WOR - Earnings call transcript Q3 2018 | Worthington Industries, Inc.

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Operator

Good afternoon. And welcome to the Worthington Industries Third 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 the Worthington Industries. If anyone objects, you may disconnect at this time. Ms. introduce to like I’d Cathy Lyttle, and Relations. Corporate President of Communications Investor Vice Ms. may you begin. Lyttle,

Cathy Lyttle

Good that our within Thank call. Welcome subject Litigation you, afternoon. Sean. statements These to the Private we are today Reform Act. earnings results more actual of risks Please refer morning. Certain make third are differ cause could from detail and this those to meaning differ actual forward-looking and the those it release to in XXXX Securities could suggested. materially. uncertainties, results We to on statements factors issued earnings cause quarter our to

We CFO, site. will be On Andy start things Rose. recording Executive COO, made Web today, call call and our and Andy President will on are and our Mark off. this and available President it Russell later Vice

Andy Rose

in settlement prior the primarily gas oil in relief obsolete holding loss a and Thanks, heavy Engineered from Pressure prior a of and Cabs’ winter inventory efforts. were We saw gains tax prior everyone. from quarter good earnings Cylinders per joint the Unique in inventory as of charges modest items share Company and from while of benefitted $X.XX solid agriculture year compared the another up the in from Steel to and Cylinders, $X excluding share law, oil afternoon acquisition. quarter; improvement hurricane in in $X.XX fuels the as per our cylinders million delivered were per $X.XX the follows: the Strength the impact quarter restructuring colder ventures. a third helped one-time in $X.X year. legal or quarter, declines X% and with $X.XX, had of share new businesses steel, truck and Cathy and during $XXX,XXX and or Pressure and million The Processing or

had or per several share. for rate that annual for our impacted year one-time expected We tax rate $XX.X effective was charges $X.X offset impact $XX.X negative, tax this foreign year-to-date the on our the $X.XX in $X.X two While million a earnings. partially were deferred million is our the the rate lower rate tax was XX.X%. current transition that tax liability tax and was on quarter quarter benefits our of by current totaled reduction earnings. million tax These million

began adjusted reduction contributed show new contributed $XX quarter, by $XXX from shares spent capital. million million $XX.X in from contribution dividends offset transition the million facilities mentioned but to million We of hampered during little was and margins parent cash we mentioned to working and and higher more in to business. for coming in two. holding $X.X successfully is up a the XX% sales. a for fiscal million. continues be allocations Inventory Revenue capacity to $X.X business million Cabs our total competitors key recent on will beginning continued to income $X.X million hampered consumer third the EBITDA of at up $X.X $XXX for first stock continue in and costs million sequentially likely Serviacero’s up despite a the Engineered in to issues Steel to and by excluding XX $XXX companies earnings operating underutilized are Volumes positively, markets improve as now pricing was from annual at previously $XX distributed income. We off quarter. XXXX. larger steel equity contributed and complete. but the Cylinders discipline. million. million $X.X quarter our And fell quoted changed $X.X quarter volumes to months return normalized in Board synergies, result. operating one income Debt improvement in the the payable business. some million expense WAVE’s a while gains by was driven profitability cab repurchased of spreads quarter $XX.X as million. were a driven was lead income, our dividends end ventures rate prices in million. oil year-over-year well at quarter Higher are still perform the $XXX,XXX, dividend operating from $X.X fell continues the the from $X.X $XX.X focus quarter, loss for modest JVs the a the $X.XX to in labor on ClarkDietrich in to and weak in solid bond rise was and be gains business conversion tax expected gas excluding to million million. declared for $XXX $X.X million Trailing million. is quarter. and $X.X million, end in of As was operations projects, up quarter or for our Equity previously, in issue X trending Strength million, conversion or from of $X.X but restructuring Interest XX%. by million we during of per restructuring, was income XXXX gas. overall. XX% and the products million million, industrial integration down largely XXX% June is prior $XX on joint to extracting received processing business and we and in million during oil The up volumes. $X.X quarter. Yesterday, capital the Amtrol share to was The lower Cash

million and consolidated available million under revolving almost our of credit $XXX and $XXX renewed cash year have AR five recently We securitization. facility

leverage is a ratio Our net to X.X modest debt EBITDA times.

