Worthington 2Q Earnings Slide on Weak Steel Prices

The Columbus, Ohio-based manufacturer and service center reported net earnings of $16.2 million in its second quarter, down 85% from $110.3 million in the year-ago period, on net sales that slid nearly 5% to $1.18 billion vs. $1.23 billion in the same comparison.

“We faced significant headwinds in the quarter from the dramatic decline in steel prices, a slowing economy and customers reducing inventory levels,” Andy Rose, president and CEO, said in a statement.

Worthington reported earnings per diluted share of $0.33 in the quarter, down from $2.15 a year earlier.

The company said the decrease in sales was driven by lower average selling prices in Steel Processing, partially offset by the impact of acquisitions and higher average selling prices across the Consumer Products, Building Products, and Sustainable Energy Solutions businesses.

Steel Processing’s net sales totaled $841.9 million, down $95.9 million from the prior year quarter. Worthington said the decrease was driven primarily by lower average selling prices and to a lesser extent lower volumes, partially offset by the impact of acquisitions.

Adjusted earnings before interest and taxes (EBIT) swung to a loss of $17.2 million in Steel Processing in the quarter vs. EBIT of $71.9 million a year earlier, on lower contributions from both operating income and equity income, the company said.

For Consumer Products, Worthington said net sales totaled $153.8 million, up 9%, or $13 million, over the same quarter a year ago, as higher average selling prices more than offset the impact of lower overall volume. 

In Building Products, net sales totaled $141.7 million, up 17%, or $20.6 million, over the year-ago period quarter on higher average selling prices, partially offset by lower volumes.

Sustainable Energy Solutions’ net sales totaled $38.1 million, up 15%, or $5 million, from a year earlier due to higher average selling prices.

Looking forward, Worthington expects to complete its previously announced separation of the company’s Steel Processing business by 2024. 

“Despite a somewhat murky economic outlook, steel prices appear to have stabilized and we believe many of our customers have returned to seasonally normal inventory levels,” Rose said. “End-market demand remains solid across most markets, and we are optimistic about our start to 2023.”

By Ethan Bernard, Ethan@SteelMarketUpdate.com