WOR - Earnings call 2 2024 | Worthington Industries, Inc.

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Operator

Good afternoon, and welcome to the Worthington Enterprises Second Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] This conference is being recorded at the request of Worthington Enterprises. If anyone objects, you may disconnect at this time. I'd now like to introduce Marcus Rogier, Treasurer and Investor Relations Officer. Mr. begin. may you Rogier,

Marcus Rogier

Worthington Good on Fiscal and for XXXX the stand-alone pre-separation quarter Jo. business, Worthington Enterprises became X. which our to Second reflect a consolidated the of Quarter Earnings traded performance including morning, you, the welcome Steel company everyone, publicly Worthington second Industries, December Thank Call. Results

segments including the primarily morning X:XX a.m. consolidated at results the products, the separation, performance the and solutions. Given of on sustainable recent Enterprises, on second week today's be Worthington focus prepared earnings within remaining products consumer Steel Friday business well call this separately building hosting remarks as Worthington quarter will energy of as their will

processing then. business please until any we'd So that steel you ask hold the questions about

Rose, and Operations Joe and have call Executive Chief our and Officer. Financial we today, Hayek, On Chief Worthington's President Worthington's Andy Officer;

those XXXX are Act. made Before the and meaning we certain to subject could actual We that get materially. uncertainties the statements actual detail differ from those more it Please could yesterday refer market Securities differ note risks suggested. started, results that like cause to for within release forward-looking issued our statements that on to are factors Private Litigation today results after to to the cause earnings I'd of close. These Reform

is comparable is measure financial Investor non-GAAP which of In our website. GAAP with in press include most discussion measures. A Relations reconciliation addition, appropriate will on today our these measures the available the release, included earnings

will website. for made and At will over to remarks. our Andy available on is turn call Lastly, call being be recorded, replay the today's this point, I opening later a

B. Rose

who good a to separation gone has morning, this successful. have and I employees above by call year Marcus, want it thanking beyond and make What our you, to Thank start the been. everyone.

confident was I that positive Enterprises to and are customers in to Steel performed companies have our by months, for the of to as these am Steel teams in Worthington have want this change thank both work X set create the I up best-in-class. worked Enterprises success. XX well also back and than process. positioned tirelessly businesses people our to I done journey face know stayed Worthington the X XXXX. Our continuing over throughout for success and for past in when companies confidence began Both entities better separate we today this Worthington and Worthington

only our to companies, help like a dig our truly of to team to not the many across finally, was leadership confidence constituencies. And thank make separate Board decision This the journey. in in I'd for effort the navigate and Directors having team to but

end X and the new X of growth poised really companies, company and for value of both are which Industries, represents great Worthington We've great marks X a but December taken capitalized beginning. it well created businesses creation. market-leading

The philosophy above our will and we by our the We We employees, first on our our Worthington most will decision-making in underpinned what money shape and culture. our our continue rule. is has is like all, people. years, value philosophy's of important golden for and years is as This belief The increase to investment. to based our goal XX to treated. asset, our their suppliers corporate our maintain for performance. treat by would earn of ago us over written shareholders performance-based be philosophy, XX And down the great founder, investors made over culture, the best customers,

you their best want numbers? endeavors. We at through Joe, future of luck us are our Worthington take excited friends future wish about and to in the Steel our in Enterprises Worthington

Joseph Hayek

held the reporting business Worthington And us. good on you, a then and consolidated a we'll is more Andy, a as morning, the unique for This be results bit over quarter Industries go up their focus Worthington units entity. reported I'll call morning. In make of team those Thank earnings Worthington be to now who $X.XX of per earnings Marcus that items were as any everybody. a consolidated share Sure. to we Enterprises, a separation that our minor mentioned, Friday for into earnings $X.XX following. and a the expense expenses X. year $XX prior questions incurred compares the scheduled or would pretax prior for share We ask results, have in may behind a versus QX, separation our that will are the the impacted per quarter. and those expenses related Steel share processing that including of we of believe we the million in steel year This incurred to quarter. that which us. QX, There $X.XX We few business new majority separation to was the December company, unique share completed some $X.XX of expenses of on quarterly related have public related in

We was expenses million by Level venture. Cabs recognized of to X. a due divestiture primarily $X to or share share, prior $X.XX of earnout at to an joint joint the a per year, Brazilian divestiture gain related WSP the partially pretax the the business the $X.XX a of In offset our of gain venture, related our by quarter which on benefited

compared of of fiscal holding processing inventory earnings steel share the inventory $X.XX QX share $X.XX $X.XX in losses $X.XX holding to Furthermore, 'XX. to items, losses per in QX, in year. in generated last of quarter estimated business were current we the share compared these of a share in Excluding QX a per

