Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2025
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 001-08399
WORTHINGTON ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Ohio
31-1189815
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
200 West Old Wilson Bridge Road, Columbus, Ohio
43085
(Address of principal executive offices)
(Zip Code)
(614) 438-3210
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares, Without Par Value
WOR
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
On April 4, 2025, the number of common shares, without par value, of the registrant issued and outstanding was 49,917,226.
TABLE OF CONTENTS
Commonly Used or Defined Terms
ii
Cautionary Note Regarding Forward-Looking Statements
iii
Use of Non-GAAP Financial Measures and Definitions
1
Part I. Financial Information
Item 1.
Financial Statements
Consolidated Balance Sheets – February 28, 2025 and May 31, 2024
4
Consolidated Statements of Earnings – Three and Nine Months Ended February 28, 2025 and February 29, 2024
5
Consolidated Statements of Comprehensive Income – Three and Nine Months Ended February 28, 2025 and February 29, 2024
6
Consolidated Statements of Cash Flows – Three and Nine Months Ended February 28, 2025 and February 29, 2024
7
Condensed Notes to Consolidated Financial Statements (Unaudited)
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
25
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
36
Item 4.
Controls and Procedures
Part II. Other Information
Legal Proceedings
37
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
38
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
Signatures
39
i
COMMONLY USED OR DEFINED TERMS
References in this Form 10-Q to “we,” “our,” “us” or the “Company” are collectively to Worthington Enterprises and its consolidated subsidiaries. In addition, the following terms, when used in this Form 10-Q, have the meanings set forth below:
Term
Definition
ABI
Architecture Billing Index
AOCI
Accumulated other comprehensive income (loss)
ASU
Accounting Standards Update
Board
Board of Directors of Worthington Enterprises, Inc.
CARES Act
Coronavirus Aid, Relief and Economic Security Act
CEO
Chief Executive Officer
ClarkDietrich
Clarkwestern Dietrich Building Systems LLC
CODM
Chief Operating Decision Maker
common shares
The common shares, no par value, of Worthington Enterprises
COVID-19
The novel coronavirus disease first known to originate in December 2019
CPI
U.S. Core Consumer Price Index
Credit Facility
Our $500,000,000 unsecured revolving credit facility with a group of lenders
Current year period
The nine months ended February 28, 2025
Current year quarter
The three months ended February 28, 2025
Distribution
The pro-rata distribution of all outstanding shares of Worthington Steel whereby each holder of record of Worthington Enterprises common shares received one common share of Worthington Steel for every one common share of Worthington Enterprises held as of the Record Date.
DMI
Dodge Momentum Index
EBIT
Earnings before interest and taxes
EPS
Earnings per common share
equity income
Equity in net income of unconsolidated affiliates
ETR
Effective income tax rate
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
Form 10-Q
This Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2025
fiscal 2025
Our fiscal year ended May 31, 2025
fiscal 2024
Our fiscal year ended May 31, 2024
third quarter of fiscal 2025
Our fiscal quarter ended February 28, 2025
third quarter of fiscal 2024
Our fiscal quarter ended February 29, 2024
GAAP
U.S. generally accepted accounting principles
GDP
U.S. gross domestic product
Halo
WH Products, LLC
Hexagon
Hexagon Composites ASA
HMI
National Association of Home Builders/Wells Fargo Housing Market Index
LIRA
Leading Indicator of Remodeling Activity
MD&A
NYSE
N.M.
Not meaningful
OCI
Other comprehensive income (loss)
Prior year period
The nine months ended February 29, 2024
Prior year quarter
The three months ended February 29, 2024
PSLRA
Private Securities Litigation Reform Act of 1995, as amended
Ragasco
Ragasco AS
SEC
Securities and Exchange Commission
Separation
The separation of our former steel processing business, effective December 1, 2023
SG&A
Selling, general and administrative expenses
SOFR
Secured Overnight Financing Rate
U.S.
United States of America
WAVE
Worthington Armstrong Venture
Workhorse
Taxi Workhorse Holdings, LLC
Worthington Enterprises
Worthington Enterprises, Inc. (formerly known as Worthington Industries, Inc.)
Worthington Steel
Worthington Steel, Inc.
2024 Form 10-K
Our Annual Report on Form 10-K for fiscal 2024 as filed with the SEC on July 30, 2024
2024 Notes
The senior unsecured notes that we issued on August 10, 2012, in the principal amount of $150,000,000, which bore interest at a rate of 4.60%, were scheduled to mature on August 10, 2024, and were paid in full on December 6, 2023.
2026 Notes
The senior unsecured notes that we issued on April 15, 2014, in the principal amount of $250,000,000, which bore interest at a rate of 4.55%, were scheduled to mature on April 15, 2026, and were paid in full on July 28, 2023.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Selected statements contained in this Form 10-Q, including, without limitation, in MD&A and in “Note E – Contingent Liabilities and Commitments,” constitute “forward-looking statements,” as that term is used in the PSLRA. We wish to take advantage of the safe harbor provisions included in the PSLRA. Forward-looking statements reflect our current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “should,” “would,” “intend,” “plan,” “will,” “likely,” “estimate,” “project,” “position,” “strategy,” “target,” “aim,” “seek,” “foresee,” and similar words or phrases. These forward-looking statements include, without limitation, statements relating to:
Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow:
We note these risk factors for investors as contemplated by the PSLRA. Forward-looking statements should be construed in the light of such risks. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. We do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
iv
USE OF NON-GAAP FINANCIAL MEASURES AND DEFINITIONS
(In thousands, except per common share amounts)
NON-GAAP FINANCIAL MEASURES. This Form 10-Q includes certain financial measures that are not calculated and presented in accordance with GAAP. Non-GAAP financial measures typically exclude items that management believes are not reflective of, and thus should not be included when evaluating the performance of our ongoing operations. Management uses these non-GAAP financial measures to evaluate ongoing performance, engage in financial and operational planning, and determine incentive compensation. Management believes these non-GAAP financial measures provide useful supplemental information regarding the performance of our ongoing operations and should not be considered as an alternative to the comparable GAAP financial measure. Additionally, management believes these non-GAAP financial measures allow for meaningful comparisons and analysis of trends in our business and enables investors to evaluate our operations and future prospects in the same manner as management.
The following provides an explanation of each non-GAAP financial measure presented in this Form 10-Q:
Adjusted operating income (loss) is defined as operating income (loss) excluding the items listed below, to the extent naturally included in operating income (loss).
Adjusted diluted EPS from continuing operations is defined as adjusted net earnings from continuing operations divided by diluted weighted-average shares outstanding for the applicable period.
Adjusted EBITDA from continuing operations is the measure by which we evaluate segment performance and our overall profitability. EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA from continuing operations excludes additional items including, but not limited to, those listed below, as well as other items that management believes are not reflective of, and thus should not be included when evaluating the performance of our ongoing operations. Adjusted EBITDA from continuing operations also excludes stock-based compensation due to its non-cash nature, which is consistent with how management assesses operating performance and determines incentive compensation. At the segment level, adjusted EBITDA from continuing operations includes expense allocations for centralized corporate back-office functions that exist to support the day-to-day business operations. Public company and other governance costs are held at the corporate level within the unallocated corporate and other category.
Adjusted EBITDA from continuing operations margin is calculated by dividing adjusted EBITDA from continuing operations by net sales.
EXCLUSIONS FROM NON-GAAP FINANCIAL MEASURES
Management believes it is useful to exclude the following items from its non-GAAP financial measures for its own and investors’ assessment of the business for the reasons identified below. Additionally, management may exclude other items from non-GAAP financial measures that do not occur in the ordinary course of our ongoing business operations and note them in the reconciliation from net earnings before from continuing operations to the non-GAAP financial measure adjusted EBITDA from continuing operations.
