Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $1.1 billion and net earnings of $46.3 million, or $0.94 per diluted share, for its fiscal 2023 third quarter ended February 28, 2023. In the third quarter of fiscal 2022, the Company reported net sales of $1.4 billion and net earnings of $56.3 million, or $1.11 per diluted share. Results in both the current and prior year quarter were impacted by certain unique items, as summarized in the table below.

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

    3Q 2023     3Q 2022  
    After-Tax     Per Share     After-Tax     Per Share  
Net earnings   $ 46.3     $ 0.94     $ 56.3     $ 1.11  
True-up of Level5 earnout accrual     (0.8 )     (0.02 )     -       -  
Impairment and restructuring charges     1.0       0.02       1.2       0.02  
Separation costs     4.8       0.10       -       -  
Loss on sale of investment in ArtiFlex     0.3       -       -       -  
Adjusted net earnings   $ 51.6     $ 1.04     $ 57.5     $ 1.13  

Financial highlights for the current and comparative periods are as follows:

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

  3Q 2023     3Q 2022     9M 2023     9M 2022  
Net sales $ 1,103.3     $ 1,378.2     $ 3,687.5     $ 3,721.9  
Operating income   30.1       37.6       89.8       263.9  
Equity income   36.9       47.5       105.5       160.6  
Net earnings   46.3       56.3       126.6       299.1  
Earnings per diluted share $ 0.94     $ 1.11     $ 2.57     $ 5.83  

“Our teams delivered solid earnings with a nice improvement sequentially compared to our second quarter,” said Andy Rose, President and CEO. “Steel Processing saw modest growth in automotive demand, but continued to be negatively impacted by inventory holding losses. Destocking trends we saw earlier this year in Consumer Products and Building Products appear to have abated, with volumes for many of these products starting to return to more seasonally normal levels.”

Consolidated Quarterly Results

Net sales for the third quarter of fiscal 2023 were $1.1 billion, a decrease of $274.9 million, or 20%, from the comparable prior year quarter. The decrease was driven primarily by lower average selling prices in the Steel Processing business as steel prices declined significantly from the prior year quarter.

Gross margin increased $0.7 million from the prior year quarter to $143.8 million, as higher direct spreads in Steel Processing and a favorable mix in Building Products were largely offset by higher manufacturing expenses, up $23.2 million primarily due to inflationary pressures, and lower volume in the Consumer Products business.

Operating income for the current quarter was $30.1 million, a decrease of $7.5 million from the prior year quarter, as costs incurred in connection with the planned separation of the Company’s Steel Processing business (Worthington 2024) outpaced the year over year decline in impairment and restructuring charges to create a $5.0 pre-tax million headwind in the current quarter. Excluding these items, and a pre-tax benefit of $1.0 million related to true up of the Level5 earnout accrual, operating income was down $3.5 million due to a $3.1 million increase in SG&A expense driven primarily by the net impact of acquisitions and divestitures, partially offset by lower profit sharing and bonus expense.

Net interest expense was $6.0 million in the current quarter, down $2.1 million from the prior year quarter due to higher interest income, and to a lesser extent, the impact of lower average debt levels associated with short-term borrowings.

Equity income from unconsolidated joint ventures decreased $10.5 million from the prior year quarter driven by lower contributions from Serviacero and ClarkDietrich, down $4.9 million and $2.5 million, respectively, combined with the divestiture of ArtiFlex which had contributed $1.8 million in the prior year quarter.

Income tax expense was $12.1 million in the current quarter compared to $18.7 million in the prior year quarter. The decrease was driven by lower pre-tax earnings. Tax expense in the current quarter reflects an estimated annual effective rate of 22.8% compared to 23.2% in the prior year quarter.

Balance Sheet

At quarter-end, total debt of $693.2 million, was down $51.4 million from May 31, 2022, on lower short-term borrowings. The Company had $267.2 million of cash at quarter end, an increase of $232.8 million from May 31, 2022, as lower steel prices resulted in significantly lower working capital in the current period.

