Worthington Industries, Inc. (NYSE: WOR) today reported net sales
of $1.4 billion and net earnings of $64.1 million, or $1.30 per
diluted share, for its fiscal 2023 first quarter ended August 31,
2022. In the first quarter of fiscal 2022, the Company reported net
sales of $1.1 billion and net earnings of $132.5 million, or $2.55
per diluted share. Results in both the current and prior year
quarter were impacted by certain unique items, as summarized in the
table below.
(U.S. dollars in millions, except per share amounts)
| |
|
1Q 2023 |
|
|
1Q 2022 |
|
| |
|
After-Tax |
|
|
Per Share |
|
|
After-Tax |
|
|
Per Share |
|
|
Net earnings |
|
$ |
64.1 |
|
|
$ |
1.30 |
|
|
$ |
132.5 |
|
|
$ |
2.55 |
|
| Incremental expense related to
Level5 earnout |
|
|
0.4 |
|
|
|
0.01 |
|
|
|
- |
|
|
|
- |
|
| Impairment and restructuring
charges (gains) |
|
|
(0.7 |
) |
|
|
(0.02 |
) |
|
|
(4.8 |
) |
|
|
(0.09 |
) |
| Pension settlement charge |
|
|
3.6 |
|
|
|
0.07 |
|
|
|
- |
|
|
|
- |
|
| Loss on sale of investment in
ArtiFlex |
|
|
12.0 |
|
|
|
0.25 |
|
|
|
- |
|
|
|
- |
|
| Adjusted net earnings |
|
$ |
79.4 |
|
|
$ |
1.61 |
|
|
$ |
127.7 |
|
|
$ |
2.46 |
|
Financial highlights for the current and comparative periods are
as follows:
(U.S. dollars in millions, except per share amounts)
| |
1Q 2023 |
|
1Q 2022 |
|
Net sales |
$ |
1,408.7 |
|
$ |
1,110.8 |
| Operating income |
|
66.7 |
|
|
135.8 |
| Equity income |
|
31.7 |
|
|
52.9 |
| Net earnings |
|
64.1 |
|
|
132.5 |
| Earnings per diluted
share |
$ |
1.30 |
|
$ |
2.55 |
“We are off to a good start in our new fiscal
year with volumes in most of our key-end markets remaining healthy
during the quarter,” said Andy Rose, President and CEO. “Our
teams continue to do a nice job navigating supply chain challenges
and inflationary pressures to deliver value-added products and
solutions for our customers.”
Consolidated Quarterly Results
Net sales for the first quarter of fiscal 2023
were $1.4 billion compared to $1.1 billion, an increase of $297.9
million, or 27%, over the comparable quarter in the prior year. The
increase was primarily driven by contributions from the acquisition
of Tempel Steel Company (“Tempel”) in fiscal 2022 and higher
average selling prices across all segments.
Gross margin decreased $50.0 million from the
prior year quarter to $169.4 million, as improvements in both the
Consumer Products and Building Products segments were more than
offset by lower margin contributions from Steel Processing. Margins
in Steel Processing were negatively impacted by an estimated $48.6
million unfavorable swing related to inventory holding losses in
the current quarter compared to inventory holding gains in the
prior year quarter.
Operating income for the current quarter was
$66.7 million, down $69.1 million from the prior year quarter.
Excluding restructuring items in both quarters, operating income
was down $57.1 million from the prior year quarter on lower gross
margin and higher SG&A expense, up $7.5 million over the prior
year quarter primarily due to the impact of acquisitions.
Miscellaneous expense increased $5.7 million
from the prior year quarter primarily due to a pension lift-out
transaction to transfer a portion of the total projected benefit
obligation of the inactive Gerstenslager pension plan to a
third-party insurance company, which resulted in a $4.8 million
pre-tax non-cash charge.
Interest expense was $8.6 million in the current
quarter, up $0.9 million over the prior year quarter due to the
impact of higher average debt levels associated with short-term
borrowings.
Equity income from unconsolidated joint ventures
decreased $21.2 million from the prior year quarter due to a $15.8
million loss related to the sale of our equity investment in
ArtiFlex and lower contributions from Serviacero, which were down
$7.6 million as lower average steel prices reduced spreads.
Income tax expense was $19.5 million in the
current quarter compared to $40.2 million in the prior year
quarter. The decrease was driven by lower pre-tax earnings. Tax
expense in the current quarter reflects an annual effective rate of
23.9% compared to 23.3% for the prior year.
Balance Sheet
At quarter-end, total debt of $705.8 million,
was down $38.8 million from May 31, 2022, on lower short-term
borrowings. The Company had $35.8 million of cash at quarter end,
an increase of $1.3 million from May 31, 2022.
Quarterly Segment Results
Steel Processing’s net sales totaled $1.0
billion, up $216.1 million, over the comparable prior year quarter.