Finally, per to million Balloon tank. Mini related recall voluntary $X.XX Time share charge a our or $X on quarter recorded the our of consumer in a business

our gross to $XXX last up quarter improved The gross was profit million trailing mix, segments. was QX of million billion primarily million. year, partially to a from average $X.X shift X%, processing, in volumes year in steel from Consolidated combined and the quarter increased from the $XXX EBITDA XX-month X.X% by to XX.X% our to in year, for QX due $XX higher prior was in increased EBITDA Adjusted processing. in of primarily product sales the of prior from prices steel selling net $XXX the margin decreased most which lower offset due across our million adjusted spreads $XX and in in million, with

With quarter, respect operations million flow sheet, to was the from cash free on $XXX our cash balance in cash flow flows was million. $XXX and

for $XX we an million quarter, the projects, in $XX Processing invested within dividends. During and acquisition spent paid million segment capital Steel the in million $XX

equity the unconsolidated We also received our from quarter, XX% rate income. cash dividends million during $XX conversion JVs a on in that

in liquidity Funded debt quarter end million $XXX Processing of the borrowing end business and A steel the by we separation, before which month. due Steel used retire December million sheet portion immediately facility balance use the million processing was this the of our to of were pay at segment borrowings sequentially $XXX Enterprises their earlier our $XXX at position. at credit XXXX X Looking million to the up Worthington quarter. $XXX to turn to on dividend notes

Adjusting and debt maturing averaging Enterprises for outstanding items, has XXXX XXXX. in $XXX approximately million currently both between X.X% and Worthington of those

X%. $XXX lower cash average balances Net We on lesser by due yielding the primarily income which to levels. in extent, is million interest to ended with cash, and a $X down approximately our over debt was $X interest million, million we QX expense of incidentally earned

the cash leverage, ample with net leverage a We under EBITDA our million X.Xx extremely continue to low ratio provide to with and undrawn trailing operate ending liquidity. $XXX quarter of debt and balance revolver

share $X.XX Enterprise's the the per a for declared Board of of is which Worthington dividend Yesterday, March payable in XXXX. quarter,

morning. on of level listen won't on detail to that minutes release host spend the and into you go and I on the each yesterday earnings afternoon from now point you encourage a segment few steel any will team processing businesses. the earnings details steel for call to to We'll would our Friday

margin for were Consumer our from consumer unfavorable $XXX Products, by adjusted in we QX million living to related Mini Time EBIT million Adjusted ago. tank. the the Balloon The and result to outdoor our business, down in tools in a net and X% for prices of In during initiated selling million recall QX average voluntary X.X% a the $XX was X.X% and was $X Consumers business year earnings our pretax quarter business. impacted in product EBIT million, negatively decrease last million lower year. $XX was an $XXX mix compared sales were

sequential Excluding improvement compared quarter. prior typically the in would encouraging with recall, a of slower EBIT quarter for We since adjusted seasonally our the impact EBIT EBIT are the and adjusted line have which in sequentially see volumes down did in second quarter. is QX, to year margin been the

quite facing channel sequential improved but our and some In headwinds consumer, team that expect led to partners October they're gains September the our to we the saw in And a and lean to was opportunity consumers in XXXX. month, that down share The we've add growth taken weathered will sales. calendar November well. recent market with

coming to are normal are seasonally our expect calendar and patterns we in across We our to positioned more markets well Living business, into Outdoor The XXXX. to serve heading improve in we expect volumes we quarters. gradually and return portfolio robust, margins the and

and of sales product XX.X% Building was margins down adjusted lower EBIT a adjusted $X compared a by million $XX selling in than net and QX ago. our million prices. to of fact higher XX% mix, Building by year. favorable was the less in last while year was with $XXX wholly QX, that Products million revenues margin million, a combined almost $XX gross of generated $XX in decrease quarter, owned XX.X% EBIT in and businesses. $XXX less from encouraging is million of decreased million result generated EBIT The The driven average down Products were

offset in are the our growth our destocking The markets in large driven months in some that weakness starting construction are initiatives are We place impact. business put format some customers QX EBIT we positive markets by in and by particularly have ago the there most propane of other a in as experiencing of heating was cooling rightsizing our end inventories. to end

in infrastructure resilience and $X well the and which by leverage and ago equity for from margins opportunities decrease in related gross very contributed Both a in improved. continues volumes the ClarkDietrich NPD million contributed $XX at WAVE ClarkDietrich, to equity $XX earnings million and year perform spending and was efforts real up they their earnings a quarter. increased to are year-over-year offset innovation. their as showing as That of WAVE million quarter, improvement $XX million