Consolidated Results – Selected Non-GAAP Adjusted Results
Three Months Ended February 28, 2025
Earnings
Net Earnings
Diluted
Before
Income
from
EPS -
Effective
Operating
Tax
Continuing
Taxes
Expense
Operations (1)
Rate (1)
$
20,868
52,579
13,240
39,663
0.79
25.0
%
Restructuring and other expense, net
5,374
295
5,669
0.12
Non-GAAP
26,242
57,953
12,945
45,332
0.91
22.2
Three Months Ended February 29, 2024
Operations
Rate
4,281
40,471
18,471
22,000
0.44
45.6
698
(166
)
532
0.01
Separation costs
2,999
(712
2,287
0.05
Pension settlement charge
-
8,103
(1,929
6,174
One-time tax effects of Separation
9,197
0.18
7,978
52,271
12,081
40,190
0.80
23.1
Nine Months Ended February 28, 2025
19,690
120,478
29,122
92,176
1.84
24.0
9,152
(633
8,519
0.17
28,842
129,630
29,755
100,695
2.01
22.8
Nine Months Ended February 29, 2024
(Loss)
(17,411
100,804
34,041
66,763
1.33
33.8
Corporate costs eliminated at Separation
19,343
(4,606
14,737
0.30
704
(168
536
12,465
(2,968
9,497
0.19
Loss on extinguishment of debt
1,534
(365
1,169
0.02
Gain on sale of assets in equity income
(2,780
662
(2,118
(0.04
15,101
140,173
34,218
105,955
2.11
24.4
2
Consolidated Results - Adjusted EBITDA from Continuing Operations
Three Months Ended
Nine Months Ended
February 28,
February 29,
2025
2024
Net earnings from continuing operations (GAAP)
39,339
91,356
Plus: net loss attributable to noncontrolling interest
324
820
Net earnings from continuing operations attributable to controlling interest
Interest expense, net
628
50
2,150
1,596
Income tax expense
EBIT (1)
53,531
40,521
123,448
102,400
Restructuring and other expense, net (2)
Adjusted EBIT (1)
58,905
52,321
132,600
141,769
Depreciation and amortization
11,950
11,949
35,707
36,238
Stock-based compensation (3)
2,924
2,601
10,122
9,822
Adjusted EBITDA from continuing operations (non-GAAP)
73,779
66,871
178,429
187,829
Net earnings from continuing operations margin (GAAP)
12.9
6.9
10.9
7.2
Adjusted EBITDA from continuing operations margin (non-GAAP)
24.2
21.1
21.3
20.3
3
Item 1. – Financial Statements
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
May 31,
Assets
Current assets:
Cash and cash equivalents
222,844
244,225
Receivables, less allowances of $3,651 and $343, respectively
202,848
199,798
Inventories:
Raw materials
78,186
66,040
Work in process
10,025
11,668
Finished products
77,124
86,907
Total inventories
165,335
164,615
Income taxes receivable
3,543
17,319
Prepaid expenses and other current assets
39,394
47,936
Total current assets
633,964
673,893
Investments in unconsolidated affiliates
131,800
144,863
Operating lease assets
21,757
18,667
Goodwill
368,047
331,595
Other intangible assets, net of accumulated amortization of $92,675 and $83,242, respectively
239,852
221,071
Other assets
23,779
21,342
Property, plant and equipment:
Land
8,613
8,657
Buildings and improvements
130,230
123,478
Machinery and equipment
363,762
321,836
Construction in progress
31,048
24,504
Total property, plant and equipment
533,653
478,475
Less: accumulated depreciation
270,848
251,269
Total property, plant and equipment, net
262,805
227,206
Total assets
1,682,004
1,638,637
Liabilities and equity
Current liabilities:
Accounts payable
83,905
91,605
Accrued compensation, contributions to employee benefit plans and related taxes
37,329
41,974
Dividends payable
9,102
9,038
Other accrued items
41,578
29,061
Current operating lease liabilities
5,644
6,228
Income taxes payable
2,830
470
Total current liabilities
180,388
178,376
Other liabilities
59,301
62,243
Distributions in excess of investment in unconsolidated affiliate
110,402
111,905
Long-term debt
293,921
298,133
Noncurrent operating lease liabilities
16,595
12,818
Deferred income taxes, net
82,876
84,150
Total liabilities
743,483
747,625
Shareholders’ equity - controlling interest
937,208
888,879
Noncontrolling interests
1,313
2,133
Total equity
938,521
891,012
Total liabilities and equity
See condensed notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF EARNINGS
Net sales
304,524
316,755
835,878
926,902
Cost of goods sold
215,277
243,643
610,077
720,882
Gross profit
89,247
73,112
225,801
206,020
Selling, general and administrative expense
63,005
65,134
196,959
210,262
Operating income (loss)
Other income (expense):
Miscellaneous income (expense), net
258
(6,995
809
(5,983
(1,534
(628
(50
(2,150
(1,596
32,081
43,235
102,129
127,328
Earnings before income taxes
Net earnings from continuing operations
Net earnings from discontinued operations
83,106
Net earnings
149,869
Net earnings (loss) attributable to noncontrolling interests
(324
(820
7,460
Net earnings attributable to controlling interest
142,409
Amounts attributable to controlling interest:
75,646
Earnings per share - basic:
Continuing operations
0.45
1.86
1.36
Discontinued operations
1.54
Consolidated
2.90
Earnings per share - diluted:
1.50
2.83
Weighted average common shares outstanding - basic
49,377
49,315
49,443
49,113
Weighted average common shares outstanding - diluted
49,981
50,417
50,171
50,271
Cash dividends declared per common share
0.16
0.51
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Other comprehensive income (loss), net of tax
Foreign currency translation
(2,704
(700
(5,439
1,643
Pension liability adjustment
161
6,805
167
6,802
Cash flow hedges
548
218
441
6,916
(1,995
6,323
(4,831
15,361
Comprehensive income
37,344
28,323
86,525
165,230
Comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income attributable to controlling interest
37,668
87,345
157,770
CONSOLIDATED STATEMENTS OF CASH FLOWS
Operating activities:
Adjustments to reconcile net earnings to net cash provided by operating activities:
68,281
Impairment of long-lived assets
1,401
Provision for (benefit from) deferred income taxes
(8,016
4,329
(10,871
843
Bad debt expense (income)
1,128
24
3,189
(430
Equity in net income of unconsolidated affiliates, net of distributions
3,089
(2,926
10,810
3,169
Net gain on sale of assets
(21
(14
(547
(348
Stock-based compensation
2,602
12,787
13,294
Changes in assets and liabilities, net of impact of acquisitions:
Receivables
(18,553
(18,124
(9,023
49,737
Inventories
14,128
16,176
15,558
54,999
46
15,561
(12,600
(59,534
Accrued compensation and employee benefits
8,838
7,190
(4,628
(2,030
Other operating items, net
2,279
(8,646
15,592
(35,979
Net cash provided by operating activities
57,131
50,121
147,330
244,806
Investing activities:
Investment in property, plant and equipment
(12,704
(10,017
(37,494
(72,191
Acquisitions, net of cash acquired
(8,707
(88,156
(29,721
Proceeds from sale of assets, net of selling costs
59
35
13,444
837
Investment in non-marketable equity securities
(833
(75
(2,873
(1,614
Investment in note receivable
100
(14,900
Excess distributions from unconsolidated affiliate
1,085
Net cash used by investing activities
(13,478
(18,664
(115,079
(116,504
Financing activities:
Dividends paid
(8,422
(15,849
(25,507
(48,907
Repurchase of common shares
(6,170
(21,052
Proceeds from issuance of common shares, net of tax withholdings
(22
(1,023
(7,073
(15,360
Net proceeds from short-term borrowings (1)
172,187
Distribution to Worthington Steel at Separation
(218,048
Principal payments on long-term obligations
(150,133
(393,890
Dividend from Worthington Steel at Separation
150,000
Payments to noncontrolling interests
(1,920
Net cash used by financing activities
(14,614
(235,053
(53,632
(355,938
Increase (decrease) in cash and cash equivalents
29,039
(203,596
(21,381
(227,636
Cash and cash equivalents at beginning of period
193,805
430,906
454,946
Cash and cash equivalents at end of period (2)
227,310
CONDENSED Notes to Consolidated Financial Statements (UNAUDITED)
(In thousands, except common share and per common share amounts)
Note A – Basis of Presentation
Basis of Presentation
These interim unaudited consolidated financial statements include the accounts of Worthington Enterprises and its consolidated subsidiaries. Significant intercompany accounts and transactions have been eliminated.
We own an 80% controlling interest in Halo, which we acquired on February 1, 2024. Halo is consolidated with the equity owned by the other joint venture members shown as “noncontrolling interests” in our consolidated balance sheets, and the other joint venture members’ portions of net earnings and OCI are shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated statements of earnings and consolidated statements of comprehensive income, respectively. Net earnings and total equity in periods prior to the Separation include the minority interest of Worthington Steel.
Investments in unconsolidated affiliates that we do not control are accounted for using the equity method with our proportionate share of income or loss recognized within equity income in our consolidated statements of earnings. See further discussion of our unconsolidated affiliates in “Note C – Investments in Unconsolidated Affiliates.”
