|
Date of Report (Date of earliest event reported): June 26, 2014
|
Ohio
(State or other jurisdiction |
1-8399
(Commission |
31-1189815
(IRS Employer |
of incorporation) | File Number) | Identification No.) |
200 Old Wilson Bridge Road, Columbus, Ohio
(Address of principal executive offices) |
43085
(Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
WORTHINGTON INDUSTRIES, INC. | |
Date: June 26, 2014 | |
By: /s/Dale T. Brinkman | |
Dale T. Brinkman, Vice President- | |
Administration, General Counsel & Secretary |
(U.S. dollars in millions, except per share data)
|
||||||||||||||||||||
4Q 2014 | 3Q 2014 | 4Q 2013 | 12M2014 | 12M2013 | ||||||||||||||||
Net sales
|
$ | 891.0 | $ | 773.2 | $ | 704.1 | $ | 3,126.4 | $ | 2,612.2 | ||||||||||
Operating income
|
32.3 | 45.3 | 33.5 | 135.8 | 129.1 | |||||||||||||||
Equity income
|
22.2 | 21.2 | 21.0 | 91.5 | 94.6 | |||||||||||||||
Net earnings
|
33.2 | 40.6 | 33.5 | 151.3 | 136.4 | |||||||||||||||
Earnings per share
|
$ | 0.47 | $ | 0.57 | $ | 0.46 | $ | 2.11 | $ | 1.91 |
|
·
|
On March 27, 2014, the Company acquired the tank manufacturing division of Steffes Corporation for cash consideration of $28.9 million. Steffes manufactures oilfield storage tanks for customers drilling in the Bakken shale and Williston Basin region from its manufacturing facility in Dickinson, ND.
|
|
·
|
On April 15, 2014, the Company completed the public offering of $250.0 million aggregate principal amount of senior notes due 2026. The notes bear interest at an annual rate of 4.55%.
|
|
·
|
During the quarter, the Company repurchased a total of 1,000,000 common shares for $37.1 million at an average price of $37.14.
|
|
·
|
On June 25, 2014, the board of directors declared a quarterly dividend of $0.18 per share payable on September 29, 2014 to shareholders of record on September 12, 2014.
|
|
·
|
On June 25, 2014, the Board of Directors authorized the repurchase of an additional 10.0 million shares. This is in addition to the 1.7 million shares remaining under the 2011 authorization.
|
|
·
|
On July 31, 2013, the Company acquired an additional 10% interest in the laser welded blanks joint venture, TWB, increasing the ownership to a 55% controlling interest. TWB’s results have been consolidated within Steel Processing since that date, with the minority member’s portion of earnings eliminated within earnings attributable to non-controlling interest.
|
|
·
|
During the second quarter of fiscal 2014, a re-branding initiative was launched to brand substantially all of the businesses under the Worthington Industries name. In connection with the branding strategy, the Company discontinued the use of non-Worthington trade names except for retail brand names including BernzOmatic® and Balloon Time® and those related to our joint ventures.
|
|
·
|
An agreement was finalized in October 2013 with Nisshin Steel Co., Ltd. and Marubeni-Itochu Steel Inc. to form Zhejiang Nisshin Worthington Precision Specialty Steel Co., Ltd. The joint venture will construct a plant in Zhejiang Province in the People’s Republic of China that will produce cold rolled strip steel primarily for the automotive industry. Worthington will own a 10% interest in the joint venture with the option to increase its ownership interest to 34%.
|
|
·
|
The Company entered into an agreement in November 2013 to sell the operating assets related to our steel high pressure and acetylene cylinders business in North America.
|
|
·
|
On December 10, 2013, the Company announced the closure of its Baltimore steel facility. With the consolidation of the steel industry, many of the mills that previously supplied the Baltimore facility have closed, negatively impacting the supply chain there. The Company has concluded that it can more efficiently service its customers in the Mid-Atlantic Region from other Worthington facilities and processing partners. The facility is no longer operating as of May 31, 2014.