in XX% QX of Sustainable EBIT In volumes SES reported sales from primarily lower to million current business adjusted last adjusted the year. fixed an costs to the mix. in and absorb year, low million due Solutions, of the product the EBIT were down as loss an QX net million unfavorable an of million quarter of Energy in $X to compared remain $XX $XX prior or too $X in volumes as

in discussed us we've going in which that SES' economy by As growth emerging our quickly CNG confidence how remains will and remains in gives business solutions prior Europe challenged Coating quarters, and the ecosystems activity develop. hydrogen be and interest in forward. the impacted high, volumes in

unique pro for will the period we separation, our transparency business increased is prior of As for earlier, into this and segments believe results reconciliation Enterprises our a I report the our EBITDA estimates at completed for last help quarterly we'll stand-alone best that insights separation reconciliation forma Industries. represents mentioned our a of this quarter beginning that fall, presented. Enterprises this the and it a been at for preparation each We results. as Worthington introduced basis, quarter the on provide revenues to processing Steel us, Worthington and Worthington is In

pro million, mentioned include XX%. XX from in results ended pro XX, forma Enterprises $XX.X $XXX above been way, have pro was enterprises' would related And forma do $XX.X forma million adjusted a trailing for XX. unchanged earlier. EBITDA XX of million slight the forma to adjusted XXXX year been in $X the have a figures months adjusted of I QX November decline million at The The that trailing a $XXX million EBITDA that our would at August Looking versus recall charge pro ago. adjusted EBITDA as months margin EBITDA same

segments, of business the for CapEx be which to previously, modernize in million related of CapEx was in to Enterprises spending the we've was of facilities. our we'll discussed X the I Andy. approximately also Worthington point, related to quarter $XX million business. other CapEx $X onetime that in Worthington will $X it our that to had onetime and At the Industries turn separation IT systems Processing million back Steel enable over this

B. Rose

Joe. Thanks,

of are long-term businesses. laser-focused Worthington growth separation the consumer our we Enterprises, potential complete on energy that Now and maximizing sustainable is products, the products at building

more brands live priorities of market-leading that safer, and We enable have to more focused lives. manufacturer healthier and and products people designer strategic a as expressive

a do. believe innovation are and in We growth innovation acquisitions enablers. transformation, We in our company as with strategic everything we

expect and year every better We new more customers. to products to enhanced serve launch our

consumer We to deliver in products a products our We balanced disciplined of economy market-leading benefit the are to and our improving we niche we ESG in with products lower technology operations and increasingly profitably and our approach and are enabling acquirer use a transform bolster operations building a that customers. to brands. believe performance our will We carbon all in our and services. stakeholders, both businesses our

XXXX. for awarded our America's sustainability As most we Newsweek and responsible fourth recently released evidence, Workplaces conjunction, in And Diversity we're companies greatest annual for report.

deliver more flow stewards are we to higher higher finally, And and margins, returns. thoughtfully capital, cash investing free of good

proud know we to questions to but leverage or customers, take are be employees, to in related reward our time Thanks our for are our any our future who We and defined suppliers your by we today. separation history and the Enterprises. today, Worthington now shareholders. these We'll our will the of we ability capabilities our

Operator

Instructions]. [Operator

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

Philip Gibbs

Congratulations. We're here.

Joseph Hayek

we're proud the of, our forward Thank to credit. of building lots people to. the you. as be in said, company And to that Lots all lots over deserve in all and look Andy

Philip Gibbs

that solid any The further construction Any and se color ClarkDietrich Any WAVE retrofit off. in bifurcated thought, quarter, WAVE's? Awesome. hanging there in between update tapering there? on last per you ClarkDietrich's being Congratulations. weakness backlog aftermarket with had you provide can versus markets and

Joseph Hayek

was remodel. there QX. dollars. million with really couple trackers is new. different of are on WAVE sticking of markets up that of focused But just and of look a and of other XX% them bit of ClarkDietrich kind at XX%, commercial a some dollars. you in mind, Well, little a said we've in market, WAVE companies up down couple bit, in out a different still construction of was that is these variety end are million -- the both actually repair most lots both down was of year-over-year. companies Bear are and well. play if those analysts looked a markets but of at ClarkDietrich more there, end November, that doing the were

more ago, at interest the all a with So people getting a 'XX about not what but at market were pretty optimistic prognosticator, look there peak, and rates X relative possibly might bit a optimistic. months out being we're like to fears that in

Philip Gibbs

to of asking And how relationship between portfolio company procurement. the that the with was Worthington in something I'm not moving was the terms to is forward direct going know be is of the obviously question on some steel that all just I a important you Steel, and businesses? other but cylinders

B. Rose

Yes.

