WS - Earnings call transcript Q2 2024 | Worthington Steel, Inc.

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Operator

Good morning, and welcome to the Worthington Steel Second Quarter Fiscal 2024 Earnings Conference Call. This conference is being recorded at the request of Worthington Steel. If anyone objects, you may disconnect at this time. I'd now like to introduce Melissa Dykstra, Corporate Communications and Investor Relations Officer. Ms. begin... may you Dykstra,

Melissa Dykstra

Geoff and and Call Worthington Officer. call and On Adams, Klingler, and we stand-alone everyone, Chief President President Fiscal Officer; Vice Operating Executive as Second Officer; XXXX company. Jeff have today, call Earnings our Vice our Financial Worthington welcome morning, Steel's Steel and President to Executive Quarter a Gilmore, Chief Good Chief first Tim earnings and

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

those which it could GAAP in certain noted, basis. as our Please for that on a results differ reference on will adjust which results measures, discussion standalone and detail more non-GAAP materially. factors to to financial for reported, Unless are actual presented cause included refer items today's

can later worthingtonsteel.com. I'll non-GAAP it replay GAAP be within over available Geoff non-GAAP reconciliations and website our Today's measure earnings time, being will definitions each release. You to our a call Gilmore. made and At is of this at on find recorded, to turn

Geoffrey Gilmore

Thank and morning, earnings welcome everyone, Worthington you, Steel. Good call Melissa. to the for first

trading stand-alone as X experienced our legal fiscal confident year Steel. a journey of meeting from our separation XXXX. remainder into leadership highly of we plans solidified Board I guided as our our December day Worthington fiscal our Worthington our the our know, team for begin by year marked qualified and you Board Wednesday, as and and we am first XXXX As first company. held Industries

John I get done for across Board, this to us Executive thank rest exciting and time Stoe with work like the look history. they've to in I'd the Lead employees the of Chair, organization our working Director, our Blystone, Independent to George our forward our to

to to other at supporting our continue say teams dedicated each Worthington Business continue suppliers, reflecting and outstanding of use Worthington golden growth customers, drive philosophy the and I the proud to have day rule and throughout our value. shareholder Our Steel. principles transformation, we I'm to how to shareholders System prove and they examples and seen company, and innovation are acquisitions every

feeling enter first Overall, are full as positive we quarter as we a stand-alone our company.

to continuing our positioned of on focused are to decarbonization on and market capitalize key transportation, We the customers renewable to transition end the and our energy modernization well trends, including of serve infrastructure.

Now a I'll to our Jeff at for COO, turn operational over highlights. it Klingler, look

Jeffrey Klingler

morning. Thanks, Geoff, and good

like thank their I ongoing to safety. to First, employees commitment would for our

on practice to measurement systematically Our teams ways continuously reduce sharing. and using analytics, data work tools best ergonomic injuries

accountability are efforts own involved leaders their facility and Our focus daily. motivating in commitment. our Their double is teams to our on down

our Our environment. seen a people guides focus daily we that work is evidence on philosophy a environment more and and have safe. keeping productive safe believe Further, our

continue which transformation, you in on employees hear reference by as our the will similar as have quality, improvement program, Worthington Steel to guided area us focus well. we a often continuous this improve

the Steel from performance family. quarter periods to industrial employees customers them to what A facility for was of markets. ourselves. best in there our quality highlight Worthington facility to footprint our have Worthington past the Europe of commend expectations the for We steel acquisition is by of built for years. I'd the this Nagold motor and goals on at important one step welcome we always the and electrical the for second an from several Steel. establishes next to like and set This capitalize the an exceed strategy in growing are they've our which Voestalpine, set Nagold led global to the the the Results Germany EV for aiming in us effort

Focus area ground We more at in expansion largest the Work have vehicles. we add significant cores expansion electrical of capacity. production transformer with employees motor of includes the a the integrate global steel our and teams This Recently, expansion underway businesses. laminations. Mexico. on create engineered and lamination for our for which our site is our to working facility to electric our site traction produces as highly reengineer production we our existing This Factory, motor announced begin will

a We start-up end are targeting the near XXXX. year calendar of

transformers on support growing for budget. the on and Our demand remains expansion to time Canada large in

to placed time long have end near the the calendar orders begin lead We expect for equipment of production XXXX. and

and to Officer, Tim things I am proud commercial of to inventory customers service, over ways Chief Adams. best hand of look I'll our continue partner control quality to and safety new while for improve, and all our ensuring the all. accomplish. with provide Financial teams continues operations the to now Our team maintaining and what