their strengthened and the products products be quite overall integration consumer well with of people, businesses. of to processes of gone performance Company. addition The have performance and continue the has industrial the We pleased financial and Amtrol and our

capabilities and Company the to to Our marketplace. beginning and continue us innovation differentiate the throughout in spread lien are

varies, ahead. We has noise our operations. have earnings growing law impact and tax and discuss changes the effectively The to the can tariffs quickly our a activity management and and so created effective us Section rewarding are tax of or playbook X% the lowering The changes term. prices enabling we shareholders. Mark tax XXX over in business by on our navigate about business. steel and of rate our goal purchasing capabilities tariffs Recent road our around effective positive is to the optimistic and of lot law that a long seasoned changes for the now likely our steel clear transformation our vision strategy continue and us, are will so but XX%

Mark Russell

Andy. Thanks

record a direct up compared for which Our to third steel quarter X% customer last year. processing were business shipments, had

and significantly profits strong automotive agriculture X% laser our continues to in acquired up missing A economic down of of return to shipments year. to meet to XX%. to a TWB reverie create has at Our segment, In the the in producing XX%, was regions. gauge traditional Detroit also Market X% shipments diesel natural continues continue move steel portion was during LPG there. reported Center flagship that as started something Pressure the XX% while for which up feed of and to toll in were to was in steel our XX% quarter. all their Mexican their Three in equipment to compared both volume XX% venture, compelling Middle-East of Total transition conditions to included at of Monterrey the continue Cylinders is the case combined XX% products strengthened from products production down Amtrol-Alfa TWB the expand products to higher was and gas in were LPG and oil up to heavy Africa, direct throughout state-of-the-art lines Steel], sold Metal X%. now Institute gas shipments and to processing X%. direct XX% overall direct by Michigan. shipments in mix the last joint efficient spreads last shipments primarily shipments their facility XX% shipments line the venture. data. heavy Serviacero particularly product [DOW and most Serviacero, the Combined, volume a XX%, outpace revenue Monterrey, we're year. Europe, the joint Service lines sell direct are particularly we market new North significant oil in in while galvanizing softness other the compared in reflecting gas direct automotive volume decreased Direct In produced Amtrol and was up in toll X%, last welding market seeing production, pole from versus including industrial years. was XX% natural with due processing venture shipments their of XX% up which production gas, Mexico conditions India. truck, and increased and the X% was the two switch alternative U.S. improve and blank Spartan continued been welded Automotive fuels, new business, industrial revenue including Portugal decreased facility to joint a aluminum two toll and increase blanker shipments business down direct this with cylinders manufactures. total business, improve facility full business, to on between to the high Revenue and last where our line America expanded our compared and European year

product including Amtrol well in for now municipal XX% The to and balance compared last Amtrol, line our XX%. products year. residential of products of included in lines revenue the business, from products consumer up Revenue Excluding systems. we consumer was water acquired up Amtrol's was are

that And of for steel sources. price used. increasing price had WAVE often supply higher announced a adequate steel another the any in WAVE's gauges revenue to WAVE the signs as Cabs the year XX% last in was we major of Engineered components was Section XX% equipment up material for imports the In course, also WAVE may market. amount response particularly are and to that's to and Excluding recently of February in joint strength they’ve U.S. from our have slightly was steel they in price. weaker Asia. lightest implemented in apply increase WAVE although implementation from continue XX% venture, In foreign increase sources compared of recently Amtrol, non-tariff April. a of XXX the revenue recently off-highway up imported, to tariffs The sales to stronger X%. foreign deal the for see tariff of impact and steel will in this volume environment, total option the usage of announced U.S. paying price WAVE Europe the raw may the slightly sources.

said, improvements Andy we're that are where we’ve the As the we have innovation had. ever more people pleased with and and with as pleased also in overall, we Company. very actively a Across quarter Company, transformational engaged

to we’ll take Now any questions happy you any be may of have.

