On September 24, 2024, Worthington Enterprises Inc (WOR, Financial) released its 8-K filing for the first quarter of fiscal 2025, ending August 31, 2024. The company reported net sales of $257.3 million and net earnings from continuing operations of $24.3 million, or $0.48 per diluted share. This performance fell short of analyst estimates, which projected earnings per share (EPS) of $0.70 and revenue of $300.27 million.
Company Overview
Worthington Enterprises Inc is a designer and manufacturer of products sold to consumers through retail channels in the tools, outdoor living, and celebrations market categories. The company also produces specialized building products for residential and non-residential construction markets, including ceiling suspension systems and light gauge metal framing products. Worthington operates under two reportable segments: Consumer Products and Building Products, with the majority of revenue derived from the Building Products segment.
Performance and Challenges
Worthington Enterprises Inc faced a challenging quarter with net sales declining by 17.5% from $311.9 million in Q1 fiscal 2024 to $257.3 million in Q1 fiscal 2025. The decrease was primarily driven by the deconsolidation of the former Sustainable Energy Solutions (SES) segment and lower volume in the Building Products segment. The SES segment, now an unconsolidated joint venture, contributed $28.6 million to net sales in the prior year quarter.
The company reported an operating loss of $4.7 million, an improvement from the $7.3 million loss in the prior year quarter. However, excluding restructuring and separation costs, the adjusted operating loss was $3.5 million compared to an adjusted operating income of $4.8 million in Q1 fiscal 2024.
Financial Achievements
Despite the challenges, Worthington Enterprises Inc managed to achieve some financial milestones. The Consumer Products segment reported net sales of $117.6 million, slightly up from the prior year, with adjusted EBITDA increasing by $3.5 million to $17.8 million. This growth was driven by improved gross margins.
However, the Building Products segment saw a decline in net sales to $139.7 million, down 15.8% from the prior year. Adjusted EBITDA for this segment decreased by $20.0 million to $39.7 million, impacted by lower volume and unfavorable product mix.
Income Statement Highlights
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Net Sales | $257.3 million | $311.9 million |
| Operating Loss | ($4.7 million) | ($7.3 million) |
| Net Earnings from Continuing Operations | $24.3 million | $26.8 million |
| Adjusted EBITDA | $48.4 million | $65.9 million |
| EPS from Continuing Operations - Diluted | $0.48 | $0.54 |
| Adjusted EPS from Continuing Operations - Diluted | $0.50 | $0.75 |
Balance Sheet and Cash Flow
As of August 31, 2024, Worthington Enterprises Inc reported total debt of $300.0 million, consistent with the balance at May 31, 2024. The company ended the quarter with cash of $178.5 million, down $65.7 million from May 31, 2024, primarily due to the acquisition of Hexagon Ragasco.
Recent Developments
During the first quarter, Worthington Enterprises Inc acquired Hexagon Ragasco, a leading global manufacturer of composite propane cylinders, for approximately $100.3 million. Additionally, the company repurchased 150,000 common shares for $6.8 million and declared a quarterly dividend of $0.17 per share, payable on December 27, 2024.
Outlook
“We have a positive long-term outlook especially with the recent recalibration of interest rates. Our market-leading products and brands are well-positioned to take advantage of long-term secular trends and should benefit when near-term headwinds subside and demand normalizes,” said Worthington Enterprises President and CEO Andy Rose.
For more detailed insights and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Worthington Enterprises Inc for further details.
