WOR - Earnings call transcript Q1 2018 | Worthington Industries, Inc.

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Operator

Ladies and gentlemen, good afternoon and welcome to the Worthington Industries First Quarter Fiscal 2018 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. If anyone objects, you may disconnect at this time. I would like to introduce Ms. of and President Relations. Vice Lyttle, Corporate Investor Communications Cathy Ms. Lyttle, begin. you may

Cathy Lyttle

of first welcome are call. meaning to Securities risks and cause are afternoon and results These quarter Reform forward-looking XXXX Act. Litigation to the and today Good suggested. subject make to our earnings differ statements those Private we Certain within could uncertainties the actual statements from

materially. was on actual news release issued differ those results that earnings with detail this Our more cause factors could to morning

We and available are call later on made recording will be this it our website.

call today on Executive Chairman me Andy McConnell; this Joining John and President President COO, the Rose. and are Russell; and start will off. Mark CEO, John CFO, and Vice

John McConnell

today. Cathy Well, good and last all one-time still quarter year’s first taken very good the record thank when joining our first but account, at of are that short with you, you us of review had all-time Andy We into will charges thank a and all afternoon you quarter. for quarter

are Andy continuing discuss let’s financials. drive now, through company a But later. Mark our have X.X, throughout which off of transformation the will with review quarter We start improvement to

Andy Rose

of high quarter. elimination million related joint revaluation $X.XX pressure position or at loss charges from first of cylinders reduction share by holding restructuring primarily was $XX leadership QX inventory holding items $X.X $X.X last acquisition processing expenses driven to John at year, share The earnings and were $X.XX everyone. were share. Thank income in Restructuring of decline to from the good last record $X.X first the Steel million $X.X of compared the ClarkDietrich $X.XX the at as down of the severance million also of income to accruals company lower quarter. solid $X.XX unique margins delivered and you, million operating unusually Inventory or start primarily in afternoon most a drove gains Equity of per fiscal at excluding Amtrol. per million in of year’s quarter resulted per related the Amtrol one-time inventory follows. all-time Several down at venture. year’s in our

and around of from expenses Our items taxes alternative $X.X fuels, during effective million $X.X XX%. a million to from again the favorable oil quarter. profitability corporate up stream A totaled earnings was prior revaluation income, deal decline during improving $XX.X a acquisition from million impact remains the expenses through and helped driven accounting two for once normalized and expect quarter business the excluding gas million was down rate a tax the largely Revenue allocation, discrete business Cylinders’ XX% more operating or XX% These acquisition. one-time annual we items one-time the at next should $X.X be by quarter. restructuring, year quarter. as lower our from result. higher Amtrol the Inventory in purchase

payable primarily structure quarter from improved during income higher lower during of excluding at operating not prior in in cabs year. million [ph] dividends spent on inventory that seen holding year $XX quarter, the lower received million to million with operations in operating and from $X.XX ago. million which quarter we $XX our at in Based of from joint flood increased million of JVs at for WAVE from of gains venture. generated going per the decline costs an almost on million $X to startup $X ventures driving way $XX million million million we the Monroe we resulting delivered business the improvement per for we Board of integration share on down preliminary to million of related and of $XX a $XX.X expect $X.X $X.X dividend the Steel quarter. this $X.X forward. restructuring combined prior the $XXX,XXX, a The of million over due furnace was synergies. As Equity depreciation stock quarter. on operations December are drove excluding the capital manufacturing volatility projects, million our improvement. as delta same price and purchase a were time quarter of operations we quarter [$XX] second $XX margins this losses the at income our This The higher TWB rise Revenue was amortization bright Serviacero significant as Steel calendar challenges to saw our revenue with as processing XX% had year ClarkDietrich was joint dividends last repurchased outage expected $XX respectively. distributed accounting, million difficult significant quarter standpoint year prior income Cash from $XX.X the the of is Today, down expenses cost in Mexico to $XXX $XX in expected up a a XXXX. EBITDA was this year we to million comparison million. $X.X also million was acquisitions, tough was to million, our year, year during and closing, prices steel mentioned engineered steel $XX Amtrol proceeding a restructuring spots continued declared annual million well and quarter. XXXX. unlocking of steel We and a in quarter were million have $X

