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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Worthington Steel Inc | NYSE:WS | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 1.64 | 5.05% | 34.10 | 34.64 | 31.75 | 32.47 | 2,609,767 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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(Address of Principal Executive Offices) |
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Registrant’s Telephone Number, Including Area Code: ( |
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On December 18, 2024, Worthington Steel, Inc. (“we,” “us,” “our” and “registrant”) issued a news release (the “Financial News Release”) reporting results for the three months ended November 30, 2024 (the second quarter of fiscal 2025). A copy of the Financial News Release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
We conducted a conference call on December 19, 2024, to discuss our unaudited financial results for the second quarter of fiscal 2025 and addressed certain matters related to our outlook for the third quarter of fiscal 2025. A copy of the transcript of the conference call is included herewith as Exhibit 99.2 and is incorporated herein by reference. During the conference call, we referenced an investor presentation that was made available on our website throughout the conference call. The investor presentation is included herewith as Exhibit 99.3 and is incorporated herein by reference.
We have included both financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and non-GAAP financial measures in the Financial News Release, the investor deck and the conference call to provide investors with additional information that we believe allows for increased comparability of the performance of our ongoing operations from period to period. Please see the Financial News Release and the investor deck for further explanations of why we use the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures.
The information contained in this Item 2.02, including Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3, is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless we specifically state that the information is to be considered “filed” under the Exchange Act or incorporate the information by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 18, 2024, our Board of Directors (the “Board”) appointed Scott Kelly, who currently serves as Senior Vice President of Operations of NPL Construction Company, a subsidiary of Centuri Group, Inc., as a director to fill the director’s office created by the Board increasing its size to 11 members pursuant to our Amended Regulations. Mr. Kelly will serve until our 2027 annual meeting of shareholders and until his successor is duly elected and qualified or until his earlier death, resignation or removal. In connection with his appointment, the Board also appointed Mr. Kelly to serve as a member of the Nominating and Governance Committee.
There were no arrangements or understandings between Mr. Kelly and any other persons, pursuant to which Mr. Kelly was selected as a director. No information is required to be disclosed pursuant to Item 404(a) of Regulation S-K. Mr. Kelly will receive the same compensation as our other non-employee directors, as such is described in our proxy statement relating to our 2024 annual meeting of shareholders.
A copy of the press release announcing the appointment of Mr. Kelly is attached hereto as Exhibit 99.4.
Item 8.01 Other Events.
On December 18, 2024, we issued a news release (the “Dividend Release”) reporting that our Board declared a quarterly cash dividend of $0.16 per common share. The dividend was declared on December 18, 2024, and is payable on March 28, 2025, to our shareholders of record at the close of business on March 14, 2025. A copy of the Dividend Release is filed herewith as Exhibit 99.5.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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WORTHINGTON STEEL, INC. |
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Date: |
December 20, 2024 |
By: |
/s/ Joseph Y. Heuer |
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Joseph Y. Heuer |
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EXHIBIT 99.1 |
Worthington Steel Reports Second Quarter Fiscal 2025 Results
COLUMBUS, Ohio, December 18, 2024 – Worthington Steel, Inc. (NYSE: WS), a market-leading, value-added metals processing company, today reported financial results for the fiscal 2025 second quarter ended November 30, 2024.
Second Quarter Highlights (all comparisons to the second quarter of fiscal 2024):
“Worthington Steel delivered a solid quarter despite headwinds across a number of end markets,” said Geoff Gilmore, president and CEO of Worthington Steel. “As we mark our first full year as a publicly traded, stand-alone company, Worthington Steel employees are driving our strategy and achieving new milestones. We continue to provide innovative solutions to our customers and partners, and we are well-positioned to capitalize on key end market trends with our high value-added solutions to generate returns for our shareholders.”
Financial highlights for the fiscal 2025 periods and the fiscal 2024 comparative periods are as follows:
(In millions, except volume and per share amounts)
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2Q 2025 |
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2Q 2024 |
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6M 2025 |
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6M 2024 |
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Volume (tons) |
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936,069 |
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|
968,595 |
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1,930,162 |
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1,992,140 |
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Net sales |
|
$ |
739.0 |
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|
$ |
808.0 |
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|
$ |
1,573.0 |
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$ |
1,713.8 |
|
Operating income (loss) |
|
|
18.9 |
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|
(8.8 |
) |
|
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62.3 |
|
|
|
60.9 |
|
Net earnings (loss) attributable to controlling interest |
|
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12.8 |
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(6.0 |
) |
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41.2 |
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|
52.5 |
|
Adjusted EBIT (Non-GAAP)(1) |
|
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14.3 |
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6.6 |
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53.7 |
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87.1 |
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Equity in net income (loss) of unconsolidated affiliate |
|
|
(0.9 |
) |
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3.8 |
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0.4 |
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12.8 |
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Net earnings (loss) per diluted share attributable to controlling interest |
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$ |
0.25 |
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$ |
(0.12 |
) |
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$ |
0.82 |
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$ |
1.07 |
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Impairment of long-lived assets per diluted share (after-tax) |
|
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- |
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- |
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|
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- |
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0.01 |
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Separation costs per diluted share (after-tax) |
|
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- |
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0.23 |
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|
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- |
|
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|
0.29 |
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Pension settlement gain per diluted share (after-tax) |
|
|
(0.04 |
) |
|
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- |
|
|
|
(0.04 |
) |
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- |
|
Gain on land sale per diluted share (after-tax) |
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(0.02 |
) |
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- |
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(0.02 |
) |
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- |
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Adjusted net earnings per diluted share attributable to controlling interest (Non-GAAP)(1) |
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$ |
0.19 |
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$ |
0.11 |
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$ |
0.76 |
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$ |
1.37 |
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Quarterly Results
Net sales for the second quarter of fiscal 2025 were $739.0 million, a decrease of $69.0 million, or 9%, compared to the prior year quarter. The decrease was driven primarily by lower volumes and direct selling prices. Direct tons sold decreased 5% and toll tons sold decreased 1% in the second quarter of fiscal 2025 compared to the prior year quarter. Direct selling prices decreased 4% in the second quarter of fiscal 2025 compared to the prior year quarter. The mix of direct tons versus toll tons processed was 55% to 45% in the second quarter of fiscal 2025 compared to 56% to 44% in the prior year quarter.
Gross margin increased by $19.8 million over the prior year quarter to $80.0 million. The increase was driven primarily by higher direct spreads, offset by lower volume. Direct spreads, up $31.1 million, were impacted by a $21.4 million favorable change from an estimated $34.8 million inventory holding loss in the prior year quarter to an estimated $13.4 million inventory holding loss in the second quarter of fiscal 2025.
Operating income increased $27.7 million from the prior year quarter to $18.9 million, primarily due to a $19.8 million increase in gross margin and a $14.9 million decrease in costs associated with the Company’s December 1, 2023, separation from Worthington Enterprises, Inc. (“Separation”), partially offset by a $7.0 million increase in selling, general and administrative (“SG&A”) expense as compared to the prior year quarter. The increase in SG&A expense was driven by an increase in wage and benefit costs, incremental costs of being a stand-alone public company, an increase in bad debt expenses, and additional professional fees associated with the Sitem Group transaction.
The Company reported net earnings attributable to controlling interest of $12.8 million, or $0.25 per diluted share, for its fiscal 2025 second quarter. For the prior year quarter, the Company recorded net loss attributable to controlling interest of $6.0 million, or $0.12 per diluted share.
Adjusted net earnings attributable to controlling interest of $9.7 million, or $0.19 per diluted share, compares to the prior year quarter adjusted net earnings attributable to controlling interest of $5.4 million, or $0.11 per diluted share. The current year quarter adjusted results exclude a $2.0 million after-tax pension settlement gain, or $0.04 per diluted share, and a $1.1 million after-tax gain on land sale, or $0.02 per diluted share. The prior year quarter adjusted results exclude an $11.4 million in after-tax Separation costs, or $0.23 per diluted share.
Balance Sheet, Cash Flow and Capital Allocation
As of November 30, 2024, the Company had cash and cash equivalents of $52.0 million. During the second quarter of fiscal 2025, net cash provided by operating activities equaled $68.0 million compared to $139.9 million in the prior year quarter. Investment in property, plant and equipment for the second quarter of fiscal 2025 equaled $34.8 million compared to $18.9 million in the prior year quarter. The increase in investment in property, plant and equipment was substantially related to the previously announced strategic expansions of the Company’s electrical steel operations in Mexico and Canada, as well as certain other assets. The Company generated free cash flow (as defined in the Non-GAAP Financial Measures / Supplemental Data section later in this release) of $33.2 million in the second quarter of fiscal 2025 compared to free cash flow of $121.0 million in the prior year quarter.
The Company ended the second quarter of fiscal 2025 with debt of $115.0 million under its revolving credit facility and $52.0 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 $63.0 million.
The Board of Directors declared a quarterly dividend of $0.16 per common share. The dividend is payable on March 28, 2025, to shareholders of record at the close of business on March 14, 2025.
