WORTHINGTON ENTERPRISES INC

(in thousands)

Non-GAAP Financial Measures

This Form 10-K includes references to certain financial measures that are not calculated or 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 our performance, engage in financial and operational planning, and determine incentive compensation. Management believes these non-GAAP measures provide useful supplemental information and additional perspective on the performance of our ongoing operations and should not be considered 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 enable 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-K:

Adjusted operating income (loss) is defined as operating income (loss) excluding the items listed below, and in the accompanying reconciliations to comparable GAAP measures, to the extent naturally included in operating income.

Adjusted net earnings from continuing operations is defined as net earnings from continuing operations attributable to controlling interest (“net earnings from continuing operations”) excluding the after-tax effect of the excluded items listed below and in the accompanying reconciliations to comparable GAAP measures.

Adjusted earnings per diluted share from continuing operations (“Adjusted EPS from continuing operations - diluted”) is defined as adjusted net earnings from continuing operations attributable to controlling interest divided by diluted weighted-average shares outstanding.

Adjusted EBITDA from continuing operations is defined as adjusted earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is calculated by adding or subtracting, as appropriate, interest expense, net, income tax expense, depreciation, and amortization to/from net earnings from continuing operations attributable to controlling interest, which is further adjusted to exclude impairment and restructuring charges (gains) as well as other items that management believes are not reflective of, and thus should not be included when evaluating the performance of its ongoing operations, as outlined below. 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. 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.

Exclusions from Non-GAAP Financial Measures

Management believes it is useful to exclude the following items from adjusted EBITDA from continuing operations for its own and investors’ assessment of the business for the reasons identified below:

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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.

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Restructuring activities, which can result in both discrete gains and/or losses, arise from established programs that are intended to fundamentally change our 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.

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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.

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Loss on early 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.

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Pension settlement charges, are excluded because of their non-cash nature and the fact that they do not occur in the normal course of business and may obscure analysis of trends and financial performance. These transactions typically result from the transfer of all or a portion of the total projected benefit obligation to third-party insurance companies.

The following provides a reconciliation of these non-GAAP financial measures from their most comparable GAAP measure for fiscal 2024, fiscal 2023, and fiscal 2022.

(1)

Excludes the impact of noncontrolling interest

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The following table presents a reconciliation from earnings before income taxes to adjusted EBITDA from continuing operations for the past three fiscal years:

Non-GAAP Footnotes

(1)

Reflects reductions in 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.

(2)

Reflects the following non-cash charges in miscellaneous expense:

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Pre-tax charges of $8,010 and $4,774 from separate pension lift-out transaction completed in February 2024 and August 2022, respectively, to transfer the pension benefit obligation under The Gerstenslager Company Bargaining Unit Employees’ Pension Plan to third-party insurance companies.

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A pre-tax charge of $11,170 during the fourth quarter of fiscal 2024 due to the write-down of an investment in notes receivable that was determined to be other than temporarily impaired.

(3)

On August 3, 2022, we sold our 50% noncontrolling equity investment in ArtiFlex, resulting in a pre-tax loss of $16,059 in equity income related to the sale.

(4)

Reflects a pre-tax loss of $1,534 realized in connection with the July 28, 2023, early redemption of the 2026 Notes. The loss resulted primarily from unamortized issuance costs and discount included in the carrying amount of the 2026 Notes and the acceleration of the remaining unamortized loss in equity related to a treasury lock derivative instrument executed in connection with the issuance of the 2026 Notes.

(5)

Reflects the following activity within equity income associated with the sale or divestiture of assets at Workhorse:

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A net gain of $2,780 associated with the divestiture of the Brazilian operations during the second quarter of fiscal 2024.

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A net gain of $2,063 related to a sale-leaseback transaction during the fourth quarter of fiscal 2023.

(6)

Reflects the settlement of certain participant balances within the pension plan maintained by WAVE.

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