Worthington Industries (WOR) 10-Q 2025 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 001-08399

WORTHINGTON ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Ohio	31-1189815
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 West Old Wilson Bridge Road, Columbus, Ohio	43085
(Address of principal executive offices)	(Zip Code)

(614) 438-3210

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

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

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.

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

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 ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

On January 6, 2025, the number of common shares, without par value, of the registrant issued and outstanding was 50,044,032.

TABLE OF CONTENTS

Commonly Used or Defined Terms			ii
Cautionary Note Regarding Forward-Looking Statements			iii
Use of Non-GAAP Financial Measures and Definitions			1
Part I. Financial Information
	Item 1.	Financial Statements
		Consolidated Balance Sheets – November 30, 2024 and May 31, 2024	4
		Consolidated Statements of Earnings – Three Months and Six Months Ended November 30, 2024 and 2023	5
		Consolidated Statements of Comprehensive Income – Three Months and Six Months Ended November 30, 2024 and 2023	6
		Consolidated Statements of Cash Flows – Three Months and Six Months Ended November 30, 2024 and 2023	7
		Condensed Notes to Consolidated Financial Statements (Unaudited)	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
	Item 4.	Controls and Procedures	36
Part II. Other Information
	Item 1.	Legal Proceedings	37
	Item 1A.	Risk Factors	37
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
	Item 3.	Defaults Upon Senior Securities	38
	Item 4.	Mine Safety Disclosures	38
	Item 5.	Other Information	38
	Item 6.	Exhibits	38
Signatures			39

i

COMMONLY USED OR DEFINED TERMS

References in this Form 10-Q to “we,” “our,” “us” or the “Company” are collectively to Worthington Enterprises and its consolidated subsidiaries. In addition, the following terms, when used in this Form 10-Q, have the meanings set forth below:

Term	Definition
ABI	Architecture Billings Index
AOCI	Accumulated other comprehensive income (loss)
ASU	Accounting Standards Update
Board	Board of Directors of Worthington Enterprises, Inc.
CARES Act	Coronavirus Aid, Relief and Economic Security Act
CEO	Chief Executive Officer
ClarkDietrich	Clarkwestern Dietrich Building Systems LLC
CODM	Chief Operating Decision Maker
common shares	The common shares, no par value, of Worthington Enterprises
COVID-19	The novel coronavirus disease first known to originate in December 2019
CPI	U.S. Core Consumer Price Index
Credit Facility	Our $500,000,000 unsecured revolving credit facility with a group of lenders
EBIT	Earnings before interest and taxes
EPS	Earnings per common share
equity income	Equity in net income of unconsolidated affiliates
ETR	Effective income tax rate
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
Form 10-Q	Our Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2024
fiscal 2024	Our fiscal year ended May 31, 2024
fiscal 2025	Our fiscal year ended May 31, 2025
second quarter of fiscal 2024	Our fiscal quarter ended November 30, 2023
second quarter of fiscal 2025	Our fiscal quarter ended November 30, 2024
GAAP	U.S. generally accepted accounting principles
GDP	U.S. gross domestic product
Halo	WH Products, LLC
HMI	The National Association of Home Builders/Wells Fargo Housing Market Index
LIRA	Leading Indicator of Remodeling Activity
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
N.M.	Not meaningful
OCI	Other comprehensive income (loss)
PSLRA	Private Securities Litigation Reform Act of 1995, as amended
Ragasco	Hexagon Ragasco AS
SEC	Securities and Exchange Commission
Separation	The separation of our former steel processing business, effective December 1, 2023
SG&A	Selling, general and administrative expenses
SOFR	Secured Overnight Financing Rate
U.S.	United States of America
WAVE	Worthington Armstrong Venture
Workhorse	Taxi Workhorse Holdings, LLC
Worthington Enterprises	Worthington Enterprises, Inc. (formerly known as Worthington Industries, Inc.)
Worthington Steel	Worthington Steel, Inc.
2024 Form 10-K	Our Annual Report on Form 10-K for fiscal 2024 as filed with the SEC on July 30, 2024
2026 Notes	The senior unsecured notes that we issued on April 15, 2014, in the principal amount of $250,000,000, which bore interest at a rate of 4.55%, were scheduled to mature on April 15, 2026, and were paid in full on July 28, 2023.

ii

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Selected statements contained in this Form 10-Q, including, without limitation, in MD&A and in “Note E – Contingent Liabilities and Commitments,” constitute “forward-looking statements,” as that term is used in the PSLRA. We wish to take advantage of the safe harbor provisions included in the 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,” “should,” “would,” “intend,” “plan,” “will,” “likely,” “estimate,” “project,” “position,” “strategy,” “target,” “aim,” “seek,” “foresee,” and similar words or phrases. These forward-looking statements include, without limitation, statements relating to:

•

future or expected cash positions, liquidity and ability to access financial markets and capital;

•

outlook, strategy or business plans;

•

anticipated benefits of the Separation;

•

expected financial and operational performance, and future opportunities, following the Separation;

•

performance on a pro forma basis to illustrate the estimated effects of the Separation on historical periods;

•

the tax treatment of the Separation transaction;

•

future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures;

•

pricing trends for raw materials and finished goods and the impact of pricing changes;

•

the ability to improve or maintain margins;

•

expected demand or demand trends;

•

additions to product lines and opportunities to participate in new markets;

•

expected benefits from transformation and innovation efforts;

•

the ability to improve performance and competitive position;

•

anticipated working capital needs, capital expenditures and asset sales;

•

anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof;

•

projected profitability potential;

•

the ability to make acquisitions, form joint ventures and consolidate operations, and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations;

•

projected capacity and the alignment of operations with demand;

•

the ability to operate profitably and generate cash in down markets;

•

the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets;

•

expectations for inventories, jobs and orders;

•

expectations for the economy and markets or improvements therein;

•

expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value;

•

effects of judicial rulings, laws and regulations;

•

effects of cybersecurity breaches and other disruptions to information technology infrastructure;

•

the lingering effects of COVID-19 on economies and markets, and on our customers, counterparties, employees and third-party service providers; and

•

other non-historical matters.

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:

•

the ability to successfully realize the anticipated benefits of the Separation;

•

the effect of conditions in national and worldwide financial markets, including inflation, increases in interest rates and economic recession, and with respect to the ability of financial institutions to provide capital;

•

the impact of tariffs, the adoption of trade restrictions affecting our products or suppliers, a U.S. withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships;

•

changing prices and/or supply of steel, natural gas, oil, copper, zinc, and other raw materials;

•

product demand and pricing;

•

changes in product mix, product substitution and market acceptance of our products;

iii

•

volatility or fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities, labor and other items required by operations;

•

effects of sourcing and supply chain constraints;

•

the outcome of adverse claims experience with respect to workers’ compensation, product recalls or product liability, casualty events or other matters;

•

effects of facility closures and the consolidation of operations;

•

the effect of financial difficulties, consolidation and other changes within construction and other industries in which we participate;

•

failure to maintain appropriate levels of inventories;

•

financial difficulties (including bankruptcy filings) of end-users and customers, suppliers, joint venture partners and others with whom we do business;

•

the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts;

•

the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives, on a timely basis;

•

the overall success of, and the ability to integrate, newly-acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom;

•

capacity levels and efficiencies, within facilities, within major product markets and within the industries in which we participate;

•

the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, labor shortages, interruption in utility services, civil unrest, international conflicts, terrorist activities, or other causes;

•

changes in customer demand, inventories, spending patterns, product choices, and supplier choices;

•

risks associated with doing business internationally, including economic, political and social instability, foreign currency exchange rate exposure and the acceptance of our products in global markets;

•

the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment;

•

the effect of inflation, interest rate increases and economic recession, which may negatively impact our operations and financial results;

•

deviation of actual results from estimates and/or assumptions used by us in the application of our significant accounting policies;

•

the level of imports and import prices in our markets;

•

the effect of national, regional and global economic conditions generally and within major product markets;

•

the impact of environmental laws and regulations or the actions of the U.S. Environmental Protection Agency or similar regulators which increase costs or limit our ability to use or sell certain products;

•

the impact of increasing environmental, greenhouse gas emission and sustainability regulations and considerations;

•

the impact of judicial rulings and governmental regulations, both in the U.S. and abroad, including those adopted by the SEC and other governmental agencies as contemplated by the CARES Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010;

•

the effect of healthcare laws in the U.S and potential changes for such laws which may increase our healthcare and other costs and negatively impact our operations and financial results;

•

the effects of tax laws in the U.S and potential changes for such laws, which may increase our costs and negatively impact our operations and financial results;

•

cyber security risks;

•

the effects of privacy and information security laws and standards;

•

the seasonality of our operations; and

•

other risks described from time to time in our filings with the SEC, including those described in “Part I – Item 1A. – Risk Factors” of the 2024 Form 10-K.

We note these risk factors for investors as contemplated by the PSLRA. Forward-looking statements should be construed in the light of such risks. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. We do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

iv

USE OF NON-GAAP FINANCIAL MEASURES AND DEFINITIONS

(In thousands, except per common share amounts)

NON-GAAP FINANCIAL MEASURES. This Form 10-Q includes certain financial measures that are not calculated and presented in accordance with GAAP. Non-GAAP financial measures typically exclude items that management believes are not reflective of, and thus should not be included when evaluating the performance of our ongoing operations. Management uses these non-GAAP financial measures to evaluate ongoing performance, engage in financial and operational planning, and determine incentive compensation. Management believes these non-GAAP financial measures provide useful supplemental information regarding the performance of our ongoing operations and should not be considered as an alternative to the comparable GAAP financial measure. Additionally, management believes these non-GAAP financial measures allow for meaningful comparisons and analysis of trends in our business and enables investors to evaluate our operations and future prospects in the same manner as management.

The following provides an explanation of each non-GAAP financial measure presented in this Form 10-Q:

Adjusted operating income (loss) is defined as operating income (loss) excluding the items listed below, to the extent naturally included in operating income (loss).

Adjusted diluted EPS from continuing operations is defined as adjusted net earnings from continuing operations divided by diluted weighted-average shares outstanding.

Adjusted EBITDA from continuing operations is the measure by which we evaluate segment performance and our overall profitability. EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA from continuing operations excludes additional items including, but not limited to, those listed below, as well as other items that management believes are not reflective of, and thus should not be included when evaluating the performance of our ongoing operations. Adjusted EBITDA from continuing operations also excludes stock-based compensation due to its non-cash nature, which is consistent with how management assesses operating performance and determines incentive compensation. At the segment level, adjusted EBITDA from continuing operations includes expense allocations for centralized corporate back-office functions that exist to support the day-to-day business operations. Public company and other governance costs are held at the corporate level within the unallocated corporate and other category.

Adjusted EBITDA from continuing operations margin is calculated by dividing adjusted EBITDA from continuing operations by net sales.

EXCLUSIONS FROM NON-GAAP FINANCIAL MEASURES

Management believes it is useful to exclude the following items from its non-GAAP financial measures for its own and investors’ assessment of the business for the reasons identified below. Additionally, management may exclude other items from the non-GAAP financial measures that do not occur in the ordinary course of our ongoing business operations and note them in the reconciliation from earnings before income taxes from continuing operations to the non-GAAP financial measure adjusted EBITDA from continuing operations.

•

Impairment charges are excluded because they do not occur in the ordinary course of our ongoing business operations, are inherently unpredictable in timing and amount, and are non-cash, which we believe facilitates the comparison of historical, current and forecasted financial results.

•

Restructuring and other expense, net, which can result in both discrete gains and/or losses, consist of established programs that are not part of our ongoing operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions). These items are excluded because they are not part of the ongoing operations of our underlying business.

•

Separation costs, which consist of direct and incremental costs incurred in connection with the completed Separation, are excluded as they are one-time in nature and are not expected to occur in periods following the Separation. These costs include fees paid to third-party advisors, such as investment banking, audit and other advisory services as well as direct and incremental costs associated with the separation of shared corporate functions. Results in fiscal 2024 also include incremental compensation expense associated with the modification of unvested short and long-term incentive compensation awards, as required under the employee matters agreement executed in conjunction with the Separation.

•

Loss on extinguishment of debt is excluded because it does not occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of this type of charge is not consistent and is significantly impacted by the timing and size of debt extinguishment transactions.