Conference Call
The Company will review fiscal 2025 second quarter results during its quarterly conference call on December 19, 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 is 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 its 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)
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Three Months Ended |
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Six Months Ended |
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November 30, |
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November 30, |
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2024 |
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2023 |
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|
2024 |
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|
2023 |
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||||
Net sales |
|
$ |
739.0 |
|
|
$ |
808.0 |
|
|
$ |
1,573.0 |
|
|
$ |
1,713.8 |
|
Cost of goods sold |
|
|
659.0 |
|
|
|
747.8 |
|
|
|
1,392.6 |
|
|
|
1,525.1 |
|
Gross margin |
|
|
80.0 |
|
|
|
60.2 |
|
|
|
180.4 |
|
|
|
188.7 |
|
Selling, general and administrative expense |
|
|
61.1 |
|
|
|
54.1 |
|
|
|
118.1 |
|
|
|
107.9 |
|
Impairment of long-lived assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1.4 |
|
Separation costs |
|
|
- |
|
|
|
14.9 |
|
|
|
- |
|
|
|
18.5 |
|
Operating income (loss) |
|
|
18.9 |
|
|
|
(8.8 |
) |
|
|
62.3 |
|
|
|
60.9 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
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Miscellaneous income (expense), net |
|
|
3.8 |
|
|
|
0.6 |
|
|
|
(2.1 |
) |
|
|
1.5 |
|
Interest expense, net |
|
|
(2.1 |
) |
|
|
(0.2 |
) |
|
|
(4.7 |
) |
|
|
(0.7 |
) |
Equity in net income (loss) of unconsolidated affiliate |
|
|
(0.9 |
) |
|
|
3.8 |
|
|
|
0.4 |
|
|
|
12.8 |
|
Earnings (loss) before income taxes |
|
|
19.7 |
|
|
|
(4.6 |
) |
|
|
55.9 |
|
|
|
74.5 |
|
Income tax expense (benefit) |
|
|
3.6 |
|
|
|
(2.5 |
) |
|
|
7.6 |
|
|
|
14.5 |
|
Net earnings (loss) |
|
|
16.1 |
|
|
|
(2.1 |
) |
|
|
48.3 |
|
|
|
60.0 |
|
Net earnings attributable to noncontrolling interests |
|
|
3.3 |
|
|
|
3.9 |
|
|
|
7.1 |
|
|
|
7.5 |
|
Net earnings (loss) attributable to controlling interest |
|
$ |
12.8 |
|
|
$ |
(6.0 |
) |
|
$ |
41.2 |
|
|
$ |
52.5 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding(1) |
|
|
49.5 |
|
|
|
49.3 |
|
|
|
49.4 |
|
|
|
49.3 |
|
Earnings (loss) per share attributable to controlling interest |
|
$ |
0.26 |
|
|
$ |
(0.12 |
) |
|
$ |
0.83 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding(2) |
|
|
50.6 |
|
|
|
49.3 |
|
|
|
50.5 |
|
|
|
49.3 |
|
Earnings (loss) per share attributable to controlling interest |
|
$ |
0.25 |
|
|
$ |
(0.12 |
) |
|
$ |
0.82 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common shares outstanding at end of period(1) |
|
|
49.5 |
|
|
|
49.3 |
|
|
|
49.5 |
|
|
|
49.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash dividends declared per share |
|
$ |
0.16 |
|
|
n/a |
|
|
$ |
0.32 |
|
|
n/a |
|
||
|
WORTHINGTON STEEL, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
(Unaudited)
|
|
November 30, |
|
|
May 31, |
|
||
|
|
2024 |
|
|
2024 |
|
||
Assets |
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|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
52.0 |
|
|
$ |
40.2 |
|
Receivables, less allowances of $4.9 and $3.2, respectively |
|
|
372.9 |
|
|
|
472.6 |
|
Inventories |
|
|
|
|
|
|
||
Raw materials |
|
|
135.9 |
|
|
|
150.2 |
|
Work in process |
|
|
127.5 |
|
|
|
176.8 |
|
Finished products |
|
|
79.6 |
|
|
|
78.3 |
|
Total inventories |
|
|
343.0 |
|
|
|
405.3 |
|
Income taxes receivable |
|
|
9.2 |
|
|
|
4.2 |
|
Assets held for sale |
|
|
1.8 |
|
|
|
2.9 |
|
Prepaid expenses and other current assets |
|
|
78.5 |
|
|
|
76.6 |
|
Total current assets |
|
|
857.4 |
|
|
|
1,001.8 |
|
Investment in unconsolidated affiliate |
|
|
130.4 |
|
|
|
135.0 |
|
Operating lease assets |
|
|
68.8 |
|
|
|
72.9 |
|
Goodwill |
|
|
79.5 |
|
|
|
79.6 |
|
Other intangible assets, net of accumulated amortization of $48.4 and $45.3, respectively |
|
|
73.9 |
|
|
|
77.0 |
|
Deferred tax asset |
|
|
8.5 |
|
|
|
8.5 |
|
Other assets |
|
|
15.6 |
|
|
|
16.8 |
|
Property, plant and equipment: |
|
|
|
|
|
|
||
Land |
|
|
37.7 |
|
|
|
37.9 |
|
Buildings and improvements |
|
|
178.3 |
|
|
|
177.1 |
|
Machinery and equipment |
|
|
924.0 |
|
|
|
893.8 |
|
Construction in progress |
|
|
110.0 |
|
|
|
83.6 |
|
Total property, plant and equipment |
|
|
1,250.0 |
|
|
|
1,192.4 |
|
Less: accumulated depreciation |
|
|
744.8 |
|
|
|
717.6 |
|
Total property, plant and equipment, net |
|
|
505.2 |
|
|
|
474.8 |
|
Total assets |
|
$ |
1,739.3 |
|
|
$ |
1,866.4 |
|
|
|
|
|
|
|
|
||
Liabilities and equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
285.5 |
|
|
$ |
380.4 |
|
Short-term borrowings |
|
|
115.0 |
|
|
|
148.0 |
|
Accrued compensation, contributions to employee benefit plans and related taxes |
|
|
34.1 |
|
|
|
52.8 |
|
Dividends payable |
|
|
9.0 |
|
|
|
8.7 |
|
Other accrued items |
|
|
15.5 |
|
|
|
15.7 |
|
Current operating lease liabilities |
|
|
7.4 |
|
|
|
7.6 |
|
Income taxes payable |
|
|
1.2 |
|
|
|
5.2 |
|
Total current liabilities |
|
|
467.7 |
|
|
|
618.4 |
|
Other liabilities |
|
|
35.3 |
|
|
|
34.3 |
|
Noncurrent operating lease liabilities |
|
|
64.6 |
|
|
|
68.3 |
|
Deferred income taxes |
|
|
26.6 |
|
|
|
27.9 |
|
Total liabilities |
|
|
594.2 |
|
|
|
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 49,482,982 shares and 49,331,514 shares, respectively |
|
|
- |
|
|
|
- |
|
Additional Paid-in Capital |
|
|
909.6 |
|
|
|
905.3 |
|
Retained Earnings |
|
|
111.0 |
|
|
|
86.1 |
|
Accumulated other comprehensive loss, net of taxes of $(1.5) and $(1.7), respectively |
|
|
(9.8 |
) |
|
|
(6.1 |
) |
Total Shareholders’ equity - controlling interest |
|
|
1,010.8 |
|
|
|
985.3 |
|
Noncontrolling interests |
|
|
134.3 |
|
|
|
132.2 |
|
Total equity |
|
|
1,145.1 |
|
|
|
1,117.5 |
|
Total liabilities and equity |
|
$ |
1,739.3 |
|
|
$ |
1,866.4 |
|
WORTHINGTON STEEL, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
|
|
Six Months Ended |
|
|||||
|
|
November 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Net earnings |
|
$ |
48.3 |
|
|
$ |
60.0 |
|
Adjustment to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
32.5 |
|
|
|
33.3 |
|
Impairment of long-lived assets |
|
|
- |
|
|
|
1.4 |
|
Benefit from deferred income taxes |
|
|
(2.3 |
) |
|
|
(0.2 |
) |
Bad debt expense (income) |
|
|
2.1 |
|
|
|
(0.4 |
) |
Equity in net income (loss) of unconsolidated affiliate, net of distributions |
|
|
4.6 |
|
|
|
(12.8 |
) |
Net gain on sale of assets |
|
|
(1.2 |
) |
|
|
(0.4 |
) |
Stock-based compensation |
|
|
5.3 |
|
|
|
6.1 |
|
Changes in assets and liabilities, net of impact of acquisitions: |
|
|
|
|
|
|
||
Receivables |
|
|
94.7 |
|
|
|
56.5 |
|
Inventories |
|
|
62.4 |
|
|
|
48.3 |
|
Accounts payable |
|
|
(99.6 |
) |
|
|
(49.9 |
) |
Accrued compensation and employee benefits |
|
|
(18.7 |
) |
|
|
(2.7 |
) |
Other operating items, net |
|
|
(5.5 |
) |
|
|
(20.0 |
) |
Net cash provided by operating activities |
|
|
122.6 |
|
|
|
119.2 |
|
|
|
|
|
|
|
|
||
Investing activities: |
|
|
|
|
|
|
||
Investment in property, plant and equipment |
|
|
(56.3 |
) |
|
|
(36.2 |
) |
Proceeds from sale of assets, net of selling costs |
|
|
1.1 |
|
|
|
0.8 |
|
Acquisitions, net of cash acquired |
|
|
- |
|
|
|
(21.0 |
) |
Net cash used in investing activities |
|
|
(55.2 |
) |
|
|
(56.4 |
) |
|
|
|
|
|
|
|
||
Financing activities: |
|
|
|
|
|
|
||
Transfers to the Former Parent, net |
|
|
- |
|
|
|
(51.4 |
) |
Proceeds from (repayments of) short-term borrowings, net |
|
|
(25.0 |
) |
|
|
172.2 |
|
Proceeds from revolving credit facility borrowings - swing loans |
|
|
223.8 |
|
|
|
- |
|
Repayments of revolving credit facility borrowings - swing loans |
|
|
(231.8 |
) |
|
|
- |
|
Proceeds from issuance of common shares, net of tax withholdings |
|
|
(1.7 |
) |
|
|
- |
|
Payments to noncontrolling interests |
|
|
(5.0 |
) |
|
|
(1.9 |
) |
Dividends paid |
|
|
(15.9 |
) |
|
|
- |
|
Net cash provided by (used in) financing activities |
|
|
(55.6 |
) |
|
|
118.9 |
|
|
|
|
|
|
|
|
||
Increase in cash and cash equivalents |
|
|
11.8 |
|
|
|
181.7 |
|
Cash and cash equivalents at beginning of period |
|
|
40.2 |
|
|
|
32.7 |
|
Cash and cash equivalents at end of period |
|
$ |
52.0 |
|
|
$ |
214.4 |
|
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 (loss) 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:
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- and six-month periods ended November 30, 2024, and November 30, 2023.
