WOR - Earnings call transcript Q4 2021 | Worthington Industries, Inc.

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Operator

Good afternoon, and welcome to the Worthington Industries' Fourth 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 would now like to introduce Marcus Rogier, Treasurer and Investor Relations Officer. Mr. begin. may you Rogier,

Marcus Rogier

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

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

Joe Hayek

you, Thank good everyone. and morning Marcus,

$X.XX in yesterday, fourth teams fiscal share And Our close earnings we a the $X.XX of out reported record to versus prior year. year QX our delivered quarter a quarter.

incurred This our charges year ago. Poland. business in a SCI in During restructuring $XX million our charges divestitures of storage $X.XX related to we pretax business of the or quarter, share primarily and of California net the $X.XX a a to share, compares LPG impairment and

$X.XX of which year $XXX significantly Consolidated million in generated million quarter were to COVID-related $X.XX per up prior by was net Excluding in of in quarter. the share compared we QX the impacted year, these to $XXX in for our quarter increased $XXX increased million QX mainly from last items, gross came from million sales compared to in a sales prices. the profit $XX Gross from prior end and XX.X%. higher of in our across volumes quarter improvement The increased record XX.X% the markets and most steel the shutdowns. to margin

a and $XX A up fiscal results actions our from strategic Our starting we've EBITDA from quarter strong our a in million. $XXX to with adjusted in of QX low flow was from year. adjusted QX benefit $XXX the And record EBITDA very profiles. for XXXX last to million, was and best assets are our acquired performing recent attractive both, taken portfolio cash businesses million

XX% Steel average increased million were of Processing, million Turning fourth of selling net which higher $XXX from QX from to last doubled Total volumes in and ship prices. In quarter, to year's due year, the businesses. XX% tons $XXX sales last up negatively were in year impacted prior automotive QX COVID-related increased XX%. quarter, by customers. Direct mix of year from compared to increased tons by the our particularly XX% a in XX% while shutdowns, the tons tons total ago. Direct was

and to automotive, delays across automotive We demand performance continue markets, constraints. semiconductor nearly our other and could better. all solid of in end see saw record-setting Steel's supply customers because heavy We truck actually been chain some from agriculture. orders of have major including

quarter teams has up prior to million business, more and consumer was shutdowns, excluding than higher North but see divestitures. to XX% reduction combined primarily generated gradual European to $XX holding million from due was offset team tight which increase impacted to Steel COVID-related our the they year. The continue managing in done fluid through Demand products for care compared benefited remained gap, last In a to US $XX a a our $X QX conditions. job of we a benefited year. arbitrage Turned market QX last business, our The remains we very X.X% prices, will Cylinders QX current from a constrained offset a the income, will while addition, year, be income steel million to and do gains prices year. meaningful market the of net our out, ago. increased $XXX take $XX X.X% continue to able estimated that in holding significantly perform well, high and had by or market expect the given restructuring per selling charges, level. Net And last partially inventory strong a 'XX team Cylinders General quarter QX unprecedented by which million impairment industrial from year headwinds of were in prior in quarter, quarter, to and face in In last operating increased we Processing operating the from by $X we in back be share America average and in customers prices. and Pressure to customers. to strong Pressure million, have our this in our on of we of were great steel from the current sales the to was and widen. in at per gains and margins gains of year, loss steel current share up which year gains demand continues to recovery rise million $XX generate, the and mark-to-market of Based operating continues with as driven quarter in our relative related penny compared in to QX Cylinders year-over-year recent by volumes increased related spreads. million, sales sales our inclusion $X.XX holding also by Tools $XX In inventory to PTEC, both products. was this for The million

market $XX fiscal XXXX June million QX respect will team market and million holding spreads current last the bringing strength effective chain inventory that year. in where supply of Xst. was into we improvements With discussing our our two Products to three challenges, Cylinders during for segments. position continued increased moving navigating due reporting and We While strategic with $XX Consumer several new forward. On year-over-year growth products reporting us Earlier Pressure from completed WAVE divestitures additional recently our to year, Building Products, which on growing believe quarter and saw ClarkDietrich segment and Solutions, the in construction September, strong Serviacero, and JVs, results the drove and the that start this begin gains fiscal Sustainable we upside. month, profitability our we to are equity to the Energy new those began we announced new commercial has call segments, from in market share, our well acquisitions and dividing new and compared our income

