Worthington Enterprises Reports Fourth Quarter Fiscal 2024 Results
Worthington Enterprises (NYSE: WOR) reported its fiscal 2024 fourth quarter results, showing net sales of $318.8 million, down from $368.8 million in the prior year. The company posted a net loss from continuing operations of $31.5 million, or $(0.64) per diluted share, compared to net earnings of $50.1 million, or $1.01 per diluted share, in the same quarter last year. Adjusted net earnings were $37.5 million, or $0.74 per share, down from $59.0 million, or $1.19 per share, in the prior year.
Key figures include operating loss of $56.1 million versus an operating income of $15.3 million last year. Net sales and adjusted EBITDA for Consumer Products and Building Products segments declined, while equity income from ClarkDietrich decreased by $13.8 million. Worthington formed a joint venture with Hexagon for Sustainable Energy Solutions and acquired Hexagon Ragasco. Total debt reduced to $298.1 million, with cash reserves of $244.2 million.
- Adjusted net earnings of $37.5 million or $0.74 per diluted share.
- Debt reduced to $298.1 million.
- Acquisition of Hexagon Ragasco, a leading manufacturer of composite propane cylinders.
- Net sales declined to $318.8 million, down from $368.8 million.
- Net loss from continuing operations of $31.5 million, or $(0.64) per share.
- Operating loss of $56.1 million, down from $15.3 million income.
- Decreased adjusted EBITDA in Consumer and Building Products segments.
- Equity income from ClarkDietrich down by $13.8 million.
Insights
Worthington Enterprises reported significant financial changes for the fourth quarter of fiscal 2024, which directly impact investors' outlook. The company faced a net loss of
Despite these losses, the company's balance sheet shows resilience with a significant reduction in total debt by
Operating income metrics show a decline, with an adjusted operating income of
In summary, while Worthington Enterprises faces short-term setbacks, its strategic adjustments and robust balance sheet suggest long-term potential if executed correctly. Retail investors should closely monitor execution of their strategic plans and subsequent quarterly performance to gauge recovery.
The segmented performance of Worthington Enterprises reveals some insightful trends. Consumer Products and Building Products both faced declines in net sales and adjusted EBITDA. Consumer Products sales dropped by
Building Products experienced a
Sustainable Energy Solutions also saw a decline in sales by
Analyzing these trends, it is clear that Worthington is facing industry-wide pressures such as margin compression and lower consumer spending. Investors should be aware that while strategic moves like joint ventures and acquisitions might present opportunities, they also come with integration risks and potential for short-term disruptions. Monitoring the impact of these strategic changes on segment performance in upcoming quarters will be crucial.
COLUMBUS, Ohio, June 25, 2024 (GLOBE NEWSWIRE) -- Worthington Enterprises, Inc. (NYSE: WOR) reported net sales of
| (U.S. dollars in millions, except per share amounts) | 4Q 2024 | 4Q 2023 | |||||||||||||
| After-Tax | Per Share | After-Tax | Per Share | ||||||||||||
| Net earnings (loss) from continuing operations | $ | (31.5 | ) | $ | (0.64 | ) | $ | 50.1 | $ | 1.01 | |||||
| Corporate costs eliminated at Separation(1) | - | - | 8.0 | 0.16 | |||||||||||
| Impairment and restructuring charges | 57.0 | 1.14 | - | - | |||||||||||
| Separation costs | 0.1 | - | 2.5 | 0.05 | |||||||||||
| Impairment of investment in notes receivable | 11.1 | 0.22 | - | - | |||||||||||
| Pension settlement charge in equity income | 0.8 | 0.02 | - | - | |||||||||||
| Sale-leaseback gain in equity income | - | - | (1.6 | ) | (0.03 | ) | |||||||||
| Adjusted net earnings from continuing operations | $ | 37.5 | $ | 0.74 | $ | 59.0 | $ | 1.19 | |||||||
(1) References in this release to the “Separation” are to the Company’s separation of its former steel processing business into Worthington Steel, Inc. on December 1, 2023.