|
|
Three Months Ended November 30, 2024 |
|
|||||||||||||||||
|
|
Operating |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense |
|
|
Net Earnings Attributable to Controlling Interest |
|
|
Net Earnings per Diluted Share Attributable to Controlling Interest |
|
|||||
GAAP |
|
$ |
18.9 |
|
|
$ |
19.7 |
|
|
$ |
3.6 |
|
|
$ |
12.8 |
|
|
$ |
0.25 |
|
Pension settlement gain |
|
|
- |
|
|
|
(2.7 |
) |
|
|
(0.7 |
) |
|
|
(2.0 |
) |
|
|
(0.04 |
) |
Gain on land sale |
|
|
- |
|
|
|
(1.5 |
) |
|
|
(0.4 |
) |
|
|
(1.1 |
) |
|
|
(0.02 |
) |
Non-GAAP |
|
$ |
18.9 |
|
|
$ |
15.5 |
|
|
$ |
2.5 |
|
|
$ |
9.7 |
|
|
$ |
0.19 |
|
|
|
Three Months Ended November 30, 2023 |
|
|||||||||||||||||
|
|
Operating |
|
|
Earnings (Loss) Before Income Taxes |
|
|
Income Tax Expense (Benefit) |
|
|
Net Earnings (Loss) Attributable to Controlling Interest |
|
|
Net Earnings (Loss) per Diluted Share Attributable to Controlling Interest |
|
|||||
GAAP |
|
$ |
(8.8 |
) |
|
$ |
(4.6 |
) |
|
$ |
(2.5 |
) |
|
$ |
(6.0 |
) |
|
$ |
(0.12 |
) |
Separation costs |
|
|
14.9 |
|
|
|
14.9 |
|
|
|
3.5 |
|
|
|
11.4 |
|
|
|
0.23 |
|
Non-GAAP |
|
$ |
6.1 |
|
|
$ |
10.3 |
|
|
$ |
1.0 |
|
|
$ |
5.4 |
|
|
$ |
0.11 |
|
|
|
Six Months Ended November 30, 2024 |
|
|||||||||||||||||
|
|
Operating |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense |
|
|
Net Earnings Attributable to Controlling Interest |
|
|
Net Earnings per Diluted Share Attributable to Controlling Interest |
|
|||||
GAAP |
|
$ |
62.3 |
|
|
$ |
55.9 |
|
|
$ |
7.6 |
|
|
$ |
41.2 |
|
|
$ |
0.82 |
|
Tax indemnification adjustment |
|
|
- |
|
|
|
4.4 |
|
|
|
4.4 |
|
|
|
- |
|
|
|
- |
|
Pension settlement gain |
|
|
- |
|
|
|
(2.7 |
) |
|
|
(0.7 |
) |
|
|
(2.0 |
) |
|
|
(0.04 |
) |
Gain on land sale |
|
|
- |
|
|
|
(1.5 |
) |
|
|
(0.4 |
) |
|
|
(1.1 |
) |
|
|
(0.02 |
) |
Non-GAAP |
|
$ |
62.3 |
|
|
$ |
56.1 |
|
|
$ |
10.9 |
|
|
$ |
38.1 |
|
|
$ |
0.76 |
|
|
|
Six Months Ended November 30, 2023 |
|
|||||||||||||||||
|
|
Operating |
|
|
Earnings Before Income Taxes |
|
|
Income Tax Expense |
|
|
Net Earnings Attributable to Controlling Interest |
|
|
Net Earnings per Diluted Share Attributable to Controlling Interest |
|
|||||
GAAP |
|
$ |
60.9 |
|
|
$ |
74.5 |
|
|
$ |
14.5 |
|
|
$ |
52.5 |
|
|
$ |
1.07 |
|
Impairment of long-lived assets |
|
|
1.4 |
|
|
|
1.4 |
|
|
|
0.2 |
|
|
|
0.7 |
|
|
|
0.01 |
|
Separation costs |
|
|
18.5 |
|
|
|
18.5 |
|
|
|
4.3 |
|
|
|
14.2 |
|
|
|
0.29 |
|
Non-GAAP |
|
$ |
80.8 |
|
|
$ |
94.4 |
|
|
$ |
19.0 |
|
|
$ |
67.4 |
|
|
$ |
1.37 |
|
To further assist in the analysis of results for the periods presented, the following volume and net sales information for three- and six-month periods ended November 30, 2024, and November 30, 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 (loss) 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 |
|
|||||
|
November 30, |
|
|||||
(In millions, except volume) |
2024 |
|
|
2023 |
|
||
Volume (tons) |
|
936,069 |
|
|
|
968,595 |
|
Net sales |
$ |
739.0 |
|
|
$ |
808.0 |
|
|
|
|
|
|
|
||
Net earnings (loss) attributable to controlling interest |
$ |
12.8 |
|
|
$ |
(6.0 |
) |
Interest expense, net |
|
2.1 |
|
|
|
0.2 |
|
Income tax expense (benefit) |
|
3.6 |
|
|
|
(2.5 |
) |
EBIT |
|
18.5 |
|
|
|
(8.3 |
) |
Separation costs |
|
- |
|
|
|
14.9 |
|
Pension settlement gain |
|
(2.7 |
) |
|
|
- |
|
Gain on land sale |
|
(1.5 |
) |
|
|
- |
|
Adjusted EBIT |
|
14.3 |
|
|
|
6.6 |
|
Depreciation and amortization |
|
16.3 |
|
|
|
16.4 |
|
Adjusted EBITDA |
$ |
30.6 |
|
|
$ |
23.0 |
|
|
|
|
|
|
|
||
Net earnings margin |
|
1.7 |
% |
|
|
-0.7 |
% |
Adjusted EBIT margin |
|
1.9 |
% |
|
|
0.8 |
% |
Adjusted EBITDA margin |
|
4.1 |
% |
|
|
2.8 |
% |
|
Six Months Ended |
|
|||||
|
November 30, |
|
|||||
(In millions, except volume) |
2024 |
|
|
2023 |
|
||
Volume (tons) |
|
1,930,162 |
|
|
|
1,992,140 |
|
Net sales |
$ |
1,573.0 |
|
|
$ |
1,713.8 |
|
|
|
|
|
|
|
||
Net earnings attributable to controlling interest |
$ |
41.2 |
|
|
$ |
52.5 |
|
Interest expense, net |
|
4.7 |
|
|
|
0.7 |
|
Income tax expense |
|
7.6 |
|
|
|
14.5 |
|
EBIT |
|
53.5 |
|
|
|
67.7 |
|
Impairment of long-lived assets(1) |
|
- |
|
|
|
0.9 |
|
Separation costs |
|
- |
|
|
|
18.5 |
|
Tax indemnification adjustment |
|
4.4 |
|
|
|
- |
|
Pension settlement gain |
|
(2.7 |
) |
|
|
- |
|
Gain on land sale |
|
(1.5 |
) |
|
|
- |
|
Adjusted EBIT |
|
53.7 |
|
|
|
87.1 |
|
Depreciation and amortization |
|
32.5 |
|
|
|
33.3 |
|
Adjusted EBITDA |
$ |
86.2 |
|
|
$ |
120.4 |
|
|
|
|
|
|
|
||
Net earnings margin |
|
2.6 |
% |
|
|
3.1 |
% |
Adjusted EBIT margin |
|
3.4 |
% |
|
|
5.1 |
% |
Adjusted EBITDA margin |
|
5.5 |
% |
|
|
7.0 |
% |
|
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 November 30, 2024, and the 12 months ended August 31, 2024.
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|||||
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||||
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
|
2024 |
|
|
2024 |
|
|||||
Net earnings (loss) attributable to controlling interest |
|
$ |
12.8 |
|
|
$ |
28.4 |
|
|
$ |
53.2 |
|
|
$ |
49.0 |
|
|
$ |
(6.0 |
) |
Interest expense, net |
|
|
2.1 |
|
|
|
2.6 |
|
|
|
2.4 |
|
|
|
2.9 |
|
|
|
0.2 |
|
Income tax expense (benefit) |
|
|
3.6 |
|
|
|
4.0 |
|
|
|
17.6 |
|
|
|
14.0 |
|
|
|
(2.5 |
) |
Depreciation and amortization |
|
|
16.3 |
|
|
|
16.2 |
|
|
|
16.1 |
|
|
|
15.9 |
|
|
|
16.4 |
|
EBITDA |
|
|
34.8 |
|
|
|
51.2 |
|
|
|
89.3 |
|
|
|
81.8 |
|
|
|
8.1 |
|
Separation costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1.0 |
|
|
|
14.9 |
|
Tax indemnification adjustment |
|
|
- |
|
|
|
4.4 |
|
|
|
(2.8 |
) |
|
|
- |
|
|
|
- |
|
Pension settlement gain |
|
|
(2.7 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Gain on land sale |
|
|
(1.5 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
30.6 |
|
|
$ |
55.6 |
|
|
$ |
86.5 |
|
|
$ |
82.8 |
|
|
$ |
23.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Trailing 12 months adjusted EBITDA |
|
$ |
255.5 |
|
|
$ |
247.9 |
|
|
|
|
|
|
|
|
|
|
|||
The following provides a reconciliation of net cash provided by 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 November 30, 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.
|
|
Second |
|
|
First |
|
|
Fourth |
|
|
Third |
|
|
Second |
|
|||||
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|||||
|
|
2025 |
|
|
2025 |
|
|
2024 |
|
|
2024 |
|
|
2024 |
|
|||||
Net cash provided by operating activities |
|
$ |
68.0 |
|
|
$ |
54.6 |
|
|
$ |
35.6 |
|
|
$ |
44.7 |
|
|
$ |
139.9 |
|
Investment in property, plant and equipment |
|
|
(34.8 |
) |
|
|
(21.5 |
) |
|
|
(44.8 |
) |
|
|
(22.4 |
) |
|
|
(18.9 |
) |
Free cash flow |
|
$ |
33.2 |
|
|
$ |
33.1 |
|
|
$ |
(9.2 |
) |
|
$ |
22.3 |
|
|
$ |
121.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Trailing 12 months free cash flow |
|
$ |
79.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
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 November 30, 2024, the Company had no long-term debt borrowings. The calculation of net debt as of November 30, 2024, is outlined below.
