COLUMBUS, Ohio, June 25, 2024 (GLOBE NEWSWIRE) -- Worthington Enterprises, Inc. (NYSE: WOR) reported net sales of $318.8 million and a net loss from continuing operations of $31.5 million, or $(0.64) per diluted share, for its fiscal 2024 fourth quarter ended May 31, 2024. This compares to net sales of $368.8 million and net earnings from continuing operations of $50.1 million, or $1.01 per diluted share, in the fourth quarter of fiscal 2023. On a non-GAAP basis, adjusted net earnings from continuing operations totaled $37.5 million for the fourth quarter of fiscal 2024, or $0.74 per diluted share, compared to $59.0 million, or $1.19 per diluted share, in the prior year comparable quarter. Reported results reflect the controlling interest portion of continuing operations and were impacted by certain items, as summarized in the table below.

(U.S. dollars in millions, except per share amounts)4Q 2024  4Q 2023 
 After-Tax  Per Share  After-Tax  Per Share 
Net earnings (loss) from continuing operations$(31.5) $(0.64) $50.1  $1.01 
Corporate costs eliminated at Separation(1) -   -   8.0   0.16 
Impairment and restructuring charges 57.0   1.14   -   - 
Separation costs 0.1   -   2.5   0.05 
Impairment of investment in notes receivable 11.1   0.22   -   - 
Pension settlement charge in equity income 0.8   0.02   -   - 
Sale-leaseback gain in equity income -   -   (1.6)  (0.03)
Adjusted net earnings from continuing operations$37.5  $0.74  $59.0  $1.19 

(1) References in this release to the “Separation” are to the Company’s separation of its former steel processing business into Worthington Steel, Inc. on December 1, 2023.


Financial highlights, on a continuing operations basis, for the fiscal 2024 periods and prior year comparative periods are as follows:

(U.S. dollars in millions, except per share amounts)

 4Q 2024  4Q 2023  12M 2024  12M 2023 
Net sales$318.8  $368.8  $1,245.7  $1,418.5 
Operating income (loss) (56.1)  15.3   (73.5)  29.8 
Adjusted operating income 5.8   28.6   20.9   77.9 
Net earnings (loss) from continuing operations (31.5)  50.1   35.2   125.8 
Adjusted EBITDA from continuing operations 63.2   93.7   251.0   306.0 
EPS from continuing operations - diluted (0.64)  1.01   0.70   2.55 
Adjusted EPS from continuing operations - diluted$0.74  $1.19  $2.84  $3.60 
                

“We finished our fiscal year with a respectable fourth quarter delivering adjusted earnings per share of $0.74,” said Worthington Enterprises President and CEO Andy Rose. “Building Products had a solid quarter benefiting from strong contributions from WAVE and our water business but was offset by lower contributions from ClarkDietrich which faced some margin compression. Consumer Products performed well despite headwinds due to volume being pulled ahead into the previous quarter and some softening in consumer spending. While both segments saw lower volumes, the overall health of the company is good. Our employees continue to deliver, and I could not be more proud of the focus and hard work they carry out every day.”

Consolidated Quarterly Results

Net sales for the fourth quarter of fiscal 2024 were $318.8 million, a decrease of $50.0 million, or 13.6%, from the prior year quarter, driven primarily by lower volume across all segments.

The operating loss of $56.1 million for the fourth quarter was unfavorable to the $15.3 million of operating income in the prior year quarter, due to significantly higher impairment and restructuring charges stemming from the deconsolidation of the former Sustainable Energy Solutions segment, effective May 29, 2024, as discussed below under Recent Business Developments. On an adjusted basis, operating income was $5.8 million, down $22.8 million from the prior year quarter, on lower volumes in Consumer Products combined with increased operating losses in Sustainable Energy Solutions.

Equity income decreased $10.9 million from the prior year quarter to $40.4 million, driven by lower contributions from ClarkDietrich which was down $13.8 million from the near record results in the prior year quarter, partially offset by strong contributions from WAVE which increased $3.3 million compared to the prior year quarter.

Miscellaneous expense was unfavorable by $11.1 million from the prior year quarter due to the write-down of an investment in a note receivable as a result of a change in business strategy in the Sustainable Energy Solutions business, while net interest expense was favorable $2.6 million over the prior year quarter due to lower average debt levels.

Income tax expense was $5.0 million in the fourth quarter of fiscal 2024 compared to $13.8 million in the prior year quarter. The decrease was driven by lower pre-tax earnings and discrete items related to the deconsolidation of the Sustainable Energy Solutions business. Tax expense in the fourth quarter of fiscal 2024 reflects an annual effective rate of 52.6% compared to 21.5% in the prior year. On an adjusted basis, the annual effective tax rate was 23.5% compared to 21.9% in the prior year.

