Item 2.02. Results of Operations and Financial Condition.
Management of Worthington Industries, Inc. (the “Registrant”) conducted a conference call on September 23, 2020, beginning at approximately 2:00 p.m., Eastern Time, to discuss the Registrant’s unaudited financial results for the first quarter of fiscal 2021 (the fiscal quarter ended August 31, 2020). Additionally, the Registrant’s management addressed certain issues related to the outlook for the Registrant and its subsidiaries and their respective 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 in 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 the Registrant’s operating income excluding restructuring and the incremental expenses related to the Nikola gains. This represents a non-GAAP financial measure and is used by management as a measure of operating performance. Operating income excluding restructuring and one-time Nikola-related expenses is calculated by adding impairment of long-lived assets, restructuring and other expense, net and the incremental expenses related to the Nikola gains to operating income (loss). The difference between the GAAP-based measure of operating income (loss) and the non-GAAP financial measure of operating income excluding restructuring and one-time Nikola-related expenses for the three months ended August 31, 2020, and August 31, 2019, as mentioned in the conference call, is outlined below:
|
Three Months Ended
|
|
|
|
|
|
|
August 31,
|
|
|
|
|
|
(in thousands)
|
2020
|
|
|
2019
|
|
|
Change
|
|
GAAP
|
$
|
(30,121
|
)
|
|
$
|
(14,588
|
)
|
|
$
|
(15,533
|
)
|
Impairment of long-lived assets
|
|
9,924
|
|
|
|
40,601
|
|
|
|
(30,677
|
)
|
Restructuring and other expense, net
|
|
1,848
|
|
|
|
455
|
|
|
|
1,393
|
|
Incremental expenses related to Nikola gains
|
|
49,511
|
|
|
|
-
|
|
|
|
49,511
|
|
Non-GAAP
|
$
|
31,162
|
|
|
$
|
26,468
|
|
|
$
|
4,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the conference call, management referred to operating income excluding impairment and restructuring for the Registrant’s Pressure Cylinders operating segment. This represents a non-GAAP financial measure and is used by management as a measure of operating performance. Operating income excluding impairment and restructuring is calculated by adding impairment of long-lived assets and restructuring and other expense, net to operating income. The difference between the GAAP-based measure of operating income and the non-GAAP financial measure of operating income excluding impairment and restructuring for the three months ended August 31, 2020, and August 31, 2019, as mentioned in the conference call, is outlined below for the Registrant’s Pressure Cylinders operating segment:
|
Three Months Ended
|
|
|
|
|
|
|
August 31,
|
|
|
|
|
|
(in thousands)
|
2020
|
|
|
2019
|
|
|
Change
|
|
GAAP
|
$
|
8,642
|
|
|
$
|
29,623
|
|
|
$
|
(20,981
|
)
|
Impairment of long-lived assets
|
|
9,924
|
|
|
|
-
|
|
|
|
9,924
|
|
Restructuring and other expense, net
|
|
314
|
|
|
|
-
|
|
|
|
314
|
|
Non-GAAP
|
$
|
18,880
|
|
|
$
|
29,623
|
|
|
$
|
(10,743
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
In the conference call, management referred to adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the Registrant’s three months ended August 31, 2020 and August 31, 2019 and the trailing twelve months ended August 31, 2020. These represent non-GAAP financial measures and are used by management as measures of operating performance. EBITDA is calculated by adding or subtracting, as appropriate, interest expense, income tax expense (benefit) and depreciation and amortization to net earnings attributable to controlling interest and adjusted EBITDA is calculated by adding or subtracting, as appropriate, impairment of long-lived assets, restructuring and other expense (income), net, incremental expenses related to Nikola gains, gains on investment in Nikola, loss on extinguishment of debt, impairment of investment in unconsolidated joint venture, gain on sale of assets within equity income, gain on consolidation of Samuel Steel Pickling and other non-recurring expense (each pre-tax) to/from EBITDA. The difference between the GAAP-based measure of net earnings (loss) attributable to controlling interest and the non-GAAP financial measure of adjusted EBITDA for the three months ended August 31, 2020 and August 31, 2019 and the trailing twelve months ended August 31, 2020, as mentioned in the conference call, is outlined below.
|
First
|
|
Fourth
|
|
Third
|
|
Second
|
|
|
First
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Quarter
|
|
(In thousands)
|
2021
|
|
2020
|
|
2020
|
|
2020
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) attributable to controlling interest
|
$
|
616,675
|
|
$
|
16,175
|
|
$
|
15,311
|
|
$
|
52,086
|
|
|
$
|
(4,776
|
)
|
Impairment of long-lived assets (pre-tax) 1
|
|
9,924
|
|
|
7,208
|
|
|
34,003
|
|
|
-
|
|
|
|
40,601
|
|
Restructuring and other expense (income), net (pre-tax) 1
|
|
1,732
|
|
|
7,558
|
|
|
1,050
|
|
|
(50
|
)
|
|
|
455
|
|
Incremental expenses related to Nikola gains (pre-tax)
|
|
49,511
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Gains on investment in Nikola (pre-tax)
|
|
(796,141
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Loss on extinguishment of debt (pre-tax)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
4,034
|
|
Impairment of investment in unconsolidated joint venture (pre-tax)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
4,236
|
|
Gain on consolidation of Samuel Steel Pickling (pre-tax)
|
|
-
|
|
|
-
|
|
|
(6,055
|
)
|
|
-
|
|
|
|
-
|
|
Gain on sale of assets within equity income (pre-tax)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(23,119
|
)
|
|
|
-
|
|
Other non-recurring expense (pre-tax)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
912
|
|
|
|
-
|
|
Interest expense
|
|
7,590
|
|
|
7,459
|
|
|
7,362
|
|
|
7,315
|
|
|
|
9,480
|
|
Income tax expense (benefit)
|
|
163,778
|
|
|
5,836
|
|
|
4,828
|
|
|
15,863
|
|
|
|
(185
|
)
|
Adjusted earnings before interest and taxes (Adjusted EBIT) 1
|
$
|
53,069
|
|
$
|
44,236
|
|
$
|
56,499
|
|
$
|
53,007
|
|
|
$
|
53,845
|
|
Depreciation and amortization
|
|
22,211
|
|
|
23,125
|
|
|
22,780
|
|
|
22,596
|
|
|
|
24,177
|
|
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) 1
|
$
|
75,280
|
|
$
|
67,361
|
|
$
|
79,279
|
|
$
|
75,603
|
|
|
$
|
78,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve Months Adjusted EBITDA 1
|
$
|
297,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Excludes the impact of the noncontrolling interest.
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|