Executive Summary
Worthington Steel Inc reported a financially positive but cyclical quarter for QQ1 2024, with revenue of $834 million and net income of $28.4 million (EPS $0.57). The top line declined 8.0% year-over-year and 8.5% quarter-over-quarter, driven largely by softer demand in key end-markets such as automotive and heavy industry, which pressured gross margins to 12.0% and operating margins to 5.20%. Despite the revenue weakness, the company generated robust operating cash flow of $54.6 million and delivered free cash flow of $33.1 million, underscoring strong cash generation and balance-sheet resilience in a cyclically sensitive sector. Cash balances stood at $36.0 million at period end, while total debt was modest at $226.3 million with net debt of $198.9 million, producing an indicative interest-coverage ratio around 16.7x.
The results reflect a period of volume softness but signal financial flexibility for Worthington Steel to navigate near-term cyclicality through cost discipline, product mix optimization, and potential selective investment in value-added capabilities (e.g., tailor welded blanks and PWBs). Management commentary is not included in the provided data, so the forward-looking narrative relies on disclosed metrics and standard industry dynamics. The stock trades at a multiple (~15.4x trailing EPS) that is broadly in-line with established steel processors, suggesting modest downside sensitivity to macro cycles but limited upside without improved demand or margin expansion.
Key Performance Indicators
QoQ: -22.23% | YoY:-22.44%
QoQ: -33.64% | YoY:-40.63%
QoQ: -46.62% | YoY:-51.76%
QoQ: -47.22% | YoY:-51.69%
Key Insights
Revenue: $834.0 million; YoY change: -8.02%; QoQ change: -8.45%
Gross Profit: $100.4 million; Gross margin: 12.04%; YoY margin change: -22.44%; QoQ: -22.23%
Operating Income: $43.4 million; Operating margin: 5.20%; YoY: -40.63%; QoQ: -33.64%
Net Income: $28.4 million; Net margin: 3.41%; YoY: -51.76%; QoQ: -46.62%
EPS: $0.57; Diluted EPS: $0.56; YoY: -51.69%; QoQ: -47.22%
EBITDA: $55.0 million; EBITDA margin: 6.59%
Cash Flow: Operating cash flow $54.6 million; Capex $-21.5 million; Free cash flow...
Financial Highlights
Revenue: $834.0 million; YoY change: -8.02%; QoQ change: -8.45%
Gross Profit: $100.4 million; Gross margin: 12.04%; YoY margin change: -22.44%; QoQ: -22.23%
Operating Income: $43.4 million; Operating margin: 5.20%; YoY: -40.63%; QoQ: -33.64%
Net Income: $28.4 million; Net margin: 3.41%; YoY: -51.76%; QoQ: -46.62%
EPS: $0.57; Diluted EPS: $0.56; YoY: -51.69%; QoQ: -47.22%
EBITDA: $55.0 million; EBITDA margin: 6.59%
Cash Flow: Operating cash flow $54.6 million; Capex $-21.5 million; Free cash flow $33.1 million; Net change in cash $(4.2) million; Cash at end of period $36.0 million; Cash at beginning $40.2 million
Balance Sheet: Total assets $1,857.8 million; Total liabilities $746.8 million; Total stockholders’ equity $983.7 million; Cash & equivalents $27.4 million; Net debt $198.9 million; Total debt $226.3 million; Current ratio 1.713; Quick ratio 1.010; Inventory $458.1 million; Net receivables $501.8 million; DSO ~48.7 days; DIO ~48.1 days; DPO ~44.1 days; CCC ~52.7 days
Valuation and Efficiency: Return on assets 1.55%; Return on equity 2.81%; ROCE 3.41%; Asset turnover 0.456; Fixed asset turnover 1.496; P/E 15.39; Price-to-book 1.73; Dividend payout ratio 28.2%; Operating cash flow per share $1.11; Free cash flow per share $0.67
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
834.00M |
-8.02% |
-8.45% |
| Gross Profit |
100.40M |
-22.44% |
-22.23% |
| Operating Income |
43.40M |
-40.63% |
-33.64% |
| Net Income |
28.40M |
-51.76% |
-46.62% |
| EPS |
0.57 |
-51.69% |
-47.22% |
Key Financial Ratios
operatingProfitMargin
5.2%
operatingCashFlowPerShare
$1.11
freeCashFlowPerShare
$0.67
dividendPayoutRatio
28.2%
Management Commentary
No earnings-call transcript data provided in the input. Management commentary and verbatim quotes were not included in the dataset. Key themes to monitor in future disclosures include: (1) demand trajectory in automotive and heavy-industrial end markets, (2) price/mix evolution and its impact on gross margin, (3) cost containment and efficiency gains, and (4) any capex plans tied to value-added product lines such as tailor welded blanks and PWBs.
Forward Guidance
There is no explicit forward guidance in the provided data. Given the cyclicality of steel processing, Worthington Steel’s near-term performance will hinge on macro demand for automotive, construction, and energy sectors, as well as raw material cost dynamics. Investors should monitor: (a) order momentum from automotive suppliers and manufacturers, (b) trajectory of commodity steel prices and input costs, (c) management's commentary on capacity utilization and operating leverage, and (d) any announced capex or strategic investments in higher-margin product offerings. In the absence of guided targets, the internal focus on cash flow generation and balance-sheet discipline remains a prudent risk-management approach.