WOR - Earnings call transcript Q3 2021 | Worthington Industries, Inc.

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Operator

Good afternoon, and welcome to the Worthington Industries Third 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 the Worthington Industries. If anyone objects, you may disconnect at this time. And I'd now like to introduce Marcus Rogier, Treasurer and Investor Relations Officer. Mr. begin. may you Rogier,

Marcus Rogier

Chief Good fiscal and our XXXX have President afternoon, Tamia. Worthington's Joe Industries Financial Chief call to third we Officer. and Worthington's Rose, quarter earnings Andy Officer; afternoon, you, and welcome Hayek, everyone, Worthington this Executive Thank call. On

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

Joe Hayek

per of of which Good Marcus. QX, prior prior out charges in net pretax shares establishing related Nikola year contributed million, or of $XX to Worthington primarily of quarter. a investment at Corporation a primarily business, or community Pressure in pretax per $XXX in $X quarter. Coil afternoon, and year In you, quarters we of unique our and our proceeds the of on investment in unprofitable gas supporting the This quarter. share, million, call include $XX $X.XX cumulative cash Thank Nikola incurred in combined lowering related for remaining The due gain Foundation, We year and of million. the QX, compares share divested $XXX Samuel to $X.XX share following. on shares restructuring benefit was our impairment recognized the our to per per earnings program the and million the share, Nikola with benefit charitable the during exit benefit in There We total, charges $X.XX In realized a million endowment to us selling our oil we of to worthwhile of per January. the in causes. prior This $X.XX end within reserve replacement with year the $X.XX tank to Cylinders. items associated current share Worthington the a consolidation that JV, Processing we $X.XX prior Industries an included pretax few quarter versus reported were everyone. a of the from

Excluding quarter $XXX the in these were a Consolidated QX, $X.XX a in flat of compared to share net year the million in quarter. $XXX sales record prior in items, compared generated to we million QX $X.XX relatively per year ago. earnings in

gross profit inventory prior quarter losses our Our to by $XXX for increased had to gains and reported $XX we from XX.X% year million, and in increased gross XX.X%, as million the from quarter quarter. year the QX this holding last margin

year prior million. was $XXX from now trailing up Our $XX the and in adjusted quarter $XXX is EBITDA adjusted EBITDA million, our million XX-month

charges benefited to oil sales per current compared were In to that were tons operating furnace Our tons show teams while across $XX remains strength, increased from for from the million was losses to customers. of to increased significantly quarter, we benefit $XX business adjusted roughly and more quarter. on toll still inventory continue $XXX X.X%. on a which In look the and holding we year Cylinders average XX% demand $XX we acquisition the had signs estimated by $X facing of higher ended business, supply. totaled market generate at most to entire restructuring down solid large believe Sales arbitrage at or made from of extremely $XX excluding year-over-year focused We $XX value Pressure from end automotive, direct of facing business, all mentioned XX.X%. million in Steel in business current selling rapidly consumer were reserve year-over-year as in January year. starting gas was Based to given Collectively, in demand last inventory continue million agriculture in GTI, tight we EBITDA which heavy continued offset spreads, are the by in in in quarter million million quarter, the up both in demand the major against as in and generated $XXX the were General strong lower gained QX across or volumes. steel through which adjustment QX see the from $XX QX as to these X% income operating year truck. gains The that Composite rise February I million. to solid XXXX, see than operating still a well one-time The gas quarter, sales in mill construction of and our through years our year improvement recovery. comp, markets. starting recovered from expect in with of prior to strong million. the primarily results total products decrease has tons markets current down markets, million, losses SCI, margins by the of losses up a had European driven primarily for increased our it's year-over-year we last where in Direct year well include in mix a prices. due very on and show quarter outages. this million prices, related was compared Tools our XX% $X last million toll is net partially earlier by consumer, third Operating flat units. will have prior business, prices, and delivering income, Steel holding quarter, Industries XX% We QX and divested Direct quarter per share US as tons are we caused million, our up as due X% $XXX steel our share X.X% quarter X% Structural products share were while from to to or have up see industrial and oil in significant net or the to we from Cylinders sales declined Steel lower and able The very in also the our $X demand January. were Instruments $X.XX and last nine markets record from year The well. ship key quarter, increase benefited recently were impairment while gains Taking and margins the our tough up sales QX – headwinds, Processing, by to million. & execute year. of of to and months headwinds prior continue driven from gains to of charges end and $X.XX our

