WORTHINGTON ENTERPRISES, INC.
For the period ended May 31, 2025. Filed Jul 30, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Jul 30, 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-K
Period ended 2024-05-31; filed 2024-07-30.
0000950170-24-087983
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-05-31; filed 2025-07-30.
0000950170-25-100137
Item 7. 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.
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A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (55)
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Item 7. — Management’s Discussion and Analysis of Financial Condition and Results of Operations
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We are 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.
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Activity outside of our two reportable segments is presented within “Other” and “Unallocated Corporate” as described further below.
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Other includes the activity of our Sustainable Energy Solutions and Workhorse unconsolidated joint ventures, as well as the activity of our former Sustainable Energy Solutions operating segment, on an historical basis, through May 29, 2024.
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Unallocated Corporate 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, have not been allocated to our operating segments and are held at the corporate level, including direct and incremental costs incurred in connection with the Separation but not attributed to discontinued operations in fiscal 2024 and fiscal 2023.
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Acquisitions and Divestitures
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Fiscal 2025
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On June 3, 2024, we completed the acquisition of Ragasco, a leading global manufacturer of composite propane cylinders based in Norway. The purchase price consisted of cash consideration of $108.6 million, including the acquisition date fair value of contingent consideration that was settled in March 2025 for approximately $11.5 million, resulting in incremental expense in restructuring and other expense, net in our consolidated statement of earnings of $4.5 million. See “Note P – Acquisitions” for additional information.
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Fiscal 2024
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Factors Affecting Revenues
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Demand Trends
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General Economic Conditions
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Demand for our products is closely tied to broader macroeconomic conditions and overall consumer and business sentiment. Shifts in inflation, interest rates, disposable income, and construction activity directly influence purchase behavior, capital investment, and distributor inventory management.
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The macroeconomic and geopolitical environment remained complex and evolving through the end of fiscal 2025, as easing inflation was offset by continued elevated interest rates, slowing economic activity, and heightened global tensions. U.S. GDP declined at an annualized rate of 0.5% during the first quarter of calendar year 2025, down sequentially from 2.4% growth in the fourth quarter of calendar year 2024, signaling a clear loss of economic momentum. Inflation continued to moderate, with the Consumer Price Index rising 2.4% year-over-year in May 2025, down from 3.1% in February 2025, and moving closer to the Federal Reserve’s 2% target. The Federal Reserve held the federal funds rate steady at 4.25% – 4.50% during the fiscal 2025 fourth quarter, while borrowing costs remained high; the average 30-year fixed mortgage rate was 6.89% at the end of May 2025, relatively unchanged from May 2024. In May 2025, the U.S. and China began a 90-day trade negotiation period following mutual tariff reductions, offering tentative relief on the trade front, even as U.S. military strikes on Iranian nuclear facilities raised geopolitical risk and market volatility.
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We believe these dynamics — tight credit conditions, softening industrial activity, and global uncertainty — continued to weigh on both consumer and business sentiment throughout fiscal 2025 and may impact new activity across our key end markets entering fiscal 2026. Within our Consumer Products segment, inflation-driven cost consciousness and elevated interest rates influenced discretionary purchases and contributed to cautious buying patterns. In Building Products, rising financing costs constrained new construction demand, while slowing industrial activity impacted select commercial and infrastructure-related channels. We expect demand to remain uneven in the near term.
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Inventory Management
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Demand for our products is influenced by the inventory management strategies of our retail and distribution partners. Periods of customer destocking, when our customers reduce their own inventories, can lead to lower order volumes, even when consumer sell-through remains steady. Conversely, customers’ restocking can temporarily elevate shipments above underlying end-user demand. As a result, shifts in customers’ inventory levels can meaningfully impact our reported revenue and margin performance, particularly in the Consumer Products segment, where a large volume of products flow through big box retailers.
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During fiscal 2025, inventory positions for most of our key customers was aligned with end-user demand, and ordering behavior become more consistent with point-of-sale trends. While we expect our customers to remain sensitive to the softer macroeconomic environment, we believe the broad destocking cycle impacting fiscal 2024 has largely run its course. We continue to monitor customer inventory and sell-through levels closely and remain focused on aligning production, fulfillment, and working capital strategies accordingly.
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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.
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We actively monitor publicly available economic data and leading indicators across our key end markets. The table and discussion that follow summarize select indicators that we monitor on a regular basis and that we believe are most relevant to our near-term outlook.
