COLUMBUS, Ohio, Dec. 17, 2024 (GLOBE NEWSWIRE) -- Worthington Enterprises, Inc. (NYSE: WOR), a market-leading designer and manufacturer of innovative products and solutions that serve customers in the building products and consumer products end markets, today reported results for its fiscal 2025 second quarter ended November 30, 2024.
Second Quarter Highlights (all comparisons to the second quarter of fiscal 2024):
- Net sales of $274.0 million, decreased 8% driven by the deconsolidation of the former Sustainable Energy Solutions segment ("SES")
- Adjusted EPS of $0.60 from continuing operations (diluted), up 5% and adjusted EBITDA of $56.2 million, up 2%, despite lower net sales
- Repurchased 200,000 shares of common stock for $8.1 million leaving 5,715,000 shares remaining on the Company's share repurchase authorization
- Declared a quarterly dividend of $0.17 per share payable on March 28, 2025, to shareholders of record at the close of business on March 14, 2025
Financial highlights, on a continuing operations basis, for the current year and prior year quarters are as follows:
| (U.S. dollars in millions, except per share amounts) | 2Q 2025 | 2Q 2024 | ||||||||||
| Net sales | $ | 274.0 | $ | 298.2 | ||||||||
| Operating income (loss) | 3.5 | (14.4 | ) | |||||||||
| Earnings before income taxes | 37.1 | 24.5 | ||||||||||
| Net earnings from continuing operations | 28.3 | 17.9 | ||||||||||
| Earnings per share ("EPS") from continuing operations - diluted | 0.56 | 0.36 | ||||||||||
| Additional Non-GAAP Financial Measures (1) | ||||||||||||
| Adjusted operating income | $ | 6.1 | $ | 2.4 | ||||||||
| Adjusted EBITDA from continuing operations | 56.2 | 55.0 | ||||||||||
| Adjusted EPS from continuing operations - diluted | 0.60 | 0.57 | ||||||||||
| ____________________ | |
| (1) | Refer to the "Use of Non-GAAP Financial Measures and Definitions" for additional information regarding our use of non-GAAP measures, including reconciliation to the most comparable GAAP measures. |
"We delivered solid financial results for the quarter despite mild but persistent macro headwinds, achieving year over year and sequential growth in adjusted EBITDA and adjusted EPS," said Worthington Enterprises President and CEO Joe Hayek. "Consumer Products' earnings growth was driven by increased volumes and improved gross margins. Building Products generated higher earnings driven by the inclusion of Ragasco and stronger contributions from WAVE."
Consolidated Quarterly Results
Net sales for the second quarter of fiscal 2025 were $274.0 million, a decrease of $24.2 million, or 8.1%, from the prior year quarter, primarily driven by the deconsolidation of SES during the fourth quarter of fiscal 2024. Net sales in the prior year quarter include $27.5 million related to SES, which is now operated as an unconsolidated joint venture and results are reported within equity income on the consolidated statement of earnings beginning June 1, 2024.
Operating income of $3.5 million was favorable $17.9 million to the operating loss in the prior year quarter due to certain nonrecurring effects of the separation of the former Steel Processing business ("Separation") in the prior year, including one-time Separation costs and stranded corporate costs eliminated post-Separation, partially offset by higher restructuring and other expense in the current quarter. Excluding these items, adjusted operating income was $6.1 million, an increase of $3.8 million over the prior year quarter, primarily driven by the inclusion of Ragasco, which was acquired on June 3, 2024, along with higher overall gross margin.
Equity income decreased $4.1 million from the prior year quarter to $34.6 million, on lower contributions from ClarkDietrich in the current year quarter and the $2.8 million gain in the prior year quarter related to the divestiture of the Brazilian operations of the engineered cabs joint venture. These headwinds were partially offset by a $3.1 million increase in equity earnings from WAVE. ClarkDietrich contributed equity earnings of $9.7 million, down $4.0 million from the prior year quarter, but up $1.0 million sequentially from the first quarter of fiscal 2025.