complements unprofitable of in recent of the future Pressure strategic will believe growth three improvements our These to mobility PTEC we've addition year. business, in Including Type this presence position Technology. expertise. as WAVE's by the construction our two year-over-year were acquisition QX, our enabled of we of income to facility in With hydrogen $XX As Austria. profitability. during in completed you sustainable equity additive production Alabama, SCI exception gives businesses and GTI the JVs, WAVE. in investments include sourcing Cylinders us results GTI PTEC increased the and six current facility the operations made in very hydrogen be sequential last market the supply Type to acquisitions, and earlier compared chain our new of significantly and and Poland divestiture months tools X oil cylinder of quarter a the JVs divested our partner and investments may cylinder X now business for We basis saw commercial well million respect seen, composite last new have CNG. because month. with in and transactions slightly to and was of continues divestiture a gas the $XX to down we our million these all specialty CryoScience from sold which on allocations, our We construction improved but the recover. strategic in expansion expands investments and The our and

million we quarter, dividends JVs. the During received our $XX from in unconsolidated

Cash and $X nine for in flow cash the to operations the from million fiscal flow cash $XXX the sheet. our Turning quarter flow months statement was free year, of with million and balance working totaling first $XX to primarily prices cash by increasing Free caused steel same was $XXX due to period. negative million levels flow by the million for the increase capital $X in quarter that million. actually our the

of X stock completed the shares $XX.XX. we spent stock an stock. paid million sale quarter, million $XX capital proceeds million $XX million and pre-tax totaling We $XXX the generated common million million $X Nikola at of $XX to two During on invested our average in in of million, common -- price dividends from $XXX projects, of acquisitions repurchase our

line quarter, Looking We $XXX and was able in the of of with This position. stock authorization continue in is XXth relatively this at an increase. our our I year of Board increase to quarter increased debt prior and our and dividend, XX% on balance now allocation reward growth quarter, for Andy. year on with it to $X QX to rewarding focused share flat on cash to $X.XX end quarter. ended program at a shares increased consecutive million pleased million balanced of Earlier interest million and we very are in the expense a to the capital be June to over today, was marks over we shareholders. and XXXX. are liquidity Funded sequentially, turn per $XXX of last dividend will repurchase aggregate million shareholders that's approach with payable our which and have well-positioned declared our sheet the XX

Andy Rose

Good afternoon, Thank Joe. everyone. you,

job good that record most of our all challenges markets be related a schedules. operational was production to issues of quarter and across end our quarantines teams and signs We outstanding let-off. and steel any appear terrific a faced excellent The results. not some demand we there extreme lingering does which is of third some to did delivered news is including staffing COVID performance. financial But supply fiscal shortages, impact Our weather,

in steel a rise We continue manner. to in large working are past partners be quarters the The our grateful steel to to rapid timely over mill receive prices processing two who gains that our steel business. ensure holding hard in created inventory we

down been these inspiring ways keep to business exceptional cost. effectively to safely another material Worthington raising our have operations our times. offset shout people together to financial dedicated employees manufacturing raw in have We increased in give in stream come question Without who out I yet these running Industries, deserve and for prices want to results. our the trying recognition

our So complete, growth our the performing of largely initiatives. our and core has underperforming shifted with focus to our businesses cleanup accelerating operations well strategic

cash opportunities accelerate attractive balance of M&A growth. sizable growing and have to continue our pipeline a will that We

our development playbook transformation shareholder new lean augment drive innovation and will Our M&A and value. product to

well to capital shareholders. raise strong over us reflection further rewarding approach our allocation dividend has today, performance balanced and and the by a us XX% years. quarterly led to financial That served our of position opportunistic our approach Our

environment stronger come rollout again, we is vaccine to need business We are away. than positioned until nimble and underway, come more before. to hopeful as this that of together only are we but such the can a all time pandemic stay out With vigilant well we months normal

the flexible We and perhaps changing have adapt to past this learned work to and thank takes lot you the to our including big the most a all activities done. be of in get do safety and dedication Worthington quickly how past importantly, remotely to what their to during Industries protocols, help job employees rules for it year, daily to year. manage to A

We will now take any questions.

Operator

comes from Phil question And KeyBanc with Instructions] Markets. first your of Gibbs Capital line the [Operator

Phil Gibbs

Hey. afternoon. Good

Andy Rose

Hey, good Phil, afternoon.