These interim unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, which are of a normal and recurring nature except those which have been disclosed elsewhere in this Form 10-Q, necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. Operating results for the third quarter of fiscal 2025 are not necessarily indicative of the results that may be expected for the full fiscal year. For further information, refer to the consolidated financial statements and notes thereto included in the 2024 Form 10-K.
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
Separation of the Steel Processing Business
On December 1, 2023, we completed the spin-off of our former steel processing business into an independent publicly traded company, Worthington Steel, on a tax-free basis. Accordingly, the operating results and financial position, of the former steel processing business, except for the minority partner’s portion of noncontrolling interest and accumulated other comprehensive income, are reported as discontinued operations for all periods presented, as discussed in further detail in “Note B – Discontinued Operations.” All discussion within this Form 10-Q, including amounts, percentages and disclosures for all periods presented, reflect only our continuing operations unless otherwise noted.
In connection with the Separation, we entered into several agreements with Worthington Steel that govern our ongoing relationships, including a Trademark License Agreement, both a short and long-term Transition Services Agreement, and a Steel Supply and Services Agreement. Transactions governed by these agreements are considered to be related party transactions.
Pursuant to the Steel Supply and Services Agreement, Worthington Steel manufactures and supplies to us, at reasonable market rates, certain flat rolled steel products, and will provide us with certain related support services such as design, engineering/technical services, price risk management, scrap management, steel purchasing, supply chain optimization and product rework services, and other services at our request that are ancillary to the supply of the flat rolled steel products. Purchases from Worthington Steel under the Steel Supply and Services Agreement totaled $27,536 and $78,991 for the three and nine months ended February 28, 2025, respectively, and $20,274 for the three and nine months ended February 29, 2024. Accounts payable related to these purchases were $6,371 and $9,637 as of February 28, 2025 and May 31, 2024, respectively.
Activity under all other agreements between us and Worthington Steel related to the Separation was immaterial for the periods presented.
Revenue Recognition
We recognize all revenue at the point in time the performance obligation is satisfied and control of the product is transferred to the customer upon shipment or delivery.
We review our receivables on an ongoing basis to ensure that they are properly valued and collectible. The allowance for doubtful accounts is used to record the estimated risk of loss related to our customers’ inability to pay us. This allowance is maintained at a level that we consider appropriate based on factors that affect collectability, such as the financial health of our customers, historical trends of charge-offs and recoveries and current economic and market conditions. Our allowance for doubtful accounts increased from $343 at May 31, 2024, to $3,651 at February 28, 2025, primarily due to bankruptcy filings by two of our Consumer Products customers.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. We are currently evaluating the impact that the adoption of ASU 2024-03 will have on our related disclosures.
In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified that ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.
Note B – Discontinued Operations
The following table summarizes the financial results from the discontinued operations of Worthington Steel for the nine months ended February 29, 2024. There were no discontinued operations for the three months ended February 29, 2024.
1,670,027
1,481,731
188,296
74,908
18,521
Operating income
93,466
Miscellaneous income, net
1,016
(3,706
Equity in net income of unconsolidated affiliate
12,735
103,511
20,405
Net earnings attributable to noncontrolling interest
9
As permitted under GAAP, the cash flows of Worthington Steel have not been segregated in our consolidated statements of cash flows in the periods prior to the Separation. Accordingly, our consolidated statements of cash flows in periods prior to the Separation do not agree to the respective balance sheet changes, which reflect the reclassification of Worthington Steel as a discontinued operation.
The following table summarizes significant non-cash operating items and capital expenditures of discontinued operations included in the consolidated statement of cash flows for the nine months ended February 29, 2024. There were no discontinued operations for the three months ended February 29, 2024.
Significant non-cash operating items:
32,043
Equity in income of unconsolidated affiliate, net of distributions
(12,734
3,472
Significant investing activities:
(33,457
(21,013
Significant financing activities:
Net proceeds from short-term borrowings
Note C – Investments in Unconsolidated Affiliates
Investments in joint ventures that we do not control, either through majority ownership or otherwise, are unconsolidated and accounted for using the equity method. At February 28, 2025, we held investments in the following unconsolidated joint ventures: ClarkDietrich (25%); Sustainable Energy Solutions (49%); WAVE (50%); and Workhorse (20%).
We received distributions from unconsolidated affiliates totaling $112,939 during the nine months ended February 28, 2025. We have received cumulative distributions from WAVE in excess of our investment balance, which resulted in a negative asset balance of $110,402 and $111,905 at February 28, 2025 and May 31, 2024, respectively. In accordance with the applicable accounting guidance, we have reclassified the negative balances to distributions in excess of investment in unconsolidated affiliate within our consolidated balance sheets. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheets. If it becomes probable that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will immediately recognize any balance classified as a liability as income.
We use the cumulative earnings approach to determine the cash flow presentation of distributions from our unconsolidated joint ventures. Distributions received are included in our consolidated statements of cash flows as operating activities unless the cumulative distributions exceed our share of the cumulative equity in the net earnings of the joint venture. In such cases, the excess distributions are considered returns of investment and are classified as investing activities in our consolidated statements of cash flows. No distributions exceeded our share in any of our unconsolidated joint ventures during the third quarter of fiscal 2025.
10
The following table presents condensed financial information for our unconsolidated affiliates for the three and nine months ended February 28, 2025 and February 29, 2024.
118,357
117,248
358,889
353,034
54,681
55,998
168,111
164,140
1,436
853
3,797
3,456
4,032
4,228
12,676
12,953
70
52
267
179
50,531
51,706
155,736
151,202
271,184
316,269
863,486
985,302
36,942
70,167
108,521
190,949
3,997
3,978
11,804
11,266
Interest expense (income), net
151
(100
168
312
489
898
977
37,944
71,164
111,840
193,069
Other (1)
70,258
64,421
246,087
241,656
(8,129
212
(7,945
21,693
1,972
2,105
7,535
7,015
243
564
992
2,099
Income tax expense (benefit)
(24
147
744
Net earnings (loss)
(8,432
(2,888
(7,665
16,477
——————————————————
11
Note D – Restructuring and Other Expense, Net
We consider restructuring activities to be programs whereby we fundamentally change our operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or making other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions).
A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense, net financial statement caption in our consolidated statement of earnings for the nine months ended February 28, 2025, is summarized below:
Balance at
May 31, 2024
Payments
February 28, 2025
Early retirement and severance
188
1,407
(1,193
402
Other restructuring charges
449
(449
1,856
(1,642
Net loss on sale of assets
95
Stock-based compensation (1)
2,665
Change in fair value of Ragasco earnout (2)
4,536
The total liability associated with our restructuring activities as of February 28, 2025 is expected to be paid in the next 12 months.
Note E – Contingent Liabilities and Commitments
We are defendants in certain legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect our consolidated financial position or future results of operations. We also believe that environmental issues will not have a material effect on our capital expenditures, consolidated financial position or future results of operations.
Note F – Guarantees
We do not have guarantees that we believe are reasonably likely to have a material current or future effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
At February 28, 2025, we also had in place $9,500 of outstanding stand-by letters of credit issued to third-party service providers. The fair value of these guaranteed instruments, based on premiums paid, was not material and no amounts were drawn against them at February 28, 2025.
Note G – Debt
Our multi-year revolving Credit Facility is scheduled to mature on September 27, 2028. Borrowings under the Credit Facility have maturities of up to one year. We have the option to borrow at rates equal to an applicable margin over the overnight bank funding rate, the prime rate of PNC Bank, National Association or the adjusted daily simple SOFR. The applicable margin is determined by our total leverage ratio. There were no borrowings outstanding under the Credit Facility at February 28, 2025 or May 31, 2024, leaving $500,000 available for use.
