Worthington Enterprises, Inc. (NYSE: WOR) reported net sales of
$316.8 million and net earnings from continuing operations of $22.0
million, or $0.44 per diluted share, for its fiscal 2024 third
quarter ended February 29, 2024. This compares to net sales of
$346.3 million and net earnings from continuing operations of $29.8
million, or $0.60 per diluted share, in the third quarter of fiscal
2023. On an adjusted basis, the Company reported net earnings
from continuing operations of $40.2 million, or $0.80 per diluted
share, for the current year quarter compared to adjusted net
earnings from continuing operations of $39.9 million, or $0.81 per
share, in the prior year quarter.
As previously disclosed, the separation of the
Company’s former Steel Processing business into an independent
publicly traded company, Worthington Steel, Inc. (“Worthington
Steel”), was completed on December 1, 2023 (the
“Separation”). Accordingly, the results of Worthington Steel
are presented as discontinued operations separate from the
Company’s continuing operations in periods prior to the
Separation. Earnings from discontinued operations include
operating expenses only to the extent directly attributable to
Worthington Steel. Indirect corporate overhead costs are
included in continuing operations, and, to the extent eliminated
post-Separation, have been included as an adjustment to earnings
from continuing operations in periods prior to the Separation in
the table below. The third quarter of fiscal 2024 was negatively
impacted by the final Separation costs, as well as a one-time
charge to income tax expense primarily related to non-deductible
transaction costs. In addition, the current year quarter was
negatively impacted by a non-cash charge to settle, in full, the
unfunded benefit obligation of our last remaining pension
plan. Results in both the current year quarter and the prior
year quarter were impacted by certain other items that have been
excluded from net earnings from continuing operations, as
summarized in the table below.
(U.S. dollars in millions, except per share amounts) |
3Q 2024 |
|
|
3Q 2023 |
|
|
|
After-Tax |
|
|
Per Share |
|
|
After-Tax |
|
|
Per Share |
|
Net earnings from continuing operations |
|
$ |
22.0 |
|
|
$ |
0.44 |
|
|
$ |
29.8 |
|
|
$ |
0.60 |
|
Corporate costs eliminated at Separation |
|
|
- |
|
|
|
- |
|
|
|
7.9 |
|
|
|
0.16 |
|
True-up of Level5 earnout accrual |
|
|
- |
|
|
|
- |
|
|
|
(0.8 |
) |
|
|
(0.02 |
) |
Impairment and restructuring charges |
|
|
0.5 |
|
|
|
0.01 |
|
|
|
0.9 |
|
|
|
0.03 |
|
Separation costs |
|
|
2.3 |
|
|
|
0.05 |
|
|
|
1.8 |
|
|
|
0.04 |
|
Pension settlement charge |
|
|
6.2 |
|
|
|
0.12 |
|
|
|
- |
|
|
|
- |
|
Loss on sale of investment in ArtiFlex |
|
|
- |
|
|
|
- |
|
|
|
0.3 |
|
|
|
- |
|
One-time tax effects of Separation |
|
|
9.2 |
|
|
|
0.18 |
|
|
|
- |
|
|
|
- |
|
Adjusted net earnings from continuing operations |
|
$ |
40.2 |
|
|
$ |
0.80 |
|
|
$ |
39.9 |
|
|
$ |
0.81 |
|
“We are off to a good start with our first full
quarter as Worthington Enterprises reporting adjusted earnings of
$0.80 per share,” said Worthington Enterprises President and CEO
Andy Rose. “Higher volume and margins in our Consumer Products
business combined with healthy contributions from our Building
Products segment drove results, offset by continued softness in
Europe from our Sustainable Energy Solutions business. We
appreciate our employees’ continued dedication to delivering
value-added products for our customers every day.”
Financial highlights for the current year periods
and prior year comparative periods are as follows:
(U.S. dollars in millions, except per share
amounts)
|
|
3Q 2024 |
|
|
3Q 2023 |
|
|
9M 2024 |
|
|
9M 2023 |
|
Net sales |
|
$ |
316.8 |
|
|
$ |
346.3 |
|
|
$ |
926.9 |
|
|
$ |
1,049.7 |
|
Operating income (loss) |
|
|
4.3 |
|
|
|
4.0 |
|
|
|
(17.4 |
) |
|
|
14.5 |
|
Adjusted operating income |
|
|
8.0 |
|
|
|
16.9 |
|
|
|
15.1 |
|
|
|
49.3 |
|
Net earnings from continuing operations |
|
|
22.0 |
|
|
|
29.8 |
|
|
|
66.8 |
|
|
|
75.6 |
|
Adjusted EBITDA |
|
|
66.9 |
|
|
|
70.2 |
|
|
|
187.8 |
|
|
|
212.3 |
|
EPS from continuing operations - diluted |
|
|
0.44 |
|
|
|
0.60 |
|
|
|
1.33 |
|
|
|
1.53 |
|
Adjusted EPS from continuing operations - diluted |
|
$ |
0.80 |
|
|
$ |
0.81 |
|
|
$ |
2.11 |
|
|
$ |
2.39 |
|
Consolidated Quarterly
Results
Net sales for the third quarter of fiscal 2024
were $316.8 million, a decrease of $29.6 million, or 8.5%, from the
prior year quarter, as unfavorable mix combined with slightly lower
volumes led to a $35.6 million decrease in net sales within
Building Products.
Operating income of $4.3 million was up slightly
from $4.0 million in the prior year quarter. On an adjusted basis,
operating income of $8.0 million was down $8.9 million from the
prior year quarter, on the combined impact of lower gross profit,
which was down $5.9 million due to lower contributions from
Building Products and Sustainable Energy Solutions, partially
offset by improvements within Consumer Products, and higher overall
SG&A expense, up $3 million, excluding the impact of corporate
costs in the prior year quarter that were eliminated
post-Separation.
Miscellaneous expense increased $7.2 million
from the prior year quarter primarily due to a pension lift-out
transaction to transfer, in full, the remaining projected benefit
obligation of the inactive Gerstenslager pension plan to a
third-party insurance company, which resulted in an $8.1 million
pre-tax non-cash charge.
Net interest expense was nominal in the current
year quarter compared to $4.2 million in the prior year quarter due
to higher interest income and, to a lesser extent, lower average
debt levels driven by the July 28, 2023, redemption of the
Company’s senior unsecured notes that were set to mature in April
2026 (“2026 Notes”).
Equity income increased $6.1 million over the
prior year quarter to $43.2 million, primarily due to higher
contributions from WAVE.
Income tax expense was $18.5 million in the
current year quarter compared to $7.4 million in the prior year
quarter. The increase was driven by discrete tax adjustments
primarily related to the Separation. Current quarter income tax
expense reflects an estimated annual effective rate of 30.8%, up
from 22.6% in the prior year quarter, due to the impact of discrete
tax items, including one-time charges triggered by the Separation
consisting primarily of non-deductible transaction costs. On an
adjusted basis, the effective tax rate was 23.1% in the current
year quarter compared to 20.9% in the prior year quarter.
