Worthington Industries (WOR) 29 Jun 232023 Q4 Earnings call transcript

Hello and welcome to the Worthington Industries' Fourth Quarter Fiscal 2023 Earnings Conference Call. All participants will be able to listen-only until the question-and-answer session of the call. This conference is being recorded at the request of Worthington Industries. [Operator Instructions].

I'd like to introduce Marcus Rogier, Treasurer and Investor Relations Officer. Mr. begin. may you Rogier,

Executive Good fiscal and our XXXX Andy and we Chris. Chief Hayek, Industries' Officer. Financial call to fourth have Chief President Worthington's quarter earnings Rose, and morning, you, Joe welcome Worthington's everyone Worthington today, Officer Thank call. On

the addition, have CFO and Business, complete who after who become the Tim In the is President Steel Vice we Processing the we our business and Strategy Steel also of Company of Corporate Adams, separation. currently planned Development for will

we our get like and Private to yesterday risks Please statements I'd of can materially. cause market close. within for the started, certain These statements it cause to to earnings differ XXXX that Before the uncertainties release those actual remind differ actual We results to factors that made Securities refer the forward-looking, after detail Act. from more on subject those everyone Litigation could Reform to today that results are are meaning issued suggested.

Today's call our replay will worthingtonindustries.com website. being later a made available be on recorded, is and

the point, over this turn discussion call financial will I a to Joe of the At for results.

gain offset use, Marcus. a Good with very JV of charges quarter. We $X.XX expense to $X our impacted related steel in per the equipment to encounter quarter, the the expect onetime incurred complete Processing our finished restructuring morning, the current to early the including impairment of a non-recurring recognized company, following, by a quarter. we ago. earnings versus which XXXX; gain the some Business million public we small modest This related a was to fiscal in which our pretax share share Steel $X.XX of unique year no reporting longer prior year during QX cabs new $X.XX compares into processing planned by share per that items everybody. strong a or year you, more Thank separation And of quarterly $X.XX results,

share current that QX Excluding compared in $X.XX the these to unique, quarterly items record we year. in generated per quarter, share $X.XX were of last of earnings per

inventory $XX In to $X.XX inventory of or million holding in a gains addition, compared or we of holding share QX, a $X.XX $XX million losses share, XXXX. in be had estimated QX

net steel due $X.X decreased processing the across in Consolidated sales prices billion selling from segments. our quarter in most lower XX% with prior lower of combined the average to year of volumes Gross due increased processing. in XX.X% quarter the for to to year $XXX our prior quarter, from profit XX%, from to the primarily and increased spreads million improved in million gross margin steel $XXX

QX up Adjusted and $XXX million. EBITDA million $XXX record in year, our million, was EBITDA last in fiscal in XXXX adjusted a QX of was $XXX from

and million. respect in $XXX quarter XXXX, cash in $XXX balance flow. free flows cash fiscal With from operations the sheet. cash to was generated million we In flow in Cash flows our free million $XXX

the quarter, million on projects During in million $XX capital dividends. and paid we $XX invested

the rate equity received $XX dividends million our conversion quarter, during We cash a unconsolidated that JVs also on from income. XX% in

debt Funded to due our a end levels. we income interest expense was million lower to sequentially. by interest our flat quarter on Net down sheet balances position. primarily $X debt lesser million, balance $XXX at was liquidity cash $X earned of average and extent, Looking and million of a

revolving net with in credit well million debt ample leverage very are QX We now believe on ratio with liquidity, to operate under times. trailing leverage for facilities. the EBITDA X.X in is to levels, cash continue and availability $XXX extremely $XXX and in We future low over our and million positioned with we our

year strong quarter share continue we shareholders which we and XXXX. have This increase deliver of for XXth our of X% is our a declared is payable board $X.XX last We're to the consecutive as able very a September be pleased results. dividend to per increased in rewarding over quarter, the marked dividend. Yesterday the

partially million, few a in volumes, year. lower and ago. XX.X% primarily million a inclusion results. EBIT from minutes compared $XXX for Adjusted XX.X% the sales by spend $XXX was slightly margin Consumer of on Let's offset was was down the year each business Products, The to the $XX of decrease $XX businesses. Consumer million EBIT QX, driven million LevelX's and were QX In adjusted by net in last