Phil Gibbs

question had I on Cylinders. a

here, selling things of handful maneuvers things. a buying made both You've and strategic

from a your You I positive sure weren't wanted because -- just takes. there's to fourth May quarter in your we quarter. anything perspective, typically puts and have make But missing seasonality baseline some

just considering seasonality were are business to out? anticipating composition trying not there's are to So, to be expect? that of that quarter of that things and third base you going there understand kind other the versus come normal So have or now what this the

Andy Rose

were normal have at seasonality a of expect materially. the are Sure. divested that would we less The change margin the the wouldn't businesses seasonal that part we on expect point, we probably ones that of to in QX. than so Phil, pretty core this actually

Phil Gibbs

to So this a good level, work is XXX-ish off of? base of sales

Andy Rose

It seems sure. reasonable than anything else,

Phil Gibbs

you challenges procurement, lagging in. versus And remarks mentioned which also see steel do a in volume and the seasonality some few some I of guess think obviously you're you and the auto normal a to for Is about ability some will or quarter of had good. February here Sounds think been in your well very supply that and quarter this involved there’s release the growth theme coming the were aware obviously, issues, questions persistent that prevail, the demand, there of I had terms inhibiting in months.

about steel and from So, volume given for help puts expecting takes us be perspective just should the right think now. what a all we

Andy Rose

I Phil, for Yes. seasonality expect steel certainly say, the should would normal you uptick processing.

got As intermittently of there the you which back variables our of schedules little production the steel It's exactly of although, semiconductor some kind the supply uptick. are bit bit kind those a customers; probably affecting face challenges. to was issue, One when which are which more you've in little will a gotten -- worse late, hard it's a It a better of shortage, timeframe. it's seasonal here January December, predict tricky as we few is predict. of to mentioned, is different

Our kind the timeframe. see little anticipating in of we might of guys that kind of bit a April, are that May more

to we those say, uptick think, normally have we So, to it's even do experienced. don't things, still going hard but reasonably still related I good if to some experience we're that the delays seasonal

Andy Rose

we in that few would nothing Phil, at that QX. have than outage a planned. recur in one an It That QX. obviously, days hope facilities was we longer was this Yes. in point, planned. our did of went also And like

Phil Gibbs

right guys. pounce you, cash the side, Thank growth Andy with And now opportunities. you're lastly, then and strategic to looking as on on obviously flushed said,

on things given, should do Thanks. silos? as are of you within the your So, you we annualized core? think route, some what then what And if staying got any some you're planning branching secondly, in? sure M&A the type Are Are you go interested that you well? CapEx, I'm about out opportunities the of of also organic

Andy Rose

opportunities front, I would most Phil, be M&A steel Yes, on around do processing. our what say will of and we the in in core. There's certainly

the which I of think higher on we've segments that. continue focused higher we margin, historically think value-add I likely kind there, would

worth businesses, higher stay many to businesses -- but Within the acquisition acquired we us Those think best to recently there's multiples trade of there as of at opportunity our We it. we're product in saw the same doing and businesses a cases out you do segment, historically they're have time, disciplined well. at amount tend in There's space. the then there. tremendous Cylinders consumer sizable Pressure lots a

were expect in to if months. XX XX we do next months something I the to So, would

as could in might there core we are globally, think You that cylinder an consumer about area still then space, as our do the -- it's a business, there's legacy products out there opportunities well. something. still product for highly industrial fragmented so market where And

a it's the of little because and time situation. an M&A, have COVID haves been have-nots created it's bit interesting be at because to looking So, of the

through So, some year, which the lot which we're to last at are of have some trying of sustainable, the when of changes that happened aren't. look we companies, filter a in

Joe Hayek

to I we're growth-oriented to to XXXX, at we're the we'll we in year investments, of relative neighborhood so make wouldn't come. out different will of year our some to CapEx, to point beyond some going have where this expect and with round QX. fiscal then would think -- to those them be I that, the projects in QX just question Phil, be And done your radically expect answer your the And more,

Phil Gibbs

Thanks Good luck. Good guys. color.

Joe Hayek

Phil. Thanks

Operator

line question with Gresser from Exane Tristan Your next the BNP comes of Paribas.

Tristan Gresser

those extent? the what mentioned for of give magnitude you rise gains, hold size given this the to double, to the may, you does of Can sense taking If next quarter. be windfall continue us on prices expect I Thank would Hi. prices kind you a gains Yes. you question. my some of gain Let's to continued that say, looking has we at? into

Joe Hayek

Good that little a question, they where of the expect in with QX upside. they would Tristan. would in were potentially We be neighborhood of bit

Tristan Gresser

there's acquiring. been completed helpful. All And maybe, operation and recent disposing you've a right. in the lot months, -- That's of

bit lot. the cylinder, you especially understand, a with you changing on but So, difficult color in with provide And a what obviously, challenges, next what mentioned expect? production is the it's guidance the Is moving for more we I commentary should the it business forward, could possible, for quarter? your