the for shares. public $XXX a available offering rate addition, $X up was Debt shares of the completed from quarter. expense Board prior million year the $X number we up of quarter was million at as $XXX the to million to a XX-year X.X%. repurchase July additional total million in prior Interest million just bond In an authorized shares also over increasing repurchase X.X XX million from the of to

interest Our run-rate is current million. of annual $XX

and of almost We our revolving have consolidated available under facilities. credit million million $XXX cash $XXX

debt despite earnings to year prices. the trailing we roughly with ratio to net in steel leverage to Our is fiscal pleased the Overall, The our decline quite X.Xx. EBITDA now are start related continued is which XX-month company generated we flow, $XX grow business of shareholders. Trailing now to EBITDA our adjusted EBITDA and $XXX million. are investing strong to deliver reward free million and cash

will shareholders continue new returning present in We themselves. to acquiring our the approach to our investing capital opportunities business, balanced businesses and as

the us our the strong become these and and development rollout will leverage transformation quarter, value effort golden pillars benefit completed history a the acquisition and new company’s of During further strategic opportunities of corporate largest progress for product saw culture in in the to continue rule The combined company. three for shareholders, our we innovative drive customers to our continued provide to more suppliers. X.X,

We start another year. are towards now solid a off will operations. discuss successful Mark to

Mark Russell

last Thanks, compared Institute Metal decline. Andy. Steel were very Service quarter. shows up data processing, to Center year’s our Comparable X% direct shipments slight

due shipment. X%. a a toll XX% decreased direct our increase Three Direct X%, other the Shipments automotive XX% were Our while and toll. heavy shipments direct to while mix shipments market by XX% XX% our our volume XX%. processing the Detroit decreased our versus fell Combined was toll our growth in and volume shipments X%, to agricultural were customers up in truck down to by overall

galvanizing significantly year’s Our high, record from venture. lower primarily total slight softening our by Spartan by the but shipment of driven it volume joint decrease reflects automotive last was demand

ventures of past to investment. joint new joint with Blanks, processing months. capital steel opened facilities X [Indiscernible], the recent Tailor see Our beginning our XX are the venture Welded has benefit over

Serviacero first on production past quarter, toll up Michigan facility. stir also our friction in with TWB X%, the full installed quarter XX%. began During welding direct shipments another had up strong recently scale our Monroe, shipments aluminum

with to and an recent in oil continue quarter. scheduled revenue European new XX% increased was were up to equipment blanker by fuels early fourth to was year. Volume begin Serviacero revenue In automotive Alternative XXXX. straight Mexico TWB due business, cylinders volume. XX% Serviacero pressure We includes to last a business facilities has gauge that’s that lower in compared heavy disrupted invest in the primarily for calendar No earthquakes the expansion there. our in with or Monterrey production this down now gas

now products the in numbers, on the LPG compared includes XX%. you in primarily Industrial higher include a of was business portion Revenue new industrial year business. business industrial was our last if to But X% Amtrol up Amtrol Our volume. up legacy business the Products products revenue our of portion

by off-highway in demand Our continued torch. include But engineered quarter of increased consumer year September to lower construction in August a business. products the growth WAVE’s X% equipment business Amtrol up XX%. business buying our decreased increases in by last Americas, see products the now portion the increases increase up was year’s a last products due the includes on of previous though from single-digit this mid consistent down driven business of are buying the by of other negatively quarter. you and customers consumer significantly. ahead volume customers. ahead to customers cabs, year. numbers, mining to new portion were versus of percent the price revenue In sales if market Europe and shipments legacy there Amtrol the impacted The in volume both price consumer was was Revenue

increased to slightly due volume China in sales Asia market. stronger the

of Texas, were Our the Florida facilities recent operations Georgia days. of that venture were performed in only ClarkDietrich returned matter each affected and Worthington normal near those cases, other to in operations hurricane ventures as expected in by and and joint joint a

significant continues work intend we business. do. across drive X.X improvement We our to everything transformation Our in

of The results implemented data-driven Our transformation approach experimentation on fully where based is is impressive. culture. part and are our we and X.X very measurably rapid

you our future We across process to continue will on progress out we you. company back keep John, to quarters. in roll and the the updated

John McConnell

point, this that have. you, Mark we Andy. to and happy questions you Thank any are At take

Operator

will you Instructions] from much. Jefferies. we Englert ahead. And with go first [Operator take Thank our Please Martin very question

Martin Englert

everyone. Hi, good afternoon

John McConnell

Hello.

