Worthington Steel, Inc. (NYSE: WS) today reported financial
results for the fiscal 2024 third quarter ended February 29,
2024.
The Company reported net sales of $805.8 million and net
earnings attributable to controlling interest of $49.0 million, or
$0.98 per diluted share, for its fiscal 2024 third quarter. For the
third quarter of fiscal 2023 ended February 28, 2023, the Company
recorded net sales of $780.7 million and net earnings attributable
to controlling interest of $5.4 million, or $0.11 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 and as further discussed in the Non-GAAP Financial Measures /
Supplemental Data section later in this release.
(U.S. dollars in millions, except per
share amounts)
3Q 2024
3Q 2023
After-Tax
Per Share
After-Tax
Per Share
Net earnings attributable to controlling
interest
$
49.0
$
0.98
$
5.4
$
0.11
Separation costs
0.6
0.01
3.2
0.06
Adjusted net earnings attributable to
controlling interest (Non-GAAP)
$
49.6
$
0.99
$
8.6
$
0.17
Financial highlights for the current and comparative periods are
as follows:
(U.S. dollars in millions, except per
share amounts)
3Q 2024
3Q 2023
9M 2024
9M 2023
Net sales
$
805.8
$
780.7
$
2,519.6
$
2,723.7
Operating income
66.3
9.5
127.2
30.5
Equity in net income of unconsolidated
affiliate
2.9
(0.2
)
15.7
3.5
Net earnings attributable to controlling
interest
49.0
5.4
101.5
19.8
Earnings per diluted share attributable to
controlling interest
$
0.98
$
0.11
$
2.05
$
0.40
“The Worthington Steel team delivered a strong third quarter and
I want to thank and congratulate our employees on their great
performance in our first quarter as a standalone company,” said
Geoff Gilmore, president and chief executive officer of Worthington
Steel. “We saw improvements in sales, operating income and net
income over the same quarter in 2023, and our teams are
laser-focused on finishing the fiscal year strong.”
Consolidated Quarterly Results
Net sales for the third quarter of fiscal 2024 were $805.8
million, an increase of $25.1 million, or 3%, compared to the prior
year quarter. The increase was driven primarily by a 1% increase in
direct selling prices and an 11% increase in toll selling prices.
Additionally, there was a 1% increase in direct tons and a 9%
increase in toll tons sold in the current year quarter compared to
the prior year quarter. Correspondingly, the mix of direct tons
versus toll tons processed was 55% to 45% in the current year
quarter, compared to 56% to 44% in the prior year quarter.
Gross margin increased by $56.9 million over the prior year
quarter to $120.1 million. The increase was driven primarily by
improved direct spreads and higher volume. Direct spreads, up $52.9
million, benefited from a $45.9 million favorable change from an
estimated $26.6 million inventory holding loss in the prior year
quarter to an estimated $19.3 million inventory holding gain in the
current year quarter.
Operating income improved by $56.8 million over the prior year
quarter to $66.3 million, primarily due to the improved gross
margin. Operating income incrementally benefited from a $3.0
million decrease in costs associated with the Company's December 1,
2023, separation from Worthington Enterprises, Inc. (“Separation”)
compared to the prior year quarter. These increases were offset by
higher selling, general and administrative (“SG&A”) expense, up
$3.1 million, primarily due to increased wage and benefit costs
resulting from a combination of higher headcount after the
Separation as well as continued inflationary pressures.
Recent Developments
- On December 1, 2023, in connection with the Separation of the
Company from Worthington Enterprises, Inc. (“Former Parent”), a
$150.0 million distribution was paid to the Former Parent.
- On March 13, 2024, Worthington Steel Joint Venture, TWB Company
signed a licensing agreement with AcerlorMittal Tailored Blanks for
a patented ablation technology that will expand the organization’s
capabilities in North America.
- On March 21, 2024, Worthington Steel’s Board of Directors
declared a quarterly dividend of $0.16 per share payable on June
28, 2024 to shareholders of record on June 14, 2024.