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Overall demand across our key end markets remained mixed, but generally stable during fiscal 2025. In residential construction, U.S. private housing starts declined 5% from May 2024, and the HMI fell to 34, its lowest level since November 2023 and second-lowest since June 2012, signaling a notably subdued new home pipeline. We believe homebuilder sentiment continues to be weighed down by persistently high mortgage rates, tariff-driven increases in material costs, and broader macroeconomic uncertainty. In non-residential construction, the ABI has remained below the 50-point growth threshold for more than a year, indicating that broad-based commercial and institutional starts will likely remain uneven. However, demand tied to data centers and federally funded manufacturing projects continues to be a bright spot. The repair and remodel industry has shown encouraging signs, with Harvard’s LIRA projecting homeowner improvement spending to rise approximately 2.5% through early 2026, supporting steady demand for many of our tools and DIY products. Taken together, we anticipate continued caution from both consumers and builders and expect demand across our key end markets to remain mixed in the near term.
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Factors Affecting Operating Costs
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Raw Materials
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Our largest raw material expenditures include cold-rolled and hot-rolled steel, propane, propylene, and aluminum. Fluctuations in the prices of these inputs have a direct impact on our cost of goods sold and overall financial performance.
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Steel remains our most significant direct material cost across both the Consumer Products and Building Products segments. During fiscal 2025, prices for both hot-rolled and cold-rolled steel moderated from the elevated levels experienced in fiscal 2024. This decline contributed to improved spread as we maintained consistent pricing discipline across our product portfolio. Our sourcing strategy, combining firm-price contracts for select inputs with index-based agreements for others, allowed us to manage volatility and capture cost advantages as prices declined.
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In contrast, aluminum costs increased during fiscal 2025, largely driven by changes to U.S. trade policy. In the fourth quarter of fiscal 2025, Section 232 tariffs on imported aluminum were raised from 25% to 50%, significantly increasing the cost of certain components used in our products. These changes impacted components such as fuel cylinder valves and other aluminum-intensive assemblies. Where possible, we mitigated these increases through forward purchasing and supplier negotiations, but tariff-related cost pressure on aluminum is expected to persist into fiscal 2026.
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Other key inputs such as propane and propylene were relatively stable throughout fiscal 2025, with a portion of our requirements secured through fixed-price agreements. Helium and other gases also declined modestly in cost compared to fiscal 2024, benefiting margins in select consumer-facing product lines.
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We continue to actively monitor commodity markets and maintain a diversified sourcing strategy to ensure continuity of supply and cost discipline. Our approach to material procurement supports margin stability and helps mitigate the impact of input price volatility on our results.
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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.
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Results of Operations
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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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Consumer Products –Net sales totaled $499.7 million in fiscal 2025, an increase of $4.4 million, or 0.9%, from the prior fiscal year, primarily due to higher volumes and a slightly favorable product mix.
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Building Products –Net sales totaled $654.1 million in fiscal 2025, an increase of $35.1 million, or 5.7%, compared to the prior fiscal year, which was largely driven by contributions from Ragasco and favorable product mix, partially offset by lower overall volumes, excluding Ragasco.
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Other –Net sales in the prior year period are related to our former Sustainable Energy Solutions operating segment, which
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was deconsolidated on May 29, 2024, when we sold a 51% interest in the business. In periods after the sale
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transaction, our 49% retained interest is accounted for under the equity method as discussed in “Note C – Investments in Unconsolidated Affiliates.”
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Gross profit was $319.0 million in fiscal 2025, an increase of $34.0 million, or 11.9%, over the prior fiscal year, driven by higher contributions from both Consumer Products and Building Products. In Consumer Products, gross profit increased $15.8 million on favorable product mix and higher overall volume. In Building Products, gross profit increased $21.5 million on contributions from Ragasco and favorable mix. In addition to the factors described above, gross margin benefited from the deconsolidation of our Sustainable Energy Solutions business on May 29, 2024.
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SG&A was $268.4 million in fiscal 2025, a decrease of $15.1 million, or 5.3%, from the prior fiscal year. The decrease was primarily attributable to the elimination of certain corporate costs that no longer exist following the Separation, but were included in net earnings from continuing operations in the prior year, as well as the net impact of acquisitions and divestitures. This was partially offset by higher profit sharing and bonus expense to correspond with the improvement in pre-tax earnings.
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Impairment activity in fiscal 2025 primarily reflects the non-cash write-down of intangible assets associated with GTI, totaling $50.1 million. Impairment charges in the prior fiscal year related primarily to the impairment of goodwill and other assets immediately prior to the deconsolidation of our Sustainable Energy Solutions business in May 2024. Refer to “Note D – Goodwill and Other Long-Lived Assets” for additional information.
