Worthington Steel, Inc. (NYSE: WS) today reported financial
results for the fiscal 2024 second quarter ended November 30, 2023.
The Company operated as part of Worthington Enterprises, Inc.
(formerly Worthington Industries, Inc.) for the entire fiscal 2024
second quarter, and historical financial measures presented in this
release were derived from Worthington Enterprises, Inc.'s
accounting records and are presented on a carve-out basis.
The Company reported net sales of $808.0 million and net loss
attributable to controlling interest of $6.0 million, or $0.12 per
diluted share, for its fiscal 2024 second quarter ended November
30, 2023. For the second quarter of fiscal 2023, the Company
recorded net sales of $868.4 million and net loss attributable to
controlling interest of $15.8 million, or $0.31 per diluted share.
Results in both the current year quarter and prior year quarter
were impacted by certain items, as summarized in the table
below.
(U.S. dollars in millions, except per
share amounts)
2Q 2024
2Q 2023
After-Tax
Per Share
After-Tax
Per Share
Net earnings (loss) attributable to
controlling interest
$
(6.0
)
$
(0.12
)
$
(15.8
)
$
(0.31
)
Restructuring and other income, net
-
-
(1.8
)
(0.04
)
Separation costs
11.4
0.23
5.9
0.12
Adjusted net earnings (loss) attributable
to controlling interest (Non-GAAP)
$
5.4
$
0.11
$
(11.7
)
$
(0.23
)
Financial highlights for the current and comparative periods are
as follows:
(U.S. dollars in millions, except per
share amounts)
2Q 2024
2Q 2023
6M 2024
6M 2023
Net sales
$
808.0
$
868.4
$
1,713.8
$
1,943.0
Operating income (loss)
(8.8
)
(19.9
)
60.9
21.0
Equity in net income of unconsolidated
affiliate
3.8
1.9
12.8
3.7
Net earnings (loss) attributable to
controlling interest
(6.0
)
(15.8
)
52.5
14.4
Earnings (loss) per diluted share
attributable to controlling interest
$
(0.12
)
$
(0.31
)
$
1.05
$
0.29
"It’s an exciting time to be at Worthington Steel. As we begin
our journey as a standalone company, our team is experienced,
energized and focused on our customers and shareholders,” said
Geoff Gilmore, president and chief executive officer of Worthington
Steel. “This quarter we saw net income and direct volume improve
compared to the prior year quarter, despite headwinds in our
automotive business due to the UAW strike. I want to thank the
employees of Worthington Steel. I’m proud of the team for what they
have done to help us achieve this milestone.”
Combined Quarterly Results
Net sales for the second quarter of fiscal 2024 were $808.0
million, a decrease of $60.4 million, or 7%, compared to the prior
year quarter. The decrease was driven primarily by an 11.5% decline
in direct selling prices, partially offset by a 4.4% increase in
direct tons sold in the current quarter compared to the prior year
quarter. The mix of direct tons versus toll tons processed was 56%
to 44% in the current year quarter, compared to 55% to 45% in the
prior year quarter.
Gross margin increased by $25.7 million over the prior year
quarter to $60.2 million due to improved spreads and higher direct
volume. Direct spreads benefited from an $18.3 million favorable
change from an estimated $53.1 million inventory holding loss in
the prior year quarter to an estimated $34.8 million inventory
holding loss in the current year quarter.
Operating loss improved by $11.1 million over the prior year
quarter to $8.8 million, primarily due to improved gross margin
partially offset by the $11.2 million combined impact of
incremental separation costs and lower restructuring gains compared
with the prior year quarter. Excluding these items, adjusted
operating income was up $22.3 million primarily due to higher gross
margin partially offset by slightly higher selling, general and
administrative (SG&A) expense. SG&A expense was up
primarily due to increased wage and benefit costs resulting from
continued inflationary pressures.
Recent Developments
- On November 16, 2023, the Company acquired Voestalpine
Automotive Components Nagold GmbH & Co. KG, a facility in
Nagold, Germany. The acquisition establishes a footprint in Europe
for Worthington Steel and allows the Company to capitalize on the
growing EV and industrial motor markets in that region. Total
consideration was approximately $21.0 million, net of cash
acquired. Total net assets acquired were $20.4 million, subject to
closing adjustments.
- On November 30, 2023, the Company entered into a multi-year
senior secured revolving credit facility (the “Credit Facility”)
scheduled to mature on November 30, 2028, with a group of lenders.