•

Corporate costs eliminated at Separation reflect certain corporate overhead costs that no longer exist post-Separation. These costs were included in continuing operations as they represent general corporate overhead that was historically allocated to our former steel processing business but did not meet the requirements to be presented as discontinued operations.

1

The following provides a reconciliation of non-GAAP financial measures, including adjusted operating income, adjusted earnings before income taxes, adjusted income tax expense (benefit), adjusted net earnings from continuing operations attributable to controlling interest, and adjusted diluted EPS from continuing operations attributable to controlling interest, from their most comparable GAAP measure for the three and six months ended November 30, 2024 and 2023.

	Three Months Ended November 30, 2024
			Earnings		Income			Net Earnings		Diluted
			Before		Tax			from		EPS -
	Operating		Income		Expense			Continuing		Continuing
	Income		Taxes		(Benefit)			Operations (1)		Operations
GAAP	$	3,521	$	37,109	$	9,100		$	28,260		0.56
Restructuring and other expense, net		2,620		2,620		(639	)		1,981		0.04
Non-GAAP	$	6,141	$	39,729	$	9,739		$	30,241	$	0.60

	Three Months Ended November 30, 2023
				Earnings			Income			Net Earnings			Diluted
	Operating			Before			Tax			from			EPS -
	Income			Income			Expense			Continuing			Continuing
	(Loss)			Taxes			(Benefit)			Operations (1)			Operations
GAAP	$	(14,367	)	$	24,543		$	6,609		$	17,934		$	0.36
Corporate costs eliminated at Separation		9,671			9,671			(2,344	)		7,327			0.14
Restructuring and other expense, net		6			6			(1	)		5			-
Separation costs		7,056			7,056			(1,690	)		5,366			0.11
Gain on sale of assets in equity income		-			(2,780	)		662			(2,118	)		(0.04	)
Non-GAAP	$	2,366		$	38,496		$	9,982		$	28,514		$	0.57

	Six Months Ended November 30, 2024
				Earnings		Income			Net Earnings
	Operating			Before		Tax			from		Diluted EPS -
	Income			Income		Expense			Continuing		Continuing
	(Loss)			Taxes		(Benefit)			Operations (1)		Operations
GAAP	$	(1,178	)	$	67,899	$	15,882		$	52,513	$	1.04
Restructuring and other expense, net		3,778			3,778		(928	)		2,850		0.06
Non-GAAP	$	2,600		$	71,677	$	16,810		$	55,363	$	1.10

	Six Months Ended November 30, 2023
				Earnings			Income			Net Earnings
	Operating			Before			Tax			from			Diluted EPS -
	Income			Income			Expense			Continuing			Continuing
	(Loss)			Taxes			(Benefit)			Operations (1)			Operations
GAAP	$	(21,692	)	$	60,333		$	15,569		$	44,764			0.89
Corporate costs eliminated at Separation		19,343			19,343			(4,609	)		14,734			0.29
Restructuring and other expense, net		6			6			(1	)		5			-
Separation costs		9,466			9,466			(2,256	)		7,210			0.15
Loss on extinguishment of debt		-			1,534			(366	)		1,168			0.02
Gain on sale of assets in equity income		-			(2,780	)		662			(2,118	)		(0.04	)
Non-GAAP	$	7,123		$	87,902		$	22,139		$	65,763		$	1.31

——————————————————

(1)

Excludes the impact of noncontrolling interest.

2

The following table presents a reconciliation from the GAAP financial measure earnings before income taxes to the non-GAAP financial measure adjusted EBITDA from continuing operations for the periods presented.

	Three Months Ended						Six Months Ended
	November 30,						November 30,
	2024			2023			2024			2023
Earnings before income taxes (GAAP)	$	37,109		$	24,543		$	67,899		$	60,333
Plus: Net loss attributable to noncontrolling interest		251			-			496			-
Net earnings before income taxes attributable to controlling interest		37,360			24,543			68,395			60,333
Interest expense, net		1,033			472			1,522			1,546
EBIT (1)		38,393			25,015			69,917			61,879
Corporate costs eliminated at Separation		-			9,671			-			19,343
Restructuring and other expense, net		2,620			6			3,778			6
Separation costs		-			7,056			-			9,466
Loss on extinguishment of debt		-			-			-			1,534
Gain on sale of assets in equity income		-			(2,780	)		-			(2,780	)
Adjusted EBIT (1)		41,013			38,968			73,695			89,448
Depreciation and amortization		11,927			12,215			23,757			24,290
Stock-based compensation (2)		3,273			3,861			7,197			7,220
Adjusted EBITDA from continuing operations (non-GAAP)	$	56,213		$	55,044		$	104,649		$	120,958
Earnings before income taxes margin (GAAP)		13.5	%		8.2	%		12.8	%		9.9	%
Adjusted EBITDA margin from continuing operations (non-GAAP)		20.5	%		18.5	%		19.7	%		19.8	%

——————————————————

(1)

EBIT and adjusted EBIT are non-GAAP financial measures. However, these measures are not used by management to evaluate our performance, engage in financial and operational planning, or determine incentive compensation. Instead, they are included in the table above as subtotals in the reconciliation of earnings before income taxes to adjusted EBITDA from continuing operations, which is a non-GAAP financial measure used by management.

(2)

Excludes $2,665 of stock-based compensation reported in restructuring and other expense, net in our consolidated statement of earnings for the three months ended November 30, 2024 due to the accelerated vesting of certain outstanding equity awards upon retirement of our former CEO effective November 1, 2024.

3

Item 1. – Financial Statements

WORTHINGTON ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	(Unaudited)
	November 30,		May 31,
	2024		2024
Assets
Current assets:
Cash and cash equivalents		193,805	$	244,225
Receivables, less allowances of $2,553 and $343, respectively		184,925		199,798
Inventories:
Raw materials		74,921		66,040
Work in process		10,577		11,668
Finished products		93,965		86,907
Total inventories		179,463		164,615
Income taxes receivable		9,417		17,319
Prepaid expenses and other current assets		35,389		47,936
Total current assets		602,999		673,893
Investments in unconsolidated affiliates		135,218		144,863
Operating lease assets		23,015		18,667
Goodwill		369,799		331,595
Other intangible assets, net of accumulated amortization of $89,638 and $83,242, respectively		244,102		221,071
Other assets		22,309		21,342
Property, plant and equipment:
Land		8,632		8,657
Buildings and improvements		129,684		123,478
Machinery and equipment		356,678		321,836
Construction in progress		27,330		24,504
Total property, plant and equipment		522,324		478,475
Less: accumulated depreciation		262,749		251,269
Total property, plant and equipment, net		259,575		227,206
Total assets	$	1,657,017	$	1,638,637
Liabilities and equity
Current liabilities:
Accounts payable	$	83,262	$	91,605
Accrued compensation, contributions to employee benefit plans and related taxes		28,499		41,974
Dividends payable		9,040		9,038
Other accrued items		42,357		29,061
Current operating lease liabilities		5,396		6,228
Income taxes payable		910		470
Total current liabilities		169,464		178,376
Other liabilities		60,305		62,243
Distributions in excess of investment in unconsolidated affiliate		110,763		111,905
Long-term debt		295,721		298,133
Noncurrent operating lease liabilities		18,090		12,818
Deferred income taxes, net		89,716		84,150
Total liabilities		744,059		747,625
Shareholders’ equity - controlling interest		911,321		888,879
Noncontrolling interests		1,637		2,133
Total equity		912,958		891,012
Total liabilities and equity	$	1,657,017	$	1,638,637

See condensed notes to consolidated financial statements.

4

WORTHINGTON ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per common share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	November 30,						November 30,
	2024			2023			2024			2023
Net sales	$	274,046		$	298,229		$	531,354		$	610,147
Cost of goods sold		199,987			234,951			394,800			477,239
Gross profit		74,059			63,278			136,554			132,908
Selling, general and administrative expense		67,918			70,583			133,954			145,128
Restructuring and other expense, net		2,620			6			3,778			6
Separation costs		-			7,056			-			9,466
Operating income (loss)		3,521			(14,367	)		(1,178	)		(21,692	)
Other income (expense):
Miscellaneous income, net		65			714			551			1,013
Loss on extinguishment of debt		-			-			-			(1,534	)
Interest expense, net		(1,033	)		(472	)		(1,522	)		(1,546	)
Equity in net income of unconsolidated affiliates		34,556			38,668			70,048			84,092
Earnings before income taxes		37,109			24,543			67,899			60,333
Income tax expense		9,100			6,609			15,882			15,569
Net earnings from continuing operations		28,009			17,934			52,017			44,764
Net earnings from discontinued operations		-			10,233			-			83,106
Net earnings		28,009			28,167			52,017			127,870
Net earnings (loss) attributable to noncontrolling interests		(251	)		3,865			(496	)		7,461
Net earnings attributable to controlling interest	$	28,260		$	24,302		$	52,513		$	120,409
Amounts attributable to controlling interest:
Net earnings from continuing operations	$	28,260		$	17,934		$	52,513		$	44,764
Net earnings from discontinued operations		-			6,368			-			75,645
Net earnings attributable to controlling interest	$	28,260		$	24,302		$	52,513		$	120,409
Earnings per share from continuing operations - basic	$	0.57		$	0.36		$	1.06		$	0.91
Earnings per share from discontinued operations - basic		-		$	0.13			-			1.55
Net earnings per share attributable to controlling interest - basic	$	0.57		$	0.49		$	1.06		$	2.46
Earnings per share from continuing operations - diluted	$	0.56		$	0.36		$	1.04		$	0.89
Earnings per share from discontinued operations - diluted		-			0.13			-			1.51
Net earnings per share attributable to controlling interest - diluted	$	0.56		$	0.49		$	1.04		$	2.40
Weighted average common shares outstanding - basic		49,464			49,186			49,475			49,013
Weighted average common shares outstanding - diluted		50,138			50,042			50,264			50,102
Cash dividends declared per common share	$	0.17		$	0.32		$	0.34		$	0.64

See condensed notes to consolidated financial statements.

5

WORTHINGTON ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended					Six Months Ended
	November 30,					November 30,
	2024			2023		2024			2023
Net earnings	$	28,009		$	28,167	$	52,017		$	127,870
Other comprehensive income (loss), net of tax
Foreign currency translation		(3,276	)		897		(2,735	)		2,342
Pension liability adjustment		13			-		6			(3	)
Cash flow hedges		(57	)		13,549		(107	)		6,699
Other comprehensive income (loss), net of tax		(3,320	)		14,446		(2,836	)		9,038
Comprehensive income		24,689			42,613		49,181			136,908
Comprehensive income (loss) attributable to noncontrolling interests		(251	)		3,865		(496	)		7,461
Comprehensive income attributable to controlling interest	$	24,940		$	38,748	$	49,677		$	129,447

See condensed notes to consolidated financial statements.

6

WORTHINGTON ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended						Six Months Ended
	November 30,						November 30,
	2024			2023			2024			2023
Operating activities:
Net earnings	$	28,009		$	28,167		$	52,017		$	127,870
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		11,927			28,007			23,757			56,332
Impairment of long-lived assets		-			-			-			1,401
Provision for (benefit from) deferred income taxes		2,682			1,968			(2,855	)		(3,485	)
Loss on extinguishment of debt		-			-			-			1,534
Bad debt (expense) income		2,069			345			2,061			(454	)
Equity in net income of unconsolidated affiliates, net of distributions		4,268			(4,129	)		7,721			6,096
Net gain on sale of assets		(508	)		(439	)		(526	)		(334	)
Stock-based compensation		5,937			6,175			9,862			10,691
Changes in assets and liabilities, net of impact of acquisitions:
Receivables		(18,636	)		76,704			9,530			67,861
Inventories		7,836			103,150			1,430			38,823
Accounts payable		447			(75,373	)		(12,646	)		(75,095	)
Accrued compensation and employee benefits		(2,021	)		2,794			(13,466	)		(9,220	)
Other operating items, net		7,043			(32,379	)		13,314			(27,334	)
Net cash provided by operating activities		49,053			134,990			90,199			194,686
Investing activities:
Investment in property, plant and equipment		(15,161	)		(32,876	)		(24,790	)		(62,174	)
Acquisitions, net of cash acquired		731			(21,013	)		(88,156	)		(21,013	)
Proceeds from sale of assets, net of selling costs		1,616			751			13,385			802
Investment in non-marketable equity securities		(40	)		(1,500	)		(2,040	)		(1,540	)
Investment in note receivable		-			-			-			(15,000	)
Excess distributions from unconsolidated affiliate		-			1,085			-			1,085
Net cash used by investing activities		(12,854	)		(53,553	)		(101,601	)		(97,840	)
Financing activities:
Dividends paid		(8,969	)		(17,333	)		(17,085	)		(33,058	)
Repurchase of common shares		(8,079	)		-			(14,882	)		-
Proceeds from issuance of common shares, net of tax withholdings		(3,893	)		(9,207	)		(7,051	)		(14,337	)
Net proceeds from short-term borrowings (1)		-			175,000			-			172,187
Principal payments on long-term obligations		-			-			-			(243,757	)
Payments to noncontrolling interests		-			-			-			(1,921	)
Net cash provided (used) by financing activities		(20,941	)		148,460			(39,018	)		(120,886	)
Increase (decrease) in cash and cash equivalents		15,258			229,897			(50,420	)		(24,040	)
Cash and cash equivalents at beginning of period		178,547			201,009			244,225			454,946
Cash and cash equivalents at end of period (2)	$	193,805		$	430,906		$	193,805		$	430,906

(1)

Net proceeds in fiscal 2024 consisted of borrowings under Worthington Steel’s short-term credit facilities assumed by Worthington Steel in conjunction with the Separation.