Quarterly Segment Results

Steel Processing’s net sales totaled $757.0 million, down 28% or $295.6 million, from the prior year quarter, driven almost entirely by lower average selling prices. Adjusted EBIT was up slightly over the prior year quarter to $7.8 million, as operating income improved although this was largely offset by a lower contribution of equity income from Serviacero which was down $4.9 million. Operating income was up $8.1 million over the prior year quarter to $10.8 million. Excluding the $3.2 million of combined impairment and restructuring charges in the prior year quarter, operating income was up $4.9 million over the prior year quarter, as the favorable impact of higher spreads was partially offset by higher manufacturing costs. Inventory holding losses, estimated to be $26.6 million in the current quarter, were comparable to the $24.9 million in the prior year quarter. The mix of direct versus toll tons processed was 56% to 44% in the current quarter, compared to 51% to 49% in the prior year quarter.

Consumer Products’ net sales totaled $162.6 million, up 1%, or $0.9 million, over the prior year quarter due to higher average selling prices, which were partially offset by lower volumes and a change in product mix. Adjusted EBIT was down $8.8 million in the current quarter to $17.9 million, as the favorable impact of higher average selling prices was more than offset by lower volumes and higher input and production costs.

Building Products’ net sales totaled $151.9 million, up 14%, or $19.0 million, over the prior year quarter on the combined impact of a favorable product mix and higher average selling prices, which were partially offset by lower overall volumes. Adjusted EBIT increased $1.9 million from the prior year quarter to $51.5 million primarily due to a favorable product mix and higher average selling prices, which were partially offset by higher input and production costs and lower contributions of equity income. Equity income for the current quarter totaled $37.8 million, down $2.2 million from the prior year quarter, as ClarkDietrich’s results declined $2.5 million from the record levels in the prior year quarter while WAVE’s results improved slightly.

Sustainable Energy Solutions’ net sales totaled $31.8 million, up 3%, or $0.8 million, from the prior year quarter primarily due to higher average selling prices. Adjusted EBIT was a loss of $1.4 million, favorable by $1.4 million to the prior year quarter’s loss, as higher average selling prices improved margins, but were partially offset by higher production costs.

Worthington 2024

On September 29, 2022, the Company announced that its Board of Directors approved a plan to pursue a separation of the Company’s Steel Processing business which it expects to complete by early 2024. This plan is referred to as “Worthington 2024.” Worthington 2024 will result in two independent, publicly traded companies that are more specialized and fit-for-purpose, with enhanced prospects for growth and value creation. Worthington plans to effect the separation via a distribution of stock of the Steel Processing business, which is expected to be tax-free to shareholders for U.S. federal income tax purposes. A dedicated area of the Company’s website has been established with more information and will be regularly updated as new details become available at www.WorthingtonIndustries.com/W24.

Recent Developments

  • On February 2, 2023, the Company announced the senior leadership teams for New Worthington and Worthington Steel which will be effective upon the completion of the planned separation of the Steel Processing business.
  • On March 22, 2023, Worthington’s Board of Directors declared a quarterly dividend of $0.31 per share payable on June 29, 2023, to shareholders of record on June 15, 2023.

Outlook

“We have good momentum heading into our fourth quarter and are optimistic that underlying demand for our key end markets will remain healthy,” Rose said. “Work continues on our Worthington 2024 plan, and we recently announced the future senior leadership teams for both companies. We remain confident that our planned separation will create two, distinct market leading companies that will generate long-term value for our shareholders.”

Conference Call

Worthington will review fiscal 2023 third quarter results during its quarterly conference call on March 23, 2023, at 9:00 a.m., Eastern Time. Details regarding the conference call can be found on the Company website at www.WorthingtonIndustries.com.

