On June 25, 2024, Worthington Enterprises Inc (WOR, Financial) released its 8-K filing for the fourth quarter of fiscal 2024, revealing a challenging period marked by a net loss from continuing operations and a decline in net sales.
Company Overview
Worthington Enterprises Inc, formerly Worthington Industries Inc, is a diversified metals manufacturing company focused on value-added steel processing and manufactured metal products. The company's product portfolio includes pressure cylinders, helium-filled balloon kits, steel and fiberglass tanks, cryogenic pressure vessels, and light gauge steel framing, among others. The firm operates through segments such as Steel Processing, Consumer Products, Building Products, and Sustainable Energy Solutions.
Q4 2024 Financial Performance
For the fourth quarter ended May 31, 2024, Worthington Enterprises reported net sales of $318.8 million, a 13.6% decrease from $368.8 million in the same quarter of the previous year. The company posted a net loss from continuing operations of $31.5 million, or $(0.64) per diluted share, compared to net earnings of $50.1 million, or $1.01 per diluted share, in Q4 2023. On a non-GAAP basis, adjusted net earnings from continuing operations were $37.5 million, or $0.74 per diluted share, down from $59.0 million, or $1.19 per diluted share, in the prior year quarter.
Segment Performance
Consumer Products generated net sales of $125.3 million, a 16% decline from the prior year quarter, primarily due to lower volume. Adjusted EBITDA for this segment fell by $12.5 million to $17.1 million.
Building Products reported net sales of $153.6 million, down 12% year-over-year, driven by lower volume and an unfavorable product mix. Adjusted EBITDA decreased by $13.1 million to $51.6 million.
Sustainable Energy Solutions saw net sales of $39.9 million, a 12% decrease from the previous year, attributed to lower average selling prices and volume. Adjusted EBITDA for this segment was $1.2 million, down $3.1 million from the prior year quarter.
Key Financial Metrics
| Metric | Q4 2024 | Q4 2023 | 12M 2024 | 12M 2023 |
|---|---|---|---|---|
| Net Sales | $318.8M | $368.8M | $1,245.7M | $1,418.5M |
| Operating Income (Loss) | $(56.1)M | $15.3M | $(73.5)M | $29.8M |
| Adjusted Operating Income | $5.8M | $28.6M | $20.9M | $77.9M |
| Net Earnings (Loss) from Continuing Operations | $(31.5)M | $50.1M | $35.2M | $125.8M |
| Adjusted EBITDA | $63.2M | $93.7M | $251.0M | $306.0M |
| EPS from Continuing Operations - Diluted | $(0.64) | $1.01 | $0.70 | $2.55 |
| Adjusted EPS from Continuing Operations - Diluted | $0.74 | $1.19 | $2.84 | $3.60 |
Challenges and Achievements
The company's performance was significantly impacted by higher impairment and restructuring charges, particularly from the deconsolidation of the former Sustainable Energy Solutions segment. Additionally, lower volumes across all segments contributed to the decline in net sales and operating income.
Despite these challenges, Worthington Enterprises managed to achieve an adjusted operating income of $5.8 million and adjusted EBITDA of $63.2 million. The company's balance sheet remains strong, with total debt reduced to $298.1 million and cash reserves of $244.2 million.
Commentary
"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."
Recent Developments
Worthington Enterprises formed a new joint venture with Hexagon Composites ASA, acquiring a 49% stake in the former Sustainable Energy Solutions segment. Additionally, the company acquired Hexagon Ragasco, a leading manufacturer of composite propane cylinders, for approximately $98 million.
The company's Board of Directors declared a quarterly dividend of $0.17 per common share, a 6
Explore the complete 8-K earnings release (here) from Worthington Enterprises Inc for further details.