Worthington with long-term have Steel. agreement purchasing a We

money preserve we with we them on buy, the but of supplier a customer them. So to make been obviously, their to -- have will a steel Phil. we having that benefit the lot able having we X we've be get close from And larger of they -- customers, relationship that

Philip Gibbs

like looks I year really over couple Can And with and -- investor then just next amount couple accomplish X years targeting in what ago, had know on talked the these from you kind about months you're or growth on presentations projects the on lastly, those the a of for the us growth separation. you CapEx a of of investments? the post decent CapEx of to update business next what

Joseph Hayek

Sure.

years. different modernize, our and It's automate talked have it's next able modernization exceptionally of kind we make to facilities for XX to X continue million, and facility and onetime roughly ready of to and call XX It's the grow facilities. we intended those $XX CapEx. about what So kind well do to

to The roughly way of it about in the the CapEx, -- and it the is business, as in for we -- our out run that. excluding about we $X X quarter CapEx different was mid-XXs, sales. I kind that think called related think will those out be of million quarter roll projects Those we rate about this the to going if in X%

XX exclude earnest, you mid-XXs supply quarter. that QX, number. the to $XX That we'll to $XX us million million but on at take that million, XX on depending if other kind next underway $X $X chains It first months so the tracking several all factors, so that's million probably kind of in in way the be right and the of flush sort gives months in was in $X it'll that through. And roughly X million enterprises for of months,

will on the on and we then do business posted other all everybody spending parts we'll projects the And way. the is what in same the those spending keep on the of

Operator

Securities. Your next of from question line of CJS the Daniel Moore comes

Dan Moore

Congrats again. absolutely. of A Yes, color, lot though.

maybe on a little and bit start gave a sequentially. color in of this You down quarter XX%, lot we down but down flat consumer X% but the revenue segments, only was QX to can drill

maybe talk impacted And business largely with by back bit a inflect next growth some expectations what Is us? to to like longer inventory your case behind extent share Is just take little where about the sounds maybe you for expect now the So to that to quarters or X is that gains. that positively? destocking. get

Joseph Hayek

Yes.

help for brands think outdoor were with and didn't unique, consumer-focused we right, it's definitely some us, right, summer. not things spending and summer more activities, Dan. had over real know I -- money companies versus But focused right, outdoor but of business calendar bit kind and that's time with living XXXX I that you're the then and a talked careful, that, also matters. on more weather experiences and We've the about being headwinds the consumer

really, see September. was moderate. the think, leg that the absolutely of real kind pronounced talked trough We September that of for headwinds. did about we We

So that QX, spending November us totally for right? expect in way QX that were better October XXXX woods, into sequential consumer not to to seasonally The for they got normal in is we And us. typically back the trends. and and and We're do growth. but through the see not more XXXX, means

So we're looking forward to that.

And the and of kind nice team partners as there their being with of thought did said, a real customers. being job we

which led incremental as be placement and that helpful wins, think well. will so some to And share gains some we

Dan Moore

the -- with That's bit helpful, profitability, to Revenue for certainly. count remains a JV's And then excluding and that pressured still But don't it excluding then was revenue. gears Products. switching because Building obviously, we -- -- softer. JVs little

your ClarkDietrich about we maybe core So the fully outlook talked there, consolidated building products. of WAVE, and kind but

Just talk over about do when growth? back have to maybe And quarters? the your visibility in you to next of business of that positive expect you that year-over-year couple get sort

Joseph Hayek

Sure.

used and we That large business, that things to construction that the for heat or homes. was this, outside used is propane So or format there sit be which would projects tanks, talked we buildings be about -- when are right, in about QX. we expensive started talk and of revenue side QX. that the which It those things. -- some in talk mix, products, It I about mix there. continued destocking why a more saw negative is

get but We QX. we certainly the get we where historically has some summer see that the by months. we'll we time it expect been, QX, it end and of into to We'll the of -- be be through moderate think a by we think, bit, will ought it to in should that

just customers our good the to going about business, feel some need are that through inventory through. so rightsizing get And that of

us and continue, gross side to a head slack The type building XXXX. expense end side, optimism margin markets than expect some and management really gives there good less up in, that on activity work we really into all $X products in being other really we for in that the hope were cause was of million addition in the certainly which upside as the picked of will that, lot down