Balance Sheet
Total debt was $298.0 million at the end of the
third quarter of fiscal 2024, down approximately $390 million from
May 31, 2023, due to the early redemption of senior unsecured notes
of an equal amount in fiscal 2024, including $150.0 million in
December 2023 that was funded by a cash distribution received from
Worthington Steel immediately prior to the Separation. The
Company ended the third quarter of fiscal 2024 with cash of $227.3
million.
Quarterly Segment Results
Effective December 1, 2023, management
responsibilities at the propane tank manufacturing facility in
Westerville, Ohio, were realigned under Building Products from
Consumer Products. Additionally, during the third quarter,
management began evaluating segment results on the basis of
adjusted EBITDA, as defined and further described in the Use of
Non-GAAP Measures and Definitions section below. Financial results
below, including historical data, reflect these changes.
Consumer Products generated net sales of $133.2
million during the current year quarter, up $2.5 million, or 1.9%,
over the prior year quarter on higher volume, partially offset by
lower average selling prices. Adjusted EBITDA was up $4.5
million in the quarter to $25.6 million, driven by the impact of
higher volume.
Building Products generated net sales of $148.2
million during the current year quarter, down 19%, or $35.6
million, from the prior year quarter primarily due to an
unfavorable shift in product mix. Adjusted EBITDA decreased $5.0
million from the prior year quarter to $53.1 million, as
unfavorable mix compressed gross profit. Higher contributions
of equity income, driven by a $7.1 million increase at WAVE,
partially offset the impact of lower gross profit.
Sustainable Energy Solutions generated net sales
of $35.4 million during the current year quarter, up $3.6 million,
or 11.3%, over the prior year quarter, on higher volume. Adjusted
EBITDA was a loss of $2.7 million, unfavorable by $2.9 million from
the prior year quarter, as volumes remained too low to absorb the
fixed costs in the business.
Recent Developments
- In connection with the Separation,
the Company received a cash distribution of $150.0 million from
Worthington Steel, which was used to redeem, in full, the unsecured
senior notes that were set to mature in August 2024.
- On February 1, 2024, the Company
acquired an 80 percent ownership stake in an affiliate of HALO
Products Group, LLC. Halo is an asset-light business with
technology-enabled solutions in the outdoor cooking space with
products that include HALO™ branded pizza ovens, pellet
grills, griddles and other accessories. The total purchase
price was approximately $9.4 million.
- On March 20, 2024, the Company’s
Board of Directors declared a quarterly dividend of $0.16 per
common share payable on June 28, 2024, to shareholders of record at
the close of business on June 14, 2024.
Outlook
“Worthington Enterprises is operating well as we
head into our fourth quarter,” Rose said. “We have well vetted
strategies and strong teams with high expectations for delivering
on our promise of increasing shareholder value. We are not without
our challenges, but our strategic positioning is solid, and we have
a strong balance sheet and significant capital available to take
advantage of opportunities as they arise. Our Worthington
Business System of transformation, innovation and acquisitions is
well entrenched and will enable our success.”
Upcoming Investor Events
- Oppenheimer 19th Annual Industrial Growth Conference, May 8,
2024
- KeyBanc Industrials & Basic Materials Conference, May 30,
2024
Conference Call
The Company will review fiscal 2024 third
quarter results during its quarterly conference call on March 21,
2024, at 8:30 a.m. Eastern Time. Details regarding the conference
call can be found on the Company website at
https://www.worthingtonenterprises.com/.
About Worthington
Enterprises
Worthington Enterprises (NYSE: WOR) is a
designer and manufacturer of market-leading brands that help enable
people to live safer, healthier and more expressive lives. The
Company operates with three segments: Building Products, Consumer
Products and Sustainable Energy Solutions. Worthington’s emphasis
on innovation and transformation extends to building products
including 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 5,000 people throughout North
America and Europe.
Founded in 1955 as Worthington Industries,
Worthington Enterprises follows a people-first Philosophy with
earning money for its shareholders as its first corporate goal.
Worthington Enterprises achieves this outcome by empowering its
employees to innovate, thrive and grow with leading brands in
attractive markets that improve everyday life. The Company engages
deeply with local communities where it has operations through
volunteer efforts and The Worthington Companies Foundation,
participates actively in workforce development programs and reports
annually on its corporate citizenship and sustainability efforts.
For more information, visit worthingtonenterprises.com.
Safe Harbor Statement
Selected statements contained in this release
constitute “forward-looking statements,” as that term is used in
the Private Securities Litigation Reform Act of 1995 (the “Act”).
The Company wishes to take advantage of the safe harbor provisions
included in the Act. Forward-looking statements reflect the
Company’s current expectations, estimates or projections concerning
future results or events. These statements are often identified by
the use of forward-looking words or phrases such as “believe,”
“expect,” “anticipate,” “may,” “could,” “should,” “would,”
“intend,” “plan,” “will,” “likely,” “estimate,” “project,”
“position,” “strategy,” “target,” “aim,” “seek,” “foresee” and
similar words or phrases. These forward-looking statements include,
without limitation, statements relating to: future or expected cash
positions, liquidity and ability to access financial markets and
capital; outlook, strategy or business plans; the anticipated
benefits of the separation of the Company’s Steel Processing
business (the “Separation); the expected financial and operational
performance of, and future opportunities for, the Company following
the Separation; the Company’s performance on a pro forma basis to
illustrate the estimated effects of the Separation on historical
periods; the tax treatment of the Separation transaction; future or
expected growth, growth potential, forward momentum, performance,
competitive position, sales, volumes, cash flows, earnings,
margins, balance sheet strengths, debt, financial condition or
other financial measures; pricing trends for raw materials and
finished goods and the impact of pricing changes; the ability to
improve or maintain margins; expected demand or demand trends for
the Company or its markets; additions to product lines and
opportunities to participate in new markets; expected benefits from
transformation and innovation efforts; the ability to improve
performance and competitive position at the Company’s operations;
anticipated working capital needs, capital expenditures and asset
sales; anticipated improvements and efficiencies in costs,
operations, sales, inventory management, sourcing and the supply
chain and the results thereof; projected profitability potential;
the ability to make acquisitions and the projected timing, results,
benefits, costs, charges and expenditures related to acquisitions,
joint ventures, headcount reductions and facility dispositions,
shutdowns and consolidations; projected capacity and the alignment
of operations with demand; the ability to operate profitably and
generate cash in down markets; the ability to capture and maintain
market share and to develop or take advantage of future
opportunities, customer initiatives, new businesses, new products
and new markets; expectations for Company and customer inventories,
jobs and orders; expectations for the economy and markets or
improvements therein; expectations for generating improving and
sustainable earnings, earnings potential, margins or shareholder
value; effects of judicial rulings; the ever-changing effects of
the novel coronavirus (“COVID-19”) pandemic and the various
responses of governmental and nongovernmental authorities thereto
on economies and markets, and on our customers, counterparties,
employees and third-party service providers; and other
non-historical matters.