Balance Sheet

Total debt was $298.1 million at the end of fiscal 2024, down approximately $391.8 million from May 31, 2023, due to the early redemption of the senior unsecured notes set to mature on August 10, 2024, and April 15, 2026, both of which were paid off earlier in the fiscal year. The Company ended the fourth quarter of fiscal 2024 with cash of $244.2 million, of which, $83.8 million was used after the quarter ended to fund the remaining purchase price of Hexagon Ragasco, as discussed below under Recent Business Developments.

Quarterly Segment Results

Consumer Products generated net sales of $125.3 million during the fourth quarter of fiscal 2024, down $23.5 million, or 16%, from the prior year quarter on lower volume. Adjusted EBITDA was down $12.5 million to $17.1 million, driven by the impact of lower volume, and to a lesser extent, a $2.4 million increase in SG&A expense due to higher benefit related costs and increased marketing spend.

Building Products generated net sales of $153.6 million during the fourth quarter of fiscal 2024, down $21.0 million, or 12%, from the prior year quarter due to lower volume and an unfavorable shift in product mix. Adjusted EBITDA decreased $13.1 million from the prior year quarter to $51.6 million on the combined impact of lower contributions of equity income from ClarkDietrich and unfavorable mix.

Sustainable Energy Solutions’ net sales totaled $39.9 million, down 12.0%, or $5.5 million, from the prior year quarter due to lower average selling prices and lower volume. Adjusted EBITDA was $1.2 million, down $3.1 million from the prior year quarter as lower average selling prices compressed gross profit. During the quarter, the Company sold an interest in the Sustainable Energy Solutions business to Hexagon Composites ASA (“Hexagon”), creating a new unconsolidated joint venture, in which the Company retained a 49% noncontrolling interest, as discussed below under Recent Business Developments. Historical results for Sustainable Energy Solutions are reported as part of Unallocated Corporate and Other, while future results, starting with the first quarter of fiscal 2025, will flow through equity income within Unallocated Corporate and Other.

Recent Developments

  • On May 29, 2024, the Company formed a new unconsolidated joint venture with Hexagon, comprised of the former Sustainable Energy Solutions segment. Pursuant to the transaction, Hexagon acquired a 49% stake in the joint venture for approximately $10 million plus closing cash. The Company retained a 49% noncontrolling interest in the joint venture, with the remaining 2% held by the executive management team of Sustainable Energy Solutions.
  • On June 3, 2024, the Company acquired Hexagon Ragasco, a leading manufacturer of composite propane cylinders. The total purchase price was approximately $98 million, subject to closing adjustments, $11.4 million of which was deposited into escrow at fiscal year end.
  • On June 25, 2024, the Company’s Board of Directors declared a quarterly dividend of $0.17 per common share payable on September 27, 2024, to shareholders of record at the close of business on September 13, 2024, a 6.25% increase or $0.01 per share, compared to the prior quarter.

Outlook

“We are optimistic heading into our new fiscal year having recently completed the acquisition of Hexagon Ragasco along with the formation of our Sustainable Energy Solutions joint venture,” Rose said. “We have market leading brands, a rock-solid balance sheet that will enable us to take advantage of growth opportunities as they arise, and a team focused on driving long-term profitable growth for Worthington Enterprises.”

Upcoming Investor Events

  • Raymond James Industrial and Energy Showcase, August 8, 2024
  • CG 44th Annual Growth Conference, August 14, 2024
  • 2024 Seaport Research Partners Annual Summer Investor Conference, August 21, 2024
  • Jefferies Industrials Conference, September 5, 2024

Conference Call

The Company will review fiscal 2024 fourth quarter results during its quarterly conference call on June 26, 2024, at 8:30 a.m., Eastern Time. Details regarding the conference call can be found on the Company website at www.WorthingtonEnterprises.com.

About Worthington Enterprises

Worthington Enterprises (NYSE: WOR) is a designer and manufacturer of market-leading brands that help enable people to live safer, healthier and more expressive lives. The Company operates with two segments: Building Products and Consumer Products. Worthington’s emphasis on innovation and transformation extends to building products including heating and cooling solutions, water systems, architectural and acoustical grid ceilings and metal framing and accessories, and consumer products in tools, outdoor living and celebrations categories sold under brand names Coleman®, Bernzomatic®, Balloon Time®, Level5 Tools®, Mag Torch®, Well-X-Trol®, General®, Garden-Weasel®, Pactool International®, HALO™ and Hawkeye™. The Company serves the growing global hydrogen ecosystem through on-board fueling systems and gas containment solutions.

Headquartered in Columbus, Ohio, Worthington Enterprises employs approximately 4,000 people throughout North America and Europe.

Founded in 1955 as Worthington Industries, Worthington Enterprises follows a people-first Philosophy with earning money for its shareholders as its first corporate goal. Worthington Enterprises achieves this outcome by empowering its employees to innovate, thrive and grow with leading brands in attractive markets that improve everyday life. The Company engages deeply with local communities where it has operations through volunteer efforts and The Worthington Companies Foundation, participates actively in workforce development programs and reports annually on its corporate citizenship and sustainability efforts. For more information, visit worthingtonenterprises.com.

