Net sales in the second quarter of fiscal 2024 were
(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
Consolidated Quarterly Results
Net sales for the second quarter of fiscal 2024 were
Gross margin increased by
The operating loss in the quarter was favorable by
Net interest expense was
Equity income increased
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 generated net sales of
Steel Processing’s net sales for the second quarter of fiscal 2024 totaled
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 theNew 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 fromWorthington Steel to pay off in full the unsecured senior notes that were set to mature inAugust 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 onMarch 29, 2024 , to shareholders of record onMarch 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
About Worthington Enterprises
Headquartered in
Founded in 1955 as
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
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 | |||||||||||||||
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 SHEETS WORTHINGTON ENTERPRISES, INC. (In thousands) | ||||||||
2023 | 2023 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 430,906 | $ | 454,946 | ||||
Receivables, less allowances of | 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 | ||||||
416,857 | 414,820 | |||||||
Other intangible assets, net of accumulated amortization of | 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 | |||||||||||||||
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 | - | - | - | 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
Three Months Ended | ||||||||||||||||||||
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 | ||||||||||||||||||||
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 | ||||||||||||||||||||
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 | ||||||||||||||||||||
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 | - | 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 inBrazil , which totaled$2,780 on a pre-tax basis. - For the six months ended
November 30, 2022 , the loss realized in connection with theAugust 3, 2022 sale of our then 50% noncontrolling equity investment inArtiFlex Manufacturing, LLC , or$15,759 on a pre-tax basis.
- For the three and six months ended
To further assist in the analysis of segment results for the three and six months ended
Additionally, adjusted EBITDA for the three and six months ended
Three Months Ended | |||||||||||||||||||||||
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 | (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 | |||||||||||||||||||||||
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 | |||||||||||||||||
$ | 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 | 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 | |||||||||||||||||||||||
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 | |||||||||||||||||
$ | 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 | (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 | |||||||||||||||||||||||
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 | |||||||||||||||||
$ | 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 | (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 inBrazil , 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 theAugust 3, 2022 sale of our then 50% noncontrolling equity investment inArtiFlex Manufacturing, LLC .
- For the three and six months ended
- 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 endedNovember 30, 2022 , respectively, and$519 related to the impairment charge in the six months endedNovember 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 dueApril 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 andWorthington 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 | |||||||||||||||
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 | ||||||||||||
- | - | - | (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
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
Senior Vice President
Chief of Corporate Affairs, Communications and Sustainability
614.438.7391
sonya.higginbotham@wthg.com
Treasurer and Investor Relations Officer
614.840.4663
marcus.rogier@wthg.com
200 Old Wilson Bridge Rd.
Columbus, Ohio 43085
WorthingtonEnterprises.com
Source:
2023 GlobeNewswire, Inc., source