- Adjusted EBITDA: $63 million
- Adjusted Earnings Per Share: $0.74
- GAAP Loss from Continuing Operations: $0.64 per share
- Pre-tax Restructuring, Impairment, and One-time Charges: $74 million or $1.38 per share
- Consolidated Net Sales: $319 million (down 13.6% from $369 million in the prior year)
- Gross Profit: $79 million (down from $94 million in Q4 last year)
- Gross Margin: 24.8% (down from 25.5%)
- Trailing 12-Month Adjusted EBITDA: $251 million
- Trailing 12-Month Adjusted EBITDA Margin: 20.1%
- Cash Flows from Operations: $45 million
- Free Cash Flow: $34 million
- Capital Expenditures: $11 million
- Acquisitions: $12 million
- Dividends Paid: $8 million
- Dividends Received from Unconsolidated JVs: $43 million
- Long-term Funded Debt: $298 million
- Cash: $244 million
- Net Debt to Trailing EBITDA Leverage Ratio: Less than a quarter turn
- Undrawn Bank Credit Facility: $500 million
- Dividend Declared: $0.17 per share (6% increase)
- Consumer Products Net Sales: $125 million (down from $149 million)
- Consumer Products Adjusted EBITDA: $17 million
- Consumer Products Adjusted EBITDA Margin: 13.6% (down from 19.8%)
- Building Products Net Sales: $154 million (down from $175 million)
- Building Products Adjusted EBITDA: $52 million
- Building Products Adjusted EBITDA Margin: 33.6% (down from 37.1%)
- ClarkDietrich Contribution: $12 million (down from $25 million)
- WAVE Contribution: $28 million (up from $24 million)
- WAVE Full-Year Equity Earnings: $103 million
- Sustainable Energy Solutions Net Sales: $40 million (down from $45 million)
- Sustainable Energy Solutions Adjusted EBITDA: $1 million (down from $4 million)
Release Date: June 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Worthington Enterprises Inc (WOR, Financial) reported a respectable quarter with adjusted EBITDA of $63 million and adjusted earnings per share of $0.74.
- The company successfully executed two significant transactions: the acquisition of Hexagon Ragasco and the formation of a joint venture with Hexagon Composites.
- The Hexagon Ragasco acquisition expands Worthington's product portfolio and global reach, particularly in the lightweight composite liquefied propane gas cylinders market.
- The joint venture with Hexagon Composites positions Worthington to capitalize on emerging opportunities in the hydrogen and compressed natural gas storage and transport markets.
- Worthington Enterprises Inc (WOR) maintains a strong balance sheet with $244 million in cash and a low net debt to trailing EBITDA leverage ratio of less than a quarter turn.
Negative Points
- Worthington Enterprises Inc (WOR) reported a GAAP loss from continuing operations of $0.64 per share in Q4, compared to earnings of $1.1 per share in the prior year.
- Consolidated net sales in the quarter decreased by 13.6% to $319 million, primarily due to lower volumes across all segments.
- Gross profit for the quarter decreased to $79 million from $94 million in Q4 of the previous year, with gross margin slightly down to 24.8%.
- The consumer products segment experienced a significant volume decrease of 17.9%, impacting adjusted EBITDA, which fell to $17 million from $30 million in the prior year.
- The building products segment also saw a decline in net sales and adjusted EBITDA, driven by a less favorable product mix and lower volumes, particularly in the large format heating end market.
Q & A Highlights
Highlights of Worthington Enterprises Inc (WOR) Q4 2024 Earnings Call
Q: Can you parse out how much of the drop in ClarkDietrich was price versus volume?
A: Joseph Hayek, CFO: It wasn't all related to volumes; volumes were slightly down but held up well. The primary issue was margin compression due to fluctuating steel prices and competition. We view this quarter's performance as frothy, and annualizing it should be reasonable.
Q: Can you expand on the Hexagon Ragasco acquisition and its synergies?
A: B. Andrew Rose, CEO: Hexagon Ragasco is a perfect strategic fit, enhancing our product portfolio and global reach. The acquisition brings advanced automation and manufacturing processes that will benefit our existing operations. Joseph Hayek, CFO: The deal also includes a JV with Hexagon Composites, enhancing our capabilities in the clean energy space.
Q: What are you seeing in the consumer segment, especially with the volume decrease?
A: Joseph Hayek, CFO: The volume decrease was primarily in outdoor living products due to consumer spending softness and inventory adjustments by retailers. However, volumes have bounced back to near-normal levels in the early weeks of the new fiscal year.
Q: Can you discuss demand and activity levels at WAVE and ClarkDietrich?
A: B. Andrew Rose, CEO: Demand is steady, with some fluctuations due to changing steel prices. Both businesses are managing well, with WAVE showing strong results and ClarkDietrich maintaining customer relationships despite margin compression.
Q: How does the JV with Hexagon enhance your competitive position and growth potential?
A: Joseph Hayek, CFO: The JV immediately improves SES by leveraging Hexagon's expertise in Type 4 cylinders and clean energy. This partnership positions us better for long-term growth in the hydrogen economy and other emerging markets.
Q: Can you explain more about the Hexagon Composite business and its market impact?
A: B. Andrew Rose, CEO: Hexagon Ragasco produces lightweight composite LPG cylinders, primarily for the European market. These cylinders are lighter and more efficient than steel, making them preferable for consumers who need to transport them frequently.
Q: What is your view on the true earnings power of the business post-split?
A: Joseph Hayek, CFO: We aim for 6-8% top-line growth annually, with a target of 24% EBITDA margins. We believe we can exceed these goals through base business improvements, a normalized operating environment, and strategic M&A.
Q: Should we expect consumer product volumes to be up this year?
A: B. Andrew Rose, CEO: We expect volumes to normalize and potentially increase slightly from last year, as we move past the unique demand patterns caused by COVID and subsequent destocking.
Q: How long does it typically take for ClarkDietrich to catch up with steel price declines?
A: Joseph Hayek, CFO: There is usually a lag of a few months as the market adjusts to new steel prices, impacting margins and competitive dynamics.
Q: What are the primary near-term drivers of margin expansion?
A: Joseph Hayek, CFO: Key drivers include base business improvements, a normalized operating environment, and strategic growth initiatives like innovation and M&A. We aim to leverage these factors to achieve higher EBITDA margins and overall growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
