Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. On ~~December 31, 2021,~~September 30, 2022, the number of Common Shares, without par value, issued and outstanding was ~~50,934,413.~~49,711,335.

Selected statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”), including, without limitation, in “PART I – Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations,” constitute “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995 (the ~~“Act”~~“PSLRA”). Forward-looking statements reflect our current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “intend,” “estimate,” “plan,” “foresee,” “likely,” “will,” ~~“should”~~“should,” “forecast,” “project,” or other similar words or phrases. These forward-looking statements include, without limitation, statements relating to:

Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow:

We note these factors for investors as contemplated by the ~~Act.~~PSLRA. It is impossible to predict or identify all potential risk factors. Consequently, you should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Any forward-looking statements in this ~~Quarterly Report on~~ Form 10-Q are based on current information as of the date of this ~~Quarterly Report on~~ Form 10-Q, and we assume no obligation to correct or update any such statements in the future, except as required by applicable law.

~~We recognize revenue at a point in time, with~~(1) The products contained within each of these operating segments have similar production processes, require substantially the ~~exception~~same raw materials, use similar equipment, and serve similar purposes. Therefore, we believe the products within each of these segments are appropriately combined for purposes of the ~~toll processing revenue stream~~disclosure requirements prescribed by ASC 280 and ~~on a historical basis, certain contracts within the oil & gas equipment revenue stream, which were recognized over time.~~ ASC 606.

We have elected the optional exemption, which allows for the exclusion of the amounts for remaining performance obligations that are a part of contracts with an expected duration of one year or less. As of ~~November 30, 2021,~~August 31, 2022, there were 0no unsatisfied or partially satisfied performance obligations related to contracts with an expected duration greater than one year.

On June 3, 2020 (the “Effective Date”), Nikola Corporation (“Nikola”) became a public company through a reverse merger with a subsidiary of VectoIQ Acquisition Corporation, a NASDAQ listed publicly traded company. Prior to the Effective Date, the Company held an equity interest in the predecessor company, which was converted to 19,048,020 shares of Nikola common stock. During fiscal 2021, the Company sold or contributed all of these shares.

During the first quarter of fiscal 2021, the Company recognized a $796,141,000 pre-tax gain consisting of $508,511,000 of realized gains from the sale or contribution of 12,000,000 of its Nikola shares, and an unrealized mark-to-market gain of $287,630,000 related to the 7,048,000 Nikola shares the Company continued to own at August 31, 2020. The Company also recognized in operating income $49,511,000 of incremental expenses related to the Nikola gains, comprised of $28,858,000 for discretionary profit sharing and bonus expenses and $20,653,000 for the contribution of 500,000 shares of Nikola common stock to the Worthington Industries Foundation to establish a charitable endowment focused on the communities in which the Company operates.

During the second quarter of fiscal 2021, the market price of the Nikola shares dropped from $40.81 per share at August 31, 2020 to $20.41 per share at November 30, 2020, resulting in an unrealized mark-to-market loss of $143,780,000 for the 7,048,000 shares we held at quarter end, and reducing the pre-tax year-to-date realized and unrealized gain on the investment in Nikola to $652,362,000. In addition, during the second quarter, we recorded incremental expenses of $4,570,000 for discretionary bonuses related to the Nikola investment gain.

Investments in affiliated companies that we do not control, either through majority ownership or otherwise, are accounted for using the equity method. At ~~November 30, 2021, the Company~~August 31, 2022, we held ~~non-controlling~~noncontrolling investments in the following affiliated companies: ~~ArtiFlex Manufacturing, LLC (“ArtiFlex”) (50%),~~ Clarkwestern Dietrich Building Systems LLC (“ClarkDietrich”) ~~(25%~~(25%),; Serviacero Planos, S. de R. L. de C.V. (“Serviacero Worthington”) ~~(50%~~(50%),; Taxi Workhorse Holdings, LLC (“~~Cabs”~~Workhorse”) ~~(20%~~(20%),; and Worthington Armstrong Venture (“WAVE”) ~~(50%~~(50%).

On August 3, 2022, the Company sold its 50% noncontrolling equity interest in ArtiFlex Manufacturing, LLC (“ArtiFlex”) to the unaffiliated joint venture member for approximately $42,086,000, after adjustments for closing debt and final net working capital. Approximately $6,000,000 of the total cash proceeds were attributed to real property in Wooster, Ohio, with a net book value of approximately $6,300,000. This real property was owned by Worthington and leased to ArtiFlex prior to closing of the transaction. The Company recognized a pre-tax loss of approximately $15,759,000 in equity income related to the equity portion of the transaction.

We received distributions from unconsolidated affiliates totaling ~~$48,642,000~~$74,557,000 during the ~~six~~three months ended ~~November 30, 2021.~~ August 31, 2022. We have received cumulative distributions from WAVE in excess of our investment balance amounting to $~~94,836,000~~84,994,000, which is shown as a separate liability on our consolidated balance sheet at ~~November 30, 2021.~~August 31, 2022. In accordance with the applicable accounting guidance, we reclassified the negative investment balance to the liabilities section of our consolidated balance ~~sheet.~~sheets. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if the investment balance becomes positive, it will again be shown as an asset on our consolidated balance ~~sheet.~~sheets. If it becomes probable that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any negative investment balance classified as a liability as income immediately.

We use the “cumulative earnings” approach for determining cash flow presentation of distributions from our unconsolidated joint ventures. Distributions received are included in our consolidated statements of cash flows as operating activities, unless the cumulative distributions received, less distributions received in prior periods that were determined to be returns of investment, exceed our portion of the cumulative equity in the net earnings of the joint venture, in which case the excess distributions are deemed to be returns of the investment and are classified as investing activities in our consolidated statements of cash flows.

There was 0 goodwill associated with the Other segment at November 30, 2021, or May 31, 2021. Accumulated goodwill impairment charges within the Other segment totaled $198,290,000 as of November 30, 2021 and May 31, 2021.

~~Fiscal 2021~~: ~~During the second quarter~~Impairment of fiscal 2021, we identified an impairment indicator related to the oil & gas equipment operations in Tulsa, Oklahoma due to the economic impact of the COVID-19 pandemic and related market softness. As a result, we tested the long-lived assets consisting of fixed assets and customer list intangible assets with net book values of $7,375,000 andLong-Lived Assets

$2,374,000, respectively, for impairment. The fair value of the fixed assets was determined to be $5,934,000 (using observable Level 2 inputs) resulting in an impairment charge of $1,441,000. Additionally, the customer list intangible assets were deemed to be fully impaired (using unobservable Level 3 inputs) and written off.

During the first quarter of fiscal 2021, management determined indicators of impairment were present with regard to the cryogenics business primarily operated out of Theodore, Alabama with European distribution in Austria. As a result, property, plant and equipment with a carrying value of $13,526,000 were written down to their estimated fair value of $9,193,000 (determined using Level 2 inputs), resulting in an impairment charge of $4,333,000. Additionally, the customer list intangible assets with a carrying value of $3,662,000 were deemed to be fully impaired and written off. The fair value of the customer list intangible assets was determined using unobservable Level 3 inputs.

During the first quarter of fiscal ~~2021, the Company decided~~2023, we committed to ~~discontinue its operation~~plans to liquidate certain fixed assets at our toll processing facility in Cleveland, Ohio. As all of the ~~manufacturing line~~criteria for ~~alternative fuel cylinders~~classification of assets held for sale were met during the current quarter, the net assets have been presented separately as assets held for sale in our consolidated balance sheet as of August 31, 2022. In accordance with the applicable accounting guidance, the net assets were recorded at the ~~Jefferson, Ohio facility.~~lower of net book value or fair market value less costs to sell. As a result, ~~long-lived assets with~~ a ~~carrying value~~pre-tax impairment of ~~$1,823,000 were written down to their estimated fair market value of $400,000 (determined using Level 2 inputs), resulting in an impairment charge of $1,423,000.~~$

~~During~~312,000 was recognized during the ~~first~~current quarter of fiscal ~~2021, the Company recognized a $506,000 impairment charge related to the Superior Tools business that was acquired as part of Magna Industries, Inc. in fiscal 2019 and subsequently sold.~~2023.

In February 2019, our former Structural Composites Industries, LLC subsidiary (“SCI”) agreed to participate in a tank replacement program for specific design sizes of SCI’s composite hydrogen fuel tanks, which are integrated into a customer’s hydrogen fuel cells used to fuel material handling equipment, primarily rider pallet jacks in warehouses. As of November 30, 2021, the Company has a reserve of $4,864,000 for the estimated remaining direct costs related to the replacement program, which are expected to be paid in the next twelve months. The actual cost incurred by the Company related to this matter may vary from the initial estimate.

We do not have guarantees that we believe are reasonably likely to have a material current or future effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We had in place ~~$16,837,000~~$16,637,000 of outstanding stand-by letters of credit issued to third-party service providers at ~~November 30, 2021. NaN~~August 31, 2022. No amounts were drawn against these letters of credit at ~~November 30, 2021.~~August 31, 2022. We are also party to an operating lease for an aircraft in which we have guaranteed a residual value at lease termination. The maximum obligation under the terms of this guarantee was approximately ~~$18,881,000~~$17,866,000 at ~~November 30, 2021.~~August 31, 2022.

Note J – Other Comprehensive Income (Loss) ~~Income~~

The following table summarizes the tax effects on each component of OCI for the periods presented:


	Three Months Ended																		Three Months Ended
	November 30, 2021									November 30, 2020									August 31, 2022									August 31, 2021
	Before-Tax			Tax			Net-of-Tax			Before-Tax			Tax			Net-of-Tax			Before-Tax			Tax			Net-of-Tax			Before-Tax			Tax			Net-of-Tax
(in thousands)
Foreign currency translation	$	(4,507	)		(365	)	$	(4,872	)	$	(1,027	)		(24	)	$	(1,051	)	$	(9,519	)		(581	)	$	(10,100	)	$	(3,617	)		(358	)	$	(3,975	)
Pension liability adjustment		0			0			0			(4	)		0			(4	)		3,725			(786	)		2,939			-			-			-
Cash flow hedges		(68,677	)		15,691			(52,986	)		19,540			(4,322	)		15,218			(17,097	)		3,796			(13,301	)		(199	)		(100	)		(299	)
Other comprehensive income (loss)	$	(73,184	)	$	15,326		$	(57,858	)	$	18,509		$	(4,346	)	$	14,163		$	(22,891	)	$	2,429		$	(20,462	)	$	(3,816	)	$	(458	)	$	(4,274	)

Six Months Ended

November 30, 2021

November 30, 2020

Before-Tax

Tax

Net-of-Tax

Before-Tax

Tax

Net-of-Tax

(in thousands)

Foreign currency translation
$
(8,124
)

(723
)

$
(8,847
)

$
6,581

676

$
7,257

Pension liability adjustment

0

0

0

484

(116
)

368

Cash flow hedges

(68,876
)

15,591

(53,285
)

22,793

(5,012
)

17,781

Other comprehensive income (loss)
$
(77,000
)

$
14,868

$
(62,132
)

$
29,858

$
(4,452
)

$
25,406

~~NOTE~~Note K – Changes in Equity

The following tables summarize the changes in equity by component and in total for the periods presented:

Controlling Interest

Accumulated

Other

Additional

Comprehensive

Non-

Paid-in

Income (Loss),

Retained

controlling

(in thousands)

Capital

Net of Tax

Earnings

Total

Interests

Total

Balance at May 31, 2021

$
282,790

$
45,387

$
1,070,016

$
1,398,193

$
153,502

$
1,551,695

Net earnings

0

0

132,491

132,491

8,984

141,475

Other comprehensive loss

0

(4,274
)

0

(4,274
)

0

(4,274
)
Common shares issued, net of withholding tax

(4,091
)

0

0

(4,091
)

0

(4,091
)
Common shares in non-qualified plans

89

0

0

89

0

89

Stock-based compensation

6,324

0

0

6,324

0

6,324

Purchases and retirement of common shares

(5,477
)

0

(55,408
)

(60,885
)

0

(60,885
)
Cash dividends declared

0

0

(14,504
)

(14,504
)

0

(14,504
)
Dividends to noncontrolling interests

0

0

0

0

(9,197
)

(9,197
)
Balance at August 31, 2021

$
279,635

$
41,113

$
1,132,595

$
1,453,343

$
153,289

$
1,606,632

Net earnings

0

0

110,301

110,301

2,884

113,185

Other comprehensive loss

0

(57,858
)

0

(57,858
)

0

(57,858
)
Common shares issued, net of withholding tax

(2,694
)

0

0

(2,694
)

0

(2,694
)
Common shares in NQ plans

257

0

0

257

0

257

Stock-based compensation

3,304

0

0

3,304

0

3,304

Purchases and retirement of common shares

(1,297
)

0

(11,405
)

(12,702
)

0

(12,702
)
Cash dividends declared

0

0

(14,154
)

(14,154
)

0

(14,154
)
Dividends to noncontrolling interest

0

0

0

0

(2,879
)

(2,879
)
Balance at November 30, 2021

$
279,205

$
(16,745
)

$
1,217,337

$
1,479,797

$
153,294

$
1,633,091


	Controlling Interest
				Accumulated
				Other
	Additional			Comprehensive									Non-
	Paid-in			Loss,			Retained						controlling
(in thousands)	Capital			Net of Tax			Earnings			Total			Interests		Total
Balance at May 31, 2022	$	273,439		$	(22,850	)	$	1,230,163		$	1,480,752		$	133,210	$	1,613,962
Net earnings		-			-			64,082			64,082			1,162		65,244
Other comprehensive loss		-			(20,462	)		-			(20,462	)		-		(20,462	)
Common shares issued, net of withholding tax		(3,466	)		-			-			(3,466	)		-		(3,466	)
Common shares in non-qualified plans		136			-			-			136			-		136
Stock-based compensation		6,976			-			-			6,976			-		6,976
Cash dividends declared		-			-			(15,418	)		(15,418	)		-		(15,418	)
Balance at August 31, 2022	$	277,085		$	(43,312	)	$	1,278,827		$	1,512,600		$	134,372	$	1,646,972

Controlling Interest

Accumulated

Other

Additional

Comprehensive

Non-

Paid-in

Loss,

Retained

controlling

(in thousands)

Capital

Net of Tax

Earnings

Total

Interests

Total

Balance at May 31, 2020

$
283,776

$
(35,217
)

$
572,262

$
820,821

$
145,612

$
966,433

Net earnings

0

0

616,675

616,675

2,063

618,738

Other comprehensive income

0

11,242

0

11,242

0

11,242

Common shares issued, net of withholding tax

(1,150
)

0

0

(1,150
)

0

(1,150
)
Common shares in non-qualified plans

90

0

0

90

0

90

Stock-based compensation

3,022

0

0

3,022

0

3,022

Purchases and retirement of common shares

(7,536
)

0

(46,784
)

(54,320
)

0

(54,320
)
Cash dividends declared

0

0

(13,595
)

(13,595
)

0

(13,595
)
Dividends to noncontrolling interests

0

0

0

0

(560
)

(560
)
Balance at August 31, 2020

$
278,202

$
(23,975
)

$
1,128,558

$
1,382,785

$
147,115

$
1,529,900

Net earnings (loss)

0

0

(74,044
)

(74,044
)

5,532

(68,512
)
Other comprehensive income

0

14,163

0

14,163

0

14,163

Common shares issued, net of withholding tax

2,294

0

0

2,294

0

2,294

Common shares in NQ plans

292

0

0

292

0

292

Stock-based compensation

3,499

0

0

3,499

0

3,499

Purchases and retirement of common shares

(4,486
)

0

(34,077
)

(38,563
)

0

(38,563
)
Contribution to Samuel joint venture

0

0

0

0

925

925

Cash dividends declared

0

0

(13,527
)

(13,527
)

0

(13,527
)
Balance at November 30, 2020

$
279,801

$
(9,812
)

$
1,006,910

$
1,276,899

$
153,572

$
1,430,471

Table of Contents


	Controlling Interest
				Accumulated
				Other
	Additional			Comprehensive									Non-
	Paid-in			Income,			Retained						controlling
(in thousands)	Capital			Net of Tax			Earnings			Total			Interests			Total
Balance at May 31, 2021	$	282,790		$	45,387		$	1,070,016		$	1,398,193		$	153,502		$	1,551,695
Net earnings		-			-			132,491			132,491			8,984			141,475
Other comprehensive loss		-			(4,274	)		-			(4,274	)		-			(4,274	)
Common shares issued, net of withholding tax		(4,091	)		-			-			(4,091	)		-			(4,091	)
Common shares in non-qualified plans		89			-			-			89			-			89
Stock-based compensation		6,324			-			-			6,324			-			6,324
Purchases and retirement of common shares		(5,477	)		-			(55,408	)		(60,885	)		-			(60,885	)
Cash dividends declared		-			-			(14,504	)		(14,504	)		-			(14,504	)
Dividends to noncontrolling interests		-			-			-			-			(9,197	)		(9,197	)
Balance at August 31, 2021	$	279,635		$	41,113		$	1,132,595		$	1,453,343		$	153,289		$	1,606,632

