Worthington to keep debt levels, excess cash to be invested elsewhere

By Devika Patel

Knoxville, Tenn., March 30 – Worthington Industries Inc. has no intention of paying down its long-term debt, even though it has a large cash balance at the moment, since the debt carries make-whole premiums, rendering it too expensive to pay down.

“We have three tranches of long-term debt,” executive vice president and chief financial officer Andy Rose said on the company’s third quarter earnings conference call on Thursday.

“The first [tranche] matures in 2020 and then after that it’s 2024 and 2026.

“We could prepay that debt, but it has make-whole penalties associated with it, so it’s not particularly economic to do so, and frankly the way we think about it, we’d like to have a reasonably good base of long-term debt, but we’d also like to have flexibility with short-term credit facilities and because we have not done any acquisitions recently and we’ve not been buying back stock, we’ve basically accumulated cash,” Rose said.

“I would not expect or say that our goal is to have a large cash balance going forward in perpetuity.

“Ultimately, we want to find good places to invest that cash,” he said.

Worthington had $227.3 million of cash at quarter-end.

Debt was essentially flat, quarter over quarter, at $577 million, down $0.4 million from Nov. 30, 2016 and down $32 million year over year.

Trailing 12-month adjusted EBITDA was $402 million.

The company has a net debt to EBITDA ratio that is below 1x.

The metal processing company is based in Columbus, Ohio.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.