Worthington Q2 2023 Earnings Report
Key Takeaways
Worthington Industries reported a challenging fiscal second quarter, driven by significant steel price declines and inventory destocking at Consumer and Building Products customers. Despite these challenges, end market demand remained steady, and the company is optimistic about a return to better results.
Earnings per share were $0.33, compared to $2.15 in the prior year quarter.
Net sales decreased 5% year-over-year to $1.2 billion.
Gross profit decreased to $106 million from $185 million in the prior year, with gross margin at 9% versus 15%.
The company is on track with its plan to separate the Steel Processing business into its own public company by early calendar 2024.
Worthington
Worthington
Worthington Revenue by Segment
Forward Guidance
The company anticipates moderate inventory holding losses in Q3, approximating or slightly lower than the $25 million loss reported in Q3 of fiscal year 2022. They expect customer inventory levels to stabilize, leading to more seasonally normal demand trends.
Positive Outlook
- Destocking trends appear to be waning.
- Anticipate this quarter represents a trough in earnings.
- Will enter calendar 2023 with solid momentum.
- Demand is solid.
- Expect seasonality to return
Challenges Ahead
- Construction end market demand has been impacted by the slowdown in both residential and nonresidential construction.
- Anticipate, we will see moderate inventory holding losses in Q3.
- Higher rates will clearly impact some markets.
- Retail sales slowed, not materially, but it is clear that consumers are watching their discretionary spending.
- Building Products might take a little more time because the seasonally normal growth there on the wholly-owned businesses certainly is more like March, April, May.