WOR - Earnings call transcript Q3 2024 | Worthington Industries, Inc.

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Operator

Hello, and welcome to the Worthington Enterprises Third 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. Rogier, you may begin.

Marcus Rogier

Sarah. you, Thank and XXXX everyone, Worthington Third Enterprises Good Call. welcome Fiscal Earnings Quarter morning, to On we Worthington's call Executive Operations our today, Officer; and Worthington's Officer. and Chief President Joe Hayek, Chief and have Financial Andy Rose,

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

measures. comparable measures the website. At will release, Investor for A call reconciliation In this measure discussion GAAP which remarks. our over I to addition, the our of most is with financial today earnings appropriate Relations included point, non-GAAP will in is on press opening the available these turn Andy include

B. Rose

you, I first good welcome Enterprises. Worthington to morning. want and quarter as our full to everyone Thank Marcus,

have our We $XX EBITDA running the and delivering are of million share earnings $X.XX. adjusted adjusted per of evidenced as hit solid results, already ground by and

ever focused are stay separation, over number related their the of Worthington proud value there year. I run and about items through, creation. are Enterprises for to to long-term onetime past which as mostly While a of the we will our and as excited Joe our ability opportunity remain people

safer, lives. will enable of Sustainable healthier Our live Consumer that products represent market-leading Building and Energy a businesses to expressive brands more and franchise and Products products, people strong

long-term to culture customers. The our industry shareholders. performance-driven goal growth has doing purposefully investment entrenched reputation safety, We is to strategy. We been for have best right transformation, opportunities, thoughtful of innovation at and on the world employees invest grow created of and drive and service people-first M&A using best that expertise, our product the deep scale and platform our the returns thing a Worthington deliver the value through build quality, in enables business for a unique faster advantage find and well proven a us a and for attractive and system sustainable generating and #X

product at direct-to-consumer of early the and is market-leading we retailers development end, to expertise outdoor that intend business products Our in into a approach with operations enhanced griddles, business add to accelerates embedded This capable will third team. competency we a years continues put build competitors our our benefiting will to evolution, portfolio distinguish our major enhancing transformation disrupting work and And access supply and for living drive and strategic that M&A new returns HALO businesses. relationships brands our days, pizza higher work us playbook, consolidate our new innovation company lean customers. And products, This as across the how markets. innovative from for we a expertise which now greater To us pellet drive capital development, systematic top space. businesses. Innovation line and with now bottom chain our best-in-class acquisition an to nice it's example we product in our pipeline the its a help of is new provide and that grills and and already offering of our from us gaining collection of provide brands, with to accelerated and value and is and we functions, Worthington the commercial, is improving ovens, immediately recently for marketing growth process that while its welcomed from system sales. deeply to finally,

value creation, off numbers. redeploying as through to in long-term not capital, of first Enterprises, we capital earn We better situations Worthington stewards where in are start disciplined but Joe our you to good can and return. We're the walk making also a deliver now only quarter investments a new will

Joseph Hayek

everyone. as recent morning, business discontinued good Worthington Worthington statement to our was and given Andy, to as have historical stand-alone XXXX, the and sheets and quarter for QX Enterprises first separation, our X, recast you, December periods Steel balance prior operations. Thank income we reflect

unique facilitate will in result, noise we be financials, call from and a As attempt earnings adjustments there of is unique business will reported negatively to GAAP that impacted prior year. performance. In the continuing including current business but were $X.XX of the discrete a $X related QX, $X.XX to by reported or million to some a results, quarterly the the our our year-over-year items There following: separation. comparability of items out the we and operations share, tax onetime in $X.XX impacted versus was all several share quarter charges

quarters. not future $X anticipate costs In a separation quarter. having or additional in of to addition, we in separation million $X.XX expense incurred current the pretax share the do We related

the negatively corporate impacted quarter. We interest items. with lastly, benefit of smaller a also of advantage charges, environment the in defined items, eliminated million due noncash costs restructuring negatively unique $X.XX prior impacted per which being charge that incurred plan, resulted only pretax to largest current by legacy at $X the of $X.XX along our were separation, restructuring modest took quarter and $X.XX or remaining earnings current results to in share. We a time by rate in share And other several annuitize year which the share nonrecurring the were pension a

in $X.XX quarter we from earnings a compared these share current share Excluding generated items, operations of per last continuing $X.XX adjusted year. in QX of to the year