Because they are based on beliefs, estimates and
assumptions, forward-looking statements are inherently subject to
risks and uncertainties that could cause actual results to differ
materially from those projected. Any number of factors could affect
actual results, including, without limitation, those that follow:
the uncertainty of obtaining regulatory approvals in connection
with the Separation, including rulings from the Internal Revenue
Service; the Company’s ability to successfully realize the
anticipated benefits of the Separation; the risks, uncertainties
and impacts related to the COVID-19 pandemic – the duration, extent
and severity of which are impossible to predict, including the
possibility of future resurgence in the spread of COVID-19 or
variants thereof – and the availability, effectiveness and
acceptance of vaccines, and other actual or potential public health
emergencies and actions taken by governmental authorities or others
in connection therewith; the effect of national, regional and
global economic conditions generally and within major product
markets, including significant economic disruptions from COVID-19,
the actions taken in connection therewith and the implementation of
related fiscal stimulus packages; the effect of conditions in
national and worldwide financial markets, including inflation,
increases in interest rates and economic recession, and with
respect to the ability of financial institutions to provide
capital; the impact of tariffs, the adoption of trade restrictions
affecting the Company’s products or suppliers, a United States
withdrawal from or significant renegotiation of trade agreements,
the occurrence of trade wars, the closing of border crossings, and
other changes in trade regulations or relationships; changing oil
prices and/or supply; product demand and pricing; changes in
product mix, product substitution and market acceptance of the
Company’s products; volatility or fluctuations in the pricing,
quality or availability of raw materials (particularly steel),
supplies, transportation, utilities, labor and other items required
by operations (especially in light of the COVID-19 pandemic and
Russia’s invasion of Ukraine); effects of sourcing and supply chain
constraints; the outcome of adverse claims experience with respect
to workers’ compensation, product recalls or product liability,
casualty events or other matters; effects of facility closures and
the consolidation of operations; the effect of financial
difficulties, consolidation and other changes within the steel,
automotive, construction and other industries in which the Company
participates; failure to maintain appropriate levels of
inventories; financial difficulties (including bankruptcy filings)
of original equipment manufacturers, end-users and customers,
suppliers, joint venture partners and others with whom the Company
does business; the ability to realize targeted expense reductions
from headcount reductions, facility closures and other cost
reduction efforts; the ability to realize cost savings and
operational, sales and sourcing improvements and efficiencies, and
other expected benefits from transformation initiatives, on a
timely basis; the overall success of, and the ability to integrate,
newly-acquired businesses and joint ventures, maintain and develop
their customers, and achieve synergies and other expected benefits
and cost savings therefrom; capacity levels and efficiencies,
within facilities, within major product markets and within the
industries in which the Company participates as a whole; the effect
of disruption in the business of suppliers, customers, facilities
and shipping operations due to adverse weather, casualty events,
equipment breakdowns, labor shortages, interruption in utility
services, civil unrest, international conflicts (especially in
light of Russia’s invasion of Ukraine), terrorist activities or
other causes; changes in customer demand, inventories, spending
patterns, product choices, and supplier choices; risks associated
with doing business internationally, including economic, political
and social instability (especially in light of Russia’s invasion of
Ukraine), foreign currency exchange rate exposure and the
acceptance of the Company’s products in global markets; the ability
to improve and maintain processes and business practices to keep
pace with the economic, competitive and technological environment;
the effect of inflation, interest rate increases and economic
recession, which may negatively impact the Company’s operations and
financial results; deviation of actual results from estimates
and/or assumptions used by the Company in the application of its
significant accounting policies; the level of imports and import
prices in the Company’s markets; the impact of environmental laws
and regulations or the actions of the United States Environmental
Protection Agency or similar regulators which increase costs or
limit the Company’s ability to use or sell certain products; the
impact of increasing environmental, greenhouse gas emission and
sustainability regulations and considerations; the impact of
judicial rulings and governmental regulations, both in the United
States and abroad, including those adopted by the United States
Securities and Exchange Commission and other governmental agencies
as contemplated by the Coronavirus Aid, Relief and Economic
Security (CARES) Act, the Consolidated Appropriations Act, 2021,
the American Rescue Plan Act of 2021, and the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010; the effect of
healthcare laws in the United States and potential changes for such
laws, especially in light of the COVID-19 pandemic, which may
increase the Company’s healthcare and other costs and negatively
impact the Company’s operations and financial results; the effects
of tax laws in the United States and potential changes for such
laws, which may increase the Company’s costs and negatively impact
the Company’s operations and financial results; cyber security
risks; the effects of privacy and information security laws and
standards; and other risks described from time to time in the
Company’s filings with the United States Securities and Exchange
Commission, including those described in “Part I – Item 1A. – Risk
Factors” of the Company’s Annual Report on Form 10-K for the fiscal
year ended May 31, 2023.
Forward-looking statements should be construed
in the light of such risks. The Company notes these factors for
investors as contemplated by the Act. It is impossible to predict
or identify all potential risk factors. Consequently, readers
should not consider the foregoing list to be a complete set of all
potential risks and uncertainties. Readers are cautioned not to
place undue reliance on any forward-looking statements, which speak
only as of the date made. The Company does not undertake, and
hereby disclaims, any obligation to update any forward-looking
statements, whether as a result of new information, future
developments or otherwise, except as required by applicable
law.
