Steel Mills

Earnings Dip as Worthington "Navigates the Impacts of Tariffs"

June 27, 2019

Worthington Industries, Inc., reported net earnings of $153.5 million for its 2019 fiscal year ended May 31, down 21 percent from earnings of $194.8 million in the prior year. Earnings were hurt by inventory holding losses from declining steel prices, among other factors. Sales for the year totaled $3.76 billion, up from $3.58 billion last year.

Worthington’s fourth-quarter sales totaled $938.8 million with net earnings of $37.7 million, compared to earnings of $30.8 million in the prior-year quarter.

“We finished our 2019 fiscal year with solid results in the fourth quarter despite a challenging steel pricing environment,” said John McConnell, Chairman and CEO. “Margins across all of our businesses improved from the third quarter, particularly in Pressure Cylinders. I’d like to thank our employees for their continued commitment during the year as we worked hard to navigate the impacts of tariffs on our businesses.”

By segment, Steel Processing’s net sales totaled $584.4 million, down 10 percent from the prior-year quarter, driven by lower volume, partially offset by higher average selling prices. Operating income of $14.9 million was $32.7 million less due to the combined impact of lower volumes and a compressed pricing spread. Declining steel prices in the current quarter resulted in inventory holding losses versus holding gains last year, the company said.

Pressure Cylinders’ net sales totaled $322.3 million, down 5 percent from the same quarter last year due to the impact of divestitures. Excluding divestitures, net sales were relatively flat as lower volumes in consumer and industrial products were partially offset by higher average selling prices.

Engineered Cabs’ net sales totaled $32.1 million, up 18 percent over the prior-year quarter on higher volume and average selling prices. The operating loss of $3.2 million was $2.1 million less than the prior-year quarter on higher net sales and gross margin.

Among highlights for the year, Worthington: sold its Garden City, Kan., and Dickinson, N.D., oil and gas manufacturing facilities to Palmer Manufacturing and Tank, Inc., for $20.3 million; received cash distributions totaling $60 million from WAVE-related transactions; sold solder and brazing assets to Lincoln Electric; acquired Magna Industries, Inc., a Cleveland-based manufacturer of MagTorch hand torches and Superior Tool plumbing accessories; and repurchased a total of 4.1 million of the company shares.

“As we enter our new fiscal year, we expect to see continued positive momentum from our three-tiered strategy of growth through transformation, innovation and acquisitions,” said McConnell. “While we expect steel pricing and a softening automotive market will continue to be headwinds, our growth levers combined with investments in technology have us positioned well to deliver on our goal of year-over-year earnings growth.”

Headquartered in Columbus, Ohio, Worthington is a leading global diversified metals manufacturer and processor with 12,000 employees and 79 facilities in 11 countries.