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

balance flow free the working to flow steel in the Free million period. was year. the capital, cash $XX cash cash quarter sheet, Turning with despite cash flow fiscal in the and $XXX million that primarily flow, million associated was $XX full statement $XXX The from operations for same and million, prices. a totaling higher increase from for headwinds quarter million in the $XXX

our million quarter, in million, million we repurchase paid $XX invested $XX and $XX on dividends completed projects, shares During capital to common two spent of generating XXX,XXX million divestitures, $XX stock. the

dividend as to generated approach business expand BlankLight million Laser declared play end on cash, it important $XXX debt liquidity strategic market. this per light to turn quarter. both and at in in which prior $XXX our to for a it Looking was was in higher Yesterday, a margin and I month, line $X.XX payable We At funded allocation, at quarter ended enabling of That Board relatively our is million the million rewarding year the the million Welding the September which sheet balance position, will in for of Brazing and of in million. adjusted announced the balanced with over QX XXXX. our calendar offerings, to $XXX weighting sequentially continue on quarter, automotive point, shareholders. US acquisition focused this in XXXX. We Processing interest addition flat we will Andy. $XX Steel of growth a segment, our roles of us share business with $X efforts capital take EBITDA valuable believe to be and Earlier and we Shiloh expense

Andy Rose

Joe, you, good everyone. Thank morning and

record, was fiscal strong a history. the quarter year finish to a best in what has been Worthington's fourth Our

yet never adapting the that COVID predicted of the deliver course, time, they constrained, terrific this are continue and proved a be labor say keep availability, but proactively Automotive quite and Of pandemic. very overall, increased also manufacturing teams shortages, record would impacted We were markets. material we should fashion. by raw for quickly Despite schedules, have safe, costs. and our raising We've our and a each efforts. year, a was most levels a of continuing steel depths we in year to been to standstill that their other again in environment. prices to and production they be did chains all backlogs customers major uncertain good across the to services at our in ago, Supply our this businesses semiconductor almost slowdowns were manufacturing important when our offset navigating all business we demand are commended and our supply products while all asset downstream people which job to of

end This better and begin Sustainable align businesses Building three performance. will to reporting the Products new and on attractive segments our quarter, with investors we markets serve provide additional excited are next around We Consumer Solutions. Products, Energy change insights

and compelling have these need tested leaders, of they strategies resources All the segments grow. to

increase on to the fourth capital. to innovation our continue underperforming will leverage product of and development playbook, We rates M&A and the return new in assets our transformation our saw and quarter. achieve growth last above-market We

our our focus has shifted accelerating portfolio. So, growth to initiatives M&A and across innovation our

sheet, balance our in exceptional have We Nikola strong generated by on investment Corporation. a supplemented the recently returns

live entrepreneurial but our have work. reward success us Company to communities the our this only allowed always and the shareholders, been not employees We an investment and we of and also

in to again 'XX beyond. months. We in perseverance we all employees business, of continue creating completed each past have just Thanks to are dedication a and our over year shareholders other our positioned value -- well well work, and one we to XXth for to that at their all for XX are and record are proud hard fiscal the and our

any will take We now, questions.

