Worthington Steel (WS) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 FY2025 were $739.0 million, down 9% year-over-year, primarily due to lower volumes and direct selling prices.

• Gross margin improved to $80.0 million (10.8% of sales), up from $60.2 million (7.5%), driven by higher direct spreads and lower inventory holding losses.

• Net earnings attributable to controlling interest were $12.8 million, reversing a net loss of $6.0 million year-over-year.

• The company completed its spin-off from Worthington Enterprises in December 2023 and now operates as an independent, publicly traded entity.

• Announced acquisition of a controlling 52% stake in Sitem Group, expanding European electric motor lamination capabilities.

Financial highlights

• Adjusted EBITDA was $30.6 million, up from $23 million year-over-year, and adjusted EBIT for Q2 was $14.3 million, up from $6.6 million.

• Adjusted EPS was $0.19, up from $0.11 year-over-year, and diluted EPS was $0.25, reversing a loss of $0.12.

• Free cash flow for the quarter was $33.2 million; trailing 12-month free cash flow was $79.4 million.

• Cash and cash equivalents stood at $52.0 million, with net debt at $63.0 million and $115.0 million in outstanding borrowings.

• Quarterly dividend of $0.16 per share declared, payable March 28, 2025.

Outlook and guidance

• Management is cautiously optimistic for 2025, expecting recovery in automotive and moderate growth in construction, with heavy truck market anticipated to pick up in late 2025.

• Fiscal 2025 capital expenditures now expected to be $125 million, up from $110 million, due to timing and new projects.

• Management expects minimal inventory holding impact in Q3 FY2025 and believes current liquidity and capital resources are adequate for the next 12 months.

• No additional separation costs are expected after FY2024.

• Forward-looking statements highlight expectations for growth, margin improvement, and benefits from recent strategic initiatives.