Income tax expense was $9.1 million in the second quarter of fiscal 2025 compared to $6.6 million in the prior year quarter. The increase was driven by higher pre-tax earnings from continuing operations, partially offset by a lower estimated annual effective tax rate of 24.1%, down from 25.7% in the prior year quarter.
Balance Sheet and Cash Flow
The Company ended the quarter with cash of $193.8 million, down $50.4 million from May 31, 2024, primarily driven by the acquisition of Ragasco. During the second quarter, the Company generated operating cash flow of $49.1 million, of which $15.2 million was invested in capital projects, including approximately $4.9 million related to previously announced facility modernization projects.
Total debt at quarter end consisted entirely of long-term debt and was relatively unchanged from May 31, 2024, at $295.7 million. The Company had no borrowings under its revolving credit facility as of November 30, 2024, leaving $500.0 million available for future use.
Quarterly Segment Results
Consumer Products generated net sales of $116.7 million during the second quarter of fiscal 2025, down $2.6 million, or 2.2%, from the prior year quarter, primarily driven by a less favorable product mix that was partially offset by higher volumes. Adjusted EBITDA was $15.5 million, up $2.8 million over the prior year quarter, on the combined impact of higher volumes and gross margin improvement partially offset by higher SG&A expense.
Building Products generated net sales of $157.3 million during the second quarter of fiscal 2025, an increase of $6.0 million, or 4.0%, over the prior year quarter on contributions from Ragasco, partially offset by lower overall volumes. Adjusted EBITDA of $47.2 million, was up $1.4 million over the prior year quarter, as contributions from Ragasco and higher equity income from WAVE were partially offset by the combined impact of lower volumes and lower contributions of equity income from ClarkDietrich.
Outlook
"Our team continues to navigate the current environment effectively, maintaining a strong focus on delivering value-added solutions and products for our customers," Hayek said. "While we are pleased with our performance, we continue to set our sights higher. We have improved our value propositions in multiple product lines over the last year, and we are very well positioned as growth returns to our end markets. Led by our people-first, performance-based culture, leveraging a solid balance sheet and a commitment to transformation, innovation and M&A, we are confident in our ability to optimize our business, drive sustainable growth and deliver long-term value to our shareholders."
Conference Call
The Company will review fiscal 2025 second quarter results during its quarterly conference call on December 18, 2024, at 8:30 a.m. Eastern Time. Details regarding the conference call can be found on the Company website at www.WorthingtonEnterprises.com.
About Worthington Enterprises
Worthington Enterprises (NYSE: WOR) is a designer and manufacturer of market-leading brands that help enable people to live safer, healthier and more expressive lives. The Company operates with two primary business segments: Building Products and Consumer Products. The Building Products segment includes cooking, heating, cooling and water solutions, architectural and acoustical grid ceilings and metal framing and accessories. The Consumer Products segment provides solutions for the tools, outdoor living and celebrations categories. Product brands within the Worthington Enterprises portfolio include Balloon Time®, Bernzomatic®, Coleman® (propane cylinders), CoMet®, Garden Weasel®, General®, HALO, Hawkeye, Level5 Tools®, Mag Torch®, NEXI, Pactool International®, PowerCore, Ragasco®, Well-X-Trol® and XLite, among others. The Company also serves the growing global hydrogen ecosystem via a joint venture focused on on-board fueling systems and gas containment solutions.
Headquartered in Columbus, Ohio, Worthington Enterprises and its joint ventures employ approximately 6,000 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, 2024.