(2)

The cash flows related to discontinued operations have not been segregated in our consolidated statements of cash flows. See “Note B – Discontinued Operations” for a summarization of significant non-cash items related to discontinued operations.

See condensed notes to consolidated financial statements.

7

WORTHINGTON ENTERPRISES, INC.

CONDENSED Notes to Consolidated Financial Statements (UNAUDITED)

(In thousands, except common share and per common share amounts)

Note A – Basis of Presentation

Basis of Presentation

These interim unaudited consolidated financial statements include the accounts of Worthington Enterprises and its consolidated subsidiaries. Significant intercompany accounts and transactions have been eliminated.

We own an 80% controlling interest in Halo, which we acquired on February 1, 2024. Halo is consolidated with the equity owned by the other joint venture members shown as “noncontrolling interests” in our consolidated balance sheets, and the other joint venture members’ portions of net earnings and OCI are shown as net earnings or comprehensive income attributable to noncontrolling interests in our consolidated statements of earnings and consolidated statements of comprehensive income, respectively. Net earnings and total equity in periods prior to the Separation include the minority interest of Worthington Steel.

Investments in unconsolidated affiliates that we do not control are accounted for using the equity method with our proportionate share of income or loss recognized within equity income in our consolidated statements of earnings. See further discussion of our unconsolidated affiliates in “Note C – Investments in Unconsolidated Affiliates.”

These interim unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, which are of a normal and recurring nature except those which have been disclosed elsewhere in this Form 10-Q, necessary for a fair presentation of the consolidated financial statements for these interim periods, have been included. Operating results for the second quarter of fiscal 2025 are not necessarily indicative of the results that may be expected for the full fiscal year. For further information, refer to the consolidated financial statements and notes thereto included in the 2024 Form 10-K.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Separation of the Steel Processing Business

On December 1, 2023, we completed the spin-off of our former steel processing business into an independent publicly traded company, Worthington Steel, on a tax-free basis. Accordingly, the operating results and financial position, of the former steel processing business, except for the minority partner’s portion of noncontrolling interest and accumulated other comprehensive income, are reported as discontinued operations for all periods presented, as discussed in further detail in “Note B – Discontinued Operations.” All discussion within this Form 10-Q, including amounts, percentages and disclosures for all periods presented, reflect only our continuing operations unless otherwise noted.

In connection with the Separation, we entered into several agreements with Worthington Steel that govern our ongoing relationships, the most significant of which is the Steel Supply and Services Agreement. Other agreements include a Trademark License Agreement, a Transition Services Agreement, and certain long-term services agreements. Amounts under the Trademark License Agreement, Transition Services Agreement and long-term services agreements were not significant during the six months ended November 30, 2024.

Pursuant to the Steel Supply and Services Agreement, Worthington Steel manufactures and supplies to us, at reasonable market rates, certain flat rolled steel products, and will provide us with certain related support services such as design, engineering/technical services, price risk management, scrap management, steel purchasing, supply chain optimization and product rework services, and other services at our request that are ancillary to the supply of the flat rolled steel products. Purchases from Worthington Steel under the Steel Supply and Services Agreement for the three months and six months ended November 30, 2024, totaled $23,024 and $51,455, respectively, of which $5,977 was payable at November 30, 2024.

8

Revenue Recognition

We recognize all revenue at the point in time the performance obligation is satisfied and control of the product is transferred to the customer upon shipment or delivery.

Receivables

We review our receivables on an ongoing basis to ensure that they are properly valued and collectible. The allowance for doubtful accounts is used to record the estimated risk of loss related to our customers’ inability to pay. This allowance is maintained at a level that we consider appropriate based on factors that affect collectability, such as the financial health of our customers, historical trends of charge-offs and recoveries and current economic and market conditions. Our allowance for doubtful accounts increased from $343 at May 31, 2024, to $2,553 at November 30, 2024, primarily due to a customer bankruptcy in Consumer Products.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact that the adoption of ASU 2024-03 will have on our related disclosures.

Note B – Discontinued Operations

The following table summarizes the financial results from the discontinued operations of Worthington Steel for the periods presented.

	Three Months Ended			Six Months Ended
	November 30, 2023			November 30, 2023
Net sales	$	788,689		$	1,670,027
Cost of goods sold		728,252			1,481,731
Gross profit		60,437			188,296
Selling, general and administrative expense		37,106			74,909
Impairment of long-lived assets		-			1,401
Separation costs		14,895			18,521
Operating income		8,436			93,465
Other income (expense):
Miscellaneous income, net		305			1,017
Interest expense, net		(1,697	)		(3,706	)
Equity in net income of unconsolidated affiliate		3,778			12,735
Earnings before income taxes		10,822			103,511
Income tax expense		589			20,405
Net earnings		10,233			83,106
Net earnings attributable to noncontrolling interest		3,865			7,461
Net earnings attributable to controlling interest	$	6,368		$	75,645

As permitted under GAAP, the cash flows related to discontinued operations have not been segregated in our consolidated statements of cash flows. Accordingly, the consolidated statement of cash flows for the three and six months ended November 30, 2023 include the results from both continuing and discontinued operations and amounts for certain captions will not agree with respective data in the consolidated balance sheet.

9

The following table summarizes significant non-cash operating items and capital expenditures of discontinued operations included in the consolidated statement of cash flows for the periods presented.

	Three Months Ended			Six Months Ended
	November 30, 2023			November 30, 2023
Significant non-cash operating items:
Depreciation and amortization	$	15,793		$	32,043
Impairment of long-lived assets		-			1,401
Equity in income of unconsolidated affiliate, net of distributions		(3,777	)		(12,734	)
Stock-based compensation		2,315			3,472
Significant investing activities:
Investment in property, plant and equipment		(13,682	)		(33,457	)
Acquisitions, net of cash acquired		(21,013	)		(21,013	)
Significant financing activities:
Net proceeds from short-term borrowings		175,000			172,187

Note C – Investments in Unconsolidated Affiliates

Investments in joint ventures that we do not control, either through majority ownership or otherwise, are unconsolidated and accounted for using the equity method. At November 30, 2024, we held investments in the following unconsolidated joint ventures: ClarkDietrich (25%); Sustainable Energy Solutions (49%); WAVE (50%); and Workhorse (20%).

We received distributions from unconsolidated affiliates totaling $77,769 during the six months ended November 30, 2024. We have received cumulative distributions from WAVE in excess of our investment balance, which resulted in a negative asset balance of $110,763 and $111,905 at November 30, 2024 and May 31, 2024, respectively. In accordance with the applicable accounting guidance, we have reclassified the negative balances to distributions in excess of investment in unconsolidated affiliate within our consolidated balance sheets. We will continue to record our equity in the net income of WAVE as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheets. If it becomes probable that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will immediately recognize any balance classified as a liability as income.

We use the cumulative earnings approach to determine the 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 exceed our share of the cumulative equity in the net earnings of the joint venture. In such cases, the excess distributions are considered returns of investment and are classified as investing activities in our consolidated statements of cash flows. No distributions exceeded our share in any of our unconsolidated joint ventures during the second quarter of fiscal 2025. During the second quarter of fiscal 2024, we classified $1,085 of dividends received from WAVE as an investing activity.

The following tables summarize combined financial information for our unconsolidated affiliates included in continuing operations as of the dates, and for the periods presented:

	November 30,		May 31,
	2024		2024
Cash and cash equivalents	$	51,240	$	36,163
Other current assets		547,436		605,043
Noncurrent assets		372,466		360,261
Total assets	$	971,142	$	1,001,467
Current liabilities		212,806		264,963
Current maturities of long-term debt		3,208		13,450
Long-term debt		356,539		349,431
Other noncurrent liabilities		143,774		146,984
Equity		254,815		226,639
Total liabilities and equity	$	971,142	$	1,001,467

10

	Three Months Ended				Six Months Ended
	November 30,				November 30,
	2024		2023		2024		2023
Net sales	$	492,990	$	513,470	$	1,008,663	$	1,082,053
Gross profit		136,693		148,298		271,028		321,315
Operating income		90,847		118,958		185,193		250,405
Depreciation and amortization		7,725		7,224		15,731		14,800
Interest expense		4,529		4,538		9,287		10,277
Income tax expense		309		442		954		1,351
Net earnings		89,186		115,114		179,868		240,766

Note D – Restructuring and Other Expense, Net

We consider restructuring activities to be programs whereby we fundamentally change our operations, such as divestitures, closing or consolidating facilities, employee severance (including rationalizing headcount or making other significant changes in personnel), and realignment of existing operations (including changes to management structure in response to underlying performance and/or changing market conditions).

A progression of the liabilities associated with our restructuring activities, combined with a reconciliation to the restructuring and other expense, net financial statement caption in our consolidated statement of earnings for the six months ended November 30, 2024 is summarized below:

	Balance at							Balance at
	May 31, 2024		Expense		Payments			November 30, 2024
Early retirement and severance	$	188	$	1,017	$	(1,068	)	$	137
Net loss on sale of assets				96
Stock-based compensation (1)				2,665
Restructuring and other expense, net			$	3,778

(1)

Represents non-cash stock-based compensation expense related to the accelerated vesting of certain outstanding equity awards upon retirement of our former CEO, effective November 1, 2024.

The total liability associated with our restructuring activities as of November 30, 2024 is expected to be paid in the next 12 months.

Note E – Contingent Liabilities and Commitments

Legal Proceedings

We are defendants in certain legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect our consolidated financial position or future results of operations. We also believe that environmental issues will not have a material effect on our capital expenditures, consolidated financial position or future results of operations.

Note F – Guarantees

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.

At November 30, 2024, we also had in place $9,500 of outstanding stand-by letters of credit issued to third-party service providers. The fair value of these guaranteed instruments, based on premiums paid, was not material and no amounts were drawn against them at November 30, 2024.

11

Note G – Debt

Our multi-year revolving Credit Facility is scheduled to mature on September 27, 2028. Borrowings under the Credit Facility have maturities of up to one year. We have the option to borrow at rates equal to an applicable margin over the overnight bank funding rate, the prime rate of PNC Bank, National Association or the adjusted daily simple SOFR. The applicable margin is determined by our total leverage ratio. There were no borrowings outstanding under the Credit Facility at November 30, 2024 or May 31, 2024, leaving $500,000 available for use.

