WOR - Earnings call transcript Q3 2019 | Worthington Industries, Inc.

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Operator

Good morning and welcome to the Worthington Industries Third Quarter Fiscal 2019 Earnings Conference Call. All participants will be able to listen only until the question-and-answer secession of the call. This conference is being recorded at the request of Worthington Industries. Anyone objects, you may disconnect at this time. I'd like to introduce Marcus Rogier. Mr. begin. may you Rogier,

Marcus Rogier

Good welcome Paul. quarter our earnings call. morning you, to and third Thank

those I'd market remind cause We of release like and on On results today statements begin, and us those These start detail we Joe that made Before more to suggested. to subject could results This Andy close. are Securities Reform actual for after it risks within today. yesterday to worthingtonindustries.com our statements off Private to later from the factors to are President, CFO, are Hayek. made and everyone call Rose; cause earnings refer forward-looking the actual Joe XXXX issued meaning could website. available today Please our our the on is uncertainties, will and Litigation will the materially. call Act. the today and differ Vice certain being recorded be that differ President

Joe Hayek

of however, net million share good sale QX, inventory share the charge replacement hydrogen $XX and benefit losses divested business our also year. prompted assets, $X.XX BernzOmatic There longer and approximately of acquired implementation morning in a acquisition our our a primary related as for included it the gain of before unique $XX were certain our QX Act. $XX and processing per Last share X% increased impacted per certain $XX $X.XX $XXX of sale which as our that which Thank was composite to last the the QX, several during face $XXX,XXX $X.XX Pressure you, the part last sold or related follows. per in we Cylinders. sales in in in of and steel per by million driven Consolidated negatively Tax growth and quarter compared of losses, the Cylinders net quarter the to and compressed mentioned quarter, fuel a as was in or of gain to between Pressure I QX, tank everyone. business by million reported profit piece in conclusion million. a items in year's Cylinders $X.XX steel were for earnings $XX current We inventory Marcus, the a of million we gross direct of to from replacement declined per by prices, estimated wider recorded $X.XX core per no brazing of versus strategy. $X.XX program spreads program million year. million of headwinds solder tanks, holding by In by Jobs part to and or share we EPS share $X.XX We a to XXXX, spread the Cuts were scrap reported quarter $XX a continued the the holding charge share in

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

impact QX restructuring, the revenues $XX our improvements million and oil to product Cylinder's X% from X%, of and were just increased to X% up in consumer due net in up Turning in gas year, units. excluding the driven gas income were was increases and year over business. operating by but last replacement business income divestitures, while oil from and excluding impact operating program, primarily the of last Cylinders, XX% divestitures, of businesses, down reported by the Cylinder our Pressure sales QX

X.X% began which million in direct X.X%. Processing year Total toll quarter income XX% were comps, declining of Direct X.X% prior with in ship The increase efforts down positive quarter declining $XX over was were Operating to of prior consistent down did While the well the is consumer and $XX product our from the quarter. million tons industrial businesses. higher margins and steel. we to million performed with to year. very show shipments year and the both declined improvement the tough builds sales got due as of orders, and February the QX, in holding to slow year-over-year not operating those average price and January direct both inventory in were off impacts auto tons excluding or primarily to Steel December by negative showed it $XX million the impact but prices loss. customers of $XX in delayed views close the see higher a income selling start million, our late and expectations last mix, from improvement, the in driven X% were of Net $XXX the up against

ventures Our in from shares by received million Engineered Yesterday, offset a and forward. by was average core million decline primarily growth prices $XX core XX JVs the year-over-year higher $XX income stream from stable, authorization in expect We also million selling from quarter year. an million both that $X offset declared Operating increased are improved We of quarter. capital should losses million in backlog our $X.X but divestitures, $XX.XX. steel share and ArtiFlex. into driven new paid average Cash currently in X% in $X the inventory by declines for the steel $XXX,XXX $XX in and sales fabrication million Equity shares. quarter. of the distributed was spent our from improvement million the up Revenue stock during QX by over last holding partially in proceeds cabs aggregate Cabs on and do for lower at to the continue facilities to prices. saw improve which million million, our QX improvement during our we quarter of year-over-year, was quarter facility, profitability our driven unconsolidated value to payable losses of markets June, program saw of the in $X.XX $XX XXX,XXX in QX joint prior we volumes. $XX repurchase were so moving per our $X.X Board million, on in and an of the due million, operations received to projects, flows in of Serviacero $XX partially by to price the repurchase a million dividend, year, the dividends WAVE, dividend from stock up We $XX

million, at and Turning of $X credit flat down quarter to under million expense balance of $XXX was available consolidated ended was at our cash sheet, slightly, the we $XXX revolving and quarter end facilities. funded with million $XXX debt sequentially, million interest