The increase in net sales was driven by contributions from Tempel
and, to a lesser extent, higher average selling prices. Adjusted
EBIT was down $72.8 million from the prior year quarter to $34.9
million, on lower direct spreads, which were negatively impacted by
the unfavorable swing in inventory holding gains/losses. Adjusted
EBIT was also negatively impacted by lower equity earnings at
Serviacero, down $7.6 million from the prior year quarter due to
unfavorable spreads. The mix of direct versus toll tons processed
was 58% to 42% in the current quarter, compared to 49% to 51% in
the prior year quarter.
Consumer Products’ net sales totaled $188.7
million, up 28%, or $40.9 million, over the prior year quarter due
to higher average selling prices and contributions from the
acquisition of Level5 in the current quarter. Adjusted EBIT was up
slightly in the current quarter to $20.9 million, as the favorable
impact of higher selling prices was mostly offset by higher wages
and input costs as well as $2.9 million of expense related to
transaction costs and the write-up of acquired Level5 inventory to
fair value.
Building Products’ net sales totaled $150.3
million, up 31%, or $35.6 million, over the prior year quarter on
higher average selling prices. Adjusted EBIT increased $3.9 million
over the prior year quarter to $52.7 million, driven primarily by
higher average selling prices, partially offset by higher
production costs. Equity income was up slightly to $43.9 million,
as improvements at ClarkDietrich were offset by lower contributions
from WAVE.
Sustainable Energy Solutions’ net sales totaled
$30.8 million, up 21%, or $5.3 million, from the comparable prior
year quarter due to higher volume. Adjusted EBIT was a loss of $1.4
million, favorable by $1.2 million compared to the prior year
quarter’s loss, on higher volume, partially offset by higher
production costs.
Recent Developments
- On June 2, 2022,
the Company acquired Level5® Tools, LLC, a leading provider of
drywall tools and related accessories. The net cash purchase price
was approximately $56.1 million, with a potential earnout of up to
$25.0 million based on performance through 2024.
- On August 3, 2022,
the Company sold its 50% interest in ArtiFlex to the unaffiliated
joint venture member for approximately $42.1 million, after closing
adjustments. The sale included real estate in Wooster, Ohio, owned
by Worthington and leased to ArtiFlex. As a result of the
transaction, we recorded a pre-tax loss of approximately $15.8
million in equity income during the quarter.
- On September 28,
2022, Worthington's Board of Directors declared a quarterly
dividend of $0.31 per share payable on December 29, 2022 to
shareholders of record on December 15, 2022.
Planned Separation of Steel
Processing
In a separate press release issued today,
Worthington announced that its Board of Directors approved a plan
to pursue a separation of the Company’s Steel Processing business.
The planned separation, which is expected to be leverage neutral
and tax-free to Worthington shareholders, will result in two
independent, publicly traded companies with enhanced capabilities
to serve their respective customers and accelerate value
creation.
- The post-separation New Worthington is positioned with premier
brands in fast-growing, attractive end markets in Consumer
Products, Building Products and Sustainable Energy Solutions.
- The post-separation Steel Processing business will be a
best-in-class, value-added steel processor with a unique capability
set, sophisticated supply chain and pricing solutions and expanded
product offerings in electrical steel laminations and laser welding
solutions.
Outlook
“Most of our businesses are holding up well
despite increased market volatility and a murky economic outlook.
Our teams are ready to respond to market demands, up or down, as
changes occur,” Rose said. “In addition, we are very excited to
announce our plan to separate our Steel Processing business to
create two market leading companies with a proud shared history and
values. The separation represents a major milestone for our
company, and I am confident that this move will position both
businesses to capitalize on focused growth strategies to better
serve their customers and unlock significant shareholder
value.”
Conference Call
Worthington will review fiscal 2023 first
quarter results and its planned separation of the Company’s Steel
Processing business during a conference call today, September 29,
2022, at 8:30 am., Eastern Time. Details regarding the conference
call can be found on the Company website at
www.WorthingtonIndustries.com.
About Worthington
Industries
Worthington Industries (NYSE:WOR) is a leading
industrial manufacturing company pursuing its vision to be the
transformative partner to its customers, a positive force for its
communities and earn exceptional returns for its shareholders. For
over six decades, the Company has been delivering innovative
solutions to customers spanning industries such as automotive,
energy, retail and construction. Worthington is North America’s
premier value-added steel processor and producer of laser welded
solutions and electrical steel laminations that provide
lightweighting, safety critical and emission reducing components to
the mobility market. Through on-board fueling systems and gas
containment solutions, Worthington serves the growing global
hydrogen ecosystem. The Company’s focus on innovation and
manufacturing expertise extends to market-leading consumer products
in tools, outdoor living and celebrations categories, sold under
brand names, Coleman®, Bernzomatic®, Balloon Time®, Mag Torch®,
Well-X-Trol®, General®, Garden-Weasel®, Pactool International®,
Hawkeye™ and Level5® ; as well as market leading building products,
including water systems, heating & cooling solutions,
architectural and acoustical grid ceilings and metal framing and
accessories.Headquartered in Columbus, Ohio, Worthington operates
52 facilities in 15 states and 9 countries, sells into over 90
countries and employs approximately 9,500 people. Founded in 1955,
the Company follows a people-first philosophy with earning money
for its shareholders as its first corporate goal. Relentlessly
finding new ways to drive progress and transform, Worthington is
committed to providing better solutions for customers and bettering
the communities where it operates by reducing waste, supporting
community-based non-profits and developing the next generations of
makers.