Note H – Other Comprehensive Income (Loss)

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

	Three Months Ended
	November 30,
	2024									2023
	Before-Tax			Tax			Net-of-Tax			Before-Tax		Tax			Net-of-Tax
Foreign currency translation	$	(2,902	)	$	(374	)	$	(3,276	)	$	843	$	54		$	897
Pension liability adjustment		16			(3	)		13			-		-			-
Cash flow hedges		(54	)		(3	)		(57	)		17,390		(3,841	)		13,549
Other comprehensive income (loss)	$	(2,940	)	$	(380	)	$	(3,320	)	$	18,233	$	(3,787	)	$	14,446

	Six Months Ended
	November 30,
	2024									2023
	Before-Tax			Tax			Net-of-Tax			Before-Tax		Tax			Net-of-Tax
Foreign currency translation	$	(2,914	)	$	179		$	(2,735	)	$	2,170	$	172		$	2,342
Pension liability adjustment		9			(3	)		6			-		(3	)		(3	)
Cash flow hedges		(119	)		12			(107	)		8,578		(1,879	)		6,699
Other comprehensive income (loss)	$	(3,024	)	$	188		$	(2,836	)	$	10,748	$	(1,710	)	$	9,038

Note I – Changes in Equity

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

	Controlling Interest
	Additional
	Paid-in			AOCI,			Retained						Noncontrolling
	Capital			Net of Tax			Earnings			Subtotal			Interests			Total
Balance at May 31, 2024	$	299,033		$	454		$	589,392		$	888,879		$	2,133		$	891,012
Net earnings (loss)		-			-			24,253			24,253			(245	)		24,008
Other comprehensive income		-			484			-			484			-			484
Common shares issued, net of withholding tax		(3,158	)		-			-			(3,158	)		-			(3,158	)
Common shares in non-qualified plans		32			-			-			32			-			32
Stock-based compensation		6,216			-			-			6,216			-			6,216
Purchases and retirement of common shares		(884	)		-			(5,919	)		(6,803	)		-			(6,803	)
Cash dividends declared		-			-			(8,550	)		(8,550	)		-			(8,550	)
Balance at August 31, 2024	$	301,239		$	938		$	599,176		$	901,353		$	1,888		$	903,241
Net earnings (loss)		-			-			28,260			28,260			(251	)		28,009
Other comprehensive loss		-			(3,320	)		-			(3,320	)		-			(3,320	)
Common shares issued, net of withholding tax		(3,893	)		-			-			(3,893	)		-			(3,893	)
Common shares in non-qualified plans		56			-			-			56			-			56
Stock-based compensation		5,539			-			-			5,539			-			5,539
Purchases and retirement of common shares		(1,212	)		-			(6,867	)		(8,079	)		-			(8,079	)
Cash dividends declared		-			-			(8,595	)		(8,595	)		-			(8,595	)
Balance at November 30, 2024	$	301,729		$	(2,382	)	$	611,974		$	911,321		$	1,637		$	912,958

12

	Controlling Interest
	Additional
	Paid-in			AOCI,			Retained						Noncontrolling
	Capital			Net of Tax			Earnings			Subtotal			Interests			Total
Balance at May 31, 2023	$	290,799		$	(23,179	)	$	1,428,391			1,696,011		$	125,617		$	1,821,628
Net earnings		-			-			96,106			96,106			3,597			99,703
Other comprehensive loss		-			(5,408	)		-			(5,408	)		-			(5,408	)
Common shares issued, net of withholding tax		(5,130	)		-			-			(5,130	)		-			(5,130	)
Common shares in non-qualified plans		130			-			-			130			-			130
Stock-based compensation		8,995			-			-			8,995			-			8,995
Cash dividends declared		-			-			(16,081	)		(16,081	)		-			(16,081	)
Dividends to noncontrolling interests		-			-			-			-			(1,921	)		(1,921	)
Balance at August 31, 2023	$	294,794		$	(28,587	)	$	1,508,416		$	1,774,623		$	127,293		$	1,901,916
Net earnings		-			-			24,302			24,302			3,865			28,167
Other comprehensive income		-			14,446			-			14,446			-			14,446
Common shares issued, net of withholding tax		(9,207	)		-			-			(9,207	)		-			(9,207	)
Common shares in non-qualified plans		195			-			-			195			-			195
Stock-based compensation		4,511			-			-			4,511			-			4,511
Cash dividends declared		-			-			(16,061	)		(16,061	)		-			(16,061	)
Balance at November 30, 2023	$	290,293		$	(14,141	)	$	1,516,657		$	1,792,809		$	131,158		$	1,923,967

The following table summarizes the changes in AOCI for the periods presented:

	Foreign			Pension
	Currency			Liability			Cash Flow
	Translation			Adjustment			Hedges			AOCI
Balance at May 31, 2024	$	(669	)	$	(441	)	$	1,564		$	454
OCI before reclassifications		(2,914	)		9			(758	)		(3,663	)
Reclassification adjustments to net earnings (1)		-			-			639			639
Income tax effect		179			(3	)		12			188
Balance at November 30, 2024	$	(3,404	)	$	(435	)	$	1,457		$	(2,382	)

	Foreign			Pension
	Currency			Liability			Cash Flow
	Translation			Adjustment			Hedges			AOCI
Balance at May 31, 2023	$	(22,123	)	$	(1,730	)	$	674		$	(23,179	)
OCI before reclassifications		2,170			-			12,947			15,117
Reclassification adjustments to net earnings (1)		-			-			(4,369	)		(4,369	)
Income tax effect		172			(3	)		(1,879	)		(1,710	)
Balance at November 30, 2023	$	(19,781	)	$	(1,733	)	$	7,373		$	(14,141	)

——————————————————

(1)

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

On March 20, 2019, the Board authorized the repurchase of up to 6,600,000 common shares. On March 24, 2021, the 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 (net of previously repurchased common shares). During the six months ended November 30, 2024, we repurchased a total of 350,000 of our common shares under these authorizations leaving 5,715,000 common shares available for repurchase at November 30, 2024.

Common shares 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.

13

Note J – Stock-Based Compensation

Non-Qualified Stock Options

During the six months ended November 30, 2024, we granted non-qualified stock options covering a total of 54,200 common shares under our stock-based compensation plans. The weighted average exercise price was $44.38 for the non-qualified stock options granted during the six months ended November 30, 2024, which was determined based on the closing market price of the underlying common shares at the respective grant date. The weighted average fair value of these non-qualified stock options, based on the Black-Scholes option-pricing model, calculated at the grant date, was $16.38 per share. The calculated pre-tax stock-based compensation expense for these non-qualified stock options was $888 and will be recognized on a straight-line basis over the three-year vesting period, net of any forfeitures. The weighted average fair value of stock options granted during the six months ended November 30, 2024 was based on the following assumptions:

Dividend yield	1.34	%
Expected volatility	36.90	%
Risk-free interest rate	3.97	%
Expected term (years)	6.0

Due to the impact of the Separation on the comparability to the historical prices of the common shares, we are unable to use the historical volatility of the common shares to determine the expected volatility. Accordingly, we use a comparable peer group to determine the expected volatility of the common shares. The risk-free interest rate is based on the U.S. Treasury strip rate for the expected term of the non-qualified stock options. The expected term was developed using historical exercise experience.

Service-Based Restricted Common Shares

During the six months ended November 30, 2024 we granted an aggregate of 289,820 service-based restricted common shares under our stock-based compensation plans, which generally cliff vest three years from the grant date. The fair value of these restricted common shares was equal to the weighted average closing market price of the underlying common shares on the grant date, or $44.89 per share. The calculated pre-tax stock-based compensation expense for these restricted common shares of $13,011 will be recognized on a straight-line basis over the three-year vesting period, net of any forfeitures.

Performance Share Awards

Outstanding performance share awards may be earned based on the level of achievement of corporate targets for cumulative corporate economic value added and EPS growth and, in the case of business unit executives, a business unit adjusted EBITDA from continuing operations target, in each case for the three-year periods ending May 31, 2025, 2026 and 2027. These performance share awards will be paid, to the extent earned, in common shares 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. 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 targets being achieved. During the six months ended November 30, 2024, we granted performance share awards covering an aggregate of 42,100 common shares (at target levels). The calculated pre-tax stock-based compensation expense for these performance shares is $1,868 (at target levels). 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 targets being achieved.

Note K – Income Taxes

Income tax expense for the six months ended November 30, 2024 and November 30, 2023 reflected estimated annual ETRs of 24.1% and 25.7%, respectively. Management is required to estimate the annual ETR based upon its forecast of annual pre-tax income for domestic and foreign operations. Our actual ETR for fiscal 2025 could be materially different from the forecasted rate as of November 30, 2024.

14

Note L – Earnings per Share

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

	Three Months Ended				Six Months Ended
	November 30,				November 30,
	2024		2023		2024		2023
Numerator (basic & diluted):
Net earnings from continuing operations attributable to controlling interest	$	28,260	$	17,934	$	52,513	$	44,764
Denominator (shares in thousands):
Basic EPS from continuing operations - weighted average common shares		49,464		49,186		49,475		49,013
Effect of dilutive securities		674		856		789		1,089
Diluted EPS from continuing operations - weighted average common shares		50,138		50,042		50,264		50,102
Basic EPS from continuing operations	$	0.57	$	0.36	$	1.06	$	0.91
Diluted EPS from continuing operations	$	0.56	$	0.36	$	1.04	$	0.89

Stock options covering an aggregate of 110,950 and 38,932 common shares for the three months ended November 30, 2024 and November 30, 2023, respectively, and 90,391 and 32,892 for the six months ended November 30, 2024 and November 30, 2023, respectively, have been excluded from the computation of diluted EPS because the effect would have been antidilutive for those periods.

Note M – Segment Operations

Our operating segments reflect the way in which internally-reported financial information is regularly reviewed by the CODM to analyze performance, make decisions and allocate resources. We have identified our Chief Executive Officer as our CODM. Our CODM evaluates segment performance on the basis of adjusted EBITDA from continuing operations, as described in the “Use of Non-GAAP Financial Measures and Definitions” section. Factors used to identify operating segments include the nature of the products provided by each business, the management reporting structure, similarity of economic characteristics and certain quantitative measures, as prescribed by GAAP. Our operations are organized under two operating segments: Consumer Products and Building Products. Our former Sustainable Energy Solutions operating segment is presented within Unallocated Corporate and Other in periods prior to its deconsolidation on May 29, 2024. In periods subsequent to the deconsolidation transaction, our retained 49% interest is accounted for under the equity method of accounting, as discussed in “Note C – Investments in Unconsolidated Affiliates.” Unallocated Corporate and Other also includes certain assets and liabilities (e.g., public debt) held at the corporate level as well as general corporate expenses that are not directly attributable to our business operations and are administrative in nature, such as public company and other governance-related costs that benefit the organization as a whole.

15

The following tables present summarized financial information for our reportable segments and Unallocated Corporate and Other for the periods indicated. A reconciliation from the GAAP financial measure of earnings before income taxes to the non-GAAP financial measure of adjusted EBITDA from continuing operations is provided directly following the summarized information below.

	Three Months Ended November 30, 2024
					Total		Unallocated
	Consumer		Building		Reportable		Corporate and
	Products		Products		Segments		Other			Total
Net sales	$	116,748	$	157,298	$	274,046	$	-		$	274,046
Capital expenditures		5,789		4,348		10,137		5,024			15,161
Depreciation and amortization		4,296		6,496		10,792		1,135			11,927
Restructuring and other expense, net		-		514		514		2,106			2,620
Equity income		-		34,294		34,294		262			34,556
Adjusted EBITDA from continuing operations		15,484		47,185		62,669		(6,456	)		56,213

	Three Months Ended November 30, 2023
					Total		Unallocated
	Consumer		Building		Reportable		Corporate and
	Products		Products		Segments		Other			Total
Net sales	$	119,389	$	151,303	$	270,692	$	27,537		$	298,229
Capital expenditures		4,194		6,987		11,181		21,695			32,876
Depreciation and amortization		4,112		5,927		10,039		2,176			12,215
Restructuring and other expense, net		-		6		6		-			6
Separation costs		-		-		-		7,056			7,056
Equity income		-		35,176		35,176		3,492			38,668
Adjusted EBITDA from continuing operations		12,674		45,809		58,483		(3,439	)		55,044

	Six Months Ended November 30, 2024
					Total		Unallocated
	Consumer		Building		Reportable		Corporate and
	Products		Products		Segments		Other			Total
Net sales	$	234,343	$	297,011	$	531,354	$	-		$	531,354
Capital expenditures		10,733		8,057		18,790		6,000			24,790
Depreciation and amortization		8,595		12,867		21,462		2,295			23,757
Restructuring and other expense, net		-		803		803		2,975			3,778
Equity income		-		70,940		70,940		(892	)		70,048
Adjusted EBITDA from continuing operations		33,259		86,914		120,173		(15,524	)		104,649