Financial highlights, on a continuing operations basis, for the fiscal 2024 periods and prior year comparative periods are as follows:
(U.S. dollars in millions, except per share amounts)
| 4Q 2024 | 4Q 2023 | 12M 2024 | 12M 2023 | ||||||||||||
| Net sales | $ | 318.8 | $ | 368.8 | $ | 1,245.7 | $ | 1,418.5 | |||||||
| Operating income (loss) | (56.1 | ) | 15.3 | (73.5 | ) | 29.8 | |||||||||
| Adjusted operating income | 5.8 | 28.6 | 20.9 | 77.9 | |||||||||||
| Net earnings (loss) from continuing operations | (31.5 | ) | 50.1 | 35.2 | 125.8 | ||||||||||
| Adjusted EBITDA from continuing operations | 63.2 | 93.7 | 251.0 | 306.0 | |||||||||||
| EPS from continuing operations - diluted | (0.64 | ) | 1.01 | 0.70 | 2.55 | ||||||||||
| Adjusted EPS from continuing operations - diluted | $ | 0.74 | $ | 1.19 | $ | 2.84 | $ | 3.60 | |||||||
“We finished our fiscal year with a respectable fourth quarter delivering adjusted earnings per share of
Consolidated Quarterly Results
Net sales for the fourth quarter of fiscal 2024 were
The operating loss of
Equity income decreased
Miscellaneous expense was unfavorable by
Income tax expense was
Balance Sheet
Total debt was
Quarterly Segment Results
Consumer Products generated net sales of
Building Products generated net sales of
Sustainable Energy Solutions’ net sales totaled
Recent Developments
- On May 29, 2024, the Company formed a new unconsolidated joint venture with Hexagon, comprised of the former Sustainable Energy Solutions segment. Pursuant to the transaction, Hexagon acquired a
49% stake in the joint venture for approximately$10 million plus closing cash. The Company retained a49% noncontrolling interest in the joint venture, with the remaining2% held by the executive management team of Sustainable Energy Solutions. - On June 3, 2024, the Company acquired Hexagon Ragasco, a leading manufacturer of composite propane cylinders. The total purchase price was approximately
$98 million , subject to closing adjustments,$11.4 million of which was deposited into escrow at fiscal year end. - On June 25, 2024, the Company’s Board of Directors declared a quarterly dividend of
$0.17 per common share payable on September 27, 2024, to shareholders of record at the close of business on September 13, 2024, a6.25% increase or$0.01 per share, compared to the prior quarter.
Outlook
“We are optimistic heading into our new fiscal year having recently completed the acquisition of Hexagon Ragasco along with the formation of our Sustainable Energy Solutions joint venture,” Rose said. “We have market leading brands, a rock-solid balance sheet that will enable us to take advantage of growth opportunities as they arise, and a team focused on driving long-term profitable growth for Worthington Enterprises.”
Upcoming Investor Events
- Raymond James Industrial and Energy Showcase, August 8, 2024
- CG 44th Annual Growth Conference, August 14, 2024
- 2024 Seaport Research Partners Annual Summer Investor Conference, August 21, 2024
- Jefferies Industrials Conference, September 5, 2024
Conference Call
The Company will review fiscal 2024 fourth quarter results during its quarterly conference call on June 26, 2024, at 8:30 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 two segments: Building Products and Consumer Products. Worthington’s emphasis on innovation and transformation extends to building products including heating and cooling solutions, water systems, 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®, HALO™ 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 4,000 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, 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 (LOSS) (In thousands, except per share amounts) | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| May 31, | May 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net sales | $ | 318,801 | $ | 368,802 | $ | 1,245,703 | $ | 1,418,496 | |||||||