|
|
WORTHINGTON ENTERPRISES, INC. CONSOLIDATED
STATEMENTS OF EARNINGS (In thousands, except per
share amounts) |
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
February 29, |
|
|
February 28, |
|
|
February 29, |
|
|
February 28, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net sales |
|
$ |
316,755 |
|
|
$ |
346,315 |
|
|
$ |
926,902 |
|
|
$ |
1,049,694 |
|
Cost of goods sold |
|
|
243,643 |
|
|
|
267,344 |
|
|
|
720,882 |
|
|
|
820,266 |
|
Gross profit |
|
|
73,112 |
|
|
|
78,971 |
|
|
|
206,020 |
|
|
|
229,428 |
|
Selling, general and administrative expense |
|
|
65,134 |
|
|
|
71,359 |
|
|
|
210,262 |
|
|
|
211,208 |
|
Impairment of long-lived assets |
|
|
- |
|
|
|
484 |
|
|
|
- |
|
|
|
484 |
|
Restructuring and other expense (income), net |
|
|
698 |
|
|
|
823 |
|
|
|
704 |
|
|
|
(354 |
) |
Separation costs |
|
|
2,999 |
|
|
|
2,305 |
|
|
|
12,465 |
|
|
|
3,572 |
|
Operating income (loss) |
|
|
4,281 |
|
|
|
4,000 |
|
|
|
(17,411 |
) |
|
|
14,518 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous income (expense) |
|
|
(6,995 |
) |
|
|
217 |
|
|
|
(5,983 |
) |
|
|
(4,499 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
(1,534 |
) |
|
|
- |
|
Interest expense, net |
|
|
(50 |
) |
|
|
(4,186 |
) |
|
|
(1,596 |
) |
|
|
(15,689 |
) |
Equity in net income of unconsolidated affiliates |
|
|
43,235 |
|
|
|
37,111 |
|
|
|
127,328 |
|
|
|
102,004 |
|
Earnings before income taxes |
|
|
40,471 |
|
|
|
37,142 |
|
|
|
100,804 |
|
|
|
96,334 |
|
Income tax expense |
|
|
18,471 |
|
|
|
7,391 |
|
|
|
34,041 |
|
|
|
20,709 |
|
Net earnings from continuing operations |
|
|
22,000 |
|
|
|
29,751 |
|
|
|
66,763 |
|
|
|
75,625 |
|
Net earnings from discontinued operations |
|
|
- |
|
|
|
20,507 |
|
|
|
83,106 |
|
|
|
59,382 |
|
Net earnings |
|
|
22,000 |
|
|
|
50,258 |
|
|
|
149,869 |
|
|
|
135,007 |
|
Net earnings attributable to noncontrolling interests |
|
|
- |
|
|
|
3,933 |
|
|
|
7,460 |
|
|
|
8,382 |
|
Net earnings attributable to controlling interest |
|
$ |
22,000 |
|
|
$ |
46,325 |
|
|
$ |
142,409 |
|
|
$ |
126,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to controlling interest: |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings from continuing operations |
|
$ |
22,000 |
|
|
$ |
29,751 |
|
|
$ |
66,763 |
|
|
$ |
75,625 |
|
Net earnings from discontinued operations |
|
|
- |
|
|
|
16,574 |
|
|
|
75,646 |
|
|
|
51,000 |
|
Net earnings attributable to controlling interest |
|
$ |
22,000 |
|
|
$ |
46,325 |
|
|
$ |
142,409 |
|
|
$ |
126,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing operations - basic |
|
$ |
0.45 |
|
|
$ |
0.61 |
|
|
$ |
1.36 |
|
|
$ |
1.56 |
|
Earnings per share from discontinued operations - basic |
|
|
- |
|
|
|
0.34 |
|
|
|
1.54 |
|
|
|
1.05 |
|
Net earnings per share attributable to controlling interest -
basic |
|
$ |
0.45 |
|
|
$ |
0.95 |
|
|
$ |
2.90 |
|
|
$ |
2.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from continuing operations - diluted |
|
$ |
0.44 |
|
|
$ |
0.60 |
|
|
$ |
1.33 |
|
|
$ |
1.53 |
|
Earnings per share from discontinued operations - diluted |
|
|
- |
|
|
|
0.34 |
|
|
|
1.50 |
|
|
|
1.04 |
|
Net earnings per share attributable to controlling interest -
diluted |
|
$ |
0.44 |
|
|
$ |
0.94 |
|
|
$ |
2.83 |
|
|
$ |
2.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic |
|
|
49,315 |
|
|
|
48,587 |
|
|
|
49,113 |
|
|
|
48,541 |
|
Weighted average common shares outstanding - diluted |
|
|
50,417 |
|
|
|
49,493 |
|
|
|
50,271 |
|
|
|
49,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share |
|
$ |
0.16 |
|
|
$ |
0.31 |
|
|
$ |
0.80 |
|
|
$ |
0.93 |
|
|
|
CONSOLIDATED BALANCE SHEETS WORTHINGTON
ENTERPRISES, INC. (In thousands) |
|
|
|
|
|
February 29, |
|
|
May 31, |
|
|
|
2024 |
|
|
2023 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
227,310 |
|
|
$ |
422,268 |
|
Receivables, less allowances of $750 and $803 at February 29,
2024 |
|
|
|
|
|
|
and May 31, 2023, respectively |
|
|
219,389 |
|
|
|
224,863 |
|
Inventories |
|
|
|
|
|
|
Raw materials |
|
|
74,929 |
|
|
|
91,988 |
|
Work in process |
|
|
18,234 |
|
|
|
19,189 |
|
Finished products |
|
|
98,553 |
|
|
|
83,322 |
|
Total inventories |
|
|
191,716 |
|
|
|
194,499 |
|
Income taxes receivable |
|
|
2,398 |
|
|
|
1,681 |
|
Prepaid expenses and other
current assets |
|
|
50,298 |
|
|
|
46,301 |
|
Current assets of discontinued
operations |
|
|
- |
|
|
|
978,725 |
|
Total current assets |
|
|
691,111 |
|
|
|
1,868,337 |
|
Investment in unconsolidated
affiliates |
|
|
120,707 |
|
|
|
138,041 |
|
Operating lease assets |
|
|
21,285 |
|
|
|
24,686 |
|
Goodwill |
|
|
345,445 |
|
|
|
336,178 |
|
Other intangibles, net of accumulated amortization of |
|
|
|
|
|
|
$82,190 and $73,308 at February 29, 2024 and May 31, 2023,
respectively |
|
|
226,859 |
|
|
|
230,851 |
|
Other assets |
|
|
30,900 |
|
|
|
14,339 |
|
Property, plant and
equipment: |
|
|
|
|
|
|
Land |
|
|
12,203 |
|
|
|
12,120 |
|
Buildings and improvements |
|
|
142,522 |
|
|
|
139,514 |
|
Machinery and equipment |
|
|
417,777 |
|
|
|
403,885 |
|
Construction in progress |
|
|
39,260 |
|
|
|
24,779 |
|
Total property, plant and equipment |
|
|
611,762 |
|
|
|
580,298 |
|
Less: accumulated depreciation |
|
|
343,380 |
|
|
|
323,883 |
|
Total property, plant and equipment, net |
|
|
268,382 |
|
|
|
256,415 |
|
Non-current assets of discontinued operations |
|
|
- |
|
|
|
782,071 |
|
Total assets |
|
$ |
1,704,689 |
|
|