Dan Moore

Obviously, helpful. relative strong we it's ClarkDietrich of Maybe out, last few more, what's that longer-term about of the that years as But and just sort over to pre-pandemic levels started in about X the on remain and just gives contribution sort Very a talk exceptionally jump the little talked and of well of confidence X question business I'll years will a to of of that specifically. back kind bit. changed you profitability, business historic levels? that above the normalize past more

Joseph Hayek

a their has income It's And business a terrific what understanding how really load that entire customers kind Clearly, sell participate can service. that about that's that of being customers full changed helping value. are in, save understanding they how done important, equity are, contribution job of terms their its accessories the They've they time. how of delivering being for the thoughtful in steel, but connectors contractors' Sure. their customers ecosystem and not us. those think about other just of who

results stay do were don't so -- yes, this, some in about will They they about or the We've XXXX. in from some where moderating grow we talked that We in And and forever moderated we've XXXX. forever right? expect those talked XXXX.

long-term, management on But team. bullish They've a that to of JV. be that happy very got We're great a very we're part business.

Operator

line Your of from the comes Research. [Operator next Instructions] John John Tumazos Very Independent Tumazos, question

John Tumazos

$XX the done. more Worthington Enterprises with of combined at announced the Well you on X the companies it. than Congratulations trading before old value

B. Rose

Thank you, John.

Joseph Hayek

Thanks, John.

John Tumazos

net quarterly the almost in half Enterprises, balance your imminent to companies, the very sheet and prices you the net I and there spending a because low. isn't just capital dividend. to preponderance much was explained was the cash no I dividend the context has debt there's the debt have really question other X capital I old set of thought working where where allocation flow, of of the at in capital need rose. that $X.XX the on how fund relative or company the between company steel

$X.X not is you My balance earnings, in super needs might for don't reinvestment not the some that's billion you you're acquisition if ]? above-average that Andy, that worry strong is is [ my or future to context, for the sheet acquisitions or could sheet save pot so concerned, And transformational since more So payment in be really worry. firepower you people the have -- dividend larger the balance isn't address good? why an and up could a since is dividend of confident low

B. Rose

a attempt somewhere, there question in there's here. I'm think to take going I an John, but

John Tumazos

love dividend sheet to company, is the are good? is low you to change and going [indiscernible] acquisition? I'll so make and going why so that's you corporate to Are balance transform [indiscernible] a cover the the

B. Rose

saying me or very our start working year been maintaining past seen years, And by focused let investment grade tell X.X towards so, And were certainly the Well, meeting. correct delever you're We purposefully has about pay that the around our us credit separation. that you you've very on revisited could in in the June we dividend payout rating. Board a that historically, ratio larger would the dividend. I of kind timeframe we've business.

spring, types so and that's those go the of make those strategic forecasts and plans look kind we our in at we things, And decisions. cash through operating do of we planning and flow where

some soon, accelerating I believe size we're M&A to acquisition that historically growth you, our smaller going is anytime we we've do that's of very of success a Business the We going a that's we've strategy. companies, had will smaller double be look easily We that do types tuck-ins much into likely of them be don't that tell the different but think going plug our done. forward. sizes can of of and get really includes the what our we at We've That's I System, buying look going part their around innovation, kind not growth. an and which of expect different at strategy pursued more acquisitions to transformational to important tuck-in transformation, companies. business. a lot lot and arms Worthington I lot of pretty to

plan now. of kind that's So the right

most let's the capital focus the kind flow we to very do complete, is have dust let of we But business, continues share higher out potentially think now, the the our support the company then that's free buybacks. can and separated, I cash so sense in settle or And figure so allocation. refocus as grow, high of what and let's dividends terms company right get for makes

John Tumazos

up. follow I could If

may With that the successful contained. price because old is discounted of more buybacks is in the steel hindsight Enterprise volatility successful? price less capital than Worthington, going stock stock really old forward going very be expect of of a the separation are so we of was stock of the which use price in Should to be the

Joseph Hayek

John, it's Joe.

determine forward. [indiscernible] decide opportunistic before. But it to best going As the will capital be to arrow Board strategies deploy We've buybacks. team And and it Andy -- balanced been -- said, we'll comes the it's that. allocation when for how the best will ultimately in been quiver. still the an business ultimately, We've our management

Operator

back I call There Rose further no questions will this time. now at some the are turn Andy over to for remarks. closing

B. Rose

we'll wish in thank appreciate and season, interest speaking everyone, We a for Worthington exciting year, look XXXX. joining to in It's everybody for you Well, time to us an terrific I and Enterprises. today. you, forward us and everybody's holiday a safe happy new

Joseph Hayek

everybody. Thanks,

Operator

today's call. conference concludes That

now may disconnect. You

Worthington Industries (WOR) 20 Dec 232024 Q2 Earnings call transcript