|
|
·
|
Worthington acquired a 75% interest in Worthington Aritas, one of Europe’s leading LNG (liquefied natural gas) and cryogenic technology companies in January, 2014 for cash consideration of $35.6 million. The remaining 25% stake was retained by the prior owners.
|
|
·
|
During fiscal 2014, the Company repurchased a total of 3,380,500 common shares for $128.2 million at an average price of $37.93.
|
WORTHINGTON INDUSTRIES, INC.
|
||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS
|
||||||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
May 31,
|
May 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Net sales
|
$
|
891,005
|
$
|
704,060
|
$
|
3,126,426
|
$
|
2,612,244
|
||||||||
Cost of goods sold
|
760,169
|
592,950
|
2,633,907
|
2,215,601
|
||||||||||||
Gross margin
|
130,836
|
111,110
|
492,519
|
396,643
|
||||||||||||
Selling, general and administrative expense
|
74,781
|
70,580
|
300,396
|
258,324
|
||||||||||||
Impairment of long-lived assets
|
22,871
|
4,968
|
58,246
|
6,488
|
||||||||||||
Restructuring and other expense (income)
|
869
|
1,482
|
(2,912
|
)
|
3,293
|
|||||||||||
Joint venture transactions
|
(12
|
)
|
584
|
1,036
|
(604
|
)
|
||||||||||
Operating income
|
32,327
|
33,496
|
135,753
|
129,142
|
||||||||||||
Other income (expense):
|
||||||||||||||||
Miscellaneous income
|
3,066
|
388
|
16,963
|
1,452
|
||||||||||||
Interest expense
|
(7,977
|
)
|
(6,167
|
)
|
(26,671
|
)
|
(23,918
|
)
|
||||||||
Equity in net income of unconsolidated affiliates
|
22,233
|
21,044
|
91,456
|
94,624
|
||||||||||||
Earnings before income taxes
|
49,649
|
48,761
|
217,501
|
201,300
|
||||||||||||
Income tax expense
|
18,401
|
16,744
|
57,349
|
64,465
|
||||||||||||
Net earnings
|
31,248
|
32,017
|
160,152
|
136,835
|
||||||||||||
Net earnings (loss) attributable to noncontrolling interest
|
(1,915
|
)
|
(1,506
|
)
|
8,852
|
393
|
||||||||||
Net earnings attributable to controlling interest
|
$
|
33,163
|
$
|
33,523
|
$
|
151,300
|
$
|
136,442
|
||||||||
Basic
|
||||||||||||||||
Average common shares outstanding
|
67,980
|
70,201
|
68,944
|
69,301
|
||||||||||||
Earnings per share attributable to controlling interest
|
$
|
0.49
|
$
|
0.48
|
$
|
2.19
|
$
|
1.97
|
||||||||
Diluted
|
||||||||||||||||
Average common shares outstanding
|
70,441
|
72,999
|
71,664
|
71,314
|
||||||||||||
Earnings per share attributable to controlling interest
|
$
|
0.47
|
$
|
0.46
|
$
|
2.11
|
$
|
1.91
|
||||||||
Common shares outstanding at end of period
|
67,408
|
69,752
|
67,408
|
69,752
|
||||||||||||
Cash dividends declared per share
|
$
|
0.15
|
$
|
-
|
$
|
0.60
|
$
|
0.52
|
WORTHINGTON INDUSTRIES, INC.