Forward-looking statements should be construed in the light of such risks. The Company notes these factors for investors as contemplated by the Act. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. The Company does not undertake, and hereby disclaims, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
| WORTHINGTON ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| November 30, | November 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net sales | $ | 274,046 | $ | 298,229 | $ | 531,354 | $ | 610,147 | ||||||||
| Cost of goods sold | 199,987 | 234,951 | 394,800 | 477,239 | ||||||||||||
| Gross profit | 74,059 | 63,278 | 136,554 | 132,908 | ||||||||||||
| Selling, general and administrative expense | 67,918 | 70,583 | 133,954 | 145,128 | ||||||||||||
| Restructuring and other expense, net | 2,620 | 6 | 3,778 | 6 | ||||||||||||
| Separation costs | - | 7,056 | - | 9,466 | ||||||||||||
| Operating income (loss) | 3,521 | (14,367 | ) | (1,178 | ) | (21,692 | ) | |||||||||
| Other income (expense): | ||||||||||||||||
| Miscellaneous income, net | 65 | 714 | 551 | 1,013 | ||||||||||||
| Loss on extinguishment of debt | - | - | - | (1,534 | ) | |||||||||||
| Interest expense, net | (1,033 | ) | (472 | ) | (1,522 | ) | (1,546 | ) | ||||||||
| Equity in net income of unconsolidated affiliates | 34,556 | 38,668 | 70,048 | 84,092 | ||||||||||||
| Earnings before income taxes | 37,109 | 24,543 | 67,899 | 60,333 | ||||||||||||
| Income tax expense | 9,100 | 6,609 | 15,882 | 15,569 | ||||||||||||
| Net earnings from continuing operations | 28,009 | 17,934 | 52,017 | 44,764 | ||||||||||||
| Net earnings from discontinued operations | - | 10,233 | - | 83,106 | ||||||||||||
| Net earnings | 28,009 | 28,167 | 52,017 | 127,870 | ||||||||||||
| Net earnings (loss) attributable to noncontrolling interests | (251 | ) | 3,865 | (496 | ) | 7,461 | ||||||||||
| Net earnings attributable to controlling interest | $ | 28,260 | $ | 24,302 | $ | 52,513 | $ | 120,409 | ||||||||
| Amounts attributable to controlling interest: | ||||||||||||||||
| Net earnings from continuing operations | $ | 28,260 | $ | 17,934 | $ | 52,513 | $ | 44,764 | ||||||||
| Net earnings from discontinued operations | - | 6,368 | - | 75,645 | ||||||||||||
| Net earnings attributable to controlling interest | $ | 28,260 | $ | 24,302 | $ | 52,513 | $ | 120,409 | ||||||||
| Earnings per share from continuing operations - basic | $ | 0.57 | $ | 0.36 | $ | 1.06 | $ | 0.91 | ||||||||
| Earnings per share from discontinued operations - basic | - | 0.13 | - | 1.55 | ||||||||||||
| Net earnings per share attributable to controlling interest - basic | $ | 0.57 | $ | 0.49 | $ | 1.06 | $ | 2.46 | ||||||||
| Earnings per share from continuing operations - diluted | $ | 0.56 | $ | 0.36 | $ | 1.04 | $ | 0.89 | ||||||||
| Earnings per share from discontinued operations - diluted | - | 0.13 | - | 1.51 | ||||||||||||
| Net earnings per share attributable to controlling interest - diluted | $ | 0.56 | $ | 0.49 | $ | 1.04 | $ | 2.40 | ||||||||
| Weighted average common shares outstanding - basic | 49,464 | 49,186 | 49,475 | 49,013 | ||||||||||||
| Weighted average common shares outstanding - diluted | 50,138 | 50,042 | 50,264 | 50,102 | ||||||||||||
| Cash dividends declared per share | $ | 0.17 | $ | 0.32 | $ | 0.34 | $ | 0.64 | ||||||||
| CONSOLIDATED BALANCE SHEETS WORTHINGTON ENTERPRISES, INC. (In thousands) | ||||||||