Operator

comes first question of the from Seth Your from line Exane BNP. Rosenfeld Instructions] [Operator

Your now line open. is

Seth Rosenfeld

for margins down end touched strong current that or looking QX. good market up touched in QX. a start of the for forward. color being, question you trends, then holding incredibly can management inventory derivative robust very of think progress to can on the a on to I time QX of walk color please please, more with well, gains and inventory just, strategically, bit just you a any are inevitably gain into also dropped? our Worthington please of On huge positioned please sequentially Q-over-Q-basis? on earlier, that inventory expecting the as both And in an the more on pricing steel losses Congrats Thank afternoon. driver at a obviously You in through I inflection Good the when expect Can inventory -- some out probably that, I how you expect maybe is out gains, can you point and on kind eliminate start us give obviously you on looking you bit If how you forward? for prices earlier you most remarks, but prepared would Can this If year. questions. a taking

Andy Rose

Seth. Yes, lot it. that A appreciate in and question

gains QX, QX. We easiest. very and the I But look were material, we everybody visibility into the QX probably expect curve lower do do bit reasonable have is in that than think mean and we you will forward one those we at we have sees. that else do first same be in holding -- a probably inventory The they

inventories. So to our try point, sequentially. question ourselves inventories we and in very and very and sort lot take have of overextending we feel that second and do there think talented a how how along decline like your steel markets we on our so, some those care so a We a aware approach we ultimately prices things about of things, team. we cyclicality We're sophisticated while that not Relative and on; do manage to customers, will things of is lines. and steel at the certainly some

to inventory demand we the is so, that is, incremental got strong lot little a And so to tight, a and steel, can able while we've because have so right to more try of balance, it's things to take risk. just of now, and modeled not of take any market access that which being on customers, our care bit sort trying is so

customers, to purchasing ourselves know, for we what our price that with you we steel mirror promise As steel. guaranteeing to that or

things where or So But, that. will well they things find we're for realize we possibly pretty been to certainly understand can't. as ourselves the well continue we're months, our do that stay or for for able do like and that feel to three going can, be to have situation others four four to last share not the years. three in. We And do of to next continue to as okay, we positioned regardless take as that to we're the we customers

Seth Rosenfeld

Thank you.

a follow-up, please. Just

should I in also gains mind? the that touched in think that we the is million, keep called well, $XX out on $XX million when you as or gain think is derivative prepared an you inventory included remarks, figure is I additional in

Andy Rose

-- can is separate we do it's we certain volatility the that can there in when along we that just prices. It's and steel way, things believe

Seth Rosenfeld

margins a Maybe and question on you on the cost from you. last metal sharply touch your my With rising downstream pass side, are those customers, could please. pricing environment thank just with have businesses, input to Pressure also please Okay, on in and who to regards there to hit you up seeing able the back higher JVs, but like-for-like P&L? increase sustainable is or cost anticipation that the what on prices going your extent to a basis been Cylinders

Andy Rose

of have, increasing Yes, Hey that how bit would is of we every every a inflation, ahead a lot terms price different is steel little in Andy. across of I better terms Seth, inflation. price gotten have we this almost business but approach we business in say

I buyers on gone the on where of But pay in go depending contractual, example an sort planet would XXX% be, prices businesses are there example, to where to very where it's that the start. for where expect doesn't like for Industrial manager contracts think Consumer no have of up business, those negotiate that, increases. that. and kind the environment you empathetic contractual, Gas There is that. Products around is our you this the you, would of are prices increase price for Cylinders, sophisticated, Sometimes price tell some XXX% account have steel purchasing not I Outside to our

four doing over P&L. last or price a of we've more So, lot that years sophisticated advance in through gotten our steel flowing the five this in of terms

So, there. we're I think in shape really good

Seth Rosenfeld

Thank you very much.

Operator

of line the Gibbs Phil KeyBanc from comes question from Capital. next Your

open. now is line Your

Phil Gibbs

good Hey, morning.

Andy Rose

Good morning, Phil.

Phil Gibbs

pick more get that a they steel earnest know to you've Obviously, had side will in now, when try WAVE, than to customers material like the around it's ahead in of it, saw can, of cycles bring quarter. on Was well? So, I that something got you in perhaps time doing as previous do good WAVE inflation to that they starts need. up all this

Joe Hayek

care and on to take that that of Not exist, included we because just and as much as trying of WAVE dynamic, steel shipping hitting we are you the scarcity Phil, can, products, our might of that customers. generally fit the will think, always everything our head business, but of

