Worthington Industries Reports Growth from Acquisitions in Fiscal First-Quarter 2013, Sees Uncertainty Looming

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Researched by Industrial Info Resources (Sugar Land, Texas)--Diversified metals manufacturer Worthington Industries Incorporated (NYSE:WOR) (Columbus, Ohio) reported overall improvement for the first quarter of the company's fiscal year 2013, as stronger volumes, particularly those resulting from acquisitions in the Engineered Cabs and Pressure Cylinders segments, offset the effects of lower average selling prices, especially in the Steel Processing segment. Net earnings were reported to be $33.96 million, a 32.39% increase from fiscal first-quarter 2012.

Net sales stood at $666.04 million, a 10.57% increase from the same period last year. The Pressure Cylinders segment saw stronger volumes in its product lines, boosted by acquisitions made in the past year. Solid results in the Engineering Cabs segment were credited partly to the acquisition of Angus Industries Incorporated, which took place in December 2011. The Steel Processing continued to benefit from improved automotive demand. However, weaker selling prices in the Steel Processing segment diminished net sales by $42.6 million, although a change in the product mix mitigated the reduction by adding $14.4 million.

Industrial Info is keeping tabs on 22 operational plants owned by Worthington in its growing North American Metals & Minerals Project Database, including 10 in Ohio, two in Maryland and two in Mexico. In Ohio, a steel galvanizing plant in Monroe is undergoing minor monthly and as-needed maintenance shutdowns as scheduled through December 2012.

Earlier this month, Worthington acquired Westerman Companies, a manufacturer of tanks and pressure vessels in the oil and gas, nuclear and marine markets, for about $70 million. Westerman will be incorporated into the Pressure Cylinders segment.

"We are adding to our family of businesses through our systematic acquisition activity to drive us into new products and higher growth markets," said Andy Rose, the chief financial officer of Worthington, in a conference call." Westerman is an excellent example of this type of activity, providing large storage and transportation tanks for the rapidly growing natural gas market, as well as products for the nuclear, marine and industrial markets."

The Steel Processing segment was the only one to report decreases in net sales or operating income:

• The Steel Processing segment reported net sales of $379.97 million, a 6.91% decrease from first-quarter 2012, and operating income of $16.02 million, a 1.58% decrease.
• The Pressure Cylinders segment reported net sales of $194.24 million, a 15.05% increase from the same period last year, and operating income of $15.03 million, a 26.11% increase.
• The newly implemented Engineered Cabs segment reported net sales of $64.5 million and operating income of $4.69 million.
• Other segments reported total net sales of $27.33 million, a 7.67% increase from first-quarter 2012, and a total operating income loss of $2.32 million, compared to a loss of $7.01 million in first-quarter 2010.

In the conference call, John McConnell, the chairman and chief executive officer of Worthington, said that the company has seen indications of a short-term slowdown in the agricultural, automotive and mining markets, but that it is unclear if this will continue into the longer term.

"The macro-economic and political outlook continues to be muddled and without a clear path to a stronger economy," Rose said in the conference call. "That being said, we continue to drive performance via our transformation process, which is firmly embedded in the steel company, progressing well in cylinders, and is now under way at our Engineered Cabs plant. To enhance organic growth, we have launched several new work streams to drive product development and innovations into our cylinder business."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.