UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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(Address of Principal Executive Offices) |
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Registrant’s Telephone Number, Including Area Code: |
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
Worthington Enterprises, Inc. (the “Registrant”) conducted a conference call on December 20, 2023, beginning at approximately 9:00 a.m., Eastern Time, to discuss the Registrant’s unaudited financial results for the second quarter of fiscal 2024 ended November 30, 2023. Additionally, the Registrant addressed certain issues related to the outlook for the Registrant and its subsidiaries and their respective markets for the coming months. A copy of the transcript of the conference call is furnished as Exhibit 99.1 to this Current Report on Form 8-K (this “Form 8-K”).
The information contained in this Item 2.02 and in Exhibit 99.1 is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, unless the Registrant specifically states that the information is to be considered “filed” under the Exchange Act or incorporates the information by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended.
In the conference call, the Registrant discussed financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) as well as non-GAAP financial measures to provide investors with additional information that the Registrant believes allows for increased comparability of the performance of the Registrant’s ongoing operations from period to period. Specifically, the Registrant referred to earnings before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, each on a consolidated basis, for the Registrant's trailing twelve months (“TTM”) ended November 30, 2023 and August 31, 2023. EBITDA and adjusted EBITDA are non-GAAP financial measures and are used by management as measures of operating performance. EBITDA is calculated by adding or subtracting, as appropriate, interest expense, net, income tax expense and depreciation and amortization to/from net earnings attributable to controlling interest. Adjusted EBITDA is calculated by adding or subtracting, as appropriate, to/from EBITDA certain items that the Registrant believes are not necessarily indicative of the Registrant's operating performance, such those listed in the Non-GAAP Footnotes section below. The table below provides a reconciliation from net earnings attributable to controlling interest (the most comparable GAAP financial measure) to the non-GAAP financial measures, EBITDA and adjusted EBITDA, for the TTM ended November 30, 2023 and August 31, 2023.
Additionally, adjusted EBITDA for the TTM ended November 30, 2023 and August 31, 2023 is adjusted further to reflect the results of the Registrant, on a pro forma basis, to illustrate the estimated effects of the separation of Worthington Steel, Inc. from the combined company prior to December 1, 2023 (“the Separation”). This non-GAAP financial information, which the Registrant refers to as pro forma adjusted EBITDA, assumes the Separation occurred on June 1, 2022, the first day of the Registrant's fiscal 2023. Beginning in the third quarter of fiscal 2024, historical results will be restated to reflect the operations of Worthington Steel as a discontinued operation in periods prior the December 1, 2023 Separation. For further information on this pro forma presentation, refer to the Use of Non-GAAP Measures and Definitions schedules included in Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on December 19, 2023.
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TTM |
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TTM |
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November 30, |
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August 31, |
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(In thousands) |
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2023 |
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2023 |
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Net earnings attributable to controlling interest (1) |
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$ |
296,638 |
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$ |
288,552 |
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Interest expense, net |
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15,801 |
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21,244 |
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Income tax expense |
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88,544 |
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85,477 |
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Depreciation and amortization |
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112,777 |
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113,124 |
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EBITDA |
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513,760 |
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508,397 |
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Incremental expense related to (true-up of) Level5 earnout accrual (2) |
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(1,050 |
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(525 |
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Impairment of long-lived assets (1)(3) |
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3,168 |
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3,168 |
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Restructuring and other expense (income), net (1)(4) |
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816 |
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(1,621 |
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Separation costs (5) |
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42,789 |
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30,083 |
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Loss on extinguishment of debt (6) |
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1,534 |
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1,534 |
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Loss on sale of investment in ArtiFlex (7) |
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300 |
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300 |
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Gain on sale of assets in equity income (9) |
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(2,780 |
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- |
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Sale-leaseback gain in equity income (8) |
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(2,063 |
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(2,063 |
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Adjusted EBITDA |
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$ |
556,474 |
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$ |
539,273 |
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Pro forma information (giving effect to the Separation) |
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Adjusted EBITDA |
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$ |
556,474 |
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$ |
539,273 |
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Removal of Worthington Steel, Inc. |
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(253,163 |
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(230,452 |
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Shared overhead reallocation (10) |
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(31,733 |
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(30,266 |
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Operational adjustments (11) |
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(3,368 |
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(3,468 |
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Stock-based compensation (12) |
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12,092 |
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11,684 |
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Pro forma adjusted EBITDA |
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$ |
280,302 |
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$ |
286,771 |
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Consolidated net sales |
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$ |
4,612,360 |
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4,700,983 |
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Removal of Worthington Steel, Inc. |
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(3,287,063 |
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(3,340,355 |
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Pro forma net sales |
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$ |
1,325,297 |
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$ |
1,360,628 |
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Pro forma adjusted EBITDA margin |
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21 |
% |
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21 |
% |
Non-GAAP Footnotes:
Pro Forma Footnotes:
In the conference call, the Registrant referred to free cash flow for the three months ended November 30, 2023. Free cash flow is a non-GAAP financial measure that management believes measures the Registrant's ability to generate cash beyond what is required for its business operations and capital expenditures. The following provides a reconciliation of net cash provided by operating activities (the most comparable GAAP financial measure) to free cash flow for the three-month period ended November 30, 2023.
