WOR - Earnings call transcript Q4 2019 | Worthington Industries, Inc.

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Operator

Good morning and welcome to the Worthington Industries Fourth 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. If anyone objects, you may disconnect at this time.

I'd like to introduce Marcus Rogier. Mr. begin. may you Rogier,

Marcus Rogier

Good year-end welcome earnings Justin. quarter our and fiscal call. morning you, to and fourth Thank

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

and today opening John and Hayek. call Andy Rose; CFO, Chairman President some John has our President, are Vice McConnell; and Joe CEO, comments. On

John McConnell

Thank you, all today. thanks you us joining of for Marcus and

quarter table, was capping fourth year terms the and management off assets in our team. both Our our resetting the strong, of of

position about future drive results. excited ability to and We’re our our

Joe the over to now. turn I’ll call

Joseph Hayek

laser venture. down John, WSP in versus you prior related year, our compared of the in QX morning writing assets a Thank Chinese last this items impariment period. in per generated majority-owned quarter and to QX, $X.X systems included of million charges inventory quarter or million $X.X year $X.XX gain couple were unique share $X.XX There our a joint the and in joint share or current venture our per fuel the of $X.XX business that exiting everybody. $X.XX to of earnings of certain of steel losses of share we estimated million roughly good $X.XX share welding In and value restructuring holding $XX.X per the and or per

of $XX.X $X.XX impairment million last year. a to QX in This of or compares charges share

exits material to conditions to will Turkey. impact our operations reached our sell week that on in and investing continuation an this we our value a reflect and a from closing focusing on business earlier agreement efforts The profitably our we addition, these that businesses exit overall. but closing deem have growing these our financials, lines In strategy non-core our transaction subject of of in to while business cryogenics streams not of

per $X.XX year, prior year. fiscal current There $X.X the were earnings year inventory gain for For in generated share the two compared as estimated we million $X.XX losses full $X.XX last out unique $X.XX also versus in of $XX.X year to share in holding per share we to the call per a the items follows; or million year. or of

in or And net a were earnings within initiated per in share $XX replacement to QX by program $X.XX tank we year adversely cylinders. affected pressure the current million composite due

Consolidated quarterly selling overall from average offset prior to decreased direct sales quarter due lower X% in year partially million and net shipments back to the by lower steel Turning processing by $XXX in cylinders prices. higher results. in pressure volumes QX to

to year unfavorable year in gains. the $XX current holding and primarily holding by Gross million last million, inventory QX lower $XXX prior the versus volumes direct profit quarter declined losses quarter of driven from by impact

offset more slightly impact average in the of businesses down prices improved over X%; tax up for current were as selling and gas consumer across and in lower excluding products coupled last sales at sales annual business pressure and higher than mix of the industrial divestitures, in came volumes year oil the businesses. with year year. volume QX our were X% effective rate in In Our net XX% versus prior cylinders, however, the the

initiatives margin cylinders up margins with increased were as progress operating quarter-over-quarter. the We're related impactful last activity, restructuring to those during income from our and pleased in and was impairment Excluding operating year quarter. cylinders improvements

In shipped XXXX Total declining X.X% of direct were due of processing, to with volumes. down primarily sales were steel lower QX toll XX.X% million tons X.X%. and from $XXX XX% direct down net shipments declining

mix quarter. down of rising significantly in Volumes believe had customers market XX% in announced, the to were quarter led compared to steel were to prior XXX we were rapidly, year steel conditions both the prior periods. the for XX% over which due been Section year, and in QX, build recently Last tons prices year inventories. Direct unique the tariffs

believe prices low steel have holding of destocking Conversely, last have in of the We customers our many been few and quarters, falling. levels been inventory.

to addition, due the experience automotive softness reduced in quarter Auto in the did year-over-year. American we North volumes builds In current

Operating $XX $XX and million down impairment and gains almost negative processing last in income the of direct QX from driven losses, was steel volumes. for holding of million charges, million swing $X of year, inventory lower $XX by million

in further While we holding our inventory we the never market processing due have QX will losses XXXX been currently prices, estimate we in position believe that that to decline steel stronger. steel has of competitive in

are and deliver on focused improving and customers. while solutions our we with We partner growth investing margins, for to are innovative

XX% XXXX a improvement net sequentially. reported the selling In driven loss million improvement prior $X.X of $X.X operating were higher million $XXX,XXX volumes of Cabs sales up over year prices. was million sequential Engineered $X.X over QX -- average by improvement and Cabs, a and

down increase down declining decreased the contributions quarter ClarkDietrich of the from WAVE million by driven from was a result primarily also was volumes across as million down million steel to spreads due lower our prices. Equity joint during income a Income due Equity $X $X margins though was portfolio. lower ventures year-over-year. $XX.X did to WAVE’s

million million a negatively our write value Chinese the joint to strategies was that are on income lead $X $XX down equity solid from million dividends strip investment to improved JV the believe performance moving took $X venture. will those executing We in steel our unconsolidated we received of our quarter, in impacted we charge businesses and by our forward. addition, In during