The Credit Facility will allow for borrowings of up to $550
million, to the extent secured by eligible accounts receivable and
inventory balances at period end, which consist primarily of U.S.
Dollar denominated account balances. Amounts drawn under the Credit
Facility will have maturities of up to one year and will accrue
interest at rates equal to an applicable margin over the SOFR Rate.
The Company incurred approximately $2.7 million of issuance costs,
of which $2.5 million will be amortized to interest expense over
the expected five-year term and are reflected in other assets. As
of November 30, 2023, $175 million was outstanding under the Credit
Facility, of which $150 million was paid to Worthington
Enterprises, Inc. on December 1, 2023, in connection with the
separation of the Company from Worthington Enterprises, Inc.
- On December 1, 2023, the previously announced separation of the
Company from Worthington Enterprises, Inc. (formerly known as
Worthington Industries, Inc.) was completed, and the Company’s
common shares began trading on the New York Stock Exchange under
the ticker symbol “WS.”
- On December 1, 2023, Worthington Enterprises, Inc., made a pro
rata distribution of 100% of the outstanding common shares of the
Company to Worthington Enterprises, Inc. shareholders of record as
of the close of business on November 21, 2023, in a spin-off that
was generally intended to be tax-free to shareholders for U.S.
federal income tax purposes.
Outlook
“Our company is performing well,” Gilmore said. “Worthington
Steel employees continue to focus on safety and improvements to our
business. We have the right team, the right strategy, and we are
laser focused on doing the right thing for our employees, customers
and shareholders.”
Conference Call
The Company will review fiscal 2024 second quarter results
during its quarterly conference call on December 22, 2023,
beginning at 8:30 a.m., Eastern Time. Details regarding the
conference call are located in the investor section of the Company
website at www.WorthingtonSteel.com.
About Worthington Steel
Worthington Steel (NYSE:WS) is a metals processor that partners
with customers to deliver highly technical and customized
solutions. Worthington Steel’s expertise in carbon flat-roll steel
processing, electrical steel laminations and tailor welded
solutions are driving steel toward a more sustainable future.
As one of the most trusted metals processors in North America,
Worthington Steel and its 4,600 employees harness the power of
steel to advance our customers’ visions through value-added
processing capabilities including galvanizing, pickling, configured
blanking, specialty cold reduction, lightweighting and electrical
lamination. Headquartered in Columbus, Ohio, Worthington operates
32 facilities in seven states and six countries. Following a
people-first Philosophy, commitment to sustainability and proven
business system, Worthington Steel’s purpose is to generate
positive returns by providing trusted and innovative solutions for
customers, creating opportunities for employees, and strengthening
its communities.
Safe Harbor Statement
Selected statements contained in this release constitute
“forward-looking statements,” as that term is used in the Private
Securities Litigation Reform Act of 1995 (the “Act”). The Company
to take advantage of the Safe Harbor provisions included in the
Act. Forward-looking statements reflect the Company’s current
expectations, estimates or projections concerning future results or
events. These statements are often identified by the use of
forward-looking words or phrases such as “believe,” “anticipate,”
“may,” “could,” “should,” “would,” “intend,” “plan,” “will,”
“likely,” “expect,” “estimate,” “project,” “position,” “strategy,”
“target,” “aim,” “seek,” “foresee” and similar words or phrases.
These forward-looking statements include, without limitation,
statements relating to: future or expected cash positions,
liquidity and ability to access financial markets and capital;
outlook, strategy or business plans; the anticipated benefits of
the Company’s separation from Worthington Enterprises, Inc. (the
“Separation”); the expected financial and operational performance
of, and future opportunities for, the Company following the
Separation; the tax treatment of the Separation transaction; the
leadership of the Company following the Separation; future or
expected growth, growth potential, forward momentum, performance,
competitive position, sales, volumes, cash flows, earnings,
margins, balance sheet strengths, debt, financial condition or
other financial measures; pricing trends for raw materials and
finished goods and the impact of pricing changes; the ability to
improve or maintain margins; expected demand or demand trends for
the Company or its markets; additions to product lines and
opportunities to participate in new markets; expected benefits from
transformation and innovation efforts; the ability to improve
performance and competitive position at the Company’s operations;
anticipated working capital needs, capital expenditures and asset
sales; anticipated improvements and efficiencies in costs,
operations, sales, inventory management, sourcing and the supply
chain and the results thereof; projected profitability potential;
the ability to make acquisitions and the projected timing, results,
benefits, costs, charges and expenditures related to acquisitions,
joint ventures, headcount reductions and facility dispositions,
shutdowns and consolidations; projected capacity and the alignment
of operations with demand; the ability to operate profitably and
generate cash in down markets; the ability to capture and maintain
market share and to develop or take advantage of future
opportunities, customer initiatives, new businesses, new products
and new markets; expectations for Company and customer inventories,
jobs and orders; expectations for the economy and markets or
improvements therein; expectations for generating improving and
sustainable earnings, earnings potential, margins or shareholder
value; effects of judicial rulings; the ever-changing effects of
the novel coronavirus (“COVID-19”) pandemic and the various
responses of governmental and nongovernmental authorities thereto
on economies and markets, and on our customers, counterparties,
employees and third-party service providers; and other
non-historical matters.