About Worthington Industries

Worthington Industries (NYSE:WOR) is a leading industrial manufacturing company pursuing its vision to be the transformative partner to its customers, a positive force for its communities and earn exceptional returns for its shareholders. For over six decades, the Company has been delivering innovative solutions to customers spanning industries such as automotive, energy, retail and construction. Worthington is North America’s premier value-added steel processor and producer of laser welded solutions and electrical steel laminations that provide lightweighting, safety critical and emission reducing components to the mobility market. Through on-board fueling systems and gas containment solutions, Worthington serves the growing global hydrogen ecosystem. The Company’s focus on innovation and manufacturing expertise extends to market-leading consumer products in tools, outdoor living and celebrations categories, sold under brand names, Coleman®, Bernzomatic®, Balloon Time®, Mag Torch®, Well-X-Trol®, General®, Garden-Weasel®, Pactool International®, Hawkeye™ and Level5® ; as well as market leading building products, including water systems, heating & cooling solutions, architectural and acoustical grid ceilings and metal framing and accessories. Headquartered in Columbus, Ohio, Worthington operates 52 facilities in 15 states and 9 countries, sells into over 90 countries and employs approximately 9,000 people. Founded in 1955, the Company follows a people-first philosophy with earning money for its shareholders as its first corporate goal. Relentlessly finding new ways to drive progress and transform, Worthington is committed to providing better solutions for customers and bettering the communities where it operates by reducing waste, supporting community-based non-profits and developing the next generations of makers.

Safe Harbor Statement

The Company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Statements by the Company relating to the ever-changing effects of the novel coronavirus (“COVID-19”) pandemic and the various responses of governmental and nongovernmental authorities thereto (such as fiscal stimulus packages, quarantines, shut downs and other restrictions on travel and commercial, social or other activities) on economies (local, national and international) and markets, and on our customers, counterparties, employees and third-party service providers; future or expected cash positions, liquidity and ability to access financial markets and capital; outlook, strategy or business plans; the intended separation of the Company’s Steel Processing business (the “Separation”); the timing and method of the Separation; the anticipated benefits of the Separation; the expected financial and operational performance of, and future opportunities for, each of the two independent, publicly-traded companies following the Separation; the tax treatment of the Separation transaction; the leadership of each of the two independent, publicly-traded companies 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; and other non-historical matters constitute “forward-looking statements” within the meaning of the PSLRA. Forward-looking statements may be characterized by terms such as “believe,” “expect,” “anticipate,” “may,” “could,” “should,” “would,” “intend,” “plan,” “will,” “likely,” “estimate,” “project,” “positioned,” “strategy,” “targets,” “aims,” “seek,” “foresee” and similar expressions. 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: obtaining final approval of the Separation by the Worthington Industries, Inc. Board of Directors; the uncertainty of obtaining regulatory approvals in connection with the Separation, including rulings from the Internal Revenue Service; the ability to satisfy the necessary closing conditions to complete the Separation on a timely basis, or at all; the Company’s ability to successfully separate the two independent companies and 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 (especially in light of the COVID-19 pandemic), 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 considerations or regulations; 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 Act of 2021, and the Dodd-Frank Wall Street Reform and the 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 filings of Worthington Industries, Inc. with the United States Securities and Exchange Commission, including those described in “Part I – Item 1A. – Risk Factors” of the Annual Report on Form 10-K of Worthington Industries, Inc. for the fiscal year ended May 31, 2022.

WORTHINGTON INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts)

  Three Months Ended     Nine Months Ended  
  February 28,     February 28,  
  2023     2022     2023     2022  
Net sales $ 1,103,322     $ 1,378,235     $ 3,687,528     $ 3,721,914  
Cost of goods sold   959,515       1,235,107       3,268,584       3,174,821  
Gross margin   143,807       143,128       418,944       547,093  
Selling, general and administrative expense   106,057       102,945       317,318       294,926  
Impairment of long-lived assets   484       3,076       796       3,076  
Restructuring and other expense (income), net   824       (504 )     (4,558 )     (14,782 )
Separation costs   6,347       -       15,593       -  
Operating income   30,095       37,611       89,795       263,873  
Other income (expense):                      
Miscellaneous income (expense), net   1,327       393       (2,354 )     2,063  
Interest expense, net   (6,035 )     (8,140 )     (22,245 )     (23,170 )
Equity in net income of unconsolidated affiliates   36,926       47,466       105,495       160,600  
Earnings before income taxes   62,313       77,330       170,691       403,366  
Income tax expense   12,055       18,683       35,684       90,059  
Net earnings   50,258       58,647       135,007       313,307  
Net earnings attributable to noncontrolling interests   3,933       2,305       8,382       14,173  
Net earnings attributable to controlling interest $ 46,325     $ 56,342     $ 126,625     $ 299,134  
                       