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
(In thousands)
|
||||||||
May 31,
|
May 31,
|
|||||||
2014
|
2013
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 190,079 | $ | 51,385 | ||||
Receivables, less allowances of $3,043 and $3,408 at May 31, 2014 and May 31, 2013, respectively
|
493,127 | 394,327 | ||||||
Inventories:
|
||||||||
Raw materials
|
213,173 | 175,093 | ||||||
Work in process
|
105,872 | 103,861 | ||||||
Finished products
|
90,957 | 77,814 | ||||||
Total inventories
|
410,002 | 356,768 | ||||||
Income taxes receivable
|
5,438 | 724 | ||||||
Assets held for sale
|
32,235 | 3,040 | ||||||
Deferred income taxes
|
24,272 | 21,928 | ||||||
Prepaid expenses and other current assets
|
43,769 | 38,711 | ||||||
Total current assets
|
1,198,922 | 866,883 | ||||||
Investments in unconsolidated affiliates
|
179,113 | 246,125 | ||||||
Goodwill
|
251,093 | 213,858 | ||||||
Other intangible assets, net of accumulated amortization of $35,506 and $26,669 at May 31, 2014 and May 31, 2013, respectively
|
145,993 | 147,144 | ||||||
Other assets
|
22,399 | 17,417 | ||||||
Property, plant & equipment:
|
||||||||
Land
|
15,260 | 26,253 | ||||||
Buildings and improvements
|
213,848 | 205,017 | ||||||
Machinery and equipment
|
848,889 | 798,467 | ||||||
Construction in progress
|
32,135 | 22,899 | ||||||
Property, plant & equipment at cost
|
1,110,132 | 1,052,636 | ||||||
Less: accumulated depreciation
|
611,271 | 593,206 | ||||||
Property, plant and equipment, net
|
498,861 | 459,430 | ||||||
Total assets
|
$ | 2,296,381 | $ | 1,950,857 | ||||
Liabilities and equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 333,744 | $ | 222,696 | ||||
Short-term borrowings
|
10,362 | 113,728 | ||||||
Accrued compensation, contributions to employee benefit plans
|
||||||||
and related taxes
|
78,514 | 68,043 | ||||||
Dividends payable
|
11,044 | 551 | ||||||
Other accrued items
|
49,873 | 36,536 | ||||||
Income taxes payable
|
4,953 | 6,268 | ||||||
Current maturities of long-term debt
|
101,173 | 1,092 | ||||||
Total current liabilities
|
589,663 | 448,914 | ||||||
Other liabilities
|
76,426 | 70,882 | ||||||
Distributions in excess of investment in unconsolidated affiliate
|
59,287 | 63,187 | ||||||
Long-term debt
|
554,790 | 406,236 | ||||||
Deferred income taxes
|
71,333 | 89,401 | ||||||
Total liabilities
|
1,351,499 | 1,078,620 | ||||||
Shareholders' equity - controlling interest
|
850,812 | 830,822 | ||||||
Noncontrolling interest
|
94,070 | 41,415 | ||||||
Total equity
|
944,882 | 872,237 | ||||||
Total liabilities and equity
|
$ | 2,296,381 | $ | 1,950,857 |
WORTHINGTON INDUSTRIES, INC.
|
||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||||||||||
(In thousands)
|
||||||||||||||||
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
May 31,
|
May 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Operating activities
|
||||||||||||||||
Net earnings
|
$
|
31,248
|
$
|
32,017
|
$
|
160,152
|
$
|
136,835
|
||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||||||||||
Depreciation and amortization
|
19,967
|
18,333
|
79,730
|
66,469
|
||||||||||||
Impairment of long-lived assets
|
22,871
|
4,968
|
58,246
|
6,488
|
||||||||||||