|
|
November 30, |
|
|
|
|
2024 |
|
|
Total debt |
|
$ |
115.0 |
|
Less: cash and cash equivalents |
|
|
(52.0 |
) |
Net debt |
|
$ |
63.0 |
|
To further assist in the analysis of results for the periods presented, the following information for the three-month periods ended November 30, 2024, and November 30, 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 and six months ended November 30, 2024, given this period included the actual results of operating as a stand-alone public company. For the three and six months ended November 30, 2023, the adjustments included in the information below represent the adjustments for the period prior to the Separation.
|
Three Months Ended |
|
|||||
|
November 30, |
|
|||||
|
2024 |
|
|
2023 |
|
||
Net earnings (loss) attributable to controlling interest |
$ |
12.8 |
|
|
$ |
(6.0 |
) |
Interest expense, net |
|
2.1 |
|
|
|
0.2 |
|
Income tax expense (benefit) |
|
3.6 |
|
|
|
(2.5 |
) |
EBIT |
|
18.5 |
|
|
|
(8.3 |
) |
Separation costs |
|
- |
|
|
|
14.9 |
|
Pension settlement gain |
|
(2.7 |
) |
|
|
- |
|
Gain on land sale |
|
(1.5 |
) |
|
|
- |
|
Adjusted EBIT |
|
14.3 |
|
|
|
6.6 |
|
Pro Forma Adjustments: |
|
|
|
|
|
||
Incremental steel supply agreement margin(1) |
|
- |
|
|
|
1.0 |
|
Incremental stand-alone corporate costs(2) |
|
- |
|
|
|
(4.1 |
) |
Total Pro Forma Adjustments |
|
- |
|
|
|
(3.1 |
) |
Pro Forma Adjusted EBIT |
$ |
14.3 |
|
|
$ |
3.5 |
|
|
Six Months Ended |
|
|||||
|
November 30, |
|
|||||
|
2024 |
|
|
2023 |
|
||
Net earnings attributable to controlling interest |
$ |
41.2 |
|
|
$ |
52.5 |
|
Interest expense, net |
|
4.7 |
|
|
|
0.7 |
|
Income tax expense |
|
7.6 |
|
|
|
14.5 |
|
EBIT |
|
53.5 |
|
|
|
67.7 |
|
Impairment of long-lived assets(3) |
|
- |
|
|
|
0.9 |
|
Separation costs |
|
- |
|
|
|
18.5 |
|
Tax indemnification adjustment |
|
4.4 |
|
|
|
- |
|
Pension settlement gain |
|
(2.7 |
) |
|
|
- |
|
Gain on land sale |
|
(1.5 |
) |
|
|
- |
|
Adjusted EBIT |
|
53.7 |
|
|
|
87.1 |
|
Pro Forma Adjustments: |
|
|
|
|
|
||
Incremental steel supply agreement margin(1) |
|
- |
|
|
|
1.9 |
|
Incremental stand-alone corporate costs(2) |
|
- |
|
|
|
(8.5 |
) |
Total Pro Forma Adjustments |
|
- |
|
|
|
(6.6 |
) |
Pro Forma Adjusted EBIT |
$ |
53.7 |
|
|
$ |
80.5 |
|
|
###
|
EXHIBIT 99.2 |
Worthington Steel, Inc.
NYSE: WS
FQ2 2025 Earnings Call Transcripts
Thursday, December 19, 2024 1:30 PM GMT
Call Participants .................................................................................. 2
Presentation .................................................................................. 3
Question and Answer .................................................................................. 7
1
WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Call Participants
EXECUTIVES
Geoffrey G. Gilmore
CEO, President & Director
Timothy A. Adams
VP & CFO
Melissa Dykstra
Vice President of Corporate
Communication & Investor Relations
ANALYSTS
Martin John Englert
Seaport Research Partners
Philip Ross Gibbs
KeyBanc Capital Markets Inc.,
Research Division
2
WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Presentation
Operator
Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Worthington Steel's Second Quarter 2025 Earnings Conference Call. [Operator Instructions]
And I would now like to turn the conference over to Melissa Dykstra, Vice President, Corporate Communications and Investor Relations. Melissa, you may begin.
Melissa Dykstra
Vice President of Corporate Communication & Investor Relations
Thank you, operator. Good morning, and welcome to Worthington Steel’s second quarter fiscal year 2025 earnings call.
On our call today we have Geoff Gilmore, Worthington Steel’s President and Chief Executive Officer and Tim Adams, Vice President and Chief Financial Officer. Before we begin, I'd like to remind everyone that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risks and uncertainties that could cause actual results to differ from those suggested. We issued our earnings release yesterday after the market closed. Please refer to it for more detail on the factors that could cause actual results to differ materially. Unless noted as reported, today’s discussion will reference non-GAAP financial measure, which adjusts for certain items included in our GAAP results and which are presented on a stand-alone basis. You can find definitions of each non-GAAP measure and GAAP to non-GAAP reconciliations within our earnings release.
Today's call is being recorded, and a replay will be available later today on WorthingtonSteel.com.
Now I'll turn it over to Geoff Gilmore.
Geoffrey G. Gilmore
CEO, President & Director
Thanks Melissa. Good morning, everyone and thank you for joining us. As we celebrate our first full year of being a publicly traded, standalone company, I am pleased to report we generated solid quarterly earnings, despite some sizeable headwinds and uncertainty across a number of end markets. In the second quarter, we generated adjusted EBITDA of 30.6 million dollars compared with 23 million dollars in the prior year quarter. Earnings per share came in at 25 cents versus a loss of 12 cents per share in the same period last year. Results were impacted by both lower volumes and lower average selling prices for the quarter.
There were several highlights this quarter as Worthington Steel continued to work safely, implement our strategy, reach new milestones, and earn accolades as a best place to work. Last month, we named Cliff Larivey President of Flat-Rolled Steel Processing, separating this role from Jeff Klingler’s COO position. Cliff’s work leading our commercial and purchasing teams has strengthened our partnerships with customers and suppliers. This move recognizes Cliff’s leadership strengths and the talented team he built; and allows Jeff Klingler to sharpen his focus on our growing global business operations.
Further, Worthington Steel continues to make strides implementing our strategy. Earlier this month, we made a move toward growing our high value-added businesses through selective acquisitions when we announced our agreement to acquire a 52 percent stake in Sitem Group. Sitem strengthens our presence in Europe, which is vital to growing our electrical steel lamination business. Europe remains a high-growth market for electric vehicles, and it is expected that by 2030, 80 percent of the vehicles produced in Europe will be battery electric or hybrids. Like Tempel, Sitem stamps laminations for both automotive and industrial motors.
More importantly, Sitem gives Worthington access to world class tool and die making and significant expertise in press automation, which we will be able to leverage across our electrical steel plants. Sitem is one of the largest and most respected electrical steel lamination producers in Europe and this partnership provides an expanded footprint required for our long-term success. Bringing together our compatible cultures and best practices allows us to fulfill customer expectations and solidify our global presence in electrical steel laminations. We expect this transaction to close in early 2025 after regulatory approvals and customary closing conditions. I am excited to begin serving our customers with the combined expertise of our Tempel and Sitem Group employees.
3
WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Rounding out our strategy is transformation, our system of continuous improvement. The transformation mindset drives our employees to always look for ways to improve quality and service, find efficiencies, free up capacity and eliminate unnecessary costs. This is an ongoing process for Worthington Steel and in the second quarter, we saw teams come together to reduce scrap, streamline purchasing processes, and more efficiently manage our IT contractors.
The Transformation mindset often carries over to our interactions with customers. Over the quarter, we developed an analytics tool to help both Worthington Steel and a key customer improve inventory control and order lead times, thereby reducing inventory. On the new product front, we continue to receive interest from customers about new capabilities at TWB using our licensed ablation technology and are filling our pipeline of potential opportunities. The equipment is being installed and tested, and we remain on schedule. I’d like to thank our teams for all they do each quarter to support the Worthington Steel Strategy.
We rounded out the period with significant momentum in other areas of our business. In October, we released our first Corporate Citizenship and Sustainability report, highlighting key achievements such as a safety record nearly 2 times better than the industry average, a decrease in carbon emissions and the support of 73 non-profit organizations through the Worthington Companies Foundation.
Our ESG approach is based on Our Philosophy of doing the right thing for our employees, customers, suppliers, shareholders and communities, and we work hard each day to improve our efforts. We were named a Military-Friendly Employer for the 10th year in a row by the Viqtory organization. Workforce development and a commitment to our military members and veterans is incredibly special to me and this was a proud moment for our company.
Another accolade for Worthington Steel as an employer was announced just last week when ComputerWorld included our company in its annual list of top places to work in IT. Our IT team deserves special recognition this year. The team separated infrastructure, end-user business applications and security systems as we became a standalone public company, and kicked off the ERP implementation at Tempel, all while working to improve every day and ensuring our day-to-day IT-dependent operations perform. Yesterday, we added a new member to our board of directors. Scott Kelly brings a great background in operations in the energy industry and adds a new and diverse voice to our board. I’m pleased to welcome him to Worthington Steel, and I look forward to working with him.
As I mentioned earlier, we saw some sizable headwinds during the quarter in several markets including automotive, construction and heavy truck. Some of these headwinds may persist for the next few quarters, especially in the automotive market. Looking ahead, we are cautiously optimistic about this segment as OEMs make moves to adjust their commercial strategy and rebuild market share. The headwinds could be offset by lower interest rates and lower inflation. We saw some positive signs in November when overall U.S. vehicle sales reached their highest levels since May of 2021.
Lower interest rates and decreasing inflation also provide positive momentum for the construction market. We continue to expect moderate growth in the construction market areas we supply, such as data centers and manufacturing, in calendar year 2025. We expect heavy truck to remain relatively slow in the first half of calendar year 2025, but we believe regulatory requirements will help fuel growth in the second half of the year and into 2026.
Overall, we are feeling positive about the tailwinds as we enter our second year as a standalone publicly traded company. We have already accomplished so much in a relatively short period of time. We have strong customer relationships, an experienced leadership team and a sound strategy. We have an amazing team of employees with a strong commitment to safety, and we are recognized consistently as a best place to work. I am grateful and energized every day to work with everyone on the Worthington Steel team.
Now I'll turn things over to Tim Adams to discuss financials.
