Worthington Steel's earnings improve despite sales slide

Depressed demand and weak prices drove Worthington Steel’s second fiscal quarter results to a sequential decline. However, earnings improved over last year for the Columbus, Ohio-based metals processor, which recently marked its first full year as a standalone company.

“Worthington Steel delivered a solid quarter despite headwinds across a number of end markets,” stated President and CEO Geoff Gilmore in Worthington’s quarterly earnings report.

Sales in the quarter ended Nov. 30 slid 11% from the prior quarter to $739 million. Compared to last year, sales were 8.5% lower. While fiscal Q2 earnings attributable to its controlling interest of $12.8 million dropped by more than a half from fiscal Q1, they showed significant improvement over the loss of $6 million in the year-ago quarter.

Volumes of 936,069 short tons (st) in the quarter declined 5.8% from the previous quarter and 3.4% from the year-ago period.

Electrical steel lamination investments

With its investments in electrical steel laminations, Worthington believes it is well-positioned to capitalize on opportunities from electrification and the energy transition.

For its ongoing $85-million motor lamination capacity expansion in Mexico, the company has completed the building expansion and installed five presses. Production is slated to begin in fall 2025, according to an investor presentation released with the earnings report.

In Canada, Worthington is adding capacity to an existing transformer core-making operation. Capex for that project is also $85 million. It is targeting late 2025 or early 2026 for the start of production. Worthington said this project will help customers close a two-year backlog on transformer orders.

Worthington Steel operates a total of 32 manufacturing facilities. They are primarily in North America, where 90% of its sales take place. It also has operations in Germany, India, and China, as well as a pending acquisition of an electric motor lamination producer in Italy.