Building trailing $XX EBITDA the million, profit million our sales months sales Including $XX onetime is million to X.X% which in Europe. for and Products months tanks decreased Products, unfavorable EBITDA of driven million sales $X.XX or is in Solutions, within on during and XX.X%. With Building that the volumes experienced cost offset lower XX.X% partially charge million quarter to or from LCM million adjusted ago, in lower the tanks. Consolidated adjusted respect Products, a related margin cash QX share quarter from costs charge increased in realizable $XXX both current driven third-party the million of in decrease decreased cash Sustainable cash $X million last and our from in was for XX million $XX in the our Products by was Building The while $XXX in our related million was an been a operations to increased to business supplier and year. benefited of a year, by $XX down slightly separation. EBITDA recorded value a Consumer higher-than-expected for if product imported the $XXX QX by business those which of outflows volumes. Gross from that adjustment in quarter a adjusted The net were primarily $XX million sheet, quarter on from pretax margin cash increases would to Additionally, QX transportation our propane Energy have XX.X%. the from in flow million quarter, free $XX now slight from prior year in lower flow not XX $XX $X was flows our and the in balance trailing higher, mix was gross net

which $X projects. modernization the previously our included million mentioned related During facility to we quarter, capital on invested projects, $XX million

also interest paid an Products represented dividends, pre-separation Group of December. $X was $XX to dividend that in Worthington an We in the XX% million acquire affiliate which spent larger HALO million in industry's and paid

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

We combined position. X%. in $XXX the sheet Looking that quarter million long-term cash $XXX liquidity million carrying balance at average our X.X% of is exceptionally an balance rate strong yielding with interest with around funded an ended and debt of sheet.

from QX XXXX. We'll about We Board continue which extremely compared X/X spring and with EBITDA Worthington net positioned begin as share partially improvement net $XXX and take more undrawn to volumes, payable QX experienced up in $X.XX from to The QX, higher demand facility. Yesterday, begin average result spend in the to million on of we was for leverage to few June ending in a remodel having of as ample prices. the margin year bank $XX Enterprises' well $XXX people some a with a heading to are well was declared ratio is compared demand XX% Adjusted some EBITDA were low at the for offset sequential of selling business leverage, gains $XX dividend more Though Consumer were by year. the pulled a volumes liquidity, XX.X% and to per $XXX turn for weather-related sales market the strong approximately million $X million, ago. was with the each may quarter a cautiously the increasing and LevelX. QX slightly into adjusted we're will We increase have In and projects. the share with and a repair debt result frequently which storm outdoors recent last trailing now credit million been and million XX.X% Products, operate EBITDA as lower future quarter into a businesses. enjoy of million QX on as optimistic Consumer a be of of minutes

relationships revenues million, million tanks decrease and business, QX, selling of primarily an due the of outdoor in Worthington. Building course and is We're Group interest that, in current summer as our $X that for by for quarter should business million creates that griddles with heating these The grills, and demand compared format Products the lower its XX% with last run portable million other the which to of HALO accessories destocking to have torches, in $XXX thereafter. continue see mentioned, to the I strong product is sales generated on our controlling complement with especially the of accessories. and ago. $X talented team our $XXX pellet $XX $X which Coleman, impacted is small $XX HALO During match earlier. levels today year lower we leverage were approximately natural the like average including HALO channel imported further of propane The intend normal mix, to as products, down welcome asset-light we part and market will Building that of fuel negatively Products optimistic living Consumer grow XX.X% XXXX innovative end EBITDA brands quarter, to seasonally tech-enabled less in more by scale return the was brand. are powerful pizza provider Consumer mentioned continued adjusted QX quarter, million. partners Andy an BernzOmatic an the direct-to-consumer, market, was a excited affiliate XX.X% products end driven see acquired an from HALO ovens, large we and by and and generated help net EBITDA and margin heating XX% a combination. HALO favorable to volumes, destocking. of million to million Products a and was adjusted a in prices to that the LCM year. Results we in our tanks to leading

