Worthington Enterprises, Inc. (NYSE: WOR), formerly Worthington
Industries, Inc., today reported results for its fiscal 2024 second
quarter ended November 30, 2023. These quarterly results include
both Worthington Enterprises and Worthington Steel. Beginning in
the third quarter of fiscal 2024, historical results will be
restated to reflect the operations of the Company’s former Steel
Processing segment as a discontinued operation in periods prior to
the December 1, 2023, separation date.
Net sales in the second quarter of fiscal 2024
were $1.1 billion and net earnings attributable to controlling
interest were $24.3 million, or $0.49 per diluted share. For the
second quarter of fiscal 2023, the Company reported net sales of
$1.2 billion and net earnings attributable to controlling interest
of $16.2 million, or $0.33 per diluted share. Results in both the
current year quarter and prior year quarter were impacted by
certain items, as summarized in the table below.
(in millions, except per share amounts)
|
|
2Q 2024 |
|
|
2Q 2023 |
|
|
|
After-Tax |
|
|
Per Share |
|
|
After-Tax |
|
|
Per Share |
|
Net earnings attributable to controlling interest |
|
$ |
24.3 |
|
|
$ |
0.49 |
|
|
$ |
16.2 |
|
|
$ |
0.33 |
|
Separation costs |
|
|
16.7 |
|
|
|
0.33 |
|
|
|
7.0 |
|
|
|
0.14 |
|
Gain on sale of assets in
equity income |
|
|
(2.1 |
) |
|
|
(0.04 |
) |
|
|
- |
|
|
|
- |
|
Incremental expense related to
Level5 earnout |
|
|
- |
|
|
|
- |
|
|
|
0.4 |
|
|
|
0.01 |
|
Restructuring gains |
|
|
- |
|
|
|
- |
|
|
|
(1.8 |
) |
|
|
(0.04 |
) |
Adjusted net earnings |
|
$ |
38.9 |
|
|
$ |
0.78 |
|
|
$ |
21.8 |
|
|
$ |
0.44 |
|
Financial highlights for the current and comparative periods are
as follows:
(in millions, except per share amounts)
|
|
2Q 2024 |
|
|
2Q 2023 |
|
|
6M 2024 |
|
|
6M 2023 |
|
Net sales |
|
$ |
1,086.9 |
|
|
$ |
1,175.5 |
|
|
$ |
2,280.2 |
|
|
$ |
2,584.2 |
|
Operating income (loss) |
|
|
(5.9 |
) |
|
|
(7.0 |
) |
|
|
71.8 |
|
|
|
59.7 |
|
Equity income |
|
|
42.4 |
|
|
|
36.9 |
|
|
|
96.8 |
|
|
|
68.6 |
|
Net earnings attributable to
controlling interest |
|
|
24.3 |
|
|
|
16.2 |
|
|
|
120.4 |
|
|
|
80.3 |
|
Earnings per diluted
share |
|
$ |
0.49 |
|
|
$ |
0.33 |
|
|
$ |
2.40 |
|
|
$ |
1.63 |
|
“This was our last quarter as Worthington
Industries, and I am very proud of our people all across the
company who stayed focused on serving our customers while we worked
hard during the last year to prepare for and ultimately execute the
separation of our steel processing business on December 1. Not only
did we finish ahead of schedule but I am confident all of our
advisors would say the work done was best in class. I could not be
more excited for the future of both companies,” said Worthington
Enterprises President and CEO Andy Rose. “For the businesses that
are part of Worthington Enterprises, the current quarter was solid
despite some headwinds. Building Products delivered healthy
year-over-year results that were consistent with normal
seasonality. While results in Consumer Products and Sustainable
Energy Solutions declined year-over-year, both segments delivered
sequential improvements in earnings relative to the first quarter
and our teams are doing a good job positioning these businesses for
a solid start to 2024.”
Consolidated Quarterly Results
Net sales for the second quarter of fiscal 2024
were $1.1 billion, a decrease of $88.6 million, or 7.5%, from the
prior year quarter. The decrease was attributed mostly to Steel
Processing, down $53.3 million, due to lower average selling prices
which were partially offset by higher volumes. Combined net
sales at the remaining segments were down $35.4 million driven by
the impact of lower average selling prices and an unfavorable
product mix in Building Products and lower volumes in Sustainable
Energy Solutions.
Gross margin increased by $18.0 million from the
prior year quarter to $123.7 million, largely driven by an
estimated $18.3 million favorable change in Steel Processing from
inventory holding losses of $53.1 million in the prior year quarter
compared to losses of $34.8 million in the current year
quarter.
The operating loss in the quarter was favorable
by $1.1 million compared to the $7.0 million operating loss in the
prior year quarter, as the combination of higher incremental costs
associated with the separation of the Company’s Steel Processing
business and higher net restructuring charges more than offset the
improvements in gross margins. Excluding these items, adjusted
operating income of $16.0 million was up $17.6 million compared to
the prior year quarter.
Net interest expense was $2.2 million in the
current year quarter, down $5.4 million compared to the prior year
quarter due to higher interest income and, to a lesser extent,
lower average debt levels driven by the July 28, 2023, redemption
of the Company’s senior unsecured notes that were set to mature in
April 2026 (“2026 Notes”).
Equity income increased $5.6 million over the
prior year quarter to $42.4 million, due in part to a $2.8 million
gain associated with the divestiture of the Brazilian operations of
the cabs joint venture. Excluding the impact of the divestiture,
equity income was up $2.8 million in the current year quarter, as
slightly higher contributions from both WAVE and Serviacero were
partially offset by lower contributions from ClarkDietrich.
Income tax expense was $7.2 million in the
current year quarter compared to $4.1 million in the prior year
quarter. The increase was driven by higher pre-tax earnings. Tax
expense in the current year quarter reflects an annual effective
rate of 23.4%, compared to 23.7% in the prior year quarter.
Balance Sheet
Total debt was $623.8 million at the end of the
second quarter of fiscal 2024, down $69.0 million from May 31,
2023, driven by the redemption of the 2026 Notes, partially offset
by $175.0 million of short-term borrowings by Worthington Steel at
quarter-end ahead of the business separation. The Company ended the
second quarter of fiscal 2024 with $430.9 million of cash, down
$24.0 million from May 31, 2023, primarily due to the early
redemption of the 2026 Notes earlier in the fiscal year, partially
offset by cash proceeds of $175.0 million associated with
Worthington Steel’s debt issuance at quarter end, a portion of
which funded a $150.0 million cash dividend paid to the Company in
connection with the December 1, 2023 separation.
Quarterly Segment Results
Consumer Products generated net sales of $147.7
million during the current year quarter, down $6.1 million, or
3.9%, from the prior year quarter. The decline in net sales was
driven by lower average selling prices and an unfavorable shift in
product mix. Adjusted EBIT was down $4.0 million in the current
year quarter to $9.5 million, driven primarily by lower volumes and
a $3.1 million non-cash inventory obsolescence charge related to a
recall of the Balloon Time® Mini helium tank.
Building Products generated net sales of $123.0
million during the current year quarter, down 13%, or $18.7
million, from the prior year quarter as lower average selling
prices and an unfavorable shift in product mix more than offset the
impact of higher volumes. Adjusted EBIT decreased $0.9 million from
the prior year quarter to $40.3 million, driven primarily by the
impact the decline in net sales had on gross margin. Equity income
was essentially flat in the quarter, as higher contributions from
WAVE were almost equally offset by a modest decline at
ClarkDietrich.
Sustainable Energy Solutions generated net sales
of $27.5 million during the current year quarter, down 28%, or
$10.6 million, compared to the prior year quarter, as lower volumes
and an unfavorable mix more than offset the impact of higher
average selling prices. Adjusted EBIT was a loss of $2.6 million,
$3.8 million lower than the prior year quarter, primarily due to
lower volumes and an unfavorable product mix.