Outlook
“Our company is performing well,” Gilmore said. “Our team is
aligned and focused on creating value for our shareholders and
working with our customers to ensure the products the world uses
every day are stronger, better performing and more durable. I’m
optimistic about our future and confident in our team, our growth
plans and our strategy.”
Conference Call
The Company will review fiscal 2024 third quarter results during
its quarterly conference call on March 22, 2024, beginning at 8:30
a.m., Eastern Time. Details regarding the conference call are
located in the investor section of the Company's website at
www.WorthingtonSteel.com.
About Worthington Steel
Worthington Steel (NYSE:WS) is a metals processor that partners
with customers to deliver highly technical and customized
solutions. Worthington Steel’s expertise in carbon flat-roll steel
processing, electrical steel laminations and tailor welded
solutions are driving steel toward a more sustainable future.
As one of the most trusted metals processors in North America,
Worthington Steel and its 4,600 employees harness the power of
steel to advance our customers’ visions through value-added
processing capabilities including galvanizing, pickling, configured
blanking, specialty cold reduction, lightweighting and electrical
lamination. Headquartered in Columbus, Ohio, Worthington Steel
operates 32 facilities in seven states and six countries. Following
a people-first Philosophy, commitment to sustainability and proven
business system, Worthington Steel’s purpose is to generate
positive returns by providing trusted and innovative solutions for
customers, creating opportunities for employees, and strengthening
its communities.
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
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,” “anticipate,”
“may,” “could,” “should,” “would,” “intend,” “plan,” “will,”
“likely,” “expect,” “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 Company’s separation from Worthington Enterprises, Inc. (the
“Separation”); the expected financial and operational performance
of, and future opportunities for, the Company following the
Separation; the tax treatment of the Separation transaction; the
leadership of the Company following the Separation; future or
expected growth, growth potential, forward momentum, performance,
competitive position, sales, volumes, cash flows, earnings,
margins, balance sheet strengths, debt, financial condition or
other financial measures; pricing trends for raw materials and
finished goods and the impact of pricing changes; the ability to
improve or maintain margins; expected demand or demand trends for
the Company or its markets; additions to product lines and
opportunities to participate in new markets; expected benefits from
transformation and innovation efforts; the ability to improve
performance and competitive position at the Company’s operations;
anticipated working capital needs, capital expenditures and asset
sales; anticipated improvements and efficiencies in costs,
operations, sales, inventory management, sourcing and the supply
chain and the results thereof; projected profitability potential;
the ability to make acquisitions and the projected timing, results,
benefits, costs, charges and expenditures related to acquisitions,
joint ventures, headcount reductions and facility dispositions,
shutdowns and consolidations; projected capacity and the alignment
of operations with demand; the ability to operate profitably and
generate cash in down markets; the ability to capture and maintain
market share and to develop or take advantage of future
opportunities, customer initiatives, new businesses, new products
and new markets; expectations for Company and customer inventories,
jobs and orders; expectations for the economy and markets or
improvements therein; expectations for generating improving and
sustainable earnings, earnings potential, margins or shareholder
value; effects of judicial rulings; 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: our
ability to successfully realize the anticipated benefits of the
Separation; 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 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, as well as potential adverse impacts as a result of the
Inflation Reduction Act of 2022, 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
(“SEC”) 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, which may increase the
Company’s healthcare and other costs and negatively impact the
Company’s operations and financial results; the effect of tax laws
in the United States and potential changes for such laws, which may
increase the Company's costs and negatively impact its 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 SEC,
including those described in the “Risk Factors” section of the
information statement filed as Exhibit 99.1 to the Company’s
Amendment No. 3 to its registration statement on Form 10 filed with
the SEC on November 14, 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, you 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 STEEL,
INC.
