WOR - Earnings call transcript Q1 2021 | Worthington Industries, Inc.

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Operator

Good afternoon and welcome to the Worthington Industries First Quarter Fiscal 2021 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 Worthington Industries. If anyone objects, you may disconnect at this time. I would now like to introduce Marcus Rogier, Treasurer and Investor Relations Officer. Mr. begin. may you Rogier,

Marcus Rogier

Andy Good Officer. Fiscal and our XXXX have Hayek, Executive afternoon, Amy. Executive and Industries and Officer; call to First we Joe Chairman; Worthington's McConnell, Quarter Earnings Chief John Worthington's afternoon you, President welcome Chief Financial everyone Worthington's Worthington this Rose, Thank Call. On

subject XXXX is to cause made forward-looking point, a within are to opening replay being the Before factors we to risks like These it refer later are John I'd to Litigation details remind everyone more Act. will of We that earlier that be today Please made actual some the actual on Private our our this differ uncertainties could to get call started, At that Securities available Reform this worthingtonindustries.com website. certain those the from over earnings for release call could recorded, morning. statements to results on results I and and for Today's meaning turn will comments. materially. issued those statements cause suggested. differ

John McConnell

Thank you, brief. Marcus. I'll be

I think jump right Hayek. will turn into just the call we to Mr. course, so over the should I

Joe Hayek

recognized John, that reported impacted you, a the Nikola quarter, Corporation. share items Thank net afternoon, Great. $XX.XX the QX, the investment gain good a prior we per we pretax million in in on share or right. our All a loss In we're share and earnings unique serving everybody. per $XX.XX of $X.XX of and versus of year $XXX following: quarter, including

gains will the X end $XX from shares stock shares, we $XX.XX. own revaluations establish recorded $XX long closing just the and of of gain-related the these the quarter $XX expenses just profit still on stock. the recognition Nikola operating million charitable income. very We're within sale shares. XXX,XXX $XXX unrealized pleased Industries offsetting to a the million, and expenses based These of of shares generated we the of for Nikola remaining be of investment subject from for donation million some quarter, employees own gains $XX as be Worthington to to of Nikola and Partially cash as of During over of the shares realized share gains with price million the compensation the endowment communities. a was on donation $XXX gain future million of Foundation. we -- our in with for $XXX realized XX.X under sharing able million to have million million which and our the We million this in

last combined Engineered in year Steel share $X.X $X.X prior of related to million Cylinders decreased million lower business. charges This share of compares Processing, from customer write-down long-term and impairment direct $X.XX and incurred year early Consolidated in This Cabs $XX The quarter, of Cabs well termination of of inventory the quarter. benefited $X.XX QX XX% QX of $X.XX losses primarily restructuring our million by as $X.XX with in charges prices share the due primarily which $X.XX or sales lower $XXX net related from of exit our per year in as of the severance losses Pressure volumes quarter, to a the share in prior and related overall the lower debt, to or expenses. North selling prior average contract Cylinders to $XX million extinguishment American share, charges year to last also assets Cryogenics we to year, per impairment included million most our and $X.XX impairment compared Engineered business. the to QX in of in the sales share Estimated of holding early per were or take-or-pay per but of per per quarter related business. our restructuring or

$XXX gross to of the $XX from for QX Our gross for to QX reported time the margin and million $X income $XX quarter long quarter year. profit adjusted million, XX.X% expenses, the million XX.X%. declined The by last increased versus restructuring for operating year of last only and million Nikola-related was from in

the slightly quarter lower the X% of Steel from The $X.X in sales was XX% in lower at year slightly down QX construction of XX% EBITDA in of prior quarter, They total inventory down of sequential mix $XXX prior losses. Our In Total but XXXX, though now volumes. XX% Samuel a of or up $XX JV. as demand year's adjusted to QX income quarter were in tons was Processing. XXXX. in last up QX to quarter, rose our up first tons favorable our year-over-year. saw the declined year, EBITDA from is trailing And prices $XXX Steel million continues compared tons for million. $XX Steel XX-month and due Processing, Operating end market improved $XX million market XX% and due XX,XXX last has to for XXXX, million and net strong. million costs year. primarily stable, Processing holding QX of Direct from were of than is million last sequentially lower adjusted selling tons in consolidation mix in X% million $X.X recent the due we the improvement from conversion $XX.X levels average to by were Pickling remain Steel shipped year automotive lower the direct the million In by to and from

the current very long-term remains Our well environment navigating team growth Steel and Processing on business. focused is profitability and that of the