Steel Processing’s net sales for the second
quarter of fiscal 2024 totaled $788.7 million, down $53.3 million,
compared to the prior year quarter. Adjusted EBIT was up $24.0
million over the prior year quarter to $6.8 million.
Recent Developments
- On December 1, 2023, the Company
completed the separation of its Steel Processing business, into a
standalone publicly traded company, Worthington Steel, Inc., which
trades under the symbol “WS” on the New York Stock
Exchange. In connection with the separation, Worthington Steel
made a cash distribution of $150.0 million to the Company.
- On December 6, 2023, the Company
used the cash distribution from Worthington Steel to pay off in
full the unsecured senior notes that were set to mature in August
2024. The payoff amount consisted of $150.0 million in principal
plus accrued interest of $0.5 million.
- On December 19, 2023, Worthington
Enterprises’ Board of Directors declared a quarterly dividend of
$0.16 per share payable on March 29, 2024, to shareholders of
record on March 15, 2024.
Outlook
“I could not be more proud of our company and
the teams we have in place,” Rose said. “Heading into calendar
2024, we are well positioned as a leading designer and manufacturer
of Building Products, Consumer Products and Sustainable Energy
Solutions with more focused strategies better able to serve our
customers and accelerate our growth. I am very optimistic about our
future given our market-leading brands, strong balance sheet and
talented people.”
Conference Call
Worthington will review fiscal 2024 second
quarter results during its quarterly conference call on December
20, 2023, at 9:00 a.m., Eastern Time. Details regarding the
conference call can be found on the Company website at
www.WorthingtonEnterprises.com/.
About Worthington
Enterprises
Worthington Enterprises (NYSE: WOR) is a
designer and manufacturer of market-leading brands that help enable
people to live safer, healthier and more expressive lives. The
Company operates with three segments: Building Products, Consumer
Products and Sustainable Energy Solutions. Worthington’s emphasis
on innovation and transformation extends to building products
including water systems, heating and cooling solutions,
architectural and acoustical grid ceilings and metal framing and
accessories, and consumer products in tools, outdoor living and
celebrations categories sold under brand names Coleman®,
Bernzomatic®, Balloon Time®, Level5 Tools®, Mag Torch®,
Well-X-Trol®, General®, Garden-Weasel®, Pactool International® and
Hawkeye™. The Company serves the growing global hydrogen ecosystem
through on-board fueling systems and gas containment solutions.
Headquartered in Columbus, Ohio, Worthington Enterprises employs
approximately 5,000 people throughout North America and Europe.
Founded in 1955 as Worthington Industries,
Worthington Enterprises follows a people-first Philosophy with
earning money for its shareholders as its first corporate goal.
Worthington Enterprises achieves this outcome by empowering its
employees to innovate, thrive and grow with leading brands in
attractive markets that improve everyday life. The Company engages
deeply with local communities where it has operations through
volunteer efforts and The Worthington Companies Foundation,
participates actively in workforce development programs and reports
annually on its corporate citizenship and sustainability efforts.
For more information, visit worthingtonenterprises.com.
Safe Harbor Statement
Selected statements contained in this release
constitute “forward-looking statements,” as that term is used in
the Private Securities Litigation Reform Act of 1995 (the “Act”).
The Company wishes to take advantage of the safe harbor provisions
included in the Act. Forward-looking statements reflect the
Company’s current expectations, estimates or projections concerning
future results or events. These statements are often identified by
the use of forward-looking words or phrases such as “believe,”
“expect,” “anticipate,” “may,” “could,” “should,” “would,”
“intend,” “plan,” “will,” “likely,” “estimate,” “project,”
“position,” “strategy,” “target,” “aim,” “seek,” “foresee” and
similar words or phrases. These forward-looking statements include,
without limitation, statements relating to: future or expected cash
positions, liquidity and ability to access financial markets and
capital; outlook, strategy or business plans; the anticipated
benefits of the separation of the Company’s Steel Processing
business (the “Separation); the expected financial and operational
performance of, and future opportunities for, each of the Company
following the Separation; the Company’s performance on a pro forma
basis to illustrate the estimated effects of the Separation on
historical periods; the tax treatment of the Separation
transaction; 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; the ever-changing effects of
the novel coronavirus (“COVID-19”) pandemic and the various
responses of governmental and nongovernmental authorities thereto
on economies and markets, and on our customers, counterparties,
employees and third-party service providers; and other
non-historical matters.
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, those that follow:
the uncertainty of obtaining regulatory approvals in connection
with the Separation, including rulings from the Internal Revenue
Service; the Company’s ability to successfully 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 are 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, 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, 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 regulations and considerations; 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 Plan Act of 2021, and the Dodd-Frank Wall
Street Reform and 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
Company’s filings with the United States Securities and Exchange
Commission, including those described in “Part I – Item 1A. – Risk
Factors” of the Company’s Annual Report on Form 10-K for the fiscal
year ended May 31, 2023.
Forward-looking statements should be construed
in the light of such risks. The Company notes these factors for
investors as contemplated by the Act. It is impossible to predict
or identify all potential risk factors. Consequently, readers
should not consider the foregoing list to be a complete set of all
potential risks and uncertainties. Readers are cautioned not to
place undue reliance on any forward-looking statements, which speak
only as of the date made. The Company does not undertake, and
hereby disclaims, any obligation to update any forward-looking
statements, whether as a result of new information, future
developments or otherwise, except as required by applicable
law.