The following ~~tables summarize~~table summarizes the changes in accumulated other comprehensive income (loss) for the periods presented:

Accumulated

Foreign

Pension

Other

Currency

Liability

Cash Flow

Comprehensive

(in thousands)

Translation

Adjustment

Hedges

Income (Loss)

Balance as of May 31, 2021

$
1,779

$
(15,955
)

$
59,563

$
45,387

Other comprehensive income (loss) before reclassifications

(8,124
)

0

14,279

6,155

Reclassification adjustments to net earnings (a)

0

0

(83,155
)

(83,155
)
Income tax effect

(723
)

0

15,591

14,868

Balance as of November 30, 2021

$
(7,068
)

$
(15,955
)

$
6,278

$
(16,745
)


										Accumulated
	Foreign			Pension						Other
	Currency			Liability			Cash Flow			Comprehensive
(in thousands)	Translation			Adjustment			Hedges			Loss
Balance as of May 31, 2022	$	(15,310	)	$	(6,244	)	$	(1,296	)	$	(22,850	)
Other comprehensive loss before reclassifications		(9,519	)		(1,049	)		(14,207	)		(24,775	)
Reclassification adjustments to net earnings (a)		-			4,774			(2,890	)		1,884
Income tax effect		(581	)		(786	)		3,796			2,429
Balance as of August 31, 2022	$	(25,410	)	$	(3,305	)	$	(14,597	)	$	(43,312	)


										Accumulated
	Foreign			Pension						Other
	Currency			Liability			Cash Flow			Comprehensive
(in thousands)	Translation			Adjustment			Hedges			Income
Balance as of May 31, 2021	$	1,779		$	(15,955	)	$	59,563		$	45,387
Other comprehensive income (loss) before reclassifications		(3,617	)		-			35,220			31,603
Reclassification adjustments to net earnings (a)		-			-			(35,419	)		(35,419	)
Income tax effect		(358	)		-			(100	)		(458	)
Balance as of August 31, 2021	$	(2,196	)	$	(15,955	)	$	59,264		$	41,113

Table of Contents

Accumulated

Foreign

Pension

Other

Currency

Liability

Cash Flow

Comprehensive

(in thousands)

Translation

Adjustment

Hedges

Loss

Balance as of May 31, 2020

$
(9,142
)

$
(21,886
)

$
(4,189
)

$
(35,217
)
Other comprehensive income before reclassifications

6,581

484

16,765

23,830

Reclassification adjustments to net earnings (a)

0

0

6,028

6,028

Income tax effect

676

(116
)

(5,013
)

(4,453
)
Balance as of November 30, 2020

$
(1,885
)

$
(21,518
)

$
13,591

$
(9,812
)
(a)

The statement of earnings classification of amounts reclassified to net earnings include:

Pension liability adjustment – During August 2022, we purchased (using pension plan assets) an annuity contract from a third-party insurance company to transfer approximately 31% of the total projected benefit obligation of The Gerstenslager Company Bargaining Unit Employees’ Pension Plan as of the purchase date. As a result of this transaction: 1) we incurred a non-cash settlement charge of $4,774,000 within miscellaneous income (expense), net; 2) we were relieved of all responsibility for these pension obligations; and 3) the insurance company is now required to pay and administer the retirement benefits owed to 220 beneficiaries; and

Cash flow hedges – disclosed in “Note Q – Derivative Financial Instruments and Hedging Activities”.

~~(a)~~

~~The statement of earnings classification of amounts reclassified to net earnings for cash flow hedges is disclosed in “Note Q – Derivative Instruments and Hedging Activities.”~~

~~NOTE~~Note L – Stock-Based Compensation

Non-Qualified Stock Options

During the ~~six~~three months ended ~~November 30, 2021,~~August 31, 2022, we granted non-qualified stock options covering a total of 54,500 common shares under our stock-based compensation plans. The weighted average exercise price of ~~$60.19~~$60.19 per share was equal to the market price of the underlying common shares at the grant date. The fair value of these stock options, based on the Black-Scholes option-pricing model, calculated at the grant date, was ~~$19.73~~$19.73 per share. The calculated pre-tax stock-based compensation expense for these stock options is ~~$1,075,080~~$1,075,080 and will be recognized on a straight-line basis over the three-year vesting period, net of any forfeitures. The following assumptions were used to value these stock options:


Dividend yield	2.10	%
Expected volatility	41.62	%
Risk-free interest rate	1.11	%
Expected term (years)			6.0

Expected volatility is based on the historical volatility of Worthington Industries, Inc.’s common shares and the risk-free interest rate is based on the U.S. Treasury strip rate for the expected term of the stock options. The expected term was developed using historical exercise experience.

Service-Based Restricted Common Shares

During the ~~six~~three months ended ~~November 30, 2021,~~August 31, 2022, we granted an aggregate of ~~154,050~~126,800 service-based restricted common shares under our stock-based compensation plans, which generally vest three years after their grant date. The fair value of these restricted common shares was equal to the closing market price of the underlying common shares on the date of grant, or ~~$58.11~~$47.10 per share. The calculated pre-tax stock-based compensation expense for these restricted common shares is ~~$9,048,253~~$5,897,000 and will be recognized on a straight-line basis over the three-year service-based vesting period.

Market-Based Restricted Common Shares

On June 24, 2022, we granted 10,000 market-based restricted common shares to one key employee under one of our stock-based compensation plans. Vesting of these restricted common shares is contingent upon the average closing price of the common shares reaching $65.00 during any 90 consecutive day period during the five-year period following the date of grant and completion of a three-year service vesting period. The grant date fair value of these restricted common shares, as determined by a Monte Carlo simulation model, was $35.49 per share. The calculated pre-tax stock-based compensation expense for these market-based restricted common shares is $355,000 and will be recognized on a straight-line basis over the three-year service-based vesting period. The following assumptions were used to determine the grant-date fair value and the derived service period for these restricted common shares:


Dividend yield	2.67	%
Expected volatility	43.00	%
Risk-free interest rate	3.18	%

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Performance Share Awards

We have awarded performance shares to certain key employees under our stock-based compensation plans. These performance shares are earned based on the level of achievement with respect to corporate targets for cumulative corporate economic value added, earnings per share growth and, in the case of business unit executives, a business unit adjusted earnings before interest and taxes

target, in each case for the three-year periods ending May 31, ~~2022,~~ 2023, 2024 and ~~2024.~~2025. These performance share awards will be paid, to the extent earned, in common shares of Worthington Industries, Inc. in the fiscal quarter following the end of the applicable three-year performance period. The fair values of our performance shares are determined by the closing market prices of the underlying common shares at the respective grant dates of the performance shares and the pre-tax stock-based compensation expense is based on our periodic assessment of the probability of the targets being achieved and our estimate of the number of common shares that will ultimately be issued. During the ~~six~~ three months ended ~~November 30, 2021~~,August 31, 2022, we granted performance share awards covering an aggregate of ~~36,400~~58,100 common shares (at target levels). The calculated pre-tax stock-based compensation expense for these performance shares is ~~$2,191,000.~~$2,695,000. The ultimate pre-tax stock-based compensation expense to be recognized over the three-year performance period on all tranches will vary based on our periodic assessment of the probability of the ~~target~~targets being achieved.

~~NOTE~~Note M – Income Taxes

Income tax expense for the ~~six~~three months ended ~~November 30,~~August 31, 2022 and 2021 ~~and 2020~~ reflected estimated annual effective income tax rates of ~~22.8%~~23.9% and ~~21.5%~~23.3%, ~~respectively. The annual effective income tax rates~~respectively, and exclude any impact from the inclusion of net earnings attributable to noncontrolling interests in our consolidated statements of earnings. Net earnings attributable to noncontrolling interests are ~~primarily~~ a result of our Samuel, Spartan, TWB and WSP consolidated joint ventures. The net earnings attributable to the noncontrolling interests in Samuel, Spartan, TWB and WSP’s U.S. operations do not generate tax expense to Worthington since the investors in Samuel, Spartan, TWB and WSP’s U.S. operations are taxed directly based on the earnings attributable to them. The tax expense of TWB’s wholly-owned foreign corporations is reported in our consolidated income tax expense. Management is required to estimate the annual effective income tax rate based upon its forecast of annual pre-tax income for domestic and foreign operations. Our actual effective income tax rate for fiscal ~~2022~~2023 could be materially different from the forecasted rate as of ~~November 30, 2021.~~ August 31, 2022.

~~NOTE~~Note N – Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share attributable to controlling interest for the periods presented:


	Three Months Ended					Six Months Ended				Three Months Ended
	November 30,					November 30,				August 31,
(in thousands, except per share amounts)	2021		2020			2021		2020		2022		2021
Numerator (basic & diluted):
Net earnings (loss) attributable to controlling interest -
income (loss) available to common shareholders	$	110,301	$	(74,044	)	$	242,792	$	542,631
Net earnings attributable to controlling interest -
income available to common shareholders										$	64,082	$	132,491
Denominator:
Denominator for basic earnings (loss) per share attributable to
Denominator for basic earnings per share attributable to
controlling interest - weighted average common shares		50,381		52,988			50,618		53,532		48,478		50,852
Effect of dilutive securities		833		-			914		907		760		1,013
Denominator for diluted earnings (loss) per share attributable to
Denominator for diluted earnings per share attributable to
controlling interest - adjusted weighted average common shares		51,214		52,988			51,532		54,439		49,238		51,865

Basic earnings (loss) per share attributable to controlling interest	$	2.19	$	(1.40	)	$	4.80	$	10.14
Diluted earnings (loss) per share attributable to controlling interest	$	2.15	$	(1.40	)	$	4.71	$	9.97
Basic earnings per share attributable to controlling interest										$	1.32	$	2.61
Diluted earnings per share attributable to controlling interest										$	1.30	$	2.55

Stock options covering an aggregate of ~~54,500~~117,000 and 40,283 common shares for the three months ended ~~November 30,~~August 31, 2022 and 2021, have been excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive for the period. All potential diluted shares (stock options and restricted common shares covering an aggregate of 1,030,835 common shares) have been excluded from the computation of diluted loss per share for the three months ended November 30, 2020, because the effect would have been anti-dilutive due to the overall net loss for the period. Stock options covering an aggregate of 47,352 and 492,011 common shares for the six months ended November 30, 2021 and 2020, respectively, have been excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive for the applicable period.

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~~NOTE~~Note O – Segment Operations

Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes. Factors used to identify reportable operating segments include the nature of the products and services provided by each business, the management reporting structure, similarity of economic characteristics and certain quantitative measures, as prescribed by authoritative accounting guidance.

Effective June 1, 2021, we reorganized the management structure of our Pressure Cylinders business to better align around the end markets which it served, resulting in 3 new reportable operating segments: Consumer Products, Building Products and Sustainable Energy Solutions. Our Steel Processing operating segment was not impacted by these changes. A discussion of each of these new reportable segments is included below.

~~Consumer Products:~~ This reportable segment is comprised of brands that offer market-leading products in the tools, outdoor living and celebrations end markets with brands that include Coleman®, Bernzomatic®, Balloon Time®, Mag Torch®, General®, Garden-Weasel®, Pactool International®, Hawkeye™ and Worthington Pro-Grade™. This market sector includes propane-filled cylinders for torches, camping stoves and other applications, certain propane gas (LPG) cylinders, hand-held torches, Balloon Time® helium-filled balloon kits, and specialized hand tools and instruments. These products are sold primarily to mass merchandisers, retailers and distributors. LPG cylinders, which hold fuel for barbeque grills and recreational vehicle equipment, are also sold through cylinder exchangers.

~~Building Products:~~ This reportable segment includes refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products. Cylinders are generally sold to gas producers and distributors. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential, and automotive air conditioning and refrigeration systems. LPG cylinders hold fuel for residential and light commercial heating systems, industrial forklifts and commercial/residential cooking (the latter, generally outside North America).Well water tanks and expansion tanks are used in the residential market with the latter also sold into commercial markets. Specialty products include a variety of fire suppression and chemical tanks.

~~Sustainable Energy Solutions:~~ This reportable segment, which is primarily based in Europe, includes on-board fueling systems and services, as well as gas containment solutions and services for storage, transport and distribution of industrial gases. It includes high pressure and acetylene cylinders for life support cylinders and alternative fuel cylinders used to hold compressed natural gas (CNG) and hydrogen for automobiles, buses, and light-duty trucks.

~~Other:~~ Divested businesses historically reported within Pressure Cylinders but no longer included in the Company’s management structure are presented within the “Other” category, on a historical basis, through the date of disposal. For the periods presented, these include the following: Structural Composites Industries, LLC (until March 2021); ~~Oil & Gas Equipment (until January 2021); and~~ ~~Cryogenic Storage and Cryo-Science (until October 2020).~~ The Other category also includes the results of our former Engineered Cabs operating segment, on a historical basis, through the date of disposition (November 1, 2019) as well as certain income and expense items not allocated to our operating segments.

Prior period financial information has been revised to reflect the operating results and financial position of the new reportable operating segments. Historical financial information presented herein reflects this change.

~~Concurrent with the change in management structure described above, the~~ profit measure that the Company’s ~~CODM~~Chief Operating Decision Maker ("CODM") uses to assess segment performance and allocate resources ~~was changed from operating income to~~is adjusted earnings (loss) before interest and taxes (“adjusted EBIT”). ~~In general, adjusted~~EBIT is calculated by adding interest expense and income tax expense to net earnings attributable to controlling interest. Adjusted EBIT excludes impairment and restructuring charges (gains), but may also exclude other items that management believes are not reflective of, and thus should not be included when evaluating, the performance of the Company’s ongoing operations. Adjusted EBIT is a non-GAAP financial measure and is used by management to evaluate segment performance, engage in financial and operational planning and determine incentive compensation because we believe that this financial measure provides additional perspective and, in some circumstances is more closely correlated to, the performance of the Company’s ongoing operations.

For the periods presented, equity income from our unconsolidated joint ventures is included in the measurement of segment profit as shown in the table below. The related investment balances are included in segment net assets in the same manner.

~~Unconsolidated Joint Ventures Included in Segment Profit~~
~~Steel Processing~~	~~Consumer Products~~	~~Building Products~~	~~Sustainable Energy Solutions~~	~~Other~~
~~Serviacero Worthington~~	~~N/A~~	~~WAVE~~	~~N/A~~	~~Cabs~~
		~~ClarkDietrich~~		~~ArtiFlex~~

The following table presents summarized financial information for our reportable operating segments for the periods indicated.


	Three Months Ended August 31, 2022
(in thousands)	Steel Processing		Consumer Products			Building Products		Sustainable Energy Solutions			Other			Consolidated
Net sales	$	1,038,880	$	188,703		$	150,323	$	30,759		$	-		$	1,408,665
Impairment of long-lived assets		312		-			-		-			-			312
Restructuring and other expense (income), net		78		-			-		-			(1,178	)		(1,100	)
Miscellaneous income (expense), net		184		(35	)		222		(86	)		(5,371	)		(5,086	)
Equity in net income of unconsolidated affiliates		1,770		-			43,866		-			(13,924	)		31,712
Adjusted earnings (loss) before interest and taxes (1)(2)		34,913		20,934			52,734		(1,393	)		5,145			112,333

Three Months Ended November 30, 2021

(in thousands)
Steel Processing

Consumer Products

Building Products

Sustainable Energy Solutions

Other

Consolidated

Net sales
$
937,842

$
140,793

$
121,125

$
33,101

$
-

$
1,232,861

Restructuring and other income, net ⁽¹⁾

(182
)

-

-

-

(1,822
)

(2,004
)
Miscellaneous income, net

17

159

218

82

564

1,040

Equity in net income of unconsolidated affiliates

8,823

-

49,894

-

1,501

60,218

Adjusted earnings before interest and taxes

71,925

17,584

54,718

796

1,893

146,916

(1)

Three Months Ended November 30, 2020

(in thousands)
Steel Processing

Consumer Products

Building Products

Sustainable Energy Solutions

Other

Consolidated

Net sales
$
468,723

$
117,513

$
93,989

$
34,023

$
16,844

$
731,092

Impairment of long-lived assets

-

-

-

-

3,815

3,815

Restructuring and other expense, net ⁽¹⁾

375

120

-

-

7,101

7,596

Incremental expenses related to Nikola gains

-

-

-

-

4,570

4,570

Miscellaneous income (loss), net

(5
)

(96
)

70

69

338

376

Equity in net income of unconsolidated affiliates

1,861

-

22,692

-

1,078

25,631

Adjusted earnings (loss) before interest and taxes

34,381

17,432

25,964

1,534

(5,633
)

73,678

⁽¹⁾~~Includes~~Excludes the noncontrolling interest portion of ~~restructuring (charges) gains~~impairment of ~~$81~~long-lived assets of $(115) within Steel Processing.