| Cost of goods sold | 239,802 | 274,642 | 960,684 | 1,094,908 | |||||||||||
| Gross profit | 78,999 | 94,160 | 285,019 | 323,588 | |||||||||||
| Selling, general and administrative expense | 73,210 | 75,910 | 283,471 | 287,118 | |||||||||||
| Impairment of goodwill and long-lived assets | 32,975 | - | 32,975 | 484 | |||||||||||
| Restructuring and other expense (income), net | 28,624 | (13 | ) | 29,327 | (367 | ) | |||||||||
| Separation costs | 240 | 2,961 | 12,705 | 6,534 | |||||||||||
| Operating income (loss) | (56,050 | ) | 15,302 | (73,459 | ) | 29,819 | |||||||||
| Other income (expense): | |||||||||||||||
| Miscellaneous expense, net | (11,145 | ) | - | (17,129 | ) | (4,497 | ) | ||||||||
| Loss on extinguishment of debt | - | - | (1,534 | ) | - | ||||||||||
| Interest income (expense), net | 9 | (2,609 | ) | (1,587 | ) | (18,298 | ) | ||||||||
| Equity in net income of unconsolidated affiliates | 40,388 | 51,257 | 167,716 | 153,262 | |||||||||||
| Earnings (loss) before income taxes | (26,798 | ) | 63,950 | 74,007 | 160,286 | ||||||||||
| Income tax expense | 4,986 | 13,825 | 39,027 | 34,535 | |||||||||||
| Net earnings (loss) from continuing operations | (31,784 | ) | 50,125 | 34,980 | 125,751 | ||||||||||
| Net earnings (loss) from discontinued operations | (265 | ) | 84,038 | 82,841 | 143,419 | ||||||||||
| Net earnings (loss) | (32,049 | ) | 134,163 | 117,821 | 269,170 | ||||||||||
| Net earnings (loss) attributable to noncontrolling interests | (263 | ) | 4,260 | 7,197 | 12,642 | ||||||||||
| Net earnings (loss) attributable to controlling interest | $ | (31,786 | ) | $ | 129,903 | $ | 110,624 | $ | 256,528 | ||||||
| Amounts attributable to controlling interest: | |||||||||||||||
| Net earnings (loss) from continuing operations | $ | (31,521 | ) | $ | 50,125 | $ | 35,243 | $ | 125,751 | ||||||
| Net earnings (loss) from discontinued operations | (265 | ) | 79,778 | 75,381 | 130,777 | ||||||||||
| Net earnings (loss) attributable to controlling interest | $ | (31,786 | ) | $ | 129,903 | $ | 110,624 | $ | 256,528 | ||||||
| Earnings (loss) per share from continuing operations - basic | $ | (0.64 | ) | $ | 1.03 | $ | 0.72 | $ | 2.59 | ||||||
| Earnings (loss) per share from discontinued operations - basic | (0.01 | ) | 1.64 | 1.53 | 2.69 | ||||||||||
| Net earnings (loss) per share attributable to controlling interest - basic | $ | (0.65 | ) | $ | 2.67 | $ | 2.25 | $ | 5.28 | ||||||
| Earnings (loss) per share from continuing operations - diluted | $ | (0.64 | ) | $ | 1.01 | $ | 0.70 | $ | 2.55 | ||||||
| Earnings (loss) per share from discontinued operations - diluted | (0.01 | ) | 1.60 | 1.50 | 2.64 | ||||||||||
| Net earnings (loss) per share attributable to controlling interest - diluted | $ | (0.65 | ) | $ | 2.61 | $ | 2.20 | $ | 5.19 | ||||||
| Weighted average common shares outstanding - basic | 49,437 | 48,643 | 49,195 | 48,566 | |||||||||||
| Weighted average common shares outstanding - diluted | 49,437 | 49,779 | 50,348 | 49,386 | |||||||||||
| Cash dividends declared per share | $ | 0.16 | $ | 0.31 | $ | 0.96 | $ | 1.24 | |||||||
| CONSOLIDATED BALANCE SHEETS WORTHINGTON ENTERPRISES, INC. (In thousands) | |||||||
| May 31, | |||||||
| 2024 | 2023 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 244,225 | $ | 422,268 | |||
| Receivables, less allowances of | |||||||
| and May 31, 2023, respectively | 199,798 | 224,863 | |||||
| Inventories | |||||||
| Raw materials | 66,040 | 91,988 | |||||
| Work in process | 11,668 | 19,189 | |||||
| Finished products | 86,907 | 83,322 | |||||
| Total inventories | 164,615 | 194,499 | |||||
| Income taxes receivable | 17,319 | 1,681 | |||||
| Prepaid expenses and other current assets | 47,936 | 46,301 | |||||
| Current assets of discontinued operations | - | 978,725 | |||||
| Total current assets | 673,893 | 1,868,337 | |||||
| Investment in unconsolidated affiliates | 144,863 | 138,041 | |||||