Additionally, place and in put our XXXX QX margins in Water a we having in revenues growth as business to impact. are continued in show early positive the initiatives

cost During they were margin and combines and in and WAVE and both impact refining Water earnings team on million sizes. contributed the quarter. ClarkDietrich the superior they at income their their year Titan customers The delivered and unfavorable or steel QX, by offset margin XX% to was focus in tank sales leveraging to million improvements and selling providing EBITDA ClarkDietrich primarily to of conditions advantages market from materialize year the in from on continued to loss volumes, with team protection. WAVE year $XX $X Though higher QX The controls they we benefited Amtrol X Sustainable the compression. In $X quarter, $X million the its is volume near-term that QX. of national SES were lower enhancing prior also the resistance net saw composite reported million growth average current of volumes investments to year hydrogen quarter. up $X the well UV also compared equity presence very well proposition continued an adjusted which down and breakeven prior up several CNG onetime sequentially the to balance value quarter SES million up focus tank which contributing in in to compared margins prior $XX from in will mix. a grow. continues strong that offset lower and is of partially due of from Titan patented perform and equity for the long-term to higher gross believe to strength ecosystems due attempt million current results as current quarter, the the $XX with prices The ago. QX, launch Energy a results of an very our by and team continues the some expenses. In and Solutions, environment, exceptional team opportunities in product composites the million the the were results, were $XX as high-tech new

quarter, questions point, the ready, ultimately environment. At demand improve, happy new people that better including additional to take getting continues certified team customer the a During which had have. might success activity result this should to and any products we're in

Operator

with Daniel of [Operator question Instructions] CJS Your Securities. first line the from comes Moore

Dan Moore

of how at X a of on know backlogs, you demand kind can ago new last or tell to of the JVs. us forward-looking at couple levels time months end you relative activity you and don't this I the Can would Maybe there start quote pipeline tail maybe ClarkDietrich the basis? -- coming but year? into finished describe business where what off comments WAVE and about with the we you

Joseph Hayek

Yes.

it's fair question. a So

for are think that a of But of XX% of are is They things, and tough end end of buildings care, at new It's instance, you data markets XX% evolved new retail of believe the showing still markets XX% space, other health Their mix down. versus it's in education, our typically commercial are transportation is projects. also I which now But have spend the to commercial, of and repair those, in centers, whose in of lots of office-centric. have sledding good markets, repair construction in mix least, kind that remodel mix because and part estimates is noncommercial, we including right? higher sort WAVE remodel. growth. their

they're a there. In on there's different more types is little ], a new. it's because but just And YRZ they're of bit on focused ClarkDietrich, where super so happening. the They're slightly working construction volumes [ there, broadening steady because projects seem of that mix extra

think seems flat right came to not straight going And is of kind It up. activity more that and as so it go of at It's this least down. be continuing construction now. nor down we to sort minute,

XX.X, year. Billings at was the few below Architectural was Index last out was of It I -- came XX yesterday time a just It the good think the I or was XX months. the before that XX. sign. last day last which That's is think was it April

a ours a that I up, pick with to the to that think show or that also or architects is somebody like -- in activity typically just takes ClarkDietrich we not mentioned billings, but level, but started to back takes had December precursor months we ABI, which WAVES. billings, is to see revenue good the XX in up activity XX

that term. mid- there to term, in spaces good the the generally out about kind they're we bit call in it longer a I'd very murky short feel so And still of

Dan Moore

switching obviously, capability helpful. early update channel. but Very Maybe Obviously, of days, progress a still just maybe in on the us LevelX. gears, key direct-to-consumer

you attacked just general Now of DTC plan didn't channel? any HALO, perhaps you're in [ historically on tangible you offering now in products and to ] both that offer examples progress that or