12
Note H – Other Comprehensive Income (Loss)
The following table summarizes the tax effects on each component of OCI for the periods presented:
Before-Tax
Net-of-Tax
(1,519
(1,185
(615
(85
154
8,927
(2,122
694
(146
(346
(818
(1,177
8,876
(2,553
(4,433
(1,006
1,555
88
16
(2,125
575
(134
9,140
(2,224
(3,842
(989
19,622
(4,261
Note I – Changes in Equity
The following tables summarize the changes in equity by component and in total for the periods presented:
Controlling Interest
Additional
Paid-in
AOCI,
Retained
Noncontrolling
Capital
Net of Tax
Subtotal
Interests
Total
Balance at May 31, 2024
299,033
454
589,392
24,253
(245
24,008
Other comprehensive income
484
Common shares issued, net of withholding tax
(3,158
Common shares in non-qualified plans
32
6,216
Repurchases and retirement of common shares
(884
(5,919
(6,803
Cash dividends declared
(8,550
Balance at August 31, 2024
301,239
938
599,176
901,353
1,888
903,241
28,260
(251
28,009
Other comprehensive loss
(3,320
(3,893
56
5,539
(1,212
(6,867
(8,079
(8,595
Balance at November 30, 2024
301,729
(2,382
611,974
911,321
1,637
912,958
33
2,890
(920
(5,250
(8,512
Balance at February 28, 2025
303,710
(4,377
637,875
13
Balance at May 31, 2023
290,799
(23,179
1,428,391
1,696,011
125,617
1,821,628
96,106
3,597
99,703
(5,408
(5,130
130
8,995
(16,081
Dividends to noncontrolling interests
(1,921
Balance at August 31, 2023
294,794
(28,587
1,508,416
1,774,623
127,293
1,901,916
24,302
3,865
28,167
14,446
(9,207
195
4,511
(16,061
Balance at November 30, 2023
290,293
(14,141
1,516,657
1,792,809
131,158
1,923,967
53
2,071
Acquisition of Halo
2,346
Separation of Worthington Steel
(717
(901,370
(902,087
(131,158
(1,033,245
(8,050
Balance at February 29, 2024
291,394
(8,535
629,237
912,096
914,442
The following table summarizes the changes in AOCI for the periods presented:
Foreign
Pension
Currency
Liability
Cash Flow
Translation
Adjustment
Hedges
(669
(441
1,564
OCI before reclassifications
207
(4,210
Reclassification adjustments to net earnings (1)
368
Income tax effect
(6,108
(274
2,005
(22,123
(1,730
674
60
14,893
16,508
Reclassification adjustments to net earnings (1)(2)
8,867
(5,753
3,114
10,874
(5,984
(5,607
(9,606
(912
1,983
14
On March 20, 2019, the Board authorized the repurchase of up to 6,600,000 common shares. On March 24, 2021, the Board authorized the repurchase of up to an additional 5,618,464 common shares, increasing the total number of common shares then authorized for repurchase to 10,000,000 (net of previously repurchased common shares). During the nine months ended February 28, 2025, we repurchased a total of 500,000 common shares under these authorizations leaving 5,565,000 common shares available for repurchase at February 28, 2025.
Common shares may be repurchased from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately-negotiated transactions.
Note J – Stock-Based Compensation
Non-Qualified Stock Options
During the nine months ended February 28, 2025, we granted non-qualified stock options covering a total of 54,200 common shares under our stock-based compensation plans. The weighted average exercise price of these non-qualified stock options was $44.38 per common share and was determined based on the closing market price of the underlying common shares at the respective grant date. The weighted average grant date fair value of these non-qualified stock options, based on the Black-Scholes option-pricing model, was $16.38 per common share, or $888 in total, and will be recognized on a straight-line basis over the three-year vesting period, net of any forfeitures. The weighted average fair value of stock options granted during the nine months ended February 28, 2025 was based on the following assumptions:
Dividend yield
1.34
Expected volatility
36.90
Risk-free interest rate
3.97
Expected term (years)
6.0
Due to the impact of the Separation on the comparability to the historical prices of the common shares, we are unable to use the historical volatility of the common shares to determine the expected volatility. Accordingly, we use a comparable peer group to determine the expected volatility of the common shares. The risk-free interest rate is based on the U.S. Treasury strip rate for the expected term of the non-qualified stock options. The expected term was developed using historical exercise experience.
Service-Based Restricted Common Shares
During the nine months ended February 28, 2025 we granted an aggregate of 291,295 service-based restricted common shares under our stock-based compensation plans, which generally cliff vest three years from the grant date. The weighted average grant date fair value of these restricted common shares, based on the weighted average closing price of the underlying common shares on the grant date, was $44.88 per share, or $13,073 in total, and will be recognized on a straight-line basis over the three-year vesting period, net of any forfeitures.
Performance Share Awards
Performance shares awarded under our stock-based compensation plans are earned based on the level of achievement with respect to a set of measurement criteria for corporate and business unit targets for the three-year periods ending May 31, 2025, 2026, and 2027.
These performance share awards will be paid, to the extent earned, in common shares in the fiscal quarter following the end of the applicable three-year performance period. The fair values of our performance shares are determined by the closing market prices of the underlying common shares at the respective grant dates of the performance shares and the pre-tax stock-based compensation expense is based on our periodic assessment of the probability of the targets being achieved and our estimate of the number of common shares that will ultimately be issued. The ultimate pre-tax stock-based compensation expense to be recognized over the three-year performance period on all tranches will vary based on our periodic assessment of the probability of the targets being achieved. During the nine months ended February 28, 2025, we granted performance share awards covering an aggregate of 42,100 common shares (at target levels). The calculated pre-tax stock-based compensation expense for these performance shares is $1,868 (at target levels). The ultimate pre-tax stock-based compensation expense to be recognized over the three-year performance period on all tranches will vary based on our periodic assessment of the probability of the targets being achieved.
15
Note K – Income Taxes
Income tax expense for the nine months ended February 28, 2025 and February 29, 2024 reflected estimated annual ETRs of 24.4% and 30.8%, respectively. Income tax expense in the prior year period was impacted by certain discrete tax items triggered by the Separation, which were primarily non-deductible transaction costs. Management is required to estimate the annual ETR based upon its forecast of annual pre-tax income for domestic and foreign operations. Our actual ETR for fiscal 2025 could be materially different from the forecasted rate as of February 28, 2025.
Note L – Earnings per Share
The following table sets forth the computation of basic and diluted EPS attributable to controlling interest for the periods presented:
Numerator (basic & diluted):
Denominator (shares in thousands):
Basic EPS from continuing operations - weighted average common shares
Effect of dilutive securities
604
1,102
728
1,158
Diluted EPS from continuing operations - weighted average common shares
Basic EPS from continuing operations
Diluted EPS from continuing operations
Stock options covering an aggregate of 94,521 and 54,686 common shares for the three months ended February 28, 2025 and February 29, 2024, respectively, and 104,608 and 61,141 for the nine months ended February 28, 2025 and February 29, 2024, respectively, have been excluded from the computation of diluted EPS because the effect would have been antidilutive for those periods.
Note M – Segment Operations
Our operating segments reflect the way in which internally-reported financial information is regularly reviewed by the CODM to analyze performance, make decisions and allocate resources. We have identified our CEO as our CODM. Our CODM evaluates segment performance on the basis of adjusted EBITDA from continuing operations, as described in the “Use of Non-GAAP Financial Measures and Definitions” section. Factors used to identify operating segments include the nature of the products provided by each business, the management reporting structure, similarity of economic characteristics and certain quantitative measures, as prescribed by GAAP. Our operations are organized under two operating segments: Consumer Products and Building Products. Our former Sustainable Energy Solutions operating segment is presented within Unallocated Corporate and Other in periods prior to its deconsolidation on May 29, 2024. In periods subsequent to the deconsolidation transaction, our retained 49% interest is accounted for under the equity method of accounting, as discussed in “Note C – Investments in Unconsolidated Affiliates.” Unallocated Corporate and Other also includes certain assets and liabilities (e.g., public debt) held at the corporate level as well as general corporate expenses that are not directly attributable to our business operations and are administrative in nature, such as public company and other governance-related costs that benefit the organization as a whole.
The following tables present summarized financial information for our reportable segments and Unallocated Corporate and Other for the periods indicated.
Unallocated
Consumer
Building
Reportable
Corporate and
Products
Segments
Other
139,714
164,810
Capital expenditures
8,775
3,413
12,188
516
12,704
4,277
6,526
10,803
1,147
579
4,795
Equity income (loss)
34,499
(2,418
Adjusted EBITDA from continuing operations
28,625
53,187
81,812
(8,033
133,181
148,190
281,371
35,384
4,806
3,952
8,758
1,259
10,017
3,960
5,984
9,944
84
614
43,813
(578
25,649
53,059
78,708
(11,837
374,057
461,821
19,508
11,470
30,978
6,516
37,494
12,872
19,392
32,264
3,443
1,382
7,770
105,438
(3,309
61,884
140,101
201,985
(23,556
369,923
465,421
835,344
91,558
10,533
16,209
26,742
13,098
39,840
12,065
17,910
29,975
6,263
Equity income
124,032
3,296
52,537
158,501
211,038
(23,209
The following table reconciles segment adjusted EBITDA from continuing operations to earnings before income taxes from continuing operations for the periods indicated.
