Worthington Steel, Inc. (NYSE: WS), a market-leading,
value-added metals processing company, today reported financial
results for the fiscal 2025 first quarter ended August 31,
2024.
First Quarter Highlights (all comparisons to the first
quarter of fiscal 2024):
- Net sales of $834.0 million decreased 8% compared to $905.8
million.
- Operating income of $43.4 million compared to $69.7
million.
- Net earnings attributable to controlling interest of $28.4
million compared to $58.5 million.
- Net earnings per diluted share attributable to controlling
interest of $0.56 compared to $1.19; Adjusted net earnings per
diluted share attributable to controlling interest of $0.56
compared to $1.26.
- Adjusted EBIT of $39.4 million compared to $80.5 million.
- Declared a quarterly dividend of $0.16 per share payable on
December 27, 2024, to shareholders of record on December 13,
2024.
“The first quarter of fiscal year 2025 was solid for Worthington
Steel despite some headwinds,” said Geoff Gilmore, president and
CEO of Worthington Steel. “Our teams are focused on serving our
customers and managing the dynamics of our industry and the markets
we serve. Demand is stable and we continue to deliver unique,
custom, value-added solutions for our customers by transforming
metals, providing lightweighting solutions and supporting
electrification.”
Financial highlights for the fiscal
2025 period and the comparative period are as follows:
(In millions, except volume and per share
amounts)
1Q 2025
1Q 2024
Volume (tons)
994,093
1,023,545
Net sales
$
834.0
$
905.8
Operating income
43.4
69.7
Net earnings attributable to controlling
interest
28.4
58.5
Adjusted EBIT (Non-GAAP)(1)
39.4
80.5
Equity in net income of unconsolidated
affiliate
1.3
9.0
Net earnings per diluted share
attributable to controlling interest
$
0.56
$
1.19
Impairment of long-lived assets per
diluted share (after-tax)
-
0.01
Separation costs per diluted share
(after-tax)
-
0.06
Adjusted net earnings per diluted share
attributable to controlling interest (Non-GAAP)(1)
$
0.56
$
1.26
______________________________
(1)
Results in both the current year period
and prior year period were impacted by certain items, as further
discussed in the Non-GAAP Financial Measures / Supplemental Data
section later in this release.
Quarterly Results
Net sales for the first quarter of fiscal 2025 were $834.0
million, a decrease of $71.8 million, or 8%, compared to the prior
year quarter. The decrease was driven primarily by a 6% decrease in
direct selling prices and a 4% decrease in direct tons and a 2%
decrease in toll tons sold in the first quarter of fiscal 2025
compared to the prior year quarter. This was partially offset by
more favorable mix within toll tons sold. The mix of direct tons
versus toll tons processed was 56% to 44% in the first quarter of
fiscal 2025 and the prior year quarter.
Gross margin decreased by $28.1 million over the prior year
quarter to $100.4 million. The decrease was driven primarily by
lower direct spreads and lower volume. Direct spreads, down $19.9
million, were impacted by a $32.1 million unfavorable change from
an estimated $15.5 million inventory holding gain in the prior year
quarter to an estimated $16.6 million inventory holding loss in the
first quarter of fiscal 2025.
Operating income decreased $26.3 million from the prior year
quarter to $43.4 million, primarily due to a $28.1 million decline
in gross margin and a $3.2 million increase in selling, general and
administrative (“SG&A”) expense driven by an increase in wage
and benefit costs as well as costs of being a stand-alone public
company. The decrease in operating income was partially offset by a
$3.6 million decrease in costs associated with the Company’s
December 1, 2023, separation from Worthington Enterprises, Inc.
(“Separation”) compared to the prior year quarter. Additionally,
there were no impairments of long-lived assets in the first quarter
of fiscal 2025, as compared to $1.4 million in the prior year
quarter.
The Company reported net earnings attributable to controlling
interest of $28.4 million, or $0.56 per diluted share, for its
fiscal 2025 first quarter. For the prior year quarter, the Company
recorded net earnings attributable to controlling interest of $58.5
million, or $1.19 per diluted share.
Adjusted net earnings attributable to controlling interest of
$28.4 million, or $0.56 per diluted share, compares to the prior
year quarter adjusted net earnings attributable to controlling
interest of $62.0 million, or $1.26 per diluted share. The prior
year quarter adjusted results exclude both $2.8 million in
after-tax Separation costs, or $0.06 per diluted share, and $0.7
million in after-tax impairment of long-lived assets, or $0.01 per
diluted share.
