Financial Performance - Net sales for the three months ended November 30, 2022, were $1,175,541, a decrease from $1,232,861 in the same period of 2021, representing a decline of approximately 4.6%[18] - Gross margin for the six months ended November 30, 2022, was $275,137, down from $403,965 in the prior year, indicating a decrease of about 31.8%[18] - Net earnings attributable to controlling interest for the three months ended November 30, 2022, were $16,218, a significant drop from $110,301 in the same period of 2021, reflecting a decline of approximately 85.3%[18] - Earnings per share attributable to controlling interest for the three months ended November 30, 2022, was $0.33, compared to $2.19 in the same period of 2021, a decrease of about 84.9%[18] - The company reported a comprehensive income of $16,281 for the three months ended November 30, 2022, compared to $55,327 in the same period of 2021, a decrease of about 70.7%[20] - Net earnings for the three months ended November 30, 2022, were $19,505,000, a decrease from $113,185,000 in the same period of 2021[22] - The Steel Processing segment reported direct sales of $807,259,000 for the three months ended November 30, 2022, down from $900,666,000 in the prior year, a decline of about 10.4%[29] - The company reported net earnings of $105,183,000 for the three months ended November 30, 2022, down 39.5% from $173,915,000 in the same period of 2021[35] - Net earnings attributable to controlling interest for the six months ended November 30, 2022, was $80,300, compared to $242,792 for the same period in 2021[54] Assets and Liabilities - Total assets as of November 30, 2022, were $3,390,660, down from $3,643,023 as of May 31, 2022, representing a decrease of approximately 6.9%[16] - Total current liabilities decreased to $660,891 as of November 30, 2022, from $932,261 as of May 31, 2022, a reduction of about 29.1%[16] - Total liabilities decreased to $1,751,368 as of November 30, 2022, from $2,029,061 as of May 31, 2022, indicating a reduction of about 13.7%[16] - Cash and cash equivalents increased to $129,596 as of November 30, 2022, from $34,485 as of May 31, 2022, reflecting a significant increase of approximately 276.5%[16] - Cash and cash equivalents at the end of the period were $129,596,000, compared to $225,194,000 at the end of the same period in 2021, indicating a decrease of approximately 42.5%[22] - Cash and cash equivalents decreased to $41,768,000 as of November 30, 2022, from $68,563,000 as of May 31, 2022[35] - As of November 30, 2022, the total equity balance was $1,639,290,000, reflecting a decrease from $1,646,970,000 as of August 31, 2022[46] Cash Flow and Investments - The company reported net cash provided by operating activities of $132,941,000 for the three months ended November 30, 2022, compared to a net cash used of $(119,104,000) in the same period of 2021[22] - Net cash provided by operating activities was $214.0 million, a significant improvement from a net cash outflow of $168.9 million in the prior year[145] - Cash used in investing activities was $30.7 million, down from $124.1 million in the prior year, mainly due to the acquisition of Level5 for $56.1 million[152] - Net cash used in financing activities was $88.2 million, compared to $122.1 million in the prior year, primarily due to repayments of short-term borrowings[154] Dividends and Stock Options - The company declared cash dividends of $0.31 per share for the three months ended November 30, 2022, up from $0.28 in the same period of 2021, an increase of approximately 10.7%[18] - The company declared cash dividends totaling $30,888,000 during the six months ended November 30, 2022, compared to $28,658,000 in the prior year, representing an increase of about 7.8%[48] - A total of 84,400 non-qualified stock options were granted with a weighted average exercise price of $46.39 per share, resulting in a pre-tax stock-based compensation expense of $1,381,000[48] - The company granted 308,000 service-based restricted common shares with a fair value of $51.09 per share, leading to a pre-tax stock-based compensation expense of $15,216,000[49] - Performance share awards covering an aggregate of 58,100 common shares were granted, with a calculated pre-tax stock-based compensation expense of $2,695,000 for the six months ended November 30, 2022[52] Separation and Restructuring - The company incurred separation costs of $9,246,000 during the three and six months ended November 30, 2022, related to the planned separation into two independent companies[27] - The company plans to complete the separation transaction by early 2024, subject to market conditions and regulatory approvals[27] - The total liabilities associated with restructuring activities as of November 30, 2022, are expected to be paid in the next twelve months[38] - Separation costs of $9.2 million were incurred in connection with the planned separation of the Steel Processing business, reflecting direct and incremental costs[137] Market and Economic Conditions - U.S. GDP growth year-over-year decreased to 1.8% in Q3 2022 from 5.0% in Q3 2021, indicating a weaker economy[100] - Hot-rolled steel prices fell to $742 per ton in Q2 2023 from $1,888 per ton in Q2 2022, resulting in significant inventory holding losses expected in Q3 2023[100][102] - The automotive industry accounts for approximately 54% of the net sales in the Steel Processing segment, significantly impacting the company's performance[97] - The construction market represents about 11% of the net sales in the Steel Processing segment, influenced by various economic indicators including U.S. GDP[98] Legal and Compliance - The company is involved in various legal proceedings but does not expect any material adverse effects on its business or financial position[167] - Risk factors disclosed in the 2022 Form 10-K remain unchanged and could materially affect the company's future results[168] - Worthington Industries, Inc. maintained effective disclosure controls and procedures as of November 30, 2022, providing reasonable assurance for timely reporting[164] - There were no changes in internal control over financial reporting that materially affected the company during the quarterly period ended November 30, 2022[165] Acquisitions - The acquisition of Level5® Tools, LLC was completed for a total purchase price of $59,321,000, which includes a potential earnout of up to $25,000,000 based on future earnings targets through 2024[60] - Level5's results have been included in the consolidated statements of earnings since acquisition, with proforma results not materially different from reported results[61] - The identified intangible assets from the acquisition include a trade name valued at $13,500,000, customer relationships at $13,300,000, and technological know-how at $6,500,000, totaling $33,580,000[63] - The net identifiable assets acquired were valued at $43,525,000, resulting in goodwill of $15,947,000[67] Risk Management - The company manages interest rate risk through a mix of fixed-rate and variable-rate debt, utilizing interest rate swaps and treasury locks[69] - The company is exposed to foreign currency exchange rate risks and uses contracts to manage this exposure, although derivative financial instruments are not used for translation risks[70] - The company has entered into commodity contracts to hedge against price fluctuations, with a notional amount of $114,516,000 for commodity contracts maturing between December 2022 and December 2023[76] - For the three months ended November 30, 2022, the company recognized a loss of $19,265,000 in other comprehensive income related to cash flow hedges[77] - The total fair value of derivative financial instruments as of November 30, 2022, was $5,038,000 in assets and $20,295,000 in liabilities[73]
Worthington Industries(WOR_V) - 2023 Q2 - Quarterly Report