Worthington Steel(WS) - 2024 Q3 - Quarterly Results

Financial Performance - Net sales for Q2 fiscal 2025 were $739.0 million, a decrease of 9% from $808.0 million in Q2 fiscal 2024[2] - Operating income increased to $18.9 million compared to an operating loss of $8.8 million in the prior year quarter[2] - Net earnings attributable to controlling interest were $12.8 million, or $0.25 per diluted share, compared to a net loss of $6.0 million, or $0.12 per diluted share, in the prior year[2] - Adjusted net earnings per diluted share attributable to controlling interest were $0.19, up from $0.11 in the prior year quarter[2] - Net earnings for the six months ended November 30, 2024, were $48.3 million, a decrease from $60.0 million in the same period last year, representing a decline of approximately 19.0%[11] - Net sales for the three months ended November 30, 2024, were $739.0 million, a decrease of 8.5% compared to $808.0 million for the same period in 2023[17] - For the three months ended November 30, 2024, net earnings attributable to controlling interest were $12.8 million, compared to a loss of $6.0 million in the prior year, marking a significant turnaround[25] - For the six months ended November 30, 2024, net sales were $1,573.0 million, down from $1,713.8 million in 2023, a decrease of 8.2%[28] Cash Flow and Liquidity - Cash and cash equivalents as of November 30, 2024, were $52.0 million, with net cash provided by operating activities at $68.0 million[4] - Free cash flow for Q2 fiscal 2025 was $33.2 million, down from $121.0 million in the prior year quarter[4] - Net cash provided by operating activities increased to $122.6 million, compared to $119.2 million for the same period last year, reflecting a growth of about 2.9%[11] - Cash and cash equivalents at the end of the period were $52.0 million, down from $214.4 million, reflecting a decrease of approximately 75.7%[11] - The company reported a net cash provided by financing activities of $(55.6) million, a decrease from $118.9 million in the same period last year[11] - Free cash flow for the six months ended November 30, 2024, was $33.2 million, consistent with $33.1 million in the prior year, demonstrating stable cash generation[29] Assets and Liabilities - Total current assets decreased to $857.4 million as of November 30, 2024, down from $1,001.8 million as of May 31, 2024[18] - Total liabilities decreased to $594.2 million as of November 30, 2024, compared to $748.9 million as of May 31, 2024, indicating a reduction of 20.7%[18] - Total assets decreased to $1,739.3 million as of November 30, 2024, down from $1,866.4 million as of May 31, 2024[18] - The company had no long-term debt borrowings as of November 30, 2024, indicating a strong balance sheet position[29] Operational Highlights - Gross margin increased by $19.8 million to $80.0 million, driven by higher direct spreads despite lower volume[3] - Gross margin for the three months ended November 30, 2024, was $80.0 million, representing a gross margin percentage of 10.8%, down from 7.4% in the prior year[17] - Operating income for the six months ended November 30, 2024, was $62.3 million, compared to $60.9 million for the same period in 2023, reflecting a year-over-year increase of 2.3%[17] - Adjusted EBITDA for the three months ended November 30, 2024, increased to $30.6 million, up from $23.0 million in the same period of 2023, reflecting a growth of 33.0%[25] - The adjusted EBITDA margin for the six months ended November 30, 2024, was 5.5%, compared to 7.0% in the prior year, indicating a decrease in profitability[28] - The company reported a pension settlement gain of $2.7 million for the six months ended November 30, 2024, which positively impacted earnings[28] Strategic Initiatives - The company executed a definitive agreement to acquire a controlling equity stake in Italy-based Sitem S.p.A., enhancing its product offerings in electric motor laminations[2] - The company is focusing on future growth opportunities following its separation from Worthington Enterprises, Inc., with expectations for improved operational performance[16] - The company anticipates potential benefits from transformation and innovation efforts, aiming to enhance competitive positioning and market share[16] - Forward-looking statements indicate expectations for future cash positions and operational performance, with a focus on maintaining margins and improving profitability[16] Dividends - The company declared a quarterly dividend of $0.16 per share, payable on March 28, 2025[4] - The company declared cash dividends of $0.16 per share for the three months ended November 30, 2024[17]