Basic                      
Weighted average common shares outstanding   48,587       49,749       48,541       50,331  
Earnings per share attributable to controlling interest $ 0.95     $ 1.13     $ 2.61     $ 5.94  
                       
Diluted                      
Weighted average common shares outstanding   49,493       50,641       49,356       51,275  
Earnings per share attributable to controlling interest $ 0.94     $ 1.11     $ 2.57     $ 5.83  
                       
Common shares outstanding at end of period   48,619       49,364       48,619       49,364  
                       
Cash dividends declared per share $ 0.31     $ 0.28     $ 0.93     $ 0.84  

CONSOLIDATED BALANCE SHEETS WORTHINGTON INDUSTRIES, INC. (In thousands)

    February 28,     May 31,  
    2023     2022  
Assets            
Current assets:            
Cash and cash equivalents   $ 267,244     $ 34,485  
Receivables, less allowances of $5,233 and $1,292 at February 28, 2023 and May 31, 2022, respectively     715,899       857,493  
Inventories            
Raw materials     271,518       323,609  
Work in process     160,688       255,019  
Finished products     168,918       180,512  
Total inventories     601,124       759,140  
Income taxes receivable     15,619       20,556  
Assets held for sale     5,191       20,318  
Prepaid expenses and other current assets     105,689       93,661  
Total current assets     1,710,766       1,785,653  
Investment in unconsolidated affiliates     244,277       327,381  
Operating lease assets     102,474       98,769  
Goodwill     413,989       401,469  
Other intangible assets, net of accumulated amortization of $107,167 and $93,973 at February 28, 2023 and May 31, 2022 respectively     318,483       299,017  
Other assets     25,454       34,394  
Property, plant and equipment:            
Land     49,695       51,483  
Buildings and improvements     306,296       303,269  
Machinery and equipment     1,247,994       1,196,806  
Construction in progress     57,307       59,363  
Total property, plant and equipment     1,661,292       1,610,921  
Less: accumulated depreciation     979,063       914,581  
Total property, plant and equipment, net     682,229       696,340  
Total assets   $ 3,497,672     $ 3,643,023  
             
Liabilities and equity            
Current liabilities:            
Accounts payable   $ 489,346     $ 668,438  
Short-term borrowings     3,605       47,997  
Accrued compensation, contributions to employee benefit plans and related taxes     84,098       117,530  
Dividends payable     17,630       15,988  
Other accrued items     57,703       70,125  
Current operating lease liabilities     12,166       11,618  
Income taxes payable     -       300  
Current maturities of long-term debt     261       265  
Total current liabilities     664,809       932,261  
Other liabilities     118,736       115,991  
Distributions in excess of investment in unconsolidated affiliate     116,825       81,149  
Long-term debt     689,339       696,345  
Noncurrent operating lease liabilities     92,481       88,183  
Deferred income taxes     100,224       115,132  
Total liabilities     1,782,414       2,029,061  
Shareholders' equity - controlling interest     1,585,426       1,480,752  
Noncontrolling interests     129,832       133,210  
Total equity     1,715,258       1,613,962  
Total liabilities and equity   $ 3,497,672     $ 3,643,023  