WORTHINGTON ENTERPRISES, INC.CONSOLIDATED
STATEMENTS OF EARNINGS(In thousands, except per
share amounts) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
November 30, |
|
|
November 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net sales |
|
$ |
1,086,918 |
|
|
$ |
1,175,541 |
|
|
$ |
2,280,174 |
|
|
$ |
2,584,206 |
|
Cost of goods sold |
|
|
963,204 |
|
|
|
1,069,778 |
|
|
|
1,958,971 |
|
|
|
2,309,069 |
|
Gross margin |
|
|
123,714 |
|
|
|
105,763 |
|
|
|
321,203 |
|
|
|
275,137 |
|
Selling, general and
administrative expense |
|
|
107,688 |
|
|
|
107,813 |
|
|
|
220,036 |
|
|
|
211,261 |
|
Impairment of long-lived
assets |
|
|
- |
|
|
|
- |
|
|
|
1,401 |
|
|
|
312 |
|
Restructuring and other
expense (income), net |
|
|
6 |
|
|
|
(4,282 |
) |
|
|
6 |
|
|
|
(5,382 |
) |
Separation costs |
|
|
21,952 |
|
|
|
9,246 |
|
|
|
27,987 |
|
|
|
9,246 |
|
Operating income (loss) |
|
|
(5,932 |
) |
|
|
(7,014 |
) |
|
|
71,773 |
|
|
|
59,700 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous income (expense) |
|
|
1,020 |
|
|
|
1,405 |
|
|
|
2,031 |
|
|
|
(3,681 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
(1,534 |
) |
|
|
- |
|
Interest expense, net |
|
|
(2,169 |
) |
|
|
(7,612 |
) |
|
|
(5,252 |
) |
|
|
(16,210 |
) |
Equity in net income of unconsolidated affiliates |
|
|
42,446 |
|
|
|
36,857 |
|
|
|
96,827 |
|
|
|
68,569 |
|
Earnings before income taxes |
|
|
35,365 |
|
|
|
23,636 |
|
|
|
163,845 |
|
|
|
108,378 |
|
Income tax expense |
|
|
7,198 |
|
|
|
4,131 |
|
|
|
35,975 |
|
|
|
23,629 |
|
Net earnings |
|
|
28,167 |
|
|
|
19,505 |
|
|
|
127,870 |
|
|
|
84,749 |
|
Net earnings attributable to
noncontrolling interests |
|
|
3,865 |
|
|
|
3,287 |
|
|
|
7,460 |
|
|
|
4,449 |
|
Net earnings attributable to
controlling interest |
|
$ |
24,302 |
|
|
$ |
16,218 |
|
|
$ |
120,410 |
|
|
$ |
80,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
49,186 |
|
|
|
48,558 |
|
|
|
49,013 |
|
|
|
48,518 |
|
Earnings per share
attributable to controlling interest |
|
$ |
0.49 |
|
|
$ |
0.33 |
|
|
$ |
2.46 |
|
|
$ |
1.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
50,042 |
|
|
|
49,330 |
|
|
|
50,102 |
|
|
|
49,293 |
|
Earnings per share
attributable to controlling interest |
|
$ |
0.49 |
|
|
$ |
0.33 |
|
|
$ |
2.40 |
|
|
$ |
1.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding at
end of period |
|
|
49,287 |
|
|
|
48,572 |
|
|
|
49,287 |
|
|
|
48,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per
share |
|
$ |
0.32 |
|
|
$ |
0.31 |
|
|
$ |
0.64 |
|
|
$ |
0.62 |
|
CONSOLIDATED BALANCE SHEETSWORTHINGTON
ENTERPRISES, INC.(In thousands) |
|
|
|
November 30, |
|
|
May 31, |
|
|
|
2023 |
|
|
2023 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
430,906 |
|
|
$ |
454,946 |
|
Receivables, less allowances of $2,944 and $3,383 at November 30,
2023 and May 31, 2023, respectively |
|
|
640,826 |
|
|
|
692,887 |
|
Inventories |
|
|
|
|
|
|
Raw materials |
|
|
245,166 |
|
|
|
264,568 |
|
Work in process |
|
|
156,361 |
|
|
|
183,248 |
|
Finished products |
|
|
174,884 |
|
|
|
160,152 |
|
Total inventories |
|
|
576,411 |
|
|
|
607,968 |
|
Income taxes receivable |
|
|
5,511 |
|
|
|
4,198 |
|
Assets held for sale |
|
|
1,789 |
|
|
|
3,381 |
|
Prepaid expenses and other
current assets |
|
|
117,160 |
|
|
|
104,957 |
|
Total current assets |
|
|
1,772,603 |
|
|
|
1,868,337 |
|
Investment in unconsolidated
affiliates |
|
|
247,421 |
|
|
|
252,591 |
|
Operating lease assets |
|
|
94,677 |
|
|
|
99,967 |
|
Goodwill |
|
|
416,857 |
|
|
|
414,820 |
|
Other intangible assets, net of accumulated amortization of
$121,478 and $112,202 at November 30, 2023 and May 31, 2023,
respectively |
|
|
305,649 |
|
|
|
314,226 |
|
Other assets |
|
|
42,916 |
|
|
|
25,323 |
|
Property, plant and
equipment: |
|
|
|
|
|
|
Land |
|
|
50,920 |
|
|
|
49,697 |
|
Buildings and improvements |
|
|
312,830 |
|
|
|
308,669 |
|
Machinery and equipment |
|
|
1,293,628 |
|
|
|
1,263,962 |
|
Construction in progress |
|
|
78,536 |
|
|
|
45,165 |
|
Total property, plant and equipment |
|
|
1,735,914 |
|
|
|
1,667,493 |
|
Less: accumulated depreciation |
|
|
1,031,900 |
|
|
|
991,839 |
|
Total property, plant and equipment, net |
|
|
704,014 |
|
|
|
675,654 |
|
Total
assets |
|
$ |
3,584,137 |
|
|
$ |
3,650,918 |
|
|
|
|
|
|
|
|
Liabilities and
equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
447,119 |
|
|
$ |
528,920 |
|
Short-term borrowings |
|
|
175,000 |
|
|
|
2,813 |
|
Accrued compensation, contributions to employee benefit plans and
related taxes |
|
|
80,461 |
|
|
|
93,810 |
|
Dividends payable |
|
|
17,245 |
|
|
|
18,330 |
|
Other accrued items |
|
|
62,270 |
|
|
|
53,362 |
|
Current operating lease liabilities |
|
|
12,493 |
|
|
|
12,608 |
|
Income taxes payable |
|
|
485 |
|
|
|
7,451 |
|
Current maturities of long-term debt |
|
|
150,269 |
|
|
|
264 |
|
Total current liabilities |
|
|
945,342 |
|
|
|
717,558 |
|
Other liabilities |
|
|
112,878 |
|
|
|
113,286 |
|
Distributions in excess of
investment in unconsolidated affiliate |
|
|
118,465 |
|
|
|
117,297 |
|
Long-term debt |
|
|
298,549 |
|
|
|
689,718 |
|
Noncurrent operating lease
liabilities |
|
|
85,283 |
|
|
|
89,982 |
|
Deferred income taxes |
|
|
99,653 |
|
|
|
101,449 |
|
Total liabilities |
|
|
1,660,170 |
|
|
|
1,829,290 |
|
Shareholders' equity -
controlling interest |
|
|
1,792,809 |
|
|
|
1,696,011 |
|
Noncontrolling interests |
|
|
131,158 |
|
|
|
125,617 |
|
Total equity |
|
|
1,923,967 |
|
|
|
1,821,628 |
|
Total liabilities and
equity |
|
$ |
3,584,137 |
|
|
$ |
3,650,918 |
|
WORTHINGTON ENTERPRISES, INC.CONSOLIDATED STATEMENTS OF
CASH FLOWS(In thousands) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
November 30, |
|
|
November 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
28,167 |
|
|
$ |
19,505 |
|
|
$ |
127,870 |
|
|
$ |
84,749 |
|
Adjustment to reconcile net
earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
28,007 |
|
|
|
28,354 |
|
|
|
56,332 |
|
|
|
56,355 |
|
Impairment of long-lived assets |
|
|
- |
|
|
|
- |
|
|
|
1,401 |
|
|
|
312 |
|
Benefit from deferred income taxes |
|
|
1,968 |
|
|
|
(3,617 |
) |
|
|
(3,485 |
) |
|
|
(14,673 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
1,534 |
|
|
|
- |
|
Bad debt expense (income) |
|
|
345 |
|
|
|
1,098 |
|
|
|
(454 |
) |
|
|
1,440 |
|
Equity in net income of unconsolidated affiliates, net of
distributions |
|
|
(4,129 |
) |
|
|
18,352 |
|
|
|
6,096 |
|
|
|
61,197 |
|
Net loss (gain) on sale of assets |
|
|
(439 |
) |
|
|
(4,265 |
) |
|
|
(334 |
) |
|
|
(5,034 |
) |
Stock-based compensation |
|
|
6,175 |
|
|
|
4,547 |
|
|
|
10,691 |
|
|
|
8,783 |
|
Changes in assets and
liabilities, net of impact of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