| Operating lease assets | 18,667 | 24,686 | |||||
| Goodwill | 331,595 | 336,178 | |||||
| Other intangibles, net of accumulated amortization of | |||||||
| 221,071 | 230,851 | ||||||
| Other assets | 21,342 | 14,339 | |||||
| Property, plant and equipment: | |||||||
| Land | 8,657 | 12,120 | |||||
| Buildings and improvements | 123,478 | 139,514 | |||||
| Machinery and equipment | 321,836 | 403,885 | |||||
| Construction in progress | 24,504 | 24,779 | |||||
| Total property, plant and equipment | 478,475 | 580,298 | |||||
| Less: accumulated depreciation | 251,269 | 323,883 | |||||
| Total property, plant and equipment, net | 227,206 | 256,415 | |||||
| Non-current assets of discontinued operations | - | 782,071 | |||||
| Total assets | $ | 1,638,637 | $ | 3,650,918 | |||
| Liabilities and equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 91,605 | $ | 126,743 | |||
| Accrued compensation, contributions to employee benefit plans and related taxes | 41,974 | 46,782 | |||||
| Dividends payable | 9,038 | 18,330 | |||||
| Other accrued items | 29,061 | 37,801 | |||||
| Current operating lease liabilities | 6,228 | 6,682 | |||||
| Income taxes payable | 470 | 8,918 | |||||
| Current maturities of long-term debt | - | 264 | |||||
| Current liabilities associated of discontinued operations | - | 472,038 | |||||
| Total current liabilities | 178,376 | 717,558 | |||||
| Other liabilities | 62,243 | 71,766 | |||||
| Distributions in excess of investment in unconsolidated affiliate | 111,905 | 117,297 | |||||
| Long-term debt | 298,133 | 689,718 | |||||
| Noncurrent operating lease liabilities | 12,818 | 18,326 | |||||
| Deferred income taxes | 84,150 | 82,346 | |||||
| Non-current liabilities of discontinued operations | - | 132,279 | |||||
| Total liabilities | 747,625 | 1,829,290 | |||||
| Shareholders' equity - controlling interest | 888,879 | 1,696,011 | |||||
| Noncontrolling interests | 2,133 | 125,617 | |||||
| Total equity | 891,012 | 1,821,628 | |||||
| Total liabilities and equity | $ | 1,638,637 | $ | 3,650,918 | |||
| WORTHINGTON ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| May 31, | May 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Operating activities: | |||||||||||||||
| Net earnings (loss) | $ | (32,049 | ) | $ | 134,163 | $ | 117,821 | $ | 269,170 | ||||||
| Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | |||||||||||||||
| Depreciation and amortization | 12,423 | 28,292 | 80,704 | 112,800 | |||||||||||
| Impairment of goodwill and long-lived assets | 32,975 | 1,800 | 34,377 | 2,596 | |||||||||||
| Provision for (benefit from) deferred income taxes | 1,919 | 4,670 | 2,762 | (15,528 | ) | ||||||||||
| Impairment of investment in note receivable | 11,170 | - | 11,170 | - | |||||||||||
| Loss on extinguishment of debt | - | - | 1,534 | - | |||||||||||
| Bad debt expense (income) | (21 | ) | (1,678 | ) | (450 | ) | 2,108 | ||||||||
| Equity in net income of unconsolidated affiliates, net of distributions | 2,552 | (4,545 | ) | 5,722 | 79,870 | ||||||||||
| Net loss (gain) on sale of assets | 29,329 | 530 | 28,980 | (4,458 | ) | ||||||||||
| Stock-based compensation | 3,394 | 5,420 | 16,688 | 19,178 | |||||||||||
| Changes in assets and liabilities, net of impact of acquisitions: | |||||||||||||||
| Receivables | 342 | (17,386 | ) | 50,078 | 143,089 | ||||||||||
| Inventories | 8,597 | (6,843 | ) | 63,596 | 160,116 | ||||||||||
| Accounts payable | (5,866 | ) | 45,089 | (65,401 | ) | (150,400 | ) | ||||||||
| Accrued compensation and employee benefits | 2,498 | 10,206 | 468 | (23,226 | ) | ||||||||||
| Other operating items, net | (22,094 | ) | 29,516 | (58,073 | ) | 30,049 | |||||||||
| Net cash provided by operating activities | 45,169 | 229,234 | 289,976 | 625,364 | |||||||||||
| Investing activities: | |||||||||||||||
| Investment in property, plant and equipment | (11,336 | ) | (17,651 | ) | (83,527 | ) | (86,366 | ) | |||||||