Safe Harbor Statement
The Company wishes to take advantage of the Safe
Harbor provisions included in the Private Securities Litigation
Reform Act of 1995 (the “PSLRA”). Statements by the Company
relating to the ever-changing effects of the novel coronavirus
(“COVID-19”) pandemic and the various responses of governmental and
nongovernmental authorities thereto (such as fiscal stimulus
packages, quarantines, shut downs and other restrictions on travel
and commercial, social or other activities) on economies (local,
national and international) and markets, and on our customers,
counterparties, employees and third-party service providers; future
or expected cash positions, liquidity and ability to access
financial markets and capital; outlook, strategy or business plans;
the intended separation of Worthington’s Steel Processing business;
the timing and method of the separation; the anticipated benefits
of the separation; the expected financial and operating performance
of, and future opportunities for, each company following the
separation; the tax treatment of the transaction; the leadership of
each company following the separation; future or expected growth,
growth potential, forward momentum, performance, competitive
position, sales, volumes, cash flows, earnings, margins, balance
sheet strengths, debt, financial condition or other financial
measures; pricing trends for raw materials and finished goods and
the impact of pricing changes; the ability to improve or maintain
margins; expected demand or demand trends for the Company or its
markets; additions to product lines and opportunities to
participate in new markets; expected benefits from transformation
and innovation efforts; the ability to improve performance and
competitive position at the Company’s operations; anticipated
working capital needs, capital expenditures and asset sales;
anticipated improvements and efficiencies in costs, operations,
sales, inventory management, sourcing and the supply chain and the
results thereof; projected profitability potential; the ability to
make acquisitions and the projected timing, results, benefits,
costs, charges and expenditures related to acquisitions, joint
ventures, headcount reductions and facility dispositions, shutdowns
and consolidations; projected capacity and the alignment of
operations with demand; the ability to operate profitably and
generate cash in down markets; the ability to capture and maintain
market share and to develop or take advantage of future
opportunities, customer initiatives, new businesses, new products
and new markets; expectations for Company and customer inventories,
jobs and orders; expectations for the economy and markets or
improvements therein; expectations for generating improving and
sustainable earnings, earnings potential, margins or shareholder
value; effects of judicial rulings; and other non-historical
matters constitute “forward-looking statements” within the meaning
of the PSLRA. Because they are based on beliefs, estimates and
assumptions, forward-looking statements are inherently subject to
risks and uncertainties that could cause actual results to differ
materially from those projected. Any number of factors could affect
actual results, including, without limitation, final approval of
the separation by our board of directors; the uncertainty of
obtaining regulatory approvals in connection with the separation,
including rulings from the Internal Revenue Service; the ability to
satisfy the necessary closing conditions to complete the separation
on a timely basis, or at all; our ability to successfully separate
the two companies and realize the anticipated benefits of the
separation; the risks, uncertainties and impacts related to the
COVID-19 pandemic – the duration, extent and severity of which is
impossible to predict, including the possibility of future
resurgence in the spread of COVID-19 or variants thereof – and the
availability, effectiveness and acceptance of vaccines, and other
actual or potential public health emergencies and actions taken by
governmental authorities or others in connection therewith; the
effect of national, regional and global economic conditions
generally and within major product markets, including significant
economic disruptions from COVID-19, the actions taken in connection
therewith and the implementation of related fiscal stimulus
packages; the effect of conditions in national and worldwide
financial markets, including inflation, increases in interest rates
and economic recession, and with respect to the ability of
financial institutions to provide capital; the impact of tariffs,
the adoption of trade restrictions affecting the Company’s products
or suppliers, a United States withdrawal from or significant