76,704 |
|
|
|
119,674 |
|
|
|
67,861 |
|
|
|
157,093 |
|
Inventories |
|
|
103,150 |
|
|
|
72,293 |
|
|
|
38,823 |
|
|
|
113,460 |
|
Accounts payable |
|
|
(75,373 |
) |
|
|
(100,535 |
) |
|
|
(75,095 |
) |
|
|
(202,116 |
) |
Accrued compensation and employee benefits |
|
|
2,794 |
|
|
|
3,336 |
|
|
|
(9,220 |
) |
|
|
(30,532 |
) |
Income taxes payable |
|
|
(35,428 |
) |
|
|
(7,629 |
) |
|
|
(6,966 |
) |
|
|
(300 |
) |
Other operating items, net |
|
|
3,049 |
|
|
|
(18,172 |
) |
|
|
(20,368 |
) |
|
|
(16,755 |
) |
Net cash provided by
operating activities |
|
|
134,990 |
|
|
|
132,941 |
|
|
|
194,686 |
|
|
|
213,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Investment in property, plant and equipment |
|
|
(32,876 |
) |
|
|
(24,490 |
) |
|
|
(62,174 |
) |
|
|
(45,967 |
) |
Proceeds from sale of assets, net of selling costs |
|
|
751 |
|
|
|
23,739 |
|
|
|
802 |
|
|
|
35,494 |
|
Acquisitions, net of cash acquired |
|
|
(21,013 |
) |
|
|
- |
|
|
|
(21,013 |
) |
|
|
(56,088 |
) |
Investment in note receivable |
|
|
- |
|
|
|
- |
|
|
|
(15,000 |
) |
|
|
- |
|
Investment in non-marketable equity securities |
|
|
(1,500 |
) |
|
|
(140 |
) |
|
|
(1,540 |
) |
|
|
(250 |
) |
Proceeds from the sale of investment in ArtiFlex, net of selling
costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
36,095 |
|
Distribution from unconsolidated affiliate |
|
|
1,085 |
|
|
|
- |
|
|
|
1,085 |
|
|
|
- |
|
Net cash used by
investing activities |
|
|
(53,553 |
) |
|
|
(891 |
) |
|
|
(97,840 |
) |
|
|
(30,716 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds (repayments) of short-term borrowings |
|
|
175,000 |
|
|
|
(10,619 |
) |
|
|
172,187 |
|
|
|
(43,062 |
) |
Principal payments on long-term debt |
|
|
- |
|
|
|
(13 |
) |
|
|
(243,757 |
) |
|
|
(150 |
) |
Proceeds from issuance of common shares, net of tax
withholdings |
|
|
(9,207 |
) |
|
|
(649 |
) |
|
|
(14,337 |
) |
|
|
(4,115 |
) |
Payments to noncontrolling interests |
|
|
- |
|
|
|
(11,760 |
) |
|
|
(1,921 |
) |
|
|
(11,760 |
) |
Dividends paid |
|
|
(17,333 |
) |
|
|
(15,181 |
) |
|
|
(33,058 |
) |
|
|
(29,065 |
) |
Net cash provided
(used) by financing activities |
|
|
148,460 |
|
|
|
(38,222 |
) |
|
|
(120,886 |
) |
|
|
(88,152 |
) |
Increase (decrease) in cash
and cash equivalents |
|
|
229,897 |
|
|
|
93,828 |
|
|
|
(24,040 |
) |
|
|
95,111 |
|
Cash and cash equivalents at
beginning of period |
|
|
201,009 |
|
|
|
35,768 |
|
|
|
454,946 |
|
|
|
34,485 |
|
Cash and cash
equivalents at end of period |
|
$ |
430,906 |
|
|
$ |
129,596 |
|
|
$ |
430,906 |
|
|
$ |
129,596 |
|
WORTHINGTON ENTERPRISES,
INC.NON-GAAP FINANCIAL MEASURES / PRO FORMA
FINANCIAL DATA(In thousands, except volume and per
share amounts)
The following provides a reconciliation of
certain non-GAAP financial measures, including adjusted operating
income, adjusted net earnings attributable to controlling interest
and adjusted earnings per diluted share attributable to controlling
interest, from their most comparable GAAP measure for the three and
six months ended November 30, 2023 and 2022.
|
|
Three Months Ended November 30, 2023 |
|
|
|
Operating Income (Loss) |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings Attributable to Controlling Interest |
|
|
Earnings per Diluted Share Attributable to Controlling
Interest |
|
GAAP |
|
$ |
(5,932 |
) |
|
$ |
35,365 |
|
|
$ |
7,198 |
|
|
$ |
24,302 |
|
|
$ |
0.49 |
|
Restructuring and other
expense, net |
|
|
6 |
|
|
|
6 |
|
|
|
(1 |
) |
|
|
4 |
|
|
|
0.00 |
|
Separation costs |
|
|
21,952 |
|
|
|
21,952 |
|
|
|
(5,261 |
) |
|
|
16,691 |
|
|
|
0.33 |
|
Gain on sale of assets in
equity income (3) |
|
|
- |
|
|
|
(2,780 |
) |
|
|
662 |
|
|
|
(2,118 |
) |
|
|
(0.04 |
) |
Non-GAAP
(1) |
|
$ |
16,026 |
|
|
$ |
54,543 |
|
|
$ |
11,798 |
|
|
$ |
38,879 |
|
|
$ |
0.78 |
|
|
|
Three Months Ended November 30, 2022 |
|
|
|
Operating Income (Loss) |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings Attributable to Controlling Interest(2) |
|
|
Earnings per Diluted Share Attributable to Controlling Interest
(2) |
|
GAAP |
|
$ |
(7,014 |
) |
|
$ |
23,636 |
|
|
$ |
4,131 |
|
|
$ |
16,218 |
|
|
$ |
0.33 |
|
Incremental expense related to
Level5 earnout |
|
|
525 |
|
|
|
525 |
|
|
|
(127 |
) |
|
|
398 |
|
|
|
0.01 |
|
Restructuring and other
income, net |
|
|
(4,282 |
) |
|
|
(4,282 |
) |
|
582 |
|
|
|
(1,850 |
) |
|
|
(0.04 |
) |
Separation costs |
|
|
9,246 |
|
|
|
9,246 |
|
|
|
(2,228 |
) |
|
|
7,018 |
|
|
|
0.14 |
|
Non-GAAP
(1) |
|
$ |
(1,525 |
) |
|
$ |
29,125 |
|
|
$ |
5,904 |
|
|
$ |
21,784 |
|
|
$ |
0.44 |
|
|
|
Six Months Ended November 30, 2023 |
|
|
|
Operating Income (Loss) |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings Attributable to Controlling Interest(2) |
|
|
Earnings per Diluted Share Attributable to Controlling Interest
(2) |
|
GAAP |
|
$ |
71,773 |
|
|
$ |
163,845 |
|
|
$ |
35,975 |
|
|
$ |
120,410 |
|
|
$ |
2.40 |
|
Impairment of long-lived
assets |
|
|
1,401 |
|
|
|
1,401 |
|
|
|
(210 |
) |
|
|
673 |
|
|
|
0.01 |
|
Restructuring and other
income, net |
|
|
6 |
|
|
|
6 |
|
|
|
(1 |
) |
|
|
4 |
|
|
|
0.00 |
|
Separation costs |
|
|
27,987 |
|
|
|
27,987 |
|
|
|
(6,669 |
) |
|
|
21,318 |
|
|
|
0.43 |
|
Loss on extinguishment of
debt |
|
|
- |
|
|
|
1,534 |
|
|
|
(366 |
) |
|
|
1,168 |
|
|
|
0.02 |
|
Gain on sale of assets in
equity income (3) |
|
|
- |
|
|
|
(2,780 |
) |
|
|
662 |
|
|
|
(2,118 |
) |
|
|
(0.04 |
) |
Non-GAAP
(1) |
|
$ |
101,167 |
|
|
$ |
191,993 |
|
|
$ |
42,559 |
|
|
$ |
141,455 |
|
|
$ |
2.82 |
|
|
|
Six Months Ended November 30, 2022 |
|
|
|
Operating Income (Loss) |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings Attributable to Controlling Interest(2) |
|
|
Earnings per Diluted Share Attributable to Controlling Interest
(2) |
|
GAAP |
|
$ |
59,700 |
|
|
$ |
108,378 |
|
|
$ |
23,629 |
|
|
$ |
80,300 |
|
|
$ |
1.63 |
|
Incremental expense related to
Level5 earnout |
|
|
1,050 |
|
|
|
1,050 |
|
|
|
(253 |
) |
|
|
797 |
|
|
|
0.02 |
|
Impairment of long-lived
assets |
|
|
312 |
|
|
|
312 |
|
|
|
(47 |
) |
|
|
149 |
|
|
|
- |
|
Restructuring and other
income, net |
|
|
(5,382 |
) |
|
|
(5,382 |
) |
|
|
851 |
|
|
|
(2,681 |
) |
|
|
(0.05 |
) |
Separation costs |
|
|
9,246 |
|
|
|
9,246 |
|
|
|
(2,228 |
) |
|
|
7,018 |
|
|
|
0.14 |
|
Pension settlement charge |
|
|
- |
|
|
|
4,774 |
|
|
|
(1,150 |
) |
|
|
3,624 |
|
|
|
0.07 |
|
Loss on sale of investment in
Artiflex (3) |
|
|
- |
|
|
|
15,759 |
|
|
|
(3,798 |
) |
|
|
11,961 |
|
|
|
0.24 |
|
Non-GAAP
(1) |
|
$ |
64,926 |
|
|
$ |
134,137 |
|
|
$ |
30,254 |
|
|
$ |
101,168 |
|
|
$ |
2.05 |
|
_____________________________
- Refer to the Use of Non-GAAP
Measures and Definitions schedules for further information on these
measures.