| Acquisitions, net of cash acquired | (12,315 | ) | - | (42,035 | ) | (56,088 | ) | ||||||||
| Proceeds from sale of assets, net of selling costs | 28 | 108 | 865 | 35,653 | |||||||||||
| Investment in note receivable | - | - | (14,900 | ) | - | ||||||||||
| Investment in non-marketable equity securities | (681 | ) | (500 | ) | (2,296 | ) | (770 | ) | |||||||
| Net proceeds from sale of investment in ArtiFlex | - | - | - | 35,795 | |||||||||||
| Excess distributions from unconsolidated affiliate | - | - | 1,085 | - | |||||||||||
| Net cash used by investing activities | (24,304 | ) | (18,043 | ) | (140,808 | ) | (71,776 | ) | |||||||
| Financing activities: | |||||||||||||||
| Dividend from Worthington Steel at Separation | - | - | 150,000 | - | |||||||||||
| Distribution to Worthington Steel at Separation | - | - | (218,048 | ) | - | ||||||||||
| Net proceeds (repayments) from short-term borrowings(1) | - | (791 | ) | 172,187 | (45,183 | ) | |||||||||
| Principal payments on long-term obligations | - | (776 | ) | (393,890 | ) | (6,685 | ) | ||||||||
| Proceeds from issuance of common shares, net of tax withholdings | 3,961 | 1,631 | (11,399 | ) | (1,780 | ) | |||||||||
| Payments to noncontrolling interests | - | (8,475 | ) | (1,920 | ) | (20,235 | ) | ||||||||
| Dividends paid | (7,911 | ) | (15,078 | ) | (56,819 | ) | (59,244 | ) | |||||||
| Net cash used by financing activities | (3,950 | ) | (23,489 | ) | (359,889 | ) | (133,127 | ) | |||||||
| Increase (decrease) in cash and cash equivalents | 16,915 | 187,702 | (210,721 | ) | 420,461 | ||||||||||
| Cash and cash equivalents at beginning of period | 227,310 | 267,244 | 454,946 | 34,485 | |||||||||||
| Cash and cash equivalents at end of period(2) | $ | 244,225 | $ | 454,946 | $ | 244,225 | $ | 454,946 | |||||||
(1) Net proceeds in fiscal 2024 consisted of borrowings under Worthington Steel’s short-term credit facilities assumed by Worthington Steel in conjunction with the Separation.
(2) The cash flows related to discontinued operations have not been segregated in the periods presented herein. Accordingly, the consolidated statements of cash flows include the results from continuing and discontinued operations.
WORTHINGTON ENTERPRISES, INC.
NON-GAAP FINANCIAL MEASURES / PRO FORMA FINANCIAL DATA
(In thousands, except units and per share amounts)
The following provides a reconciliation of non-GAAP financial measures, including adjusted operating income (loss), adjusted earnings before income taxes, adjusted income tax expense (benefit), adjusted net earnings (loss) from continuing operations attributable to controlling interest, adjusted earnings per diluted share from continuing operations attributable to controlling interest and adjusted effective tax rate, from their most comparable GAAP measure for the three and 12 months ended May 31, 2024, and May 31, 2023. Refer to the Use of Non-GAAP Measures and Definitions section herein and non-GAAP footnotes below for further information on these measures .
| Three Months Ended May 31, 2024 | |||||||||||||||||||||||
| Operating Income | Earnings Before Income Taxes | Income Tax Expense (Benefit) | Net loss from Continuing Operations(1) | Diluted EPS - Continuing Operations | Effective Tax Rate | ||||||||||||||||||
| GAAP | $ | (56,050 | ) | $ | (26,798 | ) | $ | 4,986 | $ | (31,521 | ) | (0.64 | ) | (18.8 | %) | ||||||||
| Impairment of goodwill and long-lived assets | 32,975 | 32,975 | - | 32,975 | 0.66 | ||||||||||||||||||
| Restructuring and other expense, net | 28,624 | 28,624 | (4,609 | ) | 24,015 | 0.48 | |||||||||||||||||
| Separation costs | 240 | 240 | (81 | ) | 159 | - | |||||||||||||||||
| Non-cash charges in miscellaneous expense | 11,077 | 7 | 11,084 | 0.22 | |||||||||||||||||||
| Pension settlement charge in equity income | - | 1,040 | (244 | ) | 796 | 0.02 | |||||||||||||||||