17
Segment adjusted EBITDA from continuing operations
Reconciling items:
Unallocated Corporate and Other
(11,950
(11,949
(35,707
(36,238
(2,924
(2,601
(10,122
(9,822
(19,343
(5,374
(698
(9,152
(704
(2,999
(12,465
(8,103
2,780
Net loss attributable to noncontrolling interests
Earnings before income taxes from continuing operations
Total assets for each of our reportable segments at the dates indicated were as follows:
Consumer Products
588,872
557,826
Building Products
754,126
672,723
Total reportable segments
1,342,998
1,230,549
339,006
408,088
18
Note N – Acquisitions
On June 3, 2024, we acquired Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The total purchase price, after adjustment for final working capital, consisted of cash consideration of $101,424, of which $11,343 was on deposit at May 31, 2024, and contingent consideration in the form of an earnout agreement with an estimated acquisition date fair value of $7,139. During the three months ended February 28, 2025, the fair value of the earnout increased by $4,536, resulting in a charge to restructuring and other expense, net in our consolidated statement of earnings. At February 28, 2025, the total earnout liability was $11,230 and is expected to be settled in the fourth quarter of fiscal 2025. Ragasco operates as part of the Building Products operating segment and its results have been included in our consolidated statements of earnings since the date of acquisition. Pro forma results, including the acquired business since the beginning of fiscal 2023, would not be materially different from reported results.
The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. The purchase price also includes strategic and synergistic benefits (i.e., investment value) specific to us, which resulted in a purchase price in excess of the fair value of the identifiable net assets. This additional investment value resulted in goodwill, which is not expected to be deductible for income tax purposes.
The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. In connection with the acquisition of Ragasco, we identified and valued the following intangible assets:
Useful Life
Category
Amount
(Years)
Trade name
4,379
Technological know-how
14,659
Customer relationships
12,660
Total acquired identifiable intangible assets
31,698
The following table summarizes the consideration paid and the final fair value assigned to the assets and liabilities assumed at the acquisition date.
Measurement
Preliminary
Period
Final
Valuation
Adjustments
1,925
Accounts receivable
8,554
Inventory
16,403
Other current assets
990
Property, plant and equipment
27,325
8,834
Deferred income taxes
365
Intangible assets
32,840
(1,142
Total identifiable assets
97,236
96,094
(4,885
Current operating lease liability
(980
Accrued expenses
(6,344
Noncurrent operating lease liability
(7,886
(9,226
251
(8,975
Net identifiable assets
67,815
(891
66,924
40,748
891
41,639
Total purchase price
108,563
Less: Fair value of earnout
7,139
Cash purchase price
101,424
19
Note O – Derivative Financial Instruments and Hedging Activities
We primarily utilize derivative financial instruments to manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative financial instruments include interest rate risk, foreign currency exchange risk and commodity price risk. While certain of our derivative financial instruments are designated as hedging instruments, we also enter into derivative financial instruments that are designed to hedge a risk, but are not designated as hedging instruments and therefore do not qualify for hedge accounting. These derivative financial instruments are adjusted to current fair value through earnings at the end of each period.
Interest Rate Risk Management – We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.
Foreign Currency Exchange Rate Risk Management – We conduct business in several major international currencies and are, therefore, subject to risks associated with changing foreign currency exchange rates. We enter into various contracts that change in value as foreign currency exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable foreign currency exchange rate fluctuations. The translation of foreign currencies into U.S. dollars also subjects us to exposure related to fluctuating foreign currency exchange rates; however, derivative financial instruments are not used to manage this risk.
Commodity Price Risk Management – We are exposed to changes in the price of certain commodities, including steel, natural gas, copper, zinc, aluminum and other raw materials, and our utility requirements. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative financial instruments to manage the associated price risk.
We are exposed to counterparty credit risk on all of our derivative financial instruments. Accordingly, we have established and maintain strict counterparty credit guidelines. We have credit support agreements in place with certain counterparties to limit our credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. We do not have significant exposure to any one counterparty and management believes the risk of loss is remote and, in any event, would not be material.
Refer to “Note P – Fair Value Measurements” for additional information regarding the accounting treatment for our derivative financial instruments, as well as how fair value is determined. The following table summarizes the fair value of our derivative financial instruments and the respective lines in which they were recorded in the consolidated balance sheet at February 28, 2025 and May 31, 2024:
Fair Value of Assets
Fair Value of Liabilities
Balance
Sheet
Location
Derivatives designated as hedging instruments:
Commodity contracts
1,030
601
83
21
Foreign currency exchange contracts
74
104
Derivatives not designated as hedging instruments:
304
319
54
69
1,220
1,248
1,274
1,317
Total derivative financial instruments
1,334
920
1,348
1,421
The amounts in the table above reflect the fair value of our derivative financial instruments on a net basis where allowed under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been an increase in receivables with a corresponding increase in accounts payable of $583 and $391 at February 28, 2025 and May 31, 2024, respectively.
20
Cash Flow Hedges
We enter into derivative financial instruments to hedge our exposure to changes in cash flows attributable to interest rate and commodity price fluctuations associated with certain forecasted transactions. These derivative financial instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on each of these derivative financial instruments is reported as a component of OCI and reclassified into earnings in the same line associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings.
The following table summarizes the net notional positions of our cash flow hedges at February 28, 2025:
Notional
Maturity Date(s)
8,163
March 2025 - December 2025
2,485
The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from AOCI into net earnings for derivative financial instruments designated as cash flow hedges for the periods presented:
Location of
Gain (Loss)
Reclassified
Recognized
Reclassified from AOCI
from AOCI
in OCI
into Net Earnings
For the three months ended February 28, 2025:
1,039
219
Interest rate contracts
(74
965
271
For the three months ended February 29, 2024:
1,944
1,328
1,380
For the nine months ended February 28, 2025:
281
(523
155
(368
For the nine months ended February 29, 2024:
3,553
(921
(642
136
(11
(44
3,542
(1,471
The estimated amount of net gains recognized in AOCI at February 28, 2025, expected to be reclassified into net earnings within the succeeding 12 months is $1,002 (net of tax of $321). This amount was computed using the fair value of the cash flow hedges at February 28, 2025, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, 2025 and May 31, 2026.
Net Investment Hedges
We have designated our Euro-denominated debt held in the U.S. with an initial notional amount of €91,700 ($99,479) as a non-derivative net investment hedge of our foreign operations in Portugal. Accordingly, the foreign currency effects resulting from the remeasurement of this debt have been deferred in AOCI as an offset to the translation of our net investment in Portugal. A remeasurement gain of $1,842 and $4,335 was deferred in AOCI during the three and nine months ended February 28, 2025. There was no foreign currency gain (loss) recognized in AOCI for the non-derivative instruments designated as net investment hedges in the prior year period.
Economic (Non-designated) Hedges
We enter into foreign currency exchange contracts to manage our foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative financial instruments are adjusted to current market value at the end of each period through gain (loss) recognized in earnings.
The following table summarizes the net notional positions of our economic (non-designated) derivative financial instruments outstanding at February 28, 2025:
715
March 2025 - November 2025
53,598
The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments for the periods presented:
Recognized in Earnings for the
Location of Gain (Loss)
Recognized in Earnings
108
311
(531
(82
(423
229
479
(832
27
(3
506
(835
22
Note P – Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:
Recurring Fair Value Measurements
At February 28, 2025, our assets and liabilities measured at fair value on a recurring basis were as follows:
(Level 1)
(Level 2)
(Level 3)
Totals
Assets (1)
Derivative financial instruments
Liabilities (1)
Ragasco earnout liability (2)
11,230
12,578
At May 31, 2024, our assets and liabilities measured at fair value on a recurring basis were as follows:
23
Non-Recurring Fair Value Measurements
At February 28, 2025, there were no assets measured at fair value on a non-recurring basis on our consolidated balance sheet.
At May 31, 2024, our assets measured at fair value on a non-recurring basis were as follows:
Investment in note receivable (1)
5,000
Investment in unconsolidated affiliate (2)
31,367
36,367
The fair value of non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, income taxes receivable, other assets, accounts payable, accrued compensation, contributions to employee benefit plans and related taxes, other accrued items, income taxes payable and other liabilities approximate carrying value due to their short-term nature. The fair value of long-term debt, including current maturities, based upon models utilizing market observable (Level 2) inputs and credit risk, was $265,352 and $257,866 at February 28, 2025 and May 31, 2024, respectively. The carrying amount of long-term debt, including current maturities, was $293,921 and $298,133 at February 28, 2025 and May 31, 2024, respectively.