- Excludes the impact of the
noncontrolling interest(s), including the noncontrolling interest’s
share of items excluded from our non-GAAP measures. Refer to
the supplemental segment information included herein for further
discussion of the impact of the noncontrolling interests on our
reported non-GAAP financial measures.
- Excludes the following items
reflected in equity income in our consolidated statements of
earnings on a pre-tax or after-tax basis, as appropriate:
- For the three and six months ended November 30, 2023, our share
of the gain realized by our engineered cabs joint venture, Taxi
Workhorse, in connection with the sale of joint venture operations
in Brazil, which totaled $2,780 on a pre-tax basis.
- For the six months ended November 30, 2022, the loss realized
in connection with the August 3, 2022 sale of our then 50%
noncontrolling equity investment in ArtiFlex Manufacturing, LLC, or
$15,759 on a pre-tax basis.
To further assist in the analysis of segment
results for the three and six months ended November 30, 2023 and
2022, the following supplemental information has been provided,
including net sales, volume as well as adjusted EBIT and adjusted
EBITDA, which are non-GAAP segment profit measures used by
management to evaluate ongoing segment operating performance and
allocate resources. The summarized segment information below
includes a reconciliation of these non-GAAP profitability measures
to their most comparable GAAP measure, which is operating income
for purposes of measuring segment profit.
Additionally, adjusted EBITDA for the three and
six months ended November 30, 2023 and 2022, is adjusted further to
reflect the results of Worthington Enterprises, on a pro forma
basis, to illustrate the estimated effects of the separation of
Worthington Steel, Inc. from the historical combined
company. This pro forma financial information assumes the
Separation occurred on June 1, 2022, the first day of our fiscal
2023. Beginning in the third quarter of fiscal 2024, historical
results will be restated to reflect the operations of Worthington
Steel as a discontinued operation in periods prior to the December
1, 2023, separation date. For further information on this pro
forma presentation, refer to the Use of Non-GAAP Measures and
Definitions schedules included herein.
|
Three Months Ended November 30, 2023 |
|
|
Steel |
|
|
Consumer |
|
|
Building |
|
|
Sustainable Energy |
|
|
|
|
|
|
|
|
Processing |
|
|
Products |
|
|
Products |
|
|
Solutions |
|
|
Other |
|
|
Consolidated |
|
Volume (tons/units) |
|
958,736 |
|
|
|
16,885,517 |
|
|
|
2,392,515 |
|
|
|
114,063 |
|
|
n/a |
|
|
n/a |
|
Net sales |
$ |
788,655 |
|
|
$ |
147,738 |
|
|
$ |
122,954 |
|
|
$ |
27,537 |
|
|
$ |
34 |
|
|
$ |
1,086,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
6,541 |
|
|
$ |
9,498 |
|
|
$ |
4,873 |
|
|
$ |
(3,174 |
) |
|
$ |
(23,670 |
) |
|
$ |
(5,932 |
) |
Restructuring and other
expense, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6 |
|
|
|
6 |
|
Separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21,952 |
|
|
|
21,952 |
|
Adjusted operating income (loss) |
|
6,541 |
|
|
|
9,498 |
|
|
|
4,873 |
|
|
|
(3,174 |
) |
|
|
(1,712 |
) |
|
|
16,026 |
|
Miscellaneous income
(expense), net |
|
306 |
|
|
|
12 |
|
|
|
234 |
|
|
|
557 |
|
|
|
(89 |
) |
|
|
1,020 |
|
Equity in net income of
unconsolidated affiliates (1) |
|
3,778 |
|
|
|
- |
|
|
|
35,177 |
|
|
|
- |
|
|
|
711 |
|
|
|
39,666 |
|
Less: Net earnings
attributable to noncontrolling interests |
|
3,863 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,863 |
|
Adjusted EBIT |
$ |
6,762 |
|
|
$ |
9,510 |
|
|
$ |
40,284 |
|
|
$ |
(2,617 |
) |
|
$ |
(1,090 |
) |
|
$ |
52,849 |
|
Depreciation and
amortization |
|
15,684 |
|
|
|
4,006 |
|
|
|
4,934 |
|
|
|
1,783 |
|
|
|
1,600 |
|
|
|
28,007 |
|
Adjusted EBITDA |
$ |
22,446 |
|
|
$ |
13,516 |
|
|
$ |
45,218 |
|
|
$ |
(834 |
) |
|
$ |
510 |
|
|
$ |
80,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT
margin |
|
0.9 |
% |
|
|
6.4 |
% |
|
|
32.8 |
% |
|
|
(9.5 |
%) |
|
NM |
|
|
|
4.9 |
% |
Adjusted EBITDA
margin |
|
2.8 |
% |
|
|
9.1 |
% |
|
|
36.8 |
% |
|
|
(3.0 |
%) |
|
NM |
|
|
|
7.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma information (giving
effect to the Separation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
22,446 |
|
|
$ |
13,516 |
|
|
$ |
45,218 |
|
|
$ |
(834 |
) |
|
$ |
510 |
|
|
$ |
80,856 |
|
Removal of Worthington Steel, Inc. |
|
(22,446 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(22,446 |
) |
Shared overhead reallocation (5) |
|
- |
|
|
|
508 |
|
|
|
(2,716 |
) |
|
|
- |
|
|
|
(7,354 |
) |
|
|
(9,562 |
) |
Operational adjustments (6) |
|
- |
|
|
|
(450 |
) |
|
|
(450 |
) |
|
|
- |
|
|
|
83 |
|
|
|
(817 |
) |
Stock-based compensation (7) |
|
- |
|
|
|
594 |
|
|
|
1,042 |
|
|
|
- |
|
|
|
1,591 |
|
|
|
3,227 |
|
Pro forma adjusted
EBITDA |
$ |
- |
|
|
$ |
14,168 |
|
|
$ |
43,094 |
|
|
$ |
(834 |
) |
|
$ |
(5,170 |
) |
|
$ |
51,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net
sales |
n/a |
|
|
$ |
147,738 |
|
|
$ |
122,954 |
|
|
$ |
27,537 |
|
|
$ |
34 |
|
|
$ |
298,263 |
|
Pro forma adjusted
EBITDA margin |
n/a |
|
|
|
9.6 |
% |
|
|
35.0 |
% |
|
|
(3.0 |
%) |
|
NM |
|
|
|
17.2 |
% |
|
Three Months Ended November 30, 2022 |
|
|
Steel |
|
|
Consumer |
|
|
Building |
|
|
Sustainable Energy |
|
|
|
|
|
|
|
|
Processing |
|
|
Products |
|
|
Products |
|
|
Solutions |