Phil Gibbs

to What you an if have that? were year, WAVE's last idea volumes of relative

Joe Hayek

Commercial mean, higher. are they looking are relative -- relative they talk things year-over-year the lot year the we this better. as much and volumes, earlier a as they because sequentially year. shutdowns and but But to year to -- to not like them relevant in was comparisons last relatively we're right about now, higher Construction, obviously improve we so as were you'd had of were continue things had this year, speaking, at just as not relative and to of COVID significantly be, what last sequentially depths to the I was last They QX,

Phil Gibbs

you that may -- then your prepared Joe. scrap you what can on -- you this that Thank the gap, that and in what people quarter? how you. mentioned means coming that And -- what remarks, how remind That's helpful, in impact

Joe Hayek

is are and lags very -- gap the that and So, a a worth difference us, coil simply and prices is is in run happen pricing always end scrap some and in those Processing been larger coil. our or our to head cold gap historically that if fast, some in perhaps steel the wise. the gap That's of for really scrap and really, when versus beginning there band you things XX% are hot-rolled predominantly gets ton scrap in stated, of or the business, of strip tails range steel really form. that in will, around But up a as a tons going our Blanking our have in businesses, roll given Steel shape of businesses way, of little bit the we're end at and what at

a historical gap gets that is that what obviously that or the as created headwind there to is gap. us so, relative And for bit for a of widens, average normalized

Phil Gibbs

does for mean Just -- to substantial? you guys? minor? that numerically Is what What does a it. it that understand Is trying

Joe Hayek

years tariffs I happen I couple we for it a number. it mean, of it's had I it's a mean pretty were mean won't Yes, instance, will as a but I off. us. well it's catastrophic, offset QX, gains as think, substantial this number it's -- -- XXX ago, in the FIFO not I real the think coming for

Andy Rose

for I now mean you're very the that, between different price dollars, so, one And is the steel, much issue and we what higher. of spread what what selling scrap you're the the millions but it's the number, -- Phil. scrap a and when scrap was number is you're is getting

So.

Phil Gibbs

end side, the think next -- pick I pricing big of that appreciate the but that. came in level you're at May. rise, same of evolving that And not how maybe the capital environment, the obviously about obviously to up should on working then, in we prices continue working net Because on capital because at the quarter? inbounds

So that too. trying to understand

Andy Rose

it's -- things. It's Andy two

unfolded QX actually QX capital of we in we million $XXX reductions and and million -- working had look then in working we capital around in at year, during QX and collectively you QX. $XXX saw how in capital If working built the

And build certainly. will and back prices of expect to come comes so, like us. cash in flow to that that, building stabilize working us, down, to a us bit we so, for then probably certainly in like or it's decline, But come but almost of we're things that back bank feel assuming and so, to in more we source to that and of that, steel when QX some come as capital beyond start QX, a

Phil Gibbs

is cylinders, of this me saw does Does units. just I speak if are I just Consumer in Industrial last terms from was volume each a seen your there -- pronounced, Thanks. while of there shift momentum strategic timing, know the effect really you about in and little demand if pent-up I that that one know can don't across your around because -- and you your for And seasonal from on a then you short and pressure business that -- break up that in maybe Cylinders see is bit. was then, and this volumes see continue the Thanks. what but could term or term strong just in things you've a

Joe Hayek

a bit is end Yes. different, of market But Again, really most little pretty Phil. each to that demand is markets, tell Cylinder I good across the good. would you

products cylinders, consumer think really products propane, particularly people of outdoors cylinder, were gas, heating Some doing from things. around things were benefited COVID, products, restaurants grill, and those camping

time, historically they periods and people demand booked So, of longer bought demand very than for strong, have. has been maybe have the

you going hard to right know be, feels nine months it XX it's or like now, know to -- but where steady. it's from we're So pretty exactly now, it's hard

Andy Rose

this -- have of have feel to thing is, of lot we to the acquisition, be and a one lot add ship sequentially so GTI Phil, still And a products will too. and true, that SKUs

volumes. when some there the you seeing raw the look you're So, effects of at

Phil Gibbs

good Thanks, gents. Have a one.

Andy Rose

Phil. Thanks,

Joe Hayek

Likewise.