$ |
3,650,918 |
|
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
108,660 |
|
|
$ |
126,743 |
|
Accrued compensation, contributions to employee benefit plans and
related taxes |
|
|
47,657 |
|
|
|
46,782 |
|
Dividends payable |
|
|
8,916 |
|
|
|
18,330 |
|
Other accrued items |
|
|
29,697 |
|
|
|
37,801 |
|
Current operating lease liabilities |
|
|
6,555 |
|
|
|
6,682 |
|
Income taxes payable |
|
|
536 |
|
|
|
8,918 |
|
Current maturities of long-term debt |
|
|
267 |
|
|
|
264 |
|
Current liabilities associated of discontinued operations |
|
|
- |
|
|
|
472,038 |
|
Total current liabilities |
|
|
202,288 |
|
|
|
717,558 |
|
Other liabilities |
|
|
76,300 |
|
|
|
71,766 |
|
Distributions in excess of investment in unconsolidated
affiliate |
|
|
116,775 |
|
|
|
117,297 |
|
Long-term debt |
|
|
297,695 |
|
|
|
689,718 |
|
Noncurrent operating lease liabilities |
|
|
15,103 |
|
|
|
18,326 |
|
Deferred income taxes |
|
|
82,086 |
|
|
|
82,356 |
|
Non-current liabilities of discontinued operations |
|
|
- |
|
|
|
132,269 |
|
Total liabilities |
|
|
790,247 |
|
|
|
1,829,290 |
|
Shareholders' equity - controlling interest |
|
|
912,096 |
|
|
|
1,696,011 |
|
Noncontrolling interests |
|
|
2,346 |
|
|
|
125,617 |
|
Total equity |
|
|
914,442 |
|
|
|
1,821,628 |
|
Total liabilities and equity |
|
$ |
1,704,689 |
|
|
$ |
3,650,918 |
|
|
|
WORTHINGTON ENTERPRISES, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (In
thousands) |
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
February 29, |
|
|
February 28, |
|
|
February 29, |
|
|
February 28, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
22,000 |
|
|
$ |
50,258 |
|
|
$ |
149,869 |
|
|
$ |
135,007 |
|
Adjustments to reconcile net earnings to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
11,949 |
|
|
|
28,153 |
|
|
|
68,281 |
|
|
|
84,508 |
|
Impairment of long-lived assets |
|
|
- |
|
|
|
484 |
|
|
|
1,401 |
|
|
|
796 |
|
Provision for (benefit from) deferred income taxes |
|
|
4,329 |
|
|
|
(5,525 |
) |
|
|
843 |
|
|
|
(20,198 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
1,534 |
|
|
|
- |
|
Bad debt expense (income) |
|
|
24 |
|
|
|
2,346 |
|
|
|
(430 |
) |
|
|
3,786 |
|
Equity in net income of unconsolidated affiliates, net of
distributions |
|
|
(2,926 |
) |
|
|
23,218 |
|
|
|
3,169 |
|
|
|
84,415 |
|
Net loss (gain) on sale of assets |
|
|
(14 |
) |
|
|
46 |
|
|
|
(348 |
) |
|
|
(4,988 |
) |
Stock-based compensation |
|
|
2,602 |
|
|
|
4,975 |
|
|
|
13,294 |
|
|
|
13,758 |
|
Changes in assets and liabilities, net of impact of
acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(18,124 |
) |
|
|
3,382 |
|
|
|
49,737 |
|
|
|
160,475 |
|
Inventories |
|
|
16,176 |
|
|
|
53,499 |
|
|
|
54,999 |
|
|
|
166,959 |
|
Accounts payable |
|
|
15,561 |
|
|
|
6,627 |
|
|
|
(59,534 |
) |
|
|
(195,489 |
) |
Accrued compensation and employee benefits |
|
|
7,190 |
|
|
|
(2,900 |
) |
|
|
(2,030 |
) |
|
|
(33,432 |
) |
Income taxes payable |
|
|
(725 |
) |
|
|
- |
|
|
|
(7,691 |
) |
|
|
(300 |
) |
Other operating items, net |
|
|
(7,921 |
) |
|
|
17,588 |
|
|
|
(28,288 |
) |
|
|
833 |
|
Net cash provided by operating activities |
|
|
50,121 |
|
|
|
182,151 |
|
|
|
244,806 |
|
|
|
396,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Investment in property, plant and equipment |
|
|
(10,017 |
) |
|
|
(22,748 |
) |
|
|
(72,191 |
) |
|
|
(68,715 |
) |
Acquisitions, net of cash acquired |
|
|
(8,707 |
) |
|
|
- |
|
|
|
(29,721 |
) |
|
|
(56,088 |
) |
Proceeds from sale of assets, net of selling costs |
|
|
- |
|
|
|
51 |
|
|
|
837 |
|
|
|
35,545 |
|
Investment in note receivable |
|
|
100 |
|
|
|
- |
|
|
|
(14,900 |
) |
|
|
- |
|
Investment in non-marketable equity securities |
|
|
(75 |
) |
|
|
(20 |
) |
|
|
(1,614 |
) |
|
|
(270 |
) |
Net proceeds from sale of investment in ArtiFlex |
|
|
35 |
|
|
|
(300 |
) |
|
|
- |
|
|
|
35,795 |
|
Distributions from unconsolidated affiliate |
|
|
|
|
|
|
|
|
1,085 |
|
|
|
|
Net cash used by investing activities |
|
|
(18,664 |
) |
|
|
(23,017 |
) |
|
|
(116,504 |
) |
|
|
(53,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Distribution from Separation of Worthington Steel, Inc. |
|
|
150,000 |
|
|
|
- |
|
|
|
150,000 |
|
|
|
- |
|
Transfers to Worthington Steel, Inc. at Separation |
|
|
(218,048 |
) |
|
|
- |
|
|
|
(218,048 |
) |
|
|
- |
|
Net proceeds from short-term borrowings (1) |
|
|
- |
|
|
|
(1,330 |
) |
|
|
172,187 |
|
|
|
(44,392 |
) |
Principal payments on long-term obligations |
|
|
(150,133 |
) |
|
|
(5,759 |
) |
|
|
(393,890 |
) |
|
|
(5,909 |
) |
Proceeds from issuance of common shares, net of tax
withholdings |
|
|
(1,023 |
) |
|
|
704 |
|
|
|
(15,360 |
) |
|
|
(3,411 |
) |
Payments to noncontrolling interests |
|
|
- |
|
|
|
- |
|
|
|
(1,920 |
) |
|
|
(11,760 |
) |
Dividends paid |
|
|
(15,849 |
) |
|
|
(15,101 |
) |
|
|
(48,907 |
) |
|
|
(44,166 |
) |
Net cash provided (used) by financing
activities |
|
|
(235,053 |
) |
|
|
(21,486 |
) |
|
|
(355,938 |
) |
|
|
(109,638 |
) |
Increase (decrease) in cash and cash equivalents |
|
|
(203,596 |
) |
|
|
137,648 |
|
|
|
(227,636 |
) |
|
|
232,759 |
|
Cash and cash equivalents at beginning of period |
|
|
430,906 |
|
|
|
129,596 |
|
|
|
454,946 |
|
|
|
34,485 |
|
Cash and cash equivalents at end of period
(2) |
|
$ |
227,310 |
|
|
$ |
267,244 |
|
|
$ |
227,310 |
|
|
$ |
267,244 |
|
_______________________
- 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.