more for venture or year & using $XXX Cylinders cylinder and Pressure to Oil outdoors, quarter, million, XX% Our prior volumes change Demand consumer-facing in as primarily Simply our business down net due Consumer products at continues Products. mix Products, people home strong. our Industrial be from partially they're our demand lower in products. more offset in by sales the to Gas increased in the of do stated, were

business was Softness largely in operations. in Industrial European the by continued our weakness driven Products

that the expect addition, restructuring, facilities Gas down foreseeable of down reduce prior income $XX year. in be do of million XXXX. the that two operating last Chinese the termination million equity demand JVs, joint the $X unconsolidated consolidated quarter impairment $XX business In the equity business higher due prior earnings will to $XX JVs Oil customer into That $XX and in from partner venture volumes We quarter. a and earlier. receive did related write-off I in from to included dividends and operating $X was included take-or-pay which decreased during costs. decreased our mentioned quarter million, from from million both benefit during future, to With challenged we early in contributions our by million the to our year, $XX allocations. exiting excluding & respect $X our due to million, in to year we've income, Cylinders a Processing contract million WAVE's was million the Steel

cash sheet. $XXX statement flow million Turning cash was Cash the free the operations from balance and quarter was in and to $XX million. flow flow the

million from our sale repurchase paid in X.XX million pretax generated in Nikola and million shares $XX proceeds of on common capital to invested $XX stock, the of dividends million million During quarter, the $XX stock. $XXX spent we projects,

quarter cash, million at funded from of million. today, share up XXXX. and quarter in to Looking net $X $X it was per turn at prior which million to sheet lower will At $XXX debt end both million due the declared We million. $XX in was our ended the $XXX dividend our debt of expense and debt balance this million a and liquidity point, December with Andy. over $X.X position, year QX to quarter, our the refinancing Board a $X.XX payable was for balances. down I Interest debt Earlier was

Andy Rose

Thank and afternoon Joe, you, everyone. good

Our generates have the customers. manufacturers our safe proven shutdowns continue many in Cylinders Despite been such compelling pockets this but to challenging businesses to April have grilling a camping, as our restocking outdoor and have be whom our stay Pressure for May. has, lots capital, of goes still QX. Auto depleted units, hard a markets rebounded distance weakness, portfolio nicely and and few performance despite businesses so Consumers once of environment. retail most COVID-related and during We to to implemented improve business returns of of end are and utilize employees, for deliver were from again, a or working redeploy it dining. to to shareholders. our activities that have for our dealer pursue Credit economic underperforming plans few resilient socially

in two-thirds roughly monetize to the elected we mentioned, quarter. of Nikola investment during Joe our As

share targeted as present improvements. dividends will that to our balance murky our shareholders a despite portion cash We through with is in opportunities through Unfortunately, have a outlook and expand buybacks business share sizable bit recent us reinvest still economic a allow the company, M&A themselves. and

feel dollars like if our again, would So Worthington work you, stimulus wane times. continue. of to during challenges for good challenges employees and of Industries hard we activity, dedication and thank their still about current represent as to future our quarters while to unique I level COVID-related these say all

as profit able efforts. share proceeds As recognition Nikola investment sharing the be portion to we company, our from a their employees are our a of excited to with for

that the may and are ahead. to We have new challenges lie well adapted the ready for normal

Finally, always will legacy XX like lesson the Chairman, we His to P. over to I is years. McConnell most strive many past But get would great thank his contains to John better. leadership for for our me, the forward important carry exceptional accomplishments.

any our great With as Worthington, talented questions. shareholders. take employees the deliver leaves now team well-positioned he We'll strong our a for philosophy returns us to across and foundation leadership and

Operator

today Leshock Capital first of of Keybanc line Michael [Operator Instructions] Your question from Markets. comes the

Michael Leshock

do to sale? taxes Nikola you NOLs the have So on first, offset accrued the any

Andy Rose

XX%. federal is The income Material. Nothing tax Nothing.

Michael Leshock

months it's Okay. capital what gains, And the obviously than ago. I then meaningfully in we allocation Nikola six more mean, terms expected regarding of

I think pricing than you sold the obviously IPO higher much $XX, that. was and for around

plans or use in your be investing whether what back returning to cash business the to proceeds, are shareholders. it wondering just So the

Andy Rose

where it's would we've depending we buckets, I our always into Philosophically, everything to similar probably on of little and to we tend dividends, the M&A of lean investing value repurchases company think in historically. CapEx bit those Michael, a most is. share whether done in or what through we've or kind said say, and Yes. moderation,

So can't -- with as you M&A, force it. and you know,

the right to wait advantage those. and You have right for the price opportunities of to get take

and to war So sure have have patient it's the bit to I a of think but be we're way. make we a right here, nice to going little it deploy chest

Michael Leshock

auto July, in then back And June, came August. Okay. strongly

in do expect initial quarter? November recovery, Just given that you the steel better volumes

Andy Rose

Yes.

build -- is this still where year. below the last think was I rate it

so, or million know, think fleet, that I be and last week, you it $XX $X.X As of typically million. would includes as no was which

build the is still rate than was lower so And it last year.