4
WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Timothy A. Adams
VP & CFO
Thank you, Geoff and good morning everyone. Before I provide some color on the quarter, I would like to remind everyone that the current year quarter consolidated results on a stand-alone basis are compared with a prior year quarter which was prepared on a carveout basis. For the second quarter, we are reporting earnings of 12.8 million dollars or 25 cents per share as compared with a 6-million-dollar LOSS or 12 cents per share in the prior year quarter.
There were several unique items that impacted our quarterly results, including the following: The current quarter results included recognition of a pre-tax, non-cash gain of 2.7 million dollars or 4 cents per share associated with the annuitization of a portion of the frozen Tempel pension plan. Additionally, we recognized a pre-tax gain of 1.5 million dollars or 2 cents per share related to the sale of excess land in China.
The prior year results included pre-tax separation expense of 14.9 million dollars or 23 cents per share. Excluding these unique items, we generated earnings of 19 cents per share in the current year quarter compared with 11 cents per share in the prior year quarter. In addition, in the second quarter we had estimated pre-tax inventory holding LOSSES of 13.4 million dollars, or 20 cents per share, compared to estimated pre-tax inventory holding LOSSES of 34.8 million dollars or 53 cents per share in the prior year quarter, a favorable pre-tax swing of 21.4 million dollars or 33 cents per share.
In the second quarter, we reported adjusted EBIT of 14.3 million dollars, which was up 7.7 million dollars from the [prior year quarter adjusted EBIT] of 6.6 million dollars. This increase is primarily due to higher gross margin partially offset by higher SG&A expense and lower equity earnings at Serviacero. Gross margin was impacted by higher direct material spreads, including the impact of lower year-over-year pre-tax inventory holding LOSSES, partially offset by lower direct volume.
SG&A increased 7 million dollars over the prior year second quarter, primarily due to incremental costs associated with being a stand-alone company, as well as an increase in bad debt expense associated with the bankruptcy of a customer, and an increase in our reserves associated with a separate customer. Additionally, the company incurred higher than normal professional fees, most of which were associated with the announced pending European acquisition. Equity earnings from Serviacero decreased due to lower direct spreads, which were unfavorably impacted by lower steel prices, as well as the impact of exchange rate movements.
Next, I will provide some content on the market and our shipments. Since July, the market pricing for hot rolled coil has fluctuated in a relatively tight band between 650 and 700 dollars per ton. With little movement in market pricing, we expect minimal estimated inventory holding gains in the third quarter of Fiscal 2025 as compared with the 13.4 million dollars of estimated holding LOSSES in the second quarter of 2025.
Net sales in the quarter were 739 million dollars, down 69 million dollars, or 9 percent from the prior year quarter, primarily due to lower direct volumes and lower direct market pricing. We shipped approximately 936,000 tons during the quarter, which was down 3 percent compared with the prior year quarter. Direct sales volume made up 55 percent of our mix in the current year quarter as compared with 56 percent in the prior year quarter. Direct sale volume was down 5 percent over the prior year quarter with shipments down in most markets. Our shipments to the automotive market were down 2 percent compared to the prior year quarter.
As you know, the Detroit 3 automakers represent approximately 30% of our Net Sales. The decrease in automotive volume was primarily due to deeper-than-expected production cuts at one of those customers as they attempted to right size their inventory levels and reset their commercial strategy. The OEM production cuts continued to increase as the quarter progressed. On a year-over-year basis, for the second quarter, we experienced a volume decrease of more than 30 percent with that customer, mirroring the customer’s estimated decrease in unit production.
We are monitoring the situation very closely as the OEM navigates their challenges, and we believe they could return to a more normal build schedule within the next two quarters.
As we have done in prior years, we are working closely with our partners throughout the entire automotive supply chain to prepare for increased volume requirements as the OEM ramps back up. The vast majority of the year-over-year decrease in our automotive shipments were offset by increases in volume with the other automotive OEMs. We have noted over the past few quarters that we have won new programs and increased our share in the automotive market. We are beginning to see the volume impact of some of those new programs. Our shipments to the remaining Detroit 3 increased by more than 30 percent. Our strategy continues to be collaborating with our automotive customers to find mutually beneficial solutions that help them meet their strategic goals. We look forward to continuing our partnership with our automotive customers.
5
WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Turning to the construction market, our volumes decreased 20 percent on a year-over-year basis. The decrease was a combination of several factors. First, in the prior year we successfully pivoted to a more construction heavy mix as we prepared for the potential automotive strike at the Detroit 3. Second, in the current year we anticipated a more typical mix between automotive and construction. However, as I mentioned, we experienced sudden and deep cuts to our automotive order book. Both the timing and the magnitude of those cuts limited our ability to secure replacement volume in other markets. Toll tons were down 1 percent year-over-year, primarily due to lower coated volumes, partially offset by an increase in pickling and tailor welded blanks.
Turning to cash flows and the balance sheet. Cash flow from operations was 68 million dollars and free cash flow was 33.2 million dollars. During the quarter, we spent 34.8 million dollars on capital expenditures related to a variety of projects including the previously announced electrical steel expansions. We now expect capital expenditures for Fiscal Year 2025 to be approximately 125 million dollars vs. our previous estimate of 110 million dollars.
We are increasing the estimate for Fiscal 2025 cap ex for several reasons. First, we now expect a larger portion of the cap ex for our Canada expansion to be spent in Fiscal 2025 rather than Fiscal 2026. This is simply a change in timing. Second, as we talked about in the past, we expect other projects to come up during the course of any fiscal year. For example, we are adding a new press to our electrical steel facility in China to support new business. In addition, as part of the previously mentioned Tempel ERP project, we have elected to upgrade our shop floor system and data warehouse to maximize the future opportunities for process improvements using the Transformation.
On a trailing-12-month basis, we generated 79.4 million dollars of free cash flow. Wednesday, we announced a quarterly dividend of 16 cents per share, payable on March 28, 2025. We ended the quarter with 52 million dollars of cash and our ABL debt at November 30 was 115 million dollars, resulting in net debt of 63 million dollars. Finally, I would like to thank our team for making safety the highest priority at every facility and for delivering incredible performance in our first year as a public company. I am proud to be part of Worthington Steel and look forward to working with our entire team to continue driving value for all stakeholders.
At this point, we would be happy to take your questions.
6
WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Question and Answer
Operator
[Operator Instructions] Your first question comes from Phil Gibbs with KeyBanc Capital Markets.
Philip Ross Gibbs
KeyBanc Capital Markets Inc., Research Division
Geoff, the EBITDA per ton ex inventory holding gains and losses I think was down about $26 a ton sequentially, certainly not something we were expecting. I know you guys have been managing your profitability within a pretty tight range. What made it drop off so abruptly, sequentially in particular? I know you did give some color, but what were some of the biggest, I guess, impacts to that? And when should we expect you guys to get back to some of the levels we're more used to?
Geoffrey G. Gilmore
CEO, President & Director
Thanks for the question, Phil. I'm actually going to pass that to Tim to answer for you.
Timothy A. Adams
VP & CFO
Phil, I think it's the 3 drivers. Whether it's sequential or year-over-year, I think the 3 big drivers, #1 is volume. We would have expected volume on a sequential basis to be down 2% to 3% and it was actually down 7%. And what we outlined with the D3 customer, that was unexpected. And if that would occur over a long period of time, you could take a look at your operating expense, and everything would be variable. But the way the production cuts came in, they came fast and furious and kept expanding over the course of the quarter. Most of our costs are fixed at that point.
The other 2 drivers are SG&A, which we touched on. We had an increase in bad debt as well as the professional fees associated with the Sitem transaction. Now that transaction is not closed yet, but the fees came in. And then finally, performance at Serviacero. So, you've got a couple of things happening down there. You've got volume, you've got some spread compression plus the FX gains that occur -- FX losses, I should say, rather than gains. So those are really the drivers.
Philip Ross Gibbs
KeyBanc Capital Markets Inc., Research Division
And then when you guys highlighted the bad debt expense from the customer bankruptcy and the increased reserve and then also the professional fees, any way to square up the magnitude of those 3 items?
Timothy A. Adams
VP & CFO
Sure. I mean, I think if you look at that, bad debt expense -- let me start with -- our credit group does a fantastic job. I'll just start with that. They work hand-in-hand with our commercial group. So we take that very seriously. We've got an outstanding track record and we rarely have bad debt write-offs. But 2 things that happened in the quarter, the unexpected bankruptcy of one of our customers, that was probably about $1 million, maybe a little bit less. And then we elected to reserve a little over $1 million for a second customer where we think collection of that specific receivable is at risk. So we review -- as you would guess, we review AR on a customer-by- customer basis every quarter. We don't think beyond this quarter we should have any additional issues from a collectability standpoint. But if you add those two up, it's about $2 million.
Philip Ross Gibbs
KeyBanc Capital Markets Inc., Research Division
And then the professional fees? I'm sorry.
Timothy A. Adams
VP & CFO
Professional fees, probably about $2 million, give or take.
7
WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Philip Ross Gibbs
KeyBanc Capital Markets Inc., Research Division
Any reason you guys didn't carve those out similar to the other items that you did or is some of that expected to recur as you take on Sitem or should that wind down as the transaction gets closer to close?
Timothy A. Adams
VP & CFO
Yes, we typically -- I mean, that's kind of normal course of business, right? Those are normal things versus the pension lift out or the gain on the sale of land. These things are kind of normal course. We're looking at acquisitions all the time. And we're going to have transaction expenses whether the transaction goes through or not. So, we don't expect those to reoccur.
Philip Ross Gibbs
KeyBanc Capital Markets Inc., Research Division
And then lastly, as you guys look out into the early part of next year, I know typically volumes do lift a little bit into the first part of calendar year and then certainly much stronger in the latter part of the fiscal year for you all. What are you expecting in terms of kind of customer sentiment, particularly as you come out of this period of deep carve-out from one of your key auto customers?
Geoffrey G. Gilmore
CEO, President & Director
Yes. Phil, I think we're -- overall, I had mentioned in my intro, cautiously optimistic. I specifically said that about automotive, but that's where we feel across the board. I think things will be fairly stable, excluding the one large OEM customer here looking out the next few months. But as we start to get to spring and beyond, I think our optimism gets greater for various reasons. I think that's really the sentiment from our customers. And Phil, that's what you've been reading and hearing from other executives as well.