of on flow quarter. from was million operations an paid $XX $XX our million projects, paid to sheet. cash shares in in million acquisition, million $XX capital the common balance million on million Cash to spent stock. the flow the dividends, repurchase and Turning $XX statement $XX and X We

declared the quarter, our Board just This increased share XXXX. per of Yesterday, quarter is which a the marks September year a $X.XX ninth the payable we $X.XX dividend have in increase dividend. per consecutive for

at available quarter was consolidated credit $XX flat was $XXX debt of from and Funded expense facilities. million with quarter we the year at sequentially our Interest quarter slightly end down and cash revolving $X $XXX million under million ended million. prior the of

is over $XXX net leverage our million XX Adjusted two the program, $XX last was tank which debt roughly includes replacement times. EBITDA charge and trailing EBITDA the ratio the months, for million to

it turn will I to over point Andy. This

Andy Rose

on Fiscal number by morning we we challenging Thanks the everyone. a tariffs early of Rather us, time Joe. enacted for Good was the use year to than control, on XXXX ourselves fronts. dwell primarily XXXX. steel position a for future cannot things driven the in

fiscal headed. of finished we with quarter, the a result efforts, solid a As and enthusiasm these we of year lot a where are for

be a at have lot We about Worthington. to excited

planning come. completed, of value today and process a initiatives to number do been continue for has Our there and years that so to are strategic will are delivering

opportunities. value business and been streams performance First, playbook metrics big system into optimizing lean to standard combines attack a for tools and management, refocused our agile teams has that transformation

with marketplace. meaningful bottom new have new developed ability results for beginning create teams We competitors, to have that differentiate products our are us multiple services that new our of to meaningful in innovation believe to will from and pipelines We the and that the deliver separation products line. launch

we so level while that arise. and our expensive, size we M&A experience market And of team the remains the when have are here right opportunities the increased ready

portion to quarter We continue to a generate levels. at purchase stock used and of another strong our shares million cash flow attractive this

opportunity clean our up We assets. are also taking the to underperforming

continue effort meet resulted and our growth until all we in capital. this for and will Several return those goals this businesses of impairments of moves on EBITDA quarter small our

well have Industries reposition this We growth. year used Worthington to for

fresh of business number talented to our roles in enabling workforce new a have leaders adding best the and our success. strategies We ideas

are to of Thank path support for Worthington. continued performance. We levels the on of your achieving you new right

Marcus Rogier

open for At over the turn this to we'll back point, operator line questions. it the to

Operator

we in Martin up [Operator instructions] have Jefferies. of the like of looks line queue, In first Englert

Your is line open.

Martin Englert

everyone. good morning Hi,

John McConnell

Morning.

Martin Englert

In steel that expect the of the Fiscal the you'd XQ, inventory magnitude in you discuss possible can processing? holding losses

Joseph Hayek

bottom say them million materially roughly steel different QX not don't is challenge had of $XX of it QX, that Prices in it than prognosticators, was the be be price suggested the in see. went we than that, gain we and fiscal will Yes, have we'll swing yesterday. $XX to may think XXXX. expect near in down be other folks We're do that we the really that $XXX going but to another

Martin Englert

moves, sequential trends weaker XQ Okay, you the looking seeing is volumes, cylinders you're just I a maybe the had here at anticipated demand then for the color at of of there. specifically discuss it just products, consumer fiscal bit cadence And looking into maybe than little thanks some and that here activity? can

John McConnell

cylinders, mean obviously is etcetera. I on there The those in typically lot consumer volume Yes, there's biggest camping product going cylinder the swings the the driver of numbers. XX-ounce side, a

a you volumes. think drops know softness marketplace, get I the that you so, that And when of bit little that in

don't there. with But a so markets of I end exceptions, whole reasonably concern we few would say overall, the have there are doing most of a well lot

Martin Englert

that little or you to consumer? markets bit would a able lagging be within And maybe contracting the Okay. highlight were

John McConnell

bit soft. of our a few A markets, little industrial gas

the declining folks of The will market spot that delay prices purchases when other result steel buying get have to that. thing hoping that is Joe obviously are touched a as on on lower you prices, their

cylinders bit So, a we of little get well. that as in

Martin Englert

this you talk prior price And quarter you if successful the recall, some had flowing sustainability Can in I about quarter. from were that the through initiatives, there?

John McConnell

you of is and to big overall strategies pricing momentum momentum, effort -- cylinders we one put really of there. know we've our is that there. there's become the in and I gain of transformation mature good starting Yes. much sophisticated desks terms in components place more and The pretty in

think there is to come in there. and sustainable So we're things future the I good hopefully what doing

Martin Englert

I tax If Okay. items, Thanks one CapEx detail. some rate. and that year, the for modeling for one last could, budget all on

Joseph Hayek

I really don't changes But I apologize. tax rate in been will think either. be CapEx materially the I'm anticipate comfortable that. significant more that. not I it's specific nothing disclosing than different than historically. don't

Martin Englert

Thanks and fundamental No results light the headwinds. all for there worries. Okay. the of congratulations in details on

Joseph Hayek

Thanks very much.