| Non-GAAP | $ | 5,789 | $ | 47,158 | $ | 9,913 | $ | 37,508 | $ | 0.74 | 20.9 | % | |||||||||||
| Three Months Ended May 31, 2023 | |||||||||||||||||||||||
| Operating Income | Earnings Before Income Taxes | Income Tax Expense (Benefit) | Net Earnings from Continuing Operations(1) | Diluted EPS - Continuing Operations | Effective Tax Rate | ||||||||||||||||||
| GAAP | $ | 15,302 | $ | 63,950 | $ | 13,825 | $ | 50,125 | $ | 1.01 | 21.6 | % | |||||||||||
| Corporate costs eliminated at Separation | 10,370 | 10,370 | (2,375 | ) | 7,995 | 0.16 | |||||||||||||||||
| Restructuring and other income, net | (13 | ) | (13 | ) | (1 | ) | (14 | ) | - | ||||||||||||||
| Separation costs | 2,961 | 2,961 | (424 | ) | 2,537 | 0.05 | |||||||||||||||||
| Sale-leaseback gain in equity income | - | (2,063 | ) | 472 | (1,591 | ) | (0.03 | ) | |||||||||||||||
| Non-GAAP | $ | 28,620 | $ | 75,205 | $ | 16,153 | $ | 59,052 | $ | 1.19 | 21.5 | % | |||||||||||
| Twelve Months Ended May 31, 2024 | |||||||||||||||||||||||
| Operating Income (Loss) | Earnings Before Income Taxes | Income Tax Expense (Benefit) | Net Earnings from Continuing Operations(1) | Diluted EPS - Continuing Operations | Effective Tax Rate | ||||||||||||||||||
| GAAP | $ | (73,459 | ) | $ | 74,007 | $ | 39,027 | $ | 35,243 | $ | 0.70 | 52.6 | % | ||||||||||
| Corporate costs eliminated at Separation | 19,343 | 19,343 | (4,643 | ) | 14,700 | 0.29 | |||||||||||||||||
| Impairment of goodwill and long-lived assets | 32,975 | 32,975 | - | 32,975 | 0.65 | ||||||||||||||||||
| Restructuring and other expense, net | 29,327 | 29,327 | (4,737 | ) | 24,590 | 0.49 | |||||||||||||||||
| Separation costs | 12,705 | 12,705 | (3,049 | ) | 9,656 | 0.19 | |||||||||||||||||
| Non-cash charges in miscellaneous expense | - | 19,180 | (1,922 | ) | 17,258 | 0.34 | |||||||||||||||||
| Loss on extinguishment of debt | - | 1,534 | (368 | ) | 1,166 | 0.02 | |||||||||||||||||
| Gain on sale of assets in equity income | - | (2,780 | ) | 662 | (2,118 | ) | (0.04 | ) | |||||||||||||||
| Pension settlement charge in equity income | - | 1,040 | (244 | ) | 796 | 0.02 | |||||||||||||||||
| One-time tax effects of Separation | - | - | 9,197 | 9,197 | 0.18 | ||||||||||||||||||
| Non-GAAP | $ | 20,891 | $ | 187,331 | $ | 44,131 | $ | 143,463 | $ | 2.84 | 23.5 | % | |||||||||||
| Twelve Months Ended May 31, 2023 | |||||||||||||||||||||||
| Operating Income | Earnings Before Income Taxes | Income Tax Expense (Benefit) | Net Earnings from Continuing Operations(1) | Diluted EPS - Continuing Operations | Effective Tax Rate | ||||||||||||||||||
| GAAP | $ | 29,819 | $ | 160,286 | $ | 34,535 | $ | 125,751 | $ | 2.55 | 21.5 | % | |||||||||||
| Corporate costs eliminated at Separation | 41,479 | 41,479 | (9,499 | ) | 31,980 | 0.65 | |||||||||||||||||
| Impairment of long-lived assets | 484 | 484 | (111 | ) | 373 | 0.01 | |||||||||||||||||
| Restructuring and other income, net | (367 | ) | (367 | ) | 84 | (283 | ) | (0.01 | ) | ||||||||||||||
| Separation costs | 6,534 | 6,534 | (1,496 | ) | 5,038 | 0.11 | |||||||||||||||||
| Pension settlement charge | - | 4,774 | (1,093 | ) | 3,681 | 0.07 | |||||||||||||||||
| Loss on sale of investment in Artiflex | - | 16,059 | (3,678 | ) | 12,381 | 0.25 | |||||||||||||||||
| Sale lease-back gain in equity income | - | (2,063 | ) | 472 | (1,591 | ) | (0.03 | ) | |||||||||||||||
| Non-GAAP | $ | 77,949 | $ | 227,186 | $ | 49,856 | $ | 177,330 | $ | 3.60 | 21.9 | % | |||||||||||
(1) Excludes the impact of noncontrolling interest
To further assist in the analysis of segment results for the three and twelve months ended May 31, 2024, and May 31, 2023, the following supplemental information has been provided. Reconciliations of adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations to the most comparable GAAP measures, earnings (loss) before income taxes and earnings (loss) before income taxes margin.