| November 30, | May 31, | |||||||
| 2024 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 193,805 | $ | 244,225 | ||||
| Receivables, less allowances of $2,553 and $343, respectively | 184,925 | 199,798 | ||||||
| Inventories | ||||||||
| Raw materials | 74,921 | 66,040 | ||||||
| Work in process | 10,577 | 11,668 | ||||||
| Finished products | 93,965 | 86,907 | ||||||
| Total inventories | 179,463 | 164,615 | ||||||
| Income taxes receivable | 9,417 | 17,319 | ||||||
| Prepaid expenses and other current assets | 35,389 | 47,936 | ||||||
| Total current assets | 602,999 | 673,893 | ||||||
| Investment in unconsolidated affiliates | 135,218 | 144,863 | ||||||
| Operating lease assets | 23,015 | 18,667 | ||||||
| Goodwill | 369,799 | 331,595 | ||||||
| Other intangibles, net of accumulated amortization of $89,638 and $83,242, respectively | 244,102 | 221,071 | ||||||
| Other assets | 22,309 | 21,342 | ||||||
| Property, plant and equipment: | ||||||||
| Land | 8,632 | 8,657 | ||||||
| Buildings and improvements | 129,684 | 123,478 | ||||||
| Machinery and equipment | 356,678 | 321,836 | ||||||
| Construction in progress | 27,330 | 24,504 | ||||||
| Total property, plant and equipment | 522,324 | 478,475 | ||||||
| Less: accumulated depreciation | 262,749 | 251,269 | ||||||
| Total property, plant and equipment, net | 259,575 | 227,206 | ||||||
| Total assets | $ | 1,657,017 | $ | 1,638,637 | ||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 83,262 | $ | 91,605 | ||||
| Accrued compensation, contributions to employee benefit plans and related taxes | 28,499 | 41,974 | ||||||
| Dividends payable | 9,040 | 9,038 | ||||||
| Other accrued items | 42,357 | 29,061 | ||||||
| Current operating lease liabilities | 5,396 | 6,228 | ||||||
| Income taxes payable | 910 | 470 | ||||||
| Total current liabilities | 169,464 | 178,376 | ||||||
| Other liabilities | 60,305 | 62,243 | ||||||
| Distributions in excess of investment in unconsolidated affiliate | 110,763 | 111,905 | ||||||
| Long-term debt | 295,721 | 298,133 | ||||||
| Noncurrent operating lease liabilities | 18,090 | 12,818 | ||||||
| Deferred income taxes | 89,716 | 84,150 | ||||||
| Total liabilities | 744,059 | 747,625 | ||||||
| Shareholders' equity - controlling interest | 911,321 | 888,879 | ||||||
| Noncontrolling interests | 1,637 | 2,133 | ||||||
| Total equity | 912,958 | 891,012 | ||||||
| Total liabilities and equity | $ | 1,657,017 | $ | 1,638,637 | ||||
| WORTHINGTON ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| November 30, | November 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating activities: | ||||||||||||||||
| Net earnings | $ | 28,009 | $ | 28,167 | $ | 52,017 | $ | 127,870 | ||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 11,927 | 28,007 | 23,757 | 56,332 | ||||||||||||
| Impairment of long-lived assets | - | - | - | 1,401 | ||||||||||||
| Provision for (benefit from) deferred income taxes | 2,682 | 1,968 | (2,855 | ) | (3,485 | ) | ||||||||||
| Loss on extinguishment of debt | - | - | - | 1,534 | ||||||||||||
| Bad debt expense (income) | 2,069 | 345 | 2,061 | (454 | ) | |||||||||||
| Equity in net income of unconsolidated affiliates, net of distributions | 4,268 | (4,129 | ) | 7,721 | 6,096 | |||||||||||
| Net gain on sale of assets | (508 | ) | (439 | ) | (526 | ) | (334 | ) | ||||||||