Balance Sheet, Cash Flow and Capital Allocation
As of August 31, 2024, the Company had cash and cash equivalents
of $36.0 million. During the first quarter of fiscal 2025, the
Company generated cash flow from operations of $54.6 million
compared to cash used in operations of $20.7 million in the prior
year period. Capital expenditures for the first quarter of fiscal
2025 equaled $21.5 million compared to $17.3 million in the prior
year quarter. The increase in capital expenditures was
substantially related to the previously announced strategic
expansions of the Company’s electrical steel operations in Mexico
and Canada. The Company generated positive free cash flow (as
defined in the Non-GAAP Financial Measures / Supplemental Data
section later in this release) of $33.1 million in the first
quarter of fiscal 2025 compared to a negative free cash flow of
$38.0 million in the prior year quarter.
The Company ended the first quarter of fiscal 2025 with debt of
$122.2 million under its revolving credit facility and $36.0
million in cash and cash equivalents, resulting in a net debt (as
defined in the Non-GAAP Financial Measures / Supplemental Data
section later in this release) position of $86.2 million.
The Board of Directors declared a quarterly dividend of $0.16
per common share. The dividend is payable on December 27, 2024, to
shareholders of record at the close of business on December 13,
2024.
Conference Call
The Company will review fiscal 2025 first quarter results during
its quarterly conference call on September 26, 2024, beginning at
8:30 a.m., Eastern Time. Details regarding the conference call are
located in the investor section of the Company’s 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 approximately 5,000 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 Steel 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
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,” “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 “Part I – Item 1A. – Risk Factors” of
the Company’s Annual Report on Form 10-K for the fiscal year ended
May 31, 2024.
Forward-looking statements should be construed in the light of
such risks. The Company notes these factors for investors as
contemplated by the Act. It is impossible to predict or identify
all potential risk factors. Consequently, 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.
CONSOLIDATED AND
COMBINED STATEMENTS OF EARNINGS
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended
August 31,
2024
2023
Net sales
$
834.0
$
905.8
Cost of goods sold
733.6
777.3
Gross margin
100.4
128.5
Selling, general and administrative
expense
57.0
53.8
Impairment of long-lived assets
-
1.4
Separation costs
-
3.6
Operating income
43.4
69.7
Other income (expense):
Miscellaneous income (expense), net
(5.9
)
0.9
Interest expense, net
(2.6
)
(0.5
)
Equity in net income of unconsolidated
affiliate
1.3
9.0
Earnings before income taxes
36.2
79.1
Income tax expense
4.0
17.0
Net earnings
32.2
62.1
Net earnings attributable to
noncontrolling interests
3.8
3.6
Net earnings attributable to
controlling interest
$
28.4
$
58.5
Basic
Weighted average common shares
outstanding(1)
49.4
49.3
Earnings per share attributable to
controlling interest
$
0.57
$
1.19
Diluted
Weighted average common shares
outstanding(2)
50.4
49.3
Earnings per share attributable to
controlling interest
$
0.56
$
1.19
Common shares outstanding at end of
period(1)
49.4
49.3
Cash dividends declared per share
$
0.16
n/a
_______________________________
(1)
Prior to the third quarter of fiscal 2024,
reported Weighted average common shares outstanding (Basic) and
Common shares outstanding at end of period reflects the basic
shares at the Separation. This share amount is being utilized for
the calculation of basic earnings per share for periods presented
prior to the Separation.
(2)
Prior to the third quarter of fiscal 2024,
reported Weighted average common shares outstanding (Diluted)
reflects the basic shares at the Separation. This share amount is
being utilized for the calculation of diluted earnings per share
for periods presented prior to the Separation.
WORTHINGTON STEEL,
INC.
