WORTHINGTON ENTERPRISES, INC.
For the period ended Feb 28, 2025. Filed Apr 9, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Feb 28, 2025 · Filed Apr 9, 2025
WOR$60.50-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-11-30; filed 2025-01-10.
0000950170-25-004028
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-02-28; filed 2025-04-09.
0000950170-25-052413
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 118 previous paragraphs and 91 current paragraphs.
35 unchanged; 25 reworded; 31 added; 50 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 23 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
Business Overview
Current report
Worthington Enterprises is a market-leading designer and manufacturer of innovative products and services, including manufactured metal products, organized around attractive end markets under two separate and distinct reportable operating segments: Consumer Products and Building Products. Our primary goal is to create value for our shareholders. Built on the successful foundation of the Worthington Business System, we apply a disciplined approach to capital deployment and seek to grow earnings by optimizing our operations and supply chain, developing and commercializing new products and applications, and pursuing strategic investments and acquisitions.
Current report
Our Consumer Products business has a diverse product offering in the tools, outdoor living and celebrations categories, including propane-filled cylinders for torches and related accessories, handheld torches, specialized hand tools and instruments, drywall tools (collectively, tools), propane-filled camping cylinders helium-filled balloon kits, and accessories and gas grills and pizza ovens sold primarily to mass merchandisers, retailers and distributors. Sales to one customer in Consumer Products accounted for 13.0% of our consolidated net sales in the third quarter of fiscal 2025.
Current report
Our Building Products business is a market-leading provider of pressurized containment solutions, providing critical components in the residential, non-residential, and repair and remodel end markets through essential categories, such as heating, cooking, cooling and water, and, through our unconsolidated joint ventures, WAVE and ClarkDietrich, ceiling suspension systems and light gauge metal framing products, respectively. Our pressurized containment solutions include refrigerant and LPG cylinders, well water and expansion tanks, and other specialty products which are generally sold to gas producers and distributors.
Current report
Separation of the Steel Processing Business
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On December 1, 2023, we completed the Separation of our former steel processing business into a separate public company in a transaction intended to qualify as tax free to our shareholders, which was accomplished via the Distribution. Worthington Steel is an independent public company trading under the symbol “WS” on the NYSE. Following the Separation, Worthington Industries, Inc. changed its name to Worthington Enterprises, Inc. and its common shares continue trading on the NYSE under the ticker symbol “WOR.” In connection with the Separation, we received a one-time cash dividend of $150.0 million from Worthington Steel, the proceeds of which were used to pay off in full the 2024 Notes. The dividend was funded by cash drawn on the Worthington Steel Credit Facility of $175.0 million immediately prior to the Distribution.
Current report
Acquisitions and Divestitures
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On May 29, 2024, we became a noncontrolling equity partner in a new unconsolidated joint venture with Hexagon, a leading global manufacturer of Type 4 composite cylinders used for storing gas under high-pressure, by selling 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment in Europe. Pursuant to the transaction, Hexagon acquired a 49% stake in the joint venture for approximately $11.5 million, after adjusting for closing cash and preliminary net working capital, with an additional 2% sold to members of the existing management team for an additional $0.5 million. Post-closing, we hold a 49%, noncontrolling interest in the joint venture, which is accounted for under the equity method due to our significant influence. The newly formed joint venture, which combines two of Europe’s market leaders in composite high-pressure storage technology, focuses on capitalizing on the global clean energy transition specific to the storage, transport and distribution of hydrogen and compressed natural gas.
Current report
On February 1, 2024, we acquired an 80% ownership stake in Halo, an affiliate of HPG, an asset-light business with technology-enabled solutions in the outdoor cooking space. The total purchase price was approximately $9.6 million.