| Stock-based compensation | 5,937 | 6,175 | 9,862 | 10,691 | ||||||||||||
| Changes in assets and liabilities, net of impact of acquisitions: | ||||||||||||||||
| Receivables | (18,636 | ) | 76,704 | 9,530 | 67,861 | |||||||||||
| Inventories | 7,836 | 103,150 | 1,430 | 38,823 | ||||||||||||
| Accounts payable | 447 | (75,373 | ) | (12,646 | ) | (75,095 | ) | |||||||||
| Accrued compensation and employee benefits | (2,021 | ) | 2,794 | (13,466 | ) | (9,220 | ) | |||||||||
| Other operating items, net | 7,043 | (32,379 | ) | 13,314 | (27,334 | ) | ||||||||||
| Net cash provided by operating activities | 49,053 | 134,990 | 90,199 | 194,686 | ||||||||||||
| Investing activities: | ||||||||||||||||
| Investment in property, plant and equipment | (15,161 | ) | (32,876 | ) | (24,790 | ) | (62,174 | ) | ||||||||
| Acquisitions, net of cash acquired | 731 | (21,013 | ) | (88,156 | ) | (21,013 | ) | |||||||||
| Proceeds from sale of assets, net of selling costs | 1,616 | 751 | 13,385 | 802 | ||||||||||||
| Investment in non-marketable equity securities | (40 | ) | (1,500 | ) | (2,040 | ) | (1,540 | ) | ||||||||
| Investment in note receivable | - | - | - | (15,000 | ) | |||||||||||
| Distribution from unconsolidated affiliate | - | 1,085 | - | 1,085 | ||||||||||||
| Net cash used by investing activities | (12,854 | ) | (53,553 | ) | (101,601 | ) | (97,840 | ) | ||||||||
| Financing activities: | ||||||||||||||||
| Dividends paid | (8,969 | ) | (17,333 | ) | (17,085 | ) | (33,058 | ) | ||||||||
| Repurchase of common shares | (8,079 | ) | - | (14,882 | ) | - | ||||||||||
| Proceeds from issuance of common shares, net of tax withholdings | (3,893 | ) | (9,207 | ) | (7,051 | ) | (14,337 | ) | ||||||||
| Net proceeds from short-term borrowings (1) | - | 175,000 | - | 172,187 | ||||||||||||
| Principal payments on long-term obligations | - | - | - | (243,757 | ) | |||||||||||
| Payments to noncontrolling interests | - | - | - | (1,921 | ) | |||||||||||
| Net cash provided (used) by financing activities | (20,941 | ) | 148,460 | (39,018 | ) | (120,886 | ) | |||||||||
| Increase (decrease) in cash and cash equivalents | 15,258 | 229,897 | (50,420 | ) | (24,040 | ) | ||||||||||
| Cash and cash equivalents at beginning of period | 178,547 | 201,009 | 244,225 | 454,946 | ||||||||||||
| Cash and cash equivalents at end of period (2) | $ | 193,805 | $ | 430,906 | $ | 193,805 | $ | 430,906 | ||||||||
| ____________________ | |
| (1) | Net proceeds in fiscal 2024 consisted of borrowings under Worthington Steel's short-term credit facilities assumed by Worthington Steel in conjunction with the Separation. |
| (2) | The cash flows related to discontinued operations have not been segregated in the periods presented herein. Accordingly, the consolidated statements of cash flows include the results from continuing and discontinued operations. |
WORTHINGTON ENTERPRISES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands, except units and per share amounts
The following provides a reconciliation of non-GAAP financial measures, including adjusted operating income, adjusted earnings before income taxes, adjusted income tax expense (benefit), 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 six months ended November 30, 2024 and 2023. Refer to the Use of Non-GAAP Financial Measures and Definitions section herein and non-GAAP footnotes below for further information on these measures.