renegotiation of trade agreements, the occurrence of trade wars,
the closing of border crossings, and other changes in trade
regulations or relationships; changing oil prices and/or supply;
product demand and pricing; changes in product mix, product
substitution and market acceptance of the Company’s products;
volatility or fluctuations in the pricing, quality or availability
of raw materials (particularly steel), supplies, transportation,
utilities, labor and other items required by operations (especially
in light of the COVID-19 pandemic and Russia’s invasion of
Ukraine); effects of sourcing and supply chain constraints; the
outcome of adverse claims experience with respect to workers’
compensation, product recalls or product liability, casualty events
or other matters; effects of facility closures and the
consolidation of operations; the effect of financial difficulties,
consolidation and other changes within the steel, automotive
(especially in light of the semi-conductor shortages), construction
and other industries in which the Company participates; failure to
maintain appropriate levels of inventories; financial difficulties
(including bankruptcy filings) of original equipment manufacturers,
end-users and customers, suppliers, joint venture partners and
others with whom the Company does business; the ability to realize
targeted expense reductions from headcount reductions, facility
closures and other cost reduction efforts; the ability to realize
cost savings and operational, sales and sourcing improvements and
efficiencies, and other expected benefits from transformation
initiatives, on a timely basis; the overall success of, and the
ability to integrate, newly-acquired businesses and joint ventures,
maintain and develop their customers, and achieve synergies and
other expected benefits and cost savings therefrom; capacity levels
and efficiencies, within facilities, within major product markets
and within the industries in which the Company participates as a
whole; the effect of disruption in the business of suppliers,
customers, facilities and shipping operations due to adverse
weather, casualty events, equipment breakdowns, labor shortages
(especially in light of the COVID-19 pandemic), interruption in
utility services, civil unrest, international conflicts (especially
in light of Russia’s invasion of Ukraine), terrorist activities or
other causes; changes in customer demand, inventories, spending
patterns, product choices, and supplier choices; risks associated
with doing business internationally, including economic, political
and social instability (especially in light of Russia’s invasion of
Ukraine), foreign currency exchange rate exposure and the
acceptance of the Company’s products in global markets; the ability
to improve and maintain processes and business practices to keep
pace with the economic, competitive and technological environment;
the effect of inflation, interest rate increases and economic
recession, which may negatively impact the Company’s operations and
financial results; deviation of actual results from estimates
and/or assumptions used by the Company in the application of its
significant accounting policies; the level of imports and import
prices in the Company’s markets; the impact of environmental laws
and regulations or the actions of the United States Environmental
Protection Agency or similar regulators which increase costs or
limit the Company’s ability to use or sell certain products; the
impact of increasing environmental, greenhouse gas emission and
sustainability considerations or regulations or considerations or;
the impact of judicial rulings and governmental regulations, both
in the United States and abroad, including those adopted by the
United States Securities and Exchange Commission and other
governmental agencies as contemplated by the Coronavirus Aid,
Relief and Economic Security (CARES) Act, the Consolidated
Appropriations Act, 2021, the American Rescue Act of 2021, and the
Dodd-Frank Wall Street Reform and the Consumer Protection Act of
2010; the effect of healthcare laws in the United States and
potential changes for such laws, especially in light of the
COVID-19 pandemic which may increase the Company’s healthcare and
other costs and negatively impact the Company’s operations and
financial results; the effects of tax laws in the United States and
potential changes for such laws, which may increase the Company’s
costs and negatively impact the Company’s operations and financial
results; cyber security risks; the effects of privacy and
information security laws and standards; and other risks described
from time to time in the filings of Worthington Industries, Inc.
with the United States Securities and Exchange Commission,