I think specifically with automotive, lower interest rates, the fact that the vehicle is averaging almost 13 years at this point, which is decade highs, people want to replace those vehicles. In addition to that, that's overall market. If I look specifically at Worthington, my optimism also comes from how we've positioned ourselves with automotive. Even with that large OEM down, we were more than able to offset that specifically into the other OEMs. And that was because of market share gains that I have been sharing with you over the last few quarters. Now that's excluding Tier 1s, and that's where we had a bit of a hole.
We're feeling good specifically about the market, that's 52% of our business going forward. And that large OEM, this isn't a long-term situation. I think we got another quarter and we're going to have to continue to work with them. And it's a short-term frustration, not a long-term problem. So, we'll work through that and I think we're going to be in very good shape.
Operator
[Operator Instructions] Your next question comes from Martin Englert with Seaport Research Partners.
Martin John Englert
Seaport Research Partners
A question on the increase in the reserve and the bad debt expense. What type of industry were those customers operating in?
Tim Adams
VP & CFO
The reserve increase was a scrap dealer. So, we sell our scrap to that scrap dealer. That was the reserve. And then the bankruptcy was in the heavy truck industry.
Martin John Englert
Seaport Research Partners
Okay. Are you seeing, I guess, other risks across any -- elsewhere in those industries or those verticals?
8
WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Tim Adams
VP & CFO
No, not in those industries specifically. These were customer-specific situations. So no, we don't -- fundamentally, we think the people we work with from a scrap perspective or the other heavy truck suppliers, we feel pretty good about those things. There's nothing fundamentally wrong with either of those verticals at all.
Geoff Gilmore
CEO, President & Director
And Martin, I would add, even the specific customer in that heavy truck market, we feel good about continuing to do business with them going forward.
Martin John Englert
Seaport Research Partners
Okay. Appreciate that. And then a follow-up question on looking forward, change in the U.S. administration and if there are changes on the trade front with tariffs with our trading partners to the north and the south. Could you walk through the puts and takes for your businesses, positives, negatives or neutrals as you think about it? I know you have significant operations to the north and the south and continued investment there, and growth.
Geoff Gilmore
CEO, President & Director
Yes, you got it, Martin. I mean, first, as you know, the devil is in the details and the tariffs could take different directions. Is it on steel? Is it on finished products? So, until we're fully aware of what the implications [are], I can just give you a general answer. I think we're not very concerned. We see little impact on our business. You know this, we source locally. So as far as a raw material perspective, I wouldn't expect any interruptions. I think we'd be able to manage through costs efficiently as well.
Where maybe a bit of a difference is in Canada, to your point on the north and Mexico on the South. We are importing. Those countries are less at risk right now of imports. So, we don't see an interruption in supply there. The exception may be Canada, who is also looking to put tariffs in place on China. But even if that were to occur -- sorry Martin, not an issue for us to be able to pivot and mitigate any type of issue there. So overall, I think we're in very good shape. And Martin, you know this, we've since 1955 have been dealing with different administrations and different policies and some markets are impacted negatively, some are positively. And we've always been able to navigate that quite well. So, from a business perspective, we think we're well positioned.
Now my personal opinion, I guess, I'd be a bit surprised if we see that aggressive position on Mexico and Canada, Martin. We've been under a Trump administration, and he wants to negotiate. I think that administration has certain things they'd like to see Canada and Mexico tighten up on. And at the end of the day, I think they'll get that cooperation. We're already seeing that. So hopefully, we're able to avoid the tariffs and its business as usual. Canada, Mexico and U.S. are too critical to one another to have any type of interruptions. But that's how we feel at this point.
Martin John Englert
Seaport Research Partners
Okay, understood. Appreciate the color. If I could, one last one. When you look out across all your end markets, automotive, construction, general manufacturing and elsewhere, I understand you're moving through a lull right now. Maybe volumes were a bit worse than expected and I understand the context with one specific OEM. But what are the customer -- I understand that they're constructive with their outlook. It seems like you are maybe a couple of quarters, some type of recovery. But are you seeing any green shoots on the margin today of improved activity or folks with order books out into early next year speaking to improvements or inflections in the marketplace?
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WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Timothy A. Adams
VP & CFO
Yes. I mean, I think, Martin, when it comes to our markets, I mean, I think we'll start with automotive. This year, I think we're going to end at about 15.5 million units. Next year, depending on how that OEM plays out, I think the market in automotive is going to be 15.4 to 15.7, somewhere around like that. And we'll see how it all plays out. I think in construction, we're generally positive about construction. Again, I think a lot of people sat on the sidelines here at the end of the year and it was tough for people to understand what the future was going to be like. But overall, in the construction markets that we serve, we feel positive generally about where the market is going.
I think ag is going to continue to have some challenges throughout the year, again, with interest rates still being relatively high and commodity prices being relatively low and then whatever happens with trade, right? I mean, that has a big impact on the ag market as well. And then heavy truck, I think heavy truck will probably pick-up towards the end of the year. There's some regulatory changes that are coming. And as you know, in the heavy truck market, when the regulatory changes happen, there's usually -- it's very cyclical and related to those regulatory changes. So, we may see some pick-up in heavy truck as we get to the end of the year.
Geoffrey G. Gilmore
CEO, President & Director
Martin, just to add to that and specifically automotive, I agree with everything Tim said. And the tailwinds there that could speed up that recovery is, hey, if that larger OEM is able to meet their inventory targets sooner. And right now, we're cautiously optimistic. It seems that they are making progress. That certainly is good for us. And then again, I think interest rates continuing to come down is certainly going to fuel buyers to get off the sideline.
And the other bit of optimism there, Tim had mentioned 15.5 million, maybe a little bit flat in 2025 with that 2024 calendar year number, but a few data points for you. September and October seasonally adjusted rates were at 16 million. Even more importantly, November was 16.7 million. So that's the highest it's been in three years. So, your point, we have a large OEM. We have a little bit of difficulty to overcome in the short-term. But if you start looking out 6 months and beyond, we think automotive is going to start marching back to those pre-COVID levels. And that's a good sign on those data points.
Martin John Englert
Seaport Research Partners
Do you think there may be some demand pull forward in automotive and/or other end markets because of anticipated broad- based tariffs with the incoming administration, so people trying to get ahead of potential inflation. So, buy now before that might be implemented?
Geoffrey G. Gilmore
CEO, President & Director
So hard to predict, [ my ]. We haven't seen that yet. So, we're not seeing anything that's been strange in our order books. And honestly, Martin, I would find that difficult to believe. I think the size of these customers, the OEMs, how we manage our business, they're going to want to manage their working capital smart and with discipline. So, I don't know that we're going to see a big pull ahead from the OEMs. The only wildcard I would tell you is the Tier 1s. Certainly, they may try to time things a little bit more and go long. But I think living through those cycles over the last 5 years, all of our customers have gotten a bit more disciplined on that front.
Operator
And this concludes our question-and-answer session. And I will now turn the conference back over to Geoff Gilmore, President and Chief Executive Officer, for closing comments.
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WORTHINGTON STEEL, INC. FQ2 2025 EARNINGS CALL DEC 19, 2024 |
Geoffrey G. Gilmore
CEO, President & Director
First off, thank you for everybody joining today and showing interest in Worthington Steel. Obviously, we explained to you some of the short-term frustrations. But hopefully, what you heard is a lot of optimism about how we start looking going forward. In my opinion, we had a great quarter. The things that we could control, we can control -- we controlled them and controlled them well. I think our team continues to exceed my expectations and couldn't feel better about our future. So, thank you again for joining and happy holidays to everybody. Look forward to talking to you next quarter.
Operator
This concludes today's conference call. Thank you for your participation. And you may now disconnect.
11
Worthington Steel Investor Presentation | December 2024 Exhibit 99.3
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 and its subsequent filings with the SEC. 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.
Investment Highlights 2. Long-standing customer relationships focused on value creation and best-in-class service delivery 1. Well-positioned to capitalize on opportunities resulting from the energy transition with our electrical steel products 3. Strong balance sheet and ample liquidity to pursue attractive growth opportunities via strategic capital investments and/or value-enhancing acquisitions Successful, experienced management team with a proven playbook and track record of delivering value 4.