|
|
Other |
|
|
Consolidated |
|
Volume (tons/units) |
|
925,434 |
|
|
|
16,583,326 |
|
|
|
2,367,770 |
|
|
|
155,687 |
|
|
n/a |
|
|
n/a |
|
Net Sales |
$ |
841,947 |
|
|
$ |
153,795 |
|
|
$ |
141,671 |
|
|
$ |
38,128 |
|
|
n/a |
|
|
$ |
1,175,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
(14,286 |
) |
|
$ |
12,995 |
|
|
$ |
6,041 |
|
|
$ |
1,001 |
|
|
$ |
(12,765 |
) |
|
$ |
(7,014 |
) |
Incremental expenses related
to Level5 earnout |
|
- |
|
|
|
525 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
525 |
|
Restructuring and other
income, net |
|
(4,282 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,282 |
) |
Separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,246 |
|
|
|
9,246 |
|
Adjusted operating income (loss) |
|
(18,568 |
) |
|
|
13,520 |
|
|
|
6,041 |
|
|
|
1,001 |
|
|
|
(3,519 |
) |
|
|
(1,525 |
) |
Miscellaneous income
(expense), net |
|
850 |
|
|
|
(47 |
) |
|
|
76 |
|
|
|
142 |
|
|
|
384 |
|
|
|
1,405 |
|
Equity in net income of
unconsolidated affiliates |
|
1,906 |
|
|
|
- |
|
|
|
35,107 |
|
|
|
- |
|
|
|
(156 |
) |
|
|
36,857 |
|
Less: Net earnings
attributable to noncontrolling interests (2) |
|
1,437 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,437 |
|
Adjusted EBIT |
$ |
(17,249 |
) |
|
$ |
13,473 |
|
|
$ |
41,224 |
|
|
$ |
1,143 |
|
|
$ |
(3,291 |
) |
|
$ |
35,300 |
|
Depreciation and
amortization |
|
16,984 |
|
|
|
3,845 |
|
|
|
4,375 |
|
|
|
1,500 |
|
|
|
1,650 |
|
|
|
28,354 |
|
Adjusted EBITDA |
$ |
(265 |
) |
|
$ |
17,318 |
|
|
$ |
45,599 |
|
|
$ |
2,643 |
|
|
$ |
(1,641 |
) |
|
$ |
63,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT
margin |
|
(2.0 |
%) |
|
|
8.8 |
% |
|
|
29.1 |
% |
|
|
3.0 |
% |
|
NM |
|
|
|
3.0 |
% |
Adjusted EBITDA
margin |
|
0.0 |
% |
|
|
11.3 |
% |
|
|
32.2 |
% |
|
|
6.9 |
% |
|
NM |
|
|
|
5.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma information (giving
effect to the Separation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
(265 |
) |
|
$ |
17,318 |
|
|
$ |
45,599 |
|
|
$ |
2,643 |
|
|
$ |
(1,641 |
) |
|
$ |
63,654 |
|
Removal of Worthington Steel, Inc. |
|
265 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
265 |
|
Shared overhead reallocation (5) |
|
- |
|
|
|
1,653 |
|
|
|
(2,600 |
) |
|
|
- |
|
|
|
(7,148 |
) |
|
|
(8,095 |
) |
Operational adjustments (6) |
|
- |
|
|
|
(500 |
) |
|
|
(500 |
) |
|
|
- |
|
|
|
83 |
|
|
|
(917 |
) |
Stock-based compensation (7) |
|
- |
|
|
|
507 |
|
|
|
902 |
|
|
|
- |
|
|
|
1,410 |
|
|
|
2,819 |
|
Pro forma adjusted
EBITDA |
$ |
- |
|
|
$ |
18,978 |
|
|
$ |
43,401 |
|
|
$ |
2,643 |
|
|
$ |
(7,296 |
) |
|
$ |
57,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net
sales |
n/a |
|
|
$ |
153,795 |
|
|
$ |
141,671 |
|
|
$ |
38,128 |
|
|
n/a |
|
|
$ |
333,594 |
|
Pro forma adjusted
EBITDA margin |
n/a |
|
|
|
12.3 |
% |
|
|
30.6 |
% |
|
|
6.9 |
% |
|
NM |
|
|
|
17.3 |
% |
|
Six Months Ended November 30, 2023 |
|
|
Steel |
|
|
Consumer |
|
|
Building |
|
|
Sustainable Energy |
|
|
|
|
|
|
|
|
Processing |
|
|
Products |
|
|
Products |
|
|
Solutions |
|
|
Other |
|
|
Consolidated |
|
Volume (tons/units) |
|
1,958,394 |
|
|
|
33,954,462 |
|
|
|
5,163,973 |
|
|
|
220,369 |
|
|
n/a |
|
|
n/a |
|
Net Sales |
$ |
1,669,993 |
|
|
$ |
297,151 |
|
|
$ |
256,822 |
|
|
$ |
56,174 |
|
|
$ |
34 |
|
|
$ |
2,280,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
77,587 |
|
|
$ |
18,459 |
|
|
$ |
13,789 |
|
|
$ |
(8,177 |
) |
|
$ |
(29,885 |
) |
|
$ |
71,773 |
|
Impairment of long-lived
assets |
|
1,401 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,401 |
|
Restructuring and other
expense, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6 |
|
|
|
6 |
|
Separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27,987 |
|
|
|
27,987 |
|
Adjusted operating income (loss) |
|
78,988 |
|
|
|
18,459 |
|
|
|
13,789 |
|
|
|
(8,177 |
) |
|
|
(1,892 |
) |
|
|
101,167 |
|
Miscellaneous income
(expense), net |
|
1,018 |
|
|
|
43 |
|
|
|
292 |
|
|
|
838 |
|
|
|
(160 |
) |
|
|
2,031 |
|
Equity in net income of
unconsolidated affiliates (1) |
|
12,735 |
|
|
|
- |
|
|
|
80,219 |
|
|
|
- |
|
|
|
1,093 |
|
|
|
94,047 |
|
Less: Net earnings
attributable to noncontrolling interests (2) |
|
7,979 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,979 |
|
Adjusted EBIT (3) |
$ |
84,762 |
|
|
$ |
18,502 |
|
|
$ |
94,300 |
|
|
$ |
(7,339 |
) |
|
$ |
(959 |
) |
|
$ |
189,266 |
|
Depreciation and
amortization |
|
31,822 |
|
|
|
7,894 |
|
|
|
9,937 |
|
|
|
3,572 |
|
|
|
3,107 |
|
|
|
56,332 |
|
Adjusted EBITDA (3) |
$ |
116,584 |
|
|
$ |
26,396 |
|
|
$ |
104,237 |
|
|
$ |
(3,767 |
) |
|
$ |
2,148 |
|
|
$ |
245,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT
margin |
|
5.1 |
% |
|
|
6.2 |
% |
|
|
36.7 |
% |
|
|
(13.1 |
%) |
|
NM |
|
|
|
8.3 |
% |
Adjusted EBITDA
margin |
|
7.0 |
% |
|
|
8.9 |
% |
|
|
40.6 |
% |
|
|
(6.7 |
%) |
|
NM |
|
|
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma information (giving
effect to the Separation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
116,584 |
|
|
$ |
26,396 |
|
|
$ |
104,237 |
|
|
$ |
(3,767 |
) |
|
$ |
2,148 |
|
|
$ |
245,598 |
|
Removal of Worthington Steel, Inc. |
|
(116,584 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(116,584 |
) |
Shared overhead reallocation (5) |
|
|
|
|
2,314 |
|
|
|
(4,531 |
) |
|
|
- |
|
|
|
(14,707 |
) |
|
|
(16,924 |
) |
Operational adjustments (6) |
|
- |
|
|
|
(900 |
) |
|
|
(900 |
) |
|
|
