Metal processor Worthington Industries
(WOR - Snapshot Report
) saw its profit climb in first-quarter fiscal 2014 (ended Aug 31, 2013) on strength across its Steel Processing and Pressure Cylinders divisions and contributions of its joint ventures. It raked in a profit of $54.6 million or 76 cents per share in the quarter, a roughly 61% year over year surge. The Ohio-based company’s shares gained roughly 3% the day after the earnings announcement. The stock is up around 32% so far this year.
Barring one-time items, including Tailor Welded Blanks (TWB) joint venture write-up and tax-related gains, earnings came in at 58 cents a share, meeting the Zacks Consensus Estimate. The company booked a $4.5 million gain associated with favorable tax adjustments related to its purchase of an additional 10% interest in TWB. Worthington now holds a 55% stake in TWB. Joint ventures, including TWB, contributed $27 million in equity earnings in the quarter.
Revenues rose around 4% year over year to $692.3 million and beat the Zacks Consensus Estimate of $689 million. The top line was driven by higher volumes stemming from recent acquisitions, which more than offset lower pricing.
Gross margin rose to 16% from 14.1% a year ago. The improvement mainly resulted from contributions of recent acquisitions, better product mix in the Pressure Cylinders segment and reduced inventory holding losses in the Steel Processing unit.
Revenues from the core Steel Processing division rose 5% year over year to $402.4 million in the reported quarter as lower selling prices were more than offset by higher volumes from TWB consolidation and sales gain across agriculture and heavy truck markets. Volumes rose nearly 4% year over year to 720 tons in the quarter.
Worthington’s Pressure Cylinders segment sales went up 12% year over year to $216.9 million, boosted by acquisitions of leading atmospheric tanks and pressure vessels maker Westerman Companies and steel and fiberglass tanks maker Palmer. Volumes, however, fell 3% to 20,847 units.
The Engineered Cabs segment struggled in the quarter, hit by weak volumes from major customers. The division posted revenues of $48.5 million, down 25% year over year. Lower selling prices also affected the unit's results.
Worthington ended the quarter with cash and cash equivalents of $121 million, a nearly four-fold year over year rise. Long-term debt fell marginally year over year to $407 million. Operating cash flows for the quarter jumped 33% year over year to roughly $94.5 million. Worthington bought back 880,500 shares for $30.5 million during the first quarter.
Worthington remains positive about fiscal 2014 and continues to expect growth both organically and from acquisitions. The company is seeing strength in the automotive space and improvements in commercial construction and agriculture markets. Worthington will remain committed to explore fresh opportunities and drive improvement and optimization across its businesses.
Worthington currently retains a Zacks Rank #2 (Buy).