+ Building A Differentiated Steel Processing Company Worthington Steel founded in 1955 with a focus on providing custom processed steel First public stock offering in 1968 Established market leading joint ventures to bring additional value to our customers Steel Pickling Company Introduction of Worthington Business System Worthington Steel begins driving value as a standalone company Introduction of the Worthington Philosophy and Profit Sharing Rapid growth powered by innovation with unique culture focused on the “Golden Rule” Codified safety program Strategic acquisitions to expand Worthington’s core competencies and enter attractive end-markets BlankLight® Assets Strip Steel Assets Cleveland Facility 1955 1960s 1970s – 1980s 1990s – 2000s 1992 1996 2007 2010s 2020s 2023 Automotive Components Nagold, Germany 1971 Worthington Steel changed its name to Worthington Industries to reflect new areas of business
Value-added Metals Processing Company TTM Financial Metrics2 Volume Delivered (tons) 3.9M Direct / Toll (tons) 2.2M / 1.7M Net Sales $3.3B Adjusted EBITDA / Margin $255M / 7.8% Free Cash Flow $79.4M Capex / % of sales $123.5M / 3.8% Dividend (Annualized Rate) $0.64 1955 Founded Columbus, OH Headquarters 32 Locations1 ~5,000 Employees1 ~$2.3B4 Market Capitalization As a leader in the markets we serve, we boldly drive the metals industry toward a sustainable future as the most trusted, most innovative and most value-added metals processing partner in North America and beyond. OUR VISION 1 Includes JV people & locations; 2 TTM ended November 30, 2024; 3 Excludes pro-rata share of unconsolidated JVs; 4 As of November 30, 2024. Net Sales by End-Market2,3
We Occupy a Unique Position in the Steel Supply Chain Worthington Steel Operations Mills Service Centers Melt Hot Roll Coil (HRC) Hot Roll Conversion Pickling / scale removal Hot dip galvanizing Specialty Processing Specialty cold rolling, temper pass, annealing, heavy gauge and configured blanking Electrical steel lamination manufacturing Tailor welded solutions Dimensional Processing Slitting to Width Cutting to Length Warehouse/ Distribute Customized, Value-added Solutions Make-to-Order, Contract-Based End-to-End Supply Chain Management WHY WE WIN What Differentiates Worthington Steel from Competitors Across the Steel Supply Chain Customized value-added services
Building on Market Leadership Position Blue-Chip Customer Recognition and Accolades Note: Rankings based on management estimates. Global Manufacturer of Electrical Steel Laminations and Cores #3 #1 Producer of Tailor Welded Blanks in North America #1 Trader of Steel Futures by Volume Among North American Service Centers #1 Network of Independent Picklers in North America #1 Independent Producer of Hot Dipped Galvanized Steel in North America #2 Independent Flat Rolled Service Center in Mexico Supplier of the Year 2020, 2021 & 2023 2021 Schaeffler Supplier Excellence Award 2021, 2022 & 2023 Partner Level Supplier and inducted into 10-year Hall of Fame 2020 Raw Material Supplier of the Year 2022 Global Supplier Award in "Lead Electric Propulsion" Zero PPM Award for Manufacturing Excellence 2023 Supplier of the Year 2022 Tata AutoComp Systems 2024 Supplier Award for Synergy
Joint Ventures Wholly Owned Network and Services to Deliver Added Value to Customers 1 Includes Worthington Steel’s consolidated and unconsolidated joint ventures. 32 Manufacturing Facilities Primarily Located in North America1 Key Operations Strategically Located Proximate to Suppliers and Customers Expertise in Optimizing Supply Chains and Minimizing Total Landed Cost 90% of Sales in North America; 10% of Sales in Asia and Europe
Joint Ventures Expand Our Processing Capabilities and Reach Note: Volumes shown are total tons shipped from the fiscal year ended May 31, 2024, presented on a 100% basis. 1 Worthington Samuel Coil Processing. TWB (55%) Partner: BAOSteel Tailor welded products for the automotive industry Operates 11 facilities in US, Canada, Mexico Growth Initiative - Adding ablation equipment to pursue new market 300k Direct Tons 125k Toll Tons Partner: Serviacero Pickling, heavy gauge blanking, and slitting Operates 3 steel processing facilities in Mexico Growth Initiative - New slitter available January 2025 to process recent program wins Serviacero Worthington (50%) 450k Direct Tons 125k Toll Tons Partner: Cleveland-Cliffs A cold-rolled, hot-dipped coating line producing galvanized, galvannealed and aluminized products Single facility in Michigan Growth Initiative – Added Type 1 aluminized capability Spartan Steel Coating (52%) 450k Toll Tons Partner: Samuel, Son & Co. Pickling and slitting for the automotive, fabrication and appliance markets Operates 2 pickling facilities in Ohio WSCP1 (63%) 625k Toll Tons
Agriculture Combines Grain bins Center pivot irrigation Hay bailers Auger, chain, blades and plow components Construction Metal buildings Garage doors & rail systems Corrugated steel pipe Metal framing Strut and conduit Fencing Energy Transformer cores for power distribution Racking and mounts for solar applications Generators, including large scale & home power generation Truck / Trailer Wheel rims Frames Suspensions Trailer components Drivetrain Automotive Traction motors for BEVs /hybrids including trucks Automatic transmissions for hybrids / ICE Frames and chassis Seat rails Body structure Our Steel is Used in a Variety of End Markets and Applications Note: BEVs = battery electric vehicles; Hybrids = full and mild hybrids and contain both traction motors and internal combustion engines; ICE = internal combustion engine vehicles.
Diversified Customer Base, Many With Decades-Long Relationships Critical Supplier to Blue-Chip Companies Across End Markets Note: Sales based on TTM ended November 30, 2024.
Strategy Focused on Growth Focused Investments in the rapidly growing electrical steel market Strategically expanding our capacity for highly technical electrical steel products to meet demand for improved electrical infrastructure and electric vehicles (including battery electric and hybrid) Margin-Accretive Growth using a strong commercial focus combined with disciplined strategic capex and acquisitions Capitalizing on attractive growth opportunities Base Business Improvements through our Transformation to improve margins, reduce working capital and add capacity Transformation remains unique among our peer group
Leveraging Lean Practices and Technology Systematic approach to business improvement Optimizing working capital Predictive analytics and automation enhance efficiency, reduce downtime and improve safety TRANSFORMATION INNOVATION Tailored Customer Solutions Cross-functional teams Sophisticated supply chain management Price risk management Metallurgical expertise for customized solutions ACQUISITION Adding Capabilities for Above-Market Growth Green energy transition: Tempel provides direct exposure to the global decarbonization movement and power grid modernization / expansion Automotive lightweighting: Acquisition of Shiloh BlankLight® expanded offerings for fuel-efficiency, cost reduction and part consolidation Worthington Business System is the Foundation for Driving Improved Profitability Our people-first Philosophy is rooted in the Golden Rule: We treat our employees, customers, suppliers and shareholders as we would like to be treated
Customized End-to-End Supply Chain Solutions Strategic Operating Footprint Price Risk Management Experienced Technical Team Unique Mix of Processing Capabilities Entrenched Customer Relationships Beginning with Material from our Mill Partners Worthington Steel Offers a Wide Range of Value-Added Processing Capabilities and Services Serving Customers Across Attractive End Markets Our Differentiated Business Model Drives Worthington Steel Forward
Case Study: Using the Transformation Resulted in ~$2.3M in Annualized Savings OBJECTIVES Improve gauge-reduction performance to reduce scrap and processing time Leverage insights from various holistic data set and business intelligence tools to identify opportunities for improvement GOAL: Margin Expansion Through Operational Excellence FOCUS: Columbus Tandem Mill $2M Scrap Savings from Reduced / Optimized Footage $315k Improved Performance and Reduced Processing Time APPROXIMATE ANNUAL SAVINGS ACHIEVED
Results Case Study: Product Improvements That Meet Changing Customer Needs for Lightweighting Since 2000, we have successfully launched more than 500 lightweighting production parts “Voice of Customer” Approach to New Product Development Driving Market Share Gains and Improved Customer Intimacy Continued Enhancements to Core Offerings At the Forefront of EV Battery Box Design Hot Stamped Door Ring Advanced, High-strength Tailor Welded Frame Rails Capitalizes on lightweighting and part consolidation trends Adopted by most North American light duty truck manufacturers Upper / Lower Battery Covers Deep Drawn Battery Tray A leading supplier to North American automotive producers Innovative product solution in development
Well Positioned to Capitalize on Key End Market Trends Worthington Steel Product Offering Key Trends Worldwide transition to electric vehicles and OEM push for lightweighting innovation supporting automotive steel demand Transition to renewable energy driving demand for our products Upgrading aging infrastructure and electrical grid in the U.S. will require a significant amount of steel Market Growth Drivers >70% of passenger vehicles sold globally in 2030 expected to be battery or hybrid 6.1% Projected CAGR through 2040 $1 Trillion infrastructure bill signed in 2021 Decarbonization of Transportation Energy Transition Infrastructure Tailored Blanks Electrical Steel Laminations EV Traction Motors Automotive Frames Galvanized Steel Electrical Steel Laminations Solar Panel Racks Transformer Cores Galvanized Steel Electrical Steel Laminations Transformer Cores Drainage Culvert / Renewables Sources: 1 S&P Global Mobility, E-Motor Production Forecast, July 2024, includes mid- and full-hybrids; 2 Advention, 2022 Transformer Market Study estimates based on market interviews; 3 White House (Inflation Reduction Act Guidelines, January 2023). 1 2 3
Focused Strategic Investments in Electrical Steel Expanding existing xEV production capacity Total expected capex = $85M (~40% spent through 11/30/24) Building expansion complete Initial five presses installed; five more expected (exact timing tied to commercial milestones) Targeting start of production for fall 2025 Adding capacity to existing core-making operation to help customers close 2-year backlog on transformer orders Total expected capex = $85M (~40% spent through 11/30/24) Awarded enough new business to fill 50% of the additional capacity Targeting start of production for late CY 2025 or early CY 2026 Expect Steady State EBITDA Margins to Be Accretive Mexico: Increase Motor Lamination Capacity to Meet Growing xEV Demand Canada: Increase Transformer Core Making Capacity to Meet Demand
Resilient Financial Performance Despite Commodity Volatility Net Sales ($M) & Volumes (M Tons) Adjusted EBITDA ($M) & Margin (%) Estimated Holding G/(L)1 $22 ($49) ($3) ($14) Strategic Acquisitions: Note: FY is fiscal year ended May 31. TTM ended November 30, 2024. 1 Estimated Inventory Holding Gains or Losses in respective period.
