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 & gas equipment, and 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 80 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 us or our markets; additions to product lines and opportunities to participate in new markets; expected benefits from 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 global 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 our 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 we participate; 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 we do 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 industries 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, civil unrest, international conflicts, 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 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 us in the application of our significant accounting policies; level of imports and import prices in our 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; cyber security risks; 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, 2016.

WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
			Three Months Ended August 31,
			2016				2015
Net sales			$	737,549			$	758,147
Cost of goods sold				590,267				645,131
	Gross margin			147,282				113,016
Selling, general and administrative expense				81,056				75,951
Impairment of long-lived assets				-				3,000
Restructuring and other expense				1,328				3,069
	Operating income			64,898				30,996
Other income (expense):
	Miscellaneous income (expense), net			863				(578	)
	Interest expense			(7,870	)			(7,854	)
	Equity in net income of unconsolidated affiliates			34,544				26,581
	Earnings before income taxes			92,435				49,145
Income tax expense				23,899				14,150
Net earnings				68,536				34,995
Net earnings attributable to noncontrolling interests				2,969				3,027
Net earnings attributable to controlling interest			$	65,567			$	31,968
Basic
Average common shares outstanding				61,885				63,993
Earnings per share attributable to controlling interest			$	1.06			$	0.50
Diluted
Average common shares outstanding				64,337				66,065
Earnings per share attributable to controlling interest			$	1.02			$	0.48
Common shares outstanding at end of period				62,179				63,343
Cash dividends declared per share			$	0.20			$	0.19

WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
					August 31,			May 31,
					2016			2016
Assets
Current assets:
	Cash and cash equivalents				$	181,525		$	84,188
	Receivables, less allowances of $3,866 and $4,579 at August 31, 2016 and May 31, 2016, respectively					416,529			439,688
	Inventories:
		Raw materials				192,117			162,427
		Work in process				104,418			86,892
		Finished products				73,198			70,016
			Total inventories			369,733			319,335
	Income taxes receivable					2,498			10,535
	Assets held for sale					10,052			10,079
	Prepaid expenses and other current assets					52,129			51,290
		Total current assets				1,032,466			915,115
Investments in unconsolidated affiliates						200,048			191,826
Goodwill						246,204			246,067
Other intangible assets, net of accumulated amortization of $52,998 and $49,532 at August 31, 2016 and May 31, 2016, respectively						92,689			96,164
Other assets						29,775			29,254
Property, plant and equipment:
	Land					18,537			18,537
	Buildings and improvements					259,682			256,973
	Machinery and equipment					974,219			945,951
	Construction in progress					30,789			48,156
		Total property, plant and equipment				1,283,227			1,269,617
		Less: accumulated depreciation				702,456			686,779
Total property, plant and equipment, net						580,771			582,838
Total assets					$	2,181,953		$	2,061,264
Liabilities and equity
Current liabilities:
	Accounts payable				$	325,299		$	290,432
	Short-term borrowings					1,534			2,651
	Accrued compensation, contributions to employee benefit plans and related taxes					69,204			75,105
	Dividends payable					14,212			13,471
	Other accrued items					49,453			45,056
	Income taxes payable					15,639			2,501
	Current maturities of long-term debt					867			862
		Total current liabilities				476,208			430,078
Other liabilities						63,229			63,487
Distributions in excess of investment in unconsolidated affiliate						66,192			52,983
Long-term debt						577,408			577,491
Deferred income taxes						17,836			17,379
	Total liabilities					1,200,873			1,141,418
Shareholders' equity - controlling interest						855,962			793,371
Noncontrolling interests						125,118			126,475
	Total equity					981,080			919,846
Total liabilities and equity					$	2,181,953		$	2,061,264

WORTHINGTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
			Three Months Ended August 31,
			2016				2015
Operating activities:
Net earnings			$	68,536			$	34,995
Adjustments to reconcile net earnings to net cash provided by operating activities:
	Depreciation and amortization			21,831				21,440
	Impairment of long-lived assets			-				3,000
	Provision for (benefit from) deferred income taxes			20				(5,540	)
	Bad debt (income) expense			(81	)			10
	Equity in net income of unconsolidated affiliates, net of distributions			3,898				(5,513	)
	Net loss on sale of assets			4,396				1,606
	Stock-based compensation			3,136				3,777
Changes in assets and liabilities, net of impact of acquisitions:
	Receivables			16,954				42,629
	Inventories			(50,398	)			(7,824	)
	Prepaid expenses and other current assets			7,162				11,166
	Other assets			1,246				442
	Accounts payable and accrued expenses			43,061				41,626
	Other liabilities			1,144				(3,187	)
Net cash provided by operating activities				120,905				138,627
Investing activities:
	Investment in property, plant and equipment			(16,316	)			(38,497	)
	Investments in unconsolidated affiliates			-				(1,687	)
	Proceeds from sale of assets			157				131
Net cash used by investing activities				(16,159	)			(40,053	)
Financing activities:
	Net repayments of short-term borrowings			(1,117	)			(68,511	)
	Proceeds from long-term debt			-				921
	Principal payments on long-term debt			(219	)			(208	)
	Proceeds from (payments for) issuance of common shares			5,821				(602	)
	Payments to noncontrolling interests			-				(3,336	)
	Repurchase of common shares			-				(27,582	)
	Dividends paid			(11,894	)			(11,551	)
Net cash used by financing activities				(7,409	)			(110,869	)
Increase (decrease) in cash and cash equivalents				97,337				(12,295	)
Cash and cash equivalents at beginning of period				84,188				31,067
Cash and cash equivalents at end of period			$	181,525			$	18,772

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 August 31,
				2016				2015
Volume:
	Steel Processing (tons)				1,031,498				866,376
	Pressure Cylinders (units)				18,791,723				19,219,410
Net sales:
	Steel Processing			$	505,674			$	490,800
	Pressure Cylinders				205,209				224,394
	Engineered Cabs				25,581				38,617
	Other				1,085				4,336
		Total net sales		$	737,549			$	758,147
Material cost:
	Steel Processing			$	312,715			$	348,245
	Pressure Cylinders				82,928				99,064
	Engineered Cabs				11,247				17,981
Selling, general and administrative expense:
	Steel Processing			$	36,882			$	32,915
	Pressure Cylinders				36,990				36,874
	Engineered Cabs				3,951				5,408
	Other				3,233				754
		Total selling, general and administrative expense		$	81,056			$	75,951
Operating income (loss):
	Steel Processing			$	54,782			$	23,638
	Pressure Cylinders				14,105				16,819
	Engineered Cabs				(1,843	)			(9,291	)
	Other				(2,146	)			(170	)
		Total operating income		$	64,898			$	30,996
Equity income (loss) by unconsolidated affiliate:
	WAVE			$	20,746			$	22,041
	ClarkDietrich				8,667				2,646
	Serviacero				1,952				803
	ArtiFlex				2,893				1,546
	WSP				-				753
	Other				286				(1,208	)
		Total equity income		$	34,544			$	26,581

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 August 31,
				2016			2015
Volume (units):
	Consumer products				12,088,912			11,977,945
	Industrial products				6,561,139			7,147,952
	Alternative fuels				136,062			91,956
	Oil & gas equipment				756			1,320
	Cryogenics				4,854			237
		Total Pressure Cylinders			18,791,723			19,219,410
Net sales:
	Consumer products			$	60,626		$	54,958
	Industrial products				90,020			105,106
	Alternative fuels				29,762			24,818
	Oil & gas equipment				14,461			32,884
	Cryogenics				10,340			6,628
		Total Pressure Cylinders		$	205,209		$	224,394
The following provides detail of impairment of long-lived assets and restructuring and other expense included in operating income by segment.
				Three Months Ended August 31,
				2016			2015
Impairment of long-lived assets:
	Steel Processing			$	-		$	-
	Pressure Cylinders				-			-
	Engineered Cabs				-			3,000
	Other				-			-
		Total impairment of long-lived assets		$	-		$	3,000
Restructuring and other expense (income):
	Steel Processing			$	966		$	462
	Pressure Cylinders				146			731
	Engineered Cabs				206			1,878
	Other				10			(2	)
		Total restructuring and other expense		$	1,328		$	3,069

Cathy M. Lyttle
VP, Corporate Communications and Investor Relations
(614) 438-3077
Email Contact

Sonya L. Higginbotham
Director, Corporate Communications
(614) 438-7391
Email Contact

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