WOR - Earnings call transcript Q4 2018 | Worthington Industries, Inc.

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Operator

Good morning. Welcome to the Worthington Industries Fourth 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

market. detail Good for release our and John cause On risks differ will are site. our it President We McConnell; Thank fiscal Welcome Vice statements results recorded call Private factors actual on you, morning. Justin. to Act. Reform results to yesterday and on Mark Web CEO, CFO, meaning the and President call. our it more those is Please These our issued could statements Securities actual John and COO, Litigation that the subject refer call year-end Certain to suggested. Andy fourth uncertainties, be made to and from Executive This within later today comments. Rose. to post Industries could made those today available forward-looking differ are Russell; of earnings opening XXXX and has are earnings materially. Worthington and and quarter being some Chairman cause

John McConnell

was to for that And best quarter you a going all And of great this best our fourth ever. us quarter you, Cathy. I'm We Thank quarter, morning. it thank our again fourth joining ever. had say

very fourth as of well. of quarter We best all are we've that proud had ever our led efforts second their and employees year to the

over to to lot there's about Rose so I'll talk Andy to Now, call you the this results, through turn walk Andy. our quarter

Andy Rose

excluding charges non-recurring was per year with Company the a everyone. share Good quarter. This record morning the restructuring up fourth John. quarter and share, of per from To earnings had items. $X.XX prior finish year, the tax $X Thanks impairment

natural to during items of attributable was as per gains in inventory year million liquefied were million $XXX year. we for $XX as Several to $X.XX best of our items share last million the $XX quarter; $XX in holding For the prior quarter, year $XXX charges impairment related the or or write-down during market. book of some was EBITDA were restructuring was compared were achieved the $X.XX $XX $X.XX XX value to our the estimated gains X% million record non-recurring and our investment and gas in million share second the at the share for unique QX tax recovery to market attributable million below just the new Adjusted impairment fiscal quarter impairment law. and Turkey; current value adjusted follows; per earnings the million where per assets in the despite that the exceeded underway of gas oil year,

commitment result and This and performance the roughly the quarter a or of our split our work we've all year cylinders new steel. million elected our for in non-executive million this per expense resulted tax their $X.XX in to $X by hard employees aided $X.X in a As pay bonus million $X,XXX share, strong legislation, success. $X onetime of to during

restructuring and including rate impairment due several and in charges to to tax X% annual effective new related Our discrete came benefits, those law. the tax at the

been the year. rate XX.X% have Excluding these benefits, would for the

losses previous number has received with of in steel gains, million Construction, on that further the to ClarkDietrich this programs, and in platforms have but impact quarter did and were $X under previously. gas, people The negated good quarter over for we $XX and a customers labor due still alternative are our The volume million Operating $X.X our competitive declines. continue Amtrol to gas. most transitioned declined but million has by in Revenue of driven steel expectations in the or have a industrial in but million, is the it we important and the making XXXX, product up volume JVs inventory slightly automotive strong as fiscal was impact XX% programs from of improvement $XX volume operating rising design, price year exceeded partially be Amtrol agriculture prior the financial FIFO we unattractive some in capabilities quarter. restructuring dividends tooling the $X.X a of us from of restructuring, improved a seeking compelling million offset offset the joint tax and the to lower We are has provide of higher income, by Perhaps direct and margins, operating has the and during XX% standpoint, soft increases conversion spooling rate all of to $XX losses Engineered that excluding from excluding business quarter. Steel this to and margins have costs. Worthington, hedging have of during income product markets toll new gone below to year-over-year and was oil trend some and and negative and a our $XX ventures very of For and out of Cabs up embraced to led consumer up offsetting million. below $X helped prices decline rise a Improvements were role XX%. folks team assuming prices Cylinders we million/ or integration have by our strengthened from delivered integration holding Equity most rapid income played increased by manufacturing. oil well. had losses won in positive. and model fuels very the a The engineering, transitional portion that We has the scrap Processing volume, the mix appreciate primarily operating created and prior benefit. normal down not offset strong. million. X% was Amtrol quarter full-service have as a WAVE The success. changes are quarter, position. costs

for of cash cash of on year a year. we $XXX the the fiscal income. for was year, was XX% the rate flow $XX conversion million, from for quarter the equity million. Free million million Cash $XXX $XX operations received and For dividends

quarter million dividends million During million. spent the in $XX $XX distributed projects, repurchased $XX for and million on we shares X capital

prior new in Board and This of result of our per in well of Yesterday, a available the to philosophy reinvesting consecutive our tax XXth year consistent Company our $XXX,XXX with share $XXX Interest going three and as with increase the the several debt with our XXXX. years. a tax rate dividend, that the a in $XX sharing investors, eighth lower quarter under dividend. have an legislation million consecutive profits $XXX revolving As September expense company. $X.XX share, payable dividend $X.XX is $XXX We’ve increase as and we a forward, double that of from past million cash, funded the the year declared the the million. per up million paid decisions This credit increase made employees of was the and has of facilities. is

we debt net Our to now a Overall, is ratio X.X had EBITDA year. great leverage times.