Operator

of Tumazos Your next Very from Independent the question line comes from John Tumazos Research. John

Your now line is open.

John Tumazos

If were Congratulations someone share. work. told on couple all have us a years a the ago, you great would of $XX

were thought have would right? You we nuts,

Andy Rose

John. you, Thank

John Tumazos

for interpret senton maybe or four Arkansas about River in in of when Texas, should the that Worthington, mini-mill new capacities because important maybe they Big So, River and we too first. Toledo of incoming would specific There steel in is a or close are gravity in basically Kentucky, questions more an and the Arkansas, center your senton let me in expansions, ask few don't Delta doubling be much to Big steel Gallatin? up, provide Delta, supplier Gallatin

Andy Rose

question expecting, that John. answer might maybe little you're I a than differently what

generally -- it's comes when but when think for provides it market, relief, additional think, the capacity provides steel, it some on hopefully I online, because I also good pricing.

be facilities, not of buying overall in Just should the market. still because it we with few help steel may that those

here situated mills that little chains I for sit probably or say there's to of So which But might ideally are into there. exactly Joe supply facilities are. be where those and to think not the we it a be us, obviously would able some difficult opportunity incorporate I majority our for

-- is of So your I know I thinking, kind understand, where headed. you're where question but

John Tumazos

of JSW Vienna is in or couple There those did in might you are a in go incorporate those never center NLMK says with? -- they're Ohio, to of slabs in to business your suppliers, Portage people inconspicuous are might more lot that Russia or from Farrell bringing a gravity more PA,

Joe Hayek

people I just and where go answer based with required, honest needs gave it. deal -- that many is everybody I happen you on to No, what we John. as sense, talk thought it Andy what to we it to The to and and needs similar try makes is as that, steel then just mean,

and with possibly chat availability and and needs. we relative so, decisions And can, try we to best everybody make the

John Tumazos

auto in X there Steel won't more steel and from US and come furnaces, is steel, restart have the benefit a and back refusing and companies less chips months? Because you Did Cliffs risk Cliffs furnaces? cut US because months now, restart other to incoming the first lacking that steel from recent you companies inbound with blast

Andy Rose

guess mean, risk. I I Yes. there's that always

we when help we help. need think of John. relationships they help worked we and years pretty they need a strong when symbiotic hard have are relationship have help to us And a over we build buyer know very we steel, them You and our partners I where large with the mill

is operating has we've So like of that environment, supply been a really year on But by hasn't on tight there if last companies as difficult again, also the back I well the of course -- months fronts, But and been the amount one pretty perfect up auto you any them things feel a there the risk ramp It of number is. been of some so know done a of that well. front. sell has we really X auto get steel, companies, means. fair steel again, but to

our need as well. they product So,

So, it's a complex equation on there is -- there we're is no doubt, well pretty but front. I feel positioned like that

John Tumazos

$XXX inventory, is You consolidated how of the much JVs? from consolidated disclosed the inventory million not

Andy Rose

Meaning what? their How they have not? much on that's did sheet, balance

John Tumazos

How would of rata JVs your of many XXX% share dollars tons the be? pro steel or or

Andy Rose

question that can they Serviacero, we think little they John. not buy with WAVE, The lion's overall it, amount what -- a there, who make huge they're carries a of work most Worthington the doing mean, a is don't we fair just total, exception and Industries the as of to huge a share -- I are I the -- percentage compared probably volume ClarkDietrich answer of small that without speaking, tons. relatively of Company.