	Six Months Ended November 30, 2023
					Total		Unallocated
	Consumer		Building		Reportable		Corporate and
	Products		Products		Segments		Other			Total
Net sales	$	236,742	$	317,231	$	553,973	$	56,174		$	610,147
Capital expenditures		5,727		12,257		17,984		44,190			62,174
Depreciation and amortization		8,104		11,925		20,029		4,261			24,290
Restructuring and other expense, net		-		6		6		-			6
Separation costs		-		-		-		9,466			9,466
Equity income		-		80,219		80,219		3,873			84,092
Adjusted EBITDA from continuing operations		26,889		105,442		132,331		(11,373	)		120,958

16

	Three Months Ended					Six Months Ended
	November 30,					November 30,
	2024		2023			2024		2023
Earnings before income taxes	$	37,109	$	24,543		$	67,899	$	60,333
Plus: Net loss attributable to noncontrolling interest		251		-			496		-
Net earnings before income taxes attributable to controlling interest		37,360		24,543			68,395		60,333
Interest expense, net		1,033		472			1,522		1,546
EBIT (1)		38,393		25,015			69,917		61,879
Corporate costs eliminated at Separation		-		9,671			-		19,343
Restructuring and other expense, net		2,620		6			3,778		6
Separation costs		-		7,056			-		9,466
Loss on extinguishment of debt		-		-			-		1,534
Gain on sale of assets in equity income		-		(2,780	)		-		(2,780	)
Adjusted EBIT (1)		41,013		38,968			73,695		89,448
Depreciation and amortization		11,927		12,215			23,757		24,290
Stock-based compensation (2)		3,273		3,861			7,197		7,220
Adjusted EBITDA from continuing operations	$	56,213	$	55,044		$	104,649	$	120,958

(1)

EBIT and adjusted EBIT are not used by management to evaluate our performance, engage in financial and operational planning, or to determine incentive compensation. Instead, they are included as subtotals in the reconciliation of earnings before income taxes to adjusted EBITDA from continuing operations, which management uses to assess operating performance.

(2)

Excludes $2,665 of stock-based compensation reported in restructuring and other expense, net in our consolidated statement of earnings for the three months ended November 30, 2024 related to the accelerated vesting of certain outstanding equity awards upon retirement of our former CEO effective, November 1, 2024.

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

	November 30,		May 31,
	2024		2024
Consumer Products	$	574,568	$	557,826
Building Products		764,911		672,723
Total reportable segments		1,339,479		1,230,549
Unallocated Corporate and Other		317,538		408,088
Total assets of continuing operations	$	1,657,017	$	1,638,637

17

Note N – Acquisitions

On June 3, 2024, we acquired Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The total purchase price, after adjustment for final working capital, consisted of cash consideration of $101,424, of which $11,343 was on deposit at May 31, 2024, and contingent consideration in the form of an earnout agreement with an estimated acquisition date fair value of $7,139. The earnout agreement provides for additional cash consideration of up to $14,000 should certain earnings targets be met through calendar year 2024. Ragasco operates as part of the Building Products operating segment and its results have been included in our consolidated statements of earnings since the date of acquisition. Pro forma results, including the acquired business since the beginning of fiscal 2023, would not be materially different from reported results.

The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. 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 (i.e., 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 is not expected to be deductible for income tax purposes.

The assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the net identifiable assets acquired. In connection with the acquisition of Ragasco, we identified and valued the following intangible assets:

			Useful Life
Category	Amount		(Years)
Trade name	$	4,379	10
Technological know-how		14,659	10
Customer relationships		12,660	15
Total acquired identifiable intangible assets	$	31,698

The following table summarizes the consideration paid and the final fair value assigned to the assets and liabilities assumed at the acquisition date.

				Measurement
	Preliminary			Period			Final
	Valuation			Adjustments			Valuation
Cash and cash equivalents	$	1,925		$	-		$	1,925
Accounts receivable		8,554			-			8,554
Inventory		16,403			-			16,403
Other current assets		990			-			990
Property, plant and equipment		27,325			-			27,325
Operating lease assets		8,834			-			8,834
Deferred income taxes		365			-			365
Intangible assets		32,840			(1,142	)		31,698
Total identifiable assets		97,236			(1,142	)		96,094
Accounts payable		(4,885	)		-			(4,885	)
Current operating lease liability		(980	)		-			(980	)
Accrued expenses		(6,344	)		-			(6,344	)
Noncurrent operating lease liability		(7,886	)		-			(7,886	)
Deferred income taxes		(9,226	)		251			(8,975	)
Other liabilities		(100	)		-			(100	)
Net identifiable assets		67,815			(891	)		66,924
Goodwill		40,748			891			41,639
Total purchase price		108,563			-			108,563
Less: Fair value of earnout		7,139			-			7,139
Cash purchase price	$	101,424		$	-		$	101,424

18

Note O – Derivative Financial Instruments and Hedging Activities

We primarily utilize derivative financial instruments to 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 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 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 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 foreign currency exchange rate fluctuations. The translation of foreign currencies into U.S. dollars also subjects us to exposure related to fluctuating foreign 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, aluminum 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 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 risk of loss is remote and, in any event, would not be material.

Refer to “Note P – Fair Value Measurements” for additional information regarding the accounting treatment for our derivative financial instruments, as well as how fair value is determined. The following table summarizes the fair value of our derivative financial instruments and the respective lines in which they were recorded in the consolidated balance sheet at November 30, 2024 and May 31, 2024:

	Fair Value of Assets					Fair Value of Liabilities
	Balance					Balance
	Sheet	November 30,		May 31,		Sheet	November 30,		May 31,
	Location	2024		2024		Location	2024		2024
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	762	$	601	Accounts payable	$	44	$	83
Commodity contracts	Other assets		41		-	Other liabilities		-		21
Subtotal			803		601			44		104
Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	74	$	319	Accounts payable	$	45	$	69
Foreign currency exchange contracts	Receivables		-		-	Accounts payable		689		1,248
Subtotal			74		319			734		1,317
Total derivative financial instruments		$	877	$	920		$	778	$	1,421

19

The amounts in the table above reflect the fair value of our derivative financial instruments on a net basis where allowed under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been an increase in receivables with a corresponding increase in accounts payable of $616 and $391 at November 30, 2024 and May 31, 2024, respectively.

Cash Flow Hedges

We enter into derivative financial instruments to hedge our exposure to changes in cash flows attributable to interest rate and commodity price fluctuations associated with certain forecasted transactions. These derivative financial instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on each of these derivative financial instruments is reported as a component of OCI and reclassified into earnings in the same line associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings.

The following table summarizes our cash flow hedges outstanding at November 30, 2024:

	Notional
	Amount		Maturity Date(s)
Commodity contracts	$	11,597	December 2024 - December 2025

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

				Location of	Gain (Loss)
	Gain (Loss)			Gain (Loss)	Reclassified
	Recognized			Reclassified from AOCI	from AOCI
	in OCI			into Net Earnings	into Net Earnings
For the three months ended November 30, 2024:
Commodity contracts	$	(360	)	Cost of goods sold	$	(357	)
Interest rate contracts		-		Interest expense, net		51
Total	$	(360	)		$	(306	)
For the three months ended November 30, 2023:
Commodity contracts	$	2,019		Cost of goods sold	$	(1,583	)
Interest rate contracts		-		Interest expense		52
Foreign currency exchange contracts		(34	)	Miscellaneous income, net		(97	)
Total	$	1,985			$	(1,628	)
For the six months ended November 30, 2024:
Commodity contracts	$	(758	)	Cost of goods sold	$	(742	)
Interest rate contracts		-		Interest expense		103
Total	$	(758	)		$	(639	)
For the six months ended November 30, 2023:
Commodity contracts	$	1,608		Cost of goods sold	$	(2,252	)
Interest rate contracts		-		Loss on extinguishment of debt		(641	)
Interest rate contracts		-		Interest expense		83
Foreign currency exchange contracts		(11	)	Miscellaneous income, net		(44	)
Total	$	1,597			$	(2,854	)

The estimated amount of net gains recognized in AOCI at November 30, 2024, expected to be reclassified into net earnings within the succeeding 12 months is $380 (net of tax of $157). This amount was computed using the fair value of the cash flow hedges at November 30, 2024, and will change before actual reclassification from OCI to net earnings during the fiscal years ending May 31, 2025 and May 31, 2026.

20

Net Investment Hedges

We have designated our Euro-denominated debt held in the U.S. with an initial notional amount of €91,700 ($99,479) as a non-derivative net investment hedge of our foreign operations in Portugal. Accordingly, the foreign currency effects resulting from the remeasurement of this debt have been deferred in AOCI as an offset to the translation of our net investment in Portugal. A remeasurement gain of $4,329 and $2,494 was deferred in AOCI during the three months and six months ended November 30, 2024. There was no foreign currency gain (loss) recognized in AOCI for the non-derivative instruments designated as net investment hedges in the prior year.

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 gain (loss) recognized in earnings.

The following table summarizes our economic (non-designated) derivative financial instruments outstanding at November 30, 2024:

	Notional
	Amount		Maturity Date(s)
Commodity contracts	$	982	December 2024 - October 2025
Foreign currency exchange contracts	$	64,712	December 2024 - January 2025

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
		Three Months Ended
	Location of Gain (Loss)	November 30,
	Recognized in Earnings	2024			2023
Commodity contracts	Cost of goods sold	$	398		$	571
Foreign currency exchange contracts	Miscellaneous income, net		(489	)		-
Total		$	(91	)	$	571

		Gain
		Recognized in Earnings
		Six Months Ended
	Location of Gain	November 30,
	Recognized in Earnings	2024		2023
Commodity contracts	Cost of goods sold	$	371	$	1,414
Foreign currency exchange contracts	Miscellaneous income, net		558		-
Total		$	929	$	1,414

21

Note P – Fair Value Measurements

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 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

•

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

•

Level 3 - Unobservable inputs for the asset or liability and that are significant to the fair value of the assets and liabilities (i.e., allowing for situations in which there is little or no market activity for the asset or liability at the measurement date).

Recurring Fair Value Measurements

At November 30, 2024, our assets and liabilities measured at fair value on a recurring basis were as follows:

	(Level 1)		(Level 2)		(Level 3)		Totals
Assets (1)
Derivative financial instruments	$	-	$	877	$	-	$	877
Total assets	$	-	$	877	$	-	$	877
Liabilities (1)
Derivative financial instruments	$	-	$	778	$	-	$	778
Total liabilities	$	-	$	778	$	-	$	778

At May 31, 2024, our assets and liabilities measured at fair value on a recurring basis were as follows:

	(Level 1)		(Level 2)		(Level 3)		Totals
Assets (1)
Derivative financial instruments	$	-	$	920	$	-	$	920
Total assets	$	-	$	920	$	-	$	920
Liabilities (1)
Derivative financial instruments	$	-	$	1,421	$	-	$	1,421
Total liabilities	$	-	$	1,421	$	-	$	1,421

——————————————————

(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 O – Derivative Financial Instruments and Hedging Activities” for additional information regarding our use of derivative financial instruments.

22

Non-Recurring Fair Value Measurements

At November 30, 2024, there were no assets measured at fair value on a non-recurring basis on our consolidated balance sheet.

At May 31, 2024, our assets measured at fair value on a non-recurring basis were as follows:

	(Level 1)		(Level 2)		(Level 3)		Totals
Assets
Investment in note receivable (1)	$	-	$	5,000	$	-	$	5,000
Investment in unconsolidated affiliate (2)		-		-		31,367		31,367
Total assets	$	-	$	5,000	$	31,367	$	36,367

——————————————————

(1)

Reflects the write-down of an investment in notes receivable that was determined to be other than temporarily impaired.

(2)

On May 29, 2024, in connection with the contribution of the net assets of our former Sustainable Energy Solutions operating segment to the newly-formed Sustainable Energy Solutions joint venture, we obtained a 49% minority ownership interest in the joint venture. In accordance with the applicable accounting guidance, our minority ownership interest in the Sustainable Energy Solutions joint venture was recorded at its acquisition date fair value of $31,367.

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 $265,577 and $257,866 at November 30, 2024 and May 31, 2024, respectively. The carrying amount of long-term debt, including current maturities, was $295,721 and $298,133 at November 30, 2024 and May 31, 2024, respectively.