items. per million. years over had share from an EBITDA best our before Free continues averaged with six and special and in cash best the strong standpoint, we and per be share our flow to quarter of past ever $XXX has second years earnings earnings This excess

can successful, we and through delivering of strategy are acquisition growing we solid proven innovation and has three-tiered continue that transformation, confident Our results.

and Worthington's expect to to for continue businesses our delivering to also customers their to employees thank another would We capital share shareholders. approach of our to our new in result business, via dividends all and investing will like and balanced acquiring excellent work now returning dedication for discuss We operations. Mark hard and shareholders repurchases. serving

Mark Russell

Thanks Andy.

year. mix Combined was direct and The X%, toll, was direct last same the X% the XX%. Center toll were XX% year data shipments by in Comparable prior business is Our compared shipments, direct to galvanizing of a across reflecting in was to Metals strength Institute processing the business. direct is continued had to customer in decreased volume X% an compared up and our quarter segment XX% XX%, shows construction steel direct shift X.X% The industry period. versus Toll our for Service toll volumes particularly for softness record which was shipments majority processing of markets. toll direct direct and overall quarter. increase which while the up down strong

Three New Detroit in increased domestic is sooner one Monterrey, of at shipments just one was automotive was growth welding newest customer. facility of off Heavy volume up we with book venture projected. stir is in have our DOW was volume truck Mexico, a welding Direct automotive X%, friction reduction Steel laser agriculture profitable to customers also joint still for for TWB with up that business down aluminum was markets follows few in X%. that TWB, which and continued quarter, X%, and which became the saw us products in processing X%. than large the

Mexico Serviacero TWB quarter Our facility blanks new to Monterey in continues. in we as deliver of joint to the gauge another continue with shipments ramp-up heavy up venture blanking X%, delivered solid our and

cylinders. Turning to pressure

up line in Africa last our XX% European to we alternative lines U.S. compared products, LPG East, revenue last and type to III Our business, market. shipments Revenue cylinder industrial of saw throughout year which in higher LPG of due produced Portugal now revenue manufactures industrial up market products significantly continue cylinders portion the acquired product India. In compared gas was of was products in are the and conditions and including CNG and XX%, Middle to oil gas oil significant business fuels, the Amtrol-Alfa Europe, equipment A up as higher and to sold automotive primarily year. to in Amtrol XX% improve shipments. included are from

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

up quarter was final XX%. Amtrol, of was we stage with the Cabs, in unprofitable the strategy last In that realignment revenue of Excluding exit completed our business. previously Engineered the

steel especially year, to in moving up European months as and ahead was driven and six XX to price two mid to effect the that we have Asia recent strong in flat. as in of venture, of American New was essentially Americas. volume the quarter, well drive in increases, strength us ahead raw going was forward. was improvement the and cost to the other price May. The of in were announced slightly one we volume lower compared in other the at mid-April last least increases get by partly the the volume The North the volumes online orders customers Americas’ by was joint sought material increases, In programs will coming higher our incremental our which volume, driven next keep WAVE earnings the

record quarter We’re proud and and Worthington the the in for transformation the fiscal during teamwork, drove innovation results. back year. our of the is during outstanding you. grateful the from effort that and apparent overall which in excellent we’re everyone John, to And

John McConnell

this take you you, At and be Thank point, Mark happy may any Andy. questions to have. we’ll

Operator

Engler line go the [Operator we to of Instructions] First Martin of Jefferies.

is open. line Your

Martin Engler

So there, that and if is the the cost quick about question in for category discuss continue? segment quarter. Can that's there, million something increased possibly there happened other $X.X would you here of what

Andy Rose

not a there’s in for at those businesses. of really we segment, expenses, And flow-through the examples have unallocated allocated is impacted this businesses no to charges. of yet so Actually quarter it are remaining a healthcare that that expenses couple corporate

them those on the out future And we accrue So and our EPIC top we push insurance to where the captive, is we’re time. then liabilities business accrue then also there. so second over self-insurance

but an level, we that continue dollars those, around the in to talked bounce uptick a for both think the a that’s normalized the increase that in caused little on Martin. some based past, about. a So -- I us, of quarter. rate we it for of the bit stuff of maybe expect quarter couple I a said million just I mean at don't which run I does is had the

