Worthington Industries, a US metals manufacturing company, has released its third quarter fiscal 2016 results, ending 29th February 2016.
The Ohio-based business reported net earnings of $29.6m but also revealed a drop of 19.6% in net sales to $647m compared to $805m in the same quarter in 2015, where due to restricting charges and pre-tax impairment, it announced a net loss of $25.7m last year.
Worthington puts the 19.6% decrease in sales down to the lower volume in the pressure cylinders and engineered cabs segments, combined with lower average selling prices in steel processing due to the drastic decline in the market price of steel.
Third quarter results were good in the face of market headwinds in oil and gas markets and declining prices in steel processing. Our joint ventures performed well, with WAVE leading the way
On the other hand, the $77.1m increase in operating income from the $25.7m loss in 2015, was due to significantly lower impairment and restructuring charges offset by a decrease in gross margin and a favourable pricing speed.
The company’s portion of equity income from unconsolidated joint ventures increased by $6.2m from the previous year to stand at $25m, with joint venture sales totalling $376.4m for the current quarter. It is understood that higher contributions from WAVE, Serviacero and ClarkDietrich accounted for the majority of the increase in equity income.
At quarter-end, total debt was $611.1m, down $18.3m from 30th November 2015, due to lower short-term borrowings. Worthington had a total of $25.4m of cash at the end of this fiscal quarter.
A number of strategic moves accounted for Worthington’s increased operating income, namely the acquisition of the global CryoScience business of Taylor Wharton. The $31.4m purchase was made pursuant to the Chapter 11 bankruptcy proceedings of Taylor Wharton and included attaining its manufacturing facility in Theodore, Alabama.
Additionally, Worthington obtained operating control of the WSP joint venture with United States Steel Corporation on 1st March 2016. Ownership will remain at 51% and 49% respectively, with WSP earnings being consolidated within the steel processing segment from 1st March 2016.
John McConnell, Chairman and CEO of Worthington, insisted, “Third quarter results were good in the face of market headwinds in oil and gas markets and declining prices in steel processing. Our joint ventures performed well, with WAVE leading the way.”
McConnell speculated at the future outlook of the manufacturing company, “Steel pricing appears to be stabilising, automotive remains strong and construction markets are strengthening. As we kick off our Transformation 2.0 efforts, we are encouraged by the initial results of our lean activities in our pressure cylinders and steel processing operations. While it will take some time to reach all facilities, we are focusing on the facilities where we think we can have the highest potential outcomes.”