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Other 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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Business Overview
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Founded in 1955 as Worthington Industries, we are one of the leading designers and manufacturers of products sold to consumers, primarily through retail channels, in the tools, outdoor living and celebrations market categories as well as a wide array of highly specialized building products that primarily serve customers in the residential and non-residential construction markets, including ceiling suspension systems and light gauge metal framing products, respectively, through our unconsolidated joint ventures, WAVE and ClarkDietrich, as well as wholly-owned and consolidated operations that produce pressurized containment solutions for heating, cooking and cooling applications, among others. Our business strategy is rooted in our people first culture that values our relationships across the spectrum and revolves around products and services that empower people to live safer, healthier and more expressive lives. We were founded as a value-added steel processor domiciled under the laws of the State of Ohio and have since expanded our offerings to include manufactured metal products organized around attractive end market under two separate and distinct reportable operating segments: Consumer Products and Building Products.
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Other Business Developments
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Our 49% noncontrolling interest does not qualify as a standalone operating segment and therefore will be reported within Other along with unallocated corporate expenses, as discussed further in “Note P – Segment Data.” Additionally, upon closing, our sustainable energy solutions business, as historically operated, is no longer part of our management structure and therefore the financial position and results of operations of this business are presented within Other, on an historical basis, through May 29, 2024.
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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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End Markets and Competition
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We sell our products and services to a diverse customer base and a broad range of end markets. These end markets include residential construction, non-residential construction, and repair and remodel, which drives demand in our Building Products operating segment, including WAVE and ClarkDietrich, our unconsolidated joint ventures; and tools, outdoor living, and celebrations which drives demand in our Consumer Products operating segment, including Halo, our consolidated joint venture. Given the broad base of products and services offered, specific competitors vary based on the target industry, product type, service type, size of program and geography. Competition is primarily based on price, product quality, brand recognition, product innovation, and customer service. Sales to one customer within Consumer Products represented 12% of consolidated net sales during fiscal 2024.
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General Economic and Market Conditions
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U.S. GDP growth rate trends typically reflect the strength of demand and, in many cases, the pricing of our products. An increase in year-over-year U.S. GDP growth rates usually signifies a stronger economy, which often leads to higher demand and pricing for our products. Conversely, a decline in U.S. GDP growth rates generally indicates a weaker economy, resulting in lower demand and pricing for our products. Fluctuations in U.S. GDP growth rates can signal changes in conversion costs related to production and in SG&A.
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There remains a high level of uncertainty in the current macroeconomic environment and geopolitical environments, and prolonged inflationary pressures continue to negatively impact the discretionary spending of many of our customers. In addition to inflation, consumer spending habits, including spending for products that we sell, are affected by, among other things, prevailing global economic conditions, the costs of basic necessities and other goods, levels of employment, salaries and wage rates, and prevailing interest rates. In addition, consumer purchasing patterns are generally influenced by consumers’ disposable income, credit availability and debt levels.
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We also actively monitor other publicly available macroeconomic trends that provide insight into the activity in our end markets, including, but not limited to the ABI, the Dodge Momentum Index, the HMI, steel prices, retail sales, state and local government spending, interest rate environment and inflation metrics. Current macro-economic trends within our end markets are described in additional detail below, as well as selected key indicators for the periods presented.
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Federal Reserve Bank of St. Louis
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Period average of CRU Hot-Rolled Index
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Residential Construction: The residential construction sector has demonstrated positive year-over-year growth, with an overall increase in spending during fiscal 2024. This growth is a significant recovery from the relative low in the spring of 2023. However, new housing starts have shown a downward trend, decreasing from 1.5 million units in fiscal 2023 to 1.4 million units in fiscal 2024. Additionally, the HMI of 45 for May 2024 represented its lowest level since December 2023. Persistently high mortgage rates are keeping many prospective buyers from entering the market. Home builders are also dealing with high interest rates for construction and development loans and chronic labor shortages.
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Non-residential Construction: Non-residential construction spending has shown consistent year-over-year growth. However, the near-term outlook is mixed due to a rise in on-hold projects and delayed bids. Commercial real estate remains generally weak, with notable softness for office buildings, partially offset by strong demand for data centers and manufacturing facilities. The ABI continued to decline through May 2024, signaling slowing growth in the months ahead. The higher cost of capital has made it difficult for buyers and sellers to agree on terms and the shift to hybrid work has created additional headwinds for offices, especially central business district properties in major markets. Despite these challenges, the fundamentals in this sector remain strong and are expected to improve if the Federal Reserve reduces interest rates in the second half of 2024.
