Worthington Industries has reported net sales of $611.6m and net earnings of $16.2m, or $0.29 per diluted share, for its fiscal 2020 Q4 results ended 31st May 2020.
Net earnings in the quarter were adversely impacted due to coronavirus-related shutdowns and included net pre-tax restructuring and impairment charges of $15.7m, which reduced earnings per diluted share by $0.20.
Gross margin decreased $36.1m from the prior year quarter to $89.9m, driven by reduced volume in Steel Processing, which was partially offset by the favourable impact of a slight inventory holding gain in the current quarter, combined with the unfavourable shift in product mix in the industrial products business in Pressure Cylinders.
Operating income for the current quarter was $6.3m, a decrease of $25.7m from the prior year quarter. The impact of lower gross margin was partially offset by lower SG&A expense, which was down $20m, due primarily to lower profit sharing and bonus and lower overall corporate costs.
Quarterly Segment Results
Steel Processing net sales totalled $328.2m, down 44%, or $256.2m, from the comparable prior year quarter on lower direct volume and to a lesser extent lower average selling prices. Operating loss of $1.8m was $16.7m unfavourable to the $14.9m operating income reported in the prior year quarter on lower direct volume, partially offset by the favourable impact of a slight inventory holding gain in the current quarter compared to a significant inventory holding loss in the prior year quarter.
Pressure Cylinders net sales totalled $282.9m, down 12%, or $39.4., from the comparable prior year quarter. The decline was due to lower volumes in the oil and gas equipment business and a shift in product mix in the industrial products business, partially offset by higher volume in the consumer products business. Operating income of $13.5m was $7.9m less than the prior year quarter, $5.5m of which was driven by higher combined impairment and restructuring charges.
In response to the coronavirus pandemic, Worthington formed an internal task force to monitor company developments related to the outbreak and to establish and implement best practices in all Worthington facilities.
Demand was impacted by coronavirus-related shutdowns and the company took steps to size its workforce to better match the demand environment, implementing a combination of furloughs, designed to allow the company ramp up product when market conditions improve.
“This quarter we faced unprecedented challenges, as we and the entire economy were confronted by the coronavirus and the related shutdowns and restrictions that were implemented,” said John McConnell, Chairman and CEO.
“We have been focused on providing a safe working environment for our employees as they continue to serve our customers. While our people and our results were impacted significantly by the shutdowns, I am proud of our team and how they have navigated through this period.”
“Yesterday, we announced our leadership succession plan, naming Andy Rose as President and CEO effective 1st September. At that time, I will assume the role of Executive Chairman,” McConnell said.
“One of my recent priorities was to have a strong set of leaders in place to drive the company forward. As we enter our 65th year in business, I am confident we have the right team, and we are well positioned to emerge from the current crisis as a stronger company.”