(2)

Excludes a non-cash settlement charge of $4,774 in miscellaneous income (expense), net within Other to accelerate a portion of deferred pension cost as a result of a pension lift-out transaction executed with a third-party insurance company to transfer a portion of the total projected benefit obligation of The Gerstenslager Company Bargaining Unit Employees’ Pension Plan to the third-party insurance company; excludes a loss of $15,759 in equity in net income of unconsolidated affiliates within Other related to the sale of the Company’s 50% noncontrolling equity investment in ArtiFlex effective August 3, 2022; excludes $525 in selling, general and ~~$(142) for~~administrative expense in Consumer Products related to incremental compensation expense attributable to the ~~three months ended November 30, 2021 and 2020, respectively~~

Level5 earnout.


	Three Months Ended August 31, 2021
(in thousands)	Steel Processing			Consumer Products		Building Products			Sustainable Energy Solutions			Other			Consolidated
Net sales	$	822,810		$	147,783	$	114,743		$	25,482		$	-		$	1,110,818
Restructuring and other income, net		(12,131	)		-		-			(143	)		-			(12,274	)
Miscellaneous income (expense), net		30			49		(73	)		(59	)		683			630
Equity in net income of unconsolidated affiliates		9,349			-		42,993			-			574			52,916
Adjusted earnings before interest and taxes (3)		107,692			20,555		48,754			(2,554	)		(416	)		174,031

Six Months Ended November 30, 2021

(in thousands)
Steel Processing

Consumer Products

Building Products

Sustainable Energy Solutions

Other

Consolidated

Net sales
$
1,760,652

$
288,576

$
235,868

$
58,583

$
-

$
2,343,679

Restructuring and other income, net ⁽²⁾

(12,313
)

-

-

(143
)

(1,822
)

(14,278
)
Miscellaneous income, net

47

209

144

22

1,248

1,670

Equity in net income of unconsolidated affiliates

18,172

-

92,887

-

2,075

113,134

Adjusted earnings (loss) before interest and taxes

179,617

38,140

103,471

(1,760
)

1,479

320,947

(3)

Six Months Ended November 30, 2020

(in thousands)
Steel Processing

Consumer Products

Building Products

Sustainable Energy Solutions

Other

Consolidated

Net sales
$
899,743

$
251,135

$
182,092

$
61,880

$
39,151

$
1,434,001

Impairment of long-lived assets

-

506

1,423

-

11,810

13,739

Restructuring and other expense, net ⁽²⁾

1,846

120

-

-

7,478

9,444

Incremental expenses related to Nikola gains

-

-

-

-

54,081

54,081

Miscellaneous income (loss), net

(48
)

(117
)

(92
)

151

933

827

Equity in net income of unconsolidated affiliates

3,170

-

45,243

-

852

49,265

Adjusted earnings (loss) before interest and taxes

48,557

41,341

49,337

973

(13,461
)

126,747

⁽²⁾ Includes the noncontrolling interest portion of restructuring (charges) gains of $6,027 and $(257) for the six months ended November 30, 2021 and 2020, respectively

Excludes the noncontrolling interest portion of the restructuring gains within Steel Processing of $5,946.

Total assets for each of our ~~reportable~~operating segments as of the dates indicated were as follows:


	November 30,		May 31,		August 31,		May 31,
	2021		2021		2022		2022
Total assets
Steel Processing	$	1,858,313	$	1,359,598	$	2,016,113	$	2,082,522
Consumer Products		547,132		541,028		636,208		577,026
Building Products		615,755		664,113		648,502		681,188
Sustainable Energy Solutions		118,834		169,550		107,421		114,084
Other		377,598		638,956		101,898		188,203
Total assets	$	3,517,632	$	3,373,245	$	3,510,142	$	3,643,023

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The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. The purchase price also includes strategic and synergistic benefits (investment value) specific to us, which resulted in a purchase price in excess of the fair value of the identifiable net assets. This additional investment value resulted in goodwill which will be deductible by ~~the Company~~us for income tax purposes.

The following table summarizes the consideration transferred and the estimated fair value assigned to the assets acquired and liabilities assumed at the acquisition date. These amounts reflect various preliminary fair value estimates and assumptions, including preliminary work performed by a third-party valuation specialist, and are subject to change within the measurement period as the valuation ifis finalized. The primary areas of preliminary purchase price allocation subject to change relate to the valuation of acquired tangible assets and liabilities, identification and valuation of residual goodwill and tax effects of acquired assets and assumed liabilities.

~~NOTE~~Note Q – Derivative Financial Instruments and Hedging Activities

We utilize derivative financial instruments to primarily manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative financial instruments include interest rate risk, foreign currency exchange rate risk and commodity price risk. While certain of our derivative financial instruments are designated as hedging instruments, we also enter into derivative financial instruments that are designed to hedge a risk, but are not designated as hedging instruments and, therefore, do not qualify for hedge accounting. These derivative financial instruments are adjusted to current fair value through earnings ~~(loss)~~ at the end of each period.

Interest Rate Risk Management – We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps and treasury locks to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.

Foreign Currency Exchange Rate Risk Management – We conduct business in several major international currencies and are, therefore, subject to risks associated with changing foreign currency exchange rates. We enter into various contracts that change in value as foreign currency exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable currency exchange rate fluctuations. The translation of foreign currencies into U.S. dollars also subjects us to exposure related to fluctuating currency exchange rates; however, derivative financial instruments are not used to manage this risk.

Commodity Price Risk Management – We are exposed to changes in the price of certain commodities, including steel, natural gas, copper, zinc and other raw materials, and our utility requirements. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative ~~contracts~~financial instruments to manage the associated price risk.

We are exposed to counterparty credit risk on all of our derivative financial instruments. Accordingly, we have established and maintain strict counterparty credit guidelines. We have credit support agreements in place with certain counterparties to limit our credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in

which the cumulative market position falls below the required threshold. We do not have significant exposure to any one counterparty, and management believes the overall risk of loss is remote and, in any event, would not be material.

Refer to "“~~NOTE~~Note R – Fair Value"” for additional information regarding the accounting treatment for our derivative financial instruments, as well as how fair value is determined.

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The following table summarizes the fair value of our derivative instruments and the respective lines in which they were recorded in the consolidated balance sheet at ~~November 30, 2021:~~August 31, 2022:


	Asset Derivatives			Liability Derivatives				Asset Derivatives			Liability Derivatives
	Balance			Balance				Balance			Balance
	Sheet	Fair		Sheet	Fair			Sheet	Fair		Sheet	Fair
(in thousands)	Location	Value		Location	Value			Location	Value		Location	Value
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	660	Accounts payable	$	6,207		Receivables	$	20	Accounts payable	$	11,378
	Other assets		-	Other liabilities		1,068		Other assets		-	Other liabilities		96
										20			11,474
Foreign currency exchange contracts								Other assets		138	Accounts payable		-
Total		$	660		$	7,275			$	158		$	11,474

Derivatives not designated as hedging instruments:							Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	8,555	Accounts payable	$	6,916		Receivables	$	8,034	Accounts payable	$	5,893
	Other assets		313	Other liabilities		545		Other assets		153	Other liabilities		73
			8,868			7,461				8,187			5,966
Foreign currency exchange contracts	Other assets		60	Accounts payable		390		Other assets		-	Accounts payable		276
Total			8,928			7,851				8,187			6,242

Total derivative instruments		$	9,588		$	15,126			$	8,345		$	17,716

The amounts in the table above reflect the fair value of ~~the Company’s~~our derivative instruments on a net basis where allowable under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been a ~~$15,660,000~~$9,937,000 increase in “Receivables” with a corresponding increase in “Accounts ~~payable”.~~payable.”

The following table summarizes the fair value of our derivative instruments and the respective lines in which they were recorded in the consolidated balance sheet at May 31, ~~2021:~~2022:


	Asset Derivatives			Liability Derivatives				Asset Derivatives			Liability Derivatives
	Balance			Balance				Balance			Balance
	Sheet	Fair		Sheet	Fair			Sheet	Fair		Sheet	Fair
(in thousands)	Location	Value		Location	Value			Location	Value		Location	Value
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	53,125	Accounts payable	$	-		Receivables	$	1,040	Accounts payable	$	4,517
								Other assets		-	Other liabilities		48
										1,040			4,565
Foreign currency exchange contracts								Receivables		-	Accounts payable		-
								Other assets		-	Other liabilities		17
	Other assets		23	Other liabilities		111				-			17
Total		$	53,148		$	111			$	1,040		$	4,582

Derivatives not designated as hedging instruments:							Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	24,621	Accounts payable	$	14,554		Receivables	$	11,555	Accounts payable	$	4,142
	Other assets		379	Other liabilities		-		Other assets		48	Other liabilities		24
			25,000			14,554				11,603			4,166
Foreign currency exchange contracts	Receivables		-	Accounts payable		532		Receivables		-	Accounts payable		255
Total		$	25,000		$	15,086			$	11,603		$	4,421
Total derivative instruments		$	78,148		$	15,197			$	12,643		$	9,003

The amounts in the table above reflect the fair value of ~~the Company’s~~our derivative instruments on a net basis where allowable under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been a ~~$16,594,000~~$6,300,000 increase in “Receivables” with a corresponding increase in “Accounts ~~payable”.~~payable.”

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Cash Flow Hedges

We enter into derivative financial instruments to hedge our exposure to changes in cash flows attributable to commodity price fluctuations associated with certain forecasted transactions. These derivative financial instruments are designated and qualify as cash flow hedges. The earnings effects of these derivative financial instruments are presented in the same statement of earnings line items as the earnings effects of the hedged items. For derivative financial instruments designated as cash flow hedges, ~~the Company assesses~~we assess hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative financial instruments.

The following table summarizes our cash flow hedges outstanding at ~~November 30, 2021:~~August 31, 2022:

Notional

(in thousands)

Amount

Maturity Date
Commodity contracts

$
221,292

December 2021 - December 2022
Foreign currency exchange contracts

6,082

December 2021 - March 2023

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from AOCI into net earnings ~~(loss)~~ for derivative financial instruments designated as cash flow hedges for the periods presented:


(in thousands)	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Reclassified from AOCI into Net Earnings	Gain (Loss) Reclassified from AOCI into Net Earnings				Gain (Loss) Recognized in OCI			Location of Gain (Loss) Reclassified from AOCI into Net Earnings	Gain (Loss) Reclassified from AOCI into Net Earnings
For the three months ended November 30, 2021:
For the three months ended August 31, 2022:								For the three months ended August 31, 2022:
Commodity contracts	$	(21,002	)	Cost of goods sold	$	47,706			$	(14,045	)	Cost of goods sold	$	2,869
Interest rate contracts		-		Interest expense		27				-		Interest expense		(7	)
Foreign currency exchange contracts		60		Miscellaneous income, net		3				(162	)	Net sales/Cost of goods sold		28
Total	$	(20,942	)		$	47,736			$	(14,207	)		$	2,890

For the three months ended November 30, 2020:
For the three months ended August 31, 2021:								For the three months ended August 31, 2021:
Commodity contracts	$	16,381		Cost of goods sold	$	(2,690	)		$	35,220		Cost of goods sold	$	35,459
Interest rate contracts		-		Interest expense		(470	)			-		Interest expense		(40	)
Total	$	16,381			$	(3,160	)		$	35,220			$	35,419

For the six months ended November 30, 2021:
Commodity contracts	$	14,218		Cost of goods sold	$	83,165
Interest rate contracts		-		Interest expense		(13	)
Foreign currency exchange contracts		61		Miscellaneous income, net		3
Total	$	14,279			$	83,155

For the six months ended November 30, 2020:
Commodity contracts	$	16,765		Cost of goods sold	$	(5,331	)
Interest rate contracts	-			Interest expense		(697	)
Total	$	16,765			$	(6,028	)

The estimated net amount of the ~~gains~~losses recognized in AOCI at ~~November 30, 2021~~August 31, 2022 expected to be reclassified into net earnings within the succeeding twelve months is ~~$6,192,000~~$15,462,000 (net of tax of ~~$2,798,000)~~$4,438,000). This amount was computed using the fair value of the cash flow hedges at ~~November 30, 2021,~~August 31, 2022, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, ~~2022~~2023 and May 31, ~~2023.~~2024.

Economic (Non-designated) Hedges

We enter into foreign currency exchange contracts to manage our foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative financial instruments are adjusted to current market value at the end of each period through earnings (loss).

The following table summarizes our economic (non-designated) derivative financial instruments outstanding at ~~November 30, 2021:~~August 31, 2022:

Notional

(in thousands)

Amount

Maturity Date(s)

Amount

Maturity Date(s)

Commodity contracts

119,233

December 2021 - August 2023

11,453

September 2022 - December 2023

Foreign currency exchange contracts

(7,189

)

December 2021 - July 2022

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The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments for the periods presented:


		Gain (Loss) Recognized
		In Earnings for the
	Location of Gain (Loss)	Three Months Ended August 31,
(in thousands)	Recognized in Earnings	2022			2021
Commodity contracts	Cost of goods sold	$	(1,577	)	$	29,527
Foreign currency exchange contracts	Miscellaneous income, net		-			339
Total		$	(1,577	)	$	29,866

Gain (Loss) Recognized

In Earnings for the

Location of Gain (Loss)

Three Months Ended November 30,

(in thousands)

Recognized in Earnings

2021

2020

Commodity contracts

Cost of goods sold

$
(10,135
)

$
8,905

Foreign currency exchange contracts

Miscellaneous income, net

(588
)

1

Total

$
(10,723
)

$
8,906

Gain (Loss) Recognized

in Earnings for the

Location of Gain (Loss)

Six Months Ended November 30,

(in thousands)

Recognized in Earnings

2021

2020

Commodity contracts

Cost of goods sold

$
(19,392
)

$
12,198

Foreign currency exchange contracts

Miscellaneous income, net

(249
)

(73
)
Total

$
(19,641
)

$
12,125

~~NOTE~~Note R – Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is an exit price concept that assumes an orderly transaction between willing market participants and is required to be based on assumptions that market participants would use in pricing an asset or a liability. Current accounting guidance establishes a three-tier fair value hierarchy as a basis for considering such assumptions and for classifying the inputs used in the valuation methodologies. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:

Level 1 – Observable prices in active markets for identical assets and liabilities.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.

Recurring Fair Value Measurements

At ~~November 30, 2021,~~August 31, 2022, our assets and liabilities measured at fair value on a recurring basis were as follows:


			Significant								Significant
	Quoted Prices		Other		Significant				Quoted Prices		Other		Significant
	in Active		Observable		Unobservable				in Active		Observable		Unobservable
	Markets		Inputs		Inputs				Markets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Totals		(Level 1)		(Level 2)		(Level 3)		Totals
Assets
Derivative instruments (1)	$	-	$	9,588	$	-	$	9,588
Derivative financial instruments (1)									$	-	$	8,345	$	-	$	8,345
Total assets	$	-	$	9,588	$	-	$	9,588	$	-	$	8,345	$	-	$	8,345

Liabilities
Derivative instruments (1)	$	-	$	15,126	$	-	$	15,126
Derivative financial instruments (1)									$	-	$	17,716	$	-	$	17,716
Total liabilities	$	-	$	15,126	$	-	$	15,126	$	-	$	17,716	$	-	$	17,716

At May 31, ~~2021,~~2022, our assets and liabilities measured at fair value on a recurring basis were as follows:


			Significant
	Quoted Prices		Other		Significant
	in Active		Observable		Unobservable
	Markets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Totals
Assets
Derivative financial instruments (1)	$	-	$	12,643	$	-	$	12,643
Total assets	$	-	$	12,643	$	-	$	12,643

Liabilities
Derivative financial instruments (1)	$	-	$	9,003	$	-	$	9,003
Total liabilities	$	-	$	9,003	$	-	$	9,003

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Significant

Quoted Prices

Other

Significant

in Active

Observable

Unobservable

Markets

Inputs

Inputs

(in thousands)

(Level 1)

(Level 2)

(Level 3)

Totals

Assets

Derivative instruments (1)

$
-

$
78,148

$
-

$
78,148

Total assets

$
-

$
78,148

$
-

$
78,148

Liabilities

Derivative instruments (1)

$
-

$
15,197

$
-

$
15,197

Total liabilities

$
-

$
15,197

$
-

$
15,197

(1)

The fair value of our derivative financial instruments is based on the present value of the expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Market observable, Level 2 inputs are used to determine the present value of the expected future cash flows. Refer to “Note Q – Derivative Financial Instruments and Hedging Activities” for additional information regarding our use of derivative financial instruments.