Because they are based on beliefs, estimates and assumptions,
forward-looking statements are inherently subject to risks and
uncertainties that could cause actual results to differ materially
from those projected. Any number of factors could affect actual
results, including, without limitation, those that follow: our
ability to successfully realize the anticipated benefits of the
Separation; the effect of conditions in national and worldwide
financial markets, including inflation, increases in interest rates
and economic recession, and with respect to the ability of
financial institutions to provide capital; the impact of tariffs,
the adoption of trade restrictions affecting the Company’s products
or suppliers, a United States withdrawal from or significant
renegotiation of trade agreements, the occurrence of trade wars,
the closing of border crossings, and other changes in trade
regulations or relationships; changing oil prices and/or supply;
product demand and pricing; changes in product mix, product
substitution and market acceptance of the Company’s products;
volatility or fluctuations in the pricing, quality or availability
of raw materials (particularly steel), supplies, transportation,
utilities, labor and other items required by operations (especially
in light of Russia’s invasion of Ukraine); effects of sourcing and
supply chain constraints; the outcome of adverse claims experience
with respect to workers’ compensation, product recalls or product
liability, casualty events or other matters; effects of facility
closures and the consolidation of operations; the effect of
financial difficulties, consolidation and other changes within the
steel, automotive, construction and other industries in which the
Company participates; failure to maintain appropriate levels of
inventories; financial difficulties (including bankruptcy filings)
of original equipment manufacturers, end-users and customers,
suppliers, joint venture partners and others with whom the Company
does business; the ability to realize targeted expense reductions
from headcount reductions, facility closures and other cost
reduction efforts; the ability to realize cost savings and
operational, sales and sourcing improvements and efficiencies, and
other expected benefits from transformation initiatives, on a
timely basis; the overall success of, and the ability to integrate,
newly acquired businesses and joint ventures, maintain and develop
their customers, and achieve synergies and other expected benefits
and cost savings therefrom; capacity levels and efficiencies,
within facilities, within major product markets and within the
industries in which the Company participates as a whole; the effect
of disruption in the business of suppliers, customers, facilities
and shipping operations due to adverse weather, casualty events,
equipment breakdowns, labor shortages, interruption in utility
services, civil unrest, international conflicts (especially in
light of Russia’s invasion of Ukraine), terrorist activities or
other causes; changes in customer demand, inventories, spending
patterns, product choices, and supplier choices; risks associated
with doing business internationally, including economic, political
and social instability (especially in light of Russia’s invasion of
Ukraine), foreign currency exchange rate exposure and the
acceptance of the Company’s products in global markets; the ability
to improve and maintain processes and business practices to keep
pace with the economic, competitive and technological environment;
the effect of inflation, interest rate increases and economic
recession, as well as potential adverse impacts as a result of the
Inflation Reduction Act of 2022, which may negatively impact the
Company’s operations and financial results; deviation of actual
results from estimates and/or assumptions used by the Company in
the application of its significant accounting policies; the level
of imports and import prices in the Company’s markets; the impact
of environmental laws and regulations or the actions of the United
States Environmental Protection Agency or similar regulators which
increase costs or limit the Company’s ability to use or sell
certain products; the impact of increasing environmental,
greenhouse gas emission and sustainability regulations and
considerations; the impact of judicial rulings and governmental
regulations, both in the United States and abroad, including those
adopted by the United States Securities and Exchange Commission
(“SEC”) and other governmental agencies as contemplated by the
Coronavirus Aid, Relief and Economic Security (CARES) Act, the
Consolidated Appropriations Act, 2021, the American Rescue Plan Act
of 2021, and the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010; the effect of healthcare laws in the United
States and potential changes for such laws, which may increase the
Company’s healthcare and other costs and negatively impact the
Company’s operations and financial results; the effect of tax laws
in the United States and potential changes for such laws, which may
increase the Company's costs and negatively impact its operations
and financial results; cyber security risks; the effects of privacy
and information security laws and standards; and other risks
described from time to time in the Company’s filings with the SEC,
including those described in the “Risk Factors” section of the
information statement filed as Exhibit 99.1 to the Company’s
Amendment No. 3 to its registration statement on Form 10 filed with
the SEC on November 14, 2023.
