Worthington Industries(US:WOR)2021-07-29 16:00Company Operations - Worthington Industries operates 68 manufacturing facilities across 22 states and 8 countries, with 21 facilities operated by wholly-owned subsidiaries[14]. - As of May 31, 2021, Worthington had approximately 9,000 employees, with 8% represented by collective bargaining units[36]. - Worthington operates four consolidated and five unconsolidated joint ventures to expand product offerings and market presence[36]. - The company operates a total of 47 manufacturing facilities through consolidated and unconsolidated joint ventures as of May 31, 2021[97]. - The company operates 21 manufacturing facilities and 9 warehouses, totaling approximately 10,000,000 square feet, with 8,800,000 square feet dedicated to manufacturing and distribution[93]. Financial Performance - Net sales for fiscal 2021 were $3,171.4 million, an increase from $3,059.1 million in fiscal 2020, representing a growth of approximately 3.7%[122]. - Gross margin improved to $639.1 million in fiscal 2021, compared to $443.3 million in fiscal 2020, reflecting a significant increase of 44.3%[122]. - Operating income rose to $167.5 million in fiscal 2021, up from $22.5 million in fiscal 2020, marking an increase of 642.5%[122]. - Net earnings attributable to controlling interest reached $723.8 million in fiscal 2021, a substantial increase from $78.8 million in fiscal 2020, representing a growth of 817.5%[122]. - Earnings per share (diluted) attributable to controlling interest was $13.42 in fiscal 2021, compared to $1.41 in fiscal 2020, indicating a remarkable increase of 852.5%[122]. Acquisitions and Divestitures - Worthington Industries acquired PTEC Pressure Technology GmbH for $10.8 million and General Tools & Instruments Company LLC for $120.4 million in fiscal 2021[18]. - The company sold its LPG fuel storage business in Poland for approximately $6.0 million, resulting in a pre-tax loss of $11.0 million[18]. - The company disposed of its LPG fuel storage business in Poland in May 2021 and its oil & gas equipment business in Bremen, Ohio, and Tulsa, Oklahoma, in January 2021[121]. - The acquisition of General Tools & Instruments Company LLC was completed for approximately $120.4 million, enhancing the Company's product offerings[129]. Market and Industry Conditions - Steel Processing generated approximately 65% of consolidated net sales, while Pressure Cylinders accounted for about 35%[21][26]. - The automotive industry accounted for approximately 57% of the net sales in the Steel Processing segment, with North American vehicle production increasing by 11%[132][138]. - The COVID-19 pandemic has caused significant volatility in demand for products, impacting financial position and cash flows[49]. - Steel prices have increased due to supplier consolidation and tariffs, but a decline could adversely affect pricing strategies and inventory valuations[52]. - The automotive and construction industries are crucial, with reduced demand potentially leading to negative financial results[51]. Risks and Challenges - The company faces risks from fluctuations in raw material prices, particularly flat-rolled steel, which could impact financial results[54]. - A significant loss of business from key customers, especially in the automotive sector, could adversely affect sales and financial results[58]. - Increased competition in the market could lead to loss of market share and reduced margins[59]. - The company does not have long-term contracts with customers or suppliers, increasing vulnerability to market fluctuations[56]. - Business disruptions from supply chain issues, severe weather, or other events could adversely impact operations and financial results[65]. Shareholder Returns and Capital Management - The company announced a share repurchase authorization covering 5,618,464 common shares on March 24, 2021[18]. - Worthington Industries repurchased a total of 718,583 common shares during the fiscal quarter ended May 31, 2021, with an average price of $66.76 per share[118]. - The maximum number of common shares that may yet be purchased under repurchase plans is 9,300,000 as of May 31, 2021[118]. - Cash dividends declared increased to $1.03 per share, up from $0.96 per share in the previous year, reflecting a commitment to returning value to shareholders[207]. Financial Position and Liquidity - Total current assets increased to $1,968.0 million as of May 31, 2021, compared to $983.2 million in the previous year, reflecting a growth of 100.5%[122]. - Cash and cash equivalents at the end of fiscal 2021 were $640.3 million, up from $147.2 million at the end of fiscal 2020[152]. - The company maintained a $500.0 million multi-year revolving credit facility with no borrowings outstanding as of May 31, 2021[160]. - Total long-term debt amounts to $713.5 million, with $562.1 million due after 5 years[164]. Operational Efficiency and Cost Management - The company emphasizes safety and wellness, providing above-market benefits and maintaining an industry-leading safety record[43]. - Employee engagement survey results showed 74% engagement, 89% safety, and 74% manager effectiveness, exceeding industry benchmarks[42]. - SG&A expenses increased by $23.0 million, representing 11.1% of consolidated net sales in fiscal 2021, up from 10.7% in fiscal 2020[141]. - The company has not used derivative financial instruments to manage foreign currency exchange risk, but forward contracts are in place to limit exposure[181]. Future Outlook - The company expects significant inventory holding gains in the first quarter of fiscal 2022 due to current steel prices[134]. - The proposed increase in the federal corporate income tax rate from 21% to 28% could negatively impact future financial results if adopted[84][86]. - The company is subject to cyclical economic conditions, which could lead to decreased demand for products and negatively impact financial performance[83].