Non-Recurring Fair Value Measurements

At August 31, 2022, our assets measured at fair value on a non-recurring basis were as follows:


			Significant
	Quoted Prices		Other		Significant
	in Active		Observable		Unobservable
	Markets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Totals
Assets
Long-lived assets held for sale (1)	$	-	$	3,280	$	-	$	3,280
Total assets	$	-	$	3,280	$	-	$	3,280

(1)

Comprised of fixed assets at our Steel Processing facility in Cleveland, Ohio facility with an estimated fair market value of $3,280,000. Refer to “Note E – Goodwill and Long-Lived Assets” for additional information.

At May 31, 2022, our assets measured at fair value on a non-recurring basis were as follows:


			Significant
	Quoted Prices		Other		Significant
	in Active		Observable		Unobservable
	Markets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Totals
Assets
Long-lived assets held for sale (1)	$	-	$	700	$	-	$	700
Total assets	$	-	$	700	$	-	$	700

(1)

Comprised of production equipment at our Twinsburg, Ohio facility with an estimated fair market value of $700,000.

~~(1)~~

The fair value of our derivative instruments is based on the present value of the expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Market observable, Level 2 inputs are used to determine the present value of the expected future cash flows. Refer to “~~NOTE Q – Derivative Instruments and Hedging Activities” for additional information regarding our use of derivative instruments.~~

The fair value of non-derivative financial instruments included in the carrying amounts of cash and cash equivalents, receivables, income taxes receivable, other assets, accounts payable, accrued compensation, contributions to employee benefit plans and related taxes, other accrued items, income taxes payable and other liabilities approximate carrying value due to their short-term nature. The fair value of long-term debt, including current maturities, based upon models utilizing market observable (Level 2) inputs and credit risk, was ~~$771,923,000~~$654,294,000 and ~~$792,632,000~~$684,830,000 at ~~November 30, 2021~~August 31, 2022 and May 31, ~~2021,~~2022, respectively. The carrying amount of long-term debt, including current maturities, was ~~$702,172,000~~$690,259,000 and ~~$710,489,000~~$696,610,000 at ~~November 30, 2021~~August 31, 2022 and May 31, ~~2021,~~2022, respectively.

Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Selected statements contained in this “Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations” constitute “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based, in whole or in part, on management’s beliefs, estimates, assumptions and currently available information. For a more detailed discussion of what constitutes a forward-looking statement and of some of the factors that could cause actual results to differ materially from such forward-looking statements, please refer to the “Safe Harbor Statement” in the beginning of this ~~Quarterly Report on~~ Form 10-Q ~~(this “Form 10-Q”)~~ and “Part I – Item 1A. – Risk Factors” of the ~~Annual Report on~~2022 Form ~~10-K for the fiscal year ended May 31, 2021 (“fiscal 2021”) of Worthington Industries, Inc. (the “Form 10-K”).~~10-K.

Unless otherwise indicated, all Note references contained in this Part I – Item 2. refer to the Condensed Notes to Consolidated Financial Statements included in “Part I – Item 1. – Financial Statements” of this Form 10-Q.

The following discussion and analysis of market and industry trends, business developments, and the results of operations and financial position of Worthington Industries, Inc., together with its subsidiaries (collectively, “we,” “our,” “us”, “Worthington,” or the “Company”), should be read in conjunction with our consolidated financial statements and notes thereto included in “Part I – Item 1. – Financial Statements” of this ~~Quarterly Report on~~ Form 10-Q. The 2022 Form 10-K includes additional information about Worthington, our operations and our consolidated financial position and should be read in conjunction with this Form 10-Q.

Our operations are managed principally on a products and services basis. Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes. Factors used to identify reportable operating segments include the nature of the products and services provided by each business, the management reporting structure, the similarity of economic characteristics and certain quantitative measures, as prescribed by authoritative accounting guidance.

Effective June 1, 2021, we reorganized the management structure of our Pressure Cylinders business to better align around the end markets which it served. As a result, these operations have been redefined under three new reportable operating segments: Consumer Products, Building Products and Sustainable Energy Solutions. These new reportable segments are in addition to our Steel Processing operating segment. Concurrent with the change in reportable operating segments, we revised our prior period financial information to reflect comparable information for the new segment structure. A discussion of each of these new reportable operating segments is included below:

As of ~~November 30, 2021,~~August 31, 2022, we held equity positions in ~~nine~~eight joint ventures. Four of these joint ventures are consolidated within the Steel Processing operating segment with the equity owned by the other joint venture member(s) shown as noncontrolling interests in our consolidated balance sheets, and their portions of net earnings and other comprehensive income shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated statements of earnings ~~(loss)~~ and consolidated statements of comprehensive income, ~~(loss),~~ respectively. The remaining ~~five~~four of our joint ventures are accounted for using the equity method.

•

On June 8, 2021, the Company acquired certain assets of the Shiloh Industries U.S. BlankLight® business, a provider of laser welded solutions, for approximately $104.8 million, subject to closing adjustments. The acquisition included three facilities that will expand the capacity and capabilities of TWB’s laser welded products business and an additional blanking facility that will support the Company’s core steel processing operations.

•

On June 2, 2022, the Company acquired Level5® Tools, LLC (“Level5”), a leading provider of drywall tools and related accessories. The net cash purchase price was approximately $56.1 million, with a potential earnout of up to $25.0 million based on performance through 2024.

•

On June 9, 2021, the Company’s consolidated joint venture, WSP, sold the remaining assets of its Canton, Michigan, facility for approximately $20 million, resulting in a pre-tax gain of $12.1 million within restructuring and other (income) expense, net. WSP continues to operate locations in Jackson and Taylor, Michigan.

•

On August 20, 2021, the Company amended and restated its existing multi-year, revolving credit facility, extending the final maturity to August 20, 2026. The aggregate commitments available under the amended and restated revolving credit facility remain at $500 million.

•

On December 1, 2021, the Company acquired all of the issued and outstanding capital stock of Tempel Steel Company (“Tempel”), a leading manufacturer of precision motor and transformer laminations for the electrical steel market. The purchase price consisted of cash consideration of approximately $275 million, after adjustments for estimated excess working capital and closing cash, plus the assumption of certain long-term liabilities. The purchase price is subject to post-closing

•

On August 3, 2022, the Company sold its 50% noncontrolling equity interest in ArtiFlex Manufacturing, LLC (“ArtiFlex”) to the unaffiliated joint venture member for approximately $42.1 million after adjustments for closing debt and final net working capital. Approximately $6.0 million of the total cash proceeds were attributed to real property in Wooster, Ohio, with a net book value of $6.3 million. This real property was owned by Worthington and leased to ArtiFlex prior to closing of the transaction. The Company recognized a pre-tax loss of approximately $15.8 million in equity income related to the equity portion of the transaction.

•

On September 28, 2022, the Worthington Industries, Inc. Board of Directors (the “Worthington Industries Board”) declared a quarterly dividend of $0.31 per share payable on December 29, 2022 to shareholders of record on December 15, 2022.

•

On September 29, 2022, the Company announced a plan to separate into two independent, publicly-traded companies – one company is expected to be comprised of the Company’s Steel Processing operating segment, and the other company is expected to be comprised of the Company’s Consumer Products, Building Products and Sustainable Energy Solutions businesses. The Separation transaction is expected to be completed by early 2024, but is subject to certain conditions, including, among other things, general market conditions, finalization of the capital structure of the two companies, completion of steps necessary to qualify the Separation as a tax-free transaction, receipt of regulatory approvals and final approval from the Company’s Board of Directors.

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adjustments and was funded primarily with existing cash and some borrowing from our lines of credit. Tempel, which will operate as part of the Company’s Steel Processing business segment, employs approximately 1,500 people and is headquartered in Chicago, Illinois, with additional manufacturing locations in Burlington, Canada, Changzhou, China, Chennai, India and Monterrey, Mexico.

•

~~During the first six months of fiscal 2022, the Company repurchased a total of 1,235,000 of its common shares for $73.6 million, at an average purchase price of $59.57.~~

•

On December 16, 2021, the Worthington Industries Inc. Board of Directors (the “Worthington Industries Board”) declared a quarterly dividend of $0.28 per share payable on March 29, 2022, to shareholders of record on March 15, 2022.

Market & Industry Overview

We sell our products and services to a diverse customer base and a broad range of end markets. The breakdown of net sales by end market for the ~~second~~first quarter of each of fiscal ~~2022~~2023 and fiscal ~~2021~~2022 is illustrated in the following chart:

The automotive industry is one of the largest consumers of flat-rolled steel, and thus the largest end market for our Steel Processing operating segment. Approximately ~~52%~~47% of Steel Processing’s net sales are to the automotive market. North American vehicle production, primarily by Ford, General Motors and Stellantis North America (the “Detroit Three automakers”), has a considerable impact on the activity within this operating segment. The majority of the net sales of ~~two~~one of our unconsolidated joint ventures, Serviacero Worthington, ~~and ArtiFlex, are~~is also to the automotive market.

Approximately ~~22%~~17% of the net sales of our Steel Processing operating segment are to the construction market. The construction market is also the predominant end market for ~~two of~~ our unconsolidated joint ~~ventures:~~ventures within our Building Products operating segment, WAVE and ClarkDietrich. While the market price of steel significantly impacts these businesses, there are other key indicators that are meaningful in analyzing construction market demand, including U.S. gross domestic product (“GDP”), the Dodge Index of construction contracts and, in the case of ClarkDietrich, trends in the relative price of framing lumber and steel.

Substantially all of the net sales of our Consumer Products, Building Products, and Sustainable Energy Solutions operating segments and approximately ~~26%~~36% of the net sales of our Steel Processing operating segment are to other markets such as agricultural, appliance, consumer products, ~~heavy truck,~~heavy-truck, industrial products, lawn and ~~garden, and sustainable energy.~~garden. Given the many different products that make up these net sales and the wide variety of end markets, it is very difficult to detail the key market indicators that drive ~~these portions~~this portion of our business. However, we believe that the trend in U.S. GDP growth is a good economic indicator for analyzing the demand of these end markets.

We use the following information to monitor our costs and demand in our major end markets:


	Three Months Ended
	August 31,
	2022			2021			Inc / (Dec)
U.S. GDP (% growth (decline) year-over-year) 1		2.3	%		3.9	%		(1.6	%)
Hot-Rolled Steel ($ per ton) 2	$	978		$	1,762		$	(784	)
Detroit Three Auto Build (000's vehicles) 3		1,761			1,374			386
No. America Auto Build (000's vehicles) 3		3,628			3,243			384
Zinc ($ per pound) 4	$	1.55		$	1.35		$	0.20
Natural Gas ($ per mcf) 5	$	7.87		$	3.68		$	4.19
On-Highway Diesel Fuel Prices ($ per gallon) 6	$	5.42		$	3.33		$	2.09

Three Months Ended

Six Months Ended

November 30,

November 30,

2021

2020

Inc / (Dec)

2021

2020

Inc / (Dec)

U.S. GDP (% growth (decline) year-over-year) ¹

7.2
%

(3.0
%)

10.2
%

7.7
%

(3.4
%)

11.1
%
Hot-Rolled Steel ($ per ton) ²

$
1,888

$
625

$
1,263

$
1,825

$
550

$
1,275

Detroit Three Auto Build (000's vehicles) ³

1,481

1,868

(387
)

2,856

3,718

(862
)
No. America Auto Build (000's vehicles) ³

3,170

4,076

(906
)

6,413

7,834

(1,421
)
Zinc ($ per pound) ⁴

$
1.46

$
1.11

$
0.35

$
1.41

$
1.03

$
0.38

Natural Gas ($ per mcf) ⁵

$
5.26

$
2.64

$
2.62

$
4.47

$
2.28

$
2.19

On-Highway Diesel Fuel Prices ($ per gallon) ⁶

$
3.57

$
2.41

$
1.16

$
3.45

$
2.42

$
1.03

1 2021 figures based on revised actuals 2CRU Hot-Rolled Index; period average 3IHS Global 4LME Zinc; period average 5NYMEX Henry Hub Natural Gas; period average 6Energy Information Administration; period average

Table of Contents

~~2020 figures based on revised actuals~~ ²~~CRU Hot-Rolled Index; period average~~ ³~~IHS Global~~ ⁴~~LME Zinc; period average~~ ⁵~~NYMEX Henry Hub Natural Gas; period average~~ ⁶~~Energy Information Administration; period average~~

U.S. GDP growth rate trends are generally indicative of the strength in demand and, in many cases, pricing for our products. A year-over-year increase in U.S. GDP growth rates is indicative of a stronger economy, which generally increases demand and pricing for our products. Conversely, ~~decreasing~~declining U.S. GDP growth rates generally indicate a weaker economy. Changes in U.S. GDP growth rates can also signal changes in conversion costs related to production and in selling, general and administrative ~~expense.~~(”SG&A”) expenses.

The market price of hot-rolled steel is one of the most significant factors impacting our selling prices and operating results. When steel prices fall, we typically have higher-priced material flowing through cost of goods sold, while selling prices compress to what the market will bear, negatively impacting our results. On the other hand, in a rising price environment, our results are generally favorably impacted, as lower-priced material purchased in previous periods flows through cost of goods sold, while our selling prices increase at a faster pace to cover current replacement costs. ~~Based on the recent decline in steel prices, we expect to have meaningful inventory holding losses in the third quarter of fiscal 2022.~~

The following table presents the average quarterly market price per ton of hot-rolled steel during fiscal ~~2022~~2023 (first ~~and second quarters)~~quarter), fiscal ~~2021~~2022 and fiscal ~~2020:~~

Fiscal Year

(Dollars per ton ¹ )

2022

2021

2020

1st Quarter

$
1,762

$
475

$
564

2nd Quarter

$
1,888

$
625

$
526

3rd Quarter

N/A

$
1,016

$
571

4th Quarter

N/A

$
1,358

$
527

Annual Avg.

$
1,825

$
869

$
547

2021:

Fiscal Year

(Dollars per ton 1 )

2023

2022

2021

1st Quarter

$
978

$
1,762

$
475

2nd Quarter

N/A

$
1,888

$
625

3rd Quarter

N/A

$
1,421

$
1,016

4th Quarter

N/A

$
1,280

$
1,358

Annual Avg.

$
978

$
1,588

$
869

1 CRU Hot-Rolled Index; period average

~~CRU Hot-Rolled Index; period average~~

Sales to one Steel Processing customer in the automotive industry represented ~~15.6%~~11.2% and 13.8% of consolidated net sales during the ~~second~~first quarter of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, respectively. While our automotive business is largely driven by the production schedules of the Detroit Three automakers, our customer base is much broader and includes other domestic manufacturers and many of their suppliers. During the ~~second~~first quarter of fiscal ~~2022,~~2023, vehicle production for the Detroit Three automakers ~~was down 21%~~and the North American vehicle production were up 28% and 12%, respectively, from the first quarter of fiscal ~~2021, while North American vehicle production as a whole was down 22%.~~2022.

Certain other commodities, such as zinc, natural gas and diesel fuel, represent a significant portion of our cost of goods sold, both directly through our plant operations and indirectly through transportation and freight expense.

Results of Operations

~~Second~~First Quarter – Fiscal ~~2022~~2023 Compared to Fiscal ~~2021~~2022

The following discussion provides a review of results for the ~~three months ended November 30, 2021 and 2020.~~periods indicated.

	Three Months Ended
	November 30,							Three Months Ended
(Dollars in millions)	2021		2020			Increase/ (Decrease)
								August 31,
(In millions, except per share amounts)								2022		2021		Increase/ (Decrease)
Net sales	$	1,232.8	$	731.1		$	501.7	$	1,408.7	$	1,110.8	$	297.9
Operating income		90.5		37.4			53.1		66.7		135.8		(69.1	)
Equity income		60.2		25.6			34.6		31.7		52.9		(21.2	)
Net earnings (loss) attributable to controlling interest		110.3		(74.0	)		184.3
Earnings (loss) per diluted share attributable to controlling interest		2.15		(1.40	)		3.55
Net earnings attributable to controlling interest									64.1		132.5		(68.4	)
Earnings per diluted share attributable to controlling interest									1.30		2.55		(1.25	)

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Net Sales and Volume

The following table provides ~~the percentage~~a breakdown of our consolidated net sales by reportable operating segment, along with the respective percentage of the total consolidated net sales of each, for the ~~three months ended November 30, 2021 and 2020.~~

Three Months Ended

November 30,

% of

% of

Increase/

(In millions)
2021

Net sales

2020

Net sales

(Decrease)

Steel Processing
$
937.8

76.1
%

$
468.7

64.1
%

$
469.1

Consumer Products

140.8

11.4
%

117.5

16.1
%

23.3

Building Products

121.1

9.8
%

94.0

12.9
%

27.1

Sustainable Energy Solutions

33.1

2.7
%

34.0

4.7
%

(0.9
)

Other

-

0.0
%

16.9

2.3
%

(16.9
)

Consolidated Net Sales
$
1,232.8

100.0
%

$
731.1

100.0
%

$
501.7

periods indicated.


