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.

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here.