including those described in “Part I – Item 1A. – Risk Factors” of
the Annual Report on Form 10-K of Worthington Industries, Inc. for
the fiscal year ended May 31, 2022.
Contacts:SONYA L. HIGGINBOTHAMVP, CORPORATE
COMMUNICATIONS AND BRAND MANAGEMENT614.438.7391 |
sonya.higginbotham@worthingtonindustries.com
MARCUS A. ROGIERTREASURER AND INVESTOR
RELATIONS OFFICER614.840.4663 |
marcus.rogier@worthingtonindustries.com
200 Old Wilson Bridge Rd. | Columbus, Ohio
43085WorthingtonIndustries.com
|
|
|
WORTHINGTON INDUSTRIES, INC.CONSOLIDATED
STATEMENTS OF EARNINGS(In thousands, except per
share amounts) |
| |
|
|
| |
Three Months Ended |
|
|
|
August 31, |
|
|
|
2022 |
|
|
2021 |
|
|
Net sales |
$ |
1,408,665 |
|
|
$ |
1,110,818 |
|
| Cost of goods sold |
|
1,239,291 |
|
|
|
891,444 |
|
|
Gross margin |
|
169,374 |
|
|
|
219,374 |
|
| Selling, general and
administrative expense |
|
103,448 |
|
|
|
95,851 |
|
| Impairment of long-lived
assets |
|
312 |
|
|
|
- |
|
| Restructuring and other
income, net |
|
(1,100 |
) |
|
|
(12,274 |
) |
|
Operating income |
|
66,714 |
|
|
|
135,797 |
|
| Other income (expense): |
|
|
|
|
|
|
Miscellaneous income (expense), net |
|
(5,086 |
) |
|
|
630 |
|
|
Interest expense |
|
(8,598 |
) |
|
|
(7,718 |
) |
|
Equity in net income of unconsolidated affiliates |
|
31,712 |
|
|
|
52,916 |
|
|
Earnings before income taxes |
|
84,742 |
|
|
|
181,625 |
|
| Income tax expense |
|
19,498 |
|
|
|
40,150 |
|
| Net earnings |
|
65,244 |
|
|
|
141,475 |
|
| Net earnings attributable to
noncontrolling interests |
|
1,162 |
|
|
|
8,984 |
|
| Net earnings
attributable to controlling interest |
$ |
64,082 |
|
|
$ |
132,491 |
|
| |
|
|
|
|
|
| Basic |
|
|
|
|
|
| Weighted average common shares
outstanding |
|
48,478 |
|
|
|
50,852 |
|
| Earnings per share
attributable to controlling interest |
$ |
1.32 |
|
|
$ |
2.61 |
|
| |
|
|
|
|
|
| Diluted |
|
|
|
|
|
| Weighted average common shares
outstanding |
|
49,238 |
|
|
|
51,865 |
|
| Earnings per share
attributable to controlling interest |
$ |
1.30 |
|
|
$ |
2.55 |
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| Common shares outstanding at
end of period |
|
48,526 |
|
|
|
50,438 |
|
| |
|
|
|
|
|
| Cash dividends declared per
share |
$ |
0.31 |
|
|
$ |
0.28 |
|
| |
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETSWORTHINGTON
INDUSTRIES, INC.(In thousands) |
|
|
|
|
|
|
|
|
|
August 31, |
|
|
May 31, |
|
|
|
2022 |
|
|
2022 |
|
|
Assets |
|
|
|
|
|
| Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
35,768 |
|
|
$ |
34,485 |
|
|
Receivables, less allowances of $1,615 and $1,292 at August 31 |
|
|
|
|
|
|
and May 31, 2022, respectively |
|
818,332 |
|
|
|
857,493 |
|
|
Inventories: |
|
|
|
|
|
|
Raw materials |
|
357,926 |
|
|
|
323,609 |
|
|
Work in process |
|
178,472 |
|
|
|
255,019 |
|
|
Finished products |
|
190,737 |
|
|
|
180,512 |
|
|
Total inventories |
|
727,135 |
|
|
|
759,140 |
|
|
Income taxes receivable |
|
2,331 |
|
|
|
20,556 |
|
|
Assets held for sale |
|
21,491 |
|
|
|
20,318 |
|
|
Prepaid expenses and other current assets |
|
100,246 |
|
|
|
93,661 |
|
|
Total current assets |
|
1,705,303 |
|
|
|
1,785,653 |
|
|
Investments in unconsolidated affiliates |
|
252,609 |
|
|
|
327,381 |
|
|
Operating lease assets |
|
103,587 |
|
|
|
98,769 |
|
|
Goodwill |
|
411,902 |
|
|
|
401,469 |
|
| Other
intangible assets, net of accumulated amortization of $97,648
and |
|
|
|
|
|
|
$93,973 at August 31 and May 31, 2022, respectively |
|
326,634 |
|
|
|
299,017 |
|
| Other
assets |
|
26,604 |
|
|
|
34,394 |
|
|
Property, plant and equipment: |
|
|
|
|
|
|
Land |
|
49,771 |
|
|
|
51,483 |
|
|
Buildings and improvements |
|
299,586 |
|
|
|
303,269 |
|
|
Machinery and equipment |
|
1,199,664 |
|
|
|
1,196,806 |
|
|
Construction in progress |
|
63,672 |
|
|
|
59,363 |
|
|
Total property, plant and equipment |
|
1,612,693 |
|
|
|
1,610,921 |
|
|
Less: accumulated depreciation |
|
929,190 |
|
|
|
914,581 |
|
|
Total property, plant and equipment, net |
|
683,503 |
|
|
|
696,340 |
|
|
Total assets |
$ |
3,510,142 |
|
|
$ |
3,643,023 |
|
|
|
|
|
|
|
|
| Liabilities and
equity |
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
| Accounts payable |
$ |
580,509 |
|
|
$ |
668,438 |
|
| Short-term borrowings |
|
15,554 |
|
|
|
47,997 |
|
| Accrued compensation,
contributions to employee benefit plans and related taxes |
|
83,662 |
|
|
|
117,530 |
|
| Dividends payable |
|
17,453 |
|
|
|
15,988 |
|
| Other accrued items |
|
67,094 |
|
|
|
70,125 |
|
| Current operating lease
liabilities |
|
12,141 |
|
|
|
11,618 |
|
| Income taxes payable |
|
7,629 |
|
|
|
300 |
|
| Current maturities of
long-term debt |
|
248 |
|
|
|
265 |
|
|
Total current liabilities |
|
784,290 |
|
|
|
932,261 |
|
| Other liabilities |
|
109,428 |
|
|
|
