Worthington Industries expects lower earnings in fiscal Q3

Worthington Industries, Inc. announced Monday that the company’s outlook has changed since it was discussed in December’s fiscal year 2015 second quarter earnings call. The price of steel has dropped over $100 a ton since mid-December. The amount and speed of the decline was not anticipated.  When steel prices fall, the Company typically has higher-priced base inventory flowing through cost of goods sold, while selling prices compress to market levels, reducing margins and earnings. The price decline, combined with softening demand in a few key end-markets, including oil and gas and agriculture, will cause earnings for the third quarter to be significantly below last year’s third quarter and are expected to adversely affect fourth quarter results. Additionally, continued higher than normal operating costs in certain Pressure Cylinders and Engineered Cabs operations, as discussed during last quarter’s call, will also be factors.
 
“I previously expressed my confidence in our ability to grow earnings on a year-over-year basis.  While I remain confident in our team and our ability to drive improvement, in light of these headwinds, it will be difficult to achieve year-over-year EPS growth in fiscal 2015,” said John P. McConnell, Chairman and CEO. “Increasing turmoil throughout the world tilts the scales toward continuing softness in the global economy, keeping downward pressure on the price of steel and other commodities.” Despite the short-term weakness, McConnell added that he remains confident in the long-term view of the Company.
 
 The Company has been actively repurchasing its shares pursuant to previously announced authorizations approved by its Board of Directors. The Company has in place a Rule 10b5-1 Plan, administered by an independent broker, under which repurchases of shares aggregating up to $60 million may be made through April 9, 2015, unless the Plan is earlier terminated pursuant its  terms. The Plan was established in accordance with, and as part of the repurchase authorizations under which 8.8 million shares are available for repurchase.