Worthington's Quarterly Earnings Slip

Worthington Industries’ earnings dipped in the first quarter of FY 2018 despite higher sales. The company posted net earnings of $45.5 million, down 31 percent from a year ago, and net sales of $848.2 million. Steel processing drove most of the earnings decline with an inventory holding loss of $1.5 million compared to the unusually high $17 million of inventory holding gains in last year’s first quarter.

Operating income decreased to $42.2 million as result of lower gross margin and expenses associated with the acquisition of pressure cylinder and water tank manufacturer Amtrol.

“We started off our new fiscal year with good results, though not as strong as last year’s record quarter,” said John McConnell, chairman and CEO. “We saw increases in our heavy truck and agriculture volumes, while there was some softening in automotive. In the Cylinders business, we saw increasing demand for our oil and gas equipment, and integration of our newest acquisition, Amtrol, is going well. While our joint venture ClarkDietrich was negatively impacted by higher steel costs, WAVE and Serviacero both had improved results.”

Steel processing net sales improved 7.0 percent year-over-year to $543.5 million. Steel processing volume decreased to 968,330 tons from to 1,031,498 in Q1 2016. Direct versus toll tons processed was 56 percent to 44 percent, compared to 52 percent to 48 percent in Q1 2017.

A multi-week furnace outage at the Delta galvanizing facility, minor flooding in Monroe, Ohio, and continued startup challenges at Worthington’s Mexico TWB operations resulted in higher manufacturing expenses of $2.5 million, said Executive Vice President and CFO Andy Rose.

The ClarkDietrich joint venture operations in Texas, Florida and Georgia experienced some disruption from the hurricanes, losing power and halting production for several days.

The company’s pressure cylinder sales rose 31 percent to $269.8 million due to the Amtrol acquisition and higher volumes in the oil and gas equipment business.

Engineered cabs net sales jumped 25 percent to 31.9 million on higher volume, but turned in an operating loss of $0.4 million, $1.4 million less than the prior quarter.