Worthington Industries Reaps Benefits of Acquisitions in Fiscal-Year 2012; CapEx to More than Double to $68 Million

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading diversified metals manufacturer Worthington Industries Incorporated (NYSE:WOR) (Columbus, Ohio) reported slight but steady gains in overall revenues and profits in fiscal fourth-quarter and full-year 2012, as newly acquired businesses and a continuously improving U.S. automotive sector helped the company deal with steep deconsolidation costs and a sluggish construction industry. Net earnings were reported to be $52.08 million for the quarter, a 0.31% increase from fiscal fourth-quarter 2011, and $115.6 million for the year, a 0.46% increase from full-year 2011.

Total net sales stood at $755.41 million for the quarter, an 11.8% increase from the same period last year, and $2.54 billion for the year, a 3.77% increase from 2011. For the full year, the company saw more than $209 million in sales from acquisitions made in the past year, stronger volumes in the Steel Processing segment, and higher overall selling prices, particularly in the Pressure Cylinders segment. These solid gains managed to offset a decrease of more than $335 million that was attributed to the deconsolidation of the Automotive Body Panels and Metal Framing segments. Worthington also endured almost $10 million in recall expenses in the Pressure Cylinders segment, as well as a major drop in steel prices.

As part of its growing North American Metals & Minerals Project Database, Industrial Info is tracking 21 operational plants owned by Worthington, including 10 in Ohio.

"The company's performance in the fourth quarter of fiscal-year 2012 was very good, aided by volume increases in cylinders and steel, and solid earnings from our newly acquired Engineered Cabs business," said Andy Rose, the chief financial officer of Worthington, in a conference call.

He later added, "Volume growth was solid in the fourth quarter. Cylinder volumes were up 46% for the quarter, driven by acquisitions and a 3% increase in our legacy cylinder product line. Cylinder volumes were up 22% for the year."

Among the major acquisitions made by Worthington during fiscal-year 2012 were the purchase of BernzOmatic, a leading manufacturer of hand-held torches and accessories, from Irwin Industrial Tool Company in July 2011; the acquisition of Polish company STAKO, a manufacturer of liquid petroleum gas tanks for vehicle engines, in September 2011; and the acquisition of the propane fuel cylinders business of The Coleman Company Incorporated. All three acquisitions are now part of the Pressure Cylinders segment and have contributed substantially to the segment's gains in the past 12 months.

Worthington also acquired Angus Industries Incorporated, which creates high-quality, custom-engineered open and closed cabs for heavy mobile equipment. Angus now operates as the Engineered Cabs segment within Worthington.

The Pressure Cylinders segment saw the strongest and most consistent gains in fourth-quarter and full-year 2012:

• The Steel Processing segment reported sales of $429.62 million for the quarter, a 0.49% decrease from the same period last year, and $1.58 billion for the year, a 12.31% increase from 2011. Operating income stood at $32.59 million for the quarter, a 15.37% decrease from fourth-quarter 2011, and $71.58 million for the year, a 7.84% decrease from 2011.
• The Pressure Cylinders segment reported sales of $236.82 million for the quarter, a 28.89% increase from the same period last year, and $770.1 million for the year, a 30.1% increase from 2011. Operating income stood at $21.78 million for the quarter, a 14.44% increase from fourth-quarter 2011, and $45.11 million for the year, a 7.86% decrease from 2011.
• All other segments reported sales of $88.97 million for the quarter, a 47.72% increase from the same period last year, and $186.09 million for the year, compared with $445.19 million in 2011. Operating income stood at a $5.22 million gain for the quarter, a 6.51% increase from fourth-quarter 2011, and a $15.08 million loss for the year, compared with a $2.27 million loss in 2011.

Capital expenditures for fiscal-year 2012 were $32 million. For fiscal-year 2013, capital expenditures are expected to increase to $68 million. Rose cited the addition of the Engineered Cabs segment, the purchase of a new headquarters in Columbus, Ohio, and more growth initiatives in the Pressure Cylinders segment.

"I am confident in our ability to continue growth," said John McConnell, the chairman and chief executive officer of Worthington, in the conference call. "Macroeconomic uncertainty remains in Europe, which may further impact the North American economy. Even though the conditions may affect the degree to which we grow, but we will continue to grow organically and through the continued integration of, and the improving performance of, our recent acquisitions. And, of course, we will continue to grow with new acquisitions."

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