WOR - Earnings call transcript Q2 2019 | Worthington Industries, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Worthington Industries Second Quarter Fiscal 2019 Earnings Conference Call. [Operator Instructions] I'd like to introduce Marcus Rogier. Mr. Rogier, you may begin.

Marcus Rogier

Leia. you, Thank welcome and second earnings quarter Good to call. afternoon our today Certain Reform the are meaning made Act. of Litigation within Securities forward-looking statements Private the XXXX These and and to statements from to actual differ cause results uncertainties, suggested. those are subject could risks release issued morning. We this earnings our results it actual differ Please could refer those that more for to materially. on detail factors cause to This worthingtonindustries.com website. our call later available on being is recorded made and will be CFO, and Joe Executive On our Vice Rose; Vice call President Geoff COO, Andy and today President Gilmore; Hayek. are and President, start will with review Joe off us a of today the financials.

Joe Hayek

to generated everyone. excluding Thank $XXX.X from restructuring a of and increased charges charges XXXX. $XXX.X good in you, ago. million XX% excluding and restructuring Marcus, In million afternoon the share in year share quarter, we sales a earnings QX versus impairment a $X.XX Net $X.XX by

Pressure Our our the gross million direct conversion million, as in Armstrong by driven Equity by Processing increased faced and in by expenses from was to million was to input which Worthington. Steel spreads volumes in quarter income in $X.X business impacted $XXX.X $XX.X compressed margin related the business. headwinds by WAVE, lower million catch mostly higher driven allocations $X.X up in we in costs quarter declined up and our and Cylinders and XXXX

estimated XX.X% rate prior versus was annual tax year Our XX% in quarter. the

primarily million $XX.X volumes Processing million margin due our year Inventory selling over QX. volumes to all lower were last due tons $X.X year-over-year of Processing down insignificant XXXX, holding direct wider in up in million due spreads the the businesses. charges Shipped scrap our hot sales. higher year to refer XXXX. were than in last sequentially price the XX% million across prior primarily quarter by as $XX.X Steel in was year, scrap, excluding from direct operating XXXX compression in Steel to $XXX steel. Net or quarter average up the coil the hurricane-related of operating to to million between from our business, which and sales $XX of quarter increase sales that XX% the XX% restructuring income year, an consumer million but up million, higher million, X.X%, and charges products current Engineered lower mix prices in Cylinders’ million before Cylinders quarters. $XXX.X Cylinders’ corresponded lower versus gains primarily were tolling, and driven $XX.X to was net due the primarily in in and business businesses, to the tons in $XX was down were from restructuring substantial Cabs in Turning the to X% down X% consumer of Revenue was saw gap. for last income rolled we which $XX in were products

$X.XX costs. gains $X.X ArtiFlex, decline We by during orders quarters charges, . declines for and ClarkDietrich by year. $XX.X up during startup quarter, the primarily $X.X which new and higher repurchased business Serviacero slightly $XX.XX. related the the price million input and Funded These X.X quarter. We joint special dividend to dividends and Earlier and today, our in was available with quarter in for $X.X stock an one cash a March the restructuring we the that last was under secure $X.X volumes the WAVE's improved last WAVE from were were both our at WAVE, ended million of million the other was was in the related in impacted the from financing million. million from at facilities. offset be on revolving sequentially $XX.X results, quarter, million $XX from included transaction. losses but which spent million from million unconsolidated $XXX prior received million in operations which flow $XX should Interest million partially million ventures flat $X.X for Cash which million quarter $XX.X board million, from shares sale $XXX,XXX expense driven by $XX of from Lower by by dividends, JVs average and who $X.X higher dividends costs of our year. million. for will in declared million $XX.X quarter in operating sequential of million, facility growth fabrication improvement two to Excluding per the international a was a and share continue payable programs a credit add Equity XXXX. over in We capital $XX the the debt off $XXX but consolidated million coming to to quarter distributed new down income of drove to were projects,

trailing is to debt leverage is now turn and X.X million, I'll months to over At XX point, last our the Andy. over roughly EBITDA $XXX adjusted EBITDA this times. it ratio Our net