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise indicated, all Note references contained in this MD&A refer to the Condensed Notes to Consolidated Financial Statements included in “Part I – Item 1. – Financial Statements” of this Form 10-Q. All amounts are presented in millions except common share and per common share amounts.
Introduction
The following discussion and analysis of market and industry trends, business developments, and the results of our operations and financial position should be read in conjunction with our consolidated financial statements and notes thereto included in “Part I – Item 1. – Financial Statements” of this Form 10-Q. The 2024 Form 10-K includes additional information about our business, operations and consolidated financial position and should be read in conjunction with this Form 10-Q. This MD&A is designed to provide a reader with material information relevant to an assessment of our financial condition and results of operations and to allow investors to view the Company from the perspective of management. The results of operations contained in this MD&A include all of our operations, including our former steel processing business. Our historical results have been restated to reflect the operations of Worthington Steel as a discontinued operation in periods prior to the Separation as discussed in “Note A – Basis of Presentation.”
Business Overview
Worthington Enterprises is a market-leading designer and manufacturer of innovative products and services, including manufactured metal products, organized around attractive end markets under two separate and distinct reportable operating segments: Consumer Products and Building Products. Our primary goal is to create value for our shareholders. Built on the successful foundation of the Worthington Business System, we apply a disciplined approach to capital deployment and seek to grow earnings by optimizing our operations and supply chain, developing and commercializing new products and applications, and pursuing strategic investments and acquisitions.
Our Consumer Products business has a diverse product offering in the tools, outdoor living and celebrations categories, including propane-filled cylinders for torches and related accessories, handheld torches, specialized hand tools and instruments, drywall tools (collectively, tools), propane-filled camping cylinders helium-filled balloon kits, and accessories and gas grills and pizza ovens sold primarily to mass merchandisers, retailers and distributors. Sales to one customer in Consumer Products accounted for 13.0% of our consolidated net sales in the third quarter of fiscal 2025.
Our Building Products business is a market-leading provider of pressurized containment solutions, providing critical components in the residential, non-residential, and repair and remodel end markets through essential categories, such as heating, cooking, cooling and water, and, through our unconsolidated joint ventures, WAVE and ClarkDietrich, ceiling suspension systems and light gauge metal framing products, respectively. Our pressurized containment solutions include refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products which are generally sold to gas producers and distributors.
On December 1, 2023, we completed the Separation of our former steel processing business into a separate public company in a transaction intended to qualify as tax free to our shareholders, which was accomplished via the Distribution. Worthington Steel is an independent public company trading under the symbol “WS” on the NYSE. Following the Separation, Worthington Industries, Inc. changed its name to Worthington Enterprises, Inc. and its common shares continue trading on the NYSE under the ticker symbol “WOR.” In connection with the Separation, we received a one-time cash dividend of $150.0 million from Worthington Steel, the proceeds of which were used to pay off in full the 2024 Notes. The dividend was funded by cash drawn on the Worthington Steel Credit Facility of $175.0 million immediately prior to the Distribution.
Acquisitions and Divestitures
On June 3, 2024, we acquired Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The purchase price included cash consideration of approximately $101.4 million and contingent consideration in the form of an earnout agreement with an estimated fair value of $11.2 million at February 28, 2025. See “Note N – Acquisitions” for additional information.
On May 29, 2024, we became a noncontrolling equity partner in a new unconsolidated joint venture with Hexagon, a leading global manufacturer of Type 4 composite cylinders used for storing gas under high-pressure, by selling 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment in Europe. Pursuant to the transaction, Hexagon acquired a 49% stake in the joint venture for approximately $11.5 million, after adjusting for closing cash and preliminary net working capital, with an additional 2% sold to members of the existing management team for an additional $0.5 million. Post-closing, we hold a 49%, noncontrolling interest in the joint venture, which is accounted for under the equity method due to our significant influence. The newly formed joint venture, which combines two of Europe’s market leaders in composite high-pressure storage technology, focuses on capitalizing on the global clean energy transition specific to the storage, transport and distribution of hydrogen and compressed natural gas.
On February 1, 2024, we acquired an 80% ownership stake in Halo, an affiliate of HPG, an asset-light business with technology-enabled solutions in the outdoor cooking space. The total purchase price was approximately $9.6 million.
General Economic Conditions
The macroeconomic and geopolitical outlook remains complex and continues to evolve amid persistent inflationary pressures, high interest rates, and escalating trade tensions. While the U.S. economy continues to expand at a modest pace, growth slowed in the fourth quarter of calendar 2024 with GDP increasing at an annual rate of 2.4%, down sequentially from 3.1% in the third quarter of calendar 2024. Inflationary pressures have proven more resilient than anticipated, with the CPI rising 3.1% year-over-year in February 2025, down sequentially from 3.3% in January 2025 and 3.8% in February 2024 aided by cuts in the federal funds rate of 0.50% in September 2024 and 0.25% in November 2024. However, interest rates remain high, with the 30-year mortgage rate relatively unchanged from the prior year at 6.8% as of February 28, 2025, and future rate cuts remain uncertain with the Federal Reserve opting to maintain the federal funds rate in March 2025, citing uncertainty surrounding the inflationary effects of recently imposed tariffs on Canadian, Mexican, and European imports. The recent uptick in inflation, coupled with geopolitical risks, including heightened trade tensions and financial market volatility, has further weighed on consumer sentiment, with consumer sentiment falling for a third straight month in March 2025 to its lowest level since November 2022. As a result, we expect ongoing economic uncertainty and tighter financial conditions to continue negatively influencing consumer purchasing behavior and overall market demand in the near term.
End Market Trends
We offer a wide range of products and services to a diverse, primarily domestic, customer base across several end markets, including U.S. residential and non-residential construction, repair/remodel, which collectively drive overall demand for the Building Products segment. These end markets also drive demand for many of our consumer products sold in the tools and outdoor living categories. Demand for our remaining consumer products, including helium-filled balloon kits sold into the celebrations category, is generally driven by the general health of the consumer, including the macroeconomic and geopolitical conditions discussed above.
26
We actively monitor the following publicly available economic data and selected key indicators for our major end markets:
Key Indicator
Description
U.S. Residential Construction Spend
Represents total expenditures on residential construction projects, including new builds, renovations, and improvements.
U.S. Non-residential Construction Spend
Measures total spending on commercial, institutional, and industrial construction projects across the country.
Existing Home Sales
Reports the number of previously owned homes sold in a given period, reflecting demand in the housing market.
Authorized Housing Permits
Indicates the number of building permits issued for new housing construction, serving as a leading indicator for future housing starts.
U.S. Private Housing Starts
Measures the number of new residential construction projects that have begun, signaling housing market activity.
Measures homebuilder sentiment on current and future single-family home sales and buyer traffic.
A leading economic indicator for non-residential construction, based on monthly billings reported by architecture firms.
Tracks the value of non-residential building projects in planning stages, serving as a leading indicator for future construction activity.
Projects short-term trends in U.S. home improvement and repair spending, serving as a forward-looking gauge of residential remodeling activity.
(Dollars and units in millions)
% Change
U.S. Residential Construction spend (1)(2)
940,578
925,498
1.6
U.S. Non-residential Construction Spend (1)(2)
1,255,176
1,208,252
3.9
Existing Home Sales (units) (1)(2)
4.3
4.4
(2.7
%)
Authorized Housing Permits (units) (1)(2)
1,456
1,563
(6.8
U.S. Private Housing Starts (units) (1)(2)
1,501
1,546
(2.9
42.0
48.0
(12.5
45.5
49.5
(8.1
225.6
180.5
LIRA (3)
1.2
(1.4
(185.7
Residential Construction: The near-term outlook for the residential construction end market remains uncertain as economic headwinds continue to weigh on both builders and buyers. In February 2025, residential construction spending grew a modest 1.6% year-over-year. However, this increase largely follows inflationary trends, rather than organic expansion in the housing market. Key leading indicators suggest that underlying demand remains tepid. Housing starts and authorized permits declined from the prior year period, signaling that both builders and prospective buyers are approaching the market with caution. From a demand perspective, affordability challenges persist. Elevated mortgage rates have kept many potential buyers on the sidelines, while existing homeowners, many of which are locked into historically low interest rates, are reluctant to sell, further constraining inventory turnover. In February 2025, existing home sales declined by 2.7% year-over-year to 4.3 million units, highlighting the persistent supply challenges. Additionally, homebuilder sentiment, as measured by HMI, weakened to 42.0, falling below the neutral threshold of 50, suggesting that more builders view conditions as poor than favorable. This decline in builder confidence reflects uncertainty around elevated construction costs and mortgage rates. We believe that builders and buyers will likely remain in a holding pattern in the near-term, navigating high material costs, elevated mortgage rates, a slow-moving resale market, and geopolitical developments.