WORTHINGTON INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

  Three Months Ended     Nine Months Ended  
  February 28,     February 28,  
  2023     2022     2023     2022  
Operating activities:                      
Net earnings $ 50,258     $ 58,647     $ 135,007     $ 313,307  
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:                      
Depreciation and amortization   28,153       27,425       84,508       70,579  
Impairment of long-lived assets   484       3,076       796       3,076  
Provision for (benefit from) deferred income taxes   (5,525 )     10,661       (20,198 )     13,336  
Bad debt expense   2,346       382       3,786       896  
Equity in net income of unconsolidated affiliates, net of distributions   23,218       (18,604 )     84,415       (83,096 )
Net loss (gain) on sale of assets   46       (628 )     (4,988 )     (13,830 )
Stock-based compensation   4,975       4,408       13,758       11,959  
Changes in assets and liabilities, net of impact of acquisitions:                      
Receivables   3,382       (33,766 )     160,475       (155,451 )
Inventories   53,499       31,051       166,959       (229,813 )
Accounts payable   6,627       51,893       (195,489 )     50,967  
Accrued compensation and employee benefits   (2,900 )     (21,105 )     (33,432 )     (52,924 )
Income taxes payable   -       (14,422 )     (300 )     (1,487 )
Other operating items, net   17,588       (24,828 )     833       (22,245 )
Net cash provided (used) by operating activities   182,151       74,190       396,130       (94,726 )
                       
Investing activities:                      
Investment in property, plant and equipment   (22,748 )     (23,645 )     (68,715 )     (71,804 )
Investment in non-marketable equity securities   (20 )     -       (270 )     -  
Acquisitions, net of cash acquired   -       (269,511 )     (56,088 )     (377,261 )
Net proceeds from the sale of investment in ArtiFlex   (300 )     -       35,795       -  
Proceeds from sale of assets, net of selling costs   51       4,083       35,545       35,904  
Net cash used by investing activities   (23,017 )     (289,073 )     (53,733 )     (413,161 )
                       
Financing activities:                      
Net proceeds from (repayments of) short-term borrowings   (1,330 )     105,638       (44,392 )     105,638  
Principal payments on long-term obligations   (5,759 )     (152 )     (5,909 )     (554 )
Proceeds from issuance of common shares, net of tax withholdings   704       269       (3,411 )     (6,516 )
Payments to noncontrolling interests   -       (3,360 )     (11,760 )     (15,436 )
Repurchase of common shares   -       (54,255 )     -       (127,842 )
Dividends paid   (15,101 )     (14,127 )     (44,166 )     (43,390 )
Net cash (used) provided by financing activities   (21,486 )     34,013       (109,638 )     (88,100 )
Increase (decrease) in cash and cash equivalents   137,648       (180,870 )     232,759       (595,987 )
Cash and cash equivalents at beginning of period   129,596       225,194       34,485       640,311  
Cash and cash equivalents at end of period $ 267,244     $ 44,324     $ 267,244     $ 44,324  

WORTHINGTON INDUSTRIES, INC. NON-GAAP FINANCIAL MEASURES / SUPPLEMENTAL DATA (In thousands, 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 adjusted operating income, adjusted net earnings attributable to controlling interest and adjusted net earnings per diluted share attributable to controlling interest, and for purposes of evaluating segment performance, adjusted earnings before interest and taxes attributable to controlling interest (“adjusted EBIT”) and adjusted earnings before interest, taxes, depreciation and amortization attributable to controlling interest (“adjusted EBITDA”). 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.

The following provides a reconciliation to adjusted operating income, adjusted net earnings attributable to controlling interest and adjusted earnings per diluted share attributable to controlling interest from the most comparable GAAP measures for the three months ended February 28, 2023 and 2022.

