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Worthington Industries (WOR)
Q3 2013 Earnings Call
March 21, 2013 1:30 pm ET
Catherine M. Lyttle - Vice President of Corporate Communications & Investor Relations
John P. McConnell - Chairman, Chief Executive Officer and Chairman of Executive Committee
B. Andrew Rose - Chief Financial Officer and Vice President
Mark A. Russell - President
Martin Englert - Jefferies & Company, Inc., Research Division
Arun S. Viswanathan - Longbow Research LLC
Aldo J. Mazzaferro - Macquarie Research
Michelle Applebaum - Steel Market Intelligence Inc
Richard Garchitorena - Crédit Suisse AG, Research Division
Mark L. Parr - KeyBanc Capital Markets Inc., Research Division
John Charles Tumazos - John Tumazos Very Independent Research, LLC
Previous Statements by WOR
» Worthington Industries' CEO Discusses F2Q13 Results - Earnings Call Transcript
» Worthington Industries F1Q10 (Qtr End 8/31/09) Earnings Call Transcript
» Worthington Industries, Inc. F4Q09 (QTR End 05/31/09) Earnings Call Transcript
Catherine M. Lyttle
Thank you, Rochelle. Good afternoon, and welcome to our third quarter earnings conference call. Certain statements made on this call are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and could cause actual results to differ from those suggested. Please refer to our third quarter earnings release issued this morning for more detail on those factors that could cause actual results to differ materially. For anyone interested in listening to this call again, a replay will be made available on our company website, worthingtonindustries.com.
On the call today are John McConnell, Chairman and Chief Executive Officer; Mark Russell, President and Chief Operating Officer; Andy Rose, Vice President and Chief Financial Officer.
John will get us started.
John P. McConnell
Well, thank you, Cathy, and good afternoon, everyone. We appreciate you joining us today. [Indiscernible] this quarter, we're very happy with the performance of our business, and we are very proud of our employees who continue to drive Worthington Industries to new heights. Andy and Mark are both prepared to walk through the quarter in more detail. We'll get started with Andy.
B. Andrew Rose
Thank you, John, and good afternoon, everyone. The company's performance in the third quarter of fiscal 2013 was quite good once again, led by strong earnings growth in Cylinders, improved margins in our steel company and higher earnings from our joint ventures.
Quarterly earnings per share of $0.52 were up $0.15 from the prior year or 41% and represents a record for Worthington's fiscal third quarter, something we are all very proud of. Inventory holding losses were [ph] phenomenal during the quarter, as they were in the prior year period.
Volume growth was mixed in the third quarter. Cylinder volumes were essentially flat year-over-year, but this metric is becoming less and less meaningful as we add much larger and lower volume tanks to our portfolio in energy and alternative fuels. Steel Processing direct volumes were up 3% while toll volumes declined 26%.
Excluding the planned wind-down of volumes from the MISA Metals acquisition, steel direct volumes were up 6%, while toll volumes declined 22%, mostly attributable to our Spartan joint venture. Spartan volumes are down over the last year due to our partner moving business to their in-house galvanizing facility as expected. Volumes have stabilized and the business remains solidly profitable.
The Engineered Cabs business continues to be soft due to production declines at its largest customer. The business generated $4.7 million of EBITDA during the quarter before including corporate allocations and the fiscal year -- and for the fiscal year is expected to be only 15% to 20% below the run rate when we acquired the business in December 2011. Mark Russell will elaborate on a number of positive developments in the business and why the future prospects of the Cabs segment are good.
Equity income from our joint ventures during the quarter was up 2% over last year to $26 million, driven by increases at TWB, Serviacero, ArtiFlex and WAVE as compared to last year. All of our major joint ventures operated at a profit during the quarter and we received dividends of $21 million.
Free cash flow for the quarter was nominal due to the acceleration of the third and fourth quarter dividend payments into December 2012 and a modest increase in working capital. The company invested $10 million in capital projects and distributed $27 million in dividends to shareholders. There were no repurchases of stock during the quarter.
Debt decreased by $14 million during the quarter. Our balance sheet remains strong. At quarter end, we had total funded debt of $438 million and $489 million available under our revolving credit facilities. We recently extended our receivable securitization for a 2-year term and reduced its size by $50 million to $100 million, primarily because we have ample excess borrowing capacity on both of our credit facilities.
As I mentioned, the company paid its March and June 2013 dividend payments on December 28, 2012. The company will next consider declaring regular dividends at its June 2013 board meeting for payment in September.
The first few months of calendar 2013 are off to a good start. The integration and financial performance of Westerman, our entry into the oil and gas energy production space, exceeded our expectations. We're already investing in new capacity for this business in anticipation of strong growth over the coming years. We also have a number of other acquisition and expansion opportunities that we are exploring.