Current report
General Economic Conditions
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The macroeconomic and geopolitical outlook remains complex and continues to evolve amid persistent inflationary pressures, high interest rates, and escalating trade tensions. While the U.S. economy continues to expand at a modest pace, growth slowed in the fourth quarter of calendar 2024 with GDP increasing at an annual rate of 2.4%, down sequentially from 3.1% in the third quarter of calendar 2024. Inflationary pressures have proven more resilient than anticipated, with the CPI rising 3.1% year-over-year in February 2025, down sequentially from 3.3% in January 2025 and 3.8% in February 2024 aided by cuts in the federal funds rate of 0.50% in September 2024 and 0.25% in November 2024. However, interest rates remain high, with the 30-year mortgage rate relatively unchanged from the prior year at 6.8% as of February 28, 2025, and future rate cuts remain uncertain with the Federal Reserve opting to maintain the federal funds rate in March 2025, citing uncertainty surrounding the inflationary effects of recently imposed tariffs on Canadian, Mexican, and European imports. The recent uptick in inflation, coupled with geopolitical risks, including heightened trade tensions and financial market volatility, has further weighed on consumer sentiment, with consumer sentiment falling for a third straight month in March 2025 to its lowest level since November 2022. As a result, we expect ongoing economic uncertainty and tighter financial conditions to continue negatively influencing consumer purchasing behavior and overall market demand in the near term.
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End Market Trends
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We offer a wide range of products and services to a diverse, primarily domestic, customer base across several end markets, including U.S. residential and non-residential construction, repair/remodel, which collectively drive overall demand for the Building Products segment. These end markets also drive demand for many of our consumer products sold in the tools and outdoor living categories. Demand for our remaining consumer products, including helium-filled balloon kits sold into the celebrations category, is generally driven by the general health of the consumer, including the macroeconomic and geopolitical conditions discussed above.
Current report
We actively monitor the following publicly available economic data and selected key indicators for our major end markets:
Current report
Joint Center for Housing Studies of Harvard University; four quarter moving rate of change
Current report
Residential Construction: The near-term outlook for the residential construction end market remains uncertain as economic headwinds continue to weigh on both builders and buyers. In February 2025, residential construction spending grew a modest 1.6% year-over-year. However, this increase largely follows inflationary trends, rather than organic expansion in the housing market. Key leading indicators suggest that underlying demand remains tepid. Housing starts and authorized permits declined from the prior year period, signaling that both builders and prospective buyers are approaching the market with caution. From a demand perspective, affordability challenges persist. Elevated mortgage rates have kept many potential buyers on the sidelines, while existing homeowners, many of which are locked into historically low interest rates, are reluctant to sell, further constraining inventory turnover. In February 2025, existing home sales declined by 2.7% year-over-year to 4.3 million units, highlighting the persistent supply challenges. Additionally, homebuilder sentiment, as measured by HMI, weakened to 42.0, falling below the neutral threshold of 50, suggesting that more builders view conditions as poor than favorable. This decline in builder confidence reflects uncertainty around elevated construction costs and mortgage rates. We believe that builders and buyers will likely remain in a holding pattern in the near-term, navigating high material costs, elevated mortgage rates, a slow-moving resale market, and geopolitical developments.
Current report
Non-Residential Construction: The near-term outlook for non-residential construction is mixed with key indicators signaling both caution and long-term potential. The ABI fell to 45.5 in February 2025, marking a contraction in demand for architectural services. Further reinforcing this sentiment, inquiries into new projects declined in February 2025 for the first time since the peak of the COVID-19 pandemic. This signals that clients are exercising caution amid economic uncertainty, holding back on new project commitments as they navigate concerns about broader macroeconomic conditions. The soft ABI and declining inquiries suggest the near-term construction pipeline will likely be subdued. In contrast, the DMI climbed to 225.6, up from 180.5 in February 2024, suggesting a robust long-term pipeline. This rise was broad-based due to a surge of warehouse, data center, and industrial facility plans. The DMI’s strength, contrasted with the weak ABI, implies a timing gap – while many projects are still in the concept and design phase, they have yet to translate into active architectural billings or construction starts. While industrial and data center projects remain bright spots, we believe the participants in this end market will take a wait-and-see approach as developers and investors assess economic risks before committing to large-scale builds.
