NEW YORK Worthington Industries Inc.s net income increased 10.9 percent in its fiscal year despite a 1.1-percent dip in the last three months of the year.
Sales for the three months ended May 31 jumped 26.6 percent from the same period last year, while full-year sales climbed 19.7 percent from a year earlier, the Columbus, Ohio-based company said in its earnings report June 26.
The company attributed higher quarterly sales to stronger volumes as well as acquisitions, with its steel processing business benefiting from recovering automotive, agriculture and construction markets.
"The (fiscal) fourth-quarter results showed improvement over the prior-year period, with steel processing leading the way," Worthington chairman and chief executive officer John P. McConnell said in a statement accompanying the earnings report. "Our transformation efforts continue to help that business deliver strong results as it nears the peak volumes we saw prior to the downturn."
That business, which takes steel and produces value-added components for several sectors, hit volumes not seen since the fourth quarter of fiscal 2008, executives said during the companys earnings call.
Worthington processed 3.28 million tons of steel in fiscal 2014, up 23.4 percent from 2.66 million tons a year earlier.
Steel processing volumes "approached peak levels seen prior to the downturn," chief financial officer Andy Rose said during the conference call, noting that Worthington had added $15 million in earnings before interest, taxes, depreciation and amortization (Ebitda) each year for the past two years, which it hopes to continue in 2015.
However, weakness in the mining and construction sectors hampered Worthingtons results in the fiscal fourth quarter. "Generally, commercial construction is weak and mining is weak," impacting demand for Worthingtons products, which include cabs for mining operators, chief operating officer Mark Russell said,
Capital investment in the mining sector has stalled, Russell said, citing remarks by Peoria, Ill.-based Caterpillar Inc., the worlds largest maker of mining equipment (amm.com, Jan. 29).
Worthingtons engineered cabs business also suffered from a "flat market environment," with fiscal fourth-quarter sales falling 4.3 percent from a year earlier to $52.7 million and full-year sales sliding 11.3 percent to $200.5 million.
Results for the companys pressure cylinders business, which supplies equipment to the energy sector among others, was mixed in the fiscal fourth quarter as severe winter weather chilled U.S. energy construction. But McConnell said he expects "good results" from that business in "retail, industrial, alternative fuels and energy products" in the upcoming fiscal year.
Worthingtons quarterly earnings came in below Wall Streets consensus expectations, according to Philip Gibbs, an analyst at Cleveland-based KeyBanc Capital Markets Inc. Operating results were mostly as expected, he said in a June 26 research note, although the financial results were not "stellar."
"We do not believe the (earnings) release warrants a negative overreaction from investors and we would be buyers if the stock got hit," Gibbs wrote.
Worthington is a diversified metals company that makes propane, oxygen and industrial cylinders, as well as other equipment, for the automotive, construction and energy markets.