Safe Harbor Statement

Selected statements contained in this release constitute “forward-looking statements,” as that term is used in the Private Securities Litigation Reform Act of 1995 (the “Act”). The Company wishes to take advantage of the safe harbor provisions included in the Act. Forward-looking statements reflect the Company’s current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “should,” “would,” “intend,” “plan,” “will,” “likely,” “estimate,” “project,” “position,” “strategy,” “target,” “aim,” “seek,” “foresee” and similar words or phrases. These forward-looking statements include, without limitation, statements relating to: future or expected cash positions, liquidity and ability to access financial markets and capital; outlook, strategy or business plans; the anticipated benefits of the separation of the Company’s Steel Processing business (the “Separation”); the expected financial and operational performance of, and future opportunities for, the Company following the Separation; the Company’s performance on a pro forma basis to illustrate the estimated effects of the Separation on historical periods; the tax treatment of the Separation transaction; future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures; pricing trends for raw materials and finished goods and the impact of pricing changes; the ability to improve or maintain margins; expected demand or demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; expected benefits from transformation and innovation efforts; the ability to improve performance and competitive position at the Company’s operations; anticipated working capital needs, capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; projected profitability potential; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; projected capacity and the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets; expectations for Company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value; effects of judicial rulings; the ever-changing effects of the novel coronavirus (“COVID-19”) pandemic and the various responses of governmental and nongovernmental authorities thereto on economies and markets, and on our customers, counterparties, employees and third-party service providers; and other non-historical matters.

Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow: the uncertainty of obtaining regulatory approvals in connection with the Separation, including rulings from the Internal Revenue Service; the Company’s ability to successfully realize the anticipated benefits of the Separation; the risks, uncertainties and impacts related to the COVID-19 pandemic – the duration, extent and severity of which are impossible to predict, including the possibility of future resurgence in the spread of COVID-19 or variants thereof – and the availability, effectiveness and acceptance of vaccines, and other actual or potential public health emergencies and actions taken by governmental authorities or others in connection therewith; the effect of national, regional and global economic conditions generally and within major product markets, including significant economic disruptions from COVID-19, the actions taken in connection therewith and the implementation of related fiscal stimulus packages; the effect of conditions in national and worldwide financial markets, including inflation, increases in interest rates and economic recession, and with respect to the ability of financial institutions to provide capital; the impact of tariffs, the adoption of trade restrictions affecting the Company’s products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; changing oil prices and/or supply; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company’s products; volatility or fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities, labor and other items required by operations (especially in light of the COVID-19 pandemic and Russia’s invasion of Ukraine); effects of sourcing and supply chain constraints; the outcome of adverse claims experience with respect to workers’ compensation, product recalls or product liability, casualty events or other matters; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts; the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives, on a timely basis; the overall success of, and the ability to integrate, newly-acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom; capacity levels and efficiencies, within facilities, within major product markets and within the industries in which the Company participates as a whole; the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, labor shortages, interruption in utility services, civil unrest, international conflicts (especially in light of Russia’s invasion of Ukraine), terrorist activities or other causes; changes in customer demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability (especially in light of Russia’s invasion of Ukraine), foreign currency exchange rate exposure and the acceptance of the Company’s products in global markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; the effect of inflation, interest rate increases and economic recession, which may negatively impact the Company’s operations and financial results; deviation of actual results from estimates and/or assumptions used by the Company in the application of its significant accounting policies; the level of imports and import prices in the Company’s markets; the impact of environmental laws and regulations or the actions of the United States Environmental Protection Agency or similar regulators which increase costs or limit the Company’s ability to use or sell certain products; the impact of increasing environmental, greenhouse gas emission and sustainability regulations and considerations; the impact of judicial rulings and governmental regulations, both in the United States and abroad, including those adopted by the United States Securities and Exchange Commission and other governmental agencies as contemplated by the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of healthcare laws in the United States and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase the Company’s healthcare and other costs and negatively impact the Company’s operations and financial results; the effects of tax laws in the United States and potential changes for such laws, which may increase the Company’s costs and negatively impact the Company’s operations and financial results; cyber security risks; the effects of privacy and information security laws and standards; and other risks described from time to time in the Company’s filings with the United States Securities and Exchange Commission, including those described in “Part I – Item 1A. – Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023.

Forward-looking statements should be construed in the light of such risks. The Company notes these factors for investors as contemplated by the Act. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. The Company does not undertake, and hereby disclaims, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.