Forward-looking statements should be construed in the light of
such risks. The Company notes these factors for investors as
contemplated by the Act. It is impossible to predict or identify
all potential risk factors. Consequently, you should not consider
the foregoing list to be a complete set of all potential risks and
uncertainties. Readers are cautioned not to place undue reliance on
any forward-looking statements, which speak only as of the date
made. The Company does not undertake, and hereby disclaims, any
obligation to update any forward-looking statements, whether as a
result of new information, future developments or otherwise, except
as required by applicable law.
WORTHINGTON STEEL,
INC.
CONDENSED COMBINED STATEMENTS
OF EARNINGS
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended
Six Months Ended
November 30,
November 30,
2023
2022
2023
2022
Net sales
$
808.0
$
868.4
$
1,713.8
$
1,943.0
Cost of goods sold
747.8
833.9
1,525.1
1,819.9
Gross margin
60.2
34.5
188.7
123.1
Selling, general and administrative
expense
54.1
50.7
107.9
98.0
Impairment of long-lived assets
-
-
1.4
0.3
Restructuring and other income, net
-
(4.3
)
-
(4.2
)
Separation costs
14.9
8.0
18.5
8.0
Operating income (loss)
(8.8
)
(19.9
)
60.9
21.0
Other income (expense):
Miscellaneous income (expense), net
0.6
0.9
1.5
1.1
Interest expense, net
(0.2
)
(0.9
)
(0.7
)
(2.2
)
Equity in net income of unconsolidated
affiliate
3.8
1.9
12.8
3.7
Earnings (loss) before income taxes
(4.6
)
(18.0
)
74.5
23.6
Income tax expense (benefit)
(2.5
)
(5.5
)
14.5
4.8
Net earnings (loss)
(2.1
)
(12.5
)
60.0
18.8
Net earnings (loss) attributable to
noncontrolling interests
3.9
3.3
7.5
4.4
Net earnings (loss) attributable to
controlling interest
$
(6.0
)
$
(15.8
)
$
52.5
$
14.4
Basic
Weighted average common shares
outstanding(1)
50.0
50.0
50.0
50.0
Earnings (loss) per share attributable
to controlling interest
$
(0.12
)
$
(0.31
)
$
1.05
$
0.29
Diluted
Weighted average common shares
outstanding(1)
50.0
50.0
50.0
50.0
Earnings (loss) per share attributable
to controlling interest
$
(0.12
)
$
(0.31
)
$
1.05
$
0.29
Common shares outstanding at end of
period(1)
50.0
50.0
50.0
50.0
Cash dividends declared per share
n/a
n/a
n/a
n/a
(1)
Reported Weighted average common shares
outstanding and Common shares outstanding at end of period reflect
basic shares at the Separation date (December 1, 2023). This share
amount is being utilized for the calculation of basic and diluted
Earnings (loss) per share for periods presented through the
Separation date.
WORTHINGTON STEEL,
INC.
CONDENSED COMBINED
BALANCE SHEETS
(In millions, except share
amounts)
(Unaudited)
November 30,
May 31,
2023
2023
Assets
Current assets:
Cash and cash equivalents
$
214.4
$
32.7
Receivables, less allowances of $2.2 and
$2.6 at November 30, 2023 and May 31, 2023, respectively
426.0
468.0
Inventories
Raw materials
160.1
173.9
Work in process
137.3
164.1
Finished products
76.4
76.8
Total inventories
373.8
414.8
Income taxes receivable
4.1
4.3
Assets held for sale
1.8
3.4
Prepaid expenses and other current
assets
66.4
57.7
Total current assets
1,086.5
980.9
Investment in unconsolidated affiliate
127.4
114.6
Operating lease assets
72.1
75.3
Goodwill
79.2
78.6
Other intangible assets, net of
accumulated amortization of $42.1 and $38.9 at November 30, 2023
and May 31, 2023, respectively
80.2
83.4
Deferred tax asset
6.3
6.3
Other assets
12.3
10.9
Property, plant and equipment:
Land
38.7
37.6
Buildings and improvements
171.5
168.6
Machinery and equipment
868.6
847.5
Construction in progress
42.1
20.3
Total property, plant and equipment
1,120.9
1,074.0
Less: accumulated depreciation
687.5
659.6
Total property, plant and equipment,
net
433.4
414.4
Total assets
$
1,897.4
$
1,764.4
Liabilities and equity
Current liabilities:
Accounts payable
$
349.9
$
402.2
Short-term borrowings
175.0
2.8
Accrued compensation, contributions to
employee benefit plans and related taxes
29.9
31.9
Other accrued items
14.7
15.6
Current operating lease liabilities
5.8
5.9
Current maturities of long-term debt due
to Worthington Enterprises, Inc.