CONSOLIDATED AND COMBINED
STATEMENTS OF EARNINGS
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
February 29,
February 28,
February 29,
February 28,
2024
2023
2024
2023
Net sales
$
805.8
$
780.7
$
2,519.6
$
2,723.7
Cost of goods sold
685.7
717.5
2,210.8
2,537.4
Gross margin
120.1
63.2
308.8
186.3
Selling, general and administrative
expense
52.8
49.7
160.7
147.7
Impairment of long-lived assets
-
-
1.4
0.3
Restructuring and other income, net
-
-
-
(4.2
)
Separation costs
1.0
4.0
19.5
12.0
Operating income
66.3
9.5
127.2
30.5
Other income (expense):
Miscellaneous income, net
0.1
1.3
1.6
2.4
Interest expense, net
(2.9
)
(0.5
)
(3.6
)
(2.7
)
Equity in net income of unconsolidated
affiliate
2.9
(0.2
)
15.7
3.5
Earnings before income taxes
66.4
10.1
140.9
33.7
Income tax expense
14.0
0.8
28.5
5.6
Net earnings
52.4
9.3
112.4
28.1
Net earnings attributable to
noncontrolling interests
3.4
3.9
10.9
8.3
Net earnings attributable to
controlling interest
$
49.0
$
5.4
$
101.5
$
19.8
Basic
Weighted average common shares
outstanding(1)
49.3
49.3
49.3
49.3
Earnings per share attributable to
controlling interest
$
0.99
$
0.11
$
2.06
$
0.40
Diluted
Weighted average common shares
outstanding(2)
50.3
49.3
49.6
49.3
Earnings per share attributable to
controlling interest
$
0.98
$
0.11
$
2.05
$
0.40
Common shares outstanding at end of
period(1)
49.3
49.3
49.3
49.3
Cash dividends declared per share
$
0.16
n/a
$
0.16
n/a
______________________________________
(1)
Prior to the third quarter of fiscal 2024,
reported Weighted average common shares outstanding (Basic) and
Common shares outstanding at end of period reflects the basic
shares at the Separation date. This share amount is being utilized
for the calculation of basic earnings per share for periods
presented prior to the Separation date.
(2)
Prior to the third quarter of fiscal 2024,
reported Weighted average common shares outstanding (Diluted)
reflects the basic shares at the Separation date. This share amount
is being utilized for the calculation of diluted earnings per share
for periods presented prior to the Separation date.
WORTHINGTON STEEL,
INC.
CONSOLIDATED AND COMBINED
BALANCE SHEETS
(In millions, except share
amounts)
(Unaudited)
February 29,
May 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
60.8
$
32.7
Receivables, less allowances of $1.8 and
$2.6 at February 29, 2024 and May 31, 2023, respectively
468.8
468.0
Inventories
Raw materials
157.1
173.9
Work in process
175.8
164.1
Finished products
75.3
76.8
Total inventories
408.2
414.8
Income taxes receivable
6.2
4.3
Assets held for sale
1.8
3.4
Prepaid expenses and other current
assets
77.1
57.7
Total current assets
1,022.9
980.9
Investment in unconsolidated affiliate
130.3
114.6
Operating lease assets
72.2
75.3
Goodwill
79.7
78.6
Other intangible assets, net of
accumulated amortization of $43.7 and $38.9 at February 29, 2024
and May 31, 2023, respectively
78.6
83.4
Deferred tax asset
5.8
6.3
Other assets
12.1
10.9
Property, plant and equipment:
Land
39.1
37.6
Buildings and improvements
176.8
168.6
Machinery and equipment
892.2
847.5
Construction in progress
48.9
20.3
Total property, plant and equipment
1,157.0
1,074.0
Less: accumulated depreciation
709.6
659.6
Total property, plant and equipment,
net
447.4
414.4
Total assets
$
1,849.0
$
1,764.4
Liabilities and equity
Current liabilities:
Accounts payable
$
407.3
$
402.2
Short-term borrowings
147.2
2.8
Accrued compensation, contributions to
employee benefit plans and related taxes
46.7
31.9
Dividends payable
8.5
-
Other accrued items
15.3
15.6
Current operating lease liabilities
6.7
5.9
Income taxes payable
13.7
-
Current maturities of long-term debt due
to Former Parent
-
20.0
Total current liabilities
645.4
478.4
Other liabilities
38.2
33.6
Noncurrent operating lease liabilities
68.4
71.7
Deferred income taxes
26.7
26.1
Total liabilities
778.7
609.8
Preferred shares, without par value;
authorized - 1,000,000 shares at February 29, 2024; no shares
issued or outstanding
-
-
Common shares, without par value;
authorized - 150,000,000 shares at February 29, 2024; issued and
outstanding 49,294,494 shares and 100 shares at February 29, 2024
and May 31, 2023, respectively
-
-
Additional Paid-in Capital
903.0
-
Retained Earnings
40.9
-
Net Investment by Former Parent
-
1,031.1
Accumulated other comprehensive loss, net
of taxes of $(1.5) and $(2.6) at February 29, 2024 and May 31,
2023, respectively
(6.3
)
(2.1
)
Total Shareholders' equity - controlling
interest
937.6
1,029.0
Noncontrolling interests
132.7
125.6
Total equity
1,070.3
1,154.6
Total liabilities and equity
$
1,849.0
$
1,764.4
WORTHINGTON STEEL,
INC.