WORTHINGTON ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(In thousands, except per share amounts)
      
 Three Months Ended  Twelve Months Ended 
 May 31,  May 31, 
 2024  2023  2024  2023 
Net sales$318,801  $368,802  $1,245,703  $1,418,496 
Cost of goods sold 239,802   274,642   960,684   1,094,908 
Gross profit 78,999   94,160   285,019   323,588 
Selling, general and administrative expense 73,210   75,910   283,471   287,118 
Impairment of goodwill and long-lived assets 32,975   -   32,975   484 
Restructuring and other expense (income), net 28,624   (13)  29,327   (367)
Separation costs 240   2,961   12,705   6,534 
Operating income (loss) (56,050)  15,302   (73,459)  29,819 
Other income (expense):           
Miscellaneous expense, net (11,145)  -   (17,129)  (4,497)
Loss on extinguishment of debt -   -   (1,534)  - 
Interest income (expense), net 9   (2,609)  (1,587)  (18,298)
Equity in net income of unconsolidated affiliates 40,388   51,257   167,716   153,262 
Earnings (loss) before income taxes (26,798)  63,950   74,007   160,286 
Income tax expense 4,986   13,825   39,027   34,535 
Net earnings (loss) from continuing operations (31,784)  50,125   34,980   125,751 
Net earnings (loss) from discontinued operations (265)  84,038   82,841   143,419 
Net earnings (loss) (32,049)  134,163   117,821   269,170 
Net earnings (loss) attributable to noncontrolling interests (263)  4,260   7,197   12,642 
Net earnings (loss) attributable to controlling interest$(31,786) $129,903  $110,624  $256,528 
            
Amounts attributable to controlling interest:           
Net earnings (loss) from continuing operations$(31,521) $50,125  $35,243  $125,751 
Net earnings (loss) from discontinued operations (265)  79,778   75,381   130,777 
Net earnings (loss) attributable to controlling interest$(31,786) $129,903  $110,624  $256,528 
            
Earnings (loss) per share from continuing operations - basic$(0.64) $1.03  $0.72  $2.59 
Earnings (loss) per share from discontinued operations - basic (0.01)  1.64   1.53   2.69 
Net earnings (loss) per share attributable to controlling interest - basic$(0.65) $2.67  $2.25  $5.28 
            
Earnings (loss) per share from continuing operations - diluted$(0.64) $1.01  $0.70  $2.55 
Earnings (loss) per share from discontinued operations - diluted (0.01)  1.60   1.50   2.64 
Net earnings (loss) per share attributable to controlling interest - diluted$(0.65) $2.61  $2.20  $5.19 
            
Weighted average common shares outstanding - basic 49,437   48,643   49,195   48,566 
Weighted average common shares outstanding - diluted 49,437   49,779   50,348   49,386 
            
Cash dividends declared per share$0.16  $0.31  $0.96  $1.24 



CONSOLIDATED BALANCE SHEETS
WORTHINGTON ENTERPRISES, INC.
(In thousands)
 May 31, 
 2024  2023 
Assets     
Current assets:     
Cash and cash equivalents$244,225  $422,268 
Receivables, less allowances of $343 and $803 at May 31, 2024     
and May 31, 2023, respectively 199,798   224,863 
Inventories     
Raw materials 66,040   91,988 
Work in process 11,668   19,189 
Finished products 86,907   83,322 
Total inventories 164,615   194,499 
Income taxes receivable 17,319   1,681 
Prepaid expenses and other current assets 47,936   46,301 
Current assets of discontinued operations -   978,725 
Total current assets 673,893   1,868,337 
Investment in unconsolidated affiliates 144,863   138,041 
Operating lease assets 18,667   24,686 
Goodwill 331,595   336,178 
Other intangibles, net of accumulated amortization of     
$83,242 and $73,308 at May 31, 2024 and May 31, 2023, respectively 221,071   230,851 
Other assets 21,342   14,339 
Property, plant and equipment:     
Land 8,657   12,120 
Buildings and improvements 123,478   139,514 
Machinery and equipment 321,836   403,885 
Construction in progress 24,504   24,779 
Total property, plant and equipment 478,475   580,298 
Less: accumulated depreciation 251,269   323,883 
Total property, plant and equipment, net 227,206   256,415 
Non-current assets of discontinued operations -   782,071 
Total assets$1,638,637  $3,650,918 
      
Liabilities and equity     
Current liabilities:     
Accounts payable$91,605  $126,743 
Accrued compensation, contributions to employee benefit plans and related taxes 41,974   46,782 
Dividends payable 9,038   18,330 
Other accrued items 29,061   37,801 
Current operating lease liabilities 6,228   6,682 
Income taxes payable 470   8,918 
Current maturities of long-term debt -   264 
Current liabilities associated of discontinued operations -   472,038 
Total current liabilities 178,376   717,558 
Other liabilities 62,243   71,766 
Distributions in excess of investment in unconsolidated affiliate 111,905   117,297 
Long-term debt 298,133   689,718 
Noncurrent operating lease liabilities 12,818   18,326 
Deferred income taxes 84,150   82,346 
Non-current liabilities of discontinued operations -   132,279 
Total liabilities 747,625   1,829,290 
Shareholders' equity - controlling interest 888,879   1,696,011 
Noncontrolling interests 2,133   125,617 
Total equity 891,012   1,821,628 
Total liabilities and equity$1,638,637  $3,650,918 



