Worthington Industries Announces Business Separation, Earnings Dive

Scott Peters
29 Sep, 2022
New York City

Worthington Industries, Inc plunged 11.6% to $43.53 after the steel processor and maker of pressure vessels said it plans to separate two businesses in two publicly traded companies. 

The company reported revenue in the fiscal 2022 first quarter ending in August rose 27% to $1.4 billion from $1.1 billion a year ago.  

Gross margin fell $50 million from the prior year's quarter to $169.4 million, as improvements in both the Consumer Products and Building Products segments were more than offset by lower margin contributions from Steel Processing. 

Margins in Steel Processing were negatively impacted by an estimated $48.6 million unfavorable swing related to inventory holding losses in the current quarter compared to inventory holding gains a year ago. 

Net income in the quarter declined to $64.08 million from $132.4 million and diluted earnings per share fell to $1.30 from $2.55 a year ago. 

 

Business Separation 

The post-separation, Worthington will focus on consumer products, building products and sustainable energy solutions.

Steel processing business with extensive supply chain and pricing solutions focus on custom and wholesale markets with expanded product offerings in electrical steel laminations and laser welding solutions.

 

Acquisitions and Divestitures 

Worthington  acquired Level5 Tools, LLC, a provider of drywall tools and related accessories for a net cash purchase price of approximately $56.1 million, with a potential earnout of up to $25.0 million based on performance through 2024.  

The transaction was completed on June 2, 2022. 

The company sold its 50% interest in ArtiFlex to the unaffiliated joint venture member for approximately $42.1 million, after closing adjustments. 

The sale transaction was completed on August 3, 2022. 

The sale included real estate in Wooster, Ohio, owned by Worthington and leased to ArtiFlex. 

As a result of the transaction, the company recorded a pre-tax loss of approximately $15.8 million in equity income during the quarter.

 

Outlook 

The company did not provide a specific quarterly or annual earnings or revenue guidance.