20.0
20.0
Total current liabilities
595.3
478.4
Other liabilities
34.6
33.6
Noncurrent operating lease liabilities
69.0
71.7
Deferred income taxes
27.0
26.1
Total liabilities
725.9
609.8
Preferred shares, without par value;
authorized - 1,000,000 shares at November 30, 2023; no shares
issued or outstanding
-
-
Common shares, without par value;
authorized - 150,000,000 shares at November 30, 2023; issued and
outstanding 50,025,115 shares and 100 shares at November 30, 2023
and May 31, 2023, respectively
-
-
Net Worthington Enterprises, Inc.
investment
1,039.5
1,031.1
Accumulated other comprehensive income
(loss), net of taxes of $(3.5) and $(2.6) at November 30, 2023 and
May 31, 2023, respectively
0.8
(2.1
)
Total equity - controlling interest
1,040.3
1,029.0
Noncontrolling interests
131.2
125.6
Total equity
1,171.5
1,154.6
Total liabilities and equity
$
1,897.4
$
1,764.4
WORTHINGTON STEEL,
INC.
CONDENSED COMBINED STATEMENTS
OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
Six Months Ended
November 30,
November 30,
2023
2022
2023
2022
Operating activities:
Net earnings (loss)
$
(2.1
)
$
(12.5
)
$
60.0
$
18.8
Adjustment to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation and amortization
16.4
17.8
33.3
35.5
Impairment of long-lived assets
-
-
1.4
0.3
Benefit from deferred income taxes
(0.1
)
(0.1
)
(0.2
)
(0.2
)
Bad debt expense (income)
0.3
1.0
(0.4
)
1.3
Equity in net income of unconsolidated
affiliate, net of distributions
(3.8
)
(1.9
)
(12.8
)
(3.7
)
Net gain on sale of assets
(0.4
)
(3.8
)
(0.4
)
(3.8
)
Stock-based compensation
3.3
2.5
6.1
4.8
Changes in assets and liabilities, net of
impact of acquisitions:
Receivables
89.4
98.9
56.5
114.0
Inventories
91.5
86.9
48.3
145.1
Accounts payable
(53.5
)
(84.4
)
(49.9
)
(176.1
)
Accrued compensation and employee
benefits
0.8
1.3
(2.7
)
(5.5
)
Other operating items, net
(1.9
)
(2.4
)
(20.0
)
(13.0
)
Net cash provided by operating
activities
139.9
103.3
119.2
117.5
Investing activities:
Investment in property, plant and
equipment
(18.9
)
(14.5
)
(36.2
)
(25.6
)
Proceeds from sale of assets, net of
selling costs
0.8
23.2
0.8
23.2
Acquisitions, net of cash acquired
(21.0
)
-
(21.0
)
-
Net cash provided by (used in)
investing activities
(39.1
)
8.7
(56.4
)
(2.4
)
Financing activities:
Transfers to Worthington Enterprises,
Inc., net
(88.8
)
(75.3
)
(51.4
)
(39.2
)
Proceeds from (repayment of) short-term
borrowings
175.0
(10.6
)
172.2
(43.1
)
Principal payments on long-term debt
-
(10.0
)
-
(10.0
)
Payments to noncontrolling interests
-
(11.8
)
(1.9
)
(11.8
)
Net cash provided by (used in)
financing activities
86.2
(107.7
)
118.9
(104.1
)
Increase (decrease) in cash and cash
equivalents
187.0
4.3
181.7
11.0
Cash and cash equivalents at beginning of
period
27.4
26.8
32.7
20.1
Cash and cash equivalents at end of
period
$
214.4
$
31.1
$
214.4
$
31.1
WORTHINGTON STEEL, INC. NON-GAAP
FINANCIAL MEASURES / SUPPLEMENTAL DATA (In millions, except
volume and per share amounts)
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States
(GAAP). The Company also presents certain non-GAAP financial
measures including (a) adjusted operating income, (b) adjusted
earnings before income taxes, (c) adjusted income tax expense
(benefit), (d) adjusted net earnings attributable to controlling
interest (e) adjusted net earnings per diluted share attributable
to controlling interest, (f) adjusted net earnings before interest
and taxes attributable to controlling interest (“adjusted EBIT”),
(g) adjusted net earnings before interest, taxes, depreciation and
amortization attributable to controlling interest (“adjusted
EBITDA”), (h) pro forma adjusted net earnings before interest and
taxes attributable to controlling interest ("pro forma adjusted
EBIT") and (i) free cash flow.