    Three Months Ended February 28, 2023  
    Operating Income     Earnings Before Income Taxes     Income Tax Expense (Benefit)     Net Earnings Attributable to Controlling Interest(1)     Earnings per Diluted Share  
GAAP   $ 30,095     $ 62,313     $ 12,055     $ 46,325     $ 0.94  
True-up of Level5 earnout accrual (2)     (1,050 )     (1,050 )     253       (797 )     (0.02 )
Impairment of long-lived assets     484       484       (115 )     369       0.01  
Restructuring and other expense, net     824       824       (194 )     630       0.01  
Separation costs (3)     6,347       6,347       (1,502 )     4,845       0.10  
Loss on sale of investment in ArtiFlex (4)     -       300       (43 )     257       -  
Non-GAAP   $ 36,700     $ 69,218     $ 13,656     $ 51,629     $ 1.04  
    Three Months Ended February 28, 2022  
    Operating Income     Earnings Before Income Taxes     Income Tax Expense (Benefit)     Net Earnings Attributable to Controlling Interest(1)     Earnings per Diluted Share  
GAAP   $ 37,611     $ 77,330     $ 18,683     $ 56,342     $ 1.11  
Impairment of long-lived assets     3,076       3,076       (449 )     1,489       0.03  
Restructuring and other income, net     (504 )     (504 )     136       (368 )     (0.01 )
Non-GAAP   $ 40,183     $ 79,902     $ 18,996     $ 57,463     $ 1.13  
                               
Change   $ (3,483 )   $ (10,684 )   $ (5,340 )   $ (5,834 )   $ (0.10 )

The following provides a reconciliation to adjusted operating income, adjusted net earnings attributable to controlling interest and adjusted earnings per diluted share attributable to controlling interest from the most comparable GAAP measures for the nine months ended February 28, 2023 and 2022.

    Nine Months Ended February 28, 2023  
    Operating Income     Earnings Before Income Taxes     Income Tax Expense (Benefit)     Net Earnings Attributable to Controlling Interest(1)     Earnings per Diluted Share  
GAAP   $ 89,795     $ 170,691     $ 35,684     $ 126,625     $ 2.57  
Impairment of long-lived assets     796       796       (163 )     518       0.01  
Restructuring and other income, net     (4,558 )     (4,558 )     648       (2,059 )     (0.04 )
Separation costs (3)     15,593       15,593       (3,730 )     11,863       0.24  
Pension settlement charge (5)     -       4,774       (1,142 )     3,632       0.07  
Loss on sale of investment in ArtiFlex (4)     -       16,059       (3,842 )     12,217       0.25  
Non-GAAP   $ 101,626     $ 203,355     $ 43,913     $ 152,796     $ 3.10  
    Nine Months Ended February 28, 2022  
    Operating Income     Earnings Before Income Taxes     Income Tax Expense (Benefit)     Net Earnings Attributable to Controlling Interest(1)     Earnings per Diluted Share  
GAAP   $ 263,873     $ 403,366     $ 90,059     $ 299,134     $ 5.83  
Impairment of long-lived assets     3,076       3,076       (449 )     1,489       0.03  
Restructuring and other income, net     (14,782 )     (14,782 )     2,027       (6,728 )     (0.13 )
Non-GAAP   $ 252,167     $ 391,660     $ 88,481     $ 293,895     $ 5.73  
                               
Change   $ (150,541 )   $ (188,305 )   $ (44,568 )   $ (141,099 )   $ (2.64 )
                               
(1) Excludes the impact of the noncontrolling interest.  
(2) Reflects the release of accrued compensation related to the first annual earnout opportunity associated with the Level 5 acquisition.  
(3) Reflects direct and incremental costs incurred in connection with the anticipated tax-free spin-off of the Company's Steel Processing business, including audit, advisory, and legal costs.  
(4) 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, including $300 of deal costs during the three months ended February 28, 2023.  
(5) During August of 2023 the Company completed a pension lift-out transaction to transfer a portion of the total projected benefit obligation of The Gerstenslager Company Bargaining Unit Employees' Pension Plan to a third-party insurance company, resulting in a non-cash settlement charge of $4,774 to accelerate a portion of the overall deferred pension cost.  