Martin Englert

the operating repeat was within what disruptions? processing Could you steel the from income adverse impact

John McConnell

million. Around $X.X

Martin Englert

quarter Okay. margin within ended And are seeing you any relief ClarkDietrich? the since then

John McConnell

am question, the I relief? I not margin sure understand

Martin Englert

- steel Well, you quite the headwinds bit? year-on-year contribution deteriorated from a earnings had out called prices

John McConnell

to mean, they Yes. I think I working push are hard price.

determined they be. can be to it’s think I successful how

Martin Englert

the last any there? one time horizon on then share for execution the And repurchases one Okay. remaining there,

John McConnell

last Not principally were of market the the acquisition. we opportunistic. look are We We really. because mean, I fiscal for of out entire year opportunities. Amtrol the

is feel a obviously the that headed. reauthorization of You bought – million about sign are confidence quarter, can where and we we see, we but the good sent we company in the $XX last

Martin Englert

Thank you. Excellent.

John McConnell

Thank you.

Operator

Instructions] go is ahead. KeyBanc Please Gibbs, Thank Capital Phil Next you. Markets. queue [Operator in

Phil Gibbs

afternoon. good Hi,

$X.X is costs million that Just the a the was there something the that the and cost does on account deal else is purchase both you deal-related question or outlined, that? Andy, price to Amtrol, accounting item on that – additional for that

Andy Rose

which Amtrol, of kind we called for number thing additional not The those. that accounts Does sense? and both related it the one that’s that annually. is million Phil, make to is depreciation $XX out Yes, of amortization in

Phil Gibbs

Yes.

Amtrol So, think quarter, step you come your to had a I so up more I bit is $X million little a there last under D&A little quarter a how the is the next to million, see of $X.X relative that is goods that that. unless of biggest portion of comes the end But then out this cost and essentially on sold? that side of of of

Andy Rose

Yes.

Phil Gibbs

Okay.

Andy Rose

fees fees. mean, Yes. but one know roughly of one-third breakdown, exact being were purchase I third accounting, was I probably deal the – Deal it don’t if two-thirds have I

Phil Gibbs

okay. SG&A, One-third

rig recent has On a little or of seeing if flat-lining in are those momentum continued the can of has backlog gas the up? the talk you sort and of in there the oil move as and what side terms just in any of impacted backlog you orders the to the the count business, about

John McConnell

The steady pretty and been increase has continues.

calendar customers moment and at deciding they of our of moment at ‘XX benefits capital a the is for One that budgets are the bullish. pretty are number still the

there has the growth several rig as of getting show flattened you the it weaker any looks forward doesn’t So, even and look say. as as in has good though that sign years count

Phil Gibbs

did you volumes that you in I disruption hurricane the Andy, to And had in in related hear the quarter? right the the some business steel

Andy Rose

of had, they power ClarkDietrich, facilities think they a in where and to from unable have disruption where lost one facility that to Florida a was and only I and a in material Georgia anywhere actually at week. Texas almost couple in they weren’t have that’s produce couple of a for Yes, we was the days

Phil Gibbs

was just Okay. so out steel I to was? I I that call thought what had and you related million $X.X curious heard

Andy Rose

the We It to at facility. furnace was, related hurricane. outage just but galvanizing had a not a

weeks, Monroe, So, if I they then were for of a down kind we a couple and of a think minor Ohio issue flood longer at not facility. had our

John McConnell

They were hurricane. far the from

Phil Gibbs

Got it.

to way is operational Just see more unusual normally than the items put I we it? guess

John McConnell

Yes.

Phil Gibbs

thanks much. Okay, very

John McConnell

you. Thank

Operator

no showing additional Instructions] [Operator Please you. questions. continue. am Thank I

John McConnell

Alright. Well, thank today. next to you you talking again for We look forward your quarter. participation to

Operator

and and using for conference AT&T you gentlemen, conclude your does participation Executive Ladies call that for We today. Teleconference. your thank you. do Thank for

disconnect. may You now

Worthington Industries (WOR) 27 Sep 172018 Q1 Earnings call transcript