Market Segment

Worthington Starts FY 2015 on a High Note

September 25, 2014

Worthington Industries began its fiscal year 2015 with higher sales and solid net earnings. The company, located in Columbus, Ohio, reports net earnings of $44.2 million for FY 2015 first quarter, ending on August 31, 2014. Net sales totaled $862.4 million, up 25 percent compared to the first quarter of 2013.

The consolidation of TWB and increased volume in Steel Processing, along with acquisitions in Pressure Cylinders, drove sales for the quarter. Steel Processing net sales on a year over year basis increased 37 percent while Pressure Cylinder net sales rose 15 percent. Steel tolling shipments are up 21 percent and direct shipments up 13 percent, outpacing the market as reported by MSCI.

Engineered cabs sales increased $1.1 million from the previous year’s first quarter but ramp up costs and improvements offset sales for an operating loss of 2.1 million for the segment.

“We anticipate continued steady volumes from the automotive markets, as light vehicle sales have increased, due to some strengthening in parts of the economy and improving consumer confidence,” said Chairman and CEO John McConnell. Growth prospects continue to be good in the energy sector; flat conditions are expected for Engineered Cabs.

The steel business has been most directly impacted by the increase in transportation costs. During the conference call on Thursday morning President and COO Mike Russell told analysts that freight costs have increased $2-3 million year over year. “That it is something that is different, and that is just happening in the last couple of quarters where freight prices are driving upward,” he said. The problem is not availability of trucks but availability of drivers. “We have several carriers we use a lot who have trucks that are idle at the moment because they don’t have drivers. And again, the regulatory changes are driving this, and created a temporary shortage of drivers. And as our chairman always points out, the market will fix that. But until it does, it is a tight market for freight.”

Sales in the agricultural market are down slightly. Worthington executives said the company sells into agriculture in two businesses: steel and cabs. Ag within steel is the company’s weakest segment right now, based on current demand and forecast from customers, with cabs following second.

Although Worthington Industries does not buy a lot of import materials, McConnell says they keep a “pulse on it.” “It is as volatile right now as it has been in years,” he said. When asked about potential trade case filings, McConnell added, “Just the threat of it, the whiff of it, seems to affect pricing. It’s kind of a touchy situation.”