John Tumazos

they to Would the more or million tons XX%? consolidated your steel XX% X JVs be be volume plus of processing closer like of collectively would

Andy Rose

I to one, quiz. We'll that a get you like feel pop is John. this on back

John Tumazos

you. Thank

almost process work-in-process you're as about fast steel inventory have rose interpret year a work-in-process comparing goods percentage you should up XX as the goods finished we raw XXX%, sort in finished the rose carry XX%, continue, exciting? materials dollars me where steel you're to raw of less involuntary, less inventories to prices, the and door XX%, that's steel total dollar trying the May the unprocessed to lightning, materials only and as is rose as out change but XX%, goods getting finished Let much up sales and get to means that about much so twice that but ago,

Andy Rose

that's filled reasonable finished can. don't not customers quickly -- to as we're it. we I get as any holding Yes, We trying it and need because mean know we're that a we goods, our through step

So after it to we sitting around. doesn't behoove it, finish us leave

John Tumazos

cost was the and When year, profit $XX $XXX we good steel pretty margins, fiscal should are to tolling the The the and cost because the and costs we be minus if weren't of revenues year. take which -- tolling? to because the that for that analyze the the tolling, per EBIT-based EBIT closer the or ton a processing closer we ton of literally, is interpret, $XXXX shouldn't as ratio, per revenues are would you much $X.XX, twice $XX of revenues

Andy Rose

it's differently. I you Tolling Direct that about business the definitely the think think do. fair We business and

John Tumazos

there how customer? to the steel the much move can ratio toll increase to Is to limit risk a you the price

Andy Rose

Well, we make more the money John. on Direct business,

So, while tolling and customers business are important do profits. we book to our

I of steel the the lion's terms -- steel is think Direct in the of the profitability. business share company

So, all being that things think equal, I makes sense. more

John Tumazos

you. Thank

Andy Rose

not But all customers want.

John Tumazos

That's all my questions.

And sorry for pop quiz. the

Andy Rose

you. worry. Thank Don't

Operator

BNP. Exane follow-up line Seth from of the a Rosenfeld have question We Instructions] from [Operator

line now is open. Your

Seth Rosenfeld

some pricing Can of rapidly. metal operations margins and for sustainability business, to reversing QX Pressure a disposals color the that give robust a metals due disposals or very there One EBIT the consider or that kind of us you've to your one-off on expansion new on in should were in on you more and the to Cylinder customers, going spread normal please, ability Actually regards pass however, already level some this rather a and on with bit margins out in course? this we business. that post forward, had changing of it more, particularly you. touched lot in strength the there's stripping business. we business Thank then lagging were is the one-offs, But of

Andy Rose

operations a you couple underperforming number we of I them. hit of in on eliminated have factors, some is think One, that it is a Cylinders. that

there raise So obviously will margins. just the the math operating

been lot of price. example we suddenly raising the our the where do I our products been but expanding momentum. although are margin have we helping around There inflation good steel, expansion. some price, then, have is efforts little costs think power, But an innovation I this I we've on that of a efforts we're also pushing recovering as really -- where don't a mean don't cost are well. because now margins, really will rapidly We where the that really are price primarily obviously thing that's certain have pricing us is, other have some we developing, other or more

products bottom the starting to we're line. contributing so, of are And dollars that into the to market launch millions

So mean going And things, products, we pipeline which to when in development other robust momentum, that good there. extent really typically I are continue launch on to what's feel the Cylinders. I contributors cost you very the that about, margin new and because is can higher the they

the on those me the and feel where factors, So about could confluence things where Cylinders all are pretty in make to head with respect of bullish pretty future. good we

Now I going good Pressure to of Probably where the But, over with the of we're respect in long profitability you term quarter-over-quarter, tell the feel to I it's headed can same? terms the be Cylinder really not. business.

Seth Rosenfeld

Thank you.

that The that's disposed, cost? or businesses they either versus lower loss-making the just follow-up. terms a underperforming were were margin they were Just new

Andy Rose

Probably a making. them little share bit would of loss the of both. you, lion's tell that But were I

Seth Rosenfeld

all Thank much. very you That's from me. understood. Okay,

Operator

the like further conference I'm time. questions the turn at showing Company. no this to would now I back to

Joe Hayek

September speaking to look joining I new to safe stay for Great. our talking you we'll and in Thanks and forward more us continues everyone about segment. again everyone to hope today.

So, again. thanks

Operator

call. conference today's concludes this gentlemen, and Ladies

You may now disconnect.

Worthington Industries (WOR) 24 Jun 212021 Q4 Earnings call transcript