Andy Rose

Joe. Good afternoon everyone. Thank you,

have we margins. long-term created The as But XXXX. there's of in artificial modestly, our up the and our results lag subsiding have right noise we benefits. short-term the business as improve also headwinds the Cylinders, business margin should has but steel have margins. spread good increases turn seen, created businesses. positive in that being mechanics realizing those successfully Processing, have were to challenge hot-rolled price In now. a manufacturing but we downstream been are there pressure. that you've are expected, reduced there's pricing our as the across we is biggest pass-through quarter steel have our into is Pressure a are made The As been by leaders recovering margins scrap on tackling for Steel that which In news moves number compressed tariffs to minimal of lot Financial results temporary impact higher page costs

the market demand most to End slow XXXX. across building price good economy down. is our reduction will The showing no businesses. see extended signs remains beginning and are cost of continue benefits and of and in increases strong this of We measures,

and cost successfully navigate our pressure, continue returns to shareholders. we will price deliver As confident solid are strategy that for we our volatility

remains acquisition core growth and on strategy and accelerating innovation. improving our our We're analytics, also ramping our and investments via lean, via profitability the the stages and businesses of up in centered transformation data, Our of automation. in early

driving business, we combining We data Pressure particularly we with And have of our advantage. this a in long competitive as a in further history, believe enhance can advances Cylinder analytics. and automation

optimizing we incentivize, our and ensuring company we performance and fun us recognized daily allows unlocks and is continuing their Of go train, philosophy our course, full refocusing preferred on all the our recruit, work, our develop, about to as doing way a employer. and foundation are efforts our the have our of be potential to it, people

goal improve cash We continue but be earnings year. of our that record continues to to to and flow, operate every on near levels

that support We team there. Worthington. have us and of your Thank to for right are confident we approach continued the you the right get

will open to up We it questions. now

Operator

Please Our is Martin instructions] of [Operator ahead. Jefferies. first question from go line Englert the with

Martin Englert

when estimate under and on way? would as spreads how for headwinds For quarter? scrap these reduction would resets based XQ Also you in contractual or abate you freight the in cost to other there anticipate costs the price Processing, other have such the you initiatives much Steel that

Joe Hayek

million combination those of weeks. Joe, respect the for quarter, gap are things not in $XX going the They to it’s the beyond. curve, QX It’s say several I’d Martin, away. with lessened some around following the So, was in probably the scrap outlook and has past

QX. the all us not impact gone. of to more kind estimate in at now QX started right that in in QX but we so, it some was And in little a at be than looking last QX, It’ll less year, curve, QX and would bit

So and to likely holding QX least the are as FIFO in following at well. additionally just -- losses, incur losses in some we inventory curve,

Martin Englert

FIFO the be Okay. would that? million Any than fiscal X to million or losses million for QX, X something ballpark this inventory greater X holding estimate million, to X on

Joe Hayek

now right to tough speculate. It’s Yes.

Martin Englert

business sales when completed? And unit WAVE is Okay. the

Joe Hayek

the Europe effectively going of closed for of have us. It’s That’s that’s I to transaction but the a thing by is just complete. a nothing complicated There not not middle assets. on just with answer but a the The they economics and but understand, the question, modest actually the short and be could XXXX. substantial. involves change Commission to It’s is agreement probably which hard materially the now few it’s sale Trade about change, executing in agreement some know

Martin Englert

Okay, through it’s but that it JV through will Correct? continue to completed. -- P&L flow until

Joe Hayek

P&L it time, I flow think JV through XXXX. period could of June the of is maximum through the

Martin Englert

one, was demand past there. cylinders if the on provide and business, the what could you within And profitability energy Okay. an one Can here? quarter I for update you’re seeing with last the how business

