Steel Mills

Sales Down in all Segments at Worthington Industries

Written by Sandy Williams

Worthington Industries reported net earnings of $31.4 million for first quarter 2016 ending August 31, 2015. Earnings were down from $44.2 million in Q1 2015 but up from Q4 FY 2015’s $28.9 million. Net sales declined 12 percent to $758.1 million, driven by lower volume in all business segments and lower average steel pricing.

Gross margin dropped $15.4 million year over year to $113.0 million as a result of low volumes and inventory holding losses in Steel Processing.

“The Company generated solid earnings and free cash flow in our first quarter despite some challenging end markets,” said John McConnell, Chairman and CEO. “Declining steel prices continued to hamper our earnings in Steel Processing but our team performed well generating steady volume led by the heavy-duty truck market. Cylinders saw good results in Industrial and Consumer Products, while Oil and Gas Equipment sales were weak resulting in aggressive cost reductions to maintain profitability. Our joint ventures continued to perform well.” McConnell added, “The consolidation plan in Engineered Cabs will be completed by the end of this month positioning it for better results.”

Steel Processing net sales were down 11 percent y/y due to lower toll volume and average selling price.

Pressure Cylinders sales fell 10 to $224.4 million as volumes decreased for Oil and Gas Equipment.

Engineered Cabs’ net sales plummeted 22 percent y/y due to the January sale of Advanced Component Technologies and lower volume in the construction and agricultural markets. Operating loss of $9.3 million was due to lower volume and impairment and restructuring charges, including costs associated with the pending closure of the Engineered Cabs segment in Florence, SC.

“In the face of challenging markets, we are pleased with the Company’s performance and we are optimistic about our momentum going into the next quarter,” McConnell said. “However, we are mindful of the uncertainty of the macro economic issues and we remain focused on the things we can control. We re-launched our lean Transformation process across the Company and we have already seen a positive impact from several Kaizen events. Our innovation teams are helping us launch new consumer products in Cylinders with more in development.”

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