strong for as adjusted sequential flows a increased were basis, EBIT seasonal Consumer's XX% current patterns. the earnings on saw return by to and and cash we quarter a

in spending stores. data less consumers point-of-sale suggests Our that are

Our home considered enjoy regardless celebrations, trips. used items well dynamic We as of positions economic cookouts camping and to big products this ticket typically and for are conditions. are not projects or believe

to The branded and continues team while a job new great Consumer business, developing products. managing do the innovative

to we stores fact, last more of currently compact helium new The use, broadly this for Meyer fall. more voice new up our later of will across this Balloon select customer innovative potential distribution In An outcome launched Mini launch Time easier product is Mini the in opening and tank channels. Balloon and is Time month. U.S. opportunities available patent-pending and research, the

for volumes, in decrease end million generated to income wholly $XXX some $XX to operating year driven EBIT continue and favorable shift a million quarter adjusted mix. million product partially Building offset to owned year, due and see which adjusted EBIT sales QX, million $XXX ago. the in results businesses, of which in last construction was by year-over-year generated compared XXX.X% saw destocking EBIT net down lower a year million from $XX ago. and Decrease from was Products record XX.X%, driven by markets, the our by margin $XX in decreased by of maintenance was of Building XX% Products in lower a compared QX volumes residential to

they by did year-over-year than WAVE earnings to our impacted a their more uncertainty. well, being contributed owned products while from by $XX wholly year earnings and QX, end $X continue in perform which rates equity ago. JVs, were headwinds markets building offset growth are ClarkDietrich business The generating in our interest contributions partially and higher million collectively economic both million

do the continued in an job growth. excellent innovation while current to team Building Our long-term and profitable in executing environment, investing Products

In called a PowerCore QX the power innovative containment increase by patent disruptive, water-based with adhesives contractors new cylinder shipped manually. to only This where efficiency, those a spraying could [ph]. Building adhesives applied be productivity speed Products gives pending and solution first-of-its-kind, onto surface previously,

job QX million of QX economy million in higher $XX year. to compared prices. the Solutions, Sustainable million the SES $X $X were net up current or in reported by In last quarter XX% in average Energy in The of EBIT year, of from prior driven of adjusted sales million $X a loss transition selling to continues enable as in to that We supply believe results chain a SES's our challenging be Europe of and mobility. will environment, continues an impacted excellent global team do that while positioning and will business current emissions the an zero the to executing the as important be low result. part

this over it discuss point results. At Tim Processing's turn to will I Steel to

year, was In of of the selling a ton, XX% of in a in average $X,XXX ton, Joe. QX the price our decrease were for QX while $XXX Steel sales steel resulting primarily per hot this average $X,XXX just Processing, market to In in over selling rolled price was in XX% prices. prices. billion Thanks, million net last down year, due lower market year, QX from last $X.X

shipped were year tons down the quarter. prior with Total compared X%

XX% divestitures, to impact were the X% direct but in volumes we the of been the impacted total of From in demand primarily mix modest the QX both to sale a automotive Excluding XX% continue down softness rates. tons experience shipped seeing due tons up increased of perspective, by compared interest non-residential residential mills. which and mix, were while in of sale we're made Direct production, X%, to up rising with tons construction, XXXX. increases have

holding year EBIT In In million $XX Steel million, $XX we those million Processing reported million the experienced the anticipate $XX inventory from $XX QX, generating the year. be we and up million holding in quarter. reported in could around in of gains QX gains prior current estimated half adjusted last We compared which was to quarter, estimated gains of what of quarter. of losses inventory $XX holding had estimate the

long-term, both on for recent and future. the time vehicles front environment, planning the within Our to them lightweighting, steel what's manage while employees ever Steel capitalize term investments of exciting changing an in remain electric us focused It's on infrastructure. they as for grid Processing near in electric opportunities with and

capacity capitalize on expanding in Temple to expected at we're in growth fact, in these the In a to venture, markets. Serviacero expansion joint planned addition Steel Mexico at our

Dana's global of who for would Data our the named vehicle like Dana Lead congratulate Electrical Temple's business. Temple Supplier yesterday Award Temple Propulsion XXXX the received Global We to Year Steel support Incorporated. from of to also efforts the Supplier Year employees electric a

for while doing as their safe to Broader thanks as future to team people the team focus Our our on for and well the Temple keeping Steel our so.

point, I'll it this to At turn Andy. over

you, Good Thank morning, Tim. everyone.

