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Bull of the Day: Worthington Industries (WOR)

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Worthington Industries (WOR - Free Report) who currently carries a Zacks Rank #1 (Strong Buy) is one of the leading diversified metal processing companies. The company is one of North America's premier value-added steel processors and one of the leaders in manufactured metal products such as automotive aftermarket stampings, pressure cylinders, metal framing, metal ceiling grid systems and laser welded blanks.

Recent Earnings Results

The company reported Q4 17 results on June 28th, and they easily beat both the Zacks consensus earnings and revenue estimates.  The fourth quarter results saw a year over year (YOY) gains in several different areas; net sales +18.3%, operating income +31.3%, gross margins +15.2%, and interest expenses were cut by 18.5%.  The Steel Processing segment saw YOY net sales jump up by +25%, the Pressure Cylinders segment had net sales improve by +6%, and the Engineered Cabs segment saw net sales rise by +2%.  The big jump in net sales in the Steel Processing segment was due to higher average selling prices and improved overall volume compared to the year ago quarter.  

Management’s Take

According to John McConnell, Chairman and CEO, “We finished our fiscal year with strong results, leading to record annual earnings per share for the Company. While we benefited from rising steel prices, we also saw increases in volume for Steel Processing with improvements in markets such as agriculture.  Pressure Cylinders performance was steady for the year despite headwinds caused by softness in the oil & gas equipment market, which showed signs of improving in the fourth quarter.  Engineered Cabs also benefited from better agriculture and construction markets.”

Looking Ahead

Mr. McConnell commented about fiscal year 2018 stating, “As we begin our new fiscal year, we are optimistic that we will continue to see improvements in some of our key markets, and we are very pleased to have closed on our largest acquisition to date with the purchase of Amtrol.  We think the addition of Amtrol, along with the successful traction of Transformation in Pressure Cylinders, provide good momentum and have us well-positioned for growth.  All of our businesses are focused on continuing to improve through our Transformation in driving lean practices, with innovation and by strengthening our competitive position in the markets we serve.”

Recent Developments within Worthington

In early June, WOR acquired Amtrol, one of the leading manufacturers of pressure cylinders and water systems tanks who currently has operations in both Europe and the U.S.A.  Also, the Board of Directors declared a quarterly dividend of $0.21 per share payable to record holders as of September 15.

Increasing Earnings Estimates

Due to the strong earnings performance, and their recent acquisition, estimates for Q1 18, Q2 18, FY 18 and FY 19 have all see upgrades over the past 7 days; Q1 18 rose from $0.88 to $0.90, Q2 18 improved from $0.82 to $0.84, FY 18 jumped up from $2.92 to $3.21, and FY 19 increased from $3.49 to $3.57.

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