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| May 31, | May 31, | ||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Volume | |||||||||||||||
| Consumer Products | 15,660 | 19,070 | 66,632 | 74,137 | |||||||||||
| Building Products | 3,579 | 3,787 | 14,157 | 14,630 | |||||||||||
| Total reportable segments | 19,239 | 22,857 | 80,789 | 88,767 | |||||||||||
| Other | 160 | 163 | 523 | 574 | |||||||||||
| Consolidated | 19,399 | 23,020 | 81,312 | 89,341 | |||||||||||
| Net sales | |||||||||||||||
| Consumer Products | $ | 125,336 | $ | 148,831 | $ | 495,259 | $ | 555,309 | |||||||
| Building Products | 153,551 | 174,533 | 618,973 | 717,069 | |||||||||||
| Total reportable segments | 278,887 | 323,364 | 1,114,232 | 1,272,378 | |||||||||||
| Other | 39,914 | 45,438 | 131,471 | 146,118 | |||||||||||
| Consolidated | $ | 318,801 | $ | 368,802 | $ | 1,245,703 | $ | 1,418,496 | |||||||
| Adjusted EBITDA from continuing operations | |||||||||||||||
| Consumer Products | $ | 17,061 | $ | 29,523 | $ | 69,598 | $ | 97,370 | |||||||
| Building Products | 51,628 | 64,737 | 210,128 | 222,197 | |||||||||||
| Total reportable segments | 68,689 | 94,260 | 279,726 | 319,567 | |||||||||||
| Other | (5,521 | ) | (525 | ) | (28,727 | ) | (13,542 | ) | |||||||
| Consolidated | $ | 63,168 | $ | 93,735 | $ | 250,999 | $ | 306,025 | |||||||
| Adjusted EBITDA margin from continuing operations | |||||||||||||||
| Consumer Products | 13.6 | % | 19.8 | % | 14.1 | % | 17.5 | % | |||||||
| Building Products | 33.6 | % | 37.1 | % | 33.9 | % | 31.0 | % | |||||||
| Consolidated | 19.8 | % | 25.4 | % | 20.1 | % | 21.6 | % | |||||||
| Equity income by unconsolidated affiliate | |||||||||||||||
| WAVE(1) | $ | 27,534 | $ | 24,252 | $ | 103,298 | $ | 85,933 | |||||||
| ClarkDietrich(1) | 11,560 | 25,365 | 59,827 | 80,494 | |||||||||||
| Other(2) | 1,294 | 1,640 | 4,591 | (13,165 | ) | ||||||||||
| Consolidated | $ | 40,388 | $ | 51,257 | $ | 167,716 | $ | 153,262 | |||||||
(1) Equity income contributed by Worthington Armstrong Venture (“WAVE”) and ClarkDietrich is associated with our Building Products segment
(2) Other includes the Company’s share of the equity earnings of Taxi Workhorse, LLC and ArtiFlex Manufacturing, LLC, on a historical basis through August 2, 2022.
A reconciliation from net earnings (loss) before income taxes from continuing operations to the non-GAAP financial measure of adjusted EBITDA from continuing operations for the each of the periods presented is provided below.
For periods prior to the Separation, the Company has also included adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations, on a pro forma basis, to illustrate estimated effects of the post-Separation relationship between the Company and Worthington Steel under the parties’ transition services agreement and long-term steel supply agreement. This pro forma financial information assumes the Separation occurred on June 1, 2022, the first day of our fiscal 2023. For further information on this pro forma presentation, refer to the Use of Non-GAAP Measures and Definitions section included herein.