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Repair and Remodel: Spending on home improvement is expected to decline in the near term, as existing home sales are at multi-decade lows and interest rates remain high; however, the long-term outlook remains strong, in part, due to the aging housing stock. The median age of owner-occupied homes in the U.S. is 40 years old. The majority of owner-occupied homes were built before 1980, with around 35% built before 1970. Additionally, homeowners have record levels of equity, which is expected to drive spending in the long-term.
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Tools: Spending in the tools end market is largely driven by overall macroeconomic conditions. During fiscal 2024, our sales into this end market were negatively impacted by the persistently high inflationary environment which resulted in a general moderation of consumer spending on non-essential items, leading to lower overall demand from our DIY and professional customers. Customer destocking also continued into fiscal 2024, resulting in lower volumes. Despite short-term headwinds in this end market, we believe that the outlook remains positive as we continue to grow market share with our well-known brands and innovation of new products.
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Outdoor Living: Participation in outdoor recreation is beginning to normalize to pre-pandemic levels. This trend is evident in the number of new U.S. camping households, a key metric that measures the influx of first-time campers. After reaching a peak in 2020, driven by the desire for safe, socially-distanced activities during the height of the pandemic, the number has steadily declined. However, the long-term fundamentals in the outdoor living category remain strong, driven by diverse participation across different age groups, socio-economic classes, and geographic regions.
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Celebrations: During fiscal 2024, the celebrations end market was affected by several macroeconomic trends. Consumer income and the ratio of debt-to-income showed a gradual recovery, approaching levels observed prior to COVID-19, as well as moderating inflation. Despite these positive signals, there remained uncertainty in the current macroeconomic environment and geopolitical environments. It is anticipated that consumer spending on non-essential items will remain constrained, primarily due to a larger share of income being allocated towards essential purchases and mortgage payments.
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Consumer Products –Net sales totaled $495.3 million in fiscal 2024, down $60.0 million, or 10.8%, from the prior fiscal year, due primarily to lower volumes driven largely by continued destocking by some of our retail customers that continued into the first half of fiscal 2024 as well as the general moderation in consumer spending on non-essentials driven by the persistent inflationary environment.
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Building Products –Net sales totaled $619.0 million in fiscal 2024, down $98.1 million, or 13.7%, from the prior fiscal year, due to an unfavorable shift in product mix, primarily in the large format heating tanks, and, to a lesser extent, lower volumes.
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Other –Net sales, attributable to our former Sustainable Energy Solutions segment, totaled $131.4 million in fiscal 2024, down $14.7 million, or 10.1%, from the prior fiscal year on an unfavorable shift in product mix and lower volumes.
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Gross profit was $285.0 million in fiscal 2024, a decrease of $38.6 million compared to the prior fiscal year, driven primarily by the impact of lower overall volume and an unfavorable shift in product mix.
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SG&A was $283.5 million in fiscal 2024, down $3.6 million, or 1.3%, from the prior fiscal year. Excluding the impact of corporate costs of $19.3 million in fiscal 2024 and $41.5 million in fiscal 2023 that were eliminated post-Separation, SG&A was up $18.6 million, primarily due to higher healthcare and other benefit related costs, and to a lesser extent, higher wages.
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Restructuring activity during fiscal 2024 is related primarily to the deconsolidation of our Sustainable Energy Solutions business. Restructuring activity in the prior fiscal year was related primarily to a reduction in workforce at our Columbus, Ohio facility, organizational realignment within Building Products and a pretax gain of $1.2 million from the sale of real property in Tulsa, Oklahoma.
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Miscellaneous expense, net
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Loss on extinguishment of debt
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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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Interest expense, net
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Interest expense, net of $1.6 million in fiscal 2024 was favorable compared to the prior fiscal year by $16.7 million, driven primarily by lower average debt levels as a result of the redemption of the 2024 Notes and 2026 Notes in fiscal 2024 and, to a lesser extent, higher interest income. Refer to “Note I – Debt” for additional information.
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Equity income increased $14.5 million over the prior fiscal year, as fiscal 2023 included a $16.1 million pre-tax loss from the sale of our noncontrolling interest in ArtiFlex. Additionally, higher contributions from WAVE in fiscal 2024 were partially offset by a decline at ClarkDietrich, which was down $20.7 million from the near-record equity earnings contributed in the prior year.
