Worthington Industries trims debt by $39.2 million in second quarter

By Jennifer Lanning Drey

Portland, Ore., Jan. 6 - Worthington Industries Inc. reduced debt by $39.2 million during the second quarter of fiscal 2010, ending the period with $176.1 million of total debt at Nov. 30, chief financial officer Andy Rose reported Wednesday during the company's quarterly earnings conference call.

Worthington ended the period with $56 million drawn on its $435 million revolver, leaving $379 million in available capital, Rose said.

"Our strong balance sheet and access to low-cost capital continue to be a competitive advantage," he said.

"Going forward, the combination of operating improvements from our transformation, opportunistic acquisitions and a healthier economy will provide a solid platform for growth."

Cash provided by operating activities was $37.9 million for the quarter and $134.1 million in the fiscal year to date.

During the question-and-answer portion of the call, chief executive officer John McConnell said, overall, the company is comfortable with its current cash generation and available borrowings.

"It would be our intention to use some of that money in ways that are helpful and productive to our earning power going forward," he said.

Rose added that he believes the company is probably at the bottom of an inventory liquidation cycle and is therefore likely to be a user of cash for working capital going forward, leaving the revolver to fund any volume- or steel-related increases in business or smaller acquisitions.

Worthington has ample available capital to avoid having to access the capital markets unless it were to carry out a larger acquisition, he said.

Rose also noted, "At some point, we might want to replace the $150 million notes that we tendered earlier this calendar year, but that remains to be seen as to when we do that."

The company ended the second quarter with a debt-to-capitalization ratio of 26%, compared with a maximum allowable ratio of 55%. The interest coverage ratio was 10.6 times, well above the minimum required ratio of 3.25 times.

Second-quarter net sales were $448.0 million.

Worthington is a diversified metal processing company based in Columbus, Ohio.

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