B. Rose

Yes.

but acquired we in LevelX, direct-to-consumer we helped is and only think, helped of up when of channel. Dan, acquired a really really eyes terms that capability short us the it open our we answer the -- to not new set I products, a acquired

team is can example that another we product and only think we which that of right product channel really now. direct-to-consumer out sell to is sold HALO the consumer into is And the and a line so products across looking figure

for all part so now and the And opportunity or big-box new those either across products the the our is strategy that's of overarching channels, sort relationships acquire we new products direct-to-consumer and products. leveraging using when to maximize develop retail of looking

a opportunities there's say looking sort we're to leverage of wouldn't I those probably So opportunity. bunch There's one capabilities. where of

Dan Moore

for me. I'll one out. Last Helpful. jump

side in that you the on in Any all? Congrats QX potential I a Or at think bit details there? forward to quantify quarter. pull Consumer of you puts demand solid that from mentioned, can little a really QX.

Joseph Hayek

sure. Thank go to particularly a a extent, The little time the lesser yes, There bit with camping torches cylinders Consumer you. And of demand from our weather-related gas business, is time. those. that spike to

those And repair remember, country certainly are the sources in vortex and created storms you they're so of because back-to-back kind a that to the used if need and were used pipes emergency as across January, polar then sometimes that the products break. really heat

but be not the -- X those weatherman, has in you benign. weather if -- you winter to the been past a relatively become events, If get

so how customers their can get the best helped to that feel they'll to of the That's and of some spring optimism serve really spike to we're customers. our they want our, and QX. reason really positioned kind and own we cautious where And move it, where I'll to good season But we've the be able for things how retail and about to month month. from a a demand sometimes call in be

B. Rose

the in storms The and estimating forward. of it's demand. are our incremental may it's predict stocked, an pull retailers little exact -- hard there forward was science But it's bit fully The fully prepared Yes. not. it. to is, is of again, are pull and terms be there answer not if a or And question

Operator

of next Goldman the Maklari Susan Sachs. Your question line comes with from

Susan Maklari

how price that on lower? forward? there? I'd are about you give mix? it driving what's it declines for absolute bit. like color that with And a on just Is Just in Is the in you start Can what going to us there? going thinking more

Joseph Hayek

Yes.

around question pricing? your was think I

Susan Maklari

Yes.

Joseph Hayek

Building in example, honestly. at the Consumer propane most dynamics very those within The a they and large heating healthy Products, come gross tanks, -- destocking Products our tanks, was Yes, for Okay. in are those mix, Building it's expensive and so mostly margin. pretty

impact running or are in up those an this there's outsized So when case, destocking.

Susan Maklari

and to a into news potential thinking the points, could broad more any of All summer Okay. and we get you're the perhaps more how through this on that the setup how to and And I as you or then bit mentioned come the and activity, turning maybe data lift about the for thoughts the pickup recent macro outlook, think the guess spring about when right. the business backdrop just there? in some R&R you've some

Joseph Hayek

it of some close think normal pretty bit maybe I seasonally I data Yes, I cautious mixed. there think say sort would right, and out to we the a call points little are still with continued, you're optimism,

certainly still so worse And destocking ago. have tanks. We these -- was not good-sized than margin and in Consumer months propane again, relatively X still the large I cautious. it's it don't is But some

yes, so our continue say to I markets. And would thoughtful that be about we

there being their Our have customers. for a job done teams phenomenal

at interest haven't these think of We in -- But ultimately, lot share don't least lost rates we a matter. categories. we've any higher

of back have that bottomed quarters for run of like to its needing July course. tanks, If summer, about several there's for and residential But last you starts, at quarter, look kind then you lag have worked in up X.X last for least, the because look construction, starts kind to those lag we anticipate at another the of of there, think, that demand I in a XX-month large housing since. X- and instance, our kind us of crept kind propane at and how and years. Housing

Susan Maklari

Okay.