| Three Months Ended November 30, 2024 | |||||||||||||||||||
| Earnings | Income | Net Earnings | Diluted | ||||||||||||||||
| Before | Tax | from | EPS - | ||||||||||||||||
| Operating | Income | Expense | Continuing | Continuing | |||||||||||||||
| Income | Taxes | (Benefit) | Operations (1) | Operations | |||||||||||||||
| GAAP | $ | 3,521 | $ | 37,109 | $ | 9,100 | $ | 28,260 | 0.56 | ||||||||||
| Restructuring and other expense, net | 2,620 | 2,620 | (639 | ) | 1,981 | 0.04 | |||||||||||||
| Non-GAAP | $ | 6,141 | $ | 39,729 | $ | 9,739 | $ | 30,241 | $ | 0.60 | |||||||||
| Three Months Ended November 30, 2023 | |||||||||||||||||||
| Earnings | Income | Net Earnings | Diluted | ||||||||||||||||
| Operating | Before | Tax | from | EPS - | |||||||||||||||
| Income | Income | Expense | Continuing | Continuing | |||||||||||||||
| (Loss) | Taxes | (Benefit) | Operations (1) | Operations | |||||||||||||||
| GAAP | $ | (14,367 | ) | $ | 24,543 | $ | 6,609 | $ | 17,934 | $ | 0.36 | ||||||||
| Corporate costs eliminated at Separation | 9,671 | 9,671 | (2,344 | ) | 7,327 | 0.14 | |||||||||||||
| Restructuring and other expense, net | 6 | 6 | (1 | ) | 5 | - | |||||||||||||
| Separation costs | 7,056 | 7,056 | (1,690 | ) | 5,366 | 0.11 | |||||||||||||
| Gain on sale of assets in equity income | - | (2,780 | ) | 662 | (2,118 | ) | (0.04 | ) | |||||||||||
| Non-GAAP | $ | 2,366 | $ | 38,496 | $ | 9,982 | $ | 28,514 | $ | 0.57 | |||||||||
| Six Months Ended November 30, 2024 | |||||||||||||||||||
| Earnings | Income | Net Earnings | |||||||||||||||||
| Operating | Before | Tax | from | Diluted EPS - | |||||||||||||||
| Income | Income | Expense | Continuing | Continuing | |||||||||||||||
| (Loss) | Taxes | (Benefit) | Operations (1) | Operations | |||||||||||||||
| GAAP | $ | (1,178 | ) | $ | 67,899 | $ | 15,882 | $ | 52,513 | $ | 1.04 | ||||||||
| Restructuring and other expense, net | 3,778 | 3,778 | (928 | ) | 2,850 | 0.06 | |||||||||||||
| Non-GAAP | $ | 2,600 | $ | 71,677 | $ | 16,810 | $ | 55,363 | $ | 1.10 | |||||||||
| Six Months Ended November 30, 2023 | |||||||||||||||||||
| Operating Income (Loss) | Earnings Before Income Taxes | Income Tax Expense (Benefit) | Net Earnings from Continuing Operations (1) | Diluted EPS - Continuing Operations | |||||||||||||||
| GAAP | $ | (21,692 | ) | $ | 60,333 | $ | 15,569 | $ | 44,764 | 0.89 | |||||||||
| Corporate costs eliminated at Separation | 19,343 | 19,343 | (4,609 | ) | 14,734 | 0.29 | |||||||||||||
| Restructuring and other expense, net | 6 | 6 | (1 | ) | 5 | - | |||||||||||||
| Separation costs | 9,466 | 9,466 | (2,256 | ) | 7,210 | 0.15 | |||||||||||||
| Loss on extinguishment of debt | - | 1,534 | (366 | ) | 1,168 | 0.02 | |||||||||||||
| Gain on sale of assets in equity income | - | (2,780 | ) | 662 | (2,118 | ) | (0.04 | ) | |||||||||||
| Non-GAAP | $ | 7,123 | $ | 87,902 | $ | 22,139 | $ | 65,763 | $ | 1.31 | |||||||||
| ____________________ | |
| (1) | Excludes the impact of noncontrolling interest |
To further assist in the analysis of segment results for the three and six months ended November 30, 2024 and 2023 the following supplemental information has been provided. Reconciliations of adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations to the most comparable GAAP measures are provided below.