How Worthington Steel Mitigates Volatility in Steel Pricing Worthington Business System to manage inventory Deployed to drive inventory lower within carbon flat-rolled locations; opportunities remain Inventory down 16% on a tons basis Use firm-priced contracts where possible to lock in margin Customers choose contract mechanisms that best fit their business Mirror customer and supplier contract mechanisms (e.g., buy/sell on quarterly CRU) ~100% of contracts are mirrored Utilize steel futures when fixed pricing is not offered by a mill We Minimize Steel Holding Gains and Losses Note: Fiscal year ended May 31. Worthington Business System Helps Drive Down Inventory Transformation Launch Advanced Analytics Lean Flow Baseline Historical Hot-Rolled Steel Price ($/ton)
RECENT EXAMPLES Pathway to Margin Expansion Strategy to Achieve 10%+ Adj. EBITDA Margin Target Levers to Improve Profitability Focus on high margin products Drive out waste and reduce costs Introduce higher margin new products and processes Acquire margin accretive businesses 10%+ Note: Fiscal year ended May 31. Applying Transformation to corporate functions Expanding electrical steel capabilities in Canada and Mexico Licensed ablation technology to open new opportunities for TWB Nagold acquisition adds European manufacturing for electrical steel
Strong Cash Flow Supports Growth Initiatives Note: FY is fiscal year ended May 31. TTM as of November 30, 2024. 1 Operating Working Capital defined as accounts receivable plus inventory minus accounts payable. Operating Cash Flow ($M) Operating Working Capital1 ($M) Capex ($M) $36 $45 $103 $124 Steel Price ($/ton) $1,600 $890 $870 $800
Capital Investments to Strengthen and Grow Market Position Capital Expenditures ($M) Capex (% of Sales) 1.4% 0.9% 1.3% 3.0% Strategic Capital Investments Increasing Lightweighting Capabilities/Capacity Hot Galvanizing Line: produce Type 1 aluminized steels for the automotive industry Laser Welding: support lightweighting targets for new Battery EV models Ablation: produce Hot Formed Tailored Blanks for automotive lightweighting applications Investing in Electrical Steel Capacity/Capability Transformer Core Lamination Expansion: adding capacity and capability in Canada xEV Focus Factory: expanding electrical steel lamination offering in Mexico Maintenance Capital Category includes equipment, information technology and environmental, health & safety Philosophy toward maintenance spending is to maintain key assets in market ready condition
Capital Structure Supports Growth Initiatives Note: Fiscal 2025 Second Quarter ended November 30, 2024; 1 Trailing Twelve Month Net Leverage defined as Net Debt at period end divided by Trailing Twelve Month Adjusted EBITDA; 2 Total Liquidity defined as total capacity of ABL facility less net debt. Balance Sheet Summary ($M) Total Debt $115 (-) Cash $52 Net Debt $63 Trailing Twelve Month Adjusted EBITDA $255 Trailing Twelve Month Net Leverage1 0.25x Total Liquidity2 $487 Accomplished initial goal for a strong balance sheet at Spin Date Expect to maintain a flexible capital structure with modest leverage and ample liquidity Current credit facility consists of: $550M ABL facility, maturing in 2028 Goal is to maintain sufficient liquidity and flexibility to execute on our business strategy Pursue high-return organic growth opportunities Target strategic accretive acquisitions Return capital to shareholders
M&A Is a Key Part of Our Strategy BlankLight® Assets Strip Steel Assets Cleveland Facility Automotive Components Nagold, GER Select Acquisitions Investment Criteria Immediately accretive to earnings per share and increases overall EBITDA margin Well-run, successful companies with strong management teams Culture aligns with Our Philosophy Opportunities to increase value through Transformation and synergy capture Strengthen our business in current markets or provide access to new, attractive and more niche markets
Disciplined Framework Designed to Drive Shareholder Value Organic Growth Strategic M&A Shareholder Return Maintain operations in market ready condition Grow capacity to meet electrical steel and lightweighting demand Pursue high IRR capacity additions Target acquisition opportunities that are expected to be immediately accretive to earnings Leverage track record and skill set to integrate bolt-on opportunities and realize synergies Focus on maximizing shareholder return Expect to pay a modest dividend Long-term intention to pursue opportunistic share buybacks …and Maintain Ample Liquidity and Financial Flexibility to Support Strategic Initiatives and Resiliency Through the Cycle
More than 200 Combined Years of Experience Managing Through Steel Price Cycles and Shifting Macroeconomic Climates with Proven Ability to Execute M&A Experienced Management Team to Drive Strategy CLIFF LARIVEY President, Flat-Rolled Steel Processing BILL WERTZ VP of Transformation & Chief Information Officer GEOFF GILMORE President & Chief Executive Officer JEFF KLINGLER Executive VP & Chief Operating Officer TIM ADAMS VP & Chief Financial Officer JOE HEUER VP & General Counsel MELISSA DYKSTRA VP of Corporate Communications & Investor Relations BRAD KERN VP of Operations NIKKI BALLINGER VP of Human Resources STEVE WITT Corporate Controller
Investment Highlights 2. Long-standing customer relationships focused on value creation and best-in-class service delivery 1. Well-positioned to capitalize on opportunities resulting from the energy transition with our electrical steel products 3. Strong balance sheet and ample liquidity to pursue attractive growth opportunities via strategic capital investments and/or value-enhancing acquisitions Successful, experienced management team with a proven playbook and track record of delivering value 4.
Appendix
Reconciliation of Non-GAAP Financial Measures These materials present certain financial measures that are not calculated in accordance with U.S. generally accepted accounting principles, or GAAP. Management believes these non-GAAP measures provide useful supplemental information 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 business and enable investors to evaluate operations and future prospects in the same manner as management. A reconciliation of each non-GAAP measure to its most directly comparable GAAP measure is outlined below. The following provides an explanation of each non-GAAP measure presented in these materials: Adjusted EBITDA is defined as Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, and consists of EBITDA (calculated by adding or subtracting, as appropriate, interest expense, income tax expense and depreciation and amortization to/from net earnings 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. 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 first quarter of fiscal 2025 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. Pension settlement gain - pension lift-out transaction to transfer a portion of the total projected benefit obligation of the Tempel pension plan to a third-party insurance company, which resulted in a pre-tax non-cash gain reported in Miscellaneous income (expense), net, is excluded as it is not part of the Company’s ongoing operations. Gain on land sale - sale of unused land on the campus of the Tempel subsidiary in China, which resulted in a pre-tax gain in Miscellaneous income (expense), net, is excluded as it is not part of the Company’s ongoing operations. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by net sales. Free Cash Flow is defined as operating cash flows less capital expenditures. For additional information with respect to Worthington Steel, please refer to our most recent Form 10-K.
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EXHIBIT 99.4 |
Worthington Steel Announces Appointment of Scott Kelly to Board of Directors
12/18/2024
COLUMBUS, OHIO --(BUSINESS WIRE)--Worthington Steel, Inc. (NYSE: WS) announced today the appointment of Scott Kelly to the Worthington Steel Board of Directors, effective immediately. Kelly will serve as a member of the Nominating and Governance Committee of the Board. Following the appointment of Kelly, the Board will be comprised of 11 directors, eight of whom are independent.
“We are pleased to welcome Scott Kelly to the Worthington Steel Board,” said Worthington Steel Executive Chairman John Blystone. “Scott brings deep experience in leading operations for energy infrastructure and utility services, as well as manufacturing for the heavy-duty automotive industry and will be invaluable as we continue to execute on our growth strategy and our vision to drive the metals industry into a more sustainable future.”
Kelly, 59, is senior vice president of operations for NPL Construction Company, a subsidiary of Centuri Group, Inc., a strategic infrastructure services company that builds and maintains utility energy networks across the U.S. and Canada. Kelly has been in his current role since November 2024. Prior to that, he spent three years as Centuri’s senior vice president of strategic alliances and planning, where he focused on growing the business’ geographic footprint. Before joining Centuri, Kelly served in roles including senior vice president of supply chain at NiSource, senior vice president at AES Ohio and president of Dayton Power & Light Energy Resources. Along with three decades of experience in infrastructure and utility industries, Kelly spent six years in manufacturing leadership with Rockwell International, a maker of heavy-duty truck axles.
Kelly takes an active role in the community and has served on several nonprofit boards, including Big Brothers Big Sisters of Miami Valley, Children’s Hospital of Dayton, Ohio and United Way of Union County, Ohio. He was also a member of the University of Dayton Advisory Board for the School of Engineering for two years. Kelly earned his bachelor’s degree from Carnegie Mellon University and an MBA from Xavier University.
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
Worthington Steel wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “Act"). Statements by Worthington Steel which are not historical information constitute "forward-looking statements" within the meaning of the Act. All forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those projected. Factors that could cause actual results to differ materially include risks, uncertainties and impacts described from time to time in Worthington Steel’s filings with the Securities and Exchange Commission.
Melissa Dykstra
Vice President
Corporate Communications and Investor Relations
Phone: 614-840-4144
Melissa.Dykstra@worthingtonsteel.com
Source: Worthington Steel, Inc.
###
|
EXHIBIT 99.5 |
Worthington Steel Declares Quarterly Dividend
12/18/2024
COLUMBUS, OHIO --(BUSINESS WIRE)-- The board of directors of Worthington Steel, Inc. (NYSE: WS) has declared a quarterly dividend of $0.16 per common share. The dividend is payable on March 28, 2025, to shareholders of record March 14, 2025.
Worthington Steel will host a conference call to discuss its fiscal 2025 second quarter results at 8:30 a.m. ET on Thursday, Dec. 19, 2024. A live webcast of the call will be available on the Investor Relations section of the Company’s website at www.WorthingtonSteel.com and will be archived for one year.
Live Conference Call Schedule |
|
Date: |
Thursday, Dec. 19, 2024 |
Start Time: |
8:30 a.m. ET |
Conference ID: |
5714141 |
Toll-Free Dial-In Number: |
888.510.2553 |
To automatically receive Worthington Steel financial news by email, please visit https://ir.worthingtonsteel.com and subscribe to email alerts.
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 is 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
Worthington Steel wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “Act"). Statements by Worthington Steel which are not historical information constitute "forward looking statements" within the meaning of the Act. All forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those projected. Factors that could cause actual results to differ materially include risks, uncertainties and impacts described from time to time in Worthington Steel’s filings with the Securities and Exchange Commission.
Melissa Dykstra
Vice President
Corporate Communications and Investor Relations
Phone: 614-840-4144
Melissa.Dykstra@worthingtonsteel.com
Source: Worthington Steel, Inc.
###
Document And Entity Information |
Dec. 18, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Dec. 18, 2024 |
| Entity Registrant Name | WORTHINGTON STEEL, INC. |
| Entity Central Index Key | 0001968487 |
| Entity Emerging Growth Company | false |
| Entity File Number | 001-41830 |
| Entity Incorporation, State or Country Code | OH |
| Entity Tax Identification Number | 92-2632000 |
| Entity Address, Address Line One | 100 W. Old Wilson Bridge Road |
| Entity Address, City or Town | Columbus |
| Entity Address, State or Province | OH |
| Entity Address, Postal Zip Code | 43085 |
| City Area Code | 614 |
| Local Phone Number | 840-3462 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Shares, without par value |
| Trading Symbol | WS |
| Security Exchange Name | NYSE |
1 Year Worthington Steel Chart |
1 Month Worthington Steel Chart |
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