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Worthington Enterprises Reports Fourth Quarter Fiscal 2024 Results

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

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

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

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

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

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

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

Consolidated Quarterly Results

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

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

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

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

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

Balance Sheet

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

Quarterly Segment Results

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

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

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

Recent Developments

Outlook

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

Upcoming Investor Events

Conference Call

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

About Worthington Enterprises

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

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

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

Safe Harbor Statement

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

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

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

WORTHINGTON ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(In thousands, except per share amounts)
           
  Three Months Ended     Twelve Months Ended  
  May 31,     May 31,  
  2024     2023     2024     2023  
Net sales $ 318,801     $ 368,802     $ 1,245,703     $ 1,418,496  
Cost of goods sold   239,802       274,642       960,684       1,094,908  
Gross profit   78,999       94,160       285,019       323,588  
Selling, general and administrative expense   73,210       75,910       283,471       287,118  
Impairment of goodwill and long-lived assets   32,975             32,975       484  
Restructuring and other expense (income), net   28,624       (13 )     29,327       (367 )
Separation costs   240       2,961       12,705       6,534  
Operating income (loss)   (56,050 )     15,302       (73,459 )     29,819  
Other income (expense):                      
Miscellaneous expense, net   (11,145 )           (17,129 )     (4,497 )
Loss on extinguishment of debt               (1,534 )      
Interest income (expense), net   9       (2,609 )     (1,587 )     (18,298 )
Equity in net income of unconsolidated affiliates   40,388       51,257       167,716       153,262  
Earnings (loss) before income taxes   (26,798 )     63,950       74,007       160,286  
Income tax expense   4,986       13,825       39,027       34,535  
Net earnings (loss) from continuing operations   (31,784 )     50,125       34,980       125,751  
Net earnings (loss) from discontinued operations   (265 )     84,038       82,841       143,419  
Net earnings (loss)   (32,049 )     134,163       117,821       269,170  
Net earnings (loss) attributable to noncontrolling interests   (263 )     4,260       7,197       12,642  
Net earnings (loss) attributable to controlling interest $ (31,786 )   $ 129,903     $ 110,624     $ 256,528  
                       
Amounts attributable to controlling interest:                      
Net earnings (loss) from continuing operations $ (31,521 )   $ 50,125     $ 35,243     $ 125,751  
Net earnings (loss) from discontinued operations   (265 )     79,778       75,381       130,777  
Net earnings (loss) attributable to controlling interest $ (31,786 )   $ 129,903     $ 110,624     $ 256,528  
                       
Earnings (loss) per share from continuing operations – basic $ (0.64 )   $ 1.03     $ 0.72     $ 2.59  
Earnings (loss) per share from discontinued operations – basic   (0.01 )     1.64       1.53       2.69  
Net earnings (loss) per share attributable to controlling interest – basic $ (0.65 )   $ 2.67     $ 2.25     $ 5.28  
                       
Earnings (loss) per share from continuing operations – diluted $ (0.64 )   $ 1.01     $ 0.70     $ 2.55  
Earnings (loss) per share from discontinued operations – diluted   (0.01 )     1.60       1.50       2.64  
Net earnings (loss) per share attributable to controlling interest – diluted $ (0.65 )   $ 2.61     $ 2.20     $ 5.19  
                       
Weighted average common shares outstanding – basic   49,437       48,643       49,195       48,566  
Weighted average common shares outstanding – diluted   49,437       49,779       50,348       49,386  
                       
Cash dividends declared per share $ 0.16     $ 0.31     $ 0.96     $ 1.24  
CONSOLIDATED BALANCE SHEETS
WORTHINGTON ENTERPRISES, INC.
(In thousands)
  May 31,  
  2024     2023  
Assets          
Current assets:          
Cash and cash equivalents $ 244,225     $ 422,268  
Receivables, less allowances of $343 and $803 at May 31, 2024          
and May 31, 2023, respectively   199,798       224,863  
Inventories          
Raw materials   66,040       91,988  
Work in process   11,668       19,189  
Finished products   86,907       83,322  
Total inventories   164,615       194,499  
Income taxes receivable   17,319       1,681  
Prepaid expenses and other current assets   47,936       46,301  
Current assets of discontinued operations         978,725  
Total current assets   673,893       1,868,337  
Investment in unconsolidated affiliates   144,863       138,041  
Operating lease assets   18,667       24,686  
Goodwill   331,595       336,178  
Other intangibles, net of accumulated amortization of          
$83,242 and $73,308 at May 31, 2024 and May 31, 2023, respectively   221,071       230,851  
Other assets   21,342       14,339  
Property, plant and equipment:          
Land   8,657       12,120  
Buildings and improvements   123,478       139,514  
Machinery and equipment   321,836       403,885  
Construction in progress   24,504       24,779  
Total property, plant and equipment   478,475       580,298  
Less: accumulated depreciation   251,269       323,883  
Total property, plant and equipment, net   227,206       256,415  
Non-current assets of discontinued operations         782,071  
Total assets $ 1,638,637     $ 3,650,918  
           