WORTHINGTON ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
      
 Three Months Ended  Twelve Months Ended 
 May 31,  May 31, 
 2024  2023  2024  2023 
Operating activities:           
Net earnings (loss)$(32,049) $134,163  $117,821  $269,170 
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:           
Depreciation and amortization 12,423   28,292   80,704   112,800 
Impairment of goodwill and long-lived assets 32,975   1,800   34,377   2,596 
Provision for (benefit from) deferred income taxes 1,919   4,670   2,762   (15,528)
Impairment of investment in note receivable 11,170   -   11,170   - 
Loss on extinguishment of debt -   -   1,534   - 
Bad debt expense (income) (21)  (1,678)  (450)  2,108 
Equity in net income of unconsolidated affiliates, net of distributions 2,552   (4,545)  5,722   79,870 
Net loss (gain) on sale of assets 29,329   530   28,980   (4,458)
Stock-based compensation 3,394   5,420   16,688   19,178 
Changes in assets and liabilities, net of impact of acquisitions:           
Receivables 342   (17,386)  50,078   143,089 
Inventories 8,597   (6,843)  63,596   160,116 
Accounts payable (5,866)  45,089   (65,401)  (150,400)
Accrued compensation and employee benefits 2,498   10,206   468   (23,226)
Other operating items, net (22,094)  29,516   (58,073)  30,049 
Net cash provided by operating activities 45,169   229,234   289,976   625,364 
            
Investing activities:           
Investment in property, plant and equipment (11,336)  (17,651)  (83,527)  (86,366)
Acquisitions, net of cash acquired (12,315)  -   (42,035)  (56,088)
Proceeds from sale of assets, net of selling costs 28   108   865   35,653 
Investment in note receivable -   -   (14,900)  - 
Investment in non-marketable equity securities (681)  (500)  (2,296)  (770)
Net proceeds from sale of investment in ArtiFlex -   -   -   35,795 
Excess distributions from unconsolidated affiliate -   -   1,085   - 
Net cash used by investing activities (24,304)  (18,043)  (140,808)  (71,776)
            
Financing activities:           
Dividend from Worthington Steel at Separation -   -   150,000   - 
Distribution to Worthington Steel at Separation -   -   (218,048)  - 
Net proceeds (repayments) from short-term borrowings(1) -   (791)  172,187   (45,183)
Principal payments on long-term obligations -   (776)  (393,890)  (6,685)
Proceeds from issuance of common shares, net of tax withholdings 3,961   1,631   (11,399)  (1,780)
Payments to noncontrolling interests -   (8,475)  (1,920)  (20,235)
Dividends paid (7,911)  (15,078)  (56,819)  (59,244)
Net cash used by financing activities (3,950)  (23,489)  (359,889)  (133,127)
Increase (decrease) in cash and cash equivalents 16,915   187,702   (210,721)  420,461 
Cash and cash equivalents at beginning of period 227,310   267,244   454,946   34,485 
Cash and cash equivalents at end of period(2)$244,225  $454,946  $244,225  $454,946 
 

(1) Net proceeds in fiscal 2024 consisted of borrowings under Worthington Steel’s short-term credit facilities assumed by Worthington Steel in conjunction with the Separation.

(2) The cash flows related to discontinued operations have not been segregated in the periods presented herein. Accordingly, the consolidated statements of cash flows include the results from continuing and discontinued operations.

WORTHINGTON ENTERPRISES, INC.
NON-GAAP FINANCIAL MEASURES / PRO FORMA FINANCIAL DATA
(In thousands, except units and per share amounts)

The following provides a reconciliation of non-GAAP financial measures, including adjusted operating income (loss), adjusted earnings before income taxes, adjusted income tax expense (benefit), adjusted net earnings (loss) from continuing operations attributable to controlling interest, adjusted earnings per diluted share from continuing operations attributable to controlling interest and adjusted effective tax rate, from their most comparable GAAP measure for the three and 12 months ended May 31, 2024, and May 31, 2023. Refer to the Use of Non-GAAP Measures and Definitions section herein and non-GAAP footnotes below for further information on these measures .