	Three Months Ended
	August 31,
			% of					% of			Increase/
(In millions)	2022		Net sales			2021		Net sales			(Decrease)
Steel Processing	$	1,038.9		73.7	%	$	822.8		74.1	%	$	216.1
Consumer Products		188.7		13.4	%		147.8		13.3	%		40.9
Building Products		150.3		10.7	%		114.7		10.3	%		35.6
Sustainable Energy Solutions		30.8		2.2	%		25.5		2.3	%		5.3
Consolidated Net Sales	$	1,408.7		100.0	%	$	1,110.8		100.0	%	$	297.9

The following table provides volume by reportable ~~business~~operating segment for the ~~three months ended November 30, 2021~~periods presented.


	Three Months Ended
	August 31,
					Increase/
	2022		2021		(Decrease)
Steel Processing (Tons)		974,649		1,062,288		(87,639	)
Consumer Products (Units)		22,383,341		21,388,140		995,201
Building Products (Units)		2,922,163		2,885,711		36,452
Sustainable Energy Solutions (Units)		133,133		130,676		2,457

•

Steel Processing – Net sales increased $216.1 million. The increase was driven primarily by contributions from Tempel Steel Company (“Tempel”), which was acquired in the third quarter of fiscal 2022, and, ~~2020.~~

Three Months Ended

November 30,

Increase/

2021

2020

(Decrease)

Steel Processing (Tons)

1,067,589

1,023,979

43,610

Consumer Products (Units)

18,698,589

16,657,815

2,040,774

Building Products (Units)

2,565,025

2,264,576

300,449

Sustainable Energy Solutions (Units)

155,001

247,289

(92,288
)
Other (Units)

-

11,066

(11,066
)
to a lesser extent, higher average selling prices. The mix of direct versus toll tons processed was 58% to 42% in the current quarter, compared to 49% to 51% in the prior year quarter. The shift in mix towards direct tons was driven primarily by softness at our Spartan and Samuel consolidated toll processing joint ventures and, to a lesser extent, direct tons shipped by businesses acquired in fiscal 2022.

•

~~Steel Processing –~~ ~~Net sales almost doubled over the prior year quarter to $937.8 million. The increase was driven by higher~~

•

Consumer Products – Net sales increased 27.7%, or $40.9 million, over the prior year quarter. The increase was driven by higher average selling prices, and, to a lesser extent, higher volume, including contributions from the June 2, 2022, acquisition of Level5.

•

Building Products – Net sales increased 31.1%, or $35.6 million, over the ~~Shiloh Industries U.S. BlankLight® business on June 8, 2021.~~

•

~~Consumer Products –~~ ~~Net sales increased 19.8%, or $23.3 million, over the~~ prior year quarter. The increase was driven primarily by ~~the acquisition of General Tools & Instruments Company LLC in the third quarter of fiscal 2021, and to a lesser extent,~~ higher average selling prices.

•

~~Building Products –~~ Net sales increased 28.8%, or $27.1 million, over the prior year quarter. The increase was driven by higher average selling prices ($21.8 million) and higher volume ($11.9 million), partially offset by an unfavorable shift in product mix. ~~Volume in the prior year quarter was at depressed levels due to the impact of the COVID-19 pandemic.~~

•

Sustainable Energy Solutions – Net sales increased $5.3 million, or 20.6%, from the prior year quarter due to the combined impact of increased volume and higher average selling prices.

Gross Margin


	Three Months Ended
	August 31,
			% of					% of			Increase/
(In millions)	2022		Net sales			2021		Net sales			(Decrease)
Gross Margin	$	169.4		12.0	%	$	219.4		19.8	%	$	(50.0	)

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•

Gross margin decreased $50.0 million from the prior year quarter to $169.4 million, as margin improvements in both the Consumer and Building Products businesses were more than offset by lower margin contributions from Steel Processing. Margins in Steel Processing were down $58.0 million on an estimated $48.6 unfavorable swing related to the impact of inventory holding losses in the current quarter compared to inventory holding gains in the prior year quarter.

•

~~Sustainable Energy Solutions –~~ Net sales decreased $0.9 million, or 2.7%, from the prior year quarter. The decrease was driven by lower volume, which was negatively impacted by the May 31, 2021 divestiture of the Liquified Petroleum Gas (“LPG”) business in Poland, as well as the ongoing semi-conductor chip shortage.

~~Gross Margin~~

Three Months Ended

November 30,

% of

% of

Increase/

(In millions)
2021

Net sales

2020

Net sales

(Decrease)

Gross Margin
$
184.6

15.0
%

$
135.5

18.5
%

$
49.1

•

Gross margin increased $49.1 million over the prior year quarter to $184.6 million. The improvement over the prior year quarter was primarily due to improved spreads in Steel Processing and, to a lesser extent, higher overall volume across all operating segments except Sustainable Energy Solutions.

Selling, General and Administrative Expense


	Three Months Ended
	August 31,
			% of					% of			Increase/
(In millions)	2022		Net sales			2021		Net sales			(Decrease)
Selling, general and administrative expense	$	103.4		7.3	%	$	95.9		8.6	%	$	7.5

•

SG&A expense increased $7.5 million over the prior year quarter due primarily to the impact of acquisitions, partially offset by lower profit sharing and bonus accruals.

Three Months Ended

November 30,

% of

% of

Increase/

(In millions)
2021

Net sales

2020

Net sales

(Decrease)

Selling, general and administrative expense
$
96.1

7.8
%

$
82.1

11.2
%

$
14.0

•

SG&A expense increased $14.0 million over the prior year quarter. The increase was driven primarily by higher profit sharing and bonus expense to correspond with the increase in earnings over the prior year quarter.

Other Operating Costs

Three Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

Impairment of long-lived assets
$
-

$
3.8

$
(3.8
)
Restructuring and other (income) expense, net

(2.0
)

7.6

(9.6
)
Incremental expenses related to Nikola gains

-

4.6

(4.6
)

•

There were no impairment charges recorded in the second quarter of fiscal 2022. Impairment charges in the prior year quarter related primarily to the Company’s former cryogenics business in Theodore, Alabama, which was sold in October 2020.

•

~~Restructuring activity during the three months ended~~ ~~November 30, 2021~~ related primarily to the Company’s exit from the former Cabs facility located in Stow, Ohio which generated a pre-tax gain of $1.8 million within restructuring and other (income) expense, net. Restructuring activity in the prior year quarter primarily resulted from a $7.6 million pre-tax loss within the historical Pressure Cylinders segment on the sale of the former cryogenics business previously operated out of Theodore, Alabama.

•

~~Incremental expenses related to Nikola gains of $4.6 million in the prior year quarter consisted of discretionary profit sharing and bonus expenses related to the Company’s investment in Nikola.~~


	Three Months Ended
	August 31,
							Increase/
(In millions)	2022			2021			(Decrease)
Impairment of long-lived assets	$	0.3		$	-		$	0.3
Restructuring and other income, net		(1.1	)		(12.3	)		(11.2	)

•

Impairment of long-lived assets in the current quarter was driven by our commitment to a plan to sell certain fixed assets at our Steel Processing facility in Cleveland, Ohio that were written down to fair value less cost to sell.

•

Restructuring and other income, net in both periods was driven by gains realized from the sale of long-lived assets, including a $12.1 million gain in the prior year quarter related to the sale of our WSP joint venture’s facility in Canton, Michigan. Refer to “Note F – Restructuring and Other Income, Net” for additional information.

Equity Income


	Three Months Ended
	August 31,
							Increase/
(In millions)	2022			2021			(Decrease)
WAVE	$	23.8		$	25.7		$	(1.9	)
ClarkDietrich		20.1			17.3			2.8
Serviacero Worthington		1.8			9.3			(7.5	)
ArtiFlex		(13.4	)		1.2			(14.6	)
Workhorse		(0.5	)		(0.6	)		0.1
Total Equity Income	$	31.7		$	52.9		$	(21.2	)

•

Equity income decreased $21.2 million from the prior year quarter to $31.7 million due to a $15.8 million pre-tax loss related to the sale of our equity investment in ArtiFlex and lower contributions from Serviacero Worthington, which were down $7.5 million on lower spreads driven by a swing from significant inventory holding gains in the prior year quarter to a nominal inventory holding loss in the current quarter. We received cash distributions of $74.6 million from our unconsolidated joint ventures during the current quarter.

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Other income (expense)


	Three Months Ended
	August 31,
						Increase/
(In millions)	2022			2021		(Decrease)
Miscellaneous income (expense), net	$	(5.1	)	$	0.6	$	(5.7	)

Three Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

  WAVE
$
22.4

$
17.3

$
5.1

  ClarkDietrich

27.5

5.4

22.1

  Serviacero Worthington

8.8

1.9

6.9

  ArtiFlex

1.8

1.2

0.6

  Other

(0.3
)

(0.2
)

(0.1
)
   Total Equity Income
$
60.2

$
25.6

$
34.6

•

Miscellaneous expense in the current quarter was driven primarily from the annuitization of a portion of the total projected benefit obligation of the inactive Gerstenslager Company Bargaining Unit Employees’ Pension Plan, which resulted in a pre-tax, non-cash settlement charge of $4.8 million to accelerate a portion of deferred pension cost.

•

Equity income increased $34.6 million over the prior year quarter to $60.2 million. The increase was driven by higher contributions from ClarkDietrich, WAVE, and Serviacero Worthington, up a total of $34.1 million due to the favorable actions taken by management to address higher steel prices combined with strong volume. The Company received cash distributions of $28.9 million from unconsolidated joint ventures during the current quarter.

~~Other Income~~

Three Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

Miscellaneous income, net
$
1.0

$
0.4

$
0.6

Gains (loss) on investment in Nikola

-

(143.8
)

143.8

•

During the prior year quarter, the Company recognized a pre-tax loss of $143.8 million comprised of mark-to-market losses, resulting from the $20.40 drop in the share price of Nikola common stock during the three months ended November 30, 2020.

Adjusted EBIT

We evaluate operating segment performance based on adjusted earnings before interest and taxes (“adjusted EBIT”). ~~In general, adjusted~~EBIT is calculated by adding interest expense and income tax expense to net earnings attributable to controlling interest. Adjusted EBIT excludes impairment and restructuring charges (gains), but may also exclude other items that management believes are not reflective of, and thus should not be included when evaluating, the performance of ~~the Company’s~~our ongoing operations. Adjusted EBIT is a non-GAAP measure and is used by management to evaluate segment performance, engage in financial and operational planning and determine incentive compensation because we believe that this measure provides additional perspective and, in some circumstances is more closely correlated to, the performance of ~~the Company’s~~our ongoing operations. ~~Refer to “Note O – Segment Operations” for additional information regarding our reportable operating segments.~~

The following table provides a reconciliation of consolidated net earnings ~~(loss)~~ attributable to controlling interest to adjusted EBIT for the periods presented:

Three Months Ended

November 30,

(In millions)
2021

2020

Net earnings (loss) attributable to controlling interest
$
110.3

$
(74.0
)
Interest expense

7.3

7.5

Income tax expense (benefit)

31.2

(19.4
)
Earnings (loss) before interest and taxes
$
148.8

$
(85.9
)
Impairment of long-lived assets

-

3.8

Restructuring and other (income) expense, net ⁽¹⁾

(1.9
)

7.4

Incremental expenses related to Nikola gains

-

4.6

Loss on investment in Nikola

-

143.8

Adjusted earnings before interest and taxes ⁽¹⁾
$
146.9

$
73.7

⁽¹⁾ Excludes the impact of the noncontrolling interests.


	Three Months Ended
	August 31,
(In millions)	2022			2021
Net earnings attributable to controlling interest	$	64.1		$	132.5
Interest expense		8.6			7.7
Income tax expense		19.5			40.2
Earnings before interest and taxes	$	92.2		$	180.4
Incremental expense related to Level5 earnout		0.5			-
Impairment of long-lived assets (1)		0.1			-
Restructuring and other income, net (1)		(1.1	)		(6.3	)
Pension settlement charge		4.8			-
Loss on sale of investment in ArtiFlex		15.8			-
Adjusted earnings before interest and taxes	$	112.3		$	174.1

(1) Excludes the impact of the noncontrolling interests.

The following table provides a summary of adjusted EBIT by segment for the periods presented.


	Three Months Ended								Three Months Ended
	November 30,								August 31,
						Increase/									Increase/
(In millions)	2021		2020			(Decrease)			2022			2021			(Decrease)
Steel Processing		71.9		34.4			37.5		$	34.9		$	107.7		$	(72.8	)
Consumer Products		17.6		17.4			0.2			20.9			20.6			0.3
Building Products		54.7		26.0			28.7			52.7			48.7			4.0
Sustainable Energy Solutions		0.8		1.5			(0.7	)		(1.4	)		(2.6	)		1.2
Other		1.9		(5.6	)		7.5			5.1			(0.4	)		5.5
Total Adjusted EBIT	$	146.9	$	73.7			73.2		$	112.3		$	174.0		$	(61.7	)

•

Steel Processing – Adjusted EBIT was down $72.8 million from the prior year quarter to $34.9 million, on lower direct spreads, which were negatively impacted by the unfavorable impact related to an estimated $48.6 million swing from significant•

~~Steel Processing~~ – Adjusted EBIT was up $37.5 million over the prior year quarter to $71.9 million on improved operating results and a higher contribution of equity income from Serviacero Worthington, which was up $6.9 million due to the favorable impact of higher steel prices. Direct spreads in the current quarter benefited from significant inventory holding gains, estimated to be $42.1 million in the current quarter, compared to immaterial inventory holding gains in the prior year quarter, partially offset by a higher gap in the current quarter between the cost of steel and scrap prices. The mix of direct versus toll tons processed was 47% to 53% in the current quarter, compared to 48% to 52% in the prior year quarter.

•

~~Consumer Products –~~ ~~Adjusted EBIT was up $0.2 million over the prior year quarter to $17.6 million, as higher material and conversion costs largely offset the impact of higher net sales.~~

•

~~Building Products –~~ Adjusted EBIT of $54.7 million was $28.7 million more than the prior year quarter, due primarily to higher equity earnings at ClarkDietrich and WAVE, up $27.2 million on strong volume and the favorable impact of higher steel prices. Operating income was up $1.4 million on the combined impact of higher volume and higher average selling prices, partially offset by an increase in labor and material costs. Volume in the prior year quarter had been at depressed levels due to the COVID-19 pandemic.

•

~~Sustainable Energy Solutions –~~ Adjusted EBIT was $0.8 million compared to $1.5 million in the prior year quarter, on the combined impact of lower volume and an unfavorable product mix. Both volume and mix in the current quarter were negatively impacted by the effect the ongoing semi-conductor chip shortage had on this segment’s customers in the transportation business. Volume in the current quarter was also negatively impacted by the May 31, 2021, divestiture of the Liquified Petroleum Gas business in Poland. This business continues to evolve as it transitions to serve the global hydrogen ecosystem and adjacent sustainable energies.

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inventory holding gains in the prior year quarter to nominal inventory holding losses in the current quarter. Adjusted EBIT was also negatively impacted by lower equity earnings at Serviacero Worthington, down $7.5 million from the prior year quarter, also on a swing from significant inventory holding gains in the prior year quarter to a nominal inventory holding loss in the current quarter.

•

Consumer Products – Adjusted EBIT was up $0.3 million over the prior year quarter to $20.9 million as the favorable impact of higher average selling prices was mostly offset by higher wages and input costs as well as $2.9 million of expense related to transaction costs and the write-up of acquired Level5 inventory to fair value.

•

Building Products – Adjusted EBIT of $52.7 million was $4.0 million more than the prior year quarter, due to higher average selling prices, partially offset by higher production costs.

•

Sustainable Energy Solutions – Adjusted EBIT was a loss of $1.4 million, favorable by $1.2 million compared to the prior year quarter, on the combined impact of increased volume and higher average selling prices, partially offset by higher production costs.

Interest Expense


	Three Months Ended
	August 31,
					Increase/
(In millions)	2022		2021		(Decrease)
Interest Expense	$	8.6	$	7.7	$	0.9

•

Interest expense was $8.6 million in the current quarter, up $0.9 million over the prior year quarter due to the impact of higher average debt levels associated with short-term borrowings.