| Three Months Ended | Six Months Ended | |||||||||||||||
| November 30, | November 30, | |||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Volume | ||||||||||||||||
| Consumer Products | 16,420 | 15,931 | 32,591 | 31,963 | ||||||||||||
| Building Products | 3,329 | 3,347 | 6,423 | 7,156 | ||||||||||||
| Total reportable segments | 19,749 | 19,278 | 39,014 | 39,119 | ||||||||||||
| Other | - | 114 | - | 220 | ||||||||||||
| Consolidated | 19,749 | 19,392 | 39,014 | 39,339 | ||||||||||||
| Net sales | ||||||||||||||||
| Consumer Products | $ | 116,748 | $ | 119,389 | $ | 234,343 | $ | 236,742 | ||||||||
| Building Products | 157,298 | 151,303 | 297,011 | 317,231 | ||||||||||||
| Total reportable segments | 274,046 | 270,692 | 531,354 | 553,973 | ||||||||||||
| Other | - | 27,537 | - | 56,174 | ||||||||||||
| Consolidated | $ | 274,046 | $ | 298,229 | $ | 531,354 | $ | 610,147 | ||||||||
| Adjusted EBITDA from continuing operations | ||||||||||||||||
| Consumer Products | $ | 15,484 | $ | 12,674 | $ | 33,259 | $ | 26,889 | ||||||||
| Building Products | 47,185 | 45,809 | 86,914 | 105,442 | ||||||||||||
| Total reportable segments | 62,669 | 58,483 | 120,173 | 132,331 | ||||||||||||
| Unallocated Corporate and Other | (6,456 | ) | (3,439 | ) | (15,524 | ) | (11,373 | ) | ||||||||
| Consolidated | $ | 56,213 | $ | 55,044 | $ | 104,649 | $ | 120,958 | ||||||||
| Adjusted EBITDA margin from continuing operations | ||||||||||||||||
| Consumer Products | 13.3 | % | 10.6 | % | 14.2 | % | 11.4 | % | ||||||||
| Building Products | 30.0 | % | 30.3 | % | 29.3 | % | 33.2 | % | ||||||||
| Consolidated | 20.5 | % | 18.5 | % | 19.7 | % | 19.8 | % | ||||||||
| Equity income by unconsolidated affiliate | ||||||||||||||||
| WAVE (1) | $ | 24,564 | $ | 21,428 | $ | 52,466 | $ | 49,743 | ||||||||
| ClarkDietrich (1) | 9,730 | 13,748 | 18,474 | 30,476 | ||||||||||||
| Other (2) | 262 | 3,492 | (892 | ) | 3,873 | |||||||||||
| Consolidated | $ | 34,556 | $ | 38,668 | $ | 70,048 | $ | 84,092 | ||||||||
| ____________________ | |
| (1) | Equity income contributed by Worthington Armstrong Venture ("WAVE") and Clarkwestern Dietrich Building Systems LLC ("ClarkDietrich) is associated with our Building Products reportable segment |
| (2) | Other includes the Company's share of the equity earnings of Taxi Workhorse, LLC and the SES joint venture. |
A reconciliation from earnings before income taxes from continuing operations to the non-GAAP financial measure of adjusted EBITDA from continuing operations for the each of the periods presented is provided below.