Operator

John is of Tumazos line of queue Thank Tumazos in John you. the Next Independent.

line Your open. is

John Tumazos

doing like that. Sorry, it’s John or Tumazos you are How today? something

John McConnell

you? are How John. Good

John Tumazos

selling bit going the little a Are your about other that’s to cryogenics me tank Tell to compete you cryogenics plant with good. sale. the Good, somebody operations?

John McConnell

invested what’s Turkey, were it $XXX going difficult business when and think outlook on to things Fundamentally, we the in not. barrel a was number for that that years I of also think, a at operate. different. made oil, are obviously has business different. of I were $XXX We ago, there We and

honest John, continue products what So, niche they here our we with there will we're competing markets Turkey the be and some directly in And aren’t what U.S. U.S. operations to really did the in that doing in here

John Tumazos

still you’re cryogenic -- selling cylinders But tanks.

John McConnell

correct, is That yes.

John Tumazos

owner is going it. And the do new to

John McConnell

I’m owner. sure new I’m following... not The

Joseph Hayek

very Yes, Joe. relative John. our That their as is It’s are unique other business geographies. to businesses

any So be there competitive won’t pressure.

John Tumazos

and it’s high steel Since dismantling you’ve just it value scrap? much got the specialty selling, as money is plant

John McConnell

We everybody believe for this is the best involved. and outcome us

John Tumazos

non-U.S. I your as hope rate discount as your X in is in discount least times much transactions? transactions rate, that at U.S.

John McConnell

I and that, appreciate would... certainly We

John Tumazos

continue. use bought cyanide, play game a company route Turk Freeport you’re cyanide, where, I it’s han t the your jerk as mine could for it’s change, the that love near couldn’t Arizona. me a like I jerked to foreigner has called also in just But just in and Let They Indonesia, around writing had Columbus, – and deal for Whenever Normandy Ohio get the Izmir, down an plant just more use shareholder around a you a and do gold less chump but trouble you example, it the lot China. in them earned in I’m and that you. Australian overseas. dynamite

John McConnell

you, John. Thank

Operator

of line the Gibbs KeyBanc Capital Markets. have we Next, Instructions] [Operator Phil of

is open. line Your

Phil Gibbs

was To the minutes. year. that last is interesting, on said think volumes in last super you quarter question start, a That bit versus that weak WAVE. I My five really were

the into guys that order trends or have quarter? think you How visibility we that any business Just seasonality? next bridges to do

Joseph Hayek

Last took in and effect during bought people price had ahead Phil, we that that so year a that of increase Sure, QX, price Joe. it’s announced WAVE would June, increase. believe

bit default rapidly than growing is the little number rapidly. some probably on are of growing had last QX of today, moving by a market got grid smaller market, and so brought worry into that And of that product about pieces year lumpiness very initiatives They in QX, their but WAVE’s forward. a base more have core of volumes we don’t new much front the but we

Phil Gibbs

toward more market their M&A just on commented you again out were a normalcy? -- Or move that think stock higher signs the in this I on multiples. in the Andy, given everybody nice. Any -- is little Okay, moving ground? pumped toward bit recent holding

Andy Rose

the markets Yes. I so it’s available is think she plenty Phil. market steady buyers are good. as goes, would and readily there pretty there. I mean of say I is The financing out

a ready not and I year say we’re a strong So pretty It’s nice environment. operations, and looking I really last we now up things aren’t really seeing and Joe expertise doesn’t now. building go multiple we we’re think ourselves, core where to some cleaning on has that’s supporting done think kind team job more our I spent mean, we refocusing of of would It just his like.

to to be And price certain sensitive degree. that going being to a said, we��re continue

we’re of near at at and lot companies to near not earnings, We’re a because going peak multiples. are or or peak go crazy,

you do better be for and then you environment. the you better bit a not, a best you little lot dollars buyer to saving synergies, and might be when that, of better have if So your better served

Phil Gibbs

That makes sense.

I is side think, Volumes were business relative we for which sign. was to expecting, color good more that And of cylinders. all I forward? a positive One EBIT I Any not in gas and up quarter? -- the bit, or in had terms what on a think picked EBIT the one oil were moving looks you whether how question.

Joseph Hayek

markets or in oil the -- us, know, brought have good very trending still so quarter that to in market. but in that to of momentum smaller Yes. a fair Run fluctuations prices momentum innovation million but and good be as direction, going lots their end a for amount rate at the you of of subject some to and was they $XXX they the business Phil, have it's in

them reasonably feel on for year-over-year the about good basis. few certainly we quarters So a next

Phil Gibbs

you an... And profitable in all on quarter, when were the

John McConnell

but it everything depends allocations couple months. of on I mean, last else, the

Phil Gibbs

Okay. Thanks so much.

Operator

for we no us. queuing one [Operator phone by have Instructions] At time, this

John McConnell

Okay. Thank future at look for our have with today. you us joining very pleased in very we’re much and forward. we Again, the team again coming place our results

forward the look of at you seeing first Thanks. we So, end to quarter. the

Operator

much and Well very the morning. Executive We thank ladies that you gentlemen, for this presentation participation of our conclude for and Teleconference using all does Service. your

You disconnect. now may

Worthington Industries (WOR) 27 Jun 192019 Q4 Earnings call transcript