Provision for deferred income taxes
|
(5,660
|
)
|
(8,052
|
)
|
(25,916
|
)
|
1,798
|
|||||||||
Bad debt expense
|
462
|
208
|
32
|
783
|
||||||||||||
Equity in net income of unconsolidated affiliates, net of distributions
|
(6,960
|
)
|
8,308
|
(15,333
|
)
|
(10,948
|
)
|
|||||||||
Net gain (loss) on sale of assets
|
(352
|
)
|
1,343
|
(11,212
|
)
|
1,121
|
||||||||||
Stock-based compensation
|
8,810
|
2,684
|
22,017
|
13,270
|
||||||||||||
Excess tax benefits - stock-based compensation
|
(1,586
|
)
|
(1,728
|
)
|
(8,880
|
)
|
(5,183
|
)
|
||||||||
Gain on previously held equity interest in TWB
|
-
|
-
|
(11,000
|
)
|
-
|
|||||||||||
Changes in assets and liabilities, net of impact of acquisitions:
|
||||||||||||||||
Receivables
|
(34,207
|
)
|
(8,277
|
)
|
(49,206
|
)
|
18,801
|
|||||||||
Inventories
|
21,573
|
34,372
|
(38,010
|
)
|
77,115
|
|||||||||||
Prepaid expenses and other current assets
|
(7,057
|
)
|
(763
|
)
|
(2,921
|
)
|
871
|
|||||||||
Other assets
|
(5,091
|
)
|
1,501
|
(5,278
|
)
|
4,636
|
||||||||||
Accounts payable and accrued expenses
|
(38,503
|
)
|
(12,612
|
)
|
69,682
|
(47,483
|
)
|
|||||||||
Other liabilities
|
2,924
|
4,992
|
6,943
|
8,404
|
||||||||||||
Net cash provided by operating activities
|
8,439
|
77,294
|
229,046
|
272,977
|
||||||||||||
Investing activities
|
||||||||||||||||
Investment in property, plant and equipment
|
(19,181
|
)
|
(10,186
|
)
|
(71,338
|
)
|
(44,588
|
)
|
||||||||
Acquisitions, net of cash acquired
|
(29,151
|
)
|
(113,115
|
)
|
(11,517
|
)
|
(175,225
|
)
|
||||||||
Distributions from unconsolidated affiliates
|
-
|
863
|
9,223
|
863
|
||||||||||||
Proceeds from sale of assets and insurance
|
3,125
|
747
|
27,438
|
16,974
|
||||||||||||
Net cash used by investing activities
|
(45,207
|
)
|
(121,691
|
)
|
(46,194
|
)
|
(201,976
|
)
|
||||||||
Financing activities
|
||||||||||||||||
Net proceeds from (repayments of) short-term borrowings
|
(24,994
|
)
|
83,140
|
(103,618
|
)
|
(168,446
|
)
|
|||||||||
Proceeds from long-term debt
|
247,566
|
-
|
247,566
|
150,000
|
||||||||||||
Principal payments on long-term debt
|
(364
|
)
|
(310
|
)
|
(1,219
|
)
|
(1,480
|
)
|
||||||||
Proceeds from (payments for) issuance of common shares
|
(628
|
)
|
4,954
|
4,618
|
37,914
|
|||||||||||
Excess tax benefits - stock-based compensation
|
1,586
|
1,728
|
8,880
|
5,183
|
||||||||||||
Payments to noncontrolling interest
|
(1,819
|
)
|
(672
|
)
|
(40,969
|
)
|
(9,254
|
)
|
||||||||
Repurchase of common shares
|
(37,140
|
)
|
(30,417
|
)
|
(128,218
|
)
|
(30,417
|
)
|
||||||||
Dividends paid
|
(10,246
|
)
|
-
|
(31,198
|
)
|
(44,144
|
)
|
|||||||||
Net cash provided (used) by financing activities
|
173,961
|
58,423
|
(44,158
|
)
|
(60,644
|
)
|
||||||||||
Increase in cash and cash equivalents
|
137,193
|
14,026
|
138,694
|
10,357
|
||||||||||||
Cash and cash equivalents at beginning of period
|
52,886
|
37,359
|
51,385
|
41,028
|
||||||||||||
Cash and cash equivalents at end of period
|
$
|
190,079
|
$
|
51,385
|
$
|
190,079
|
$
|
51,385
|
SUPPLEMENTAL DATA
|
||||||||||||||||
(In thousands)
|
||||||||||||||||
This supplemental information is provided to assist in the analysis of the results of operations.