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Consumer Products –Adjusted EBITDA from continuing operations was down $27.8 million from the prior fiscal year to $69.6 million, primarily on lower volume, driven by destocking at certain large retail customers that continued into the second half of fiscal 2024 and ongoing moderation in non-essential consumer spending as well as non-cash charges totaling $4.6 million to write-down inventory associated with the two voluntary recalls further discussed in “Note C – Inventory.”
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Building Products –Adjusted EBITDA from continuing operations was $210.1 million in the current fiscal year, a decrease of $12.1 million from the prior fiscal year on the combined impact of lower equity income from WAVE and ClarkDietrich, down $3.3 million, and lower gross profit, driven by an unfavorable product mix, primarily in the large format heating end market, and, to a lesser extent lower volumes driven by destocking at certain distributors.
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Unallocated Corporate and Other –Adjusted EBITDA from continuing operations was down $15.1 million from the prior fiscal year, driven by losses in our former Sustainable Energy Solutions business, unfavorable to the prior year by $12.4 million. Sustainable Energy Solutions is now an unconsolidated joint venture.
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Net Sales and Volume
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Consumer Products –Net sales increased 10.0%, or $50.4 million, over fiscal 2022 to $555.3 million in fiscal 2023. The increase was driven by higher average selling prices, and, to a lesser extent, contributions from the June 2, 2022 acquisition of Level5. Excluding Level5 units shipped in fiscal 2023, overall volumes were down 7.1% from fiscal 2022, as retail customers reduced inventory levels resulting in lower customer orders.
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Selected statements contained in this MD&A constitute forward-looking statements, as that term is used in the PSLRA. Such forward-looking statements are based, in whole or in part, on management’s beliefs, estimates, assumptions and currently available information. For a more detailed discussion of what constitutes a forward-looking statement and of some of the factors that could cause actual results to differ materially from such forward-looking statements, please refer to the “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Form 10-K and “Part I - Item 1A. - Risk Factors” of this Form 10-K.
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This MD&A contains forward-looking statements within the meaning of the PSLRA. Such forward-looking statements are based, in whole or in part, on management’s beliefs, estimates, assumptions and currently available information. For a more detailed discussion of what constitutes a forward-looking statement and of some of the factors that could cause actual results to differ materially from such forward-looking statements, please refer to the “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Form 10-K and “Part I - Item 1A. - Risk Factors” of this Form 10-K.
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This MD&A should be read in conjunction with our consolidated financial statements and the related Notes in this Form 10-K. 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. This MD&A is divided into seven main sections:
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This MD&A should be read in conjunction with our consolidated financial statements and the related Notes in this Form 10-K. It is intended to provide insight into the financial condition and results of operations to allow investors to view the Company from the perspective of management. The historical results discussed herein include the operations of Worthington Steel, which are presented as discontinued operations in all periods prior to the Separation, as further described in “Note A – Summary of Significant Accounting Policies.”
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Consumer Products: Our Consumer Products business serves retail customers and end consumers in the tools, outdoor living and celebrations categories under market-leading brands that include the following: Balloon Time®, Bernzomatic®, Coleman® (licensed), Garden-Weasel®, General®, Halo®, Hawkeye™, Level5®, Mag-Torch®, Pactool International®, and Worthington Pro Grade™. These include propane-filled cylinders for torches, camping stoves and other applications, handheld torches, helium-filled balloon kits, specialized hand tools and instruments, drywall tools and accessories and gas grills and pizza ovens sold primarily to mass merchandisers, retailers and distributors. This segment also includes our consolidated joint venture, Halo.
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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, propane-filled camping cylinders helium-filled balloon kits, and accessories and gas grills and pizza ovens sold primarily to mass merchandisers, retailers and distributors.
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Building Products: Our Building Products business is a market-leading provider of pressurized containment solutions, providing critical components in 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. 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. Refrigerant gas cylinders are used to hold refrigerant gases for commercial, residential, and automotive air conditioning and refrigeration systems. LPG cylinders hold fuel for residential and light commercial heating systems, barbeque grills and recreational vehicle equipment, industrial forklifts and commercial/residential cooking (the latter, generally outside North America). Well water tanks and expansion tanks are used primarily in the residential market with certain products also sold to commercial markets. Specialty products include a variety of fire suppression tanks, chemical tanks, and foam and adhesive tanks.
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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.
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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, will focus on capitalizing on the global clean energy transition specific to the storage, transport and distribution of hydrogen and compressed natural gas.