- |
|
|
|
166 |
|
|
|
(1,634 |
) |
Stock-based compensation (7) |
|
- |
|
|
|
1,188 |
|
|
|
2,084 |
|
|
|
- |
|
|
|
3,182 |
|
|
|
6,454 |
|
Pro forma adjusted
EBITDA |
$ |
- |
|
|
$ |
28,998 |
|
|
$ |
100,890 |
|
|
$ |
(3,767 |
) |
|
$ |
(9,211 |
) |
|
$ |
116,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net
sales |
n/a |
|
|
$ |
297,151 |
|
|
$ |
256,822 |
|
|
$ |
56,174 |
|
|
$ |
34 |
|
|
$ |
610,181 |
|
Pro forma adjusted
EBITDA margin |
n/a |
|
|
|
9.8 |
% |
|
|
39.3 |
% |
|
|
(6.7 |
%) |
|
NM |
|
|
|
19.2 |
% |
|
For the Six Months Ended November 30, 2022 |
|
|
Steel |
|
|
Consumer |
|
|
Building |
|
|
Sustainable Energy |
|
|
|
|
|
|
|
|
Processing |
|
|
Products |
|
|
Products |
|
|
Solutions |
|
|
Other |
|
|
Consolidated |
|
Volume (tons/units) |
|
1,900,083 |
|
|
|
38,966,668 |
|
|
|
5,289,933 |
|
|
|
288,820 |
|
|
n/a |
|
|
n/a |
|
Net Sales |
$ |
1,880,827 |
|
|
$ |
342,497 |
|
|
$ |
291,994 |
|
|
$ |
68,888 |
|
|
n/a |
|
|
$ |
2,584,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
19,560 |
|
|
$ |
33,438 |
|
|
$ |
14,687 |
|
|
$ |
(306 |
) |
|
$ |
(7,679 |
) |
|
$ |
59,700 |
|
Incremental expenses related
to Level5 earnout |
|
- |
|
|
|
1,050 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,050 |
|
Impairment of long-lived
assets |
|
312 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
312 |
|
Restructuring and other
income, net |
|
(4,205 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,177 |
) |
|
|
(5,382 |
) |
Separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,246 |
|
|
|
9,246 |
|
Adjusted operating income (loss) |
$ |
15,667 |
|
|
$ |
34,488 |
|
|
$ |
14,687 |
|
|
$ |
(306 |
) |
|
$ |
390 |
|
|
$ |
64,926 |
|
Miscellaneous income
(expense), net (4) |
|
1,035 |
|
|
|
(82 |
) |
|
|
299 |
|
|
|
56 |
|
|
|
(215 |
) |
|
|
1,093 |
|
Equity in net income of
unconsolidated affiliates (1) |
|
3,676 |
|
|
|
- |
|
|
|
78,973 |
|
|
|
- |
|
|
|
1,679 |
|
|
|
84,328 |
|
Less: Net earnings
attributable to noncontrolling interests (2) |
|
2,715 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,715 |
|
Adjusted EBIT |
$ |
17,663 |
|
|
$ |
34,406 |
|
|
$ |
93,959 |
|
|
$ |
(250 |
) |
|
$ |
1,854 |
|
|
$ |
147,632 |
|
Depreciation and
amortization |
|
33,829 |
|
|
|
7,547 |
|
|
|
8,632 |
|
|
|
2,970 |
|
|
|
3,377 |
|
|
|
56,355 |
|
Adjusted EBITDA |
$ |
51,492 |
|
|
$ |
41,953 |
|
|
$ |
102,591 |
|
|
$ |
2,720 |
|
|
$ |
5,231 |
|
|
$ |
203,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT
margin |
|
0.9 |
% |
|
|
10.0 |
% |
|
|
32.2 |
% |
|
|
(0.4 |
%) |
|
NM |
|
|
|
5.7 |
% |
Adjusted EBITDA
margin |
|
2.7 |
% |
|
|
12.2 |
% |
|
|
35.1 |
% |
|
|
3.9 |
% |
|
NM |
|
|
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma information (giving
effect to the Separation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
51,492 |
|
|
$ |
41,953 |
|
|
$ |
102,591 |
|
|
$ |
2,720 |
|
|
$ |
5,231 |
|
|
$ |
203,987 |
|
Removal of Worthington Steel, Inc. |
|
(51,492 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(51,492 |
) |
Shared overhead reallocation (5) |
|
- |
|
|
|
3,714 |
|
|
|
(4,787 |
) |
|
|
- |
|
|
|
(14,295 |
) |
|
|
(15,368 |
) |
Operational adjustments (6) |
|
- |
|
|
|
(1,000 |
) |
|
|
(1,000 |
) |
|
|
- |
|
|
|
166 |
|
|
|
(1,834 |
) |
Stock-based compensation (7) |
|
- |
|
|
|
1,014 |
|
|
|
1,804 |
|
|
|
- |
|
|
|
2,820 |
|
|
|
5,638 |
|
Pro forma adjusted
EBITDA |
$ |
- |
|
|
$ |
45,681 |
|
|
$ |
98,608 |
|
|
$ |
2,720 |
|
|
$ |
(6,078 |
) |
|
$ |
140,931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net
sales |
n/a |
|
|
$ |
342,497 |
|
|
$ |
291,994 |
|
|
$ |
68,888 |
|
|
n/a |
|
|
$ |
703,379 |
|
Pro forma adjusted
EBITDA margin |
n/a |
|
|
|
13.3 |
% |
|
|
33.8 |
% |
|
|
3.9 |
% |
|
NM |
|
|
|
20.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Footnotes:
- Excludes the following items
reflected in equity income in our consolidated statements of
earnings:
- For the three and six months ended
November 30, 2023, our share of the gain realized by our engineered
cabs joint venture, Taxi Workhorse, in connection with the sale of
the joint venture’s operations in Brazil, which totaled $2,780 on a
pre-tax basis.
- For the six months ended November
30, 2022, a pre-tax loss of $15,759 realized in connection with the
August 3, 2022 sale of our then 50% noncontrolling equity
investment in ArtiFlex Manufacturing, LLC.
- Excludes the noncontrolling
interest portion of excluded items within Steel Processing,
including $1,850 and $1,734 related to the restructuring gains in
the three and six months ended November 30, 2022, respectively, and
$519 related to the impairment charge in the six months ended
November 30, 2023.
- Excludes a pre-tax loss of 1,534
realized in connection with the July 28, 2023, early redemption of
the Company’s senior unsecured notes due April 2026 (the “2026
Notes”). The loss resulted primarily from unamortized issuance
costs and discount included in the carrying amount of the 2026
Notes and the acceleration of the remaining unamortized loss in
equity related to a treasury lock derivative instrument executed in
connection with the issuance of the 2026 Notes.
- Excludes a pre-tax settlement
charge of $4,774 within Other related to the pension lift-out
transaction associated with The Gerstenslager Company Bargaining
Unit Employees’ Pension Plan, as further described and defined in
the Use of Non-GAAP Measures and Definitions schedules.
