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Worthington (WOR) Q4 Earnings Surpass Estimates, Revenues Lag
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Worthington Industries, Inc. (WOR - Free Report) logged adjusted earnings of $2.74 per share for the fourth quarter of fiscal 2023 (ending May 31, 2023), beating the Zacks Consensus Estimate of $1.96. This compares favorably with earnings of $1.58 per share a year ago.
Worthington posted revenues of $1,228.9 million for the quarter, a decline of 19% from the prior-year figure of $1,520.3 million. It lagged the Zacks Consensus Estimate of $1,366 million. The decline was primarily due to lower average selling prices in the Steel Processing division and reduced total volumes.
Worthington Industries, Inc. Price, Consensus and EPS Surprise
In the fourth quarter, net sales in the Steel Processing division were $860.1 million, down $259.7 million from the prior-year quarter. Adjusted EBIT rose by $79.7 million to $96.2 million from the previous year due to an increase in operating income, largely offset by a decline in Serviacero's equity income by $2.7 million.
Net sales in Consumer Products’ segment fell 3% year over year to $181.2 million in the reported quarter. The decrease is due to reduced volume, partially offset by contributions from Level5 Tools, LLC, following its acquisition on Jun 1, 2022. In the reported quarter, adjusted EBIT was down $3.8 million to $25.7 million due to the unfavorable impact of decreased volumes and higher SG&A expenses.
Building Products' net sales were $142.2 million, an 18% decrease from the prior-year quarter, as lower volume more than offset a favorable shift in product mix. Adjusted EBIT declined $4.4 million to $59.2 million as a result of lower volume and higher manufacturing expenses, partly offset by a rise in equity income.
Sustainable Energy Solutions' net sales were $45.4 million, up 9.9% from the prior-year quarter, attributable largely to increased average selling prices, partly offset by an unfavorable change in product mix. Adjusted EBIT was $2.6 million, up $4.3 million from the prior year's loss, as higher average selling prices led to margin improvements despite persistent inflationary pressure.
Financials
At the end of the quarter, the total debt was $692.8 million, which was $51.8 million less than the prior-year quarter. The company ended fiscal 2023 with $454.9 million in cash, up $420.5 million from the prior fiscal year-end.
Outlook
The company stated that its board approved the plan to pursue a separation of its Steel Processing division, which it hopes to accomplish by early 2024. The strategy is called "Worthington 2024." With the improved potential for growth and value generation, Worthington 2024 will lead to two independent, publicly traded firms that are more specialized and purpose-fit. To accomplish the separation, Worthington intends to distribute Steel Processing Company stock to shareholders in a tax-free manner for U.S. federal income tax purposes.
Price Performance
WOR’s shares are up 57% over the past year compared with a 42.5% rise recorded by its industry.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Worthington currently carries a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks in the Industrial Products space are Alamo Group Inc. (ALG - Free Report) , Axon Enterprise Inc. (AXON - Free Report) and Barnes Group Inc. (B - Free Report)
Alamo Group currently carries a Zacks Rank #1. Shares of ALG have gained 58.4% in the past year. It has a projected earnings growth rate of 28% for the current year. It delivered a trailing four-quarter earnings surprise of 17.7% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon, currently carrying a Zacks Rank #1, has a projected earnings growth rate of 42.5% for the current year. The Zacks Consensus Estimate for AXON’s current-year earnings has been revised 8.8% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 44.4%, on average. The stock has gained 103.4% over the past year.
Barnes currently carries a Zacks Rank #2 (Buy) and has a projected earnings growth rate of 11.1% for the current year. Shares of Barnes have gained 35.8% in the past year. It delivered a trailing four-quarter earnings surprise of 11.9% on average.
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Worthington (WOR) Q4 Earnings Surpass Estimates, Revenues Lag
Worthington Industries, Inc. (WOR - Free Report) logged adjusted earnings of $2.74 per share for the fourth quarter of fiscal 2023 (ending May 31, 2023), beating the Zacks Consensus Estimate of $1.96. This compares favorably with earnings of $1.58 per share a year ago.
Worthington posted revenues of $1,228.9 million for the quarter, a decline of 19% from the prior-year figure of $1,520.3 million. It lagged the Zacks Consensus Estimate of $1,366 million. The decline was primarily due to lower average selling prices in the Steel Processing division and reduced total volumes.
Worthington Industries, Inc. Price, Consensus and EPS Surprise
Worthington Industries, Inc. price-consensus-eps-surprise-chart | Worthington Industries, Inc. Quote
Segment Highlights
In the fourth quarter, net sales in the Steel Processing division were $860.1 million, down $259.7 million from the prior-year quarter. Adjusted EBIT rose by $79.7 million to $96.2 million from the previous year due to an increase in operating income, largely offset by a decline in Serviacero's equity income by $2.7 million.
Net sales in Consumer Products’ segment fell 3% year over year to $181.2 million in the reported quarter. The decrease is due to reduced volume, partially offset by contributions from Level5 Tools, LLC, following its acquisition on Jun 1, 2022. In the reported quarter, adjusted EBIT was down $3.8 million to $25.7 million due to the unfavorable impact of decreased volumes and higher SG&A expenses.
Building Products' net sales were $142.2 million, an 18% decrease from the prior-year quarter, as lower volume more than offset a favorable shift in product mix. Adjusted EBIT declined $4.4 million to $59.2 million as a result of lower volume and higher manufacturing expenses, partly offset by a rise in equity income.
Sustainable Energy Solutions' net sales were $45.4 million, up 9.9% from the prior-year quarter, attributable largely to increased average selling prices, partly offset by an unfavorable change in product mix. Adjusted EBIT was $2.6 million, up $4.3 million from the prior year's loss, as higher average selling prices led to margin improvements despite persistent inflationary pressure.
Financials
At the end of the quarter, the total debt was $692.8 million, which was $51.8 million less than the prior-year quarter. The company ended fiscal 2023 with $454.9 million in cash, up $420.5 million from the prior fiscal year-end.
Outlook
The company stated that its board approved the plan to pursue a separation of its Steel Processing division, which it hopes to accomplish by early 2024. The strategy is called "Worthington 2024." With the improved potential for growth and value generation, Worthington 2024 will lead to two independent, publicly traded firms that are more specialized and purpose-fit. To accomplish the separation, Worthington intends to distribute Steel Processing Company stock to shareholders in a tax-free manner for U.S. federal income tax purposes.
Price Performance
WOR’s shares are up 57% over the past year compared with a 42.5% rise recorded by its industry.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Worthington currently carries a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks in the Industrial Products space are Alamo Group Inc. (ALG - Free Report) , Axon Enterprise Inc. (AXON - Free Report) and Barnes Group Inc. (B - Free Report)
Alamo Group currently carries a Zacks Rank #1. Shares of ALG have gained 58.4% in the past year. It has a projected earnings growth rate of 28% for the current year. It delivered a trailing four-quarter earnings surprise of 17.7% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon, currently carrying a Zacks Rank #1, has a projected earnings growth rate of 42.5% for the current year. The Zacks Consensus Estimate for AXON’s current-year earnings has been revised 8.8% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 44.4%, on average. The stock has gained 103.4% over the past year.
Barnes currently carries a Zacks Rank #2 (Buy) and has a projected earnings growth rate of 11.1% for the current year. Shares of Barnes have gained 35.8% in the past year. It delivered a trailing four-quarter earnings surprise of 11.9% on average.