|
||||||||||||||||
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
May 31,
|
May 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Volume:
|
||||||||||||||||
Steel Processing (tons)
|
949
|
703
|
3,282
|
2,659
|
||||||||||||
Pressure Cylinders (units)
|
22,908
|
23,363
|
84,564
|
82,189
|
||||||||||||
Net sales:
|
||||||||||||||||
Steel Processing
|
$
|
563,515
|
$
|
379,632
|
$
|
1,936,073
|
$
|
1,462,630
|
||||||||
Pressure Cylinders
|
264,184
|
252,328
|
928,396
|
859,264
|
||||||||||||
Engineered Cabs
|
52,714
|
55,075
|
200,528
|
226,002
|
||||||||||||
Other
|
10,592
|
17,025
|
61,429
|
64,348
|
||||||||||||
Total net sales
|
$
|
891,005
|
$
|
704,060
|
$
|
3,126,426
|
$
|
2,612,244
|
||||||||
Material cost:
|
||||||||||||||||
Steel Processing
|
$
|
412,183
|
$
|
267,913
|
$
|
1,392,009
|
$
|
1,044,802
|
||||||||
Pressure Cylinders
|
124,442
|
123,854
|
426,856
|
409,101
|
||||||||||||
Engineered Cabs
|
24,639
|
26,912
|
90,854
|
112,769
|
||||||||||||
Selling, general and administrative expense:
|
||||||||||||||||
Steel Processing
|
$
|
33,755
|
$
|
29,483
|
$
|
129,669
|
$
|
110,094
|
||||||||
Pressure Cylinders
|
30,000
|
31,366
|
125,984
|
106,947
|
||||||||||||
Engineered Cabs
|
7,995
|
6,878
|
30,620
|
27,448
|
||||||||||||
Other
|
3,031
|
2,853
|
14,123
|
13,835
|
||||||||||||
Total selling, general and administrative expense
|
$
|
74,781
|
$
|
70,580
|
$
|
300,396
|
$
|
258,324
|
||||||||
Operating income (loss):
|
||||||||||||||||
Steel Processing
|
$
|
33,312
|
$
|
19,990
|
$
|
119,025
|
$
|
68,156
|
||||||||
Pressure Cylinders
|
5,997
|
16,402
|
55,004
|
66,367
|
||||||||||||
Engineered Cabs
|
(4,232
|
)
|
(1,209
|
)
|
(26,516
|
)
|
4,158
|
|||||||||
Other
|
(2,750
|
)
|
(1,687
|
)
|
(11,760
|
)
|
(9,539
|
)
|
||||||||
Total operating income
|
$
|
32,327
|
$
|
33,496
|
$
|
135,753
|
$
|
129,142
|
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
May 31,
|
May 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Impairment of long-lived assets:
|
||||||||||||||||
Steel Processing
|
$
|
2,500
|
$
|
-
|
$
|
7,141
|
$
|
-
|
||||||||
Pressure Cylinders
|
20,371
|
4,968
|
32,005
|
6,488
|
||||||||||||
Engineered Cabs
|
-
|
-
|
19,100
|
-
|
||||||||||||
Other
|
-
|
-
|
-
|
-
|
||||||||||||
Total impairment of long-lived assets
|
$
|
22,871
|
$
|
4,968
|
$
|
58,246
|
$
|
6,488
|
||||||||
Restructuring and other expense (income):
|
||||||||||||||||
Steel Processing
|
$
|
-
|
$
|
-
|
$
|
(3,382
|
)
|
$
|
-
|
|||||||
Pressure Cylinders
|
289
|
2,482
|
(745
|
)
|
2,665
|
|||||||||||
Engineered Cabs
|
-
|
-
|
-
|
-
|
||||||||||||
Other
|
580
|
(1,000
|
)
|
1,215
|
628
|
|||||||||||
Total restructuring and other expense (income)
|
$
|
869
|
$
|
1,482
|
$
|
(2,912
|
)
|
$
|
3,293
|
|||||||
Joint venture transactions:
|
||||||||||||||||
Steel Processing
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Pressure Cylinders
|
-
|
-
|
-
|
-
|
||||||||||||
Engineered Cabs
|
-
|
-
|
-
|
-
|
||||||||||||
Other
|
(12
|
)
|
584
|
1,036
|
(604
|
)
|
||||||||||
Total joint venture transactions
|
$
|
(12
|
)
|
$
|
584
|
$
|
1,036
|
$
|
(604
|
)
|
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