To further assist in the analysis of segment results for the periods presented, the following volume and net sales information for the three and nine months ended February 28, 2023 and 2022 has been provided along with a reconciliation of adjusted EBIT and adjusted EBITDA to the most comparable GAAP measure, which is operating income for purposes of measuring segment profit:

  Three Months Ended February 28, 2023  
  Steel Processing     Consumer Products     Building Products     Sustainable Energy Solutions     Other     Consolidated  
Volume (tons/units)   917,670       19,158,164       2,494,881       122,139     n/a     n/a  
Net sales $ 757,007     $ 162,647     $ 151,876     $ 31,792     n/a     $ 1,103,322  
                                   
Operating income (loss) $ 10,794     $ 18,808     $ 12,405     $ (1,403 )   $ (10,509 )   $ 30,095  
True-up of Level5 earnout accrual   -       (1,050 )     -       -       -       (1,050 )
Impairment of long-lived assets   -       -       484       -       -       484  
Restructuring and other income, net   1       206       617       -       -       824  
Separation costs   -       -       -       -       6,347       6,347  
Adjusted operating income (loss)   10,795       17,964       13,506       (1,403 )     (4,162 )     36,700  
Miscellaneous income (expense), net   1,111       (21 )     130       (37 )     144       1,327  
Equity in net income of unconsolidated affiliates (1)   (185 )     -       37,836       -       (425 )     37,226  
Less: Net earnings attributable to noncontrolling interests   3,933       -       -       -       -       3,933  
Adjusted EBIT   7,788       17,943       51,472       (1,440 )     (4,443 )     71,320  
Depreciation and amortization   16,147       4,128       4,615       1,652       1,611       28,153  
Adjusted EBITDA $ 23,935     $ 22,071     $ 56,087     $ 212     $ (2,832 )   $ 99,473  
                                   
(1) Excludes $300 of deal costs within Other related to the sale of our investment in ArtiFlex, effective August 3, 2022.  
  Three Months Ended February 28, 2022  
  Steel Processing     Consumer Products     Building Products     Sustainable Energy Solutions     Other     Consolidated  
Volume (tons/units)   998,590       20,297,372       2,786,560       144,108     n/a     n/a  
Net sales $ 1,052,562     $ 161,692     $ 132,944     $ 31,037     n/a     $ 1,378,235  
                                   
Operating income $ 2,690     $ 26,713     $ 9,631     $ (2,763 )   $ 1,340     $ 37,611  
Impairment of long-lived assets   3,076       -       -       -       -       3,076  
Restructuring and other income, net   114       -       (35 )     -       (583 )     (504 )
Adjusted operating income (loss)   5,880       26,713       9,596       (2,763 )     757       40,183  
Miscellaneous income, net   (12 )     (39 )     (3 )     (38 )     485       393  
Equity in net income of unconsolidated affiliates   4,692       -       39,978       -       2,796       47,466  
Less: Net earnings attributable to noncontrolling interests (2)   3,444       -       -       -       -       3,444  
Adjusted EBIT   7,116       26,674       49,571       (2,801 )     4,038       84,598  
Depreciation and amortization   16,715       3,037       4,176       1,679       1,818       27,425  
Adjusted EBITDA $ 23,831     $ 29,711     $ 53,747     $ (1,122 )   $ 5,856     $ 112,023  
                                   
(2) Excludes the noncontrolling interest portion of impairment of long-lived assets and restructuring charges of $1,139 within Steel Processing.  
  Nine Months Ended February 28, 2023  
  Steel Processing     Consumer Products     Building Products     Sustainable Energy Solutions     Other     Consolidated  
Volume (tons/units)   2,817,752       58,124,832       7,784,814       410,959     n/a     n/a  
Net sales $ 2,637,834     $ 505,145     $ 443,870     $ 100,679     n/a     $ 3,687,528  
                                   
Operating income (loss) $ 30,354     $ 52,246     $ 27,093     $ (1,709 )   $ (18,189 )   $ 89,795  
Impairment of long-lived assets   312       -       484       -       -       796  
Restructuring and other income, net   (4,204 )     206       617       -       (1,177 )     (4,558 )
Separation costs   -       -       -       -       15,593       15,593  
Adjusted operating income (loss)   26,462       52,452       28,194       (1,709 )     (3,773 )     101,626  
Miscellaneous income (expense), net (3)   2,145       (102 )     428       19       (69 )     2,421  
Equity in net income of unconsolidated affiliates (4)   3,491       -       116,809       -       1,254       121,554  
Less: Net earnings attributable to noncontrolling interests (5)   6,648       -       -       -       -       6,648  
Adjusted EBIT   25,450       52,350       145,431       (1,690 )     (2,588 )     218,953  
Depreciation and amortization   49,976       11,675       13,247       4,622       4,988       84,508  
Adjusted EBITDA $ 75,426     $ 64,025     $ 158,678     $ 2,932     $ 2,400     $ 303,461  
                                   