Timothy Adams

Thanks, thank Jeff. quarter. to our staying on for the our also focused serving would second during employees I like customers

in you. hard Our results of reflect put by work all the

loss compared results, year items or that unique the There quarter a on reminder, will of in a from share a which our $X as the basis, per quarter. $XX.X a Enterprises. segment prior and including differ carve-out loss quarterly X-month the $X.XX several As the were the share carve-out results following. Worthington in per reported On a $X.XX million results are million prepared we impacted are or by basis, with second reporting quarterly

quarter. First, $XX.X share prior $X.XX or $X we with incurred as year $X.XX share the per million of expenses or compared pretax per separation in million

approximately the Additionally, of operating of joint WSP per facility. the divestiture historical the restructuring to ventures gain share prior remaining related included $X.XX year a

share the year per items, generated earnings we quarter. quarter a compared prior loss of per $X.XX to in these share Excluding current $X.XX in the of

up or $XX.X from prior million which a higher or EBIT of million In per swing largely Steel per per addition, estimated of calendar $X.XX adjusted of profit, year is profit quarter, holding adjusted per holding in $X.XX steel a prior million was quarter. QX, to of This loss price current we almost the the $X.X in inventory the due has had million to share. ton. that $XX.X we $XX.X or wages pricing the the expense, reached compared gross SG&A $X.XX $XX.X in per inventory pretax favorable low losses of $XX.X and pretax In $X,XXX quarter, share year reported share $XXX estimated million increased October, of increased losses EBIT offset year sharing. to time, by primarily since in and ton million,

QX those gains inventory than prior direct losses anticipate due gains will quarter, flip estimated volumes. the Net will expect gains selling slightly in X% $XXX larger to partially higher the year in be lower QX to holding were in We million, in prices, offset from QX the down quarter primarily average results. inventory our by holding and sales

the per rolled selling approximately average calendar to $XXX coil in decrease its resulting During in XXXX, of the hot prices. our level fell lowest quarter, ton, in direct price an XX%

ventures during divestiture in X% Toll facility. We compared sales year-over-year, tons operating prior quarter, the with to primarily up XX% the X% of our year tons the XX% prior compared which shipped year to made joint were remaining quarter. of mix was the down historical XXX,XXX tons WSP up due the quarter. Direct

November. year impact X, the tons X% tolling due prior at mills. volumes the toll the not X% quarter, settled until began in up completely early of to despite primarily year and the over were with divestiture, mid-September the the tons up Direct sales were quarter UAW as Excluding Detroit increased prior strike the compared was with which

the did a team nice impact of Our commercial securing to job markets volumes additional in action. UAW other minimize any of

We automotive flat. by ag heavy shipments shipments market, were actually year-over-year to construction decreases increased truck which our were partially On and the markets. a basis, shipments to offset in the

to flow cash was from and Cash the and balance flows Turning was million, $XXX.X operations million. cash flow $XXX sheet. free

with on the announced spent the Canada. we going in of steel quarter, majority towards million electrical the previously $XX.X and that During Mexico expenditures, expansions capital

and XXXX, noted, XX, announced Jeff basis, Nagold, As dividend acquired we have payable for Klingler per electrical million. $X.XX quarterly steel record March XX, to free on shareholders On cash flow approximately Germany million $XX Wednesday, an trailing XXXX. also $XXX a facility of a lamination generated share March XX-month of we we of in

sheet, and very well of working during cash balance payable. inventory capital our the $XXX delivering accounts million from operating receivables, Regarding quarter, teams managed our

their for point, on meet I'm commitment quarter, Gilmore. we summary, our the and During normal Detroit turn credit facility of levels. dividend and revolving borrowed performed UAW had to teams and November December to credit Steel OEMs second Worthington quarter I proud that a separation. customers' on very issuing continue XX of In strike will finalized in the anticipation back We At to Worthington on our facility. with an navigated to this X well X-year million schedules. at the their for Geoff $XXX million build cash all to in connection our excellent enterprises $XXX needs it safety. as of teams the high return continued We dedication a

Geoffrey Gilmore

Thanks, Tim.

Steel. heard, you As to Worthington an be at time it's exciting

that strong driving transformation a strategy. already our our continuous on believe growth, and a strategy proven have improvement defined We We action M&A with have organic on focus taken using process, strategic along steel services. Worthington technical, we growth our products Canada, several and with processor in is unique in highly and Mexico in truly with acquisition markets. expansions accelerate a Germany our will key Steel value-added Nagold, and

with strategy attractive strong and we to leadership a We team. are end a experienced supplier driving that market-leading are markets,

We employees, strategy the thing doing right shareholders. have our right and a the focus customers on right and for the team, laser-like

questions. Now we'll open it up for

Operator

Research [Operator Instructions] comes first of line Englert the from Your of Seaport Martin question Partners.

Martin Englert

the volume Good like offset it Hello. elsewhere. estimated quite on strike impact front. more from there just maybe is automotive the quarter, your the of comments, bit a gaining But volumes specifically everyone. any from with morning, Through your sounds

Geoffrey Gilmore

Gilmore Martin, Geoff here.