115,991 |
|
| Distributions in excess of
investment in unconsolidated affiliate |
|
84,994 |
|
|
|
81,149 |
|
| Long-term debt |
|
690,011 |
|
|
|
696,345 |
|
| Noncurrent operating lease
liabilities |
|
92,760 |
|
|
|
88,183 |
|
| Deferred income taxes,
net |
|
101,687 |
|
|
|
115,132 |
|
|
Total liabilities |
|
1,863,170 |
|
|
|
2,029,061 |
|
| Shareholders' equity -
controlling interest |
|
1,512,600 |
|
|
|
1,480,752 |
|
| Noncontrolling interests |
|
134,372 |
|
|
|
133,210 |
|
|
Total equity |
|
1,646,972 |
|
|
|
1,613,962 |
|
| Total liabilities and
equity |
$ |
3,510,142 |
|
|
$ |
3,643,023 |
|
| |
|
|
|
|
|
|
|
|
WORTHINGTON INDUSTRIES, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(In
thousands) |
| |
|
|
| |
Three Months Ended |
|
| |
August 31, |
|
| |
2022 |
|
|
2021 |
|
|
Operating activities: |
|
|
|
|
|
|
Net earnings |
$ |
65,244 |
|
|
$ |
141,475 |
|
|
Adjustments to reconcile net earnings to net cash provided (used)
by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
28,001 |
|
|
|
22,064 |
|
|
Impairment of long-lived assets |
|
312 |
|
|
|
- |
|
|
Provision for (benefit from) deferred income taxes |
|
(11,056 |
) |
|
|
1,366 |
|
|
Bad debt expense |
|
342 |
|
|
|
179 |
|
|
Equity in net income of unconsolidated affiliates, net
ofdistributions |
|
42,845 |
|
|
|
(33,218 |
) |
|
Net gain on sale of assets |
|
(769 |
) |
|
|
(12,706 |
) |
|
Stock-based compensation |
|
4,236 |
|
|
|
3,303 |
|
| Changes
in assets and liabilities, net of impact of acquisitions: |
|
|
|
|
|
|
Receivables |
|
37,419 |
|
|
|
(31,868 |
) |
|
Inventories |
|
41,167 |
|
|
|
(163,682 |
) |
|
Accounts payable |
|
(101,581 |
) |
|
|
46,668 |
|
|
Accrued compensation and employee benefits |
|
(33,868 |
) |
|
|
(46,177 |
) |
|
Income taxes payable |
|
7,329 |
|
|
|
35,857 |
|
|
Other operating items, net |
|
1,417 |
|
|
|
(13,073 |
) |
|
Net cash provided (used) by operating
activities |
|
81,038 |
|
|
|
(49,812 |
) |
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
Investment in property, plant and equipment |
|
(21,477 |
) |
|
|
(23,925 |
) |
|
Investment in non-marketable equity securities |
|
(110 |
) |
|
|
- |
|
|
Acquisitions, net of cash acquired |
|
(56,088 |
) |
|
|
(104,750 |
) |
|
Proceeds from the sale of investment in ArtiFlex |
|
36,095 |
|
|
|
- |
|
|
Proceeds from sale of assets, net of selling costs |
|
11,755 |
|
|
|
26,685 |
|
|
Net cash used by investing activities |
|
(29,825 |
) |
|
|
(101,990 |
) |
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
Net repayments of short-term borrowings |
|
(32,443 |
) |
|
|
- |
|
|
Principal payments on long-term obligations |
|
(137 |
) |
|
|
(392 |
) |
|
Proceeds from issuance of common shares, net of tax
withholdings |
|
(3,466 |
) |
|
|
(4,091 |
) |
|
Payments to noncontrolling interests |
|
- |
|
|
|
(9,197 |
) |
|
Repurchase of common shares |
|
- |
|
|
|
(60,885 |
) |
|
Dividends paid |
|
(13,884 |
) |
|
|
(14,698 |
) |
|
Net cash used by financing activities |
|
(49,930 |
) |
|
|
(89,263 |
) |
| Increase
(decrease) in cash and cash equivalents |
|
1,283 |
|
|
|
(241,065 |
) |
| Cash and
cash equivalents at beginning of period |
|
34,485 |
|
|
|
640,311 |
|
|
Cash and cash equivalents at end of period |
$ |
35,768 |
|
|
$ |
399,246 |
|
|
|
|
|
|
|
|
|
|
WORTHINGTON INDUSTRIES,
INC.NON-GAAP FINANCIAL MEASURES / SUPPLEMENTAL
DATA(In thousands, except volume and per share
amounts)
The Company reports its financial results in
accordance with accounting principles generally accepted in the
United States (GAAP). The Company also presents certain non-GAAP
financial measures including adjusted operating income, adjusted
net earnings attributable to controlling interest and adjusted net
earnings per diluted share attributable to controlling interest,
and for purposes of evaluating segment performance, adjusted
earnings (loss) before interest and taxes attributable to
controlling interest (“adjusted EBIT”) and adjusted earnings (loss)
before interest, taxes, depreciation and amortization attributable
to controlling interest (“adjusted EBITDA”). These non-GAAP
financial measures typically exclude impairment and restructuring
charges (gains), but may also exclude other items that management
believes are not reflective of, and thus should not be included
when evaluating the performance of the Company’s ongoing
operations. Management uses these non-GAAP financial measures to
evaluate the Company’s performance, engage in financial and
operational planning, and determine incentive compensation and
believes these non-GAAP financial measures provide useful
information to investors because they provide additional
perspective and, in some circumstances are more closely correlated
to, the performance of the Company’s ongoing operations.
