Item 2.02. Results of Operations and Financial Condition
.
Management of Worthington Industries, Inc. (the
“Registrant”) conducted a conference call on March 30, 2017 beginning at approximately 10:30 a.m., Eastern Daylight
Time, to discuss the Registrant’s unaudited financial results for the third quarter of fiscal 2017 (the fiscal quarter ended
February 28, 2017). Additionally, the Registrant’s management addressed certain issues related to the outlook for the Registrant
and its subsidiaries and their markets for the coming months. A copy of the transcript of the conference call is furnished as Exhibit
99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information contained in this Item 2.02
and Exhibit 99.1 furnished with this Current Report on Form 8-K, is being furnished pursuant to Item 2.02 and shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or otherwise subject to the liabilities of that Section, unless the Registrant specifically states that the information is to be
considered “filed” under the Exchange Act or incorporates the information by reference into a filing under the Securities
Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
In the conference call, management referred
to quarterly earnings per share excluding restructuring. This represents a non-GAAP financial measure and is used by management
as a measure of operating performance. Earnings per share, excluding restructuring, is calculated by adding restructuring and other
expense (after-tax) to net earnings attributable to controlling interest, and dividing the result by the average diluted common
shares for the period. The difference between the GAAP-based financial measure of diluted earnings per share attributable to controlling
interest of $0.55 and the non-GAAP financial measure of diluted earnings per share, excluding restructuring, of $0.57, in each
case for the fiscal quarter ended February 28, 2017, as mentioned in the conference call, is outlined below:
|
|
Three Months Ended February 28, 2017
|
(in thousands, except per share amounts)
|
|
Operating Income
|
|
Earnings Before Income Taxes
|
|
Income Tax Expense
|
|
Net Earnings Attributable to Controlling Interest
|
|
Earnings per Diluted Share
|
GAAP
|
|
$
|
34,320
|
|
|
$
|
50,092
|
|
|
$
|
11,141
|
|
|
$
|
35,889
|
|
|
$
|
0.55
|
|
Restructuring and other expense
|
|
|
1,394
|
|
|
|
1,394
|
|
|
|
489
|
|
|
|
905
|
|
|
|
0.02
|
|
Non-GAAP
|
|
$
|
35,714
|
|
|
$
|
51,486
|
|
|
$
|
11,630
|
|
|
$
|
36,794
|
|
|
$
|
0.57
|
|
In the conference call, management referred
to operating income, excluding restructuring, for the Registrant’s Pressure Cylinders, Steel Processing and Engineered Cabs
operating segments. This represents a non-GAAP financial measure and is used by management as a measure of operating performance.
Operating income, excluding restructuring, is calculated by adding restructuring and other expense to operating income. The difference
between the GAAP-based measure of operating income and the non-GAAP financial measure of operating income, excluding restructuring,
for the fiscal quarter ended February 28, 2017, as mentioned in the conference call, is outlined below for the Registrant’s
Pressure Cylinders, Steel Processing and Engineered Cabs operating segments (in thousands).
|
|
Pressure
|
|
Steel
|
|
Engineered
|
|
|
Cylinders
|
|
Processing
|
|
Cabs
|
Operating income (loss)
|
|
$
|
10,071
|
|
|
$
|
26,026
|
|
|
$
|
(2,001
|
)
|
Restructuring and other expense
|
|
|
1,056
|
|
|
|
212
|
|
|
|
169
|
|
Operating income (loss), excluding restructuring
|
|
$
|
11,127
|
|
|
$
|
26,238
|
|
|
$
|
(1,832
|
)
|
In the conference call, management referred
to trailing twelve months adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”).
This represents a non-GAAP financial measure and is used by management as a measure of operating performance. Adjusted EBITDA is
calculated by adding restructuring and other expense, other non-recurring income, net, interest expense, tax expense and depreciation
and amortization to net earnings attributable to controlling interest. The difference between the GAAP-based measure of net earnings
attributable to controlling interest and the non-GAAP financial measure of adjusted EBITDA for the trailing twelve months ended
February 28, 2017, as mentioned in the conference call, is outlined below.
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
(In thousands)
|
|
2017
|
|
2017
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to controlling interest
|
|
$
|
35,889
|
|
|
$
|
46,565
|
|
|
$
|
65,567
|
|
|
$
|
58,523
|
|
Restructuring and other expense
(pre-tax)
|
|
|
1,394
|
|
|
|
3,272
|
|
|
|
1,328
|
|
|
|
1,883
|
|
Other non-recurring income, net (
pre-tax)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,211
|
)
|
Interest expense
|
|
|
7,674
|
|
|
|
7,658
|
|
|
|
7,870
|
|
|
|
8,131
|
|
Income tax expense
|
|
|
11,141
|
|
|
|
13,515
|
|
|
|
23,899
|
|
|
|
24,831
|
|
Adjusted earnings before interest and taxes
(Adjusted EBIT)
1
|
|
$
|
56,098
|
|
|
$
|
71,010
|
|
|
$
|
98,664
|
|
|
$
|
89,157
|
|
Depreciation and amortization
|
|
|
21,677
|
|
|
|
21,645
|
|
|
|
21,831
|
|
|
|
21,951
|
|
Adjusted earnings before interest, taxes, depreciation and amortization
(Adjusted EBITDA)
1
|
|
$
|
77,775
|
|
|
$
|
92,655
|
|
|
$
|
120,495
|
|
|
$
|
111,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve Months Adjusted EBITDA
1
|
|
$
|
402,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Excludes the impact of the noncontrolling interest.