CONSOLIDATED BALANCE
SHEETS
(In millions, except share
amounts)
(Unaudited)
August 31,
May 31,
2024
2024
Assets
Current assets:
Cash and cash equivalents
$
36.0
$
40.2
Receivables, less allowances of $2.7 and
$3.2, respectively
443.4
472.6
Inventories
Raw materials
157.5
150.2
Work in process
150.2
176.8
Finished products
84.4
78.3
Total inventories
392.1
405.3
Income taxes receivable
7.6
4.2
Assets held for sale
2.9
2.9
Prepaid expenses and other current
assets
73.5
76.6
Total current assets
955.5
1,001.8
Investment in unconsolidated affiliate
136.3
135.0
Operating lease assets
70.8
72.9
Goodwill
79.7
79.6
Other intangible assets, net of
accumulated amortization of $46.8 and $45.3, respectively
75.5
77.0
Deferred tax asset
8.5
8.5
Other assets
16.5
16.8
Property, plant and equipment:
Land
38.0
37.9
Buildings and improvements
178.4
177.1
Machinery and equipment
902.3
893.8
Construction in progress
99.1
83.6
Total property, plant and equipment
1,217.8
1,192.4
Less: accumulated depreciation
731.2
717.6
Total property, plant and equipment,
net
486.6
474.8
Total assets
$
1,829.4
$
1,866.4
Liabilities and equity
Current liabilities:
Accounts payable
$
359.3
$
380.4
Short-term borrowings
122.2
148.0
Accrued compensation, contributions to
employee benefit plans and related taxes
39.6
52.8
Dividends payable
8.8
8.7
Other accrued items
13.3
15.7
Current operating lease liabilities
7.4
7.6
Income taxes payable
7.3
5.2
Total current liabilities
557.9
618.4
Other liabilities
34.8
34.3
Noncurrent operating lease liabilities
66.4
68.3
Deferred income taxes
27.1
27.9
Total liabilities
686.2
748.9
Preferred shares, without par value;
authorized – 1,000,000 shares; no shares issued
or outstanding
-
-
Common shares, without par value;
authorized – 150,000,000 shares; issued
and outstanding 49,424,731 shares and
49,331,514 shares, respectively
-
-
Additional Paid-in Capital
906.7
905.3
Retained Earnings
106.3
86.1
Accumulated other comprehensive loss, net
of taxes of $(1.8) and $(1.7), respectively
(3.9
)
(6.1
)
Total Shareholders’ equity - controlling
interest
1,009.1
985.3
Noncontrolling interests
134.1
132.2
Total equity
1,143.2
1,117.5
Total liabilities and equity
$
1,829.4
$
1,866.4
WORTHINGTON STEEL,
INC.
CONSOLIDATED AND COMBINED
STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
August 31,
2024
2023
Operating activities:
Net earnings
$
32.2
$
62.1
Adjustment to reconcile net earnings to
net cash provided by (used in) operating activities:
Depreciation and amortization
16.2
16.9
Impairment of long-lived assets
-
1.4
Benefit from deferred income taxes
(0.9
)
(0.1
)
Bad debt income
(0.2
)
(0.7
)
Equity in net income of unconsolidated
affiliate, net of distributions
(1.3
)
(9.0
)
Net loss on sale of assets
0.1
-
Stock-based compensation
2.4
2.8
Changes in assets and liabilities:
Receivables
28.5
(32.9
)
Inventories
13.2
(43.2
)
Accounts payable
(25.5
)
3.6
Accrued compensation and employee
benefits
(13.2
)
(3.5
)
Other operating items, net
3.1
(18.1
)
Net cash provided by (used in)
operating activities
54.6
(20.7
)
Investing activities:
Investment in property, plant and
equipment
(21.5
)
(17.3
)
Net cash used in investing
activities
(21.5
)
(17.3
)
Financing activities:
Transfers from the Former Parent, net
-
37.4
Repayment of short-term borrowings
(15.0
)
(2.8
)
Proceeds from revolving credit facility
borrowings - swing loans
146.6
-
Repayments of revolving credit facility
borrowings - swing loans
(157.4
)
-
Proceeds from issuance of common shares,
net of tax withholdings
(1.6
)
-
Payments to noncontrolling interests
(1.9
)
(1.9
)
Dividends paid
(8.0
)
-
Net cash provided by (used in)
financing activities
(37.3
)
32.7
Decrease in cash and cash equivalents
(4.2
)
(5.3
)
Cash and cash equivalents at beginning of
period
40.2
32.7
Cash and cash equivalents at end of
period
$
36.0
$
27.4
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, (d)
adjusted net earnings attributable to controlling interest, (e)
adjusted net earnings per diluted share attributable to controlling
interest, (f) net earnings before interest and taxes attributable
to controlling interest (“EBIT”), (g) adjusted net earnings before
interest and taxes attributable to controlling interest (“adjusted
EBIT”), (h) net earnings before interest, taxes, depreciation and
amortization attributable to controlling interest (“EBITDA”), (i)
adjusted net earnings before interest, taxes, depreciation and
amortization attributable to controlling interest (“adjusted
EBITDA”), (j) free cash flow, (k) total debt less cash and cash
equivalents (“net debt”), and (l) pro forma adjusted net earnings
before interest and taxes attributable to controlling interest
(“pro forma adjusted EBIT”).