23

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

Unless otherwise indicated, all Note references contained in this MD&A refer to the Condensed Notes to Consolidated Financial Statements included in “Part I – Item 1. – Financial Statements” of this Form 10-Q. All amounts are presented in millions except common share and per common share amounts.

Introduction

The following discussion and analysis of market and industry trends, business developments, and the results of our operations and financial position should be read in conjunction with our consolidated financial statements and notes thereto included in “Part I – Item 1. – Financial Statements” of this Form 10-Q. The 2024 Form 10-K includes additional information about our business, operations and consolidated financial position and should be read in conjunction with this Form 10-Q. This MD&A is designed to provide a reader with material information relevant to an assessment of our financial condition and results of operations and to allow investors to view the Company from the perspective of management. The results of operations contained in this MD&A include all of our operations, including our former steel processing business. Our historical results have been restated to reflect the operations of Worthington Steel as a discontinued operation in periods prior to the December 1, 2023 Separation as discussed in “Note A – Basis of Presentation.” This MD&A is divided into five main sections:

•

Recent Business Developments;

•

Trends and Factors Impacting our Performance;

•

Results of Operations;

•

Liquidity and Capital Resources; and

•

Critical Accounting Estimates.

Recent Business Developments

•

On December 17, 2024, the Board declared a quarterly dividend of $0.17 per common share payable on March 28, 2025, to shareholders of record at the close of business on March 14, 2025.

•

Due to the retirement of our former CEO, effective November 1, 2024, we accelerated the vesting of certain outstanding equity awards, resulting in a charge of $2.7 million reported in restructuring and other expense, net in our consolidated statement of earnings for the three and six months ended November 30, 2024. Refer to “Note D – Restructuring and Other Expense, Net” for additional information.

•

On June 3, 2024, we acquired Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The purchase price included cash consideration of approximately $101.4 million, with a future earnout opportunity of up to $14.0 million. The results of Ragasco are included within the Building Products operating segment for periods subsequent to the acquisition date. See “Note N – Acquisitions” for additional information.

•

During the six months ended November 30, 2024, we repurchased a total of 350,000 of our common shares for $14.9 million, at an average purchase price of $42.52.

24

Trends and Factors Impacting our Performance

The following trends and factors have contributed to the results of our consolidated operations, and we anticipate that they will continue to affect our future results.

Key Indicators

We actively monitor publicly available macroeconomic trends that provide insight into the activity in our end markets and raw material pricing trends that provide insight into our cost of goods sold. These trends include, but are not limited to, the ABI, the Dodge Momentum Index, the HMI, hot-rolled and cold-rolled steel prices, retail sales, state and local government spending, interest rate environment and inflation metrics. Selected key indicators are presented below.

	November 30,						Increase/
(Dollars and units in millions)	2024			2023			(Decrease)
U.S. Residential Construction spend (1)(3)	$	918,113		$	889,691		$	28,422
U.S. Non-residential Construction Spend (1)(3)	$	1,234,468		$	1,200,999		$	33,469
Hot-Rolled Steel ($ per ton) (2)	$	690		$	747		$	(57	)
Cold-Rolled Steel ($ per ton) (2)	$	938		$	978		$	(40	)
Existing Home Sales (units) (1)(3)		4.2			3.9			0.3
Authorized Housing Permits (units) (1)(3)		1.5			1.5			-
U.S. Private Housing Starts (units) (1)(3)		1.3			1.5			(0.2	)
U.S. Core CPI (4)		3.30	%		4.02	%		(0.72	%)
HMI		46.0			34.0			12.0
ABI		49.6			45.3			4.3
Dodge Momentum Index		191.5			179.2			12.3
30-Year Fixed mortgage rates (1)		6.81	%		7.22	%		(0.41	%)

——————————————————

(1)

Federal Reserve Bank of St. Louis; figures based on seasonally adjusted annual rates

(2)

Period average of CRU Hot-Rolled Index

(3)

2023 figures based on revised actuals

(4)

U.S. Bureau of Labor Statistics

End Markets and Competition

We offer a wide range of products and services to a diverse customer base across various end markets, primarily in the U.S., including the residential and non-residential construction markets, repair and remodeling, which drive demand for our building products offerings, as well as the tools, outdoor living, and celebrations end markets, which drive demand for our consumer products offerings. Given the range of products and services we provide, our competitors vary by industry, product type, service type, program size, and geography. Competition is primarily based on price, product quality, brand recognition, product innovation, and customer service. Sales to one customer in the Consumer Products operating segment accounted for 12.9% of our consolidated net sales in the second quarter of fiscal 2025.

Residential Construction: The near-term outlook for U.S. residential construction spend remains cautiously optimistic, growing a modest 3.0% year-over-year in November 2024. The year-over-year growth, however, continues to follow the trend of the overall inflationary rate rather than organic growth, as housing starts and authorized permits remain flat indicating that both builders and potential buyers remain cautious in their spending approach. The HMI was up 12 points year-over-year in November 2024 to 46.0, highlighting resilience in this end market, despite persistent macro-economic challenges, including high mortgage rates, elevated home prices, and increasing material and labor costs. Although there are short-term challenges posed by higher interest rates and inflation that have impacted demand and affordability for consumers, we are optimistic that the underlying fundamentals of the U.S. residential housing market remains sound due to favorable demographics and a chronic undersupply of homes and we remain well-positioned to take advantage of these positive long-term trends.

25

Non-residential Construction: The near-term outlook for U.S. non-residential construction remains mixed. The November 2024 ABI was 49.6, indicating that the share of firms that reported declining billings was essentially equal to the share of firms that reported increasing billings. Despite declining interest rates and softening inflation, firms remain hesitant to start new projects, especially as some developers wait until the full scope of President-elect Trump's legislative agenda comes into better focus. While up year-over-year, the Dodge Momentum Index decreased 2.3% from October 2024 representing a moderate pullback in the number of projects planned. Some of this pullback is attributed to a decline in planned data center projects as well as weaker activity in healthcare, recreational, and religious projects. Despite the recent pullback in activity, there is optimism in market conditions as the planning queue remains strong and potential further rate cuts in calendar year 2025 have the potential to spur additional activity.

Repair and Remodel / Tools: Spending on home improvement has declined year-over-year through November 2024 due to multi-decade lows in existing home sales, driven by elevated interest rates, rising prices and supply constraints. Despite the recent pullback in repair and remodel spend, the October 2024 LIRA Report by the Joint Center for Housing Studies at Harvard University forecasts 1.2 percent of annual growth in home renovation and maintenance expenditures, rising to $477.1 billion through the third quarter of 2025. This projected growth comes as the average 30-year fixed mortgage rate decreased to 6.81% at November 30, 2024, from 7.22% at November 30, 2023, with further rate reductions expected over the medium to long-term as the U.S. Federal Reserve works to balance growth while keeping prices stable. However, it remains uncertain how far rates need to fall to entice home buyers to enter the market or leave their existing, lower fixed-rate mortgages.

Outdoor Living / Celebrations: Spending in the outdoor living and celebrations end markets is predominantly influenced by macroeconomic conditions affecting the general consumer (i.e., consumer spending), which have been adversely impacted by continued economic uncertainty, elevated interest rates, and lower than average housing turnover. However, the recent headwinds created by the combination of higher prices and higher interest rates should abate as prices stabilize and rates fall from their recent peak levels. While inflation has consistently dropped from its peak of 9.1% in June 2022, overall consumer demand continues to be adversely affected by a general moderation in consumer spending on non-essential items, driven by the combination of tighter monetary policy and persistently higher prices – the November 2024 Core CPI increased 3.30% relative to November 2023. We expect our consumers, who are price sensitive, to maintain a cautious posture in the near term as a result.

General Economic and Market Conditions

GDP growth rate trends are generally indicative of the underlying demand trends and, in many cases, pricing for our products. Increasing. GDP growth rates, which are an indication of a strengthening economy, typically drive higher demand for our products. Conversely, declining GDP growth rates usually indicate a weaker economy potentially reducing demand for many of our products. Fluctuations in GDP growth rates can affect conversion costs related to production and SG&A.

The macroeconomic and geopolitical outlook remains complex and evolving. Although the U.S. economy continues to grow at a modest pace, prolonged inflationary pressures have negatively impacted discretionary spending, reducing demand for certain of our products and services. Recent rate cuts by the U.S. Federal Reserve, including 0.50% in September 2024 and an additional 0.25% in November 2024, are expected to alleviate some of this pressure in the near-term by reducing borrowing costs and stimulating spending, particularly in the U.S. residential and non-residential construction end markets. However, the extent and magnitude of future rate cuts will be predicated on price stability and the Federal Reserve’s ability to lower the core CPI, currently at 3.30%, down to its target of 2%. In addition to inflation, consumer spending habits and demand for our products and services are influenced by prevailing global economic conditions, the costs of basic necessities and other goods, employment levels, salaries and wage rates, and prevailing interest rates. Additionally, consumer purchasing patterns are generally affected by consumers’ disposable income, credit availability, and debt levels.

Seasonality

Historically, sales tend to be stronger in the third and fourth quarters of our fiscal year for our Consumer Products businesses when our facilities perform at seasonal peaks, matching consumer demand. Sales in our Building Products businesses are generally stronger in the first and fourth quarters of our fiscal year due to weather conditions, customer business cycles, and the timing of renovation and new construction projects.

26

Results of Operations

Second Quarter – Fiscal 2025 Compared to Fiscal 2024

The following discussion provides a review of results for the three months ended November 30, 2024 and November 30, 2023:

	Three Months Ended
	November 30,					Increase/
(In millions, except per common share amounts)	2024		2023			(Decrease)
GAAP Financial Measures
Net sales	$	274.0	$	298.2		$	(24.2	)
Operating income (loss)		3.5		(14.4	)		17.9
Earnings before income taxes		37.1		24.5			12.6
Net earnings from continuing operations		28.3		17.9			10.4
Equity income		34.6		38.7			(4.1	)
EPS from continuing operations - diluted		0.56		0.36			0.20
Non-GAAP Financial Measures (1)
Adjusted operating income	$	6.1	$	2.4		$	3.7
Adjusted EBITDA from continuing operations		56.2		55.0			1.2
Adjusted EPS from continuing operations - diluted		0.60		0.57			0.03

——————————————————

(1)

A reconciliation of each of these non-GAAP financial measures to their most comparable GAAP financial measure is provided in the “Use of Non-GAAP Financial Measures and Definitions” section.

Net Sales and Volume

The following table provides a breakdown of our consolidated net sales by operating segment for the periods indicated:

	Three Months Ended							%
	November 30,				Increase/			Increase
(Dollars in millions)	2024		2023		(Decrease)			(Decrease)
Consumer Products	$	116.7	$	119.4	$	(2.7	)		(2.3	%)
Building Products		157.3		151.3		6.0			4.0	%
Total reportable segments		274.0		270.7		3.3			1.2	%
Other		-		27.5		(27.5	)	N.M.
Consolidated	$	274.0	$	298.2	$	(24.2	)		(8.1	%)

The following table provides volume by operating segment for the periods presented:

	Three Months Ended							%
	November 30,				Increase/			Increase
(Volume in units)	2024		2023		(Decrease)			(Decrease)
Consumer Products		16,419,957		15,931,049		488,908			3.1	%
Building Products		3,328,513		3,346,983		(18,470	)		(0.6	%)
Total reportable segments		19,748,470		19,278,032		470,438			2.4	%
Other		-		114,063		(114,063	)	N.M.
Consolidated		19,748,470		19,392,095		356,375			1.8	%

•

Consumer Products – Net sales totaled $116.7 million in the second quarter of fiscal 2025, down $2.7 million, or 2.3% from the second quarter of fiscal 2024 primarily due to an unfavorable shift in product mix, partially offset by an increase in volume.

•

Building Products – Net sales totaled $157.3 million in the second quarter of fiscal 2025, up $6.0 million, or 4.0%, over the second quarter of fiscal 2024, primarily driven by contributions from Ragasco, partially offset by lower overall volumes, excluding Ragasco, primarily in our heating and cooking business where our production of gas grill tanks was limited due to ongoing facility modernization efforts.

27

•

Other - Net sales in the second quarter of fiscal 2024 are related to our former Sustainable Energy Solutions operating segment, which was deconsolidated on May 29, 2024, when we sold a 51% interest in the business. In periods subsequent to the sale transaction, our retained 49% interest is accounted for under the equity method as discussed in “Note C – Investments in Unconsolidated Affiliates.”