Andy Rose

guidance. We will point two-thirds we you Joe's I businesses losing mean, that this. is were related know probably one-time Yes. million expenses, two of you The I earnings sort of to of outlined don't which comments give $X you money. was that, in one divested, to thing

obviously probably losses as at the point. away, line but as those of this crossing color that's without we much can on go kind So give guidance

Joe Hayek

in clarify, tune may we for to we one-time just Tristan, GTI sort that charge an of would be acquisition Yes, of may the accounting the couple additional a of it. quarter, have million -- dollars but have to

Tristan Gresser

on situation That's sense it expect the that worsening? the is All so helpful. the kind you last far? shortage, And Is have forward? what impact And moving seen do now chip you of you right question, what right. maybe do have --

Andy Rose

production-related I honest, lines regularly. it's And of be earlier supply, how to saw, I again, answer and a sure hit chips, fast we think more production they question. hand it was that think best to mouth of we're of produce. miss. not Ford you But lot delayed I'm but not week, and I the facilities could are I so sure to I they're much mean, to impact customers a kind how can that right talk chip us. getting so it's these this they're some mean, customers. our obviously To just mean, that now, Yes. our positioned

hard it's accuracy. for that question answer a level with little So, of to any us

Joe Hayek

with as you We the a impact building and definitely on. and eye an those limited it's adding Yes. cars that can -- they're on that actually in chips but And certain something would Tristan, doctors far, situations, muted thus say, plan keeping the we're leaving sending but later, out it's or know, pretty the on change. us always had

Andy Rose

and Yes. respects, because that our migrated some business estimate, of XX% but that. an around we've going is years, And we several our business we're fortunate automotive, in Processing the truck, SUV, XX%, and about so van have Steel over the things crossover that Its non-sedan. like that’s in last business, business into

given they're are And so, of the just the last shut those the profitability for going those OEMs, typically vehicles profiles to down. that

Tristan Gresser

very right. much. you, All Thank

Andy Rose

you. Thank

Operator

your John the Research. from [Operator comes of Very Tumazos Instructions] Tumazos Independent next line John question And with

John Tumazos

get ton more you it of XXX,XXX Could couldn't Processing day? as through How volume leap us was, was, period auto was walk you. because couldn't much Steel get Thank much last of How the one year because steel? the of decline because much you good with last How versus it was customers a much chips? year? it

Joe Hayek

specific toll a those think yes, think bit be more business more questions and good core related tons, would from Yeah. and the profit some the of partnering doing outages you direct exclusively which with more our so And yes, decline and I John flat and I number our you a was we mills. of had candidly outages. and toll to were and to business, oftentimes yes. are All and be answer for things furnace And that we're the tons. mill had the

or so not producing we're tons. obviously to steel, And if they're those toll code process not going toll

December earlier, trying tolling weeks. we could facilities we to we did I We take for situations as in could mentioned one it direct, outage in also our as shift customers as really a of an couple have to and of just in from good certain of care then when those

coupled good And XXX% It a QX drove really of was that in what so tolling us the that business. from you with suggested give year decline. as pretty comp last is

John Tumazos

hard any I to know around but that investments there company? more another Nikola, are $X laying have it's the million

Andy Rose

things see talked we're I Yes. one more we've things we that's made of We've business John now different – mean, and incorporate that periodically interesting we I about is mean hydrogen few have investments a – in the our some areas. to technology. in but starting

obvious and ideas another table laying right as but anybody least So around we or to sitting now the I entrepreneurial to to around you know that but lot get Nikola think world think of will make know seed businesses least never don't continue there's be places you you you're it. in get you and going a as investing, the surprised we sense. to where And expect what in of sometimes at

So $XXX – sheet but now. worth at I are any don't least investments that right balance our on million see now, right

John Tumazos

them? If When investments assets? do you them? this, sheets see you expense would other like them, are the where on they we capitalize capitalize make balance you --? Do Where you

Joe Hayek

typically not all typically that They're They're expensed. John. large,

John Tumazos

Thank you.

Operator

over point, At back we call turn this closing the company for to remarks. will the

Andy Rose

our Thanks And talking for will of everybody in you afternoon. joining the colleagues us efforts a forward us. great June. Industries. all want thank again look yet again, of to Worthington Have Just And to for we at appreciate, joining to today.

Operator

concludes this conference Thank gentlemen, and Ladies call. participating. today's you for

may You disconnect. now

Worthington Industries (WOR) 24 Mar 212021 Q3 Earnings call transcript