| Three Months Ended | Six Months Ended | |||||||||||||||
| November 30, | November 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Earnings before income taxes (GAAP) | $ | 37,109 | $ | 24,543 | $ | 67,899 | $ | 60,333 | ||||||||
| Plus: Net loss attributable to noncontrolling interest | 251 | - | 496 | - | ||||||||||||
| Net earnings before income taxes attributable to controlling interest | 37,360 | 24,543 | 68,395 | 60,333 | ||||||||||||
| Interest expense, net | 1,033 | 472 | 1,522 | 1,546 | ||||||||||||
| EBIT (1) | 38,393 | 25,015 | 69,917 | 61,879 | ||||||||||||
| Corporate costs eliminated at Separation | - | 9,671 | - | 19,343 | ||||||||||||
| Restructuring and other expense, net | 2,620 | 6 | 3,778 | 6 | ||||||||||||
| Separation costs | - | 7,056 | - | 9,466 | ||||||||||||
| Loss on extinguishment of debt | - | - | - | 1,534 | ||||||||||||
| Gain on sale of assets in equity income | - | (2,780 | ) | - | (2,780 | ) | ||||||||||
| Adjusted EBIT (1) | 41,013 | 38,968 | 73,695 | 89,448 | ||||||||||||
| Depreciation and amortization | 11,927 | 12,215 | 23,757 | 24,290 | ||||||||||||
| Stock-based compensation (2) | 3,273 | 3,861 | 7,197 | 7,220 | ||||||||||||
| Adjusted EBITDA from continuing operations (non-GAAP) | $ | 56,213 | $ | 55,044 | $ | 104,649 | $ | 120,958 | ||||||||
| Earnings before income taxes margin (GAAP) | 13.5 | % | 8.2 | % | 12.8 | % | 9.9 | % | ||||||||
| Adjusted EBITDA margin from continuing operations (non-GAAP) | 20.5 | % | 18.5 | % | 19.7 | % | 19.8 | % | ||||||||
| ____________________ | |
| (1) | EBIT and adjusted EBIT are non-GAAP financial measures. However, these measures are not used by management to evaluate the Company's performance, engage in financial and operational planning, or to determine incentive compensation. Instead, they are included as subtotals in the reconciliation of earnings (loss) before income taxes to adjusted EBITDA from continuing operations, which is a non-GAAP financial measure used by management. |
| (2) | Excludes $2.7 million of stock-based compensation reported in restructuring and other expense, net in the Company's consolidated statement of earnings for the three months ended November 30, 2024 related to the accelerated vesting of certain outstanding equity awards upon retirement of a key employee. |
WORTHINGTON ENTERPRISES, INC.
USE OF NON-GAAP FINANCIAL MEASURES AND DEFINITIONS
NON-GAAP FINANCIAL MEASURES. These materials include certain financial measures that are not calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP"). The non-GAAP financial measures typically exclude items that management believes are not reflective of, and thus should not be included when evaluating the performance of the Company's ongoing operations. Management uses the non-GAAP financial measures to evaluate the Company's performance, engage in financial and operational planning, and determine incentive compensation. Management believes these non-GAAP financial 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 financial measures allow for meaningful comparisons and analysis of trends in the Company's businesses and enable investors to evaluate operations and future prospects in the same manner as management.
The following provides an explanation of each non-GAAP financial measure presented in these materials:
Adjusted operating income (loss) 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 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 financial measures presented in this report for its own and investors' assessment of the business for the reasons identified below. Additionally, management may exclude other items from the Non-GAAP financial measures that do not occur in the ordinary course of our ongoing business operations and note them in the reconciliation from earnings before income taxes from continuing operations to the non-GAAP financial measure of adjusted EBITDA from continuing operations.
- 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.
- Corporate costs eliminated at Separation are those costs that were related to corporate resources that, post-Separation, no longer exist to support the Company's continuing operations, but were not clearly identifiable to the former Steel Processing segment.
Sonya L. Higginbotham
Senior Vice President
Chief of Corporate Affairs, Communications and Sustainability
614.438.7391
sonya.higginbotham@wthg.com
Marcus A. Rogier
Treasurer and Investor Relations Officer
614.840.4663
marcus.rogier@wthg.com
200 West Old Wilson Bridge Rd.
Columbus, Ohio 43085
WorthingtonEnterprises.com
