Worthington Industries, Inc. (NYSE:WOR) stock fell 3.31% (As on September 28, 11:22:04 AM UTC-4, Source: Google Finance) after the company posted mixed result for the first quarter of FY 24. Gross margin increased $28.1 million over the prior year quarter to $197.5 million, on higher direct spreads in Steel Processing, which were partially offset by lower volumes in Consumer Products. Direct spreads in Steel Processing benefited from an estimated $17.0 million favorable swing from inventory holding losses of $1.5 million in the prior year quarter to inventory holding gains of $15.5 million in the current year quarter. The adjusted operating income was up $18.7 million compared to the prior year quarter to $85.1 million on higher overall gross margin, partially offset by an $8.9 million increase in SG&A expense, due to higher benefit expenses and, to a lesser extent, higher wages.

Further, Equity income increased $22.7 million over the prior year quarter, which included a $15.8 million loss on the August 2022 divestiture of the Company’s equity investment in ArtiFlex. Excluding the impact of the divestiture, equity income was up $6.9 million over the prior year quarter, as higher contributions from both Serviacero and WAVE were partially offset by a decline at ClarkDietrich. Steel Processing’s net sales for the first quarter of fiscal 2024 totaled $881.3 million, down $157.5 million, compared to the prior year quarter, driven almost entirely by lower average selling prices.

WOR in the first quarter of FY 24 has reported the adjusted earnings per share of $2.06, beating the analysts’ estimates for the adjusted earnings per share of $1.99, according to the Zacks Consensus Estimate. The company had reported 15 percent fall in the adjusted revenue to $1.2 billion in the first quarter of FY 24, missing the analysts’ estimates for revenue by 11.81%. The decrease was driven primarily by lower average selling prices in Steel Processing and, to a lesser extent, the impact of lower overall volumes.

Additionally, total debt was $448.4 million as of August 31, 2023, down $244.4 million from May 31, 2023, driven by the redemption of the 2026 Notes. The Company ended the first quarter of fiscal 2024 with $201.0 million of cash, down $253.9 million from May 31, 2023, primarily due to the early redemption of the 2026 Notes.

Meanwhile, the company has approved a plan to pursue a separation of the Company’s Steel Processing business which it expects to complete as early as December 2023, ahead of the originally projected timing of early 2024.