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

Andy Rose

everyone. Thanks, Joe. a lot third to There of in Good be our noise quarter results. morning continues

end that As margin steel we pricing business, costs. beginning good pressure. businesses the tariffs, The QX. in created almost volumes of past stated mechanics over price facing steel of all we last is increases markets. cover Recent in have steel news input fluctuations raw our impacted processing. quarter, and these the all challenge higher impacted few is declines finally in of have been margins are long-term Cylinders helium we've But and hindered see which created our impact benefit in prices material artificial biggest Steel on to demand minimal price our should been steel quarters. remains short-term by have good the but the cost have to for that

So as improve. offset these expect to margins effect our see strategies mitigation take to we cost pressures,

at Worthington. excited about have lot a be to We

Our strategic and annual year planning best is been. the process is ever underway, this it's

are stock of we growth value our With authorization are attractive ways not agreed M&A our using we creating our we our innovation, expensive to an expectations. Many In cash to capital and investment, of flow, and We a pivoting accelerate to continue sheet are whom for value. allocation and that follow where core that found and have repurchases approach give strengths million investments strategic The in meantime, expanding finding the have now, most to we be meet to new, search balance an our have shares. our divesting leaders. around Recently, energized see team transformation, who Board of business return to profitability either but strong to the businesses M&A. pillars the balanced do where XX or we is are advantage. our us non-core market our right up continues and share by our

some your strategies, in and flow. Thanks employees itself cost, or enable Sometimes manifest ultimately your in our best to that are work their Worthington. to value does for work our shareholders. us of of always record best right ways reward continued earnings to not growth will doing I bring customers build support that quarterly mitigate setting our believe cash now

Marcus Rogier

the for up it open questions. will to we point this At operator take

Operator

Tumazos Please first John [Operator Tumazos ahead. go from instructions] with Research. The question John Independent is Very

John Tumazos

in processing volume, you a Thank in rate you question. my it steel taking change the fall explain drop auto was lot of than for XX,XXX bigger sales? Could the ton

Joe Hayek

of It's lot of Sure, we Joe. John. it automotive was some saw. the due A weakness to

business months other across our we more the couldn't little and February are honestly, we the January up as were three. bit slow saw imagined January in pricing, better, during to board, much for December in a X.X% for our as down numbers coated though We those weakness waited bit catch reset and in of the had and quarter I think a two. in domestic the than people the have you very might

John Tumazos

that need you we spend Do steel? to more that love days out you quarter are selling in financial guy. you you Andy, going a think the

Andy Rose

go people allowed into be don't maybe I you I finance to that. know might and John, if are sell, out should right, but look

John Tumazos

am and a if Excuse can. shareholder happy me, a am I be to I I shareholder,

Andy Rose

John. We you, appreciate you. Thank

Operator

go KeyBanc We [Operator Leschuk Michael to go ahead. line Markets. instructions] Capital of Please with will

Michael Leschuk

see into -- color replacement am around that something fuel continue at the looking more related Hey, so tanks, I that hydrogen just will to question you program first is XQ? just

Andy Rose

question, the fourth quarter? your will continue Was into it

Michael Leschuk

continue? what a bit if and will Yes, maybe just happened then it there on explain

Andy Rose

okay. you, Got

number those will the tanks I customer So, took for that, quarter didn't call related happened for replacement this to hydrogen full for the this the essentially of standards, is, tests cylinders it of factors that replace best few decided have a and to to of to to we to we estimate ISO what that in but cost XXXX certification. that our program. XXXX, total charge And built we the we of additional a a were sold dates ISO here, complete customer, back

estimated. it months we've complete, kind charge we're we're So, modest the of that about hopeful accurately charge program go or takes be has been the so could hopeful some up while but take that the amount, got to properly. there, will Obviously and there could six sized down a puts