Additionally, management believes these non-GAAP financial measures
provide useful information to investors because they allow for
meaningful comparisons and analysis of trends in the Company’s
businesses and enables investors to evaluate operations and future
prospects in the same manner as management.
The following provides a reconciliation to
adjusted operating income, adjusted net earnings attributable to
controlling interest and adjusted earnings per diluted share
attributable to controlling interest from the most comparable GAAP
measures for the three months ended August 31, 2022 and 2021.
| |
|
Three Months Ended August 31, 2022 |
|
|
|
|
Operating Income |
|
|
Earnings BeforeIncome Taxes |
|
|
Income TaxExpense (Benefit) |
|
|
Net EarningsAttributable toControlling Interest(1) |
|
|
Earnings perDiluted Share |
|
|
GAAP |
|
$ |
66,714 |
|
|
$ |
84,742 |
|
|
$ |
19,498 |
|
|
$ |
64,082 |
|
|
$ |
1.30 |
|
| Incremental expense related to
Level5 earnout |
|
|
525 |
|
|
|
525 |
|
|
|
(126 |
) |
|
|
399 |
|
|
|
0.01 |
|
| Impairment of long-lived
assets |
|
|
312 |
|
|
|
312 |
|
|
|
(47 |
) |
|
|
149 |
|
|
|
0.00 |
|
| Restructuring and other
income, net |
|
|
(1,100 |
) |
|
|
(1,100 |
) |
|
|
265 |
|
|
|
(835 |
) |
|
|
(0.02 |
) |
| Pension settlement charge |
|
|
- |
|
|
|
4,774 |
|
|
|
(1,150 |
) |
|
|
3,624 |
|
|
|
0.07 |
|
| Loss on sale of investment in
ArtiFlex |
|
|
- |
|
|
|
15,759 |
|
|
|
(3,795 |
) |
|
|
11,964 |
|
|
|
0.25 |
|
| Non-GAAP |
|
$ |
66,451 |
|
|
$ |
105,012 |
|
|
$ |
24,351 |
|
|
$ |
79,383 |
|
|
$ |
1.61 |
|
| |
|
Three Months Ended August 31, 2021 |
|
|
|
|
OperatingIncome |
|
|
Earnings BeforeIncome Taxes |
|
|
Income TaxExpense |
|
|
Net EarningsAttributable toControlling Interest(1) |
|
|
Earnings perDiluted Share |
|
|
GAAP |
|
$ |
135,797 |
|
|
$ |
181,625 |
|
|
$ |
40,150 |
|
|
$ |
132,491 |
|
|
$ |
2.55 |
|
| Restructuring and other
income, net |
|
|
(12,274 |
) |
|
|
(12,274 |
) |
|
|
1,481 |
|
|
|
(4,848 |
) |
|
|
(0.09 |
) |
| Non-GAAP |
|
$ |
123,523 |
|
|
$ |
169,351 |
|
|
$ |
38,669 |
|
|
$ |
127,643 |
|
|
$ |
2.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
$ |
(57,072 |
) |
|
$ |
(64,339 |
) |
|
$ |
(14,318 |
) |
|
$ |
(48,260 |
) |
|
$ |
(0.85 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1)Excludes the
impact of the noncontrolling interest. |
|
To further assist in the analysis of segment
results for the periods presented, the following volume and sales
information for the three months ended August 31, 2022 and 2021 has
been provided along with a reconciliation of adjusted EBIT and
adjusted EBITDA to the most comparable GAAP measure, which is
operating income for purposes of measuring segment profit:
| |
Three Months Ended August 31, 2022 |
|
| |
SteelProcessing |
|
|
ConsumerProducts |
|
|
BuildingProducts |
|
|
Sustainable Energy Solutions |
|
|
Other |
|
|
Consolidated |
|
| Volume (tons/units) |
|
974,649 |
|
|
|
22,383,341 |
|
|
|
2,922,163 |
|
|
|
133,133 |
|
|
n/a |
|
|
n/a |
|
| Sales |
$ |
1,038,880 |
|
|
$ |
188,703 |
|
|
$ |
150,323 |
|
|
$ |
30,759 |
|
|
n/a |
|
|
$ |
1,408,665 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
33,846 |
|
|
$ |
20,444 |
|
|
$ |
8,646 |
|
|
$ |
(1,307 |
) |
|
$ |
5,085 |
|
|
$ |
66,714 |
|
| Incremental expenses related
to Level5 earnout |
|
- |
|
|
|
525 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
525 |
|
|
Impairment of long-lived assets |
|
312 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
312 |
|
| Restructuring and other
expense (income), net |
|
78 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,178 |
) |
|
|
(1,100 |
) |
|
Adjusted operating income (loss) |
|
34,236 |
|
|
|
20,969 |
|
