) saw its profit fall in second-quarter fiscal 2014 (ended Nov
30, 2013) on sizable impairment charges. The company posted a
profit of $23 million or 32 cents per share in the quarter, down
28% from $31.8 million or 45 cents a year ago.
Barring one-time items, including pre-tax impairment charges of
$30.7 million related to the write-off of certain assets and
tax-related gains, earnings came in at 57 cents a share, just
beating the Zacks Consensus Estimate of 56 cents.
Revenues and Margins
Revenues rose 24% year over year to $769.9 million in the
quarter, exceeding the Zacks Consensus Estimate of $685 million.
The top line was driven by higher volumes stemming from
acquisitions. The company saw strength across its Steel
Processing and Pressure Cylinders divisions in the quarter.
Gross margin rose to 16.7% from 15.2% a year ago. The improvement
mainly resulted from increased volumes and the impact of
inventory holding gains in Steel Processing in the quarter.
Revenues from the core Steel Processing division rose 43% year
over year to $492.1 million in the reported quarter. The increase
can be attributed to higher volumes resulting from the
consolidation of TWB and increased sales in automotive,
construction and agriculture markets. Volumes rose 30.5% year
over year to 817 tons in the quarter.
Worthington's Pressure Cylinders segment sales went up 3% year
over year to $214 million, buoyed by recent acquisitions of
leading atmospheric tanks and pressure vessels maker Westerman
Companies and steel and fiberglass tanks maker Palmer. Volumes,
however, fell 9% to 17,694 units.
The Engineered Cabs segment struggled in the quarter, hit by weak
volumes. The division posted revenues of $47.9 million, down 17%
year over year. Lower selling prices also affected the unit's
Worthington ended the quarter with cash and cash equivalents of
$109 million, a nearly three-fold year-over-year rise. Long-term
debt fell marginally year over year to $405.7 million. Operating
cash flows for the quarter declined 69% year over year to roughly
On Oct 18, 2013, Worthington entered into an agreement with
Nisshin Steel Co., Ltd. and Marubeni-Itochu Steel Inc to form a
joint venture Zhejiang Nisshin Worthington Precision Specialty
Steel Co., Ltd. to produce cold rolled strip steel mainly for the
automotive industry. The joint venture will build a facility in
Zhejiang Province in China. Initially, Worthington will hold a
10% stake in the joint venture; however, it has an option to
increase its ownership interest to 34%. The joint venture is
currently waiting for regulatory approval.
Worthington remains positive about fiscal 2014 and continues to
expect growth both organically and from acquisitions. The company
is witnessing strength in the automotive space and improvements
in commercial construction and agriculture markets. Worthington
will remain committed to explore fresh opportunities so as to
invest in new and growing markets, develop new products for
customers and drive improvement and optimization across its
Worthington currently carries a Zacks Rank #2 (Buy).
Other companies in the metal processing and fabrication industry
having a favorable Zacks Rank include
Dynamic Materials Corp.
CIRCOR International, Inc.
). All of these hold a Zacks Rank #1 (Strong Buy).
DYNAMIC MATLS (BOOM): Free Stock Analysis
CIRCOR INTL (CIR): Free Stock Analysis Report
NN INC (NNBR): Free Stock Analysis Report
WORTHINGTON IND (WOR): Free Stock Analysis
To read this article on Zacks.com click here.