Steel Mills

Worthington Industries Announces Solid Quarter

December 19, 2016

Worthington Industries announced second quarter 2017 net earnings (ending Nov. 30, 2016) were $46.6 million on $727.8 million in net sales. In comparison Q2 earnings were down from first quarter earnings of $65.6 million but double that of Q2 2016.

“We had a good second quarter with overall improving results and solid year-over-year growth,” said John McConnell, Chairman and CEO. “The Steel Processing business had a record second quarter and our joint ventures were steady. Results were mixed in Pressure Cylinders due to depressed oil and gas markets and declines in industrial products; consumer products had an excellent quarter. Demand was down in Engineered Cabs.”

Steel processing net sales were up 9 percent year over year to $508.8 million due to higher average direct selling prices and higher tolling volume due to consolidation of the WSP joint venture in March. The WSP venture contributed to a change in the mix of direct versus toll tons processed, 49 percent to 51 percent in the current quarter compared to 62 percent to 38 percent in the prior year quarter.

The company’s pressure cylinders segment saw net sales fall 3 percent from a year ago to $194.7 million. Pressure cylinder sales were down due to lower volume in oil and gas equipment and industrial products which was partially offset by higher average selling prices in consumer products as a result of a better product mix.

Engineered cabs sales of $22.5 million were down 22 percent from the prior year due to declines in market demand.

McConnell said he was “encouraged by early views of the economic outlook for 2017 and look forward to pursuing growth opportunities.”

During the earnings conference call McConnell said he is seeing a little bit of slowing in automotive.

“We do see just a little bit of what we would term getting inventories right sized among our direct ship to customers,” said McConnell. “Often demand is determined by sales of vehicles to retail and there is a little bit of excess inventory in parts of the supply chain that we can see. And people are starting to correct for that, adjusting their orders accordingly. We were off 3 percent compared to last year for example, in just overall Detroit 3 automotive shipments.”

He noted today’s announcement by General Motors that it will extend the holiday shutdown for five of their larger facilities by 1 to 3 weeks. “So that will further affect immediate demand in the supply chain,” he said.

McConnell was asked to weigh in on what benefits he sees from manufacturing returning to the U.S. under the new administration.

“We are principally a domestic manufacturing organization. We do have some footprint in Europe and some in Asia. If manufacturing comes back to the US all of our business should benefit to some degree. Measuring that is a very difficult exercise.”