CONSOLIDATED AND COMBINED
STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
Nine Months Ended
February 29,
February 28,
February 29,
February 28,
2024
2023
2024
2023
Operating activities:
Net earnings
$
52.4
$
9.3
$
112.4
$
28.1
Adjustment to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation and amortization
15.9
17.0
49.2
52.4
Impairment of long-lived assets
-
-
1.4
0.3
Benefit from deferred income taxes
(0.9
)
(0.1
)
(1.1
)
(0.3
)
Bad debt expense (income)
(0.2
)
2.3
(0.6
)
3.6
Equity in net income of unconsolidated
affiliate, net of distributions
(2.9
)
10.2
(15.7
)
6.5
Net gain on sale of assets
-
-
(0.4
)
(3.8
)
Stock-based compensation
2.2
2.7
8.3
7.5
Changes in assets and liabilities, net of
impact of acquisitions:
Receivables
(52.1
)
9.6
4.4
123.6
Inventories
(34.9
)
34.3
13.4
179.4
Accounts payable
45.5
14.6
(4.4
)
(161.5
)
Accrued compensation and employee
benefits
4.4
(1.0
)
1.7
(6.5
)
Other operating items, net
15.3
19.3
(4.7
)
6.4
Net cash provided by operating
activities
44.7
118.2
163.9
235.7
Investing activities:
Investment in property, plant and
equipment
(22.4
)
(10.8
)
(58.6
)
(36.4
)
Proceeds from sale of assets, net of
selling costs
-
-
0.8
23.2
Acquisitions, net of cash acquired
-
-
(21.0
)
-
Net cash used in investing
activities
(22.4
)
(10.8
)
(78.8
)
(13.2
)
Financing activities:
Dividend to Former Parent
(150.0
)
-
(150.0
)
-
Transfers to Former Parent, net
3.8
(99.5
)
(47.6
)
(138.7
)
Proceeds from (repayment of) short-term
borrowings
(45.0
)
(1.3
)
127.2
(44.4
)
Proceeds from revolving credit facility
borrowings - swingline
142.6
-
142.6
-
Repayments of revolving credit facility
borrowings - swingline
(125.4
)
-
(125.4
)
-
Principal payments on long-term debt
-
(5.0
)
-
(15.0
)
Payments to noncontrolling interests
(1.9
)
-
(3.8
)
(11.8
)
Net cash used in financing
activities
(175.9
)
(105.8
)
(57.0
)
(209.9
)
Increase (decrease) in cash and cash
equivalents
(153.6
)
1.6
28.1
12.6
Cash and cash equivalents at beginning of
period
214.4
31.1
32.7
20.1
Cash and cash equivalents at end of
period
$
60.8
$
32.7
$
60.8
$
32.7
WORTHINGTON STEEL, INC. NON-GAAP
FINANCIAL MEASURES / SUPPLEMENTAL DATA (In millions, except
volume and per share amounts)
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States
(“GAAP”). The Company also presents certain non-GAAP financial
measures including (a) adjusted operating income, (b) adjusted
earnings before income taxes, (c) adjusted income tax expense
(benefit), (d) adjusted net earnings attributable to controlling
interest, (e) adjusted net earnings per diluted share attributable
to controlling interest, (f) adjusted net earnings before interest
and taxes attributable to controlling interest (“adjusted EBIT”),
(g) adjusted net earnings before interest, taxes, depreciation and
amortization attributable to controlling interest (“adjusted
EBITDA”), (h) pro forma adjusted net earnings before interest and
taxes attributable to controlling interest ("pro forma adjusted
EBIT") and (i) free cash flow.