And cars, so automakers you're volumes when making the still But cars. right, will they were that. absolutely selling track our during period weren't

continuing and and lots dealer volumes to sell restocking still absolutely those stable So recover. be suggest would should that

Michael Leshock

further strong remainder improving calendar quarter. -- secondly, Okay. to And Do you are in going set of was costs come that the shutdowns, forward? the see that they tied And mix are over year? any the of the the there pandemic to the back are

Andy Rose

and a shouldn't We a terms what pandemic We own us at of deciding real over associated cost and demand with for have in some they lot several and construction, places. we visibility, to market But next economically mega our very a Relative of mix, to live is trends uncertainty several back different with see automotive was out strong to respect want the months. business. fixed construction happens residential least and of a of for which there there's will expect the great seeing that lot don't strength has in next also lot the with people continue it that has months. into

corner hard housing in to things see because mentioned far hard So the like see to see starts earlier, cautious that, we're reasons be ahead to or right around and to -- we it's it's but now. that still Andy optimistic, tracking as

Michael Leshock

And I'm me, quarter? prices. sheet-based if galvanized your been wondering then the the HRC Got for there what's or and benefiting not seeing you're it. you've widespread gains that or between And outlook next losses are, what whether holding for lastly normal? then from versus gains are you And

Andy Rose

losses. now, effectively. pretty spreads where either it price but important question it need Relative doing have be will first, spreads our for are that job being us, big to able really Michael. teams pricing a or we based So Right think wouldn't is, on a that flat are important, more be impact, and and your to being gains able second good what it's to customers

team job the are that very done spreads some very, so of really well. and And definitely a executing but share gaining nice has part equation,

Operator

next BNP. question. line Exane the your Your Rosenfeld proceed with question of with from comes Please Seth

Seth Rosenfeld

very quarter. Congrats on a strong

the forward-looking to risk year. the wondering are little around construction-oriented read seeing on business real regards give next you over the if example, and also JVs, both But Moving some to conditions, trends? demand was bit estate, construction more a and us color it JVs? can did into going across color whether for WAVE any touch non-resi You Processing infrastructure side outlook, within or ClarkDietrich. commercial challenge, be on the your Any from you on on stimulus I with Steel

Andy Rose

projects, first. These That a when the I get little completion. is different JVs, move construction started, through maybe than pretty tend one take they they still so Yes. to mean of strong. that business to steel construction the is side

backlog think that Index, starts are so the Billings The and the and there. we And the are thing one activity watching now a starts so is great. Architectural not I great. is of The Index numbers right there's Billings

sort their our call profit let's are JVs, at Interestingly, Their behaving volume bit calendar about, WAVE it, is to than activity. are because ClarkDietrich, changes of parents. volumes off. construction of little more just some for little they're leads which off and that be allocation a So WAVE's bit the different. cautious a you 'XX

is see don't actually concern strong. up on But the and of well a side, holding I ClarkDietrich their very business lot very So is there.

that an are they're similarly, differently of bit right those a but now. -- interesting sure great businesses why. not answer as And dynamic usually, little kind I'm pretty a it's trend So have behaving I to

Seth Rosenfeld

so from very non-resi I steel is that, interesting. the Okay. although for And some XXXX. some this JVs divergent for of flag flagging the the time still the looking construction for That's side, But you're side, guess, very you, on into being, good performance.

Okay.

today have look Pressure last can the How within bit point quarter Are additional the when we work in think might of bit little Moving business at at restructuring going going a That's you forward? where over the us the you forward, outlook impairments the for do are require you additional feel ducks businesses Pressure seen time. you a a order? forward? outlook on your impacted you color that I guess, give Cylinders there performance? that's about business, Or like Cylinders more a obviously quite that