These non-GAAP financial measures typically exclude impairment
and restructuring charges (gains), but may also exclude other items
that management believes are not reflective of, and thus should not
be included when evaluating the performance of the Company’s
ongoing operations. Management uses these non-GAAP financial
measures to evaluate the Company’s performance, engage in financial
and operational planning, and determine incentive compensation and
believes these non-GAAP financial measures provide useful
information to investors because they provide additional
perspective of the performance of the Company’s ongoing operations.
Additionally, management believes these non-GAAP financial measures
provide useful information to investors because they allow for
meaningful comparisons and analysis of trends in the Company’s
businesses and enables investors to evaluate operations and future
prospects in the same manner as management.
For the purposes of the subsequent tables, the below non-GAAP
measures have been adjusted for the reasons identified below:
- Impairment of long-lived assets -
impairments are excluded because they do not occur in the ordinary
course of the Registrant’s ongoing business operations, are
inherently unpredictable in timing and amount, and are non-cash, so
their exclusion facilitates the comparison of historical and
current financial results.
- Restructuring activities - these
activities consist of established programs that are not part of the
Company's ongoing operations, such as divestitures, closing or
consolidating facilities, employee severance (including
rationalizing headcount or other significant changes in personnel),
and realignment of existing operations (including changes to
management structure in response to underlying performance and/or
changing market conditions).
- Separation Costs - direct and
incremental costs incurred in connection with the Separation from
Worthington Enterprises, Inc., including audit, legal, and other
fees paid to third-party advisors as well as direct and incremental
costs associated with the separation of shared corporate functions
which are not part of the Registrant’s ongoing operations.
The following provides a reconciliation to adjusted operating
income (loss), adjusted earnings (loss) before income taxes,
adjusted income tax expense (benefit), adjusted net earnings (loss)
attributable to controlling interest and adjusted net earnings
(loss) per diluted share attributable to controlling interest from
the most comparable GAAP measures for the three months ended
November 30, 2023 and November 30, 2022.
Three Months Ended November
30, 2023
Operating Income (Loss)
Earnings (Loss) Before Income
Taxes
Income Tax Expense (Benefit)
Net Earnings (Loss) Attributable
to Controlling Interest
Net Earnings (Loss) per Diluted
Share Attributable to Controlling Interest
GAAP
$
(8.8
)
$
(4.6
)
$
(2.5
)
$
(6.0
)
$
(0.12
)
Separation costs
14.9
14.9
(3.5
)
11.4
0.23
Non-GAAP
$
6.1
$
10.3
$
(6.0
)
$
5.4
$
0.11
Three Months Ended November
30, 2022
Operating Income (Loss)
Earnings (Loss) Before Income
Taxes
Income Tax Expense (Benefit)
Net Earnings (Loss) Attributable
to Controlling Interest
Net Earnings (Loss) per Diluted
Share Attributable to Controlling Interest
GAAP
$
(19.9
)
$
(18.0
)
$
(5.5
)
$
(15.8
)
$
(0.31
)
Restructuring and other income, net
(4.3
)
(4.3
)
0.6
(1.8
)
(0.04
)
Separation costs
8.0
8.0
(2.1
)
5.9
0.12
Non-GAAP
$
(16.2
)
$
(14.3
)
$
(7.0
)
$
(11.7
)
$
(0.23
)
The following provides a reconciliation to adjusted operating
income, adjusted earnings before income taxes, adjusted income tax
expense, adjusted net earnings attributable to controlling interest
and adjusted net earnings per diluted share attributable to
controlling interest from the most comparable GAAP measures for the
six months ended November 30, 2023 and November 30, 2022.
