Worthington Industries, Inc. has reported net sales of $874.4m and net earnings of $25.8m, for its fiscal 2019 third quarter (Q3) ended 28th February (2019).
The current quarter was negatively impacted due to a replacement programme related to certain composite hydrogen fuel tanks, resulting in a pre-tax charge of $13m.
The current quarter included estimated inventory holding losses of $10.8m in steel processing and a pre-tax net restructuring gain of $11.2m related to the sale of certain assets in the pressure cylinder business.
“We beleive that we are through the worst of the recent cost pressures and I’m proud of the way our teams have executed,”
John McConnel, Chairman and CEO of Worthington Industries
“We continued to feel the impact of higher input costs and volatility in steel prices, but we also made good progress toward recovering margin as the quarter progressed,” said John McConnel, Chairman and CEO of Worthington.
“We believe that we are through the worst of the recent cost pressures and I’m proud of the way our teams have executed,” said McConnel.
Net sales for Q3 of fiscal 2019 were $874.4m, up 4% over the comparable quarter in the prior year, when net sales were $841.7m. The increase was primarily driven by higher average direct selling prices in steel processing, particularly offset by lower direct volume in steel processing and the impact of current year divestitures in the pressure cylinders.
Gross margin decreased $37m from the prior year quarter to $90m. The decrease was driven primarily by lower direct spreads in steel processing, which were negatively impacted by significant inventory holding losses in the quarter, and a $13m charge in pressure cylinders associated with a tank replacement programme for certain composite hydrogen fuel tanks produced primarily between 2012 and 2015.
Operating income for the current quarter was $26m, a decrease of $16.8m from the prior year quarter. The impact was partially offset by lower SG&A expense which was down $9.1m, due primarily to lower profit sharing and bonus accruals.
Equity income from unconsolidated joint ventures increased $1m over the prior year quarter to $20.8m primarily due to a higher contribution from WAVE, which was partially offset by declines at Serviacero and ArtiFlex. The company received cash distributions of $21.4m from unconsolidated joint ventures during the quarter.
“Despite recent headwinds, the company is performing well, and we remain focused on driving improvements throughout our businesses,” McConnell said.
“Overall, our market remains steady. We expect to see continued margin expansion in Pressure Cylinders, but also anticipate continued inventory holding losses in steel processing in the upcoming quarter.”