Worthington Industries, a diversified metals manufacturing company, reported a one percent gain in net sales in the third quarter ending February 28, 2013, finishing at $619.5 million compared to $611.3 million the prior year. Gross margin improved to $97 million from $83.3 million in 2012, mostly due to gains from Pressure Cylinders and acquisitions.
Steel Processing net sales dropped five percent, or $17.7 million, from the prior year quarter to $349.6 million. Lower average selling prices were blamed for impacting net sales by $21.4 million.
The acquisition of Westerman in the second quarter bumped Pressure Cylinder sales up 9 percent while the acquisition of Angus Industries in the third quarter added net sales of $48.6 million and operating income of $0.1 million from the Engineered Cabs operation. Gains were less than expected due to slower growth and production by a leading customer. Although the Cabs segment is underperforming, it is still a positive cash flow, said Worthington in their conference call, and is expected to come back. Other operations in construction, energy and steel packaging were mostly flat with a combined loss of $2.1 million for the quarter.
“We had a record third quarter with nearly all of our businesses performing at or above our expectations,” said John McConnell, Chairman and CEO. “There was strength in some areas of the economy, with good automotive demand and the return of some agriculture business for Steel Processing, along with solid volumes in Cylinders’ new oil and gas business. Engineered Cabs, while still experiencing lower volumes in the short term, is aggressively reducing costs and matching up their operations with demand. WAVE had excellent results along with good contributions from joint ventures ClarkDietrich, TWB and Serviacero.”
Guidance cited the non-linear growth improvement in the Worthington markets. Automotive continues to be strong. Construction is traditionally the Company’s second largest market but currently business has shifted to 80 percent remodeling instead of new construction said Worthington. The company foresees strong growth in the alternative energy market and therefore will focus on opportunities in the energy sector. A good fourth quarter is anticipated. KeyBanc steel analyst, Mark Parr predicts 7 percent earnings per share growth for Worthington in FY2014.
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