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Worthington Reports First Quarter Fiscal 2023 Results

General News
Worthington Industries Logo Lumber Manufacturer

Worthington Industries, Inc. (the “Company”) reported net sales of $1.4 billion and net earnings of $64.1 million, or $1.30 per diluted share, for its fiscal 2023 first quarter ended August 31, 2022. In the first quarter of fiscal 2022, the Company reported net sales of $1.1 billion and net earnings of $132.5 million, or $2.55 per diluted share. Results in both the current and prior year quarter were impacted by certain unique items.

“We are off to a good start in our new fiscal year with volumes in most of our key-end markets remaining healthy during the quarter,” said Andy Rose, President and CEO. “Our teams continue to do a nice job navigating supply chain challenges and inflationary pressures to deliver value-added products and solutions for our customers.”

Consolidated Quarterly Results

Net sales for the first quarter of fiscal 2023 were $1.4 billion compared to $1.1 billion, an increase of $297.9 million, or 27%, over the comparable quarter in the prior year. The increase was primarily driven by contributions from the acquisition of Tempel Steel Company (“Tempel”) in fiscal 2022 and higher average selling prices across all segments.

Gross margin decreased $50.0 million from the prior year quarter to $169.4 million, as improvements in both the Consumer Products and Building Products segments were more than offset by lower margin contributions from Steel Processing. Margins in Steel Processing were negatively impacted by an estimated $48.6 million unfavorable swing related to inventory holding losses in the current quarter compared to inventory holding gains in the prior year quarter.

Operating income for the current quarter was $66.7 million, down $69.1 million from the prior year quarter. Excluding restructuring items in both quarters, operating income was down $57.1 million from the prior year quarter on lower gross margin and higher SG&A expense, up $7.5 million over the prior year quarter primarily due to the impact of acquisitions.

Miscellaneous expense increased $5.7 million from the prior year quarter primarily due to a pension lift-out transaction to transfer a portion of the total projected benefit obligation of the inactive Gerstenslager pension plan to a third-party insurance company, which resulted in a $4.8 million pre-tax non-cash charge.

Interest expense was $8.6 million in the current quarter, up $0.9 million over the prior year quarter due to the impact of higher average debt levels associated with short-term borrowings.

Equity income from unconsolidated joint ventures decreased $21.2 million from the prior year quarter due to a $15.8 million loss related to the sale of our equity investment in ArtiFlex and lower contributions from Serviacero, which were down $7.6 million as lower average steel prices reduced spreads.

Income tax expense was $19.5 million in the current quarter compared to $40.2 million in the prior year quarter. The decrease was driven by lower pre-tax earnings. Tax expense in the current quarter reflects an annual effective rate of 23.9% compared to 23.3% for the prior year.

Balance Sheet

At quarter-end, total debt of $705.8 million, was down $38.8 million from May 31, 2022, on lower short-term borrowings. The Company had $35.8 million of cash at quarter end, an increase of $1.3 million from May 31, 2022.

Quarterly Segment Results

Steel Processing’s net sales totaled $1.0 billion, up $216.1 million, over the comparable prior year quarter. The increase in net sales was driven by contributions from Tempel and, to a lesser extent, higher average selling prices. Adjusted EBIT was down $72.8 million from the prior year quarter to $34.9 million, on lower direct spreads, which were negatively impacted by the unfavorable swing in inventory holding gains/losses. Adjusted EBIT was also negatively impacted by lower equity earnings at Serviacero, down $7.6 million from the prior year quarter due to unfavorable spreads. The mix of direct versus toll tons processed was 58% to 42% in the current quarter, compared to 49% to 51% in the prior year quarter.

Consumer Products’ net sales totaled $188.7 million, up 28%, or $40.9 million, over the prior year quarter due to higher average selling prices and contributions from the acquisition of Level5 in the current quarter. Adjusted EBIT was up slightly in the current quarter to $20.9 million, as the favorable impact of higher selling prices was mostly offset by higher wages and input costs as well as $2.9 million of expense related to transaction costs and the write-up of acquired Level5 inventory to fair value.