Our ever. Industries. all best go every customers and history. for happen, fourth who the To earnings mile make per our dedication to completed the our day second it our share adjusted we thank employees possible make fiscal XX-year best And were Worthington you in year results fiscal quarter the was to to this just our your extra

and commitment. same on close our service in fully on level we This we separate calendar companies, the intend to XXXX. distinct to delivering plan track for growth is quality, As completion progressing early strong two project into XXXX and well financially Worthington continue in of

embraced We excited joined the of employees We both have within the have structure employees and changes finalized about and the believe opportunities one have are our a all two in the coming front companies. team for them. businesses of our corporate

Employee also As to increased Worthington the strong. and Annual and evidence participation results employee continued engagement were manufacturing received learn questions very in benchmarks we specifically rank effectiveness. employees We this, to our pleased Survey. that of related Worthington manager were XXXX above Responses to to of recently Engagement

palpable. people continued assets. energy regarding Our the the The our and and culture of future is greatest belief to company be our

should and sustainable multiples. quarter's Once hope company addition, and for With next markets In capitalize fast to consumer we a attractive complete, and brands call. trends outdoor and this earnings sector living. products leading will company be announce premium higher market business branding on in and each poised key construction Worthington from benefit and energy growing premier new technology and products, asset by the lower to sustainability with intensity margins building names

is electrical continue set take steel and to value-added and with we this with to cash businesses new paydown quarter have and leverage built expanding both steel of -end. a opportunities business spending. in capability a each as opportunities their cash to automotive steel lightweighting will laminations and and sustainability excellent million to day processor debt growth of To with up plenty ensure advantage use be of available low of electrification, begin best-in-class $XXX Worthington available unique in positioned plan infrastructure that capital capital. We significant capitalize and

Once we businesses separation the of shareholder principles strategy. rule with complete, acquisitions our will capital growth transformation, and business philosophy run is to value. drive our continue be Both historical golden are system to and utilize with Worthington the in innovation and allocation balanced likely

may recent those you HVAC We have Circuit would a workers. American unlawfully save for the reversing that American EPA cylinder. environment, imposed refrigerant Court effort jobs practical and of all our of the by and the our solution Some better like deliver seen contractors is ban a in involved victory in on to DC the thank to

effort. Ohio and this the aisle instrumental in of Congress associations industry customers, Our sides of us on governors supporting both were members Kentucky in and

other of coming partnership. success our look all thank continued to share months customers, the forward you years. shareholders in and and To we employees, for suppliers, And stakeholders, your

take now any We'll questions.

Capital Thank BMO at Katja you. question our from [Operator first Markets. Instructions] is Jancic And

open. is line Your

Hi, thank taking you for question. my

strength -- the talk driving you First ClarkDietrich? can on and about in -- quad what's WAVE

flow you businesses things their then if are way innovation there's handful run models, have that have really in from both but their they the their working good kind contributions a to prices if look going their But at models going businesses. up do Well, year, an to evolved when business you specifically tied look perspective, on. they and at of are that capital. money And this tend you of if up, well cash they

did, at look year, their last we you as equity their to if as their relative in distributions, we So didn't costs are relative income income. get to much distributions

up And was a so for this catch them. here

markets, companies they They but most in their run testament those run. to kind of nothing businesses, facing a end that's as So businesses are products, proud And are part them. but be driving our specific the really have really way we're a challenges, the participate awfully building just of results. that to that well it's construction

products, a the in they also and And best have And customers that that they being do markets both best things add, commands are acoustical service, their that businesses ClarkDietrich might can in those metal I premium And the Yeah. of that, other they leaders being the do. serve. ceilings, oftentimes framing. marketplace. can't WAVE

