On June 26, 2024, Worthington Steel Inc (WS, Financial) released its 8-K filing reporting financial results for the fourth quarter and full fiscal year ended May 31, 2024. Worthington Steel Inc is one of North America's premier value-added steel processors, providing a diversified range of products and services across various end markets.
Performance Overview
For the fourth quarter of fiscal 2024, Worthington Steel Inc (WS, Financial) reported net sales of $911.0 million, a 3% increase compared to $884.0 million in the same period last year. However, the company faced challenges with a decrease in operating income and net earnings. Operating income for the quarter was $67.3 million, down from $89.8 million in the prior year quarter. Net earnings attributable to controlling interest were $53.2 million, or $1.06 per diluted share, compared to $67.3 million, or $1.37 per diluted share, in the fourth quarter of fiscal 2023.
Financial Achievements and Challenges
Despite the revenue growth, Worthington Steel Inc (WS, Financial) faced a decline in gross margin, which decreased by $19.2 million to $131.0 million. This was primarily due to lower direct spreads and volume. The company also experienced a $10.6 million increase in selling, general, and administrative expenses, driven by higher wage and benefit costs and other expenses associated with being a stand-alone public company.
Geoff Gilmore, President and CEO of Worthington Steel, commented,
“Worthington Steel saw a solid performance in Q4 and finished fiscal 2024 strong. Employees continue to be the driving force behind Worthington Steel’s momentum, I’d like to thank them for continuing to find improvements for our customers and our business through the transformation process – our system of continuous improvement.”
Income Statement Highlights
| Metric | 4Q 2024 | 4Q 2023 | 12M 2024 | 12M 2023 |
|---|---|---|---|---|
| Net Sales ($M) | 911.0 | 884.0 | 3,430.6 | 3,607.7 |
| Operating Income ($M) | 67.3 | 89.8 | 194.5 | 120.3 |
| Net Earnings Attributable to Controlling Interest ($M) | 53.2 | 67.3 | 154.7 | 87.1 |
| Net Earnings per Diluted Share ($) | 1.06 | 1.37 | 3.11 | 1.77 |
Balance Sheet and Cash Flow
As of May 31, 2024, Worthington Steel Inc (WS, Financial) had cash and cash equivalents of $40.2 million. The company generated $35.6 million in cash flow from operations during the fourth quarter, compared to $79.2 million in the prior year period. Capital expenditures for the quarter were $44.8 million, primarily related to strategic expansions in electrical steel operations in Mexico and Canada. The company ended the quarter with a net debt position of $107.8 million.
Dividend Declaration
The Board of Directors declared a quarterly dividend of $0.16 per share, payable on September 27, 2024, to shareholders of record on September 13, 2024.
Analysis
Worthington Steel Inc (WS, Financial) demonstrated resilience with a 3% increase in net sales despite facing challenges in gross margin and operating income. The company's strategic expansions and focus on continuous improvement are expected to drive future growth. However, the decline in net earnings and increased SG&A expenses highlight the need for careful cost management as the company navigates its stand-alone public entity status.
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Explore the complete 8-K earnings release (here) from Worthington Steel Inc for further details.