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| May 31, | May 31, | May 31, | May 31, | ||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Earnings (loss) before income taxes (GAAP) | $ | (26,798 | ) | $ | 63,950 | $ | 74,007 | $ | 160,286 | ||||||
| Less: net loss attributable to noncontrolling interest | (263 | ) | - | (263 | ) | - | |||||||||
| Net earnings (loss) before income taxes attributable to controlling interest | (26,535 | ) | 63,950 | 74,270 | 160,286 | ||||||||||
| Interest expense (income), net | (9 | ) | 2,609 | 1,587 | 18,298 | ||||||||||
| EBIT (subtotal) | (26,544 | ) | 66,559 | 75,857 | 178,584 | ||||||||||
| Corporate costs eliminated at Separation(1) | - | 10,370 | 19,343 | 41,479 | |||||||||||
| Impairment of goodwill and long-lived assets | 32,975 | - | 32,975 | 484 | |||||||||||
| Restructuring and other expense (income), net | 28,624 | (13 | ) | 29,327 | (367 | ) | |||||||||
| Separation costs | 240 | 2,961 | 12,705 | 6,534 | |||||||||||
| Non-cash charges in miscellaneous expense(2) | 11,077 | - | 19,180 | 4,774 | |||||||||||
| Loss on investment in ArtiFlex(3) | - | - | - | 16,059 | |||||||||||
| Loss on extinguishment of debt(4) | - | - | 1,534 | - | |||||||||||
| Gain on sale of assets in equity income(5) | - | (2,063 | ) | (2,780 | ) | (2,063 | ) | ||||||||
| Pension settlement charge in equity income(6) | 1,040 | - | 1,040 | - | |||||||||||
| Adjusted EBIT (subtotal) | 47,412 | 77,814 | 189,181 | 245,484 | |||||||||||
| Depreciation and amortization | 12,424 | 11,773 | 48,663 | 45,975 | |||||||||||
| Stock-based compensation | 3,332 | 4,148 | 13,155 | 14,566 | |||||||||||
| Adjusted EBITDA from continuing operations (non-GAAP) | $ | 63,168 | $ | 93,735 | $ | 250,999 | $ | 306,025 | |||||||
| Earnings (loss) before income taxes margin | (8.4 | %) | 17.3 | % | 5.9 | % | 11.3 | % | |||||||
| Non-GAAP adjusted EBITDA margin from continuing operations | 19.8 | % | 25.4 | % | 20.1 | % | 21.6 | % | |||||||
| Pro forma adjusted EBITDA from continuing operations | n/a | $ | 92,868 | $ | 249,399 | $ | 302,357 | ||||||||
| Pro forma adjusted EBITDA margin from continuing operations | n/a | 25.2 | % | 20.0 | % | 21.3 | % | ||||||||
Non-GAAP Footnotes:
(1) Reflects reductions in certain corporate overhead costs that no longer exist post-Separation. These costs were included in continuing operations as they represent general corporate overhead that was historically allocated to the Company’s former steel processing business but did not meet the requirements to be presented as discontinued operations.
(2) Reflects the following non-cash charges in miscellaneous expense:
- Pre-tax charges of
$8,010 and$4,774 from separate pension lift-out transaction completed in February 2024 and August 2022, respectively, to transfer the pension benefit obligation under The Gerstenslager Company Bargaining Unit Employees’ Pension Plan to third-party insurance companies. - A pre-tax charge of
$11,170 during the current year quarter due to the write-down of an investment in notes receivable that was determined to be other than temporarily impaired.
(3) On August 3, 2022, the Company sold its
(4) Reflects a pre-tax loss of
(5) Reflects the following activity within equity income associated with the sale or divestiture of assets at Taxi Workhorse Holdings, LLC:
- A net gain of
$2,780 associated with the divestiture of the Brazilian operations. - A net gain of
$2,063 related to a sale-leaseback transaction during the three months ended May 31, 2023.
(6) Reflects the settlement of certain participant balances within the pension plan maintained by WAVE.
WORTHINGTON ENTERPRISES, INC.
USE OF NON-GAAP MEASURES AND DEFINITIONS
NON-GAAP MEASURES. These materials include certain financial measures that are not calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). The non-GAAP financial measures typically exclude 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 the non-GAAP financial measures to evaluate the Company’s performance, engage in financial and operational planning, and determine incentive compensation. Management believes these non-GAAP measures provide useful supplemental information and additional perspective 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 from continuing operations is defined as net earnings from continuing operations attributable to controlling interest (“net earnings from continuing operations”) excluding the after-tax effect of the excluded items outlined below.
Adjusted earnings per diluted share from continuing operations (“Adjusted EPS from continuing operations”) – is defined as adjusted net earnings from continuing operations divided by diluted weighted-average shares outstanding.
Adjusted EBITDA – Adjusted EBITDA is defined as Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA is calculated by adding or subtracting, as appropriate, interest expense, net, income tax expense, depreciation, and amortization to/from net earnings from continuing operations 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 also excludes stock-based compensation due to its non-cash nature, which is consistent with how management assesses operating performance. At the segment level, adjusted EBITDA includes expense allocations for centralized corporate back-office functions that exist to support the day-to-day business operations. Public company and other governance costs are held at the corporate-level.
Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by 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 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 all or 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 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 date of this release.
Sonya L. Higginbotham
Senior Vice President
Chief of Corporate Affairs, Communications and Sustainability
614.438.7391
sonya.higginbotham@wthg.com
Marcus A. Rogier
Treasurer and Investor Relations Officer
614.840.4663
marcus.rogier@wthg.com
200 West Old Wilson Bridge Rd.
Columbus, Ohio 43085
WorthingtonEnterprises.com
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