- 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
certain non-GAAP financial measures, including adjusted operating
income, adjusted net earnings from continuing operations
attributable to controlling interest and adjusted earnings per
diluted share from continuing operations attributable to
controlling interest, from their most comparable GAAP measure for
the three and nine months ended February 29, 2024, and
February 28, 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 February 29, 2024 |
|
|
|
Operating Income |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings - Continuing Operations |
|
|
Diluted EPS - Continuing Operations |
|
|
Effective Tax Rate |
|
GAAP |
|
$ |
4,281 |
|
|
$ |
40,471 |
|
|
$ |
18,471 |
|
|
$ |
22,000 |
|
|
$ |
0.44 |
|
|
|
45.6 |
% |
Restructuring and other expense, net |
|
|
698 |
|
|
|
698 |
|
|
|
(166 |
) |
|
|
532 |
|
|
|
0.01 |
|
|
|
|
Separation costs |
|
|
2,999 |
|
|
|
2,999 |
|
|
|
(712 |
) |
|
|
2,287 |
|
|
|
0.05 |
|
|
|
|
Pension settlement charge |
|
|
- |
|
|
|
8,103 |
|
|
|
(1,929 |
) |
|
|
6,174 |
|
|
|
0.12 |
|
|
|
|
One-time tax effects of Separation |
|
|
- |
|
|
|
- |
|
|
|
9,197 |
|
|
|
9,197 |
|
|
|
0.18 |
|
|
|
|
Non-GAAP |
|
$ |
7,978 |
|
|
$ |
52,271 |
|
|
$ |
12,081 |
|
|
$ |
40,190 |
|
|
$ |
0.80 |
|
|
|
23.1 |
% |
|
|
Three Months Ended February 28, 2023 |
|
|
|
Operating Income |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings - Continuing Operations |
|
|
Diluted EPS - Continuing Operations |
|
|
Effective Tax Rate |
|
GAAP |
|
$ |
4,000 |
|
|
$ |
37,142 |
|
|
$ |
7,391 |
|
|
$ |
29,751 |
|
|
$ |
0.60 |
|
|
|
19.9 |
% |
Corporate costs eliminated at Separation |
|
|
10,369 |
|
|
|
10,369 |
|
|
|
(2,469 |
) |
|
|
7,900 |
|
|
|
0.16 |
|
|
|
|
True-up of Level5 earnout accrual |
|
|
(1,050 |
) |
|
|
(1,050 |
) |
|
|
253 |
|
|
|
(797 |
) |
|
|
(0.02 |
) |
|
|
|
Impairment of long-lived assets |
|
|
484 |
|
|
|
484 |
|
|
|
(115 |
) |
|
|
369 |
|
|
|
0.01 |
|
|
|
|
Restructuring and other income, net |
|
|
823 |
|
|
|
823 |
|
|
|
(191 |
) |
|
|
632 |
|
|
|
0.02 |
|
|
|
|
Separation costs |
|
|
2,305 |
|
|
|
2,305 |
|
|
|
(549 |
) |
|
|
1,756 |
|
|
|
0.04 |
|
|
|
|
Loss on sale of investment in ArtiFlex |
|
|
- |
|
|
|
300 |
|
|
|
(43 |
) |
|
|
257 |
|
|
|
- |
|
|
|
|
Non-GAAP |
|
$ |
16,931 |
|
|
$ |
50,373 |
|
|
$ |
10,505 |
|
|
$ |
39,868 |
|
|
$ |
0.81 |
|
|
|
20.9 |
% |
|
|
Nine Months Ended February 29, 2024 |
|
|
|
Operating Income (Loss) |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings - Continuing Operations |
|
|
Diluted EPS - Continuing Operations |
|
|
Effective Tax Rate |
|
GAAP |
|
$ |
(17,411 |
) |
|
$ |
100,804 |
|
|
$ |
34,041 |
|
|
$ |
66,763 |
|
|
$ |
1.33 |
|
|
|
33.8 |
% |
Corporate costs eliminated at Separation |
|
|
19,343 |
|
|
|
19,343 |
|
|
|
(4,606 |
) |
|
|
14,737 |
|
|
|
0.30 |
|
|
|
|
Restructuring and other income, net |
|
|
704 |
|
|
|
704 |
|
|
|
(168 |
) |
|
|
536 |
|
|
|
0.01 |
|
|
|
|
Separation costs |
|
|
12,465 |
|
|
|
12,465 |
|
|
|
(2,968 |
) |
|
|
9,497 |
|
|
|
0.19 |
|
|
|
|
Pension settlement charge |
|
|
- |
|
|
|
8,103 |
|
|
|
(1,929 |
) |
|
|
6,174 |
|
|
|
0.12 |
|
|
|
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
1,534 |
|
|
|
(365 |
) |
|
|
1,169 |
|
|
|
0.02 |
|
|
|
|
Gain on sale of assets in equity income |
|
|
- |
|
|
|
(2,780 |
) |
|
|
662 |
|
|
|
(2,118 |
) |
|
|
(0.04 |
) |
|
|
|
One-time tax effects of Separation |
|
|
- |
|
|
|
- |
|
|
|
9,197 |
|
|
|
9,197 |
|
|
|
0.18 |
|
|
|
|
Non-GAAP |
|
$ |
15,101 |
|
|
$ |
140,173 |
|
|
$ |
34,218 |
|
|
$ |
105,955 |
|
|
$ |
2.11 |
|
|
|
24.4 |
% |
|
|
Nine Months Ended February 28, 2023 |
|
|
|
Operating Income |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings - Continuing Operations |
|
|
Diluted EPS - Continuing Operations |
|
|
Effective Tax Rate |
|
GAAP |
|
$ |
14,518 |
|
|
$ |
96,334 |
|
|
$ |
20,709 |
|
|
$ |
75,625 |
|
|
$ |
1.53 |
|
|
|
21.5 |
% |
Corporate costs eliminated at Separation |
|
|
31,108 |
|
|
|
31,108 |
|
|
|
(7,391 |
) |
|
|
23,717 |
|
|
|
0.48 |
|
|
|
|
Impairment of long-lived assets |
|
|
484 |
|
|
|
484 |
|
|
|
(115 |
) |
|
|
369 |
|
|
|
0.01 |
|
|
|
|
Restructuring and other income, net |
|
|
(354 |
) |
|
|
(354 |
) |
|
|
85 |
|
|
|
(269 |
) |
|
|
(0.01 |
) |
|
|
|
Separation costs |
|
|
3,572 |
|
|
|
3,572 |
|
|
|
(854 |
) |
|
|
2,718 |
|
|
|
0.06 |
|
|
|
|
Pension settlement charge |
|
|
- |
|
|
|
4,774 |
|
|
|
(1,142 |
) |
|
|
3,632 |
|
|
|
0.07 |
|
|
|
|
Loss on sale of investment in Artiflex |
|
|
- |
|
|
|
16,059 |
|
|
|
(3,842 |
) |
|
|
12,217 |
|
|
|
0.25 |
|
|
|
|
Non-GAAP |
|
$ |
49,328 |
|
|
$ |
151,977 |
|
|
$ |
33,968 |
|
|
$ |
118,009 |
|
|
$ |
2.39 |
|
|
|
22.4 |
% |
To further assist in the analysis of segment
results for the three and nine months ended February 29, 2024, and
February 28, 2023, the following supplemental information has been
provided, including net sales, volume, and adjusted EBITDA and
adjusted EBITDA margin, which are non-GAAP financial measures used
by management to evaluate ongoing segment operating performance and
allocate resources. The summarized segment information below
includes a reconciliation of adjusted EBITDA to its most comparable
GAAP measure, which is operating income for purposes of measuring
segment profit.
