Worthington Industries Inc. Reports Operating Results (10-Q)

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Oct 09, 2012
Worthington Industries Inc. (WOR, Financial) filed Quarterly Report for the period ended 2012-08-31.

Worthington Industries, Inc. has a market cap of $1.49 billion; its shares were traded at around $21.63 with a P/E ratio of 11.1 and P/S ratio of 0.6. The dividend yield of Worthington Industries, Inc. stocks is 2.4%.

Highlight of Business Operations:

Income tax expense for the three months ended August 31, 2012 and 2011 reflected estimated annual effective income tax rates of 32.6% and 32.4% respectively. These rates are applicable only to net earnings attributable to controlling interest, as reflected in our consolidated statements of earnings. Net earnings attributable to noncontrolling interest is primarily a result of our Spartan consolidated joint venture. The earnings attributable to the noncontrolling interest in Spartan do not generate tax expense to Worthington since the investors in Spartan are taxed directly based on the earnings attributable to them. Management is required to estimate the annual effective income tax rate based upon its forecast of annual pre-tax income for domestic and foreign operations. Our actual effective income tax rate for fiscal 2013 could be materially different from the forecasted rate used for the first quarter of fiscal 2013.

The estimated net amount of the losses recognized in accumulated OCI at August 31, 2012 expected to be reclassified into net earnings within the succeeding twelve months is $854,000 (net of tax of $588,000). This amount was computed using the fair value of the cash flow hedges at August 31, 2012, and will change before actual reclassification from OCI to net earnings during the fiscal years ended May 31, 2013 and 2014.

The net sales of our Pressure Cylinders and Engineered Cabs operating segments, and approximately 34% and 60% of the net sales of our Steel Processing and Steel Packaging operating segments, respectively, are to other markets such as leisure and recreation, industrial gas, HVAC, lawn and garden, agriculture, mining and appliance. Given the many different products that make up these net sales and the wide variety of end markets, it is very difficult to detail the key market indicators that drive this portion of our business. However, we believe that the trend in U.S. GDP growth is a good economic indicator for analyzing these operating segments.

Net earnings attributable to controlling interest for the three months ended August 31, 2012 increased $8.3 million over the comparable period in the prior year. Net sales and operating highlights were as follows:

Operating loss of $2.3 million was $4.8 million lower than the comparable period in the prior year, as the decrease in gross margin was more than offset by the impact of the joint venture transactions, lower SG&A expense and a decrease in restructuring charges. In connection with the wind-down of our former Metal Framing operating segment, we recognized a net benefit of $1.2 million within the joint venture transactions caption in our consolidated statement of earnings, which consisted primarily of net gains on asset disposals. This compared to $3.2 million of non-recurring charges in the comparable quarter of prior year, consisting primarily of facility exit and other costs. Current quarter restructuring charges consisted of facility exit and other costs related to the closure of our Commercial Stairs operating segment.

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