 Three Months Ended May 31, 2024 
 Operating
Income		  Earnings
Before
Income Taxes		  Income Tax Expense
(Benefit)		  Net loss from Continuing Operations(1)  Diluted EPS - Continuing Operations  Effective
Tax
Rate		 
GAAP$(56,050) $(26,798) $4,986  $(31,521)  (0.64)  (18.8%)
Impairment of goodwill and long-lived assets 32,975   32,975   -   32,975   0.66    
Restructuring and other expense, net 28,624   28,624   (4,609)  24,015   0.48    
Separation costs 240   240   (81)  159   -    
Non-cash charges in miscellaneous expense    11,077   7   11,084   0.22    
Pension settlement charge in equity income -   1,040   (244)  796   0.02    
Non-GAAP$5,789  $47,158  $9,913  $37,508  $0.74   20.9%


 Three Months Ended May 31, 2023 
 Operating
Income		  Earnings
Before
Income Taxes		  Income Tax Expense
(Benefit)		  Net Earnings from Continuing Operations(1)  Diluted EPS - Continuing Operations  Effective
Tax
Rate		 
GAAP$15,302  $63,950  $13,825  $50,125  $1.01   21.6%
Corporate costs eliminated at Separation 10,370   10,370   (2,375)  7,995   0.16    
Restructuring and other income, net (13)  (13)  (1)  (14)  -    
Separation costs 2,961   2,961   (424)  2,537   0.05    
Sale-leaseback gain in equity income -   (2,063)  472   (1,591)  (0.03)   
Non-GAAP$28,620  $75,205  $16,153  $59,052  $1.19   21.5%


 Twelve Months Ended May 31, 2024 
 Operating
Income (Loss)		  Earnings
Before
Income Taxes		  Income Tax Expense
(Benefit)		  Net Earnings from Continuing Operations(1)  Diluted EPS - Continuing Operations  Effective
Tax
Rate		 
GAAP$(73,459) $74,007  $39,027  $35,243  $0.70   52.6%
Corporate costs eliminated at Separation 19,343   19,343   (4,643)  14,700   0.29    
Impairment of goodwill and long-lived assets 32,975   32,975   -   32,975   0.65    
Restructuring and other expense, net 29,327   29,327   (4,737)  24,590   0.49    
Separation costs 12,705   12,705   (3,049)  9,656   0.19    
Non-cash charges in miscellaneous expense -   19,180   (1,922)  17,258   0.34    
Loss on extinguishment of debt -   1,534   (368)  1,166   0.02    
Gain on sale of assets in equity income -   (2,780)  662   (2,118)  (0.04)   
Pension settlement charge in equity income -   1,040   (244)  796   0.02    
One-time tax effects of Separation -   -   9,197   9,197   0.18    
Non-GAAP$20,891  $187,331  $44,131  $143,463  $2.84   23.5%


 Twelve Months Ended May 31, 2023 
 Operating
Income		  Earnings
Before
Income Taxes		  Income Tax Expense
(Benefit)		  Net Earnings from Continuing Operations(1)  Diluted EPS - Continuing Operations  Effective
Tax
Rate		 
GAAP$29,819  $160,286  $34,535  $125,751  $2.55   21.5%
Corporate costs eliminated at Separation 41,479   41,479   (9,499)  31,980   0.65    
Impairment of long-lived assets 484   484   (111)  373   0.01    
Restructuring and other income, net (367)  (367)  84   (283)  (0.01)   
Separation costs 6,534   6,534   (1,496)  5,038   0.11    
Pension settlement charge -   4,774   (1,093)  3,681   0.07    
Loss on sale of investment in Artiflex -   16,059   (3,678)  12,381   0.25    
Sale lease-back gain in equity income -   (2,063)  472   (1,591)  (0.03)   
Non-GAAP$77,949  $227,186  $49,856  $177,330  $3.60   21.9%
 

(1) Excludes the impact of noncontrolling interest

To further assist in the analysis of segment results for the three and twelve months ended May 31, 2024, and May 31, 2023, the following supplemental information has been provided. Reconciliations of adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations to the most comparable GAAP measures, earnings (loss) before income taxes and earnings (loss) before income taxes margin.

 Three Months Ended  Twelve Months Ended 
 May 31,  May 31, 
(in thousands) 2024   2023   2024   2023 
Volume           
Consumer Products 15,660   19,070   66,632   74,137 
Building Products 3,579   3,787   14,157   14,630 
Total reportable segments 19,239   22,857   80,789   88,767 
Other 160   163   523   574 
Consolidated 19,399   23,020   81,312   89,341 
            
Net sales           
Consumer Products$125,336  $148,831  $495,259  $555,309 
Building Products 153,551   174,533   618,973   717,069 
Total reportable segments 278,887   323,364   1,114,232   1,272,378 
Other 39,914   45,438   131,471   146,118 
Consolidated$318,801  $368,802  $1,245,703  $1,418,496 
            
Adjusted EBITDA from continuing operations           
Consumer Products$17,061  $29,523  $69,598  $97,370 
Building Products 51,628   64,737   210,128   222,197 
Total reportable segments 68,689   94,260   279,726   319,567 
Other (5,521)  (525)  (28,727)  (13,542)
Consolidated$63,168  $93,735  $250,999  $306,025 
            