Building Products’ net sales totaled $150.3 million, up 31%, or $35.6 million, over the prior year quarter on higher average selling prices. Adjusted EBIT increased $3.9 million over the prior year quarter to $52.7 million, driven primarily by higher average selling prices, partially offset by higher production costs. Equity income was up slightly to $43.9 million, as improvements at ClarkDietrich were offset by lower contributions from WAVE.

Sustainable Energy Solutions’ net sales totaled $30.8 million, up 21%, or $5.3 million, from the comparable prior year quarter due to higher volume. Adjusted EBIT was a loss of $1.4 million, favorable by $1.2 million compared to the prior year quarter’s loss, on higher volume, partially offset by higher production costs.

Recent Developments

  • On June 2, 2022, the Company acquired Level5® Tools, LLC, a leading provider of drywall tools and related accessories. The net cash purchase price was approximately $56.1 million, with a potential earnout of up to $25.0 million based on performance through 2024.
  • On August 3, 2022, the Company sold its 50% interest in ArtiFlex to the unaffiliated joint venture member for approximately $42.1 million, after closing adjustments. The sale included real estate in Wooster, Ohio, owned by Worthington and leased to ArtiFlex. As a result of the transaction, we recorded a pre-tax loss of approximately $15.8 million in equity income during the quarter.
  • On September 28, 2022, Worthington’s Board of Directors declared a quarterly dividend of $0.31 per share payable on December 29, 2022 to shareholders of record on December 15, 2022.

Planned Separation of Steel Processing

In a separate press release issued today, Worthington announced that its Board of Directors approved a plan to pursue a separation of the Company’s Steel Processing business. The planned separation, which is expected to be leverage neutral and tax-free to Worthington shareholders, will result in two independent, publicly traded companies with enhanced capabilities to serve their respective customers and accelerate value creation.

  • The post-separation New Worthington is positioned with premier brands in fast-growing, attractive end markets in Consumer Products, Building Products and Sustainable Energy Solutions.
  • The post-separation Steel Processing business will be a best-in-class, value-added steel processor with a unique capability set, sophisticated supply chain and pricing solutions and expanded product offerings in electrical steel laminations and laser welding solutions.


“Most of our businesses are holding up well despite increased market volatility and a murky economic outlook. Our teams are ready to respond to market demands, up or down, as changes occur,” Rose said. “In addition, we are very excited to announce our plan to separate our Steel Processing business to create two market leading companies with a proud shared history and values. The separation represents a major milestone for our company, and I am confident that this move will position both businesses to capitalize on focused growth strategies to better serve their customers and unlock significant shareholder value.”

For the full first quarter results, click here.

About Worthington Industries

Worthington Industries (NYSE:WOR) is a leading industrial manufacturing company pursuing its vision to be the transformative partner to its customers, a positive force for its communities and earn exceptional returns for its shareholders. For over six decades, the Company has been delivering innovative solutions to customers spanning industries such as automotive, energy, retail and construction. Worthington is North America’s premier value-added steel processor and producer of laser welded solutions and electrical steel laminations that provide lightweighting, safety critical and emission reducing components to the mobility market. Through on-board fueling systems and gas containment solutions, Worthington serves the growing global hydrogen ecosystem. The Company’s focus on innovation and manufacturing expertise extends to market-leading consumer products in tools, outdoor living and celebrations categories, sold under brand names, Coleman®, Bernzomatic®, Balloon Time®, Mag Torch®, Well-X-Trol®, General®, Garden-Weasel®, Pactool International®, Hawkeye™ and Level5® ; as well as market leading building products, including water systems, heating & cooling solutions, architectural and acoustical grid ceilings and metal framing and accessories. Headquartered in Columbus, Ohio, Worthington operates 52 facilities in 15 states and 9 countries, sells into over 90 countries and employs approximately 9,500 people. Founded in 1955, the Company follows a people-first philosophy with earning money for its shareholders as its first corporate goal. Relentlessly finding new ways to drive progress and transform, Worthington is committed to providing better solutions for customers and bettering the communities where it operates by reducing waste, supporting community-based non-profits and developing the next generations of makers.


Sonya L. Higginbotham – Vice President, Corporate Communications & Brand Management – – (614) 438-7391

Source: Worthington Industries, Inc.