Operator

[Operator you Thank Instructions].

the Jefferies. ahead. first from will Seth Our line question Rosenfeld Please come go from of

Seth Rosenfeld

of Just us the sense cost and tell to more two like cost response those out the to little pressure feeling structures WAVE second of guys in you at on looked scale start price perhaps in to at recent your first the the us of businesses? both product Can You of And and and customers JVs. bit district. you’re perhaps bit please? either ability start pass there those ClarkDietrich on give about a WAVE

Mark Russell

the our recent WAVE is question increases to ability your ClarkDietrich through and pass Seth price right? So at

Seth Rosenfeld

Yes.

Mark Russell

the mentioned increase month. another So WAVE, next I one recently will in February announced and announced we we implemented price be already as in that

historically the able with been keep of is So the up also And the intent up easily with ClarkDietrich keeping the price price. for has WAVE to that’s price announced the case with that WAVE also business. increases. increases

of price able both we increases to customers. the will businesses be their have So those pass confidence to

Seth Rosenfeld

you price you the guess, different Do those have ability see two your seen execute you’re guess, to been customers? in differential obviously response I hikes. them. dynamics businesses? competitive to But from able what’s those I a in successfully announce

Andy Rose

planet at say moving And increase. in that and WAVE rising too a There's of I obviously aware competitive. is the both that of not The that, thing implemented displayed people tariffs, so that I historically see has U.S. many are much between very those competitors historically, metal more the framing market. that competitive many one successful side has these more in there there's been the this ClarkDietrich. steel on aren’t one of rapidly across think are there is The businesses different dynamics will because are business been I when many, -- the number it's media. prices news price broadly the

think reality competitors move is and customer day, the And their to at this amongst think as customers a are I an aware, it end base viewing only so of are opportunity up. there and not the but aware their is the I price the also acknowledgment they’re

Mark Russell

So even allows going price going able are everybody that hedge the because in a some we mentioned, have we environment the it. price I’d knows where price And to if still say the of businesses movements Andy is have to as steel, up. be

Seth Rosenfeld

Thank a Detroit And then more bit if Three dynamics in going color more Steel you Detroit customer what have the little for back can you. this expectations year? Three be a and segments? us different non- little your to perhaps just Can the the within automotive about business please. customers, talk you the you volumes Processing bit current Just on to the give

Mark Russell

kind forecast volume do. for same forward rate terms than the people use in of most build We of

And as well so as can. that can we see you

the I were actually us Three couple up. which of typically us points the Detroit off is new just that, just mentioned domestics is As it’s the for non-Detroit for component volume largest a of the and slightly, Three,

pretty is steady the at moment. automotive overall us So for

Operator

Thank you.

from Very from of comes Research. Please Independent Tumazos the John question go ahead. next Our line

John Tumazos

Why the lower market of a inventory the steel as processing stock record steel as steel election, do before JV your many Recently with the Is ago have are the which past And shares, processing earnings surge, your hedging we’ve companies had nor prices. gone steel or your near where with prices year market two record think good? in haven’t higher past. steel you a much up when made they your program had. Trump whom in that the or was the earnings,

Mark Russell

income the So businesses call hasn’t run steel other prices question, guess the your both the steel company statement our flowed up first that through in of I part really John, processors. of and is you the

sometimes they let’s sale You a have it the call there's way or because buy two, quarter and quarter to remember and a steel a effect of lag half, they of way the steel. maybe

be recently going little the price, mills. actually And a our on to your XX% in And it’s moving correlation. between seems is So question We then happen. it lockstep think that us was the and I just is ran interesting. Ironically, it a of there. just in price stock with around moved a the bit There maybe mills. today, stock lag it correlation to

manufacturing ourselves a little So from of view bit by I bit disassociated a mills more think investors. and we’ve little the maybe it company like a number metals

part question, explain may But it. an that explain it’s So to of hard interesting sometimes.