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Second |
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Quarter |
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(In thousands) |
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2024 |
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Net cash provided by operating activities |
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$ |
134,990 |
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Investment in property, plant and equipment |
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(32,876 |
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Free cash flow |
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$ |
102,114 |
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In the conference call, the Registrant referred to the ratio of net debt to TTM adjusted EBITDA, which is a non-GAAP financial measure that is used by the Registrant as a measure of leverage. Net debt to adjusted EBITDA is calculated by subtracting cash and cash equivalents from net debt (defined as the aggregate of short-term borrowings, current maturities of long-term debt and long-term debt) and dividing the sum by adjusted EBITDA. The calculation of net debt to adjusted EBITDA for the twelve months ended November 30, 2023, along with a reconciliation of net cash provided by operating activities (the most comparable GAAP financial measure) to adjusted EBITDA for the same period, as mentioned in the conference call, is outlined below.
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Second |
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First |
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Fourth |
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Third |
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Quarter |
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Quarter |
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Quarter |
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Quarter |
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(In thousands) |
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2024 |
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2024 |
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2023 |
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2023 |
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Net cash provided by operating activities: |
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$ |
134,990 |
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$ |
59,696 |
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$ |
229,234 |
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$ |
182,152 |
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Adjustments: |
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Changes in assets and liabilities, net of impact of acquisitions |
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(74,895 |
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79,860 |
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(60,582 |
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(78,197 |
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Interest expense, net |
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2,169 |
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3,083 |
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4,514 |
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6,035 |
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Income tax expense |
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7,198 |
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28,777 |
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40,514 |
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12,055 |
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Impairment of long-lived assets |
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- |
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(1,401 |
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(1,800 |
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(484 |
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Benefit from (provision for) deferred income taxes |
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(1,968 |
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5,453 |
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(4,670 |
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5,525 |
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Loss on extinguishment of debt |
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- |
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(1,534 |
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- |
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- |
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Bad debt (expense) benefit |
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(345 |
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799 |
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1,678 |
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(2,346 |
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Equity in net income of unconsolidated affiliates, net of distributions |
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4,129 |
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(10,225 |
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4,545 |
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(23,218 |
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Net gain (loss) on sale of assets |
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439 |
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(105 |
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(530 |
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(46 |
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Stock-based compensation |
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(6,175 |
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(4,516 |
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(5,420 |
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(4,975 |
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Less: noncontrolling interest |
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(3,865 |
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(3,596 |
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(4,260 |
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(3,933 |
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EBITDA (1) |
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$ |
61,677 |
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$ |
156,291 |
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$ |
203,223 |
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$ |
92,568 |
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Adjustments: |
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Incremental expense related to (true-up of) Level5 earnout |
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- |
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- |
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- |
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(1,050 |
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Impairment of long-lived assets (1) |
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- |
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884 |
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1,800 |
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484 |
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Restructuring and other expense (income), net (1) |
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6 |
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- |
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(13 |
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824 |
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Separation costs |
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21,952 |
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6,035 |
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8,455 |
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6,347 |
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Loss on extinguishment of debt |
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1,534 |
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- |
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- |
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Loss on sale of investment in ArtiFlex |
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- |
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- |
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- |
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300 |
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Gain on sale of assets in equity income |
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(2,780 |
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- |
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- |
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- |
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Sale-leaseback gain in equity income |
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- |
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- |
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(2,063 |
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- |
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Adjusted EBITDA (1) |
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$ |
80,855 |
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$ |
164,744 |
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$ |
211,402 |
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$ |
99,473 |
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TTM adjusted EBITDA (1) |
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$ |
556,474 |
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November 30, |
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(In thousands) |
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2023 |
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Short-term borrowings |
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$ |
175,000 |
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Current maturities of long-term debt |
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150,269 |
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Long-term debt |
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298,549 |
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Total debt |
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$ |
623,818 |
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Less: cash and cash equivalents |
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(430,906 |
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Net debt |
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$ |
192,912 |
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TTM adjusted EBITDA |
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$ |
556,474 |
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Net debt to TTM adjusted EBITDA |
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0.35 |
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Additional non-GAAP financial measures referred to by the Registrant on the conference call, including reconciliations to the most comparable GAAP financial measures, are included in Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on December 19, 2023. Such Exhibit 99.1 includes a copy of the Registrant’s news release issued on December 19, 2023 (the “Financial News Release”) reporting results for the three-month period ended November 30, 2023 (the Registrant’s fiscal 2024 second quarter). The Financial News Release was made available on the Registrant’s website throughout the conference call and will remain available on the Registrant’s website for at least one year.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits: The following exhibits are included with this Form 8‑K:
Exhibit No. |
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Description |
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99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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WORTHINGTON ENTERPRISES, INC. |
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Date: |
December 22, 2023 |
By: |
/s/Patrick J. Kennedy |
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Patrick J. Kennedy, Vice President - |