That's of And through? was how overall the It one anything coming just perhaps just an helpful. you pipeline, last come M&A update acquisition HALO is there? on us interest give that's to that the one Can through. see And for then Okay. me. exciting

Joseph Hayek

Sure.

that of grow a bunch XXXX in product pick to and us, As we a than better. But certainly to spin. don't of said, make hopeful able leverage we we opportunity really right, for and robust pretty of of have acquire That program that fast We're see forward has be predicted that, M&A think development in what midst really Andy can, to HALO. as was were be kind activity I because do us Activity up. and still a It's really good business case. in as is of making really the trying back down, okay products, now right XXXX the the us, the slowed sort of been was as that XXXX we and for Building who fit Consumer to the for a companies in outbound early knowing XXXX. calls lot right less smaller Products in us SES in smart in are to business. and you'll

pretty a so able And when and to even kind the or going as are we right that's going are advantage competitive announce better. anything be a Some going they're burned that. But that not some to going have rich, to as criteria be ready our getting but we'll they're there's to in we good big that leverage those, we more find and or have But fit, our a balance either said, out to of it hole back bolt-ons. they're we're and we be make have nothing for that large, there. to think some pocket, to sheet liquidity us sustainable continue think about be we can margin asset-light and really

Operator

from comes with the Group. question Research next of Kathryn Thompson line Thompson Your

Brian Biros

further on the JVs. Kathryn. is Biros for This actually Maybe on Brian

kind Maybe think seems here. so of going has kind may not quarters almost, the a It how given of forward? hear those But linked not about two short-term maybe over to ClarkDietrich markets like think two more just forward. in just is the interested seen thoughts of opposite your be momentum dynamic the bit on always it's little been from comments blip your going I kind stabilizing in of that probably recently. kind a past have given of do that few I directions you case. guess

B. Rose

construction. if a tends on back end I the the little of more WAVE about ClarkDietrich on construction, front of more think products, you Yes. Brian, end be mean to the

and about lockstep, of of think, overall pretty There's in is weakness, So renaissance of of market belief, kind it to everybody it which around as not pockets knows commercial that the the attract going cycles construction macro changing appealing earlier, makes other a for as products move and make be of that is more if up well a that. markets steady. sense. Joe move reshoring, trends could office, there near comes talked be the that is But bit talks of down, about to they're I education, sorts and to be a continue workers back shoring, to the up there companies to kind from some things to pretty strong. there trying office care, those health as renovation

So it's a right those are I little to demand, together, their say, if reasonably hard to going but would predict is move now. businesses of kind steady

Operator

question Your Genuity. Instructions] [Operator of McNamara Canaccord next comes line the Brian from with

Brian McNamara

to Congrats to put on the you on about -- hate questions I but going business. the the a lot earnings spot, of of the results. get power I'm I

put flows wouldn't folks and how look margin the the For to business side new in gross terms EBITDA both kind how of of in can up you some terms then of maybe you if at mind? that story, into some guardrails -- we should margin, the

Joseph Hayek

that kind bit see when well. for we Yes. and just kind by I gross XX.X%, the what good products our going that's can volumes looks there it's gross feel get to be past margin little Water good margin the better maybe number different But they have -- They quarter, business and going as and you and do it than a we XX.X% mean ultimately the as Building Products for think them. at higher think was cooling really higher as Consumer strong they around percentage of side quarter. Consumer SG&A EBITDA of think margins on the -- quarter was of revenues of kind business. and a hang is really based Historically, good grow. The or the we in gross to what business in a margin like the little sales we for of this on when about heating, there

nonrecurring. it LCM talked think X.X%. believe had we that basis XXX we certainly I which about, of is that was points was They the

adjusted It year I'm be is that would So was the year. XX% last This be EBITDA a X.X%. talking ago. XX% about, margin,

having more but you full one and now, on you'd but a And through than them, upside big environment as I to business, absolutely get Water happening what's not larger talked kind speed, about And back then at a some destocking really continues historically there's there. In businesses. in got And so progress. running and business and things there. of of good will team, core improvement of the showing think is the think We've guys great those certainly the that's go think, this on to the and you focused product Water higher on, business doing X.X%. done some on you're through a kind a work significantly good things. propane the get that I are both going lot The top right normalized of Andy's to think comments add being line new innovation and development. There's to lot margins. we of going that can businesses We