Liabilities and equity          
Current liabilities:          
Accounts payable $ 91,605     $ 126,743  
Accrued compensation, contributions to employee benefit plans and related taxes   41,974       46,782  
Dividends payable   9,038       18,330  
Other accrued items   29,061       37,801  
Current operating lease liabilities   6,228       6,682  
Income taxes payable   470       8,918  
Current maturities of long-term debt         264  
Current liabilities associated of discontinued operations         472,038  
Total current liabilities   178,376       717,558  
Other liabilities   62,243       71,766  
Distributions in excess of investment in unconsolidated affiliate   111,905       117,297  
Long-term debt   298,133       689,718  
Noncurrent operating lease liabilities   12,818       18,326  
Deferred income taxes   84,150       82,346  
Non-current liabilities of discontinued operations         132,279  
Total liabilities   747,625       1,829,290  
Shareholders’ equity – controlling interest   888,879       1,696,011  
Noncontrolling interests   2,133       125,617  
Total equity   891,012       1,821,628  
Total liabilities and equity $ 1,638,637     $ 3,650,918  
WORTHINGTON ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
           
  Three Months Ended     Twelve Months Ended  
  May 31,     May 31,  
  2024     2023     2024     2023  
Operating activities:                      
Net earnings (loss) $ (32,049 )   $ 134,163     $ 117,821     $ 269,170  
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:                      
Depreciation and amortization   12,423       28,292       80,704       112,800  
Impairment of goodwill and long-lived assets   32,975       1,800       34,377       2,596  
Provision for (benefit from) deferred income taxes   1,919       4,670       2,762       (15,528 )
Impairment of investment in note receivable   11,170             11,170        
Loss on extinguishment of debt               1,534        
Bad debt expense (income)   (21 )     (1,678 )     (450 )     2,108  
Equity in net income of unconsolidated affiliates, net of distributions   2,552       (4,545 )     5,722       79,870  
Net loss (gain) on sale of assets   29,329       530       28,980       (4,458 )
Stock-based compensation   3,394       5,420       16,688       19,178  
Changes in assets and liabilities, net of impact of acquisitions:                      
Receivables   342       (17,386 )     50,078       143,089  
Inventories   8,597       (6,843 )     63,596       160,116  
Accounts payable   (5,866 )     45,089       (65,401 )     (150,400 )
Accrued compensation and employee benefits   2,498       10,206       468       (23,226 )
Other operating items, net   (22,094 )     29,516       (58,073 )     30,049  
Net cash provided by operating activities   45,169       229,234       289,976       625,364  
                       
Investing activities:                      
Investment in property, plant and equipment   (11,336 )     (17,651 )     (83,527 )     (86,366 )
Acquisitions, net of cash acquired   (12,315 )           (42,035 )     (56,088 )
Proceeds from sale of assets, net of selling costs   28       108       865       35,653  
Investment in note receivable               (14,900 )      
Investment in non-marketable equity securities   (681 )     (500 )     (2,296 )     (770 )
Net proceeds from sale of investment in ArtiFlex                     35,795  
Excess distributions from unconsolidated affiliate               1,085        
Net cash used by investing activities   (24,304 )     (18,043 )     (140,808 )     (71,776 )
                       
Financing activities:                      
Dividend from Worthington Steel at Separation               150,000        
Distribution to Worthington Steel at Separation               (218,048 )      
Net proceeds (repayments) from short-term borrowings(1)         (791 )     172,187       (45,183 )
Principal payments on long-term obligations         (776 )     (393,890 )     (6,685 )
Proceeds from issuance of common shares, net of tax withholdings   3,961       1,631       (11,399 )     (1,780 )
Payments to noncontrolling interests         (8,475 )     (1,920 )     (20,235 )
Dividends paid   (7,911 )     (15,078 )     (56,819 )     (59,244 )
Net cash used by financing activities   (3,950 )     (23,489 )     (359,889 )     (133,127 )
Increase (decrease) in cash and cash equivalents   16,915       187,702       (210,721 )     420,461  
Cash and cash equivalents at beginning of period   227,310       267,244       454,946       34,485  
Cash and cash equivalents at end of period(2) $ 244,225     $ 454,946     $ 244,225     $ 454,946  
 