Pro Forma Footnotes:
- Reflects the excess of
our estimated post-separation corporate expenses over the amounts
historically absorbed by our segments, including the re-allocation
of costs historically attributed to Steel Processing that will
continue post-separation as well as incremental corporate expenses
resulting from lost economies of scale. Pro forma amounts within
Corporate & Other reflect certain general overhead expenses
that will not be allocated to our segments post-separation but are
included in our historical segment reporting.
- Includes the estimated incremental
material cost associated with intercompany purchases from Steel
Processing post-separation that will be subject to arms-length
commercial pricing arrangements specified in the Steel Supply
Agreement between us and Worthington Steel entered into in
connection with the separation, net of anticipated costs to be
recovered by us post-separation under the Transition Services
Agreement between us and Worthington Steel entered into in
connection with the Separation.
- For purposes of this pro forma
presentation, adjusted EBITDA excludes stock-based compensation.
Post-separation, management intends to change the profitability
measure it uses to assess segment performance from adjusted EBIT to
adjusted EBITDA. In connection with the change, management revised
its definition of adjusted EBITDA to exclude non-cash stock-based
compensation, in addition to the other excluded items as
historically defined and measured by management. Refer to Use of
Non-GAAP Measures and Definition for further information regarding
this planned change in our segment profitability measure.
The following table outlines our equity income
(loss) by unconsolidated affiliate for the periods presented:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
November 30, |
|
|
November 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
WAVE |
|
$ |
21,428 |
|
|
$ |
18,982 |
|
|
$ |
49,743 |
|
|
$ |
42,775 |
|
ClarkDietrich |
|
|
13,748 |
|
|
|
16,125 |
|
|
|
30,476 |
|
|
|
36,198 |
|
Serviacero Worthington |
|
|
3,778 |
|
|
|
1,906 |
|
|
|
12,735 |
|
|
|
3,676 |
|
ArtiFlex |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,400 |
) |
Workhorse |
|
|
3,492 |
|
|
|
(156 |
) |
|
|
3,873 |
|
|
|
(680 |
) |
Total equity income |
|
$ |
42,446 |
|
|
$ |
36,857 |
|
|
$ |
96,827 |
|
|
$ |
68,569 |
|
WORTHINGTON ENTERPRISES,
INC.NON-GAAP MEASURES AND DEFINITIONS
NON-GAAP MEASURES. These
materials include certain financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles, or GAAP. Management believes these non-GAAP
measures provide useful supplemental information on the performance
of the Company’s ongoing operations and should not be considered as
an alternative to the comparable GAAP measure. Additionally,
management believes these non-GAAP measures 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 an explanation of each
non-GAAP measure presented in these materials:
Adjusted operating income is defined as
operating income (loss) excluding the items listed below, to the
extent naturally included in operating income (loss).
Adjusted net earnings attributable to
controlling interest is defined as net earnings attributable to
controlling interest excluding the after-tax effect of the excluded
items outlined below.
Adjusted earnings per diluted share attributable
to controlling interest is defined as adjusted net earnings
attributable to controlling interest divided by diluted
weighted-average shares outstanding.
Adjusted EBIT and adjusted EBITDA – Adjusted
EBIT is defined as Adjusted Earnings Before Interest and Taxes.
EBIT is calculated by adding or subtracting, as appropriate,
interest expense, net and income tax expense to/from net earnings
attributable to controlling interest, which is further adjusted to
exclude impairment and restructuring charges (gains) as well as
other items that management believes are not reflective of, and
thus should not be included when evaluating the performance of its
ongoing operations, as outlined below. Adjusted EBITDA is
calculated by further adjusting adjusted EBIT to exclude
depreciation and amortization. On a pro forma basis, adjusted
EBITDA also excludes stock-based compensation due to its non-cash
nature, which is consistent with how management will assess segment
performance post-separation. In prior periods, adjusted EBITDA did
not exclude stock-based compensation. However, management now
believes that further excluding stock-based compensation from
adjusted EBITDA is useful to better understand the financial
performance of our business and to facilitate a better comparison
of our results to those of our peer companies over multiple periods
given that this item may vary between companies for reasons
unrelated to overall operating performance.
Adjusted EBIT margin is calculated by dividing
adjusted EBIT by net sales.
Adjusted EBITDA margin is calculated by dividing
adjusted EBITDA by net sales.
Pro forma adjusted EBITDA margin is calculated
by dividing pro forma adjusted EBITDA by pro forma net sales.
Pro forma net sales is calculated by excluding
the net sales of Steel Processing from consolidated net sales.
Exclusions from Non-GAAP Financial
Measures
Management believes it is useful to exclude the
following items from the non-GAAP measures presented in this report
for its own and investors’ assessment of the business for the
reasons identified below:
- Impairment charges are excluded
because they do not occur in the ordinary course of our ongoing
business operations, are inherently unpredictable in timing and
amount, and are non-cash, which we believe facilitates the
comparison of historical, current and forecasted financial
results.
- Restructuring activities, which can
result in both discrete gains and/or losses, consist of established
programs that are not part of our ongoing operations, such as
divestitures, closing or consolidating facilities, employee
severance (including rationalizing headcount or other significant
changes in personnel), and realignment of existing operations
(including changes to management structure in response to
underlying performance and/or changing market
conditions). These items are excluded because they are not
part of the ongoing operations of our underlying business.
- Separation costs, which consist of
direct and incremental costs incurred in connection with the
completed separation of Worthington Steel, Inc. are excluded as
they are one-time in nature and are not expected to occur in period
following the separation. These costs include fees paid to
third-party advisors, such as investment banking, audit and other
advisory services as well as direct and incremental costs
associated with the separation of shared corporate functions.
Results in the current fiscal year also include incremental
compensation expense associated with the modification of unvested
short and long-term incentive compensation awards, as required
under the employee matters agreement executed in conjunction with
the separation.
- Loss on early extinguishment of
debt is excluded because it does not occur in the normal course of
business and may obscure analysis of trends and financial
performance. Additionally, the amount and frequency of this type of
charge is not consistent and is significantly impacted by the
timing and size of debt extinguishment transactions.
- Pension settlement charges are
excluded because due to their non-cash nature and the fact that
they do not occur in the normal course of business and may obscure
analysis of trends and financial performance. These transactions
typically result from the transfer of a portion of the total
projected benefit obligation to third-party insurance
companies.
PRO FORMA FINANCIAL
INFORMATION. These materials include certain
financial data and operating metrics that are presented on a pro
forma basis to illustrate the estimated effects of the separation
of Worthington Steel from the historical combined company, which
was consummated on December 1, 2023 and is further described in our
Current Report on Form 8-K filed on December 5, 2023, and to give
effect to divested operations historically presented within
Other. Management believes these pro forma measures provide
investors with useful supplemental financial information regarding
the performance of the Company’s continuing operations after
reflecting the separation. This pro forma financial information has
been prepared based upon the best available information and
management estimates and is subject to assumptions and adjustments
described in the accompanying footnotes. They are not intended to
be a complete presentation of the Company’s financial position or
results of operations had the separation occurred as of and for the
periods indicated. In addition, the pro forma financial information
is being provided for informational purposes only, and is not
necessarily indicative of the Company’s future results of
operations or financial condition had the separation and related
transactions been completed on the dates assumed. Management
believes these assumptions and estimates are reasonable, given the
information available on the filing date.
Sonya L. HigginbothamSenior
Vice PresidentChief of Corporate Affairs, Communications and
Sustainability614.438.7391sonya.higginbotham@wthg.com
Marcus A. RogierTreasurer and
Investor Relations Officer614.840.4663marcus.rogier@wthg.com
200 Old Wilson Bridge Rd.Columbus, Ohio 43085WorthingtonEnterprises.com
Worthington Enterprises (NYSE:WOR)
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