Non-Residential Construction: The near-term outlook for non-residential construction is mixed with key indicators signaling both caution and long-term potential. The ABI fell to 45.5 in February 2025, marking a contraction in demand for architectural services. Further reinforcing this sentiment, inquiries into new projects declined in February 2025 for the first time since the peak of the COVID-19 pandemic. This signals that clients are exercising caution amid economic uncertainty, holding back on new project commitments as they navigate concerns about broader macroeconomic conditions. The soft ABI and declining inquiries suggest the near-term construction pipeline will likely be subdued. In contrast, the DMI climbed to 225.6, up from 180.5 in February 2024, suggesting a robust long-term pipeline. This rise was broad-based due to a surge of warehouse, data center, and industrial facility plans. The DMI’s strength, contrasted with the weak ABI, implies a timing gap – while many projects are still in the concept and design phase, they have yet to translate into active architectural billings or construction starts. While industrial and data center projects remain bright spots, we believe the participants in this end market will take a wait-and-see approach as developers and investors assess economic risks before committing to large-scale builds.
Repair and Remodel: Spending on home improvement continues to show signs of softness as the market remains under pressure from multi-decade lows in existing home sales, driven by elevated mortgage rates, high prices, and limited supply. With many homeowners locked into historically low interest rates, mobility in the housing market remains stalled, dampening turnover-driven renovation activity. Despite this pullback, the January 2025 LIRA report from Harvard’s Joint Center for Housing Studies projects a 1.2% annual increase in home renovation and maintenance expenditures, reaching $509 billion by the end of calendar year 2025. This upward revision from prior forecasts reflects stronger-than expected late calendar year 2024 spending. Near-term activity is expected to remain concentrated on essential maintenance projects, rather than large-scale, discretionary remodels. Uncertainty around recent and potential future tariffs, particularly on construction materials like steel, aluminum, and lumber, could create headwinds and pressure margins for both contractors and DIY consumers. We believe this end market is transitioning from the pandemic fueled highs into a more normalized, sustainable growth phase, supported by long-term fundamentals such as rising home equity, energy efficiency upgrades, and the need to modernize older homes.
Seasonality
Historically, sales tend to be stronger in the third and fourth quarters of our fiscal year for our Consumer Products businesses when our facilities perform at seasonal peaks, matching consumer demand. Sales in our Building Products businesses are generally stronger in the first and fourth quarters of our fiscal year due to weather conditions, customer business cycles, and the timing of renovation and new construction projects.
Results of Operations
The following discussion provides a review of results for the three and nine months ended February 28, 2025 and February 29, 2024:
$ Change
GAAP Financial Measures
304.5
316.8
(12.3
835.9
926.9
(91.0
20.9
16.6
19.7
(17.4
37.1
52.6
40.5
12.1
120.5
100.8
39.3
22.0
17.3
91.4
66.8
24.6
32.1
43.2
(11.1
102.1
127.3
(25.2
EPS from continuing operations - diluted
0.35
Non-GAAP Financial Measures (1)
Adjusted operating income
26.2
8.0
18.2
28.8
15.1
13.7
73.8
66.9
178.4
187.8
(9.4
Adjusted EPS from continuing operations - diluted
0.11
(0.10
28
Net Sales and Volume
The following table provides a breakdown of our consolidated net sales by operating segment for the periods indicated:
Change
139.7
133.2
6.5
4.9
374.1
369.9
4.2
1.1
164.8
148.2
11.2
461.8
465.4
(3.6
(0.8
281.4
8.2
835.3
0.6
0.1
35.4
(35.4
91.6
(91.6
(3.9
(9.8
The following table provides volume (in units) by operating segment for the periods presented:
Units
20,760,641
19,009,883
1,750,758
9.2
53,351,154
50,972,515
2,378,639
4.7
3,559,814
3,422,475
137,339
4.0
9,982,444
10,578,278
(595,834
(5.6
24,320,455
22,432,358
1,888,097
8.4
63,333,598
61,550,793
1,782,805
2.9
142,878
(142,878
363,247
(363,247
22,575,236
1,745,219
7.7
61,914,040
1,419,558
2.3
Quarterly Comparison
Year-to-Date Comparison
29
Gross Profit
89.2
73.1
16.1
225.8
206.0
19.8
9.6
Gross margin %
29.3
27.0
63.0
65.1
(2.1
(3.2
197.0
210.3
(13.3
(6.3
Net Sales %
20.7
20.5
23.6
22.7
Other Consolidated Results
5.4
0.7
8.5
3.0
(3.0
12.5
1.5
(1.5
30
Income Tax Expense
13.2
18.5
(5.3
29.1
34.0
(4.9
Annual Estimated ETR
30.8
Equity Income
WAVE (1)
26.0
(1.0
(4
77.4
75.8
ClarkDietrich (1)
9.5
17.8
(8.3
(47
28.0
48.3
(20.3
(42
Other (2)
(2.4
(0.6
(1.8
(300
(3.3
3.3
(6.6
(200
(26
127.4
(25.3
(20
31
Adjusted EBITDA from Continuing Operations
The following table provides a summary of adjusted EBITDA from continuing operations, a non-GAAP financial measure, by reportable segment and on a consolidated basis, along with the respective percentage of net sales for each reportable segment and on a consolidated basis. See the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-Q for additional information regarding our use of non-GAAP financial measures. A reconciliation from earnings before income taxes to adjusted EBITDA from continuing operations is provided in “Note M – Segment Operations.”
% of
Net Sales
28.6
25.6
19.2
11.7
53.2
32.3
53.1
35.8
0.2
81.8
26.9
78.7
3.1
(8.0
(11.8
3.8
32.2
10.3
61.9
16.5
52.5
14.2
9.4
17.9
140.1
30.3
158.5
34.1
(18.4
(11.6
202.0
211.0
25.3
(9.0
(4.3
(23.6
(23.2
(0.4
(1.7
(5.0
Liquidity and Capital Resources
During the nine months ended February 28, 2025, we generated $147.3 million of cash from operating activities, invested $37.5 million in property, plant and equipment, spent $88.2 million to acquire Ragasco, and received $11.4 million for the sale of 51% of our former Sustainable Energy Solutions operating segment. Additionally, we paid $21.1 million to repurchase 500,000 common shares and paid dividends of $25.5 million on the common shares during the nine months ended February 28, 2025.
The following table summarizes our consolidated cash flows for the periods presented:
147.3
244.8
(115.1
(116.5
(53.6
(355.9
Decrease in cash and cash equivalents
(21.4
(227.6
244.2
454.9
Cash and cash equivalents at end of period
222.8
227.3
Activity related to our discontinued operations has not been segregated in our consolidated statements of cash flows. See “Note B – Discontinued Operations” for a summarization of significant non-cash items related to discontinued operations.
We believe we have access to adequate resources to meet the needs of our existing businesses for normal operating costs, mandatory capital expenditures, debt redemptions, dividend payments, and working capital, to the extent not funded by cash provided by operating activities, for at least 12 months and for the foreseeable future thereafter. These resources include cash and cash equivalents and unused committed lines of credit under our Credit Facility, which had a total of $500.0 million of borrowing capacity available to be drawn as of February 28, 2025.
Although we do not currently anticipate a need, we believe that we could access the financial markets to sell long-term debt or equity securities. However, the continuation of uncertain economic conditions, including those caused by a high interest rate environment, could create volatility in the financial markets, which may impact our ability to access capital and the terms under which we can do so.
We routinely monitor current operational requirements, financial market conditions, and credit relationships and we may choose to seek additional capital by issuing new debt and/or equity securities to strengthen our liquidity or capital structure. Should we seek additional capital, there can be no assurance that we would be able to obtain such additional capital on terms acceptable to us, if at all, and such additional equity or debt financing could dilute the interests of our existing shareholders and/or increase our interest costs. We may also from time to time seek to retire or repurchase our outstanding debt through cash purchases, in open-market purchases, privately-negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Operating Activities
Our business is cyclical and cash flows from operating activities may fluctuate during the year and from year to year due to economic and industry conditions. We rely on cash and short-term borrowings to meet cyclical increases in working capital needs. These needs generally arise during periods of increased economic activity or increasing raw material prices, requiring higher levels of inventory and accounts receivable. During economic slowdowns or periods of decreasing raw material costs, working capital needs generally decrease as a result of the reduction of inventories and accounts receivable.