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

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

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

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

  Three Months Ended May 31, 2024  
  Operating
Income
    Earnings
Before
Income Taxes
    Income Tax Expense
(Benefit)
    Net loss from Continuing Operations(1)     Diluted EPS – Continuing Operations     Effective
Tax
Rate
 
GAAP $ (56,050 )   $ (26,798 )   $ 4,986     $ (31,521 )     (0.64 )     (18.8 %)
Impairment of goodwill and long-lived assets   32,975       32,975             32,975       0.66        
Restructuring and other expense, net   28,624       28,624       (4,609 )     24,015       0.48        
Separation costs   240       240       (81 )     159              
Non-cash charges in miscellaneous expense         11,077       7       11,084       0.22        
Pension settlement charge in equity income         1,040       (244 )     796       0.02        
Non-GAAP $ 5,789     $ 47,158     $ 9,913     $ 37,508     $ 0.74       20.9 %
  Three Months Ended May 31, 2023  
  Operating
Income
    Earnings
Before
Income Taxes
    Income Tax Expense
(Benefit)
    Net Earnings from Continuing Operations(1)     Diluted EPS – Continuing Operations     Effective
Tax
Rate
 
GAAP $ 15,302     $ 63,950     $ 13,825     $ 50,125     $ 1.01       21.6 %
Corporate costs eliminated at Separation   10,370       10,370       (2,375 )     7,995       0.16        
Restructuring and other income, net   (13 )     (13 )     (1 )     (14 )            
Separation costs   2,961       2,961       (424 )     2,537       0.05        
Sale-leaseback gain in equity income         (2,063 )     472       (1,591 )     (0.03 )      
Non-GAAP $ 28,620     $ 75,205     $ 16,153     $ 59,052     $ 1.19       21.5 %
  Twelve Months Ended May 31, 2024  
  Operating
Income (Loss)
    Earnings
Before
Income Taxes
    Income Tax Expense
(Benefit)
    Net Earnings from Continuing Operations(1)     Diluted EPS – Continuing Operations     Effective
Tax
Rate
 
GAAP $ (73,459 )   $ 74,007     $ 39,027     $ 35,243     $ 0.70       52.6 %
Corporate costs eliminated at Separation   19,343       19,343       (4,643 )     14,700       0.29        
Impairment of goodwill and long-lived assets   32,975       32,975             32,975       0.65        
Restructuring and other expense, net   29,327       29,327       (4,737 )     24,590       0.49        
Separation costs   12,705       12,705       (3,049 )     9,656       0.19        
Non-cash charges in miscellaneous expense         19,180       (1,922 )     17,258       0.34        
Loss on extinguishment of debt         1,534       (368 )     1,166       0.02        
Gain on sale of assets in equity income         (2,780 )     662       (2,118 )     (0.04 )      
Pension settlement charge in equity income         1,040       (244 )     796       0.02        
One-time tax effects of Separation               9,197       9,197       0.18        
Non-GAAP $ 20,891     $ 187,331     $ 44,131     $ 143,463     $ 2.84       23.5 %
  Twelve Months Ended May 31, 2023  
  Operating
Income
    Earnings
Before
Income Taxes
    Income Tax Expense
(Benefit)
    Net Earnings from Continuing Operations(1)     Diluted EPS – Continuing Operations     Effective
Tax
Rate
 
GAAP $ 29,819     $ 160,286     $ 34,535     $ 125,751     $ 2.55       21.5 %
Corporate costs eliminated at Separation   41,479       41,479       (9,499 )     31,980       0.65        
Impairment of long-lived assets   484       484       (111 )     373       0.01        
Restructuring and other income, net   (367 )     (367 )     84       (283 )     (0.01 )      
Separation costs   6,534       6,534       (1,496 )     5,038       0.11        
Pension settlement charge         4,774       (1,093 )     3,681       0.07        
Loss on sale of investment in Artiflex         16,059       (3,678 )     12,381       0.25        
Sale lease-back gain in equity income         (2,063 )     472       (1,591 )     (0.03 )      
Non-GAAP $ 77,949     $ 227,186     $ 49,856     $ 177,330     $ 3.60       21.9 %
 

(1) Excludes the impact of noncontrolling interest

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

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

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

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

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

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

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

Non-GAAP Footnotes:

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

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

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

(4) Reflects a pre-tax loss of $1,534 realized in connection with the July 28, 2023, early redemption of the 2026 Notes. The loss resulted primarily from unamortized issuance costs and discount included in the carrying amount of the 2026 Notes and the acceleration of the remaining unamortized loss in equity related to a treasury lock derivative instrument executed in connection with the issuance of the 2026 Notes.

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

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

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

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

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

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

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

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

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

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

Exclusions from Non-GAAP Financial Measures

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

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

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

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

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


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