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On May 29, 2024, we became a noncontrolling equity partner in an 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. We now hold a 49% noncontrolling equity stake in the joint venture, which is accounted for under the equity method. Our retained interest does not qualify as a standalone operating segment and is reported within Other. As a result of the transaction, the financial position and results of operations of the former Sustainable Energy Solutions business are reflected in Other on a historical basis through May 29, 2024 and post deconsolidation. See “Note O – Segment Data” for additional information.
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The tables throughout this section present, on a comparative basis, our consolidated results of operations for the past two fiscal years.
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The tables throughout this section present, on a comparative basis, our consolidated results of operations for the periods presented. For a discussion of the non-GAAP financial measures presented in the following table, as well as a reconciliation of the differences between each non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP, refer to the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-K.
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The following table provides a breakdown of consolidated net sales by operating segment for the past two fiscal years.
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The following table provides a breakdown of consolidated net sales by operating segment for the periods indicated:
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The following table provides volume (in units) by reportable segment for the past two fiscal years.
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The following table provides volume (in units) by operating segment for the periods presented:
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Separation costs reflect direct and incremental costs incurred in connection with the Separation.
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Separation costs in the prior fiscal year reflect direct and incremental costs incurred in connection with the Separation and attributable to our continuing operations.
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Miscellaneous expense in fiscal 2024 was primarily driven by the following: (1) the annuitization of the remaining projected benefit obligation of the inactive Gerstenslager Plan, which resulted in a pre-tax charge of $8.0 million and (2) the write-down of an investment in notes receivable that was determined to be other than temporarily impaired, resulting in a pre-tax charge of $11.2 million. Miscellaneous expense in the prior fiscal year was due to the annuitization of a portion of the total projected benefit obligation of the Gerstenslager Plan, which resulted in a pre-tax non-cash settlement charge of $4.8 million to accelerate a portion of the overall deferred costs out of AOCI.
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Miscellaneous expense in fiscal 2025 was driven primarily by the write down of an investment in notes receivable that was determined to be other than temporarily impaired, resulting in a pre-tax charge of $5.0 million. Miscellaneous expense in fiscal 2024 was primarily driven by (1) the annuitization of the remaining projected benefit obligation of the inactive Gerstenslager Plan, which resulted in a pre-tax charge of $8.0 million and (2) the write-down of an investment in notes receivable that was determined to be other than temporarily impaired, resulting in a pre-tax charge of $11.2 million.
Previous wording
Income tax expense was $39.0 million in fiscal 2024 compared to income tax expense of $34.5 million in the prior fiscal year. The increase was primarily driven by one-time discrete tax charges related to the Separation and the deconsolidation of our Sustainable Energy Solutions business. Income tax expense in fiscal 2024 reflected an annual effective rate of 52.6% up from 21.5% in the prior year due the impact of discrete items. On an adjusted basis, the annual effective tax rate was 23.5% compared to 21.9% in the prior fiscal year. Refer to “Note N - Income Taxes” for additional information.
Current wording
Income tax expense totaled $33.8 million in fiscal 2025, compared to $39.0 million in the prior fiscal year. The decrease was primarily due to the impact of one-time discrete tax charges related to the Separation and charges associated with the deconsolidation of our Sustainable Energy Solutions business in the prior fiscal year, partially offset by higher pre-tax earnings in fiscal 2025. The effective tax rate for fiscal 2025 was 26.1%, compared to 52.6% in the prior fiscal year. On an adjusted basis, the annual effective tax rate was 23.0% in fiscal 2025, compared to 23.5% in the prior fiscal year. Refer to “Note M – Income Taxes” for additional information.
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” section preceding Part I, Item 1 of this Form 10-K 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 P – Segment Data.”
Current 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 net sales for each reportable segment and on a consolidated basis. Refer to the “Use of Non-GAAP Financial Measures and Definitions” section preceding Part I, Item 1 of this Form 10-K for additional information regarding our use of non-GAAP financial measures. A reconciliation of earnings before income taxes from continuing operations to adjusted EBITDA from continuing operations is provided in “Note O – Segment Data.”
Previous wording
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. The Credit Facility had a total of $500.0 million of borrowing capacity available to be drawn as of May 31, 2024.
Current wording
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 the next 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. The Credit Facility had a total of $500.0 million of borrowing capacity available to be drawn as of May 31, 2025.
Previous wording
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. The amounts involved in any such transaction may or may not be material. To facilitate our post-Separation capital structure, during the first quarter of fiscal 2024, we redeemed in full our 2026 Notes for $243.6 million followed by the early redemption of the 2024 Notes for $150.0 million on December 6, 2023, as further discussed in “Note I – Debt.”
Current wording
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. The amounts involved in any such transaction may or may not be material.