Adjusted EBITDA margin from continuing operations           
Consumer Products 13.6%  19.8%  14.1%  17.5%
Building Products 33.6%  37.1%  33.9%  31.0%
Consolidated 19.8%  25.4%  20.1%  21.6%
            
Equity income by unconsolidated affiliate           
WAVE(1)$27,534  $24,252  $103,298  $85,933 
ClarkDietrich(1) 11,560   25,365   59,827   80,494 
Other(2) 1,294   1,640   4,591   (13,165)
Consolidated$40,388  $51,257  $167,716  $153,262 
 

(1) Equity income contributed by Worthington Armstrong Venture (“WAVE”) and ClarkDietrich is associated with our Building Products segment

(2) Other includes the Company’s share of the equity earnings of Taxi Workhorse, LLC and ArtiFlex Manufacturing, LLC, on a historical basis through August 2, 2022.

A reconciliation from net earnings (loss) before income taxes from continuing operations to the non-GAAP financial measure of adjusted EBITDA from continuing operations for the each of the periods presented is provided below.

For periods prior to the Separation, the Company has also included adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations, on a pro forma basis, to illustrate estimated effects of the post-Separation relationship between the Company and Worthington Steel under the parties’ transition services agreement and long-term steel supply agreement. This pro forma financial information assumes the Separation occurred on June 1, 2022, the first day of our fiscal 2023. For further information on this pro forma presentation, refer to the Use of Non-GAAP Measures and Definitions section included herein.

 Three Months Ended  Twelve Months Ended 
 May 31,  May 31,  May 31,  May 31, 
(in thousands)2024  2023  2024  2023 
Earnings (loss) before income taxes (GAAP)$(26,798) $63,950  $74,007  $160,286 
Less: net loss attributable to noncontrolling interest (263)  -   (263)  - 
Net earnings (loss) before income taxes attributable to controlling interest (26,535)  63,950   74,270   160,286 
Interest expense (income), net (9)  2,609   1,587   18,298 
EBIT (subtotal) (26,544)  66,559   75,857   178,584 
Corporate costs eliminated at Separation(1) -   10,370   19,343   41,479 
Impairment of goodwill and long-lived assets 32,975   -   32,975   484 
Restructuring and other expense (income), net 28,624   (13)  29,327   (367)
Separation costs 240   2,961   12,705   6,534 
Non-cash charges in miscellaneous expense(2) 11,077   -   19,180   4,774 
Loss on investment in ArtiFlex(3) -   -   -   16,059 
Loss on extinguishment of debt(4) -   -   1,534   - 
Gain on sale of assets in equity income(5) -   (2,063)  (2,780)  (2,063)
Pension settlement charge in equity income(6) 1,040   -   1,040   - 
Adjusted EBIT (subtotal) 47,412   77,814   189,181   245,484 
Depreciation and amortization 12,424   11,773   48,663   45,975 
Stock-based compensation 3,332   4,148   13,155   14,566 
Adjusted EBITDA from continuing operations (non-GAAP)$63,168  $93,735  $250,999  $306,025 
            
Earnings (loss) before income taxes margin (8.4%)  17.3%  5.9%  11.3%
Non-GAAP adjusted EBITDA margin from continuing operations 19.8%  25.4%  20.1%  21.6%
            
Pro forma adjusted EBITDA from continuing operationsn/a  $92,868  $249,399  $302,357 
Pro forma adjusted EBITDA margin from continuing operationsn/a   25.2%  20.0%  21.3%

Non-GAAP Footnotes:

(1) Reflects reductions in certain corporate overhead costs that no longer exist post-Separation. These costs were included in continuing operations as they represent general corporate overhead that was historically allocated to the Company’s former steel processing business but did not meet the requirements to be presented as discontinued operations.

(2) Reflects the following non-cash charges in miscellaneous expense:

  • Pre-tax charges of $8,010 and $4,774 from separate pension lift-out transaction completed in February 2024 and August 2022, respectively, to transfer the pension benefit obligation under The Gerstenslager Company Bargaining Unit Employees’ Pension Plan to third-party insurance companies.
  • A pre-tax charge of $11,170 during the current year quarter due to the write-down of an investment in notes receivable that was determined to be other than temporarily impaired.

(3) On August 3, 2022, the Company sold its 50% noncontrolling equity investment in ArtiFlex Manufacturing, LLC, resulting in a pre-tax loss of $16,059 in equity income related to the sale.

(4) Reflects 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.

(5) Reflects the following activity within equity income associated with the sale or divestiture of assets at Taxi Workhorse Holdings, LLC:

  • A net gain of $2,780 associated with the divestiture of the Brazilian operations.
  • A net gain of $2,063 related to a sale-leaseback transaction during the three months ended May 31, 2023.

(6) Reflects the settlement of certain participant balances within the pension plan maintained by WAVE.

