Worthington Industries Q2 Profit Rises, But Misses View; Sales Beat

(RTTNews) - Diversified metal manufacturer Worthington Industries, Inc. (WOR) on Wednesday reported a 28 percent increase in profit for the second quarter from last year, reflecting higher volume in the steel processing segment and the impact of recent acquisitions in the pressure cylinders business.

However, adjusted earnings per share for the quarter missed analysts' expectations due to elevated manufacturing costs, while sales beat their estimates.

John McConnell, Chairman and CEO of Worthington Industries said, "... while we had strong revenue growth across the Company, we were disappointed we did not meet our own Company-wide expectations for results this quarter. We have a couple areas needing attention, particularly one operation in our oil and gas equipment business and one in Engineered Cabs."

The company noted that both the businesses had elevated manufacturing costs, while the oil and gas equipment business facility had a product miss on the commercial side.

The Columbus, Ohio-based metal processing company reported net earnings for the second quarter of $29.46 million or $0.43 per share, up from $22.98 million or $0.32 per share in the prior-year quarter.

Excluding items, adjusted earnings per share for the quarter were $0.55, compared to $0.56 per share in the year-ago period. On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.68 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 13 percent to $871.01 million from $769.90 million in the same quarter last year, and topped analysts' consensus estimate of $859.3 million.

The increase was driven largely by higher volume in Steel Processing and the impact of recent acquisitions in Pressure Cylinders.

Steel processing net sales for the quarter rose 12 percent to $552.76 million over the prior-year quarter due to the combined impact of higher volume and average selling prices.

Pressure cylinders' net sales grew 18 percent to $252.74 million, driven by recent acquisitions. Engineered cobs net sales increased 8 percent to $51.5 million on higher volume.

Steel processing volumes increased 10 percent to 899 tons from 817 tons last year, while pressure cylinders volumes also rose 10 percent to 19.45 million units.

However, higher manufacturing expenses in all three business units combined with the unfavorable impact of inventory holding losses in Steel Processing in the latest quarter, more than offset the impact of higher volume.

The company's board declared a quarterly dividend of $0.18 per share, payable on March 27 to shareholders of record March 13, 2015.

Looking ahead, Worthington Industries said it is on track to achieve year-over-year earnings growth and positive cash flow.

McConnell said, "There are solid areas of growth, particularly in automotive, where we are working with our customers on a number of initiatives including light weighting solutions. We expect Steel Processing to continue to perform well. There are some markets, like agriculture, where we are seeing slower demand."

WOR closed Wednesday's regular trading at $35.69, up $1.14 or 3.33 percent on a volume of 571,293 shares. However, in after-hours, the stock declined $1.21 or 3.41 percent to $34.18.