Gross Profit

	Three Months Ended
	November 30,		Gross			November 30,		Gross			Increase/
(Dollars in millions)	2024		Margin			2023		Margin			(Decrease)
Gross profit	$	74.1		27.0	%	$	63.3		21.2	%	$	10.8

•

Gross profit for the second quarter of fiscal 2025 was $74.1 million, an increase of $10.8 million, or 17.1% from the second quarter of fiscal 2024, largely driven by improved spread and higher volume in Consumer Products and contributions from Ragasco in Building Products. Gross profit for the second quarter of fiscal 2024 was negatively impacted by a $3.1 million reserve related to the voluntary recall of Consumer Products’ Balloon Time® Mini helium tank.

SG&A

	Three Months Ended
	November 30,		% of			November 30,		% of			Increase/
(Dollars in millions)	2024		Net Sales			2023		Net Sales			(Decrease)
SG&A	$	67.9		24.8	%	$	70.6		23.7	%	$	(2.7	)

•

SG&A decreased $2.7 million, or 3.8%, from the second quarter of fiscal 2024, primarily driven by the elimination of certain corporate overhead costs that no longer exist post-Separation, but have been presented within net earnings from continuing operations in our consolidated statements of earnings, partially offset by a $2.8 million increase due to the acquisition of Ragasco on June 3, 2024.

Other Operating Items

	Three Months Ended
	November 30,				Increase/
(Dollars in millions)	2024		2023		(Decrease)
Restructuring and other expense, net		2.6		-		2.6
Separation costs		-		7.1		(7.1	)

•

Restructuring and other expense, net in the second quarter of fiscal 2025 was driven primarily by the accelerated vesting of certain outstanding equity awards upon retirement of our former CEO.

•

Separation costs in the prior year quarter reflect direct and incremental costs incurred in connection with the Separation.

Interest Expense, Net

	Three Months Ended
	November 30,				Increase/
(Dollars in millions)	2024		2023		(Decrease)
Interest expense, net	$	1.0	$	0.5	$	0.5

•

Interest expense, net was up $0.5 million over the second quarter of fiscal 2024, driven primarily by lower interest income.

28

Equity Income

	Three Months Ended
	November 30,				Increase/
(Dollars in millions)	2024		2023		(Decrease)
WAVE (1)	$	24.6	$	21.4	$	3.2
ClarkDietrich (1)		9.7		13.7		(4.0	)
Other (2)		0.3		3.5		(3.2	)
Equity income	$	34.6	$	38.6	$	(4.0	)

——————————————————

(1)

Equity income contributed by WAVE and ClarkDietrich is reported within our Building Products segment.

(2)

Includes our share of equity earnings of the Workhorse and the Sustainable Energy Solutions joint ventures.

•

Equity income decreased $4.0 million from the second quarter of fiscal 2024 to $34.6 million, on lower contributions from ClarkDietrich and a $2.8 million gain in the second quarter of fiscal 2024 related to the divestiture of the Brazilian operations of Workhorse, partially offset by a $3.2 million increase in equity earnings from WAVE.

Income Taxes

	Three Months Ended
			Annual					Annual
	November 30,		Estimated			November 30,		Estimated			Increase/
(Dollars in millions)	2024		ETR			2023		ETR			(Decrease)
Income tax expense	$	9.1		24.1	%	$	6.6		25.7	%	$	2.5

•

Income tax expense was $9.1 million in the second quarter of fiscal 2025 compared to $6.6 million in the second quarter of fiscal 2024. The increase was driven by higher pre-tax earnings. Income tax expense in the second quarter of fiscal 2025 reflected an estimated annual ETR of 24.1% compared to 25.7% in the second quarter of fiscal 2024.

Adjusted EBITDA from Continuing Operations

The following table provides a summary of adjusted EBITDA from continuing operations by reportable segment, a non-GAAP financial measure, along with the respective percentage of the total of each reportable segment. See the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-Q for additional information regarding our use of non-GAAP financial measures. A reconciliation from earnings before income taxes to adjusted EBITDA from continuing operations is provided in “Note M – Segment Operations.”

	Three Months Ended
	November 30,			% of			November 30,			% of			Increase/			% Increase/
(Dollars in millions)	2024			Net Sales			2023			Net Sales			(Decrease)			(Decrease)
Consumer Products	$	15.5			13.3	%	$	12.7			10.6	%	$	2.8			22.0	%
Building Products		47.2			30.0	%		45.8			30.3	%		1.4			3.1	%
Total reportable segments	$	62.7			22.9	%	$	58.5			21.6	%		4.2			7.2	%
Unallocated Corporate and Other		(6.5	)	N.M.				(3.4	)	N.M.				(3.1	)		8.8	%
Consolidated	$	56.2			20.5	%	$	55.1			18.5	%		1.1			2.0	%

•

Consumer Products – Adjusted EBITDA from continuing operations was $15.5 million in the second quarter of fiscal 2025, an increase of $2.8 million over the second quarter of fiscal 2024, primarily driven by higher gross profit and margin improvement. Adjusted EBITDA in the current quarter includes incremental bad debt expense of $1.9 million related to a customer bankruptcy whereas the second quarter of fiscal 2024 included a $3.1 million reserve related to the recall of our Balloon Time® Mini helium tank initiated in November 2023.

29

•

Building Products – Adjusted EBITDA from continuing operations increased $1.4 million from the second quarter of fiscal 2024 as contributions from Ragasco and a favorable product mix, particularly in our heating and cooking business, where volume in our higher margin large format propane tank offering increased, was partially offset by lower volumes, excluding Ragasco. Equity income was down less than $1.0 million as lower earnings from ClarkDietrich more than offset the strong performance at WAVE.

•

Unallocated Corporate and Other – Adjusted EBITDA from continuing operations was down $3.1 million from the second quarter of fiscal 2024, primarily due to lower contributions of equity income driven by a $2.8 million gain in the second quarter of fiscal 2024 related to the divestiture of the Brazilian operations of Workhorse.

Six Months Year-to-Date - Fiscal 2025 Compared to Fiscal 2024

The following discussion provides a review of results for the six months ended November 30, 2024 and November 30, 2023:

	Six Months Ended
	November 30,						Increase/
(In millions, except per common share amounts)	2024			2023			(Decrease)
GAAP Financial Measures
Net sales	$	531.4		$	610.1		$	(78.7	)
Operating loss		(1.2	)		(21.7	)		20.5
Earnings before income taxes		67.9			60.3			7.6
Net earnings from continuing operations		52.5			44.8			7.7
Equity income		70.0			84.1			(14.1	)
EPS from continuing operations - diluted		1.04			0.89			0.15
Non-GAAP Financial Measures (1)
Adjusted operating income	$	2.6		$	7.1		$	(4.5	)
Adjusted EBITDA from continuing operations		104.6			121.0			(16.4	)
Adjusted EPS from continuing operations - diluted		1.10			1.31			(0.21	)

——————————————————

(1)

A reconciliation of each of these non-GAAP financial measures to their most comparable GAAP financial measure is provided in the “Use of Non-GAAP Financial Measures and Definitions” section.

Net Sales and Volume

The following table provides a breakdown of our consolidated net sales by operating segment for the periods indicated:

	Six Months Ended							%
	November 30,				Increase/			Increase
(Dollars in millions)	2024		2023		(Decrease)			(Decrease)
Consumer Products	$	234.3	$	236.7	$	(2.4	)		(1.0	%)
Building Products		297.0		317.2		(20.2	)		(6.4	%)
Total reportable segments		531.3		553.9		(22.6	)		(4.1	%)
Other		-		56.2		(56.2	)	N.M.
Consolidated	$	531.3	$	610.1	$	(78.8	)		(12.9	%)

The following table provides volume by operating segment for the periods presented:

	Six Months Ended							%
	November 30,				Increase/			Increase
(Volume in units)	2024		2023		(Decrease)			(Decrease)
Consumer Products		32,590,513		31,962,632		627,881			2.0	%
Building Products		6,422,630		7,155,803		(733,173	)		(10.2	%)
Total reportable segments		39,013,143		39,118,435		(105,292	)		(0.3	%)
Other		-		220,369		(220,369	)	N.M.
Consolidated		39,013,143		39,338,804		(325,661	)		(0.8	%)

30

•

Consumer Products – Net sales totaled $234.3 million in the current year period, down slightly from the prior year period as unfavorable mix more than offset the impact of higher overall volume.

•

Building Products – Net sales totaled $297.0 million in the current year period, down $20.2 million, or 6.4%, from the prior year period, as contributions from Ragasco were more than offset by the combined impact of lower volume and an unfavorable product mix.

•

Other - Net sales in the prior year period are related to our former Sustainable Energy Solutions operating segment, which was deconsolidated on May 29, 2024, when we sold a 51% interest in the business. In periods subsequent to the sales transaction, our 49% retained interest is accounted for under the equity method as discussed in “Note C – Investments in Unconsolidated Affiliates.”

Gross Profit

	Six Months Ended
	November 30,		Gross			November 30,		Gross			Increase/
(Dollars in millions)	2024		Margin			2023		Margin			(Decrease)
Gross profit	$	136.6		25.7	%	$	132.9		21.8	%	$	3.7

•

Gross profit was $136.6 million for the current year period, an increase of $3.7 million, or 2.8%, over the prior year period, primarily due to improvements within Consumer Products, up $10.9 million, on the combined impact of higher volume and improvement in gross margin due, in part, to a $3.1 million reserve related to the voluntary recall of our Balloon Time® Mini helium tank in the prior year quarter, partially offset by lower contributions from Building Products, down $6.5 million on lower volume.

SG&A

	Six Months Ended
	November 30,		% of			November 30,		% of			Increase/
(Dollars in millions)	2024		Net Sales			2023		Net Sales			(Decrease)
SG&A	$	134.0		25.2	%	$	145.1		23.8	%	$	(11.1	)

•

SG&A decreased $11.1 million, or 7.6%, from the prior year period, largely driven by the elimination of certain corporate overhead costs that no longer exist post-Separation, but have been presented within net earnings from continuing operations in our consolidated statements of earnings, partially offset by a $5.4 million increase due to the acquisition of Ragasco on June 3, 2024.

31

Other Operating Items

	Six Months Ended
	November 30,				Increase/
(Dollars in millions)	2024		2023		(Decrease)
Restructuring and other expense, net		3.8		-		3.8
Separation costs		-		9.5		(9.5	)

•

Restructuring activity in the current year period was driven by $2.7 million of non-cash stock-based compensation expense related to the accelerated vesting of certain outstanding equity awards upon retirement of our former CEO and a $1.1 million true-up of the loss on deconsolidation of our former Sustainable Energy Solutions operating segment.

•

Separation costs in the prior year quarter reflect direct and incremental costs incurred in connection with the Separation.

Loss on Extinguishment of Debt

	Six Months Ended
	November 30,				Increase/
(Dollars in millions)	2024		2023		(Decrease)
Loss on extinguishment of debt	$	-	$	1.5	$	(1.5	)

•

Loss on extinguishment of debt of $1.5 million resulted from the July 28, 2023 early redemption of the 2026 Notes and consisted primarily of unamortized debt issuance costs and the remaining loss deferred in AOCI associated with an interest rate swap executed prior to the issuance of the 2026 Notes.

Interest Expense, Net

	Six Months Ended
	November 30,				Increase/
(Dollars in millions)	2024		2023		(Decrease)
Interest expense, net	$	1.5	$	1.5	$	-

•

Interest expense, net of $1.5 million was flat compared to the prior year period as lower interest income was largely offset by lower average debt levels.

Equity Income

	Six Months Ended
	November 30,					Increase/
(Dollars in millions)	2024			2023		(Decrease)
WAVE (1)	$	52.5		$	49.7	$	2.8
ClarkDietrich (1)		18.5			30.5		(12.0	)
Other (2)		(0.9	)		3.9		(4.8	)
Equity income	$	70.1		$	84.1	$	(14.0	)

——————————————————

(1)

Equity income contributed by WAVE and ClarkDietrich is reported within our Building Products segment.

(2)

Includes our share of equity earnings of the Workhorse and the Sustainable Energy Solutions joint ventures.