WORTHINGTON ENTERPRISES, INC.
USE OF NON-GAAP MEASURES AND DEFINITIONS

NON-GAAP MEASURES. These materials include certain financial measures that are not calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). The non-GAAP financial measures typically exclude items that management believes are not reflective of, and thus should not be included when evaluating the performance of the Company’s ongoing operations. Management uses the non-GAAP financial measures to evaluate the Company’s performance, engage in financial and operational planning, and determine incentive compensation. Management believes these non-GAAP measures provide useful supplemental information and additional perspective on the performance of the Company’s ongoing operations and should not be considered as an alternative to the comparable GAAP measure. Additionally, management believes these non-GAAP measures allow for meaningful comparisons and analysis of trends in the Company’s businesses and enables investors to evaluate operations and future prospects in the same manner as management.

The following provides an explanation of each non-GAAP measure presented in these materials:

Adjusted operating income is defined as operating income (loss) excluding the items listed below, to the extent naturally included in operating income (loss).

Adjusted net earnings from continuing operations is defined as net earnings from continuing operations attributable to controlling interest (“net earnings from continuing operations”) excluding the after-tax effect of the excluded items outlined below.

Adjusted earnings per diluted share from continuing operations (“Adjusted EPS from continuing operations”) – is defined as adjusted net earnings from continuing operations divided by diluted weighted-average shares outstanding.

Adjusted EBITDA – Adjusted EBITDA is defined as Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA is calculated by adding or subtracting, as appropriate, interest expense, net, income tax expense, depreciation, and amortization to/from net earnings from continuing operations attributable to controlling interest, which is further adjusted to exclude impairment and restructuring charges (gains) as well as other items that management believes are not reflective of, and thus should not be included when evaluating the performance of its ongoing operations, as outlined below. Adjusted EBITDA also excludes stock-based compensation due to its non-cash nature, which is consistent with how management assesses operating performance. At the segment level, adjusted EBITDA includes expense allocations for centralized corporate back-office functions that exist to support the day-to-day business operations. Public company and other governance costs are held at the corporate-level.

Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by net sales.

Exclusions from Non-GAAP Financial Measures

Management believes it is useful to exclude the following items from the non-GAAP measures presented in this report for its own and investors’ assessment of the business for the reasons identified below:

  • Impairment charges are excluded because they do not occur in the ordinary course of our ongoing business operations, are inherently unpredictable in timing and amount, and are non-cash, which we believe facilitates the comparison of historical, current and forecasted financial results.
  • Restructuring activities, which can result in both discrete gains and/or losses, consist of established programs that are not part of our ongoing operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions). These items are excluded because they are not part of the ongoing operations of our underlying business.
  • Separation costs, which consist of direct and incremental costs incurred in connection with the completed Separation are excluded as they are one-time in nature and are not expected to occur in period following the Separation. These costs include fees paid to third-party advisors, such as investment banking, audit and other advisory services as well as direct and incremental costs associated with the Separation of shared corporate functions. Results in the current fiscal year also include incremental compensation expense associated with the modification of unvested short and long-term incentive compensation awards, as required under the employee matters agreement executed in conjunction with the Separation.
  • Loss on early extinguishment of debt is excluded because it does not occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of this type of charge is not consistent and is significantly impacted by the timing and size of debt extinguishment transactions.
  • Pension settlement charges are excluded because due to their non-cash nature and the fact that they do not occur in the normal course of business and may obscure analysis of trends and financial performance. These transactions typically result from the transfer of all or a portion of the total projected benefit obligation to third-party insurance companies.

PRO FORMA FINANCIAL INFORMATION. These materials include certain financial data and operating metrics that are presented on a pro forma basis to illustrate the estimated effects of the Separation of Worthington Steel from the historical combined company, which was consummated on December 1, 2023, and to give effect to divested operations historically presented within Other. Management believes these pro forma measures provide investors with useful supplemental financial information regarding the performance of the Company’s continuing operations after reflecting the Separation. This pro forma financial information has been prepared based upon the best available information and management estimates and is subject to assumptions and adjustments described in the accompanying footnotes. They are not intended to be a complete presentation of the Company’s financial position or results of operations had the Separation occurred as of and for the periods indicated. In addition, the pro forma financial information is being provided for informational purposes only and is not necessarily indicative of the Company’s future results of operations or financial condition had the Separation and related transactions been completed on the dates assumed. Management believes these assumptions and estimates are reasonable, given the information available on the date of this release.

Sonya L. Higginbotham
Senior Vice President
Chief of Corporate Affairs, Communications and Sustainability
614.438.7391
sonya.higginbotham@wthg.com

Marcus A. Rogier
Treasurer and Investor Relations Officer
614.840.4663
marcus.rogier@wthg.com

200 West Old Wilson Bridge Rd.
Columbus, Ohio 43085
WorthingtonEnterprises.com


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Source: Worthington Enterprises, Inc.

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