Current report
Repair and Remodel: Spending on home improvement continues to show signs of softness as the market remains under pressure from multi-decade lows in existing home sales, driven by elevated mortgage rates, high prices, and limited supply. With many homeowners locked into historically low interest rates, mobility in the housing market remains stalled, dampening turnover-driven renovation activity. Despite this pullback, the January 2025 LIRA report from Harvard’s Joint Center for Housing Studies projects a 1.2% annual increase in home renovation and maintenance expenditures, reaching $509 billion by the end of calendar year 2025. This upward revision from prior forecasts reflects stronger-than expected late calendar year 2024 spending. Near-term activity is expected to remain concentrated on essential maintenance projects, rather than large-scale, discretionary remodels. Uncertainty around recent and potential future tariffs, particularly on construction materials like steel, aluminum, and lumber, could create headwinds and pressure margins for both contractors and DIY consumers. We believe this end market is transitioning from the pandemic fueled highs into a more normalized, sustainable growth phase, supported by long-term fundamentals such as rising home equity, energy efficiency upgrades, and the need to modernize older homes.
Current report
The following table provides volume (in units) by operating segment for the periods presented:
Current report
Consumer Products – Net sales totaled $139.7 million in the current year quarter, up $6.5 million, or 4.9% over the prior year quarter, primarily driven by higher volumes.
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Building Products – Net sales totaled $164.8 million in the current year quarter, up $16.6 million, or 11.2%, over the prior year quarter, driven by contributions from Ragasco and favorable product mix, particularly in the large-format heating business which returned to more seasonally normal levels following a prolonged destocking cycle.
Current report
Gross profit for the current year quarter was $89.2 million, an increase of $16.1 million, or 22.0%, over the prior year quarter, driven by higher contributions from both Consumer Products and Building Products. In Consumer Products, the increase resulted from higher volume, particularly in our more profitable product categories. In Building Products, gross profit benefited from contributions by Ragasco, a favorable product mix, and a lower of cost or net realizable value charge in the prior year quarter that did not repeat, partially offsetting lower volume excluding Ragasco. Additionally, gross profit improved $0.9 million due to the deconsolidation of the former Sustainable Energy Solutions segment.
Current report
SG&A decreased $2.1 million, or 3.2%, from the prior year quarter, primarily driven by lower profit sharing and bonus expense and costs recovered from Worthington Steel through the Transition Services Agreement, partially offset by an increase of incremental bad debt expense of $1.1 million related to a customer bankruptcy in Consumer Products.
Current report
Other Consolidated Results
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Restructuring and other expense, net in the current year quarter was primarily driven by a $4.5 million increase in the fair value of the contingent liability associated with the Ragasco earnout.
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Income Tax Expense
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Income tax expense was $13.2 million in the current year quarter compared to $18.5 million in the prior year quarter. The decrease was primarily driven by one-time discrete tax charges from the Separation, which were recognized in the prior year quarter, partially offset by higher pre-tax earnings in the current year quarter. Income expense in the current year quarter reflects an estimated annual ETR of 24.4% compared to 30.8% in the prior year quarter.
Current report
Equity income decreased $11.1 million from the prior year quarter to $32.1 million, primarily driven by lower contributions from ClarkDietrich, which decreased $8.3 million compared to the prior year quarter, as declining year-over-year steel prices compressed margin.
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Building Products –Adjusted EBITDA from continuing operations increased slightly over the prior year quarter to $53.2 million as contributions from Ragasco and a favorable product mix were largely offset by lower equity income contributions from ClarkDietrich and WAVE, which decreased by $9.3 million compared to the prior year quarter. Adjusted EBITDA from continuing operations in the prior year quarter was negatively impacted by a $1.9 million lower of cost or net realizable value charge.