For periods prior to the Separation, we have
also included adjusted EBITDA and adjusted EBITDA margin, on a pro
forma basis, to illustrate estimated effects of the post-Separation
relationship between us and Worthington Steel under our 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 February 29, 2024 |
|
|
|
|
|
|
|
|
Sustainable |
|
|
Unallocated |
|
|
|
|
|
Consumer |
|
|
Building |
|
|
Energy |
|
|
Corporate |
|
|
|
|
|
Products |
|
|
Products |
|
|
Solutions |
|
|
and Other |
|
|
Consolidated |
|
Volume (units) |
|
19,010 |
|
|
|
3,422 |
|
|
|
143 |
|
|
n/a |
|
|
|
22,575 |
|
Net sales |
$ |
133,181 |
|
|
$ |
148,190 |
|
|
$ |
35,384 |
|
|
n/a |
|
|
$ |
316,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
21,352 |
|
|
$ |
2,703 |
|
|
$ |
(4,848 |
) |
|
$ |
(14,926 |
) |
|
$ |
4,281 |
|
Restructuring and other expense, net |
|
- |
|
|
|
84 |
|
|
|
- |
|
|
|
614 |
|
|
|
698 |
|
Separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,999 |
|
|
|
2,999 |
|
Adjusted operating income (loss) |
|
21,352 |
|
|
|
2,787 |
|
|
|
(4,848 |
) |
|
|
(11,313 |
) |
|
|
7,978 |
|
Miscellaneous income (expense), net (1) |
|
12 |
|
|
|
154 |
|
|
|
328 |
|
|
|
613 |
|
|
|
1,107 |
|
Equity in net income of unconsolidated affiliates |
|
- |
|
|
|
43,813 |
|
|
|
- |
|
|
|
(578 |
) |
|
|
43,235 |
|
Adjusted EBIT |
$ |
21,364 |
|
|
$ |
46,754 |
|
|
$ |
(4,520 |
) |
|
$ |
(11,278 |
) |
|
$ |
52,320 |
|
Depreciation and amortization |
|
3,960 |
|
|
|
5,985 |
|
|
|
1,853 |
|
|
|
151 |
|
|
|
11,949 |
|
Stock-based compensation |
|
325 |
|
|
|
320 |
|
|
|
- |
|
|
|
1,957 |
|
|
|
2,602 |
|
Adjusted EBITDA |
$ |
25,649 |
|
|
$ |
53,059 |
|
|
$ |
(2,667 |
) |
|
$ |
(9,170 |
) |
|
$ |
66,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
19.3 |
% |
|
|
35.8 |
% |
|
|
(7.5 |
%) |
|
NM |
|
|
|
21.1 |
% |
|
Three Months Ended February 28, 2023 |
|
|
|
|
|
|
|
|
Sustainable |
|
|
Unallocated |
|
|
|
|
|
Consumer |
|
|
Building |
|
|
Energy |
|
|
Corporate |
|
|
|
|
|
Products |
|
|
Products |
|
|
Solutions |
|
|
and Other |
|
|
Consolidated |
|
Volume (units) |
|
18,154 |
|
|
|
3,499 |
|
|
|
122 |
|
|
n/a |
|
|
|
21,775 |
|
Net Sales |
$ |
130,684 |
|
|
$ |
183,839 |
|
|
$ |
31,792 |
|
|
n/a |
|
|
$ |
346,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
14,594 |
|
|
$ |
9,900 |
|
|
$ |
(1,403 |
) |
|
$ |
(19,091 |
) |
|
$ |
4,000 |
|
Corporate costs eliminated at Separation (4) |
|
2,611 |
|
|
|
2,616 |
|
|
|
- |
|
|
|
5,142 |
|
|
|
10,369 |
|
True-up of Level5 earnout accrual |
|
(1,050 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,050 |
) |
Impairment of long-lived assets |
|
- |
|
|
|
484 |
|
|
|
- |
|
|
|
- |
|
|
|
484 |
|
Restructuring and other income, net |
|
206 |
|
|
|
617 |
|
|
|
- |
|
|
|
- |
|
|
|
823 |
|
Separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,305 |
|
|
|
2,305 |
|
Adjusted operating income (loss) |
|
16,361 |
|
|
|
13,617 |
|
|
|
(1,403 |
) |
|
|
(11,644 |
) |
|
|
16,931 |
|
Miscellaneous income (expense), net |
|
(12 |
) |
|
|
122 |
|
|
|
(37 |
) |
|
|
144 |
|
|
|
217 |
|
Equity in net income of unconsolidated affiliates (2) |
|
- |
|
|
|
37,836 |
|
|
|
- |
|
|
|
(425 |
) |
|
|
37,411 |
|
Adjusted EBIT |
$ |
16,349 |
|
|
$ |
51,575 |
|
|
$ |
(1,440 |
) |
|
$ |
(11,925 |
) |
|
$ |
54,559 |
|
Depreciation and amortization |
|
4,264 |
|
|
|
5,666 |
|
|
|
1,652 |
|
|
|
311 |
|
|
|
11,893 |
|
Stock-based compensation |
|
487 |
|
|
|
856 |
|
|
|
- |
|
|
|
2,421 |
|
|
|
3,764 |
|
Adjusted EBITDA |
$ |
21,100 |
|
|
$ |
58,097 |
|
|
$ |
212 |
|
|
$ |
(9,193 |
) |
|
$ |
70,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
16.1 |
% |
|
|
31.6 |
% |
|
|
0.7 |
% |
|
NM |
|
|
|
20.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma adjusted EBITDA |
$ |
20,625 |
|
|
$ |
57,622 |
|
|
$ |
212 |
|
|
$ |
(9,110 |
) |
|
$ |
69,349 |
|
Pro forma Adjusted EBITDA margin |
|
15.8 |
% |
|
|
31.3 |
% |
|
|
0.7 |
% |
|
NM |
|
|
|
20.0 |
% |
|
Nine Months Ended February 29, 2024 |
|
|
|
|
|
|
|
|
Sustainable |
|
|
Unallocated |
|
|
|
|
|
Consumer |
|
|
Building |
|
|
Energy |
|
|
Corporate |
|
|
|
|
|
Products |
|
|
Products |
|
|
Solutions |
|
|
and Other |
|
|
Consolidated |
|
Volume (units) |
|
50,973 |
|
|
|
10,578 |
|
|
|
363 |
|
|
n/a |
|
|
|
61,914 |
|
Net Sales |
$ |
369,923 |
|
|
$ |
465,421 |
|
|
$ |
91,558 |
|
|
n/a |
|
|
$ |
926,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
34,207 |
|
|
$ |
8,971 |
|
|
$ |
(13,025 |
) |
|
$ |
(47,564 |
) |
|
$ |
(17,411 |
) |
Corporate costs eliminated at Separation (4) |
|
4,707 |
|
|
|
4,650 |
|
|
|
- |
|
|
|
9,986 |
|
|
|
19,343 |
|
Restructuring and other expense, net |
|
- |
|
|
|
84 |
|
|
|
- |
|
|
|
620 |
|
|
|
704 |
|
Separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,465 |
|
|
|
12,465 |
|
Adjusted operating income (loss) |
|
38,914 |
|
|
|
13,705 |
|
|
|
(13,025 |
) |
|
|
(24,493 |
) |
|
|
15,101 |
|
Miscellaneous income (expense), net (1) |
|
49 |
|
|
|
452 |
|
|
|
1,165 |
|
|
|
454 |
|
|
|
2,120 |
|
Equity in net income of unconsolidated affiliates (2) |
|
- |
|
|
|
124,032 |
|
|
|
- |
|
|
|
516 |
|
|
|
124,548 |
|
Adjusted EBIT (3) |
$ |
38,963 |
|
|
$ |
138,189 |
|
|
$ |
(11,860 |
) |
|
$ |
(23,523 |