Joe Hayek

Cylinders. when businesses. stay we've have is have Andy think to not timelines, business, it generate bit it's think, the generate should, returns use of that's in seen having see the well, baseball several of of you just in But I and rest of And out. there's what and that kinds And better the question. our for our that what have you've them that strength said if our restructured part, are of plan to our stretch for -- we in they are, it which businesses But charge and couple analogy, part it that to of we're Part I figure businesses conversations. X.X to all realize of businesses some is kinds to Yes, the that think There last And been generate. a the to efforts, then for most I good a need got if the real it that's few we've those assured, for a we're pockets we've way probably it are said if a little terms we do accounting better going to over in Seth, of always we're restructuring to is the We give owner have in something cleanup terms a the returns pockets years, place. seventh out last of the need I color of maybe weakness. or The divested going years, of worth. terms a of of inning rest ongoing in the things remaining maybe. plan

Seth Rosenfeld

capital last quarter And meaningful for with you forward capital Can going for the the still that? that investment working a And forward? you QX, or some there. stop would question o drivers working looking The quite saw us demand walk of through sequentially improving potentially, expect on Okay. last release capital. what release. working into I'll

Joe Hayek

pretty astute quarter all Cylinders, and No, half anticipating first we in February in We've were about. Sure. observation. and both we managing job, Steel that pretty elevated, done didn't fair materialize strong of the amount spring March bought a of Processing, a In steel know our strong levels inventory really that a a reasons steel inventory. particularly nice May, in and for where

And balance obviously, which during us. material the at so inventories cash there generated if was you quarter, in sheet, look the decline for some a

$XX is So additional generate during destocking free of recovering. flow We'd year, but cash stable own and have demand as additional quarter. free our of to inventories unlikely million cash the to the probably during flow certainly expect

we'll don't and So, reasonable well. -- job forward, we'll we intend earnings have sheet believe but as we have should the after balance to do looking that we a dynamic power, have going good

Seth Rosenfeld

reversal there to gradually that going of forward recover? continue inventory to Just be need you if would to volumes expect release clarify, any

Joe Hayek

price any -- know, of mean, a would reversal, be big it happen. think possibly, that would if materially a don't things I as picked material and you I those steel Yes. driver Seth. up be But

Andy Rose

maybe current dependent it's as fall probably Seth, probably more from Yes. volume volumes answer opposed another to off is price I way unless levels. dependent question, mean, the to

Operator

question. your Your Research. from with proceed line Tumazos John John comes the Tumazos of next with Please question Independent Very

John Tumazos

in... been It a that's started X-year over and [Indiscernible] period.

Andy Rose

hearing hard John, having a Hey, you. we're time

question? want somebody Did we John? You else's can come you? to take We there, back. still You lose

Operator

Instructions] [Operator

Joe Hayek

you a a you answer balance -- the projects relative complete those off. us we didn't give a had of question. sheet. we to where finished respect didn't couple you long CapEx in tail I to With asked the quarter, Seth,

so to we basis, more normalized believe will perspective, quarterly be that the the on on levels do back should QX and QX. And that watermark high a year starting from a for CapEx in trend

Operator

from And Seth Please you question. with do have your BNP. line the proceed Exane a Rosenfeld of of question

Joe Hayek

CapEx. Maybe asking he about was

Seth Rosenfeld

on those earlier I can to Processing regard Sorry, the aiding conversion costs going commented forward? When performance sustainability margin for Steel just with a of you have follow-up a of QX, kind holding please. margins, on touch spreads challenged QX, and despite conditions, a margin tailwinds on please? think the loss into gross about Obviously, stripping should obviously that the market out in quite strong period, inventory how go-forward we basis you

Joe Hayek

of solutions I one what customers. and to in we volatility when pricing sustainable a certainly a So And lot is think ability of competitive is variety our believe there advantage of to is hedge creates pricing, our really offer opportunities. it our

conversion better our it's predict while we certainly so and others future, not in like to take that. do advantage benefit have offer whether And well-positioned in and and pretty way, different see market we're to difficult shareholders, of or things customers we'll the costs continue the can't, both to can the we and we'll that that feel along things our

Seth Rosenfeld

boosted But nothing particular that the price given Fine. the regards environment, volatility have last Okay. to quarter? uniquely in with market there was margin in that would

Joe Hayek

that of out being Nothing in unique as stands onetime that or kind sense.

Operator

back Rogier. Mr. the at questions there this no call turn queue time. And over I further are Instructions] to in [Operator

John McConnell

today. Once again, McConnell. all joining John is this for us you Thank

I this routine you the at wish enjoyed I've you effective afternoon. as September Rose. quarterly the and with such, last conference over working attendance know, call. way of years, all in Mr. a be relinquished my Xst, title good a I CEO you will As and And

Operator

conference today's you call. Thank And participation. this for your concludes

may disconnect. You now

Worthington Industries (WOR) 23 Sep 202021 Q1 Earnings call transcript