These non-GAAP financial measures typically exclude impairment
and restructuring charges (gains), but may also exclude other items
that management believes are not reflective of, and thus should not
be included when evaluating the performance of the Company’s
ongoing operations. Management uses these non-GAAP financial
measures to evaluate the Company’s performance, engage in financial
and operational planning, and determine incentive compensation and
believes these non-GAAP financial measures provide useful
information to investors because they provide additional
perspective on the performance of the Company’s ongoing operations.
Additionally, management believes these non-GAAP financial measures
provide useful information to investors because they allow for
meaningful comparisons and analysis of trends in the Company’s
business and enable investors to evaluate operations and future
prospects in the same manner as management.
For the purposes of the subsequent tables, the non-GAAP measures
have been adjusted for the reasons identified below:
- Impairment of long-lived assets -
impairments are excluded because they do not occur in the ordinary
course of the Company's ongoing business operations, are inherently
unpredictable in timing and amount, and are non-cash, so their
exclusion facilitates the comparison of historical and current
financial results.
- Restructuring activities -
restructuring activities consist of items that are not part of the
Company's 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).
- Separation costs - direct and
incremental costs incurred in connection with the Separation from
Former Parent, including audit, legal, and other fees paid to
third-party advisors as well as direct and incremental costs
associated with the separation of shared corporate functions which
are not part of the Company's ongoing operations.
The following provides a reconciliation to adjusted operating
income, adjusted earnings before income taxes, adjusted income tax
expense (benefit), adjusted net earnings attributable to
controlling interest and adjusted net earnings per diluted share
attributable to controlling interest from the most comparable GAAP
measures for the three- and nine-month periods ended February 29,
2024 and February 28, 2023.
Three Months Ended February
29, 2024
Operating Income
Earnings Before Income Taxes
Income Tax Expense
Net Earnings Attributable to
Controlling Interest
Net Earnings per Diluted Share
Attributable to Controlling Interest
GAAP
$
66.3
$
66.4
$
14.0
$
49.0
$
0.98
Separation costs
1.0
1.0
(0.3
)
0.6
0.01
Non-GAAP
$
67.3
$
67.4
$
13.7
$
49.6
$
0.99
Three Months Ended February
28, 2023
Operating Income
Earnings Before Income Taxes
Income Tax Expense (Benefit)
Net Earnings Attributable to
Controlling Interest
Net Earnings per Diluted Share
Attributable to Controlling Interest
GAAP
$
9.5
$
10.1
$
0.8
$
5.4
$
0.11
Separation costs
4.0
4.0
(0.9
)
3.2
0.06
Non-GAAP
$
13.5
$
14.1
$
(0.1
)
$
8.6
$
0.17
Nine Months Ended February 29,
2024
Operating Income
Earnings Before Income Taxes
Income Tax Expense
Net Earnings Attributable to
Controlling Interest
Net Earnings per Diluted Share
Attributable to Controlling Interest
GAAP
$
127.2
$
140.9
$
28.5
$
101.5
$
2.05
Impairment of long-lived assets
1.4
1.4
(0.2
)
0.7
0.01
Separation costs
19.5
19.5
(4.3
)
15.1
0.31
Non-GAAP
$
148.1
$
161.8
$
24.0
$
117.3
$
2.37
Nine Months Ended February 28,
2023
Operating Income
Earnings Before Income Taxes
Income Tax Expense
Net Earnings Attributable to
Controlling Interest
Net Earnings per Diluted Share
Attributable to Controlling Interest
GAAP
$
30.5
$
33.7
$
5.6
$
19.8
$
0.40
Impairment of long-lived assets
0.3
0.3
(0.1
)
0.1
-
Restructuring and other income, net
(4.2
)
(4.2
)
0.6
(1.7
)
(0.03
)
Separation costs
12.0
12.0
(2.6
)
9.4
0.19
Non-GAAP
$
38.6
$
41.8
$
3.5
$
27.6
$
0.56
To further assist in the analysis of results for the periods
presented, the following volume and net sales information for
three- and nine-month periods ended February 29, 2024 and February
28, 2023 has been provided along with a reconciliation of adjusted
EBIT and adjusted EBITDA to the most comparable GAAP measure, which
is net earnings attributable to controlling interests. Adjusted
EBIT margin is calculated by dividing adjusted EBIT by net sales.
Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by
net sales.
Three Months Ended
February 29,
February 28,
2024
2023
Volume (tons)
985,668
944,851
Net Sales
$
805.8
$
780.7
Net earnings attributable to controlling
interest
$
49.0
$
5.4
Interest expense, net
2.9
0.5
Income tax expense
14.0
0.8
Separation costs
1.0
4.0
Adjusted EBIT
66.9
10.7
Depreciation and amortization
15.9
17.0
Adjusted EBITDA
$
82.8
$
27.7
Adjusted EBIT margin
8.3
%
1.4
%
Adjusted EBITDA margin
10.3
%
3.5
%
Nine Months Ended
February 29,
February 28,
2024
2023
Volume (tons)
2,977,808
2,901,647
Net Sales
$
2,519.6
$
2,723.7
Net earnings attributable to controlling
interest
$
101.5
$
19.8
Interest expense, net
3.6
2.7
Income tax expense
28.5
5.6
Impairment of long-lived assets(2)
0.9
0.1
Restructuring and other income, net(1)
-
(2.4
)
Separation costs
19.5
12.0
Adjusted EBIT
154.0
37.8
Depreciation and amortization
49.2
52.4
Adjusted EBITDA
$
203.2
$
90.2
Adjusted EBIT margin
6.1
%
1.4
%
Adjusted EBITDA margin
8.1
%
3.3
%
______________________________________
(1)
Excludes the noncontrolling interest
portion of restructuring and other income, net of $(1.8) million in
the prior year period.
(2)
Excludes the noncontrolling interest
portion of impairment of long-lived assets of $0.5 million and $0.2
million in the current year period and prior year period,
respectively.
The table below provides a reconciliation from net earnings
(loss) attributable to controlling interest (the most comparable
GAAP financial measure) to the non-GAAP financial measures, EBITDA
and adjusted EBITDA, for each of the past five fiscal quarters and
the twelve months ended February 29, 2024.
Third
Second
First
Fourth
Third
Quarter
Quarter
Quarter
Quarter
Quarter
2024
2024
2024
2023
2023
Net earnings (loss) attributable to
controlling interest
$
49.0
$
(6.0
)
$
58.5
$
67.3
$
5.4
Interest expense, net
2.9
0.2
0.5
0.4
0.5
Income tax expense (benefit)
14.0
(2.5
)
17.0
23.4
0.8
Depreciation and amortization
15.9
16.4
16.9
17.1
17.0
EBITDA
81.8
8.1
92.9
108.2
23.7
Impairment of long-lived assets
-
-
0.9
1.8
-
Restructuring and other income, net
-
-
-
-
-
Separation costs
1.0
14.9
3.6
5.5
4.0
Adjusted EBITDA
$
82.8
$
23.0
$
97.4
$
115.5
$
27.7
Trailing twelve months adjusted EBITDA
$
318.7
The following provides a reconciliation of net cash provided by
(used in) operating activities (the most comparable GAAP financial
measure) to free cash flow each of the past four fiscal quarters
and the twelve months ended February 29, 2024. Free cash flow is a
non-GAAP financial measure that management believes measures the
Company's ability to generate cash beyond what is required for its
business operations and capital expenditures.