I meaningfully look sequentially. earnings they understand prices steel right, And this if So, quarter, I higher. the are at improved going

likely they push increases. price So

any there prebuy quarter? this potential was in two So those businesses

it had lot hedge not and little year-over-year, $X.X Yeah, ultimately, $X up they there. just I they buying times of $X.X mean, collectively spot, But I million kind and of sort think they're a bit. and buy were a million, respectively. try of understand their steel million,

you of it there's price some increases, you something the sequential specific I know, more think, buy than is ahead. when do the seasonal order have, see So you really But businesses. do in growth, probably

going first think about we quarter? should so Okay, it how into

the pressures of are economic facing rates some some kind the same with both of are others interest those Well, uncertainty. are and of under headwinds same businesses the of that

So, they're do they're end sort doing. But, is, continue trying kind what going they're would and going try take doing care and markets. of doing to there, keep which what say in kind I take of would challenging maintain their fundamentally, share And to guidance, of I to of without doing. say we and get don't share customers what they're into that

What's for year? CapEx just one one. expectation last your Okay, this

Sure.

$X place So, higher the that a we businesses from We best kind investments I good a $XX and America-centric growth for start some basis. we ended, mean, on CapEx is to mention, be The XX% the It it we're 'XX. in probably million relative could was will was way Temple the where run-rate down way had of Mexico in year. had overall, down, 'XX. or more business. than then than to of the couple, Tim $XX CapEx for the to making. steel that one little the business. there be it's that's was million The $XX breaks business million. But a looking one at pretty And slightly the We think North rest XX-XX, CapEx that 'XX, in think a of of and $XX go-forward for kind million that around fiscal that million we 'XX. significant in that, was

you very thank much. Okay,

Sure.

The next Englert from Seaport Partners. with question Research is Martin

Your line is open

Hello, good morning, everyone.

Martin. morning, Good

believe removed going steel for it similar unit in think was a EBITDA, question for $XX ago, per strong to processing business? think And year. at a of I'm the we And cycle back ton do profitability revisit the fiscal processing. I the I for it. year I maybe profitability normalized asked the you steel $XX holding but through to What is this quarter, comes gains, underlying when

the don't into one. We look a tough way. business That's that

through Or look Okay. Are Maybe like, cycle ability looking guess you on ask about a that it? you different I it at how way. for do it margin a basis? you at business? think when

Yes.

really the price be we think And about it the average look gross that material would think minus at think it to We gross on costs. is of the for each about product. think material way. selling on best that, I the way materials

has materially Okay. a on continue And that on basis? to spread changing that do on been a maybe and you go-forward think year will

what push to to price strategy Certainly, is, wherever more we and add to can, part we try of it's products. profitable do our

higher much rolled than, see Temple on product. being say you added, gross materials when their So hot

price, let's as the yeah, be strategy So push spread as to and continues can. let's we much that push

a your does. worth it's the the that do, to from how offering customers And we do you nature it's that and question, with from partnering that's job a but our honestly as pretty really that Martin. couple that proud it's I we less last value-added Yeah, the kind of pretty unique is, perspective, team see we're do much yield that and as But do years? of. simply a more And something you think when And perspective, improvement of because commoditized. that's well. testament

question was fiscal there. the And was was That years fiscal But, maybe prior gains point. capital to XX, I the in XX. holding trying $XX-$XX 'XX at at and pulling was out would there. baked 'XX have looking a exactly this that's ton. Yeah, In what highlight losses,

seems like through on, normalized it's that it stepping been maybe -- cycle off long-term, it's possibility is So and improving. some

helpful So That's all you. thank there. right,

touched sustainable past on also, this I more already or of is this improved reflective that's the this generally a the and segment in energy year, unit [indiscernible] here, be was gains holding to call out a improved quarters? anomaly when You of was run-rate, we something that's profitability then market. over challenging coming did Unit you look an going XQ. EBITDA, despite guess, pricing function

it's would of Martin. I a But say it beginning Yeah, trend, anomaly. the not wasn't an also

talked So, that headwinds, like the because always business about, going we ultimately, in the of shutdowns by that. and that what's is they're August continuing meantime, in quarter that in first challenge But, going to happening to the transition Europe things to for are is things and business buffeted of some invest mobility, other that zero low the global the have and Europe to some transition the in but them. emissions