~~Interest Expense~~

Three Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

Interest Expense
$
7.3

$
7.5

$
(0.2
)

•

~~Interest expense of $7.3 million for the current quarter was down slightly, compared to $7.5 million in the prior year quarter, primarily due to favorable exchange rates on our euro-denominated debt.~~

Income Taxes


	Three Months Ended
	August 31,
(In millions)	2022		Effective Tax Rate			2021		Effective Tax Rate			Increase/ (Decrease)
Income tax expense	$	19.5		23.9	%	$	40.2		23.3	%	$	(20.7	)

Three Months Ended

November 30,

(In millions)
2021

Effective Tax Rate

2020

Effective Tax Rate

Increase/
(Decrease)

Income tax expense (benefit)
$
31.2

22.8
%

$
(19.4
)

21.5
%

$
50.6

•

~~Income tax expense was $31.2~~Income tax expense was $19.5 million in the current quarter compared to an income tax benefit of $19.4 million in the prior year quarter. The change was driven by higher pre-tax earnings in the current quarter and the impact of the unrealized mark-to-market loss related to the Company’s investment in Nikola in the prior year quarter. Tax expense in the current quarter reflected an estimated annual effective rate of 22.8% compared to 21.5% for the prior year quarter. For additional information regarding the Company’s income taxes, refer to “NOTE M – Income Taxes”.

~~Six Months Year-to-date – Fiscal 2022 Compared~~ to ~~Fiscal 2021~~

income tax expense of $40.2 million in the prior year quarter. The ~~following discussion provides a review~~decrease was driven by lower pre-tax earnings. Tax expense in the current quarter reflected an estimated annual effective rate of ~~results~~23.9% compared to 23.3% for the ~~six months ended November 30, 2021 and 2020.~~

Six Months Ended

November 30,

(Dollars in millions)
2021

2020

Increase/
(Decrease)

Net sales
$
2,343.7

$
1,434.0

$
909.7

Operating income

226.3

7.3

219.0

Equity income

113.1

49.2

63.9

Net earnings attributable to controlling interest

242.8

542.7

(299.9
)
Earnings per diluted share attributable to controlling interest

4.71

9.97

(5.26
)
prior year quarter. For additional information regarding our income taxes, refer to “Note M – Income Taxes”.

~~Net Sales and Volume~~

~~The following table provides the percentage of net sales by reportable operating segment for the six months ended November 30, 2021 and 2020.~~

Six Months Ended

November 30,

% of

% of

Increase/

(In millions)
2021

Net sales

2020

Net sales

(Decrease)

Steel Processing
$
1,760.7

75.1
%

$
899.7

62.7
%

$
861.0

Consumer Products

288.6

12.3
%

251.1

17.5
%

37.5

Building Products

235.9

10.1
%

182.1

12.7
%

53.8

Sustainable Energy Solutions

58.6

2.5
%

61.9

4.3
%

(3.3
)
Other

-

0.0
%

39.2

2.7
%

(39.2
)
Consolidated Net Sales
$
2,343.8

100.0
%

$
1,434.0

100.0
%

$
909.8

~~The following table provides volume by reportable business segment for the six months ended November 30, 2021 and 2020.~~

Six Months Ended

November 30,

Increase/

2021

2020

(Decrease)

Steel Processing (Tons)

2,129,877

1,952,423

177,454

Consumer Products (Units)

40,086,729

35,478,377

4,608,352

Building Products (Units)

5,450,736

4,986,611

464,125

Sustainable Energy Solutions (Units)

285,677

437,197

(151,520
)
Other (Units)

-

21,626

(21,626
)

•

~~Steel Processing –~~ Net sales almost doubled over the prior year period to $1,760.7 million. The increase was driven by higher average selling prices, and contributions from the acquisition of the Shiloh Industries U.S. BlankLight® business on June 8, 2021.

•

~~Consumer Products –~~ Net sales increased 14.9%, or $37.5 million, over the prior year period. The increase was driven primarily by higher volume due, in large part, to the acquisition of General Tools & Instruments Company LLC in the third quarter of fiscal 2021.

•

~~Building Products –~~ Net sales increased 29.5%, or $53.8 million, over the prior year period. The increase was driven by higher average selling prices ($37.8 million) and to a lesser extent higher volume ($16.0 million), which were at depressed levels in the prior year period due to the COVID-19 pandemic.

•

~~Sustainable Energy Solutions –~~ Net sales decreased $3.3 million, or 5.3%, from the prior year period. The decrease was driven primarily by lower volume, which was negatively impacted by the May 31, 2021 divestiture of the LPG business in Poland as well as the ongoing semi-conductor chip shortage.

~~Gross Margin~~

Six Months Ended

November 30,

% of

% of

Increase/

(In millions)
2021

Net sales

2020

Net sales

(Decrease)

Gross Margin
$
404.0

17.2
%

$
248.8

17.4
%

$
155.2

•

Gross margin increased $155.2 million over the prior year period to $404.0 million. The improvement over the prior year period was primarily due to improved spreads in Steel Processing and, to a lesser extent, higher overall volume across all operating segments except Sustainable Energy Solutions.

~~Selling, General and Administrative Expense~~

Six Months Ended

November 30,

% of

% of

Increase/

(In millions)
2021

Net sales

2020

Net sales

(Decrease)

Selling, general and administrative expense
$
192.0

8.2
%

$
164.3

11.5
%

$
27.7

•

SG&A expense increased $27.7 million over the prior year period. The increase was driven primarily by higher profit sharing and bonus expense to correspond with the increase in operating income over the prior year period.

~~Other Operating Costs~~

Six Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

Impairment of long-lived assets
$
-

$
13.7

$
(13.7
)
Restructuring and other (income) expense, net

(14.3
)

9.4

(23.7
)
Incremental expenses related to Nikola gains

-

54.1

(54.1
)

•

There were no impairment charges recorded during the current period. Impairment charges in the prior year period related primarily to the write-down of certain assets in the Company’s former cryogenics and oil and gas businesses.

•

~~Restructuring activity during the six months ended~~ ~~November 30, 2021~~, related primarily to the divestiture of the WSP joint venture’s facilities in Canton, Michigan, which generated a pre-tax gain of $12.1 million within restructuring and other (income) expense, net and our exit from the former Cabs facility located in Stow, Ohio, which generated a pre-tax gain of $1.8 million within restructuring and other (income) expense, net. Restructuring activity in the prior year period primarily resulted from a $7.1 million pre-tax loss within the historical Pressure Cylinders segment on the sale of the former cryogenics business previously operated out of Theodore, Alabama and severance expense in connection with the reduction in workforce in Steel Processing related to the impact of COVID-19.

•

Incremental expenses related to Nikola gains of $54.1 million consisted of $33.5 million of discretionary profit sharing and bonus expenses directly related to the Nikola gains and $20.6 million for the contribution of 500,000 shares of Nikola common stock to the Worthington Industries Foundation.

~~Equity Income~~

Six Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

  WAVE
$
48.1

$
35.0

$
13.1

  ClarkDietrich

44.8

10.3

34.5

  Serviacero Worthington

18.1

3.2

14.9

  ArtiFlex

3.0

1.1

1.9

  Other

(0.9
)

(0.4
)

(0.5
)
   Total Equity Income
$
113.1

$
49.2

$
63.9

•

Equity income increased $63.9 million over the prior year period to $113.1 million. The increase was driven by higher contributions from ClarkDietrich, WAVE, and Serviacero Worthington, up a combined $62.5 million on strong volume and the favorable impact of higher steel prices. The Company received cash distributions of $48.6 million from unconsolidated joint ventures during the current year period.

~~Other Income~~

Six Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

Miscellaneous income, net
$
1.7

$
0.8

$
0.9

Gains on investment in Nikola

-

652.3

(652.3
)

•

Gains on investment in Nikola totaled $652.3 million and consisted of $508.5 million of realized gains from the sale and charitable contribution of the Company’s Nikola shares in the first quarter of fiscal 2021 combined with a $143.8 million

~~unrealized gain related to the 7,048,020 shares of Nikola common stock the Company continued to own at November 30, 2020.~~

~~Adjusted EBIT~~

~~The following table provides a reconciliation of consolidated net earnings (loss) attributable to controlling interest to adjusted EBIT for the periods presented:~~

Six Months Ended

November 30,

(In millions)
2021

2020

Net earnings attributable to controlling interest
$
242.8

$
542.6

Interest expense

15.0

15.1

Income tax expense

71.4

144.3

Earnings before interest and taxes
$
329.2

$
702.0

Impairment of long-lived assets

-

13.7

Restructuring and other (income) expense, net ⁽¹⁾

(8.3
)

9.3

Incremental expenses related to Nikola gains

-

54.1

Gains on investment in Nikola

-

(652.4
)
Adjusted earnings before interest and taxes ⁽¹⁾
$
320.9

$
126.7

⁽¹⁾ Excludes the impact of the noncontrolling interests.

~~The following table provides a summary of adjusted EBIT by segment for the periods presented.~~

Six Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

Steel Processing
$
179.6

$
48.6

$
131.0

Consumer Products

38.1

41.3

(3.2
)
Building Products

103.5

49.3

54.2

Sustainable Energy Solutions

(1.8
)

1.0

(2.8
)
Other

1.5

(13.5
)

15.0

Total Adjusted EBIT
$
320.9

$
126.7

194.2

•

~~Steel Processing~~ – Adjusted EBIT was up $131.0 million over the prior year period to $179.6 million on improved operating results and a higher contribution of equity income from Serviacero Worthington, which was up $14.9 million due to the favorable impact of higher steel prices. Direct spreads in the current year period benefited from significant inventory holding gains, estimated to be $89.1 million, compared to inventory holding losses in the prior year period of $6.6 million, partially offset by a higher gap in the current year period between the cost of steel and scrap prices. The mix of direct versus toll tons processed was 48% to 52% in the current year period, compared to 49% to 51% in the prior year period.

•

~~Consumer Products –~~ ~~Adjusted EBIT was down $3.2 million over the prior year period to $38.1 million as higher material and conversion costs more than offset the impact of higher net sales.~~

•

~~Building Products –~~ Adjusted EBIT of $103.5 million was $54.2 million more than the prior year period, due primarily to higher equity earnings at ClarkDietrich and WAVE, up $47.7 million on strong volume and the favorable impact of higher steel prices. Operating income was up $7.7 million on the combined impact of higher volume and higher average selling prices, partially offset by an increase in labor and material costs. Volume in the prior year period had been at depressed levels due to the COVID-19 pandemic.

•

~~Sustainable Energy Solutions –~~ Adjusted EBIT reflected a loss of $1.8 million, unfavorable by $2.8 million when compared to the prior year period, on the combined impact of lower volume, and an unfavorable product mix. Both volume and mix in the current period were negatively impacted by the ongoing semi-conductor chip shortage. Volume in the current period was also negatively impacted by the May 31, 2021, divestiture of the LPG business in Poland.

~~Interest Expense~~

Six Months Ended

November 30,

Increase/

(In millions)
2021

2020

(Decrease)

Interest Expense
$
15.0

$
15.1

$
(0.1
)

•

Interest expense of $15.0 million for the current year period was down slightly, compared to $15.1 million in the prior year period, primarily due to favorable exchange rates on our euro-denominated debt.

~~Income Taxes~~

Six Months Ended

November 30,

(In millions)
2021

Effective Tax Rate

2020

Effective Tax Rate

Increase/
(Decrease)

Income tax expense
$
71.4

22.8
%

$
144.3

21.5
%

$
(72.9
)

•

Income tax expense decreased $72.9 million from the comparable period in the prior year due to the impact of the Nikola gains and associated expenses in the prior year period, partially offset by higher pre-tax earnings in the current year period. The current year period tax expense reflected an estimated annual effective income tax rate of 22.8% versus 21.5% in the prior year period. For additional information regarding the Company’s income taxes, refer to “NOTE M – Income Taxes”.

Liquidity and Capital Resources

During the ~~six~~three months ended ~~November 30, 2021~~August 31, 2022, we generated $81.0 million of cash from operating activities, invested ~~$48.2~~$21.5 million in property, plant and equipment, ~~and paid $104.8~~spent $56.1 million to acquire ~~certain assets~~Level5, and received $42.1 million of cash proceeds from the ~~Shiloh Industries U.S BlankLight ® business.~~sale of our equity investment in ArtiFlex and related real property. Additionally, ~~Worthington Industries, Inc. acquired 1,235,000~~we repaid $32.4 million of ~~its common shares at a cost of $73.6 million~~borrowings outstanding under the AR Facility and paid dividends of ~~$29.3~~$13.9 million on Worthington Industries, Inc.’s common shares. The following table summarizes our consolidated cash flows for the periods presented:


	Six Months Ended						Three Months Ended
	November 30,						August 31,
(in millions)	2021			2020			2022			2021
Net cash (used) provided by operating activities	$	(168.9	)	$	224.8
Net cash (used) provided by investing activities		(124.1	)		460.4
Net cash provided (used) by operating activities							$	81.0		$	(49.8	)
Net cash used by investing activities								(29.8	)		(102.0	)
Net cash used by financing activities		(122.1	)		(119.3	)		(49.9	)		(89.3	)
(Decrease) increase in cash and cash equivalents		(415.1	)		565.9
Increase (decrease) in cash and cash equivalents								1.3			(241.1	)
Cash and cash equivalents at beginning of period		640.3			147.2			34.5			640.3
Cash and cash equivalents at end of period	$	225.2		$	713.1		$	35.8		$	399.2

~~As disclosed previously in “NOTE S – Subsequent Events”, the Company closed its acquisition~~26

Table of Tempel Steel Company on December 1, 2021, for approximately $275 million, which was funded primarily with existing cash and some borrowing from our lines of credit. Following the acquisition, we continue toContents

We believe that the available borrowing capacity of our committed ~~lines~~line of credit is sufficient to meet the needs of our existing businesses for normal operating costs, mandatory capital expenditures, debt redemptions, dividend payments, and working capital, to the extent not funded by cash provided by operating ~~activities.~~ activities, for at least 12 months and for the foreseeable future thereafter.

Although we do not currently anticipate a need, we ~~also~~ believe that we could access the financial markets to be in a position to sell long-term debt or equity ~~securities to strengthen our liquidity or capital resources.~~securities. However, lingering supply chain disruptions and other challenges caused by the COVID-19 pandemic ~~supply chain issues, labor shortages~~ and ~~other national and global~~softening economic conditions could create uncertainty and volatility in the financial markets, which may impact our ability to access capital and the terms under which we can do so. As the impact of such challenges on the economy and our operations is evolving, we will continue to review our discretionary spending and other variable costs as well as our liquidity needs.

We routinely monitor current operational requirements, financial market conditions, and credit relationships and we may choose to seek additional capital by issuing new debt and/or equity securities to strengthen our liquidity or capital structure. However, should we seek such additional capital, there can be no assurance that we would be able to obtain such additional capital on terms acceptable to us, if at all, and such additional equity or debt financing ~~or additional equity~~ could ~~increase our interest cost and/or~~ dilute the interests of our existing ~~shareholders.~~shareholders and/or increase our interest costs.

Operating Activities

Our business is cyclical and cash flows from operating activities may fluctuate during the year and from year to year due to economic and industry conditions. We rely on cash and short-term borrowings to meet cyclical increases in working capital needs. These needs generally rise during periods of increased economic activity or increasing raw material prices, requiring higher levels of inventory and accounts receivable. During economic slowdowns, or periods of decreasing raw material costs, working capital needs generally decrease as a result of the reduction of inventories and accounts receivable.

Net cash ~~used~~provided by operating activities was ~~$168.9~~$81.0 million during the ~~six~~three months ended ~~November 30, 2021,~~August 31, 2022, a ~~decrease~~difference of ~~$393.7~~$130.8 million from the net cash ~~provided~~used by operating activities in the prior year period. This ~~decrease~~change was primarily due to a ~~$490.4~~$125.9 million ~~increase~~decrease in operating working capital (accounts receivable, inventory, and accounts payable) requirements over the prior ~~year-to-date period,~~year quarter, mainly driven by ~~higher~~lower average steel prices.

Investing Activities

Net cash used by investing activities was ~~$124.1~~$29.8 million during the ~~six~~three months ended ~~November 30, 2021~~August 31, 2022 compared to ~~net cash provided by investing activities of $460.4~~$102.0 million in the prior year ~~period.~~quarter. Net cash ~~provided~~used by investing activities in the prior year ~~period~~quarter resulted primarily from ~~proceeds from~~cash used to acquire certain assets of the ~~sale of Nikola shares which totaled $487.9~~Shiloh Industries’ U.S BlankLight ® business on June 8, 2021, for $104.8 million. Net cash used by investing activities in the current year ~~period~~quarter resulted primarily from the purchase of the ~~Shiloh Industries U.S BlankLight ®~~Level5 business on June ~~8, 2021,~~2, 2022, for ~~$104.8 million. Capital~~$56.1 million, net of cash acquired, and capital expenditures ~~in the current year period totaled $48.2~~of $21.4 million, ~~a decrease~~partially offset by combined cash proceeds of ~~$0.7~~$47.9 million from the ~~prior year period.~~sale of our equity investment in ArtiFlex and other long-lived assets, including the related real property that was owned by Worthington and leased to ArtiFlex.