Previous wording
Net cash used by investing activities was $140.8 million during fiscal 2024, compared to $71.8 million during fiscal 2023. Net cash used by investing activities in fiscal 2024 resulted primarily from capital expenditures of $83.5 million, investment in notes receivable of $14.9 million, a deposit of $11.4 million for the June 3, 2024 acquisition of Ragasco, and the acquisitions of Halo and Voestalpine for net cash consideration of $9.6 million and $21.0 million, respectively. Net cash used by investing activities in the prior year resulted from the purchase of the Level5 business on June 2, 2022, for $56.1 million, and capital expenditures of $86.4 million, partially offset by combined cash proceeds of $71.3 million from the sale of our 50% noncontrolling equity investment in ArtiFlex, and the sale of the remaining net assets of our former WSP Jackson, Michigan facility and other long-lived assets.
Current wording
Net cash used by investing activities was $135.1 million during fiscal 2025, compared to $140.8 million during fiscal 2024. Net cash used by investing activities during fiscal 2025 was driven primarily by the acquisition of Ragasco for $95.0 million, including an earnout, and capital expenditures of $50.6 million, partially offset by $11.5 million of proceeds from the sale of 51% of the nominal share capital of our former Sustainable Energy Solutions operating segment on May 29, 2024. Net cash used by investing activities in fiscal 2024 resulted primarily from capital expenditures of $83.5 million, investment in notes receivable of $14.9 million, a deposit of $11.4 million for the June 3, 2024 acquisition of Ragasco, and the acquisitions of Halo and Voestalpine for net cash consideration of $9.6 million and $21.0 million, respectively.
Previous wording
Net cash used by financing activities was $359.9 million in fiscal 2024 compared to $133.1 million in fiscal 2023. The change was primarily due to activity related to the Separation transaction including the net distribution of $68.0 million to Worthington Steel and net proceeds of $172.2 million under Worthington Steel’s short-term credit facilities, which were assumed by Worthington Steel. To facilitate our post-Separation capital structure, we redeemed in full our 2026 Notes for $243.6 million and our 2024 Notes for $150.0 million, as further discussed in “Note I - Debt.”
Current wording
Net cash used by financing activities was $68.8 million in fiscal 2025 compared to $359.9 million in fiscal 2024. The change was primarily due to activity related to the Separation transaction including the net distribution of $68.0 million to Worthington Steel and net proceeds of $172.2 million under Worthington Steel’s short-term credit facilities, which were assumed by Worthington Steel. During fiscal 2025, we paid $30.9 million to repurchase 700,000 common shares and paid dividends of $33.9 million on the common shares. During fiscal 2024, we redeemed in full our 2026 Notes for $243.6 million and our 2024 Notes for $150.0 million, as further discussed in “Note H – Debt.”
Previous wording
As discussed in “Note H – Guarantees,” we had in place $12.1 million in outstanding letters of credit for third-party beneficiaries as of May 31, 2024. No amounts were drawn against these outstanding letters of credit at May 31, 2024, and the fair value of these guaranteed instruments, based on premiums paid, was not material.
Current wording
As discussed in “Note G – Guarantees,” we had in place $9.5 million in outstanding letters of credit for third-party beneficiaries as of May 31, 2025. No amounts were drawn against these outstanding letters of credit at May 31, 2025, and the fair value of these guaranteed instruments, based on premiums paid, was not material.
Previous wording
Common shares –During fiscal 2024, we declared dividends totaling $0.96 per common share, which consisted of three quarters of declared dividends under our pre-Separation capital structure and one quarter as a standalone company. During fiscal 2023, we declared dividends totaling $1.24 per common share. Dividends paid on our common shares totaled $56.8 million in fiscal 2024 compared to $59.2 million during fiscal 2023. On June 25, 2024, the Board declared a quarterly dividend of $0.17 per common share for the first quarter of fiscal 2025, a $0.01 per share increase from the previous quarterly rate. The dividend is payable on September 27, 2024 to shareholders of record at the close of business on September 13, 2024.
Current wording
Common shares –During fiscal 2025, we declared dividends totaling $0.68 per common share at a quarterly rate of $0.17 per common share. During fiscal 2024, we declared dividends totaling $0.96 per common share, which consisted of three quarters of declared dividends under our pre-Separation capital structure and one quarter as a standalone company. Dividends paid on our common shares totaled $33.9 million in fiscal 2025 compared to $56.8 million during fiscal 2024. On June 23, 2025, the Board declared a quarterly dividend of $0.19 per common share for the first quarter of fiscal 2026, a $0.02 per share increase from the previous quarterly rate. The dividend is payable on September 29, 2025 to shareholders of record at the close of business on September 15, 2025.