Michael Leschuk

going 'XX how forward? at performance and you oil the markets is there Okay. the looking end do business gas, in what And full-year expect then for and

Joe Hayek

Sure.

earlier, quarter-over-quarter continued go there. what expect to small Andy But and end markets markets, of respect gas as to which and ours, that's to with a resilience was strides our back lot the end the certainly they're continuing at a in the We there. would oil to moment most market be improvement that's and case so articulated showing There, of some reasonably make also And end growth. of business well. I seem

Michael Leschuk

lastly equity then you about think joint the that to in you do And on Okay. WAVE venture, be Do earning than better we should be expect full-year full-year -- 'XX? 'XX, to there? expect how

Andy Rose

increases, margins know, I They've and done as price WAVE's performing of job you expanded result right a little But nice that. business, tell a don't now. on the bit their you, up give well and well, recovering of a even Well, held we that. still have guidance they're so as will

as long as good the have another they'll So, be continue we then to strong year. construction markets expect

Michael Leschuk

thank Okay, you.

Operator

have further do Instructions] from questions in no Please queue. this ahead. [Operator We At John a there go Tumazos. time, are follow-up

John Tumazos

were a Is markets The hikes steel in cylinder little other catching than to price better a quarters escalation the X% up or energy or business the that attributable were ago? had some from improvement the margin. stronger

Andy Rose

take when get Yes, prices margins there, compressed, takes things couple so know quarters there's to is, That in few rise continue their One we start on us And Pressure in for and a of in John. steel a business, fourth it going did start that as this to Cylinders. quarter, you that to quarter. the recovery see accelerate even cost in affect. recovery hopefully and will

improvement also a pretty saw gas. oil We significant and in

increases. Some of revenue by driven is that

increases driven Some that business. of it profitability also by is in

Pressure So, both to the Cylinders. -- those to of contributed things

John Tumazos

savings? SG&A related to tons were that in cost there steel fall fell Was $X other million. or

Joe Hayek

perspective that bonus know, is you sharing profitability, our as overall compensation way SG&A, up it to from a the profit our related structure going the come was down is as well. set and to some SG&A but

John Tumazos

too. hurt that guys Sorry you to hear got

Andy Rose

way the works sometimes, that's John. capitalism Well,

John Tumazos

You said fear the the of listeners. expensive little Maybe M&A a that business in is to look at. a bit little stroked

and Is worth opportunities? $XX at the spend were Your money price share is it looking time M&A to very at buyback attractive.

Andy Rose

is as and look at into. but outside what Well, they And majority those would that front The that to that it I the conversations tell there's tend And of venturing -- always our businesses of mentioned market we looking be in things of to occasionally to consider because would core I high. are just very businesses. relates are smaller, our be pricing multiples is you today competition. we're on The acquisitions. having and conversations also around purchase core, tend we lot a just

synergies, buyer. better that of players very obviously that are the well, the One staying know number we there reasons and businesses, of a of reasons the bring markets well. been very can core our lot we to we a is different we the have We be know closer

So, if have do you out you stock and conversations, at is we there, a but We, looking share tell impact on standpoint. they're those didn't mentioned, will having purchase to opportunities our we effort like lot. a our I most what of we as not them going resources

have. of that noisy rapidly way going businesses of a mentioned the we're that, good really in and my with through couple to think positioned, some the initiatives earnings in are of I feel growth about period through which as and respect are kind we last we comments moving the we We our quarters,

of view have the authorization. we as That's So, think with in well and Board it's that's our Worthington. the that to invest in of view management the team, shares that a increase I as sort good time their repurchase

John Tumazos

you. Thank

Operator

this our Teleconference using conclude participation queue. at for you And time, are that today. Gentlemen, in for does Thank for AT&T questions conference there further and no your Services.

disconnect. now may You

Worthington Industries (WOR) 21 Mar 192019 Q3 Earnings call transcript