Worthington Sees Profits Rise from Strong Markets in Fiscal Third-Quarter 2014, Readies Sale of Construction Businesses

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Researched by Industrial Info Resources (Sugar Land, Texas)--Diversified metals manufacturer Worthington Industries Incorporated (NYSE:WOR) (Columbus, Ohio) reported solid overall gains in the third quarter of the company's 2014 fiscal year, as improving markets and key acquisitions drove volume gains in the Steel Processing and Pressure Cylinders segments. Net earnings were reported to be $40.6 million, a 9.35% increase from third-quarter 2013.

Net sales stood at $773.23 million, a 24.81% increase from the same period last year. Although Worthington's WAVE and ClarkDietrich joint ventures reported dips in net income due to harsh winter weather, the company saw strong volume gains in the Steel Processing and Pressure Cylinders segments. The Steel Processing segment benefited from Worthington's agreement last year with Wuhan Iron and Steel Company (Wuhan, China) to become the majority member in Tailor Welded Blanks (TWB), its laser welded blanking joint venture; the segment also saw stronger sales in its automotive, construction and agriculture businesses. Recently acquired oilfield equipment strengthened the Pressure Cylinders segment.

Following its quarterly earnings statement, Worthington announced that it had reached an agreement with Steffes Corporation (Dickinson, North Dakota) to acquire its tank-manufacturing division. The deal is expected to boost Worthington's presence in the Bakken Shale and Williston Basin, as Steffes' manufacturing facility in Dickinson will be a significant addition to Worthington's existing facilities in Ohio and Kansas, which also serve the Marcellus and Utica shales.

In January, Worthington acquired a 75% interest in Aritas Basincli Kaplar Sanayi A.S. (Istanbul, Turkey), a leading European producer of liquefied natural gas and cryogenic technology.

As part of its North American Metals & Minerals Project Database, Industrial Info is following progress at 22 operational plants owned by Worthington, including 11 in Ohio, two in Maryland and two in Mexico. The Ohio-based facilities include a steel sheet plant in Warren; a value-added steel rolls plant in Columbus; and automotive stampings plants in Wooster and Clyde.

"Pressure Cylinders' operating income was up 20% to $21.7 million, driven by strong contributions from our branded consumer products, alternative fuels in the U.S., and a large propane-system tank business," said Andy Rose, the Vice President and Chief Financial Officer of Worthington, in a conference call. "Our European Cylinder business declined modestly, due to the slow economy and reduced operations in Austria from a fire several months ago."

Worthington executives noted that the company's fiscal fourth quarter is typically its strongest of any year, given seasonal factors. They expect to end fiscal 2014 on a strong note, and are planning to sell off two problematic construction businesses.

"Unfortunately, we lost almost $3.5 million in our construction businesses, Mid-Rise [Residential] and Military Construction," Rose said. "Significant cost overruns at two projects in Military Construction caused a larger-than-expected loss in the quarter. We expect to complete the sale of Mid-Rise in the next quarter, and we are in the process of evaluating the most efficient exit path for Military Construction, giving consideration to all stakeholders. We do not expect similar-sized losses in the fiscal fourth quarter."

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