Current report
Unallocated Corporate and Other –Adjusted EBITDA from continuing operations increased $3.8 million over the prior year quarter, primarily driven by lower SG&A and lower losses related to the deconsolidation of our former Sustainable Energy Solutions in May 2024, partially offset by lower contributions of equity income from Workhorse.
Current report
Building Products –Adjusted EBITDA from continuing operations decreased $18.4 million from the prior year period as equity income was down $25.3 million partially offset by contributions from Ragasco and a favorable product mix. Equity income declined primarily from lower contributions from ClarkDietrich. Adjusted EBITDA from continuing operations in the prior year quarter was negatively impacted by a $1.9 million lower of cost or net realizable value charge which did not repeat in the current year quarter.
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Previous report
Recent Business Developments;
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Trends and Factors Impacting our Performance;
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Liquidity and Capital Resources; and
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Recent Business Developments
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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.
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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.
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Trends and Factors Impacting our Performance
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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.
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Key Indicators
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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.
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Period average of CRU Hot-Rolled Index
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U.S. Bureau of Labor Statistics
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End Markets and Competition
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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.
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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.
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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.
Previous report
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.
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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.
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General Economic and Market Conditions
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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.
Previous report
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.
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Results of Operations
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Second Quarter – Fiscal 2025 Compared to Fiscal 2024
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The following table provides volume by operating segment for the periods presented:
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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.
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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.
Previous report
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.
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Other Operating Items
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Interest Expense, Net
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Interest expense, net was up $0.5 million over the second quarter of fiscal 2024, driven primarily by lower interest income.
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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.
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Income Taxes
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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.
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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.
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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.
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Six Months Year-to-Date - Fiscal 2025 Compared to Fiscal 2024
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Net Sales and Volume
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The following table provides volume by operating segment for the periods presented:
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Gross Profit
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Previous wording
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:
Current wording
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 Separation as discussed in “Note A – Basis of Presentation.”
Previous wording
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.
Current wording
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 and contingent consideration in the form of an earnout agreement with an estimated fair value of $11.2 million at February 28, 2025. See “Note N – Acquisitions” for additional information.
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The following discussion provides a review of results for the three months ended November 30, 2024 and November 30, 2023:
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The following discussion provides a review of results for the three and nine months ended February 28, 2025 and February 29, 2024:
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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.
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Reconciliations for 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.
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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.”
Current wording
Other – Net sales in the prior year quarter 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.”
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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.
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Consumer Products – Net sales totaled $374.1 million in the current year period, an increase of $4.2 million over the prior year period primarily due to higher overall volume.
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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.
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Building Products – Net sales totaled $461.8 million in the current year period, down $3.6 million, or 0.8%, from the prior year period, as contributions from Ragasco and a favorable product mix were more than offset by lower overall volume.
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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.
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Gross profit was $225.8 million for the current year period, an increase of $19.8 million, or 9.6% over the prior year period, primarily due to improvements in Consumer Products, up $15.7 million, on the combined impact of higher volume and a $3.1 million reserve related to the voluntary recall of our Balloon Time® Mini helium tank in the prior year period. In Building Products, gross profit was positively impacted by contributions from Ragasco, favorable product mix, and a lower of cost or net realizable value charge in the prior year quarter that did not repeat, partially offsetting the impact of lower volume.
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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.
Current wording
SG&A decreased $13.3 million, or 6.3%, 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 an $8.1 million increase due to the acquisition of Ragasco on June 3, 2024 and an increase in bad debt expense of $3.2 million.
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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.
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Restructuring and other expense, net in the current year period was driven primarily by the accelerated vesting of certain outstanding equity awards upon retirement of our former CEO and a change in fair value of an earnout associated with the acquisition of Ragasco.
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Separation costs in the prior year quarter reflect direct and incremental costs incurred in connection with the Separation.
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Separation costs in the prior year period reflect direct and incremental costs incurred in connection with the Separation.
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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.
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Loss on extinguishment of debt of $1.5 million in the prior year period 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.