Net cash provided by operating activities was $147.3 million during the nine months ended February 28, 2025, down from $244.8 million from the prior year period. The decrease was primarily due to lower net earnings in the current year period driven by the Separation and a $31.4 million decrease in dividends received from unconsolidated joint ventures.
Investing Activities
Net cash used by investing activities was $115.1 million during the nine months ended February 28, 2025 compared to $116.5 million from the prior year period. Net cash used by investing activities during the nine months ended February 28, 2025 was driven primarily by the acquisition of Ragasco and capital expenditures partially offset by proceeds from the sale of 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment on May 29, 2024.
34
Investment activities are largely discretionary and future investment activities could be reduced significantly, or eliminated, as economic conditions warrant. We assess acquisition opportunities as they arise, and any such opportunities may require additional financing. However, there can be no assurance that any such opportunities will arise, that any such acquisition opportunities will be consummated, or that any additional financing will be available on satisfactory terms if required.
Financing Activities
Net cash used by financing activities was $53.6 million during the nine months ended February 28, 2025, compared to $355.9 million in the prior year period. During the nine months ended February 28, 2025, we paid $21.1 million to repurchase 500,000 common shares and paid dividends of $25.5 million on the common shares. During the nine months ended February 29, 2024, we received $172.2 million in net proceeds of short-term borrowings and repaid $243.8 million of long-term debt associated with the redemption of the 2026 Notes and $150.0 million for the redemption of our 2024 Notes.
Common shares – On March 25, 2025, the Board declared a quarterly dividend of $0.17 per common share payable on June 27, 2025, to shareholders of record at the close of business on June 13, 2025.
On March 20, 2019, the Board authorized the repurchase of up to 6,600,000 common shares.
On March 24, 2021, the Board authorized the repurchase of up to an additional 5,618,464 common shares, increasing the total number of common shares then authorized for repurchase to 10,000,000. As of February 28, 2025, 5,565,000 common shares remained available for repurchase under these two authorizations.
The common shares may be repurchased under these authorizations from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately negotiated transactions.
Long-term debt and short-term borrowings – As of February 28, 2025, we were in compliance with the financial covenants of our short-term and long-term debt agreements. Our debt agreements do not include credit rating triggers or material adverse change provisions. There were no outstanding borrowings drawn against the Credit Facility at February 28, 2025, leaving the full borrowing capacity of $500.0 million available for future use.
Dividend Policy
We currently have no material contractual or regulatory restrictions on the payment of dividends. Dividends are declared at the discretion of the Board. The Board reviews the dividend quarterly and establishes the dividend rate based upon our consolidated financial condition, results of operations, capital requirements, current and projected cash flows, business prospects, and other relevant factors. While we have paid a dividend every quarter since becoming a public company in 1968, there is no guarantee that payments of dividends will continue in the future.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements and related disclosure, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to use judgment and make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We continually evaluate our estimates, including those related to our valuation of receivables, inventories, intangible assets, accrued liabilities, income and other tax accruals, contingencies and litigation, and business combinations. We base our estimates on historical experience, current trends and other factors that we believe to be relevant and reasonable under the circumstances at the time the estimate was made. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting policies are defined as those that reflect our significant judgments and uncertainties that could potentially result in materially different results under different assumptions and conditions. Although actual results historically have not deviated significantly from those determined using our estimates, our consolidated financial position or results of operations could be materially different if we were to report under different conditions or to use different assumptions in the application of such policies. We believe that our estimates, assumptions, and judgments are reasonable in that they were based on information available when the estimates, assumptions and judgments were made. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from those implied by our assumptions and estimates. Our critical accounting policies have not significantly changed from those discussed in “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of the 2024 Form 10-K.
Item 3. – Quantitative and Qualitative Disclosures About Market Risk
Market risks have not materially changed from those disclosed in “Part II – Item 7A. – Quantitative and Qualitative Disclosures About Market Risk” of the 2024 Form 10-K.
Item 4. – Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports that Worthington Enterprises files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including Worthington Enterprises’ principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management, under the supervision of and with the participation of Worthington Enterprises’ principal executive officer and principal financial officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on that evaluation, Worthington Enterprises’ principal executive officer and principal financial officer have concluded that such disclosure controls and procedures were designed at the reasonable assurance level and were effective at a reasonable assurance level as of the end of the quarterly period covered by this Form 10-Q.
Changes in Internal Control Over Financial Reporting
There were no changes that occurred during the period covered by this Form 10-Q in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. – Legal Proceedings
We are involved in various judicial and administrative proceedings, as both plaintiff and defendant, arising in the ordinary course of business. We do not believe that any such proceedings, individually and in the aggregate, will have a material adverse effect on our business, financial position, results of operation or cash flows.
Item 1A. – Risk Factors
There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. In “PART I – Item 1A. – Risk Factors” of the 2024 Form 10-K, we included a detailed discussion of our risk factors. Our risk factors have not changed significantly from those disclosed in the 2024 Form 10-K. Those risk factors should be read carefully in connection with evaluating our business and investments in the common shares and in connection with the forward-looking statements and other information contained in this Form 10-Q. Any of the risks described in the 2024 Form 10-K could materially affect our business, consolidated financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. The risk factors described in the 2024 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may materially adversely affect our business, consolidated financial condition and/or future results.
Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
There were no equity securities of Worthington Enterprises sold by Worthington Enterprises during the nine months ended February 28, 2025 that were not registered under the Securities Act of 1933, as amended.
Issuer Purchases of Equity Securities
Common shares withheld to cover tax withholding obligations in connection with the vesting of restricted common shares are treated as common share purchases for purposes of the following table. However, those withheld common shares are not considered common share repurchases under an authorized common share repurchase plan or program. The total number of common shares purchased, as indicated in the table below, include (1) common shares withheld from our employees to satisfy minimum statutory tax withholding obligations arising from the vesting of restricted common shares and (2) common shares repurchased as part of publicly announced plans or programs.
Maximum Number of
Total Number of Common
Common Shares that
Total Number of
Average Price
Shares Purchased as Part
May Yet Be
Common Shares
Paid per
of Publicly Announced
Purchased Under the
Purchased
Common Share
Plans or Programs
Plans or Programs (1)
December 1-31, 2024
703
41.04
5,715,000
January 1-31, 2025
152,400
41.15
5,565,000
February 1-28, 2025
153,103
41.10
Item 3. – Defaults Upon Senior Securities
Not applicable.
Item 4. – Mine Safety Disclosures
Item 5. – Other Information
During the quarter ended February 28, 2025, no director or officer (as defined under Rule 16a-1 of the Exchange Act) adopted or terminated any Rule 10b5-1 trading arrangements or any non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).
Item 6. – Exhibits
Incorporated by Reference
Exhibit No.
Exhibit Description
Form
Exhibit
Filing Date
2.1
Separation and Distribution Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.
8-K
12/05/2023
Amended Articles of Incorporation of Worthington Enterprises, Inc. [This document represents the articles of incorporation of Worthington Enterprises, Inc. in compiled form incorporating all amendments.]
10-Q
01/09/2024
3.2
Code of Regulations of Worthington Enterprises, Inc. [This document represents the code of regulations of Worthington Enterprises, Inc. in compiled form incorporating all amendments.]
3(b)
10/16/2000
31.1
Rule 13a - 14(a)/15d - 14(a) Certifications (Principal Executive Officer)*
31.2
Rule 13a - 14(a)/15d - 14(a) Certifications (Principal Financial Officer)*
Section 1350 Certification of Principal Executive Officer**
Section 1350 Certification of Principal Financial Officer**
101
Interactive Data Files Pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at February 28, 2025 and May 31, 2024; (ii) Consolidated Statements of Earnings for the nine months ended February 28, 2025 and February 29, 2024; (iii) Consolidated Statements of Comprehensive Income for the nine months ended February 28, 2025 and February 29, 2024; (iv) Consolidated Statements of Cash Flows for the nine months ended February 28, 2025 and February 29, 2024 and (v) Condensed Notes to Consolidated Financial Statements.*
The cover page from this Quarterly Report on Form 10-Q for the quarter ended February 28, 2025, formatted in Inline XBRL and included in Exhibit 101.*
* Filed herewith.
** Furnished herewith.
† Indicates a management contract or compensatory plan or arrangement.
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 thereunto duly authorized.
Date: April 9, 2025
By:
/s/ Colin J. Souza
Colin J. Souza,
Vice President and Chief Financial Officer
(On behalf of the registrant as Duly Authorized Officer and as Principal Financial Officer)