John Tumazos

Do you comp that ETFs with of the owned might by much are your know mills? shares how you

Mark Russell

not. the Off it’s of a high But head, my percentage. do I top pretty

Operator

KeyBanc Instructions]. we go And of [Operator you Capital. Please ahead. Gibbs have question from a Thank line Phil

Phil Gibbs

had inventory. Just question a the you comments on on some the made of

suspect. And think we maybe wouldn’t I think I there something and the that. explain some of were don’t gas some business. oil you that’s losses in could

Andy Rose

one is of should gas, is the for we was that specific also about to that years inventory million products two thought that took There's couldn't. we and did around were related million, our be but we an things there sell million, business. in acquisition really basically in an primarily X.X the offs X.X it's a balance essentially carrying legal we fuels that several of oil there. X.X settlement And can reserve there that alternative we write just which So And we ago. product going then escrow of on

written obsolete off inventory of that the So quarter. it during as was think

Phil Gibbs

you in right the terms maybe and of if gas business the backlog? regions the of give in now you're returns terms could in some Mark maybe your and what And oil in color seeing

Mark Russell

from everybody the available publicly stronger Obviously information. see much board across as can the

is of ideally now, that suited the not that much And there strength was price We increase are the customers to acreage availability and there -- the in be suited strength very Marcellus Eagle strength and from course for the And so now because Ford, also Utica west is gathering up and pipeline. in we are doing only up then in and caught those are of drillable not the the And Bakken. there the That's helped it so of at Denver-Julesburg the then increasing. all east. also couldn’t well lines serve in ideally the coming there in with the the with completeable, the but of moment. so the obviously,

up that's like reflected in significantly It's So we're it looks and order forward digits. markets double to book. return strength those our seeing

Phil Gibbs

This or is a separation there the backlogs the there? tanks between equipment differentiation or the is both,

Mark Russell

Phil. It's both,

Phil Gibbs

gains assume magnitude Andy, around potential color And of for Processing the us you XXX FIFO we or call out holding QX it provide XXX? on any Steel if that could

Andy Rose

I north meaningful. few months is But definitely to left let's so million, going of still the quarter it XX actual be mean, it's in it's is so to call there double-digit the determined. But to a going million. be number be

Phil Gibbs

And could. more from if one me I

So link there you you going strong the in down Thanks. on and direct there Serviacero draw a the the tolling between broadly be processing correlation that is Is steel quite that the the automotive? had and quite a might down processing toll I in in think mentioned domestically, any is of sourcing could or in two speaking business why bit something toll volumes the the isn’t, bit. terms business

Mark Russell

Phil, I don’t the that market. broad there in is a think change

tolling our that think the seeing more in I facilities us. to specific that we’re differences for

believe around is that our total Spartan. mentioned, quarters. turn in business galvanizing down that As We will I at future

volume pickle course through line. the loss that, we our down out particularly having while that Ohio were But quality we We've to Town had on and there. now. sorting reduce and of facility, issues sorted some to line we really got was on those particular is business in toll Middle pickling by that Cincinnati Our were volume that down,

So temporary us. we two facilities things to individually think and those pretty much are for applying

Operator

Independent John go Thank we ahead. have line Tumazos Very of Please you. And from Research. a question

John Tumazos

you other us little a were give segments, a little each Could the bigger? Cabs and color Engineered losses the on there

Andy Rose

programs a out going smaller they the bad The and a where business, news XX they business news of to Engineered bring is been new business replacing online. the business months period from cabs somewhere win large Cabs, between programs. that transitioning good about through number a when are XX takes and those they've it with and customer

markets are revenue And end programs saw those some so their as taking to bring newer time online. XX%, while it's up up with we

in thing in of our other The that's challenge of pretty facilities, going on significant labor is terms can Cabs Engineered good keep that around. have one we labor in we a finding

of And labor lot to costs, right temporary has so significantly higher now. had a we’re that working we've which address

in So cab labor, result a business only that’s way we other. unallocated to so a there energy and was related one your in small you're decline quarters. innovations up Typically, what think have on as business. which is through the seeing is something facility And expect terms to of producing There's one other, we there can overhead cost business, future the of our as fluctuations that second of question work then company. very it’s we that left in in a is a

corporate that things we’ll next and we times often our allocate will charges. healthcare have in is we out, of good some at then example the quarter, a So them accounts accrue

expect but less in little be are to that those predict a hard quarters. And I negative to so bit number future

Operator

questions no am I showing you. at in this queue. And Thank further time,

Cathy Lyttle

you Great. speaking you for look fiscal with our us today. call. joining earnings all year-end forward Well, We June thank for in to

Operator

conclude participation for our joining conference. gentlemen, And your you. does conference ladies and our Thank Thanks and today. for that

Worthington Industries (WOR) 29 Mar 182018 Q3 Earnings call transcript