Six Months Ended November 30,
2023
Operating Income (Loss)
Earnings (Loss) Before Income
Taxes
Income Tax Expense (Benefit)
Net Earnings (Loss) Attributable
to Controlling Interest
Net Earnings (Loss) per Diluted
Share Attributable to Controlling Interest
GAAP
$
60.9
$
74.5
$
14.5
$
52.5
$
1.05
Impairment of long-lived assets
1.4
1.4
(0.2
)
0.7
0.01
Separation costs
18.5
18.5
(4.3
)
14.2
0.28
Non-GAAP
$
80.8
$
94.4
$
10.0
$
67.4
$
1.34
Six Months Ended November 30,
2022
Operating Income (Loss)
Earnings (Loss) Before Income
Taxes
Income Tax Expense (Benefit)
Net Earnings (Loss) Attributable
to Controlling Interest
Net Earnings (Loss) per Diluted
Share Attributable to Controlling Interest
GAAP
$
21.0
$
23.6
$
4.8
$
14.4
$
0.29
Impairment of long-lived assets
0.3
0.3
(0.1
)
0.1
-
Restructuring and other income, net
(4.2
)
(4.2
)
0.6
(1.7
)
(0.03
)
Separation costs
8.0
8.0
(2.1
)
5.9
0.12
Non-GAAP
$
25.1
$
27.7
$
3.2
$
18.7
$
0.38
To further assist in the analysis of results for the periods
presented, the following volume and net sales information for three
and six months ended November 30, 2023 and November 30, 2022 has
been provided below along with a reconciliation of adjusted EBIT
and adjusted EBITDA to the most comparable GAAP measure, which is
net earnings (loss) attributable to controlling interests. Adjusted
EBIT margin is calculated by dividing adjusted EBIT by net sales.
Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by
net sales.
Three Months Ended
November 30,
2023
2022
Volume (tons)
968,595
952,888
Net Sales
$
808.0
$
868.4
Net earnings (loss) attributable to
controlling interest
$
(6.0
)
$
(15.8
)
Interest expense, net
0.2
0.9
Income tax expense (benefit)
(2.5
)
(5.5
)
Restructuring and other income, net(1)
-
(2.5
)
Separation costs
14.9
8.0
Adjusted EBIT
6.6
(14.9
)
Depreciation and amortization
16.4
17.8
Adjusted EBITDA
$
23.0
$
2.9
Adjusted EBIT margin
0.8
%
-1.7
%
Adjusted EBITDA margin
2.8
%
0.3
%
Six Months Ended
November 30,
2023
2022
Volume (tons)
1,992,140
1,956,796
Net Sales
$
1,713.8
$
1,943.0
Net earnings (loss) attributable to
controlling interest
$
52.5
$
14.4
Interest expense, net
0.7
2.2
Income tax expense (benefit)
14.5
4.8
Impairment of long-lived assets(2)
0.9
0.1
Restructuring and other income, net(1)
-
(2.4
)
Separation costs
18.5
8.0
Adjusted EBIT
87.1
27.1
Depreciation and amortization
33.3
35.5
Adjusted EBITDA
$
120.4
$
62.6
Adjusted EBIT margin
5.1
%
1.4
%
Adjusted EBITDA margin
7.0
%
3.2
%
(1)
Excludes the noncontrolling interest
portion of restructuring and other income, net of $(1.8) million in
both the prior year quarter and prior year period.
(2)
Excludes the noncontrolling interest
portion of impairment of long-lived assets of $0.5 million and $0.2
million in the current year period and prior year period,
respectively.
The table below provides a reconciliation from net earnings
(loss) attributable to controlling interest (the most comparable
GAAP financial measure) to the non-GAAP financial measures, EBITDA
and adjusted EBITDA, for the three months ended November 30, 2023
and November 30, 2022, and the twelve months ended November 30,
2023.
Second
First
Fourth
Third
Second
Quarter
Quarter
Quarter
Quarter
Quarter
2024
2024
2023
2023
2023
Net earnings (loss) attributable to
controlling interest
$
(6.0
)
$
58.5
$
67.3
$
5.4
$
(15.8
)
Interest expense, net
0.2
0.5
0.4
0.5
0.9
Income tax expense (benefit)
(2.5
)
17.0
23.4
0.8
(5.5
)
Depreciation and amortization
16.4
16.9
17.1
17.0
17.8
EBITDA
8.1
92.9
108.2
23.7
(2.6
)
Impairment of long-lived assets
-
0.9
1.8
-
-
Restructuring and other income, net
-
-
-
-
(2.5
)
Separation costs
14.9
3.6
5.5
4.0
8.0
Adjusted EBITDA
$
23.0
$
97.4
$
115.5
$
27.7
$
2.9
Trailing twelve months adjusted EBITDA
$
263.6
The following provides a reconciliation of net cash provided by
operating activities (the most comparable GAAP financial measure)
to free cash flow for the three months and the twelve months ended
November 30, 2023. Free cash flow is a non-GAAP financial measure
that management believes measures the Company's ability to generate
cash beyond what is required for its business operations and
capital expenditures.