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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.
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Income tax expense was $29.1 million in the current year period compared to $34.0 million in the prior year period. The decrease was primarily driven by one-time discrete tax charges from the Separation, which were recognized in the prior year period, partially offset by higher pre-tax earnings in the current year period. Income expense in the current year period reflects an estimated annual ETR of 24.4% compared to 30.8% in the prior year period.
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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.
Current wording
Equity income was down $25.3 million from the prior year period, driven by lower contributions from ClarkDietrich and lower contributions from Workhorse, which benefited from a $2.8 million gain in the prior year period.
Previous wording
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.”
Current wording
The following table provides a summary of adjusted EBITDA from continuing operations, a non-GAAP financial measure, by reportable segment and on a consolidated basis, along with the respective percentage of net sales for each reportable segment and on a consolidated basis. 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.”
Previous wording
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.
Current wording
Consumer Products –Adjusted EBITDA from continuing operations was $28.6 million in the current year quarter, an increase of $3.0 million over the prior year quarter, primarily driven by higher volumes and gross margin improvement, partially offset by higher SG&A. Adjusted EBITDA from continuing operations in the current year quarter includes incremental bad debt expense of $1.1 million related to a customer bankruptcy.
Previous wording
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.
Current wording
Consumer Products –Adjusted EBITDA from continuing operations was $61.9 million, an increase of $9.4 million over the prior year quarter, primarily due to the favorable impact of higher volume in gross profit. Adjusted EBITDA from continuing operations in the current year period included $2.5 million of incremental bad debt related to customer bankruptcies. The prior year period was negatively impacted by a $3.1 million reserve related to the recall of our Balloon Time® Mini helium tank.
Previous wording
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.
Current wording
Unallocated Corporate and Other –Adjusted EBITDA from continuing operations was down $0.4 million from the prior year period, primarily 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.
Previous wording
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.
Current wording
During the nine months ended February 28, 2025, we generated $147.3 million of cash from operating activities, invested $37.5 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 $21.1 million to repurchase 500,000 common shares and paid dividends of $25.5 million on the common shares during the nine months ended February 28, 2025.
Previous wording
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.
Current wording
Net cash provided by operating activities was $147.3 million during the nine months ended February 28, 2025, down from $244.8 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 $31.4 million decrease in dividends received from unconsolidated joint ventures.
Previous wording
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.
Current wording
Net cash used by investing activities was $115.1 million during the nine months ended February 28, 2025 compared to $116.5 million from the prior year period. Net cash used by investing activities during the nine months ended February 28, 2025 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.
Previous wording
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.
Current wording
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 additional financing will be available on satisfactory terms if required.
Previous wording
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.
Current wording
Net cash used by financing activities was $53.6 million during the nine months ended February 28, 2025, compared to $355.9 million in the prior year period. During the nine months ended February 28, 2025, we paid $21.1 million to repurchase 500,000 common shares and paid dividends of $25.5 million on the common shares. During the nine months ended February 29, 2024, 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 and $150.0 million for the redemption of our 2024 Notes.
Previous wording
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.
Current wording
Common shares – On March 25, 2025, the Board declared a quarterly dividend of $0.17 per common share payable on June 27, 2025, to shareholders of record at the close of business on June 13, 2025.
Previous wording
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.
Current wording
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 February 28, 2025, 5,565,000 common shares remained available for repurchase under these two authorizations.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
The following discussion provides a review of results for the six months ended November 30, 2024 and November 30, 2023:
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
The following table provides a breakdown of our consolidated net sales by operating segment for the periods indicated:
Previous report — wording carried elsewhere
Equity income contributed by WAVE and ClarkDietrich is reported within our Building Products segment.
Previous report — wording carried elsewhere
Includes our share of equity earnings of the Workhorse and the Sustainable Energy Solutions joint ventures.
Previous report — wording carried elsewhere
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.”
Previous report — wording carried elsewhere
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.