Worthington Enterprises Reports Fourth Quarter Fiscal 2024 Results

Worthington Enterprises, Inc. reported net sales of $318.8 million and a net loss from continuing operations of $31.5 million, or $(0.64) per diluted share, for its fiscal 2024 fourth quarter ended May 31, 2024. This compares to net sales of $368.8 million and net earnings from continuing operations of $50.1 million, or $1.01 per diluted share, in the fourth quarter of fiscal 2023. On a non-GAAP basis, adjusted net earnings from continuing operations totaled $37.5 million for the fourth quarter of fiscal 2024, or $0.74 per diluted share, compared to $59.0 million, or $1.19 per diluted share, in the prior year comparable quarter.

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

Consolidated Quarterly Results

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

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

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

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

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

Balance Sheet

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

Quarterly Segment Results

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

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

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

Recent Developments

• On May 29, 2024, the Company formed a new unconsolidated joint venture with Hexagon, comprised of the former Sustainable Energy Solutions segment. Pursuant to the transaction, Hexagon acquired a 49% stake in the joint venture for approximately $10 million plus closing cash. The Company retained a 49% noncontrolling interest in the joint venture, with the remaining 2% held by the executive management team of Sustainable Energy Solutions.
• On June 3, 2024, the Company acquired Hexagon Ragasco, a leading manufacturer of composite propane cylinders. The total purchase price was approximately $98 million, subject to closing adjustments, $11.4 million of which was deposited into escrow at fiscal year end.
• On June 25, 2024, the Company’s Board of Directors declared a quarterly dividend of $0.17 per common share payable on September 27, 2024, to shareholders of record at the close of business on September 13, 2024, a 6.25% increase or $0.01 per share, compared to the prior quarter.

Outlook

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

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About Worthington Enterprises

Worthington Enterprises (NYSE: WOR) is a designer and manufacturer of market-leading brands that help enable people to live safer, healthier and more expressive lives. The Company operates with three segments: Building Products, Consumer Products and Sustainable Energy Solutions. Worthington’s emphasis on innovation and transformation extends to building products including heating and cooling solutions, water systems, architectural and acoustical grid ceilings and metal framing and accessories, and consumer products in tools, outdoor living and celebrations categories sold under brand names Coleman®, Bernzomatic®, Balloon Time®, Level5 Tools®, Mag Torch®, Well-X-Trol®, General®, Garden-Weasel®, Pactool International®, HALO™ and Hawkeye™. The Company serves the growing global hydrogen ecosystem through on-board fueling systems and gas containment solutions. Headquartered in Columbus, Ohio, Worthington Enterprises employs approximately 5,000 people throughout North America and Europe. Founded in 1955 as Worthington Industries, Worthington Enterprises follows a people-first Philosophy with earning money for its shareholders as its first corporate goal. Worthington Enterprises achieves this outcome by empowering its employees to innovate, thrive and grow with leading brands in attractive markets that improve everyday life. The Company engages deeply with local communities where it has operations through volunteer efforts and The Worthington Companies Foundation, participates actively in workforce development programs and reports annually on its corporate citizenship and sustainability efforts. For more information, visit worthingtonenterprises.com.

Contact:

Sonya L. Higginbotham – Senior Vice President, Chief of Corporate Affairs, Communications and Sustainability – sonya.higginbotham@wthg.com – (614) 438-7391

Source: Worthington Enterprises, Inc.