them we better see to choppy. right them and and So do going year, the but to, grow hope to it's next quarter. be it's expect and best, little starts And every certainly their to their they're going in to in to some level profitability be month every we do going fits a

customers footprint the are highlighted anticipating, basis you thinking what in a are hearing here. this Euro strong of or like comparable, that maybe for your just on kind level But pivot year, what relative up to fiscal be, you demand What come there's of is hearing, that seeing seasonality like Is also And a off understand quarter business? to sequential even? starting or that's going that you the and you activity. bottom last the down it's from are something I'd I up the coming current slightly XQ to of

of the in to that regular think mean, that than several on we the basis is that. with inflection These I accomplish away industry Martin We able the we next that be have what Yeah, conversations to are stick. SES, four this I or three hope still a plans, is kind point our years from for are further years. ultimately with believe customers, out hockey

we ongoing made, conversations those that war, market of And that some everybody's as And grow. innovate so we're the to chain. part out. have, see half front little plans us there's bit think investments European have the the kind will to that economy that and an to and and already about continue we you, a ultimately, all key then to help has reflected last year the continuing. the thrown about And get we've participate, going of you what's have then really of disruption of But in you forward. that good drive a and But supply feel when still of has more a

tax Okay, fiscal excellent. 'XX? rate One one, any for budgeted last

you was that be thank reason this than different No year? to materially it

results. Congratulations you. excellent. the Thank on Okay,

Thank you.

from Gibbs withKeybanc next Markets. question Phil Capital The is

Your line is open.

Hey, good morning.

Good morning, Phil.

On a largely bit do nicely, a of site Or by of the we up mix little have that spreads Was or WAVE driven profits are at both? year-over-year. volume?

as think I I around goes kind this Yeah, of business what steel pricing know, is cycles mean, doing. Phil, in you

we margin of pretty remained from waiting you Joe's quarter, were end expansion to there. comments some kind And while of so saw softness market, Their bit see little volume business. steady, we the it's a earlier, this heard

businesses year that early of good. And, are for pretty the being But the a or see some We yet. you're anticipate that margins people most going haven't ton commercial time 'XX, But, construction, is pretty in this back either there. good. half to of their softness seen

for Thanks, kind a folks. And the steel lot of of then But there. Andy. more mixed signals automotive,

mosaic? a think business steps all and you're what polls the seemingly lot thing. an that automotive kind couple terms changes, model I steps that focused you your seeing expectations in forward, of of it sort are Just of broader and on? of update on back changes like couple any and/or of in next But

American automotive Yes, we production as Year-over-year, from up And up an about well. were North was X% about standpoint. X%.

year, pretty quite units which but sounds in XX For predicting the 'XX. XX at like calendar the units still is they're and IHS we on last 'XX, that 'XX year'sXX.X. behind far million strong, follow day, it's units of average were and X% the million the end for produced over

'XX they as they're And problems, in and supply you but about there. did XX.X still 'XX. as not they're much, say, chain talked So about

Interest improved there. So there's up, going lots bit. little of a dealer varying rates things out are inventories

So things to the be happening there. this is up But there's going of automotive end out we think lots the about day, year. X% at of

quarters, Thank most you. transition need in pretty do next of it that And stuff investment that point the anything are any you in the years, that to feel like or need modifications, would pretty fresh time in the all there? of there that as including relates was in of do is or you're but coming you I of couple systems several last sort terms to separation that to IT guys assume sad. [ph] you before material

separate. the an a has of group because running somewhat work shouldering CapEx But group, a Well, that's burden a separation, people in to out a total is, little it of the consistently. that we that do have lot up bit to to we to they're it's the keep our the of relative But of happen. of excellent of shout need to it's there's terms And a error where our folks us lot rounding short of and an to investment. in give because answer IT opportunity what

to do And happen amount happen of but got will to some sense. That it will we some that. post-separation. makes of investment a separate, not also that But of that's it's happen material before

it's the ERP us, but actually different to on a business today. unique run is Phil, little Yeah, systems

then about situation you But kind SEC, timelines. our of portable, with more company. carve during our to in QX, process. bit We a would the fiscal did, kind something And initial that a different a our of thought we they're certainly just would of file ended. have we are where we Form full So everybody broadly, XX year as WXX, asks than more out on did

or get conversations. we'll kind the And we'll and SEC six so to file with on next from And there. hope month go weeks. then And our start of get those audit that in done the

Good guys. job. Thanks,

Thank you.

