Worthington Industries, Inc.WOR reported disappointing results in the first quarter of fiscal 2019 (ended Aug 31, 2018), wherein both the top line and the bottom line missed the Zacks Consensus Estimate.
The company came out with quarterly earnings of 92 cents per share, which missed the Zacks Consensus Estimate of $1.02. However, the bottom line increased 26% from the year-ago tally of 73 cents. The rise came on the back of sales growth. Notably, these figures are adjusted for non-recurring items.
Worthington Industries, Inc. Price, Consensus and EPS Surprise
Worthington Industries, Inc. Price, Consensus and EPS Surprise | Worthington Industries, Inc. Quote
Quarterly net sales of $988.1 million were up 16.5% year over year, backed by higher average selling prices and higher direct volume in Steel Processing. The improvement was also driven by improved product mix in Pressure Cylinders. However, the figure lagged the Zacks Consensus Estimate of $1,010 million.
The company reports its net sales in three segments - Steel Processing, Pressure Cylinders and Engineered Cabs. The segmental information is briefly discussed below:
Net sales from Steel Processing were $660.5 million, increasing 22% year over year. Gains from higher average selling prices and higher direct volume were partially offset by increase in freight expenses.
Net sales from Pressure Cylinders totaled $300.4 million, up 11% year over year. The improvement came on the back of higher volume in consumer products as well as higher average selling prices and a favorable product mix in the industrial products business.
Net sales from Engineered Cabs were $27.3 million, declining 14% year over year. Lower volumes contributed to the segment's continued poor results.
Gross Margin & Cost of Sales
In the quarter under review, Worthington's cost of sales increased 18.1% year over year to $845.1 million. It represented 85.5% of net sales compared with 84.3% in the year-ago quarter. Gross margin declined 120 basis points to 14.5%.
Selling, general and administrative expenses increased 2.7% year over year to $90.6 million. It represented 9.2% of net sales.
Exiting the fiscal first quarter, Worthington's cash and cash equivalents were $96.8 million, roughly 20.6% below $122 million at the end of the previous quarter. Long-term debt balance declined marginally to $748.7 million on a sequential basis.
Concurrent with its earnings release, the company announced that its board of directors has approved a quarterly cash dividend of 23 cents per share. The dividend will be paid on Dec 28 to shareholders on record as of Dec 14.
Zacks Rank & Stocks to Consider
Worthington currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are Global Brass and Copper Holdings, Inc. BRSS , TriMas Corporation TRS and Brady Corporation BRC . While Global Brass and Copper Holdings sports a Zacks Rank #1 (Strong Buy), TriMas and Brady carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Global Brass and Copper Holdings surpassed estimates twice in the trailing four quarters with an average beat of 5.65%.
TriMas exceeded estimates twice in the trailing four quarters with an average beat of 2.28%.
Brady surpassed estimates thrice in the trailing four quarters with an average beat of 5.20%.
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