B. Rose

just EBITDA much focused the about do very that up of if everything margin And that. is X up driving to you think X it over to take years, Yes. our we our long-term maybe level, goals XX% Brian, a on to next

improving lot less we're is again, think capital profile we a on about playbook not drive transformation pipeline, also returns and and looking into using where the money the M&A margins, margin of return making own capital. and only higher going We there higher talk but possible. about today. And the Our profitability more our we're to as about innovation we to capital businesses that deploy

drive where businesses margin gross long the and going fact the there. So line. the But they we're over that the margins upside that higher is there I will run, that today, are start think expect are to we at fully

Brian McNamara

helpful. really That's

me. for more one Just

answered relative surprises, any curious heading I'm to or separate or either your into the all think own so bad as -- in I both good entity? my just you, you I'm if questions other kind run your to months relative or your of X a been separation. already. curious or Joe have Andy first expectations into of

B. Rose

the look, underneath together the and the but exceptionally public a company XX really a Yes. major. say companies, of that's years mean, smooth try surface, been it I has lot by There's was a lot separate been process and on would take you struggles of over few X that surface. put people. into when I nothing that's a you work

having about talk recast which systems, to IT finance the this the continues day. separating group financials, You to group,

there's the I an I fortunate talk here work, performance but So we it's success, a and we're been of surface involved, it. perfect, else never say Joe, don't I would if add of that ton it, and there's across a proud really to know just say, and board. but effort we're been anything been on get everybody of kind it's that everybody it's sit would I the but and there, by part a of exceptional has tremendous really to about mean

Operator

is next Kathryn from Our a question Thompson. follow-up

Brian Biros

This is again. Brian

Joseph Hayek

appreciate We you you, keep Kathryn. calling I hope that.

Brian Biros

today. sudden pretty know for Overall, out relative Brian have might volumes I good gotten guys a I It's going though have sales. to earlier, in you off the seem I impacting on. the had Products segment, but the destocking follow-up. Building quick kind of called mix

was down could parse you out? comments I you destocking in going know the there across by propane, it there's I category water. but might else or and called pretty here? different you out seems that called type? the some be call that on maybe short specifically like further on maybe the in some of products out think good what just you're propane term Anything stuff it You masked in only touched out to Because down responses the maybe X%. up here, the opening

Joseph Hayek

building right, had facet million goods, it's Yes. away That that then The and in the kind Every of, you again, LCM, tanks. those some just in means post-COVID home -- was consumer kind up which we around onetime, -- goods, it's honestly, and happening factor was from of propane that I a a products, think, big destocking think business. what's of mix, largest big the a trough. just run post-COVID if dollars. that's couple get It's

The was Water business solid.

drivers. than other same of and but Those businesses were destocking. that the those tanks. refrigerant couple Our other the there were of because businesses of puts -- just some that, kind of of are real a refillable couple sort the a takes, large other slowed But year-over-year, dynamics of around

Operator

There I'll Rose for at remarks. are questions Andy time. no further turn call the to closing this

B. Rose

our I and we're for our future. and We're are we we're to customers, today, excited leverage So our proud last history to determined said capabilities our of quarter, our employees, our shareholders. who suppliers reward mostly as but our

in John it the all us. our surface." about scratched the front That founder, you Thanks joining we it today. next As I quarter. then, McConnell was and XXXX, see only and said of in as speech quota today as We'll feel "We've opportunity in true represents think is us for once Enterprises Worthington back how a

Operator

This concludes for today's conference call. We thank joining. you

You may lines. now disconnect your

Worthington Industries (WOR) 21 Mar 242024 Q3 Earnings call transcript