Worthington's Not Worth a Ton: Fool by Numbers
By Anders Bylund
September 26, 2007
On Sept. 25, steel-processing expert Worthington Industries (NYSE: WOR) released first-quarter 2008 earnings for the period ended Aug. 31.
- Materials are getting more expensive, and Worthington's customers demand lower product prices -- hardly an ideal profit-generation setup. The effects are showing up as thinner margins and lower net income.
- The metal framing segment came up short, losing $8 million on an operational basis this quarter after making a $17.8 million operating profit last year. Worthington is going to close a few framing plants to save $9 million a year going forward, but the restructuring itself will cost about $15 million.
- Worthington prides itself on its employee and customer relationships, just like Nucor (NYSE: NUE), which is one of its larger steel suppliers. Is that good enough to set Worthington apart from its competitors? Your fellow CAPS Fools don't think so, giving Worthington a middle-of-the-road three-star rating. Do you agree? Disagree? Head on over to Motley Fool CAPS and share your thoughts right now!
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q1 2008
|
Q1 2007
|
Change
|
|
Sales
|
$759.0
|
$778.7
|
(2.5%)
|
|
Net Profit
|
$20.2
|
$43.2
|
(53.3%)
|
|
EPS
|
$0.24
|
$0.48
|
(50%)
|
|
Diluted Shares
|
85.0
|
89.4
|
(4.9%)
|
Get back to basics with the income statement.
Margin Checkup
|
Q1 2008
|
Q1 2007
|
Change*
|
|
Gross Margin
|
10.4%
|
15.6%
|
(5.2)
|
|
Operating Margin
|
2.6%
|
7%
|
(4.4)
|
|
Net Margin
|
2.7%
|
5.6%
|
(2.9)
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q1 2008
|
Q1 2007
|
Change
|
|
Cash + ST Invest.
|
$78.7
|
$17.0
|
362.6%
|
|
Accounts Rec.
|
$384.2
|
$400.0
|
(3.9%)
|
|
Inventory
|
$445.2
|
$555.0
|
(19.8%)
|
|
Liabilities
|
Q1 2008
|
Q1 2007
|
Change
|
|
Accounts Payable
|
$284.3
|
$288.9
|
(1.6%)
|
|
Long-Term Debt
|
$245.0
|
$245.0
|
(0%)
|
| |
|
|
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q1 2008
|
Q1 2007
|
Change
|
|
Cash From Ops.
|
$74.8
|
($103.7)
|
N/A
|
|
Capital Expenditures
|
$16.5
|
$16.8
|
(1.9%)
|
|
Free Cash Flow
|
$58.3
|
($120.5)
|
N/A
|
|
Owner Earnings
|
$21.8
|
$41.3
|
(47.3%)
|
Free cash flow is a Fool's best friend.
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