Worthington Sees Solid Growth in Third-Quarter 2013, as Acquisition Boosts Pressure Cylinder Business

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Researched by Industrial Info Resources (Sugar Land, Texas)--Diversified metals manufacturer Worthington Industries Incorporated (NYSE:WOR) (Columbus, Ohio) reported strong income gains for the third quarter of the company's 2013 fiscal year, as the Pressure Cylinders segment benefited from a major acquisition, while automotive and agricultural demand improved. Net income for the quarter was reported to be $37.13 million, a 43.47% increase from fiscal third-quarter 2012.

Total net sales stood at $619.53 million, a 1.35% increase from the same period last year. The Pressure Cylinders segment accounted for much of the gains, boosted by an improved product mix and the September 2012 acquisition of Westerman Incorporated, a manufacturer of tanks and separators for the oil and gas, nuclear and marine markets. Along with Angus Industries, which was acquired in December 2011 and is now included in the Engineered Cabs segment, the acquisition accounted for much of the quarter's volume increase. The declining market prices for steel negatively affected sales in the Steel Processing segment by $21.4 million.

Worthington's joint ventures performed well during the quarter, with WAVE adding $17.1 million to sales, ClarkDietrich adding $3.1 million, and TWB adding $2.6 million.

As part of its North American Metals & Minerals Project Database, Industrial Info is keeping tabs on 21 operational plants owned by Worthington, including 10 in Ohio, two in Maryland and two in Mexico. Among those in the Pressure Cylinders segment are a steel cylinders plant in Tilbury, Ontario; industrial cylinders plants in Columbus and Jefferson, Ohio; and a propane cylinders plant in Westerville, Ohio.

"The continued strong growth of cylinders has driven us to a notable milestone in the history of Worthington," said Mark Russell, the president and chief operating officer of Worthington, in a conference call. "Since 1955, the steel company has been Worthington's largest entity by all key measures. But the growth of Cylinders has been so significant, that we now have more capital employed in the cylinders business than we do in the steel company. And Cylinders has more growth prospects on the horizon, especially in the energy production and alternative fuels markets."

All of Worthington's major segments reported improved operating income when compared with the same period last year, with only Steel Processing reporting lower sales:

• The Steel Processing segment reported net sales of $349.57 million, a 4.82% decrease from third-quarter 2012, and operating income of $17.5 million, a 13.63% increase from the same period last year.
• The Pressure Cylinders segment reported net sales of $205.21 million, a 9.31% increase from third-quarter 2012, and operating income of $17.86 million, a 64.05% increase from the same period last year.
• The Engineered Cabs segment reported net sales of $48.63 million, a 21.05% increase from third-quarter 2012, and operating income of $108,000, compared with an operating loss of $1.45 million in the same period last year.
• Other segments reported total net sales of $16.12 million, basically unchanged from third-quarter 2012, and a total operating loss of $2.07 million, compared to a loss of $6.77 million in the same period last year.

Worthington executives expect to see a renewed focus on the energy industry in the final fiscal quarter of the year, which includes the company's oil & gas and alternative fuels products, as well as other growth opportunities. Worthington invested $10 million in capital projects in the third quarter, on which executives expect to build.

"The first few months of 2012 are off to a good start," said Andy Rose, the vice president and chief financial officer of Worthington, in the conference call. "The entry into the oil & gas energy production space exceeded our expectations. We are already investing in new capacity for this business in anticipation of strong growth over the coming years. We also have a number of other acquisition and expansion opportunities that we are exploring. Our 12-month trailing EBITDA [earnings before interest, taxes, depreciation and amortization] at the end of February was over $310 million. We are well-positioned to finish the fiscal year strong."

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.