Second
First
Fourth
Third
Quarter
Quarter
Quarter
Quarter
2024
2024
2023
2023
Net cash provided by (used by) operating
activities
$
139.9
$
(20.7
)
$
79.2
$
118.3
Investment in property, plant and
equipment
(18.9
)
(17.3
)
(9.0
)
(10.9
)
Free cash flow
$
121.0
$
(38.0
)
$
70.2
$
107.4
Trailing twelve months free cash flow
$
260.6
To further assist in the analysis of results for the periods
presented, the following information for the three and six months
ended November 30, 2023 and November 30, 2022 has been provided
below along with a reconciliation of net earnings (loss)
attributable to controlling interest to pro forma adjusted EBIT.
Pro forma adjusted EBIT is a non-GAAP financial measure that
management believes includes incremental and on-going impacts to
the Company's operating results as a stand-alone public company
resulting from the separation from Worthington Enterprises, Inc.
The pro forma financial information assumes the separation occurred
on June 1, 2022, the first day of our fiscal 2023.
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. It is not intended to be a complete
presentation of the Company’s financial position or results of
operations had the separation occurred as of and for the periods
indicated. In addition, the pro forma financial information is
being provided for informational purposes only, and is not
necessarily indicative of the Company’s future results of
operations or financial condition had the separation and related
transactions been completed on the dates assumed. Management
believes these assumptions and estimates are reasonable, given the
information available on the filing date.
Three Months Ended
November 30,
2023
2022
Net earnings (loss) attributable to
controlling interest
$
(6.0
)
$
(15.8
)
Interest expense, net
0.2
0.9
Income tax expense (benefit)
(2.5
)
(5.5
)
Restructuring and other income, net(3)
-
(2.5
)
Separation costs
14.9
8.0
Adjusted EBIT
6.6
(14.9
)
Pro Forma Adjustments:
Incremental steel supply agreement
margin(1)
1.0
1.0
Incremental stand-alone corporate
costs(2)
(4.1
)
(3.4
)
Total Pro Forma Adjustments
(3.1
)
(2.4
)
Pro Forma Adjusted EBIT
$
3.5
$
(17.3
)
Six Months Ended
November 30,
2023
2022
Net earnings (loss) attributable to
controlling interest
$
52.5
$
14.4
Interest expense, net
0.7
2.2
Income tax expense (benefit)
14.5
4.8
Impairment of long-lived assets(4)
0.9
0.1
Restructuring and other income, net(3)
-
(2.4
)
Separation costs
18.5
8.0
Adjusted EBIT
87.1
27.1
Pro Forma Adjustments:
Incremental steel supply agreement
margin(1)
1.9
1.9
Incremental stand-alone corporate
costs(2)
(8.5
)
(6.7
)
Total Pro Forma Adjustments
(6.6
)
(4.8
)
Pro Forma Adjusted EBIT
$
80.5
$
22.3
(1)
Reflects the incremental margin on sales
to Worthington Enterprise, Inc. under the steel supply agreement
between the Company and Worthington Enterprise, Inc.
(2)
Includes an increase in SG&A expense
for the three and six months ended November 30, 2023 and November
30, 2022 respectively, to capture the effects of recurring and
ongoing costs required to operate our stand-alone corporate
functions as well as public company costs, offset by lower
corporate profit sharing and bonus expense post-separation than
what was allocated to the Company in the combined financial
statements due to the employee matters agreement.
(3)
Excludes the noncontrolling interest
portion of restructuring and other income, net of $(1.8) million in
both the prior year quarter and prior year period.
(4)
Excludes the noncontrolling interest
portion of impairment of long-lived assets of $0.5 million and $0.2
million in the current year period and prior year period,
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231221328354/en/
Melissa Dykstra Vice President, Corporate Communications and
Investor Relations Phone: 614-840-4144
Melissa.Dykstra@worthingtonsteel.com
Grafico Azioni Worthington Steel (NYSE:WS)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Worthington Steel (NYSE:WS)
Storico
Da Apr 2023 a Apr 2024
