Worthington hurt by steel, oil prices; cuts debt $29 million in Q4

By Lisa Kerner

Charlotte, N.C., June 25 – Worthington Industries, Inc. had a “mixed year” in fiscal 2015, according to executive vice president and chief financial officer Andy Rose.

After several years of strong growth, the company was unable to achieve its goal of year-over-year earnings growth, Rose said during Worthington’s fiscal fourth-quarter and full-year earnings conference call on Thursday.

Macro headwinds from declining steel and oil prices in part hindered profits, said Rose.

However, the company was able to cut its debt by $29 million in the fiscal fourth quarter that ended on May 31.

Total funded debt at quarter end was $671 million and the company had $515 million under its revolving credit facilities at a borrowing rate of about 1.4%.

“Our balance sheet is well positioned with $550 million of long term capital at an average rate of 5% with maturities spread across 2020, 2024 and 2026,” Rose said.

Worthington successfully closed on a five-year extension of its credit facility during the quarter, upsizing it by $75 million to $500 million and pushing out the maturity to April 2020.

“We have plenty of low cost capital at our disposal and attractive opportunities in front of us,” Rose said.

Cash and cash equivalents totaled about $31 million at May 31, compared to $190 million in the year-ago quarter.

During the fiscal fourth quarter, the company spent $29.1 million to repurchase about 1.1 million shares, at an average price of $26.54.

There is authorization for 7.5 million shares under Worthington’s share repurchase program.

Worthington also distributed $12 million in dividends, according to Rose.

Financial highlights

Net sales for the quarter were $846 million and net earnings were $28.9 million, or $0.44 per diluted share.

This compares to $891 million, $33.2 million, and $0.47, respectively, for the prior-year period, according to the earnings news release.

Worthington attributed the decline to lower volume in steel processing and pressure cylinders, as well as lower average selling prices in steel processing as a result of lower steel prices.

Net sales for the full year were up 8% year over year at $3.34 billion. Full-year net earnings were $76.8 million, or $1.12 per diluted share.

Operating income for the current was down $5.1 million from the prior year at $27.2 million.

Interest expense was up slightly year over year at $8.2 million.

Worthington is a Columbus, Ohio-based metal processing company.

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