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 on 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
business and enable investors to evaluate operations and future
prospects in the same manner as management.
For the purposes of the subsequent tables, the non-GAAP measures
have been adjusted for the items identified below:
- Impairment of long-lived assets -
impairments are excluded because they do not occur in the ordinary
course of the Company’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.
- Separation costs - direct and
incremental costs incurred in connection with the Separation from
the Former Parent, 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 Company’s ongoing operations.
- Tax indemnification adjustment -
tax benefit and indemnification payable adjustments reported in
Miscellaneous income (expense), net and income tax expense related
to an indemnification agreement with the former owners of Tempel
Steel Company (“Tempel”) as a result of a current quarter favorable
tax ruling in one of the jurisdictions in which Tempel operates.
The indemnification agreement, which was entered into with the
former Tempel owners at the time the Company acquired Tempel,
provides protection to the Company from rulings by tax authorities
through the acquisition date.
The following provides a reconciliation to the non-GAAP
financial measures 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 three-month periods
ended August 31, 2024, and August 31, 2023.
Three Months Ended August 31,
2024
Operating Income
Earnings Before Income Taxes
Income Tax Expense
Net Earnings Attributable to
Controlling Interest
Net Earnings per Diluted Share
Attributable to Controlling Interest
GAAP
$
43.4
$
36.2
$
4.0
$
28.4
$
0.56
Tax indemnification adjustment
-
4.4
4.4
-
-
Non-GAAP
$
43.4
$
40.6
$
8.4
$
28.4
$
0.56
Three Months Ended August 31,
2023
Operating Income
Earnings Before Income Taxes
Income Tax Expense
Net Earnings Attributable to
Controlling Interest
Net Earnings per Diluted Share
Attributable to Controlling Interest
GAAP
$
69.7
$
79.1
$
17.0
$
58.5
$
1.19
Impairment of long-lived assets
1.4
1.4
(0.2
)
0.7
0.01
Separation costs
3.6
3.6
(0.8
)
2.8
0.06
Non-GAAP
$
74.7
$
84.1
$
16.0
$
62.0
$
1.26
To further assist in the analysis of results for the periods
presented, the following volume and net sales information for
three-month periods ended August 31, 2024, and August 31, 2023, has
been provided along with a reconciliation of the non-GAAP financial
measures, EBIT, adjusted EBIT and adjusted EBITDA to the most
comparable GAAP measure, which is net earnings attributable to
controlling interests. Net earnings margin is calculated by
dividing net earnings attributable to controlling interest by net
sales. 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
August 31,
(In millions, except volume)
2024
2023
Volume (tons)
994,093
1,023,545
Net sales
$
834.0
$
905.8
Net earnings attributable to
controlling interest
$
28.4
$
58.5
Interest expense, net
2.6
0.5
Income tax expense
4.0
17.0
EBIT
35.0
76.0
Impairment of long-lived assets(1)
-
0.9
Separation costs
-
3.6
Tax indemnification adjustment
4.4
-
Adjusted EBIT
39.4
80.5
Depreciation and amortization
16.2
16.9
Adjusted EBITDA
$
55.6
$
97.4
Net earnings margin
3.4
%
6.5
%
Adjusted EBIT margin
4.7
%
8.9
%
Adjusted EBITDA margin
6.7
%
10.8
%
_______________________________
(1)
Excludes the noncontrolling interest
portion of impairment of long-lived assets of $0.5 million in the
prior year period.
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 each of the past five fiscal quarters and
the 12 months ended August 31, 2024, and the 12 months ended May
31, 2024.