Very The Research. is John Tumazos next question Independent Tumazos John from with

is open. Your line

very earnings Thank my shine or prices much with could $XX just two $XX wish of your last falling the ton. Congratulations. for you you well. mind, years steel shoes. did boggles a It I I $X,XXX so

we That's around, very our do. John. of they're kind so you, believe But steel processing showcasing business best is the they can what

the percentage for XXXX? much was How total

Total quarter quarter, percentage XX%. XXXX, in entire for fourth the fourth was

So --

in probably partners they a having where was where going. the getting and that, not are and of It -- than with This back mill for was first saw growth year. geographies lot do mostly to fiscal having most quarter the some higher we year-over-year John, up the their tolling

ground. of that steel XXXX, So imports the in-line in we in half that the be processing segments If example, I the fiscal that fiscal have have year for only are would production, you. helping just lower X% What and it ended, about volumes reshoring are with a up the wouldn't make thought auto XXX,XXX processing steel lost rebound declining? steel in would tons. fell

some had quarters. in prior divestitures We there in

So facility a direct Alabama, Decatur, only, facility direct that only. we in exited sale our facility was

toll a in processing exited We also Jackson, Michigan. facility

numbers you're [indiscernible]. you some some the at impact seeing noise you've But in got of that So those that me. look you've of overcoming got in the in when front that's there divestiture figures of

that that our since bit. tons excluding our from specifically actually that's some In weakness picks space. a the construction slack up tons of down And in of see QX, some were that the are Yeah, levels growing headwinds this I total debt direct divestitures, year-over-year of kind X% market the And is we some automotive in up mentioned recessionary X%. And were Tim largest construction. think, John. and and you seeing makes

I'm steel it Concerning combined year be unreasonable just you new under let estimating PE estimate six buybacks core the larger earnings the to me companies? dynamics And or the is think elaborate. under from $XXX on would eight. million demerger, current do and first a

the construction and Steel cylinder get an worried conglomerate. has exact worried misunderstood sympathy a discounted I'm a diverse to and PE And might a and I'm Dietrich RemainCo businesses have the that. of like little So and business Processing comparable WAVE doesn't little and mini that

big in $XX encourage not it clear lot you million. PE-ish? you trade much combined these tongue advisors buybacks in asset fees just cheek, charge your you a year legal XX do that me to and it's So to as to banking do Maybe to the is more. I'm the don't saying unreasonable But coming it's the as your current concern companies think of well larger out two expect valuation

Well, things there, a John. couple

creation to. employees First, other company, the because stakeholders. do spin because it's our it and bankers value and us for to this and we our didn't did the lawyers believe do right long-term shareholders of thing encouraged we We for our and the for

liquidity now, those this have little us, followed long a while opportunities we tremendous of you what have know so opportunities. our say where companies advantage fortify we that allocate to a both and say, not I that sheet time to right back have when to we are year, take which are. if buying might capital will based we do the I trying separate, you on be But leverage a been of for low stock best it's because balance amount difficult opportunities we have think

those opportunities sometimes are acquisitions. And

where companies to will a trade opportunities as there. And of think bit terms of it's of you value when these are little shares our sort in is Sometimes when a blackbox, separate there those we we repurchase correctly identified.

know, of the we think companies shakes trade at that'll and value of free going invest end premiums Now, at flow the to are is. both the of are that to wait bullish groups. see we that how our And out. their to where when have But to does, that actually we'll these cash extremely determine day, peer sort you best

Thank I'd cranky. Thank your you. when change you. I'm just lazy and [indiscernible]. rebuild models segment, my like to you

Thank you, John.

any for turn further comments. it have And we closing over Instructions] that back appears questions. no I'll presenters the it [Operator to

and we'll holiday. Great. today. appreciate Thanks, in X a speak great guys. everybody to September. you us everyone for We July have joining to time you And your encourage Thanks

This conference concludes today's call.

disconnect. now may You