Worthington Industries’ net sales declined by 35pc to $611.6mn during Q4 FY2020—which concluded ended May 31, 2020—from $938.8mn during the same quarter last year.
Net earnings were severely impacted by COVID-19 shutdowns, which affected production rates, inventories, and demand. The automotive industry represents 58pc of Worthington’s total sales, and they dropped to almost zero with because of shutdowns in that industry, according to statements in during the company’s earnings call. As a result, April was the most difficult month of the quarter because fewer orders.
Future quarters in fiscal year 2021 are expected to improve compared to fourth quarter 2020, but due to unknown variables specific earning or sales objectives are not being quantified. No material disruptions on supply chain as they proactively developed secondary supply sourcing over the past few years.
Worthington reported net earnings of $16.2mn on net sales of $611.6mn, or a 3pc earning-to-sales ratio. Compared to the same quarter a year ago, the ratio declined only 1pc point from 4pc, with net earnings of $37.7mn on $938.8mn in net sales.
The firm’s operating income for the 12-month period in 2019 was $144.8mn against $22.5mn in 2020. The operating income-to-net sales ratio decreased from 4pc in FY2019 to less than 1pc in FY2020.
Steel processing net sales dropped by 44pc to $328.2mn in FY2020 compared to the same quarter the year prior. The decline occurred because of lower direct volume demand rather than by lower average selling prices. Steel processing contributed 54pc to the Q4 FY2020 net sales.
Pressure Cylinders for oil and gas customers declined by 12pc to $282.9mn Q4 FY2020 compared to the same quarter a year ago. The business segment, which contributed 46pc to total sales, was mainly affected by weakness in the industrial products segment, primarily in Europe. European market conditions were difficult before COVID-19 and worsened over the past few months.
As a result of COVID-19-induced shutdowns, the company implemented temporary layoffs. As of June 25, over half of furloughed workers were reinstated. Additionally, Worthington added cost reducing measures, like reducing travel, freezing new hires, and deferring non-essential capital investments.
Andy Rose, the company’s president, is slated to become chief executive offer effective Sept 1, 2020. John P. McConnell, current chief executive officer, will remain with the board as its executive chairman.
Ohio-based Worthington operates 56 facilities in 15 US states and six countries, carries 7,500 employees, and sells into over 90 countries.