Post Earnings Coverage as Worthington Rides Surging Steel Price to Record Q1 Earnings

LONDON, UK / ACCESSWIRE / September 30, 2016 / Active Wall St. announces its post-earnings coverage on Worthington Industries, Inc. (NYSE: WOR). The company released its financial results for the first quarter fiscal 2017 (Q1 FY17) on September 28, 2016. The Columbus, Ohio-based company reported a record adjusted net earnings for Q1 FY17, thus outperforming market consensus estimate. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on WOR. Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=WOR.

Earnings Reviewed

In Q1 FY17, Worthington net sales declined 3% y-o-y to $737.55 million from $758.15 million recorded at the end of Q1 FY16. Net sales numbers for Q1 FY17 fell short of market consensus estimates of $742.8 million. The drop in quarterly net sales was primarily attributed to a weakening sales volume in Pressure Cylinders and Engineered Cabs segment, partially offset by sales contributions from recently acquisitions companies.

The metal manufacturer’s net earnings improved to $65.57 million, or $1.02 per diluted share, in Q1 FY17 from $31.97 million, or $0.48 per diluted share, in the prior year’s comparable quarter. Furthermore, the company’s adjusted net earnings surged 91% y-o-y to a record figure of $1.03 per diluted share, beating market consensus estimates of $0.77 per diluted share.

Worthington reported a better-than-expected quarter results primarily driven by a strong performance in steel processing unit along with its joint ventures, particularly the ClarkDietrich’s one. The company benefited from inflationary steel prices together with robust demand in the automotive and construction markets, partially offset by headwinds in the agriculture and oil and gas markets.

Operational Metrics

In the quarter ended on August 31, 2016, Worthington’s gross margin improved to $147.28 million from $113.02 million in the year ago period. The company reported operating margin of $64.90 million versus $31.00 million reported in the year ago period. The company improved gross margin was attributed to favorable effect of lowered impairment and restructuring charges, partially offset by acquisition costs and higher profit sharing and bonus expense.

Segment Performance

Worthington’s Steel Processing segment net sales for Q1 FY17 improved 3% y-o-y to $505.67 million from $490.80 million reported in Q1 FY16. The segment’s Q1 FY17 operating income surged to $54.78 million from $23.64 million in Q1 FY16 on favorable spreads from inventory holding gains.

The company’s Pressure Cylinders segment net sales dropped 9% y-o-y in Q1 FY17 to $205.21 million from $224.39 million in Q1 FY16. Furthermore, the segment’s reported operating income of $14.11 million in Q1 FY17 lower than $16.82 million recorded in Q1 FY16, primarily due to declines in oil & gas equipment.

Engineered Cabs segments’ net sales decline 34% y-o-y in the reported period to $25.58 million from $38.62 million in Q1 FY16. The segment’s operating loss narrowed down to $1.84 million from operating loss of $9.29 million in the year ago quarter due to lower impairment and restructuring charges and SG&A expense along with improved gross margins.

Cash Matters and Balance Sheet

In Q1 FY17, the company cash flow from operations was $120.91 million compared to $138.63 million in the last year’s quarter. The company had cash and cash equivalents balance of $181.53 million on August 31, 2016, which was above $84.19 million as on close of books on May 31, 2016. Worthington ended the reported quarter with a total debt of $579.8 million, down by $1.2 million from May 31, 2016, due to lower short-term borrowings.

Dividend

In a separate press release on September 28, 2016, the company’s Board of Directors has declared a quarterly dividend $0.20 per share, which will be payable on December 29, 2016, to all the shareholders on records as on December 15, 2016. The upcoming dividend payment would mark Worthington’s 196th uninterrupted dividend payment since the company went public in 1968.

Stock Performance

Worthington Industries’ share price finished yesterday’s trading session at $47.23, advancing 0.73%. A total volume of 839.1 thousand shares exchanged hands, which was higher than the 3 months average volume of 396.92 thousand shares. The stock has advanced 10.88% and 12.19% in the last month and past three months, respectively. Furthermore, since the start of the year, shares of the company has surged 59.12%. The stock is trading at a PE ratio of 21.33 and has a dividend yield of 1.69%.

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