Executive Summary
Worthington Industries reported a challenging Q4 FY2024 on a GAAP basis, driven by one-time charges and weaker volumes across segments, while delivering a respectable Adjusted EBITDA of $63 million and adjusted EPS of $0.74. Revenue totaled $319 million, down 13.6% year over year as management noted destocking and softer demand in several core end-markets. Despite the topline pressure, the company showcased a disciplined capital allocation stance, including deposits for the Hexagon Ragasco acquisition and the formation of a Sustainable Energy Solutions (SES) joint venture with Hexagon Composites, transforming SES into an unconsolidated equity investment with earnings flowing through equity income going forward. The trailing 12-month adjusted EBITDA reached $251 million with a margin of 20.1%, highlighting earnings power that could be enhanced as normalization in end-markets and synergies from M&A activities materialize. The balance sheet remained strong, with about $244 million of cash and long-term funded debt of $298 million, yielding an implied leverage that is well within conservative covenant headroom. Management signaled a constructive 2025 outlook, anchored by continued growth through transformation, innovation, and accretive M&A, while acknowledging near-term headwinds from macro demand and commodity price cycles. Overall, the company is transitioning to Worthington Enterprises, with Consumer Products and Building Products as the primary platforms, and highlighted potential for margin improvement toward a mid-20s EBITDA profile as destocking normalizes and new products scale.
Key Performance Indicators
QoQ: -22.86% | YoY:-97.42%
QoQ: -244.48% | YoY:-124.47%
QoQ: -242.22% | YoY:-123.97%
Key Insights
Revenue: $318.8 million, down 13.6% YoY from $369.0 million; Gross profit: $78.1 million, margin 24.8% vs 25.5% prior year; Operating income: $4.89 million (operating margin 1.54%); Adjusted EBITDA: $63.0 million; Net income (GAAP): -$31.8 million; EPS (GAAP): -$0.64; Adjusted EPS: $0.74; Trailing 12-month adjusted EBITDA: $251 million, margin 20.1%; Cash from operations: $45.2 million; Free cash flow: $33.8 million; Capex: $11.3 million; Acquisitions deposits: $12 million; Dividends paid: $7.91...
Financial Highlights
Revenue: $318.8 million, down 13.6% YoY from $369.0 million; Gross profit: $78.1 million, margin 24.8% vs 25.5% prior year; Operating income: $4.89 million (operating margin 1.54%); Adjusted EBITDA: $63.0 million; Net income (GAAP): -$31.8 million; EPS (GAAP): -$0.64; Adjusted EPS: $0.74; Trailing 12-month adjusted EBITDA: $251 million, margin 20.1%; Cash from operations: $45.2 million; Free cash flow: $33.8 million; Capex: $11.3 million; Acquisitions deposits: $12 million; Dividends paid: $7.91 million; Debt: total debt $317.2 million, cash $244.2 million; Net debt: $72.95 million; Net debt to trailing EBITDA: <2.5x; Undrawn revolver: $500 million. Key segment views: Consumer Products net sales $125 million (down 16% YoY); Building Products net sales $154 million (down ~12% YoY) with ClarkDietrich margin compression; WAVE equity earnings $28 million; SES net sales $40 million; SES reported as unconsolidated post-transaction (JV).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
318.80M |
-74.06% |
0.65% |
| Gross Profit |
78.10M |
-68.04% |
9.27% |
| Operating Income |
4.89M |
-97.42% |
-22.86% |
| Net Income |
-31.79M |
-124.47% |
-244.48% |
| EPS |
-0.64 |
-123.97% |
-242.22% |
Key Financial Ratios
operatingProfitMargin
1.53%
operatingCashFlowPerShare
$0.91
freeCashFlowPerShare
$0.68
dividendPayoutRatio
-24.9%
priceEarningsRatio
-22.17
Management Commentary
Theme: Strategy and M&A execution: Management underscored the Hexagon Ragasco acquisition and the SES joint venture as core to accelerated earnings growth and portfolio optimization. Key quote: “We recently announced two transactions, the acquisition of Hexagon Ragasco and the formation of a joint venture of our Sustainable Energy Solutions business with Hexagon Composites.” (Andy Rose) Theme: Profitability and cash generation: Management highlighted Adjusted EBITDA of $63 million and adjusted EPS of $0.74 in Q4, while GAAP results reflected $74 million of pretax charges driving a GAAP loss per share of $0.64; ex-items, L4Q24 adjusted EPS was $0.74 vs $1.19 in the prior year. Quote: “On a GAAP basis, in Q4, we reported a loss from continuing operations of $0.64 a share... Excluding these items, we generated adjusted earnings from continuing operations of $0.74 per share in the current quarter.” (Joe Hayek) Theme: End-market dynamics and outlook: The team discussed destocking in Building Products and softer consumer demand in outdoor living categories, with expectations that destocking could normalize in the summer and fall season. Quote: “We are optimistic that this destocking cycle will run its course this summer and demand will return to normal seasonal levels in time for the fall heating season.” (Joe Hayek) Theme: SES JV implications: The SES JV shifts SES earnings to equity income and reduces consolidated invested capital, while Hexagon Composites brings manufacturing automation and global reach; management emphasized strategic fit and expected long-run value creation. Quote: “This strategic move results in a reduction of invested capital, higher earnings in the prospect of a brighter future for our SES business.” (Andy Rose)
We had a respectable quarter with adjusted EBITDA of $63 million and adjusted earnings per share of $0.74.
— Andy Rose
This strategic move results in a reduction of invested capital, higher earnings in the prospect of a brighter future for our SES business.
— Andy Rose
Forward Guidance
Near-term normalization in construction and consumer end-markets is expected to drive more stable volumes compared with FY2024. Management targets 6-8% annual top-line growth and a long-term EBITDA margin objective of approximately 24%, supported by transformation initiatives, efficient capital deployment, and accretive M&A. The Hexagon Ragasco acquisition and SES JV position Worthington Enterprises to gain market access, enhance product innovation, and gain incremental margin through scale, automation, and geographic diversification. Key factors for investors to monitor include: (1) pace of destocking unwinding in Building Products and Outdoor Living; (2) sustainability and hydrogen markets developing for SES and Type 4 cylinders; (3) synergies from Ragasco integration and post-JV operational improvements; (4) steel price cycles affecting ClarkDietrich and WAVE pricing dynamics; (5) cadence of capital returns and capex execution related to modernization projects (roughly $60 million remaining over next two years). Management reiterated that SES profits will flow through equity income in fiscal 2025 Q1, which may dampen consolidated earnings in the near term but improve ROIC and reduce invested capital; over time, the broader portfolio should generate stronger, more durable earnings growth.