Steel Mills
Worthington Industries Q4 Net Earnings Double Y/Y
Written by Sandy Williams
June 30, 2016
A strong finish to the 2016 fiscal year drove annual earnings per share to a record $2.22 for Worthington Industries. Earnings for fourth quarter, ending May 31, 2016, were were $58.8 million with sales of $714.7 million. Net earnings were more than double Q4 2015 earnings of $28.9 million.
“While we expect some headwinds to continue, our legacy businesses are performing well and we anticipate a good start to our new fiscal year,” said Chief Executive John McConnell. “The Company’s two underperforming businesses, engineered cabs and oil and gas, are in better positions with smaller footprints and the cryogenics business is repositioning with its moves to new facilities later this year and new markets.”
Steel processing posted net sales of $466.0 million, down 14 percent year-over-year primarily due to lower average selling prices. Operating income was $40.4 million, up $18 million from the prior year quarter. Executive vice-president and CFO Andrew Rose noted that an improvement in operating income was driven by recent increases in flat steel prices and modest market to-market gains on steel hedges. The mix of direct versus toll tons processed was 52 percent to 48 percent in the current quarter, compared to 62 percent to 38 percent in the prior year quarter.
Pressure Cylinder net sales of $218.6 million were down 13 percent from Q4 2015. The decline was driven by a 61 percent volume decrease in the oil and gas equipment business.
Engineered cab sales were down 37 percent year-over-year to $29.1 million. An operating loss of $1.2 million in the segment was an improvement of $2.6 million from the previous quarter as well as the year ago quarter.
“Despite the recent increase in oil prices, the equipment market continues to be extremely challenged and customer capital budgets for well drilling and completion remain limited. In response, we continue to adjust our cost structure, implementing another reduction in force during the quarter, our third since the downturn started,” said President and COO Mark Russell.
During the conference call Chairman and CEO John McConnell was asked to comment on the spread between domestic and foreign steel prices. Although Worthington Steel imports very little steel, McConnell said that with the current wide spread there is a lot of incentive. “I think we are anticipating seeing more products made of steel show up in the United States, as a result of the trade cases which takes a little time to manifest itself; but that’s another way to get steel into this country regardless of trade cases.”
Worthington does not plan to build inventory to take advantage of low prices. “We’re not inventory speculators,” said Rose. “We’re not going to do that just because we think prices are low, we don’t think that’s the right way to run our business. So at the end of the day we want to have the flexibility to flex up if the business does improve, and I think we’ve got that.”
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
AM/NS Calvert to produce electrical steel with IRA funding
After receiving a hefty federal tax credit, the AM/NS Calvert mill plans to move into the production of non-grain oriented electrical steel (NOES).
Nucor taps Theophilus for new HR role
Nucor has appointed Nicole B. Theophilus to the newly created position of EVP of talent and human resources, effective April 29.
Former JSW Steel USA CEO to join AM/NS Calvert
Steel industry veteran Mark Bush announced he will be joining AM/NS Calvert as area manager steelmaking.
U.S. Steel taking 45-day outage on Gary Works’ BF4
U.S. Steel’s No. 8 blast furnace (BF8) at its Gary Works in northwest Indiana is undergoing a 45-day maintenance outage that started on April 4.
USS shareholders vote in favor of Nippon merger
U.S. Steel Corp.’s impending sale to Japan’s Nippon Steel Corp. (NSC) has cleared one hurdle: USS stockholders voted overwhelmingly in favor of the nearly $15 billion merger.