) |
|
$ |
141,769 |
|
Depreciation and amortization |
|
12,064 |
|
|
|
17,911 |
|
|
|
5,426 |
|
|
|
837 |
|
|
|
36,238 |
|
Stock-based compensation |
|
1,510 |
|
|
|
2,401 |
|
|
|
- |
|
|
|
5,911 |
|
|
|
9,822 |
|
Adjusted EBITDA (3) |
$ |
52,537 |
|
|
$ |
158,501 |
|
|
$ |
(6,434 |
) |
|
$ |
(16,775 |
) |
|
$ |
187,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
14.2 |
% |
|
|
34.1 |
% |
|
|
(7.0 |
%) |
|
NM |
|
|
|
20.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma adjusted EBITDA |
$ |
51,637 |
|
|
$ |
157,601 |
|
|
$ |
(6,434 |
) |
|
$ |
(16,609 |
) |
|
$ |
186,195 |
|
Pro forma Adjusted EBITDA margin |
|
14.0 |
% |
|
|
33.9 |
% |
|
|
(7.0 |
%) |
|
NM |
|
|
|
20.1 |
% |
|
Nine Months Ended February 28, 2023 |
|
|
|
|
|
|
|
|
Sustainable |
|
|
Unallocated |
|
|
|
|
|
Consumer |
|
|
Building |
|
|
Energy |
|
|
Corporate |
|
|
|
|
|
Products |
|
|
Products |
|
|
Solutions |
|
|
and Other |
|
|
Consolidated |
|
Volume (units) |
|
55,068 |
|
|
|
10,842 |
|
|
|
411 |
|
|
n/a |
|
|
|
66,321 |
|
Net Sales |
$ |
406,479 |
|
|
$ |
542,536 |
|
|
$ |
100,679 |
|
|
n/a |
|
|
$ |
1,049,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
46,422 |
|
|
$ |
12,250 |
|
|
$ |
(1,709 |
) |
|
$ |
(42,445 |
) |
|
$ |
14,518 |
|
Corporate costs eliminated at Separation (4) |
|
7,833 |
|
|
|
7,849 |
|
|
|
- |
|
|
|
15,426 |
|
|
|
31,108 |
|
Impairment of long-lived assets |
|
- |
|
|
|
484 |
|
|
|
- |
|
|
|
- |
|
|
|
484 |
|
Restructuring and other income, net |
|
206 |
|
|
|
617 |
|
|
|
- |
|
|
|
(1,177 |
) |
|
|
(354 |
) |
Separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,572 |
|
|
|
3,572 |
|
Adjusted operating income (loss) |
$ |
54,461 |
|
|
$ |
21,200 |
|
|
$ |
(1,709 |
) |
|
$ |
(24,624 |
) |
|
$ |
49,328 |
|
Miscellaneous income (expense), net (1) |
|
(78 |
) |
|
|
405 |
|
|
|
19 |
|
|
|
(69 |
) |
|
|
277 |
|
Equity in net income of unconsolidated affiliates (2) |
|
- |
|
|
|
116,809 |
|
|
|
- |
|
|
|
1,254 |
|
|
|
118,063 |
|
Adjusted EBIT |
$ |
54,383 |
|
|
$ |
138,414 |
|
|
$ |
(1,690 |
) |
|
$ |
(23,439 |
) |
|
$ |
167,668 |
|
Depreciation and amortization |
|
12,002 |
|
|
|
16,479 |
|
|
|
4,622 |
|
|
|
1,099 |
|
|
|
34,202 |
|
Stock-based compensation |
|
1,461 |
|
|
|
2,565 |
|
|
|
- |
|
|
|
6,392 |
|
|
|
10,418 |
|
Adjusted EBITDA |
$ |
67,846 |
|
|
$ |
157,458 |
|
|
$ |
2,932 |
|
|
$ |
(15,948 |
) |
|
$ |
212,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin |
|
16.7 |
% |
|
|
29.0 |
% |
|
|
2.9 |
% |
|
NM |
|
|
|
20.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma adjusted EBITDA |
$ |
66,371 |
|
|
$ |
155,983 |
|
|
$ |
2,932 |
|
|
$ |
(15,699 |
) |
|
$ |
209,587 |
|
Pro forma Adjusted EBITDA margin |
|
16.3 |
% |
|
|
28.8 |
% |
|
|
2.9 |
% |
|
NM |
|
|
|
20.0 |
% |
Non-GAAP Footnotes:
- Excludes pre-tax charges of $8,103
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.
- Excludes the following items reflected in equity income in our
consolidated statements of earnings:
- For the three and nine months ended
February 29, 2024, our share of the gain realized by our
engineered cabs joint venture, Taxi Workhorse, in connection with
the sale of the joint venture’s operations in Brazil, which totaled
$2,780 on a pre-tax basis.
- For the nine months ended February
28, 2023, the loss realized in connection with the August 3, 2022,
sale of our then 50% noncontrolling equity investment in ArtiFlex
Manufacturing, LLC, or $16,059 on a pre-tax basis, including $300
of deal costs during the three months ended February 28, 2023.
- Excludes a pre-tax loss of $1,534
realized in connection with the July 28, 2023, early redemption of
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.
- 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 Worthington Steel but did not meet the requirements to
be presented as discontinued operations.
The following table outlines our equity income
(loss) by unconsolidated affiliate for the periods presented:
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
February 29, |
|
|
February 28, |
|
|
February 29, |
|
|
February 28, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
WAVE |
$ |
26,022 |
|
|
$ |
18,906 |
|
|
$ |
75,765 |
|
|
$ |
61,681 |
|
ClarkDietrich |
|
17,791 |
|
|
|
18,930 |
|
|
|
48,267 |
|
|
|
55,128 |
|
ArtiFlex |
|
- |
|
|
|
(300 |
) |
|
|
- |
|
|
|
(13,700 |
) |
Workhorse |
|
(578 |
) |
|
|
(425 |
) |
|
|
3,296 |
|
|
|
(1,105 |
) |
Total equity income |
|
|
$ |
43,235 |
|
|
$ |
37,111 |
|
|
$ |
127,328 |
|
|
$ |
102,004 |
|
WORTHINGTON ENTERPRISES, INC.
USE OF NON-GAAP MEASURES AND DEFINITIONS
NON-GAAP MEASURES. These
materials include certain financial measures that are not
calculated and precented 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 of 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 filing date.
Sonya L. HigginbothamSenior Vice PresidentChief
of Corporate Affairs, Communications and
Sustainability614.438.7391sonya.higginbotham@wthg.com
Marcus A. RogierTreasurer and Investor
Relations Officer614.840.4663marcus.rogier@wthg.com
200 Old Wilson Bridge Rd.Columbus, Ohio
43085WorthingtonEnterprises.com
Worthington Enterprises (NYSE:WOR)
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