(3) Excludes within Other, the $4,774 non-cash settlement charge related to the pension lift-out transaction discussed above.  
(4) Excludes a loss of $16,059 within Other related to the sale of our investment in ArtiFlex.  
(5) Excludes the noncontrolling interest portion of impairment of long-lived assets and restructuring gains of $1,734 within Steel Processing.  
  Nine Months Ended February 28, 2022  
  Steel Processing     Consumer Products     Building Products     Sustainable Energy Solutions     Other     Consolidated  
Volume (tons/units)   3,128,466       60,384,101       8,237,296       429,785     n/a     n/a  
Net sales $ 2,813,214     $ 450,268     $ 368,813     $ 89,619     n/a     $ 3,721,914  
                                   
Operating income (loss) $ 182,243     $ 64,644     $ 20,071     $ (4,402 )   $ 1,317     $ 263,873  
Impairment of long-lived assets   3,076       -       -       -       -       3,076  
Restructuring and other income, net   (12,199 )     -       (35 )     (143 )     (2,405 )     (14,782 )
Adjusted operating income (loss)   173,120       64,644       20,036       (4,545 )     (1,088 )     252,167  
Miscellaneous income, net   35       169       141       (16 )     1,734       2,063  
Equity in net income of unconsolidated affiliates   22,864       -       132,865       -       4,871       160,600  
Less: Net earnings attributable to noncontrolling interests (6)   9,285       -       -       -       -       9,285  
Adjusted EBIT   186,734       64,813       153,042       (4,561 )     5,517       405,545  
Depreciation and amortization   38,480       9,600       12,003       4,943       5,553       70,579  
Adjusted EBITDA $ 225,214     $ 74,413     $ 165,045     $ 382     $ 11,070     $ 476,124  
                                   
(6) Excludes the noncontrolling interest portion of impairment of long-lived assets and restructuring gains of $4,888 within Steel Processing.  

The following tables outlines our equity income (loss) by unconsolidated affiliate for the periods presented:

  Three Months Ended     Nine Months Ended  
  February 28,     February 28,  
  2023     2022     2023     2022  
WAVE $ 18,906     $ 18,586     $ 61,681     $ 66,672  
ClarkDietrich   18,930       21,392       55,128       66,193  
Serviacero Worthington   (185 )     4,692       3,491       22,864  
ArtiFlex (1)   (300 )     1,761       (13,700 )     4,784  
Workhorse   (425 )     1,035       (1,105 )     87  
Total equity income $ 36,926     $ 47,466     $ 105,495     $ 160,600  
                       
(1) On August 3, 2022, the Company sold its 50% interest in ArtiFlex.  

Contacts:SONYA L. HIGGINBOTHAMVP, CORPORATE COMMUNICATIONS AND BRAND MANAGEMENT614.438.7391 | sonya.higginbotham@worthingtonindustries.com

MARCUS A. ROGIERTREASURER AND INVESTOR RELATIONS OFFICER614.840.4663 | marcus.rogier@worthingtonindustries.com

200 Old Wilson Bridge Rd. | Columbus, Ohio 43085WorthingtonIndustries.com

Worthington Enterprises (NYSE:WOR)
Historical Stock Chart
Von Feb 2024 bis Mär 2024 Click Here for more Worthington Enterprises Charts.
Worthington Enterprises (NYSE:WOR)
Historical Stock Chart
Von Mär 2023 bis Mär 2024 Click Here for more Worthington Enterprises Charts.