•

Equity income was down $14.0 million from the prior year period, driven by lower contributions from ClarkDietrich, which was down $12.0 million, as declining steel prices compressed margins, and lower contributions from Workhorse, which benefited from a $2.8 million gain in the prior year period related to the divestiture of its Brazilian operations.

32

Income Taxes

	Six Months Ended
			Annual					Annual
	November 30,		Estimated			November 30,		Estimated			Increase/
(Dollars in millions)	2024		ETR			2023		ETR			(Decrease)
Income tax expense	$	15.9		24.1	%	$	15.6		25.7	%	$	0.3

•

Income tax expense was $15.9 million in the current year period compared to $15.6 million in the prior year period. The increase was primarily driven by higher pre-tax earnings. Income tax expense in the current year period reflected an estimated annual ETR of 24.1% compared to 25.7% in the prior year period.

Adjusted EBITDA from Continuing Operations

The following table provides a summary of adjusted EBITDA from continuing operations by reportable segment, a non-GAAP financial measure, along with the respective percentage of the total of each reportable segment. See the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-Q for additional information regarding our use of non-GAAP financial measures. A reconciliation from earnings before income taxes to adjusted EBITDA from continuing operations is provided in “Note M – Segment Operations.”

	Six Months Ended
	November 30,			% of			November 30,			% of			Increase/			% Increase/
(Dollars in millions)	2024			Net Sales			2023			Net Sales			(Decrease)			(Decrease)
Consumer Products	$	33.3			14.2	%	$	26.9			11.4	%	$	6.4			23.8	%
Building Products		86.9			29.3	%		105.4			33.2	%		(18.5	)		(17.6	%)
Total reportable segments	$	120.2			22.6	%	$	132.3			23.9	%		(12.1	)		(9.1	%)
Unallocated Corporate and Other		(15.6	)	N.M.				(11.4	)	N.M.				(4.2	)		(36.8	%)
Consolidated	$	104.6			19.7	%	$	120.9			19.8	%		(16.3	)		(13.5	%)

•

Consumer Products – Adjusted EBITDA from continuing operations was $33.3 million in the current year period, an increase of $6.4 million over the prior year period, primarily due to the impact of higher volume and improved spread in gross margin. Adjusted EBITDA in the prior year period was negatively impacted by a $3.1 million reserve related to the recall of our Balloon Time® Mini helium tank.

•

Building Products – Adjusted EBITDA from continuing operations decreased $18.5 million from the prior year period, on lower volume, particularly in our gas grill tanks, and lower contributions from ClarkDietrich. Adjusted EBITDA from continuing operations in the current year period included $1.9 million of incremental expense related to the Ragasco acquisition resulting primarily from the step up of inventory to fair value.

•

Unallocated Corporate and Other – Adjusted EBITDA from continuing operations was down $4.2 million from the prior year period, driven by lower equity earnings from Workhorse, which benefited from a $2.8 million gain related to the divestiture of its Brazilian operations in the prior year period, and higher SG&A, partially offset by lower losses due to the deconsolidation of our former Sustainable Energy Solutions operating segment in May 2024.

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Liquidity and Capital Resources

During the six months ended November 30, 2024, we generated $90.2 million of cash from operating activities, invested $24.8 million in property, plant and equipment, spent $88.2 million to acquire Ragasco, and received $11.4 million for the sale of 51% of our former Sustainable Energy Solutions operating segment. Additionally, we paid $14.9 million to repurchase 350,000 common shares and paid dividends of $17.1 million on the common shares during the six months ended November 30, 2024.

The following table summarizes our consolidated cash flows for the periods presented:

	Six Months Ended
	November 30,
(In millions)	2024			2023
Net cash provided by operating activities	$	90.2		$	194.7
Net cash used by investing activities		(101.6	)		(97.8	)
Net cash used by financing activities		(39.0	)		(120.9	)
Decrease in cash and cash equivalents		(50.4	)		(24.0	)
Cash and cash equivalents at beginning of period		244.2			454.9
Cash and cash equivalents at end of period	$	193.8		$	430.9

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Activity related to our discontinued operations has not been segregated in our consolidated statements of cash flows. See “Note B – Discontinued Operations” for a summarization of significant non-cash items related to discontinued operations.

We believe we have access to adequate resources 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, for at least 12 months and for the foreseeable future thereafter. These resources include cash and cash equivalents and unused committed lines of credit under our Credit Facility, which had a total of $500.0 million of borrowing capacity available to be drawn as of November 30, 2024.

Although we do not currently anticipate a need, we believe that we could access the financial markets to sell long-term debt or equity securities. However, the continuation of uncertain economic conditions, including those caused by a high interest rate environment, could create volatility in the financial markets, which may impact our ability to access capital and the terms under which we can do so.

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. Should we seek 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 could dilute the interests of our existing shareholders and/or increase our interest costs. We may also from time to time seek to retire or repurchase our outstanding debt through cash purchases, in open-market purchases, privately-negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

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 arise 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 provided by operating activities was $90.2 million during the six months ended November 30, 2024, down from $194.7 million from the prior year period. The decrease was primarily due to lower net earnings in the current year period driven by the Separation and a $26.2 million decrease in dividends from unconsolidated joint ventures.

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Investing Activities

Net cash used by investing activities was $101.6 million during the six months ended November 30, 2024 compared to $97.8 million from the prior year period. Net cash used by investing activities during the six months ended November 30, 2024 was driven primarily by the acquisition of Ragasco and capital expenditures partially offset by proceeds from the sale of 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment on May 29, 2024.

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 any such opportunities may require additional financing. However, there can be no assurance 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 $39.0 million during the six months ended November 30, 2024, compared to $120.9 million in the prior year period. During the six months ended November 30, 2024, we paid $14.9 million to repurchase 350,000 common shares and paid dividends of $17.1 million on the common shares. During the six months ended November 30, 2023, we received $172.2 million in net proceeds of short-term borrowings and repaid $243.8 million of long-term debt associated with the redemption of the 2026 Notes.

Common shares – On December 24, 2024, the Board declared a quarterly dividend of $0.17 per common share payable on March 28, 2025, to shareholders of record at the close of business on March 14, 2025. During the second quarter of fiscal 2024, we declared dividends totaling $0.32 per common share under our pre-Separation capital structure.

On March 20, 2019, the Board authorized the repurchase of up to 6,600,000 common shares.

On March 24, 2021, the 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 November 30, 2024, 5,715,000 common shares remained available for repurchase under these two authorizations.

The common shares may be repurchased under these authorizations 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.

Long-term debt and short-term borrowings – As of November 30, 2024, we were in compliance with the financial covenants of our short-term and long-term debt agreements. Our debt agreements do not include credit rating triggers or material adverse change provisions. There were no outstanding borrowings drawn against the Credit Facility at November 30, 2024, leaving the full borrowing capacity of $500.0 million available for future use.

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Dividend Policy

We currently have no material contractual or regulatory restrictions on the payment of dividends. Dividends are declared at the discretion of the Board. The 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 of dividends will continue in the future.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements and related disclosure, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to use judgment and 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, current trends and other factors that we believe to be relevant and reasonable under the circumstances at the time the estimate was made. 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. We believe that our estimates, assumptions, and judgments are reasonable in that they were based on information available when the estimates, assumptions and judgments were made. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from those implied by our assumptions and estimates. 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 Estimates” of the 2024 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 2024 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 Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports that Worthington Enterprises files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including Worthington Enterprises’ principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management, under the supervision of and with the participation of Worthington Enterprises’ principal executive officer and principal financial officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on that evaluation, Worthington Enterprises’ principal executive officer and principal financial officer have concluded that such disclosure controls and procedures were designed at the reasonable assurance level and were effective at a reasonable assurance level as of the end of the quarterly period covered by this Form 10-Q.

Changes in Internal Control Over Financial Reporting

There were no changes that occurred during the period covered by this Form 10-Q 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.

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PART II. OTHER INFORMATION

Item 1. – Legal Proceedings

We are involved in various judicial and administrative proceedings, as both plaintiff and defendant, arising in the ordinary course of business. We do not believe that any such proceedings, individually and in the aggregate, will have a material adverse effect on our business, financial position, results of 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 2024 Form 10-K, we included a detailed discussion of our risk factors. Our risk factors have not changed significantly from those disclosed in the 2024 Form 10-K. Those risk factors should be read carefully in connection with evaluating our business and investments in the common shares and in connection with the forward-looking statements and other information contained in this Form 10-Q. Any of the risks described in the 2024 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 2024 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

Unregistered Sales of Equity Securities

There were no equity securities of Worthington Enterprises sold by Worthington Enterprises during the six months ended November 30, 2024 that were not registered under the Securities Act of 1933, as amended.

Issuer Purchases of Equity Securities

Common shares withheld to cover tax withholding obligations in connection with the vesting of restricted common shares are treated as common share purchases for purposes of the following table. However, those withheld common shares are not considered common share repurchases under an authorized common share repurchase plan or program. The total number of common shares purchased, as indicated in the table below, include (1) common shares withheld from our employees to satisfy minimum statutory tax withholding obligations arising from the vesting of restricted common shares and (2) common shares repurchased as part of publicly announced plans or programs.

							Maximum Number of
					Total Number of Common		Common Shares that
	Total Number of		Average Price		Shares Purchased as Part		May Yet Be
	Common Shares		Paid per		of Publicly Announced		Purchased Under the
Period	Purchased		Common Share		Plans or Programs		Plans or Programs (1)
September 1-30, 2024		53,528	$	42.74		-		6,035,000
October 1-31, 2024		203,526		40.39		200,000		5,915,000
November 1-30, 2024		45,005		38.82		-		5,715,000
Total		302,059	$	40.65		200,000

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(1)

The number shown represents, 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 Board authorized the repurchase of up to 6,600,000 common shares. On March 24, 2021, the 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 (net of previously repurchased common shares). A total of 4,285,000 common shares have been repurchased since the latest authorization, leaving 5,715,000 common shares available for repurchase under these authorizations at November 30, 2024, and such authorizations are not subject to a fixed expiration date. The common shares available for repurchase under the authorizations currently in effect may be purchased 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.

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Item 3. – Defaults Upon Senior Securities

Not applicable.

Item 4. – Mine Safety Disclosures

Not applicable.

Item 5. – Other Information

During the quarter ended November 30, 2024, no director or officer (as defined under Rule 16a-1 of the Exchange Act) adopted or terminated any Rule 10b5-1 trading arrangements or any non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).

Item 6. – Exhibits

		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	Exhibit	Filing Date
2.1	Separation and Distribution Agreement, dated November 30, 2023, between Worthington Enterprises, Inc. and Worthington Steel, Inc.	8-K	2.1	12/05/2023
3.1	Amended Articles of Incorporation of Worthington Enterprises, Inc. [This document represents the articles of incorporation of Worthington Enterprises, Inc. in compiled form incorporating all amendments.]	10-Q	3.1	01/09/2024
3.2	Code of Regulations of Worthington Enterprises, Inc. [This document represents the code of regulations of Worthington Enterprises, Inc. in compiled form incorporating all amendments.]	10-Q	3(b)	10/16/2000
10.1	Letter Agreement between Worthington Enterprises, Inc. and B. Andrew Rose†	8-K	10.1	10/08/2024
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	Section 1350 Certification of Principal Executive Officer**
32.2	Section 1350 Certification of Principal Financial Officer**
101	Interactive Data Files Pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at November 30, 2024 and May 31, 2024; (ii) Consolidated Statements of Earnings for the six months ended November 30, 2024 and November 30, 2023; (iii) Consolidated Statements of Comprehensive Income for the six months ended November 30, 2024 and November 30, 2023; (iv) Consolidated Statements of Cash Flows for the six months ended November 30, 2024 and November 30, 2023 and (v) Condensed Notes to Consolidated Financial Statements.*
104	The cover page from this Quarterly Report on Form 10-Q for the quarter ended November 30, 2024, formatted in Inline XBRL and included in Exhibit 101.*

——————————————————

* Filed herewith.

** Furnished herewith.

† Indicates a management contract or compensatory plan or arrangement.

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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 ENTERPRISES, INC.
Date: January 10, 2025	By:	/s/ Colin J. Souza
		Colin J. Souza,
		Vice President and Chief Financial Officer
		(On behalf of the registrant as Duly Authorized Officer and as Principal Financial Officer)

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