First
Fourth
Third
Second
First
Quarter
Quarter
Quarter
Quarter
Quarter
2025
2024
2024
2024
2024
Net earnings (loss) attributable to
controlling interest
$
28.4
$
53.2
$
49.0
$
(6.0
)
$
58.5
Interest expense, net
2.6
2.4
2.9
0.2
0.5
Income tax expense (benefit)
4.0
17.6
14.0
(2.5
)
17.0
Depreciation and amortization
16.2
16.1
15.9
16.4
16.9
EBITDA
51.2
89.3
81.8
8.1
92.9
Impairment of long-lived assets
-
-
-
-
0.9
Separation costs
-
-
1.0
14.9
3.6
Tax indemnification adjustment
4.4
(2.8
)
-
-
-
Adjusted EBITDA
$
55.6
$
86.5
$
82.8
$
23.0
$
97.4
Trailing 12 months adjusted
EBITDA
$
247.9
$
289.7
The following provides a reconciliation of net cash provided by
(used in) operating activities (the most comparable GAAP financial
measure) to free cash flow for each of the past five fiscal
quarters and the 12 months ended August 31, 2024. 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.
First
Fourth
Third
Second
First
Quarter
Quarter
Quarter
Quarter
Quarter
2025
2024
2024
2024
2024
Net cash provided by (used in)
operating activities
$
54.6
$
35.6
$
44.7
$
139.9
$
(20.7
)
Investment in property, plant and
equipment
(21.5
)
(44.8
)
(22.4
)
(18.9
)
(17.3
)
Free cash flow
$
33.1
$
(9.2
)
$
22.3
$
121.0
$
(38.0
)
Trailing 12 months free cash
flow
$
167.2
The following provides a reconciliation of total debt (the most
comparable GAAP financial measure) to the non-GAAP financial
measure net debt. Net debt is calculated by subtracting cash and
cash equivalents from total debt (defined as the aggregate of
short-term borrowings, current maturities of long-term debt, and
long-term debt). As of August 31, 2024, and May 31, 2024, the
Company had no long-term debt borrowings. The calculation of net
debt as of August 31, 2024, and May 31, 2024, is outlined
below.
August 31,
May 31,
2024
2024
Total debt
$
122.2
$
148.0
Less: cash and cash equivalents
(36.0
)
(40.2
)
Net debt
$
86.2
$
107.8
To further assist in the analysis of results for the periods
presented, the following information for the three-month periods
ended August 31, 2024, and August 31, 2023, has been provided along
with a reconciliation of net earnings attributable to controlling
interest (the most comparable GAAP financial measure) 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 the Former Parent. The
pro forma financial information assumes the Separation occurred on
June 1, 2022, the first day of the Company’s 2023 fiscal year.
The 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 date of this release.
There were no incremental pro forma adjustments made for the
three months ended August 31, 2024, given this period included the
actual results of operating as a stand-alone public company. For
the three months ended August 31, 2023, the adjustments included in
the information below represent the adjustments for the period
prior to the Separation.
Three Months Ended
August 31,
2024
2023
Net earnings attributable to
controlling interest
$
28.4
$
58.5
Interest expense, net
2.6
0.5
Income tax expense
4.0
17.0
EBIT
35.0
76.0
Impairment of long-lived assets(1)
-
0.9
Separation costs
-
3.6
Tax indemnification adjustment
4.4
-
Adjusted EBIT
39.4
80.5
Pro Forma Adjustments:
Incremental steel supply agreement
margin(2)
-
0.9
Incremental stand-alone corporate
costs(3)
-
(4.4
)
Total Pro Forma Adjustments
-
(3.5
)
Pro Forma Adjusted EBIT
$
39.4
$
77.0
______________________________
(1)
Excludes the noncontrolling interest
portion of impairment of long-lived assets of $0.5 million in the
prior year period.
(2)
Reflects the incremental margin on sales
to the Former Parent under the steel supply agreement between the
Company and the Former Parent.
(3)
Includes an increase in SG&A expense
for the three months ended August 31, 2023, to capture the effects
of recurring and ongoing costs required to operate the Company’s
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
with the Former Parent.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240923926402/en/
Melissa Dykstra Vice President Corporate Communications and
Investor Relations Phone: 614-840-4144
Melissa.Dykstra@worthingtonsteel.com
Worthington Steel (NYSE:WS)
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