Investment activities are largely discretionary, and future investment activities could be reduced significantly, or eliminated, as economic conditions warrant. We assess acquisition opportunities as they arise, and such opportunities may require additional financing. There can be no assurance, however, that any such opportunities will arise, that any such acquisition opportunities will be consummated, or that any needed additional financing will be available on satisfactory terms if required.

Financing Activities

Net cash used by financing activities was ~~$122.1~~$49.9 million during the ~~six~~three months ended ~~November 30, 2021~~August 31, 2022 compared to ~~$119.3~~$89.3 million in the prior year ~~period. During the six months ended~~ ~~November 30, 2021, Worthington Industries, Inc. paid $73.6~~quarter. The change was primarily due to $32.4 million ~~to repurchase 1,235,000~~net repayments of Worthington Industries, Inc.’s common shares and paid dividends of $29.3 million on Worthington Industries, Inc.’s common shares. During the six months ended November 30, 2020, we paid $92.9 million to repurchase 2,318,464 of Worthington Industries, Inc.’s common shares and paid dividends of $26.8 million on Worthington Industries, Inc.’s common shares.short-term borrowings.

Long-term debt and short-term borrowings – As of ~~November 30, 2021,~~August 31, 2022, we were in compliance with the financial covenants of our short-term and long-term financial debt ~~covenants.~~agreements. Our debt agreements do not include credit rating triggers or material adverse change provisions. During the first quarter of fiscal 2023, our credit rating was upgraded from Baa3 to Baa2 by Moody’s Investors Service, Inc. Short-term borrowings consisted of $11.2 million drawn against our AR Facility, leaving $163.8 million available for future use. This is in addition to $500.0 million of short-term borrowing capacity available under our multi-year revolving credit facility.~~Our credit ratings at November 30, 2021 were unchanged from those reported as of May 31, 2021.~~

Common shares – On September 29, 2021, the Worthington Industries, Inc. Board of Directors (the “Worthington Industries Board”) declared a quarterly dividend of $0.28 per common share payable on December 29, 2021, to shareholders of record on December 15, 2021. This represented a $0.03 per common share increase over the dividend paid in the prior year quarter. On December 16, 2021,28, 2022, the Worthington Industries Board declared a quarterly dividend ~~for the third quarter~~ of ~~fiscal 2022 of $0.28~~$0.31 per share payable on ~~March~~December 29, 2022, to shareholders of record on ~~March~~December 15, 2022.

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On March 20, 2019, the Worthington Industries Board authorized the repurchase of up to 6,600,000 of Worthington Industries, Inc.’s outstanding common ~~shares. These~~shares (the “common shares”).

On March 24, 2021, the Worthington Industries Board authorized the repurchase of up to an additional 5,618,464 common shares, increasing the total number of common shares then authorized for repurchase to 10,000,000. As of August 31, 2022, 6,065,000 common shares remained available for repurchase under these authorizations.

The common shares available for repurchase under the authorizations currently in effect may be repurchased from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately negotiated transactions. On March 24, 2021, the Worthington Industries Board authorized the repurchase of up to an additional 5,618,464 of Worthington Industries, Inc.’s common shares, increasing the total number of common shares then authorized for repurchase to 10,000,000. As of November 30, 2021, 8,065,000 common shares remained available for repurchase under these authorizations.

Dividend Policy

We currently have no material contractual or regulatory restrictions on the payment of dividends. Dividends are declared at the discretion of the Worthington Industries Board. The Worthington Industries Board reviews the dividend quarterly and establishes the dividend rate based upon our consolidated financial condition, results of operations, capital requirements, current and projected cash flows, business prospects, and other relevant factors. While we have paid a dividend every quarter since becoming a public company in 1968, there is no guarantee that payments will continue in the future.

~~Contractual Cash Obligations and Other Commercial Commitments~~

Our contractual cash obligations and other commercial commitments have not materially changed from those disclosed in “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Cash Obligations and Other Commercial Commitments” of the Form 10-K.

~~Off-Balance Sheet Arrangements~~

We do not have guarantees or other off-balance sheet financing arrangements that we believe are reasonably likely to have a material current or future effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We continually evaluate our estimates, including those related to our valuation of receivables, inventories, intangible assets, accrued liabilities, income and other tax accruals, contingencies and litigation, and business combinations. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting policies are defined as those that reflect our significant judgments and uncertainties that could potentially result in materially different results under different assumptions and conditions. Although actual results historically have not deviated significantly from those determined using our estimates, our consolidated financial position or results of operations could be materially different if we were to report under different conditions or to use different assumptions in the application of such policies. Our critical accounting policies have not significantly changed from those discussed in “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” of the 2022 Form 10-K.

Item 3. – Quantitative and Qualitative Disclosures About Market Risk

Market risks have not materially changed from those disclosed in “Part II – Item 7A. – Quantitative and Qualitative Disclosures About Market Risk” of the 2022 Form 10-K.

Item 4. – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures [as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)] that are designed to provide reasonable assurance that information required to be disclosed in the reports that ~~we file~~Worthington Industries, Inc. files or ~~submit~~submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including ~~our~~Worthington Industries, Inc.’s principal executive officer and ~~our~~ principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management, under the supervision of and with the participation of ~~our~~Worthington Industries, Inc.’s principal executive officer and ~~our~~ principal financial officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this ~~Quarterly Report on~~ Form 10-Q (the quarterly period ended ~~November 30, 2021)~~August 31, 2022). Based on that evaluation, ~~our~~Worthington Industries’ principal executive officer and ~~our~~ principal financial officer have concluded that such disclosure controls and procedures were effective at a reasonable assurance level as of the end of the quarterly period covered by this ~~Quarterly Report on~~ Form 10-Q.

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Changes in Internal Control Over Financial Reporting

There were no changes that occurred during the period covered by this ~~Quarterly Report on~~ Form 10-Q (the quarterly period ended ~~November 30, 2021)~~August 31, 2022) in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. – Legal Proceedings

~~Various legal actions, which generally have arisen~~We are involved in various judicial and administrative proceedings, as both plaintiff and defendant, arising in the ordinary course of ~~business, are pending against the Company. None of this pending litigation, individually or collectively, is expected to~~business. We do not believe that any such proceedings will have a material adverse effect on our ~~consolidated~~business, financial position, results of ~~operations~~operation or cash flows.

Item 1A. – Risk Factors

There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. In “PART I – Item 1A. – Risk Factors” of the 2022 Form 10-K, as filed with the U.S. Securities and Exchange Commission on ~~July 30, 2021,~~August 1, 2022, and available at www.sec.gov or at www.worthingtonindustries.com, we included a detailed discussion of our risk factors. Our risk factors have not changed significantly from those disclosed in the 2022 Form 10-K. These risk factors should be read carefully in connection with evaluating our business and in connection with the forward-looking statements and other information contained in this ~~Quarterly Report on~~ Form 10-Q. Any of the risks described in the 2022 Form 10-K could materially affect our business, consolidated financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. The risk factors described in the 2022 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may materially adversely affect our business, consolidated financial condition and/or future results.

Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases made by, or on behalf of, Worthington Industries, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a) (3) under the ~~Securities~~ Exchange Act, ~~of 1934,~~ as amended) of common shares of Worthington Industries, Inc. during each month of the quarterly period ended ~~November 30, 2021:~~August 31, 2022:


					Total Number of
					Common Shares
					Purchased as		Maximum Number of
	Total Number		Average Price		Part of Publicly		Common Shares that
	of Common		Paid per		Announced		May Yet Be
	Shares		Common		Plans or		Purchased Under the
Period	Purchased		Share		Programs		Plans or Programs (1)
June 1-30, 2022 (2)		9,145	$	44.73		-		6,065,000
July 1-31, 2022		-		-		-		6,065,000
August 1-31, 2022		-		-		-		6,065,000
Total		9,145	$	44.73		-

Total Number of

Common Shares

Purchased as

Maximum Number of

Total Number

Average Price

Part of Publicly

Common Shares that

of Common

Paid per

Announced

May Yet Be

Shares

Common

Plans or

Purchased Under the

Period
Purchased

Share

Programs

Plans or Programs (1)

September 1-30, 2021

65,000

$
53.55

65,000

8,235,000

October 1-31, 2021

170,000

54.39

170,000

8,065,000

November 1-30, 2021

-

-

-

8,065,000

Total

235,000

$
54.03

235,000

(1)

The numbers shown in this column represent, as of the end of each period, the maximum number of common shares that could be purchased under the publicly announced repurchase authorizations then in effect. On March 20, 2019, the Worthington Industries Board authorized the repurchase of up to 6,600,000 of the common shares. On March 24, 2021, the Worthington Industries Board authorized the repurchase of up to an additional 5,618,464 common shares. A total of 3,935,000 common shares have been repurchased since the latest authorization, leaving 6,065,000 common shares available for repurchase at August 31, 2022.

~~(1)~~

The numbers shown in this column represent, as of the end of each period, the maximum number of common shares that were available for repurchase under authorizations of the Worthington Industries Board. On March 20, 2019, the Worthington Industries Board authorized the repurchase of up to 6,600,000 of Worthington Industries, Inc.’s outstanding common shares. On March 24, 2021, the Company announced that on that same day, the Worthington Industries Board authorized the repurchase of up to an additional 5,618,464 of Worthington Industries, Inc.’s outstanding common shares, increasing the total number of common shares then authorized for repurchase to 10,000,000. A total of 1,935,000 common shares have been repurchased since the latest authorization, leaving 8,065,000 common shares available for repurchase under the existing authorizations at November 30, 2021.

The common shares available for repurchase under the authorizations currently in effect may be ~~purchased~~repurchased from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately negotiated transactions.

(2)

Includes an aggregate of 9,145 common shares surrendered by employees in the period from June 1, 2022 through June 30, 2022 to satisfy withholding obligations upon the vesting of restricted common shares. These common shares were not counted against the share repurchase authorizations in effect during the fiscal quarter ended August 31, 2022 and discussed in footnote (1) above.

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Item 3. – Defaults Upon Senior Securities

Not applicable.

Item 4. – Mine Safety Disclosures

Not applicable.

Item 5. – Other Information

Not applicable.

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Item 6. – Exhibits


Exhibit No.		Description

2.1		Equity Interest Purchase Agreement, dated as of October 29, 2021, by and among Worthington Steel of Michigan, Inc., Tempel Holdings Inc., and Tempel Steel Company (Incorporated herein by reference to Exhibit 2.01 to the Current Report on Form 8-K of Worthington Industries, Inc. dated November 1, 2021 and filed with the SEC on the same date (SEC File No. 1-8399)) †

3.1		Amended Articles of Incorporation of Worthington Industries, Inc., as filed with the Ohio Secretary of State on October 13, 1998 (Incorporated herein by reference to Exhibit 3(a) to the Quarterly Report on Form 10-Q of Worthington Industries, Inc. for the quarterly period ended August 31, 1998 (SEC File No. 0-4016)) P

3.2		Code of Regulations of Worthington Industries, Inc. (reflecting all amendments through the date of this Quarterly Report on Form 10-Q) [This document represents the Code of Regulations of Worthington Industries, Inc. in compiled form incorporating all amendments.] (Incorporated herein by reference to Exhibit 3(b) to the Quarterly Report on Form 10-Q of Worthington Industries, Inc. for the quarterly period ended August 31, 2000 (SEC File No. 1-8399))

~~31.1~~10.1		Summary of Annual Base Salaries Approved for Named Executive Officers of Worthington Industries, Inc. (Incorporated herein by reference to Exhibit 10.69 to the Annual Report on Form 10-K of Worthington Industries, Inc. for the fiscal year ended May 31, 2022 (SEC File No. 1-8399)

10.2		Summary of Annual Cash Incentive Bonus Awards, Long-Term Performance Awards, Stock Options and Restricted Common Shares Granted in Fiscal 2023 for Named Executive Officers of Worthington Industries, Inc. (Incorporated herein by reference to Exhibit 10.81 to the Annual Report on Form 10-K of Worthington Industries, Inc. for the fiscal year ended May 31, 2022 (SEC File No. 1-8399))

10.3		Restricted Stock Award Agreement entered into by and between Worthington Industries, Inc. and Steven M. Caravati in order to evidence the grant, effective as of June 24, 2022, of 10,000 performance-based restricted common shares pursuant to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan*

10.4		Amendment to the Receivables Financing Agreement, dated as of October 6, 2022, among Worthington Receivables Company, LLC, Worthington Industries, Inc., PNC Bank, National Association, and PNC Capital Markets LLC

31.1		Rule 13a - 14(a) / 15d - 14(a) Certifications (Principal Executive Officer) *

31.2		Rule 13a - 14(a) / 15d - 14(a) Certifications (Principal Financial Officer) *

32.1		Certifications of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

32.2		Certifications of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Date File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document #

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document #

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document #

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document #

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document #

104		Cover Page Interactive Data File – the cover page from this Quarterly Report on Form 10-Q for the quarterly period ended ~~November 30, 2021,~~August 31, 2022, formatted in Inline XBRL (included within the Exhibit 101 attachments).

*	~~Filed herewith.~~

**	~~Furnished herewith.~~

†

The Disclosure Schedules and Exhibits referenced in the Equity Purchase Agreement have been omitted pursuant to Item 601(a)(5) of SEC Regulation S-K. Worthington Industries, Inc. will supplementally furnish a copy of any of the omitted Disclosure Schedules and Exhibits to the Securities and Exchange Commission on a confidential basis upon request.

#	~~Attached as Exhibit 101 to this Quarterly Report on Form 10-Q of Worthington Industries, Inc. are the following documents formatted in Inline XBRL (Extensible Business Reporting Language):~~

~~(i)~~

~~Consolidated Balance Sheets at November 30, 2021 and May 31, 2021;~~

~~(ii)~~

~~Consolidated Statements of Earnings (Loss) for the three months and six months ended November 30, 2021 and November 30, 2020;~~

~~(iii)~~

~~Consolidated Statements of Comprehensive Income (Loss) for the three months and six months ended November 30, 2021 and November 30, 2020;~~

~~(iv)~~

~~Consolidated Statements of Cash Flows for the three months and six months ended November 30, 2021 and November 30, 2020; and~~

~~(v)~~

~~Condensed Notes to Consolidated Financial Statements.~~

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~~Signatures~~

* Filed herewith.

** Furnished herewith.

† The Disclosure Schedules and Exhibits referenced in the Equity Interest Purchase Agreement have been omitted pursuant to Item 601(a)(5) of SEC Regulation S-K. Worthington Industries, Inc. will supplementally furnish a copy of any of the omitted Disclosure Schedules and Exhibits to the Securities and Exchange Commission on a confidential basis upon request.

# Attached as Exhibit 101 to this Quarterly Report on Form 10-Q of Worthington Industries, Inc. are the following documents formatted in Inline XBRL (Extensible Business Reporting Language):

(i)

Consolidated Balance Sheets at August 31, 2022 and May 31, 2022;

(ii)

Consolidated Statements of Earnings for the three months ended August 31, 2022 and August 31, 2021;

(iii)

Consolidated Statements of Comprehensive Income for the three months ended August 31, 2022 and August 31, 2021;

(iv)

Consolidated Statements of Cash Flows for the three months ended August 31, 2022 and August 31, 2021; and

(v)

Condensed Notes to Consolidated Financial Statements.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		WORTHINGTON INDUSTRIES, INC.

