Steel Product Producers

Worthington Steel earnings fall, sales inch up

Written by Ethan Bernard & Laura Miller

Worthington Steel

Fourth quarter ended May 3120242023Change
Net sales$911.0$884.03.1%
Net earnings$53.2$67.3-21.0%
Per diluted share$1.06$1.37-22.7%
Twelve months ended May 31
Net sales$3,430.6$3,607.7-4.9%
Net earnings$154.7$87.177.6%
Per diluted share$3.11$1.7775.7%
(in millions of dollars except per share)

Worthington Steel’s earnings slipped in its fiscal fourth quarter while sales ticked up.

The Columbus, Ohio-based steel processor posted net earnings attributable to controlling interest of $53.2 million in fiscal Q4’24, sliding 21% from $67.3 million a year earlier. Sales rose 3% to $911 million.

While quarterly shipments were down 2% from last year to just over 1 million tons, Worthington attributed the boost in total sales to a 4% rise in direct selling prices and a more favorable mix in toll processing.

Worthington’s operating income fell $22.5 million from the same quarter last year to $67.3 million. This was primarily due to a $19.2-million drop in gross margin and a $10.6-million increase in selling, general, and administrative expenses (SG&A).

The driving factors for higher SG&A were a jump in wage and benefit costs, costs related to being a stand-alone public company, and increased bad debt expense.

Recall that Worthington Industries completed its planned split into two separate companies, Worthington Steel Inc. and Worthington Enterprises Inc., on Dec. 1.

“Worthington Steel saw a solid performance in Q4 and finished fiscal 2024 strong,” President and CEO Geoff Gilmore said in a statement on Wednesday. “As we enter fiscal 2025, we remain focused on executing our strategy and driving shareholder value through organic growth and strategic M&A.”

Steel pricing was “volatile” in the quarter and remains “unsettled,” according to CFO Tim Adams, who spoke on an earnings call on Thursday. He said Q4’24 inventory losses were estimated to be $3.4 million, and he expects Q1’25 losses to be $15-20 million on a pre-tax basis.

End-use markets

The automotive sector, Worthington’s largest end market, accounted for 52% of Q4 sales and “remains solid,” according to EVP and COO Jeff Klingler.

“We believe North American light-vehicle production could return to pre-Covid levels of more than 16 million units as early as next calendar year,” he commented on the earnings call.

Adams noted that the automotive industry will see its typical summer slowdown, but he expects auto plants’ downtime for model-year turnovers to last “roughly two weeks for most automobiles,” which is on pace with last year.

Construction is Worthington’s second-largest end market. Sales in this sector accounted for 14% of total Q4’24 sales, up two percentage points from last year. Klingler said the company saw strength in fencing and metal buildings during the quarter.

Executives expressed optimism about the company’s electrical steel operations. Two expansion projects—one in Mexico and another in Canada—are on track and on budget, with approximately $25 million invested in each facility thus far. Both projects are expected to be fully operational by the end of 2025.

Ethan Bernard

Read more from Ethan Bernard

Laura Miller

Read more from Laura Miller

Latest in Steel Product Producers