Business Separation and Strategy - The company plans to separate its Steel Processing business, Worthington Steel, from its other operations, with anticipated benefits and operational performance improvements for both entities post-separation[13]. - The proposed separation of the Steel Processing business is expected to create two independent publicly-traded companies, with the transaction anticipated to be completed by early 2024, subject to market conditions and regulatory approvals[300]. - The company expects to capture and maintain market share while developing new products and entering new markets as part of its growth strategy[13]. - The company anticipates improvements in operational efficiencies and cost management as part of its transformation and innovation efforts[13]. Financial Performance - Net sales for the fiscal year ended May 31, 2023, were $4,916,392 thousand, a decrease of 6.2% compared to $5,242,219 thousand in 2022[288]. - Gross margin for the fiscal year 2023 was $663,312 thousand, down from $714,816 thousand in 2022, reflecting a decline of approximately 7.2%[288]. - Operating income decreased to $212,367 thousand in 2023 from $329,268 thousand in 2022, representing a decline of 35.5%[288]. - Net earnings attributable to controlling interest for 2023 were $256,528 thousand, a decrease of 32.4% compared to $379,386 thousand in 2022[288]. - Earnings per common share attributable to controlling interest for 2023 were $5.28, down from $7.60 in 2022, reflecting a decline of 30.3%[288]. - Total comprehensive income for 2023 was $268,841,000, down from $331,027,000 in 2022, representing a decline of 18.7%[291]. Assets and Liabilities - Total current assets increased to $1,868,337 thousand in 2023 from $1,785,653 thousand in 2022, an increase of 4.6%[282]. - Total assets as of May 31, 2023, were $3,650,918 thousand, slightly up from $3,643,023 thousand in 2022[284]. - Total liabilities decreased to $1,829,290 thousand in 2023 from $2,029,061 thousand in 2022, a reduction of 9.8%[284]. - Shareholders' equity - controlling interest increased to $1,696,011 thousand in 2023 from $1,480,752 thousand in 2022, an increase of 14.5%[284]. Cash Flow and Investments - Net cash provided by operating activities significantly increased to $625,364,000 in 2023, compared to $70,112,000 in 2022[297]. - The company reported a net cash used by investing activities of $71,776,000 in 2023, a decrease from $438,188,000 in 2022[297]. - Cash and cash equivalents at the end of the fiscal year 2023 were $454,946,000, up from $34,485,000 in 2022[297]. - The company’s investment in property, plant, and equipment was $86,366,000 in 2023, a slight decrease from $94,600,000 in 2022[297]. Market Risks and Management - The company is exposed to fluctuations in commodity prices, particularly for steel, natural gas, copper, and zinc, and uses derivative financial instruments to manage this risk[263]. - The fair value of the company's commodity contracts was $(13.2) million as of May 31, 2023, compared to $3.9 million in 2022, indicating a significant change in market conditions[265]. - A 10% decline in the market prices of hedged commodities is not expected to materially impact the value of the company's hedges or reported results[264]. - The company has entered into forward contracts to manage foreign currency exchange risks, with no material impact expected from a 10% change in exchange rates[262]. - The company is actively monitoring market risks and developing strategies to mitigate exposure, including the use of financial and commodity-based derivative instruments[258]. Pension and Employee Benefits - The net periodic benefit cost for defined benefit pension plans in fiscal 2023 was $23.87 million, an increase from $18.09 million in fiscal 2022 and $17.55 million in fiscal 2021[416]. - The funded status of the defined benefit pension plans showed a deficit of $23.45 million in fiscal 2023, improving from a deficit of $30.17 million in fiscal 2022[419]. - The company incurred a non-cash settlement charge of $4.77 million in fiscal 2023 related to the Gerstenslager Plan, compared to $1.36 million in fiscal 2022[416]. - The aggregate intrinsic value of outstanding performance shares was $9.64 million at the end of fiscal 2023, up from $7.45 million in fiscal 2022[408]. Taxation - Earnings before income taxes for fiscal year 2023 were $345,368,000, down from $514,286,000 in 2022, reflecting a decrease of approximately 32.8%[427]. - The effective tax rate attributable to controlling interest for fiscal year 2023 was 22.9%, compared to 23.3% in 2022[428][429]. - Total unrecognized tax benefits as of May 31, 2023, were $4,663,000, a slight decrease from $4,706,000 in 2022[431][432]. - Deferred tax assets increased to $68,362,000 in 2023 from $62,608,000 in 2022, while net deferred tax liabilities decreased to $101,449,000 from $115,132,000[434].
Worthington Industries(WOR_V) - 2023 Q4 - Annual Report