Geoff Gilmore

been has and demand to that . grow is Hi. continued Gilmore. Yes, This Geoff good we’ve very see

this of facilities. We needed move through concerns facility finally we’re operating last a two moving faced which the that quarter, had facility that decided we and is or to Catoosa. Some reasons, were Skiatook, of Oklahoma for a we move the issues we’re and to operating various we in we were working in Port

forward. from now out perspective facilities, balance you’re over amount trying of job and think be that move the one I and So, you to group out of navigate. done on volume that Again, and a you has operating will certainly can wonderful going facility to difficult two it, cost situation executing with a understand a when specific have we

excited we’re very that. about So,

Martin Englert

Okay. was for energy the And business how operating for the quarter? there income the

Joe Hayek

Martin. a was dollars It million few loss,

Operator

John Tumazos Very Please we go question with Tumazos from have a ahead. John Research. Next, Independent

John Tumazos

in much. time a month June, how through cylinders For does And input? customer? product through the peaked work you a work longer this And to through the then when mill Is wash steel in go and get four fourth very Hot there for through? many to take maybe of months that to process two until it it's you future. cost and spot, were Does quarter to from does or further delay rolled that statement? was months early income shipped highest in your your quotation prices lead to past less XXX cabs your of the lines take some example, delivered, in three delivering Thank processing? take the month times NYMEX in XXX months substrate

Joe Hayek

today, that you through days I business, very complicated of steel between I inventory and it's be six happens a the our it question. short carrying XX we're before usually spot steel XX months have that mean three our also the contracts. is, have contracts have it's John, we in fact as depends. monthly going reset company, price expect somewhere but that quarterly reset It's sometimes long as might months we complicated to we to is statement. as answer flows Yes, movement tell people whatever and What income by

two or two two a changes it's half a price another and a contract if doesn't for before two So but and be through. flows or to half today a months, reset going it

range. probably to So, kind of days it's XXX the XX is

John Tumazos

So, XXX will five months. be

Joe Hayek

going that's be long and certainly, mean to side on I Yes. but the XX it’s days.

John Tumazos

you the are going partly period? offset in products being if cylinders by some some in or and most all could improving substrate some the So costs the margins your even or have product passed maybe holidays be of hikes in next price cabs XX-day or steel down, February in lines the

Joe Hayek

Are you steel or general? or talking just about cylinders

John Tumazos

Each them. of

Joe Hayek

because company, the different, it's were costs, somewhat we're could days steel of Yes, down, steel you little benefit bit higher continue I cylinder do prices trend prices or a about. you know as for little certainly XXX FIFO each XX of input capture business, a steel if do a prices see to just is in to bit raising business different. double be we as what going mean to talking sort the But In follows and there.

John Tumazos

was with do spot falling year? in those businesses Why hurt quarter. this the will you think and you on the accounting ceilings In the to and be get with WAVE comparison seem in higher question, cost the the JV inventory off bother as -- didn't in So Is I'll you business Andy. Serviacero last the it did the better? Mexico, the last WAVE

Joe Hayek

steel when No. both the WAVE, is price way, behaved really move and ClarkDietrich move same very they prices quickly. WAVE WAVE which

price And behave then, business to is, standpoint and the FIFO financial for much through. others. -- business company, of of and logistics. from reporting of the to to more other ahead And some us couple to is but kind in of experience a going a tend steel days of is they're able as a a to WAVE just contractual, for because Serviacero factors they on XX than be takes inflation on one some our going the so, cylinder there. the get XX so well. so where obviously it that’s like are get lag month impact example, business, a there’s so One then, And the of going to they increase cost lot

John Tumazos

happy a Thank to you. shareholder. very be I'm

Joe Hayek

proud. We're Thank Thank you. trying to make you you.

Operator

And other no there are questions.

may continue. You

Andy Rose

thanks work year. and to We well, us look to thank everybody and happy today. XXXX. holiday of we'll dedication a hard for I'd seeing right, all and forward their joining New this our in All for everybody past wish like employees And safe terrific a Year. in season

Operator

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

now may You disconnect.

Worthington Industries (WOR) 18 Dec 182019 Q2 Earnings call transcript