Martin Engler

both about price volume pull-forward. since and the if other increases you increases and WAVE you some seeing about spoke there JVs? talk of margin similar initiated ClarkDietrich within within quarter any relatively you’re is if ended Can then the here of some the just there, trends those And and price

Andy Rose

may does. been not increase each they’re each obviously I’m what those of to But one last It’s sure when businesses. for be recent. of was. the coming Yes, more There pricing price track steel going through them pretty for

So steel recapture will of continue prices raise continue to can. to rise. as to much that trying as They they price

Mark Russell

is ClarkDietrich price so there same nothing price the increase the The for in last feeling May. in WAVE was And quarter. increase last before that, in

Martin Engler

steel volume assuming price is, like Correct? forward sounds and little prices implemented. it a as increase bit what little there pull bench a So could you the a margins and bit was higher,

Mark Russell

the got bit. ahead WAVE, that case, little a in was within Certainly, we May

Martin Engler

fiscal anticipation any holding both XQ? And now in for gains

Andy Rose

the then well. after quiet there pretty mean down. expecting holding meaningful think But I prices we’re a what gains, Yes, depends stay where I inventory pretty prices is are. And next steel some are assuming first -- expecting as that, that for Obviously, reasonable we it do number. should on quarter, they quarter, steel

Martin Engler

what you to ballpark Comparable this saw quarter?

Andy Rose

probably But We that give you I’d again, that just number this estimate probably we would not better mean, so exact a But exceptionally not I bit. it Yes, an down I was idea. quarter high. tamp know otherwise, it’s yet. a it. high. little sign, can don’t

Martin Engler

EPS adjusting all the you per Correct? share. noted remarks, your And the would $X quarter last been have one items, prepared there, for in that one-time your for

Andy Rose

Yes.

Martin Engler

you Okay, excellent. Thank very much.

Andy Rose

add that a bonus, not the adjusted for as that, the include charge does is I number which $X.X Yes, just and well. million would non-recurring to onetime

I say probably actually share. So it’s would a $X.XX

Martin Engler

And then the was the bridge from there? and the XX $X.XX really adjusted the disparity what

Andy Rose

So from to bridge an XX The I from last little quarter. deferred accrual tax bit liability is to confusing. dollar related a know that's a

quarter So $X.XX which share that, this true there a gain was remember for actually had we but about last you a big a tax, it’s from well up non-recurring. quarter, was in

Martin Engler

line Does P&L that hit item the tax the on or…

Andy Rose

the in Correct. item. tax it's line Yes,

Operator

KeyBanc. the [Operator Phil Instructions] to of Next go Gibbs we’ll line of

Phil Gibbs

saw for Mark, -- industrial said intensive. as would think of quarter there terms Amtrol happened pre hurricane then there you? WAVE with we was basis, the volumes you say And one. any further I for metal between that Cylinders you organic very Do obviously, XX% and XX% cycle that on very Was somewhere what in that's in some similar at cylinders replenishment two from consumer. in strong, buy, to an the still well? anything were are

Mark Russell

hurricane your so and and is. there is the So a still question, the that answer volume first the to of part second

However, big the It'll catch hurricane the to normal to catch this where we plus we’re into finish seasonal we point that, take are because bit demand going to seen five which up just season little getting before. now the think I us a quarter we’ve never have up. from

hurricane see to season. produced there we pre-buy. pre-buy effects simply from is I anybody that the effect, an in So definitely for don't is think you continued because have it leftover demand wanted any that there, who couldn’t

that are So words, the up cost because increases for forward, pretty material we've working there, further the place. adjusted on price compression And going in space see that should you we're the to make for In other material much see in prices there shouldn't cost you increases. effect. margin increases

Phil Gibbs

in next to you Speaking strong go steel to of about attacking in in the obviously particular? we're upside mitigate do of that customers in the going see the how terms of that, quarters couple

Mark Russell

we're into you're and the Mark large will effect them XX there are dealing dealing volumes. usually with increases. It’s in there's price about, But days a take mean, purchase the just not example where times that I in the product I increases like with When with for those cylinder out decreases, work large was those on the more XX obviously lag like a with but contractual, it's meet go it under segment, on customer cases consumer our built it things often so of before and control. mean, are price We'll contract, call depends the exceptions. talking within effect. industrial to business increase buyers,

Phil Gibbs

that talking know to and just of put I the remember, I can't be something be has And some there I about was or for propane LPG tariffs was. maybe whatever some potential in your cylinders, to on border. some anecdotes in second-half. place watch that it some on But again smaller folks Canada, or about the be might of to Mark, the hearing south And obviously, north on cylinders, recently business,

are guess, are of it how being and this the terms terms mean, being what’s dealt with right seeing I So in now, of you that, in you behavior business? seeing retaliatory what's in math, terms customers, in written? I of