Date: ~~January 10,~~October 11, 2022	By:	/s/ Joseph B. Hayek
		Joseph B. Hayek,
		Vice President and Chief Financial Officer
		(On behalf of the Registrant as Duly Authorized Officer and as Principal Financial Officer)


Ohio		31-1189815
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 Old Wilson Bridge Road, Columbus, Ohio		43085
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, Without Par Value	WOR	New York Stock Exchange


	(Unaudited)				(Unaudited)
	November 30,		May 31,		August 31,		May 31,
	2021		2021		2022		2022
Assets
Current assets:
Cash and cash equivalents	$	225,194	$	640,311	$	35,768	$	34,485
Receivables, less allowances of $790 and $608 at November 30, 2021
and May 31, 2021, respectively		736,738		639,964
Receivables, less allowances of $1,615 and $1,292 at August 31, 2022
and May 31, 2022, respectively						818,332		857,493
Inventories:
Raw materials		420,511		266,208		357,926		323,609
Work in process		247,772		183,413		178,472		255,019
Finished products		171,305		115,133		190,737		180,512
Total inventories		839,588		564,754		727,135		759,140
Income taxes receivable		1,574		1,958		2,331		20,556
Assets held for sale		34,721		51,956		21,491		20,318
Prepaid expenses and other current assets		72,952		69,049		100,246		93,661
Total current assets		1,910,767		1,967,992		1,705,303		1,785,653
Investments in unconsolidated affiliates		291,397		233,126		252,609		327,381
Operating lease assets		93,628		35,101		103,587		98,769
Goodwill		370,191		351,056		411,902		401,469
Other intangible assets, net of accumulated amortization of $86,459 and
$80,513 at November 30, 2021 and May 31, 2021, respectively		267,564		240,387
Other intangible assets, net of accumulated amortization of $97,648 and
$93,973 at August 31, 2022 and May 31, 2022, respectively						326,634		299,017
Other assets		32,451		30,566		26,604		34,394
Property, plant and equipment:
Land		21,319		21,744		49,771		51,483
Buildings and improvements		273,483		271,196		299,586		303,269
Machinery and equipment		1,086,453		1,046,065		1,199,664		1,196,806
Construction in progress		68,423		53,903		63,672		59,363
Total property, plant and equipment		1,449,678		1,392,908		1,612,693		1,610,921
Less: accumulated depreciation		898,044		877,891		929,190		914,581
Total property, plant and equipment, net		551,634		515,017		683,503		696,340
Total assets	$	3,517,632	$	3,373,245	$	3,510,142	$	3,643,023

Liabilities and equity
Current liabilities:
Accounts payable	$	610,278	$	567,392	$	580,509	$	668,438
Accrued compensation, contributions to employee benefit plans and
related taxes		105,879		137,698
Short-term borrowings						15,554		47,997
Accrued compensation, contributions to employee benefit plans and related taxes						83,662		117,530
Dividends payable		15,794		16,536		17,453		15,988
Other accrued items		60,484		52,250		67,094		70,125
Current operating lease liabilities		10,888		9,947		12,141		11,618
Income taxes payable		16,555		3,620		7,629		300
Current maturities of long-term debt		280		458		248		265
Total current liabilities		820,158		787,901		784,290		932,261
Other liabilities		81,786		82,824		109,428		115,991
Distributions in excess of investment in unconsolidated affiliate		94,836		99,669		84,994		81,149
Long-term debt		701,892		710,031		690,011		696,345
Noncurrent operating lease liabilities		83,887		27,374		92,760		88,183
Deferred income taxes, net		101,982		113,751		101,687		115,132
Total liabilities		1,884,541		1,821,550		1,863,170		2,029,061
Shareholders' equity - controlling interest		1,479,797		1,398,193		1,512,600		1,480,752
Noncontrolling interests		153,294		153,502		134,372		133,210
Total equity		1,633,091		1,551,695		1,646,972		1,613,962
Total liabilities and equity	$	3,517,632	$	3,373,245	$	3,510,142	$	3,643,023


	Three Months Ended						Six Months Ended						Three Months Ended
	November 30,						November 30,						August 31,
	2021			2020			2021			2020			2022			2021
Operating activities:
Net earnings (loss)	$	113,185		$	(68,512	)	$	254,660		$	550,226
Adjustments to reconcile net earnings (loss) to net cash (used) provided by operating activities:
Net earnings													$	65,244		$	141,475
Adjustments to reconcile net earnings to net cash (used) provided by operating activities:
Depreciation and amortization		21,090			21,560			43,154			43,771			28,001			22,064
Impairment of long-lived assets		0			3,815			0			13,739			312			-
Provision for (benefit from) deferred income taxes		1,309			(31,776	)		2,675			39,255			(11,056	)		1,366
Bad debt expense (income)		335			(159	)		514			(65	)
Bad debt expense														342			179
Equity in net income of unconsolidated affiliates, net of distributions		(31,274	)		4,608			(64,492	)		(2,149	)		42,845			(33,218	)
Net (gain) loss on sale of assets		(496	)		7,271			(13,202	)		7,673
Net gain on sale of assets														(769	)		(12,706	)
Stock-based compensation		4,248			4,854			7,551			9,710			4,236			3,303
(Gains) loss on investment in Nikola		0			143,780			0			(652,362	)
Charitable contribution of Nikola shares		0			0			0			20,653
Changes in assets and liabilities, net of impact of acquisitions:
Receivables		(89,817	)		3,580			(121,685	)		(78,614	)		37,419			(31,868	)
Inventories		(97,182	)		4,623			(260,864	)		90,245			41,167			(163,682	)
Accounts payable		(47,594	)		48,176			(926	)		95,330			(101,581	)		46,668
Accrued compensation and employee benefits		14,358			13,960			(31,819	)		37,812			(33,868	)		(46,177	)
Income taxes payable		(22,922	)		(44,623	)		12,935			39,041			7,329			35,857
Other operating items, net		15,656			(3,729	)		2,583			10,551			1,417			(13,073	)
Net cash (used) provided by operating activities		(119,104	)		107,428			(168,916	)		224,816
Net cash provided (used) by operating activities														81,038			(49,812	)

Investing activities:
Investment in property, plant and equipment		(24,234	)		(16,073	)		(48,159	)		(48,944	)		(21,477	)		(23,925	)
Investment in non-marketable equity securities														(110	)		-
Acquisitions, net of cash acquired		(3,000	)		(75	)		(107,750	)		(75	)		(56,088	)		(104,750	)
Proceeds from sale of assets, net		5,136			21,580			31,821			21,580
Proceeds from sale of Nikola shares		0			0			0			487,859
Net cash (used) provided by investing activities		(22,098	)		5,432			(124,088	)		460,420
Proceeds from sale of investment in ArtiFlex														36,095			-
Proceeds from sale of assets, net of selling costs														11,755			26,685
Net cash used by investing activities														(29,825	)		(101,990	)

Financing activities:
Principal payments on long-term obligations and debt redemption costs		(10	)		(96	)		(402	)		(193	)
Net repayments of short-term borrowings														(32,443	)		-
Principal payments on long-term obligations														(137	)		(392	)
Proceeds from issuance of common shares, net of tax withholdings		(2,694	)		2,294			(6,785	)		1,144			(3,466	)		(4,091	)
Payments to noncontrolling interests		(2,879	)		0			(12,076	)		(560	)		-			(9,197	)
Repurchase of common shares		(12,702	)		(38,563	)		(73,587	)		(92,883	)		-			(60,885	)
Dividends paid		(14,565	)		(13,433	)		(29,263	)		(26,812	)		(13,884	)		(14,698	)
Net cash used by financing activities		(32,850	)		(49,798	)		(122,113	)		(119,304	)		(49,930	)		(89,263	)

(Decrease) increase in cash and cash equivalents		(174,052	)		63,062			(415,117	)		565,932
Increase (decrease) in cash and cash equivalents														1,283			(241,065	)
Cash and cash equivalents at beginning of period		399,246			650,068			640,311			147,198			34,485			640,311
Cash and cash equivalents at end of period	$	225,194		$	713,130		$	225,194		$	713,130		$	35,768		$	399,246


	Three Months Ended				Six Months Ended				Three Months Ended
	November 30,				November 30,				August 31,
(in thousands)	2021		2020		2021		2020		2022		2021
Steel Processing - toll	$	37,176	$	35,167	$	71,958	$	61,379	$	36,745	$	34,782
Certain oil & gas equipment contracts		-		4,367		-		12,066
Total over time revenue	$	37,176	$	39,534	$	71,958	$	73,445


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


Safe Harbor Statement			ii

Part I. Financial Information

	Item 1.	Financial Statements

		Consolidated Balance Sheets – ~~November 30, 2021~~August 31, 2022 and May 31, ~~2021~~2022	1

		Consolidated Statements of Earnings ~~(Loss)~~ – Three Months Ended August 31, 2022 and ~~Six Months Ended November 30,~~ 2021 ~~and 2020~~	2

		Consolidated Statements of Comprehensive Income ~~(Loss)~~ – Three Months Ended August 31, 2022 and ~~Six Months Ended November 30,~~ 2021 ~~and 2020~~	3

		Consolidated Statements of Cash Flows – Three Months Ended August 31, 2022 and ~~Six Months Ended November 30,~~ 2021 ~~and 2020~~	4
		Condensed Notes to Consolidated Financial Statements	5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2320

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3728

	Item 4.	Controls and Procedures	3728

Part II. Other Information

	Item 1.	Legal Proceedings	3829

	Item 1A.	Risk Factors	3829

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3829

	Item 3.	Defaults Upon Senior Securities (Not applicable)	3930

	Item 4.	Mine Safety Disclosures (Not applicable)	3930

	Item 5.	Other Information (Not applicable)	3930

	Item 6.	Exhibits	4031

Signatures			4133

(in thousands)	Steel Processing		Consumer Products ⁽¹⁾		Building Products ⁽¹⁾			Sustainable Energy Solutions ⁽¹⁾			Total
Balance at May 31, 2021	$	20,218	$	240,940	$	72,273		$	17,625		$	351,056
Acquisitions and purchase accounting adjustments		24,859		237		-			-			25,096
Translation adjustments		-		-		(4,073	)		(1,888	)		(5,961	)
Balance at November 30, 2021	$	45,077	$	241,177	$	68,200		$	15,737		$	370,191

⁽¹⁾ In connection with the reorganization of the Company's pressure cylinders business, effective June 1, 2021, the goodwill of our former Pressure Cylinders reporting unit was allocated to the new reporting units on a relative fair value basis. Refer to Note O – Segment Operations for additional information.


	Balance, as of		Expense									Balance, as of		Balance, as of										Balance, as of
(in thousands)	May 31, 2021		(Income)			Payments			Adjustments			November 30, 2021		May 31, 2022		Income			Payments			Adjustments		August 31, 2022
Early retirement and severance	$	771	$	(350	)	$	(172	)	$	(55	)	$	194	$	541	$	77		$	(422	)	$	-	$	196
Facility exit and other costs		449		(449	)		0			0			0		-		-			-			-		-
	$	1,220	$	(799	)	$	(172	)	$	(55	)	$	194	$	541	$	77		$	(422	)	$	-	$	196
Net gain on sale of assets ⁽¹⁾				(12,637	)												(1,177	)
Gain on lease buyout ⁽²⁾				(842	)
Restructuring and other income, net			$	(14,278	)											$	(1,100	)

	Three Months Ended November 30, 2021
(in thousands)	Steel Processing			Consumer Products		Building Products		Sustainable Energy Solutions		Other			Consolidated
Net sales	$	937,842		$	140,793	$	121,125	$	33,101	$	-		$	1,232,861
Restructuring and other income, net ⁽¹⁾		(182	)		-		-		-		(1,822	)		(2,004	)
Miscellaneous income, net		17			159		218		82		564			1,040
Equity in net income of unconsolidated affiliates		8,823			-		49,894		-		1,501			60,218
Adjusted earnings before interest and taxes		71,925			17,584		54,718		796		1,893			146,916

	Three Months Ended November 30, 2020
(in thousands)	Steel Processing			Consumer Products			Building Products		Sustainable Energy Solutions		Other			Consolidated
Net sales	$	468,723		$	117,513		$	93,989	$	34,023	$	16,844		$	731,092
Impairment of long-lived assets		-			-			-		-		3,815			3,815
Restructuring and other expense, net ⁽¹⁾		375			120			-		-		7,101			7,596
Incremental expenses related to Nikola gains		-			-			-		-		4,570			4,570
Miscellaneous income (loss), net		(5	)		(96	)		70		69		338			376
Equity in net income of unconsolidated affiliates		1,861			-			22,692		-		1,078			25,631
Adjusted earnings (loss) before interest and taxes		34,381			17,432			25,964		1,534		(5,633	)		73,678

	Six Months Ended November 30, 2021
(in thousands)	Steel Processing			Consumer Products		Building Products		Sustainable Energy Solutions			Other			Consolidated
Net sales	$	1,760,652		$	288,576	$	235,868	$	58,583		$	-		$	2,343,679
Restructuring and other income, net ⁽²⁾		(12,313	)		-		-		(143	)		(1,822	)		(14,278	)
Miscellaneous income, net		47			209		144		22			1,248			1,670
Equity in net income of unconsolidated affiliates		18,172			-		92,887		-			2,075			113,134
Adjusted earnings (loss) before interest and taxes		179,617			38,140		103,471		(1,760	)		1,479			320,947

	Six Months Ended November 30, 2020
(in thousands)	Steel Processing			Consumer Products			Building Products			Sustainable Energy Solutions		Other			Consolidated
Net sales	$	899,743		$	251,135		$	182,092		$	61,880	$	39,151		$	1,434,001
Impairment of long-lived assets		-			506			1,423			-		11,810			13,739
Restructuring and other expense, net ⁽²⁾		1,846			120			-			-		7,478			9,444
Incremental expenses related to Nikola gains		-			-			-			-		54,081			54,081
Miscellaneous income (loss), net		(48	)		(117	)		(92	)		151		933			827
Equity in net income of unconsolidated affiliates		3,170			-			45,243			-		852			49,265
Adjusted earnings (loss) before interest and taxes		48,557			41,341			49,337			973		(13,461	)		126,747

⁽²⁾ Includes the noncontrolling interest portion of restructuring (charges) gains of $6,027 and $(257) for the six months ended November 30, 2021 and 2020, respectively

(in thousands)
Category	Amount		Useful Life (Years)
Customer relationships	$	34,500	15-20
Non-compete agreement		290		3
In-process research & development		1,300	Indefinite
Total acquired identifiable intangible assets	$	36,090


(in thousands)	Preliminary Valuation			Measurement Period Adjustments			Revised Valuation			Preliminary Valuation
Cash and cash equivalents										$	1,515
Accounts receivable	$	44,191		$	-		$	44,191			2,860
Inventories		13,971			-			13,971			9,161
Prepaid expenses											64
Property, plant and equipment		30,461			-			30,461			273
Intangible assets		34,280			1,810			36,090			33,580
Operating lease assets		59,905			-			59,905			377
Total identifiable assets		182,808			1,810			184,618			47,830
Accounts payable		(44,822	)		-			(44,822	)		(3,175	)
Accrued expenses											(904	)
Current operating lease liabilities		(1,555	)		-			(1,555	)		(111	)
Noncurrent operating lease liabilities		(58,350	)		-			(58,350	)		(266	)
Net identifiable assets		78,081			1,810			79,891			43,374
Goodwill		26,669			(1,810	)		24,859			15,947
Purchase price	$	104,750		$	-		$	104,750
Total purchase price											59,321
Less: Fair value of earnout											(2,000	)
Plus: Estimated net working capital deficit											282
Cash purchase price										$	57,603

~~Reportable Segments~~	~~Description~~
~~Consumer Products~~	The Consumer Products reportable segment is comprised of brands that offer market-leading products in the tools, outdoor living and celebrations end markets with brands that include Coleman®, Bernzomatic®, Balloon Time®, Mag Torch®, General®, Garden-Weasel®, Pactool International®, Hawkeye™ and Worthington Pro-Grade™. This market sector includes propane-filled cylinders for torches, camping stoves and other applications, certain propane gas (LPG) cylinders, hand-held torches, Balloon Time® helium-filled balloon kits, and specialized hand tools and instruments. These products are sold primarily to mass merchandisers, retailers and distributors. LPG cylinders, which hold fuel for barbeque grills and recreational vehicle equipment, are also sold through cylinder exchangers.
~~Building Products~~	The Building Products reportable segment includes refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products. Cylinders in this market sector are generally sold to gas producers, and distributors. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential, and automotive air conditioning and refrigeration systems. LPG cylinders hold fuel for residential and light commercial heating systems, industrial forklifts and commercial/residential cooking (the latter, generally outside North America).Well water tanks and expansion tanks are used in the residential market with the latter also sold into commercial markets. Specialty products include a variety of fire suppression and chemical tanks.
~~Sustainable Energy Solutions~~	The Sustainable Energy Solutions reportable segment, which is primarily based in Europe, includes on-board fueling systems and services, as well as gas containment solutions and services for storage, transport and distribution of industrial gases. It includes high pressure and acetylene cylinders for life support cylinders and alternative fuel cylinders used to hold compressed natural gas (CNG) and hydrogen for automobiles, buses, and light-duty trucks.
~~Other~~	Divested businesses historically reported within Pressure Cylinders but no longer included in the Company’s management structure are presented within the "Other" category, on a historical basis, through the date of disposal. For the periods presented, these include the following: Structural Composites Industries, LLC (until March 2021); Oil & Gas Equipment (until January 2021); and Cryogenic Storage and Cryo-Science (until October 2020). The Other category also includes the results of our former Engineered Cabs operating segment, on a historical basis, through the date of disposition (November 1, 2019) as well as certain income and expense items not allocated to our operating segments.

	Fiscal Year
(Dollars per ton ¹ )	2022		2021		2020
1st Quarter	$	1,762	$	475	$	564
2nd Quarter	$	1,888	$	625	$	526
3rd Quarter	N/A		$	1,016	$	571
4th Quarter	N/A		$	1,358	$	527
Annual Avg.	$	1,825	$	869	$	547

(in thousands)

Maturity Date

Commodity contracts

September 2022 - December 2023

Foreign currency exchange contracts

October 2022 - March 2023