Third
Second
First
Fourth
Quarter
Quarter
Quarter
Quarter
2024
2024
2024
2023
Net cash provided by (used in) operating
activities
$
44.7
$
139.9
$
(20.7
)
$
79.2
Investment in property, plant and
equipment
(22.4
)
(18.9
)
(17.3
)
(9.0
)
Free cash flow
$
22.3
$
121.0
$
(38.0
)
$
70.2
Trailing twelve months free cash flow
$
175.5
To further assist in the analysis of results for the periods
presented, the following information for the three- and nine-month
periods ended February 29, 2024, and February 28, 2023, has been
provided along with a reconciliation of net earnings attributable
to controlling interest (the most comparable GAAP financial
measure) to pro forma adjusted EBIT. Pro forma adjusted EBIT is a
non-GAAP financial measure that management believes includes
incremental and on-going impacts to the Company's operating results
as a stand-alone public company resulting from the Separation from
Former Parent. The pro forma financial information assumes the
Separation occurred on June 1, 2022, the first day of the Company's
2023 fiscal year.
The 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. It is 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.
There were no incremental pro forma adjustments made for the
three months ended February 29, 2024, given this period included
the actual results of operating as a stand-alone public company.
For the nine months ended February 29, 2024, the adjustments
included in the information below represent only the adjustments
for the period prior to the Separation.
Three Months Ended
February 29,
February 28,
2024
2023
Net earnings attributable to controlling
interest
$
49.0
$
5.4
Interest expense, net
2.9
0.5
Income tax expense
14.0
0.8
Separation costs
1.0
4.0
Adjusted EBIT
66.9
10.7
Pro Forma Adjustments:
Incremental steel supply agreement
margin(1)
-
1.0
Incremental stand-alone corporate
costs(2)
-
(3.4
)
Total Pro Forma Adjustments
-
(2.4
)
Pro Forma Adjusted EBIT
$
66.9
$
8.3
Nine Months Ended
February 29,
February 28,
2024
2023
Net earnings attributable to controlling
interest
$
101.5
$
19.8
Interest expense, net
3.6
2.7
Income tax expense
28.5
5.6
Impairment of long-lived assets(4)
0.9
0.1
Restructuring and other income, net(3)
-
(2.4
)
Separation costs
19.5
12.0
Adjusted EBIT
154.0
37.8
Pro Forma Adjustments:
Incremental steel supply agreement
margin(1)
1.9
2.9
Incremental stand-alone corporate
costs(2)
(8.5
)
(10.0
)
Total Pro Forma Adjustments
(6.6
)
(7.1
)
Pro Forma Adjusted EBIT
$
147.4
$
30.7
______________________________________
(1)
Reflects the incremental margin on sales
to Former Parent under the steel supply agreement between the
Company and Former Parent.
(2)
Includes an increase in SG&A expense
for the three and nine months ended February 29, 2024 and February
28, 2023 respectively, to capture the effects of recurring and
ongoing costs required to operate the Company's stand-alone
corporate functions as well as public company costs, offset by
lower corporate profit sharing and bonus expense post-separation
than what was allocated to the Company in the combined financial
statements due to the employee matters agreement with Former
Parent.
(3)
Excludes the noncontrolling interest
portion of restructuring and other income, net of $(1.8) million in
the prior year period.
(4)
Excludes the noncontrolling interest
portion of impairment of long-lived assets of $0.5 million and $0.2
million in the current year period and prior year period,
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240319758218/en/
Melissa Dykstra Vice President, Corporate Communications and
Investor Relations Phone: 614-840-4144
Melissa.Dykstra@worthingtonsteel.com
Worthington Steel (NYSE:WS)
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