|
|
8,646 |
|
|
|
(1,307 |
) |
|
|
3,907 |
|
|
|
66,451 |
|
| Miscellaneous income
(expense), net(1) |
|
184 |
|
|
|
(35 |
) |
|
|
222 |
|
|
|
(86 |
) |
|
|
(597 |
) |
|
|
(312 |
) |
| Equity in net income of
unconsolidated affiliates(2) |
|
1,770 |
|
|
|
- |
|
|
|
43,866 |
|
|
|
- |
|
|
|
1,835 |
|
|
|
47,471 |
|
| Less: Net earnings
attributable to noncontrolling interests(3) |
|
1,277 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,277 |
|
|
Adjusted EBIT |
|
34,913 |
|
|
|
20,934 |
|
|
|
52,734 |
|
|
|
(1,393 |
) |
|
|
5,145 |
|
|
|
112,333 |
|
| Depreciation and
amortization |
|
16,845 |
|
|
|
3,702 |
|
|
|
4,256 |
|
|
|
1,470 |
|
|
|
1,728 |
|
|
|
28,001 |
|
|
Adjusted EBITDA |
$ |
51,758 |
|
|
$ |
24,636 |
|
|
$ |
56,990 |
|
|
$ |
77 |
|
|
$ |
6,873 |
|
|
$ |
140,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1)Excludes
within Other a non-cash settlement charge of $4,774 to accelerate a
portion of deferred pension cost resulting from a pension lift-out
transaction to transfer a portion of the total projected benefit
obligation of The Gerstenslager Company Bargaining Unit Employees'
Pension Plan to a third-party insurance company. |
|
| (2) Excludes
within Other a loss of $15,759 within Other related to the sale of
the Company's 50% noncontrolling equity investment in ArtiFlex
Manufacturing, LLC effective August 3, 2022. |
|
| (3) Excludes the
noncontrolling interest portion of impairment of long-lived assets
of $(115) within Steel Processing. |
|
| |
Three Months Ended August 31, 2021 |
|
| |
SteelProcessing |
|
|
ConsumerProducts |
|
|
BuildingProducts |
|
|
Sustainable EnergySolutions |
|
|
Other |
|
|
Consolidated |
|
| Volume (tons/units) |
|
1,062,288 |
|
|
|
21,388,140 |
|
|
|
2,885,711 |
|
|
|
130,676 |
|
|
n/a |
|
|
n/a |
|
| Sales |
$ |
822,810 |
|
|
$ |
147,783 |
|
|
$ |
114,743 |
|
|
$ |
25,482 |
|
|
n/a |
|
|
$ |
1,110,818 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
113,482 |
|
|
$ |
20,506 |
|
|
$ |
5,834 |
|
|
$ |
(2,352 |
) |
|
$ |
(1,673 |
) |
|
$ |
135,797 |
|
| Restructuring and other
income, net |
|
(12,131 |
) |
|
|
- |
|
|
|
- |
|
|
|
(143 |
) |
|
|
- |
|
|
|
(12,274 |
) |
|
Adjusted operating income (loss) |
|
101,351 |
|
|
|
20,506 |
|
|
|
5,834 |
|
|
|
(2,495 |
) |
|
|
(1,673 |
) |
|
|
123,523 |
|
| Miscellaneous income
(expense), net |
|
30 |
|
|
|
49 |
|
|
|
(73 |
) |
|
|
(59 |
) |
|
|
683 |
|
|
|
630 |
|
| Equity in net income of
unconsolidated affiliates |
|
9,349 |
|
|
|
- |
|
|
|
42,993 |
|
|
|
- |
|
|
|
574 |
|
|
|
52,916 |
|
| Less: Net earnings
attributable to noncontrolling interests(4) |
|
3,038 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,038 |
|
|
Adjusted EBIT |
|
107,692 |
|
|
|
20,555 |
|
|
|
48,754 |
|
|
|
(2,554 |
) |
|
|
(416 |
) |
|
|
174,031 |
|
| Depreciation and
amortization |
|
11,550 |
|
|
|
3,293 |
|
|
|
3,769 |
|
|
|
1,572 |
|
|
|
1,880 |
|
|
|
22,064 |
|
|
Adjusted EBITDA |
$ |
119,242 |
|
|
$ |
23,848 |
|
|
$ |
52,523 |
|
|
$ |
(982 |
) |
|
$ |
1,464 |
|
|
$ |
196,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4) Excludes the
noncontrolling interest portion of the restructuring gains within
Steel Processing of $5,946. |
|
The following tables outlines our equity income (loss) by
unconsolidated affiliate for the periods presented:
| |
Three Months Ended |
|
| |
August 31, |
|
| |
2022 |
|
|
2021 |
|
|
WAVE |
$ |
23,793 |
|
|
$ |
25,671 |
|
| ClarkDietrich |
|
20,073 |
|
|
|
17,322 |
|
| Serviacero Worthington |
|
1,770 |
|
|
|
9,349 |
|
| ArtiFlex |
|
(13,400 |
) |
|
|
1,208 |
|
| Workhorse |
|
(524 |
) |
|
|
(634 |
) |
|
Total equity income |
$ |
31,712 |
|
|
$ |
52,916 |
|
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