Previous wording
On March 20, 2019, the Board authorized the repurchase of up to 6.6 million of the common shares. On March 24, 2021, the Board authorized the repurchase of up to an additional 5.6 million of the common shares, increasing the total number of common shares then authorized for repurchase to 10.0 million. The total number of common shares available for repurchase under these authorizations at May 31, 2024 was 6.1 million.
Current wording
On March 20, 2019, the Board authorized the repurchase of up to 6,600,000 of the common shares. On March 24, 2021, the Board authorized the repurchase of up to an additional 5,618,464 of the common shares, increasing the total number of common shares then authorized for repurchase to 10,000,000 (net of previously repurchased common shares). The total number of common shares available for repurchase under these authorizations at May 31, 2025 was 5,365,000.
Previous wording
Refer to “Note A – Summary of Significant Accounting Policies” for further information.
Current wording
Refer to “Note A – Summary of Significant Accounting Policies” for additional information.
Previous wording
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting estimates 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, as discussed below, 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. The following accounting estimates are considered to be the most critical to us, as these are the primary areas where financial information is subject to our estimates, assumptions and judgment in the preparation of our consolidated financial statements.
Current wording
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. These results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Critical accounting estimates are defined as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations. Although actual results historically have not deviated significantly from those determined using our estimates, as discussed below, 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. The following accounting estimates are considered to be the most critical to us, as these are the primary areas where financial information is subject to our estimates, assumptions and judgment in the preparation of our consolidated financial statements.
Previous wording
Impairment of goodwill and long-lived assets in fiscal 2024 was primarily due to the deconsolidation of our Sustainable Energy Solutions business. Impairment activity in the prior fiscal year was driven by changes in the intended use of certain fixed assets at our Building Products facility in Jefferson, Ohio. Refer to “Note E – Goodwill and Other Long-Lived Assets” for additional information.
Current wording
Impairment of Goodwill and Indefinite-Lived Long-Lived Assets
Previous wording
Assumptions and judgments: When performing a qualitative assessment, judgment is required when considering relevant events and circumstances that could affect the fair value of the indefinite lived intangible asset or reporting unit to which goodwill is assigned. Management considers whether events and circumstances such as a change in strategic direction and changes in business climate would impact the fair value of the indefinite lived intangible asset or reporting unit to which goodwill is assigned. If a quantitative analysis is required, assumptions are required to estimate fair value, both at the individual asset and enterprise level, to compare against the carrying value. Significant assumptions that form the basis of fair value can include discount rates, underlying forecast assumptions, and royalty rates. These assumptions are forward looking and can be affected by future economic and market conditions. We were able to qualitatively conclude that all of our indefinite-lived intangibles and the goodwill of our Consumer Products and Building Products reporting units were not impaired during fiscal 2024. However, the deconsolidation of our former Sustainable Energy Solutions reporting unit triggered an impairment review of this asset group as an asset held for sale in the fourth quarter of fiscal 2024. This analysis determined that the fair value of the Sustainable Energy Solutions reporting unit exceeded its book value resulting in the full impairment of goodwill, which totaled $14.2 million.
Current wording
Assumptions and judgments: When performing a qualitative assessment, judgment is required when considering relevant events and circumstances that could affect the fair value of the indefinite lived intangible asset or reporting unit to which goodwill is assigned. Management considers whether events and circumstances such as a change in strategic direction and changes in business climate would impact the fair value of the indefinite lived intangible asset or reporting unit to which goodwill is assigned. If a quantitative analysis is required, assumptions are required to estimate fair value, both at the individual asset and enterprise level, to compare against the carrying value. Significant assumptions that form the basis of fair value can include discount rates, underlying forecast assumptions, and royalty rates. These assumptions are forward looking and can be affected by future economic and market conditions.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Separation of the Steel Processing Business
Previous report — wording carried elsewhere
The tables throughout this section present, on a comparative basis, our consolidated results of operations for fiscal 2022 and fiscal 2023.
Previous report — wording carried elsewhere
The following table provides a breakdown of consolidated net sales by operating segment for fiscal 2023 and fiscal 2022.
Previous report — wording carried elsewhere
The following table provides volume (in units) by reportable segment for fiscal 2023 and fiscal 2022.
Previous report — wording carried elsewhere
Separation costs reflect direct and incremental costs incurred in connection with the Separation.
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” section preceding Part I, Item 1 of this Form 10-K 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 P – Segment Data.”