Mark Russell

So we’re Those with we we priced anti-dumping cost or for the LPG £XX along very the £XX and coming low believe petition in tanks. actually in steel. priced with under Manchester tanks, joined some propane

takes And the those because forward, file. so items to have end quarter, if retroactive of that process we quarters its through. bit think we to of the effect that filed course that of I kind But did imports an filing on several petition the in follow a getting with little up coming that of

hot-roll a as world But the then in right long that’s in and United anywhere everywhere you $XXX United make dynamic the steel as you things else So the of States now. have can out course there. cheaper cheaper of lot with States

continue that’s So asked, as exists, on anything are long that I to U.S. Canada have correct? question, disparity might going as imports. tariffs I now that you about your Is misunderstood the putting we hearing thought

Mark Russell

Cylinders. Yes, specifically of

Phil Gibbs

no. the And that to is answer

not aware protecting. of -- that But I there know -- Canada? we have am in they’d producer not We be what a is

Andy Rose

No.

Mark Russell

don’t do for know they that probably would but… why going to I So retaliatory on what’s

Andy Rose

so… strong what’s They’re you of on the talk, everything terms on. In talking know about going tariffs

Phil Gibbs

mean what track. hard to So keep I it’s

Mark Russell

there’s to No, it Phil. case, to anything don’t in I this apply think

Phil Gibbs

service obviously, And the design look to about next you’re just Cabs, top with and XX and pressures because talking trying now, cost right programs moving over we’re some transition I to months, but quarter six and process costs. how that into think obviously some about getting at full to some transitionary am dealing forward. business other

how so we thinking should be -- thinking we’re how And just that? about

Mark Russell

capabilities them. benefit greater and need focusing don’t our can toward the those understand. done is larger important efforts need it’s who be a We’ve marketing what we’ve to think start them, them. had those do And players always really I to just

a as So our there’s capabilities. our opposed in shift to marketing

Andy Rose

It’s sell. years any news it’s lifecycle is good takes a for decade. longest of is sell extremely we That’s of several we sales products lifecycle cycle because the one a of Phil, slow, longest It bad cycle. to The sales to the Cab average news. have of the these somebody sell. the also product program, we that’s a anything The

got something a for you So decade. sold it, place once you’ve in

forward better a we’re just this it But slowly strategy. it's it’s and very, getting years to very a So shift-in implement done looking taken to forward. and we think moves basically several situation, going so

Andy Rose

mean line good in feel Phil, forward. say, going top Cabs, I pretty about I also Yes the we would

We’re because cycle programs come trying timing we not feel of as It an predict. takes Mark is to overpromise the is when up time inflection is but long, to we're here, point long, tooling the here. these like difficult of sales said, cycle the on in

So hopeful we’re from better but worst aren’t just here get of we’ll that sure but the start to get not timing. we’re things exactly

Phil Gibbs

there that gas I and oil have losses that little mentioned think The year-over-year. heavier business, some could were so been you a

the oil on is, So side secondarily, of what then question the the how those contribute gas And Thanks. much outlook? losses quarter? the in and what and Amtrol magnitude are

Mark Russell

we’re gas say, oil little I of more and the business, a Yes, the the turnaround would optimistic about trajectory there.

bookings or margins up, cost revenues way way say, Our their should are on up, out. way are I

told quite that not be breakeven we point, that you standpoint, fully to the should hopefully business, has XX couple we double-digit an it be we from I And years. so expect year-end, And will in we the where close. over get getting last in operating the have lost but may dollars business by a past of income next millions months think

was second during pretty question, trend to And will your your quarter? hopefully, that of Amtrol emerge part this so What quickly. start

Phil Gibbs

or in sounds gas. about it So so oil and million loss $X

of was what question contributed. it terms other The Amtrol in

Andy Rose

EBITDA well. of that earned So for we of our million $XX very ahead business. gone are quarter, so they Their the integration earnings forecast when bought the has about

bring on well overall So both the been work the the a from lot of isle there fantastic Worthington from into of house. folks, folks as great to sides have the as

Phil Gibbs

$X $X or that in million million is EBIT? what So

Andy Rose

Yes.

Operator

queued And at phone. by further questions actually have this time, no we

John McConnell

Well, again us thank this you joining morning. for

shareholders’ founding Xth to of are We of committed and hope our you of enjoy this investment. We the all our celebrating country July. increasing the performance value improving our

Operator

Ladies We much Teleconference this and call gentlemen, using Service. you for conference the that and very for AT&T’s does Executive conclude the morning. thank participation

disconnect. now may You

Worthington Industries (WOR) 28 Jun 182018 Q4 Earnings call transcript