Your assumption is correct.

were the Fortunately, from relatively automotive strikes insignificant. impact

anticipation probably I strike. of think in pull there's ahead the

an a Fortunately, at Xs rightsized get up catch the opportunity inventories and of Xs as their facilities. to that lot use and Tier

think of And orders see automotive on great our our commercial pickup of strike. highlight saw we important thing some that to would continue most like team. team we analytics to not I we a are is and customers our from But also there. work the the just So

into that in of if what able importantly, were going approach strike, vehicles and vehicles the the what the book. on union there targeted order strikes, parts we more that are some holes we identify the producing facility were with taking Because will parts? going of those are and quickly producing they and which steel we be obviously, was at Are facilities to

our able to different with were markets where capacity, analytics quickly our facilities and out get those they in did very job commercial there we were open on group to focused offsetting that So was then volume. excellent that going we and and do an customers to team different able lost

Martin Englert

profitability? and there Voestalpine It's helpful. the did the Automotive annual look on How Question acquisition. volumes

Timothy Adams

Martin, It's Tim. this What do a footprint just is trying small facility. a to get is there. relatively we're

So about a it's it's it's got people. facility, feet and about XX,XXX XXX square

volumes we'll So it's and Tempel’ to win up asked small been relatively be Europe in for We've be a time. for there asked business. we there. long as to a facility, been years be has ramping

part through but you to future. in just go know starting the we're So let integration volumes on of the that, we'll

Martin Englert

Okay. Any comments profitability business? on the for

Timothy Adams

electrical No, it's in I say steel. would

it's So similar profitability a to Tempel.

Martin Englert

$X fixed agreement steel was Okay. details annually? such that's adjustments. in the you that are more this agreement, as supply on this variable? within the Is something Or duration? on related release, Can pro the forma there's margin provide volumes the some booked and is million

Geoffrey Gilmore

of supporting we'll agreement them have a a continue They to obviously, will customer ours. enterprises. with consistently to XX We're customer us. multiyear Martin, Yes. as be a Worthington top excited

at profitability, those not all understand of that's we but our for agreements everybody them. are And length, would answer we're something place certainly know arm's should any put that as excited as supporting about far in and As customers.

Martin Englert

sales, would able pro to Are you group for of a what on forma percentage basis? comment accounted have as a they

Geoffrey Gilmore

of top shift. top be they the far our back I tell just would will head. as I to, my know I'd of percentage again, top volume consistently, in you, don't what go of as the XX

Martin Englert

XXXX. calendar one it. What's here. sentiment could, on last appreciate I read budgets customer If looking their ahead one and your to Okay. I

Jeffrey Klingler

Martin, Jeff Klingler. this is

high ag, the activities us, increasing strike our returning production the the to level, are level with by of they and think standpoint, to XXXX more a -- we to In in from customers a X our other X%. several off And heavy on to markets, in expect then and a basis. X% truck other record modestly improve markets, construction years coming major year-over-year they're I a automotive from looking behind normalized forward row. do

So bit softness year we going the into sectors. do both of in see a those little

Martin Englert

in some general, growth Okay. your markets But here largest end expecting degree. to

Geoffrey Gilmore

That's right, Martin.

at to automotive X%, anywhere build said, we're million. $XX.X X% from rates automotive which As Jeff would anticipating put up

So spot obviously, for it would be a us. bright

Martin Englert

the on Okay. separation. all Excellent. congratulations I appreciate comments and the

Operator

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

John Tumazos

and old I'm Worthington. years feel it's younger, like I XX Congratulation. the

Geoffrey Gilmore

glad We're Clearly, you're well. as are we excited.

John Tumazos

higher sheet. I the math try want to balance understand of the to

So December offsetting the million, doesn't item, to goes balance X, is the change, interest sheet controlling is and November the $XXX down shareholders' cash but right? $XXX XX. goes debt the the equity On down

Timothy Adams

That correct. is

John Tumazos

gain receivables up. the with prices quarter. the and So we the example, In should going and next February XX% steel and in payables going payables? larger maybe in up and balance XX% larger inventories inventories receivables and expect, for sheet,

Timothy Adams

up, it I you as and don't what will just to increase just would know you steel payables price yes, at XX%. in -- that's see peg inventory, as But that I happens, of the runs an know. receivables

John Tumazos

more XX something million $XXX on that. like So February debt might or be

Timothy Adams

be to an will steel but I beauty that's of you -- -- It's yes. up, revolver right? to prices ABL, sorry, $XXX more, those, move gives mean as if you and the it those. be don't I fund relying your fund will million right, it moves on having up ability that the know just

John Tumazos

terms of company much $XXX.X flush is value tangible the those underlying questions the In ask a sheet series the I'm net going million I to How of goodwill values. than And think more to intangibles of worth. and balance the trying some Tempel Steel? out of of is

Timothy Adams

is vast of I majority would Steel. say the that Tempel

John Tumazos

So Tempel is least at million. the of $XXX million Steel $XXX.X

Timothy Adams

in don't but seems have say data front would that that's I accurate. right. me, about of I the

John Tumazos

Shiloh be would How blanking? much

Timothy Adams

of of rest Probably difference. of that, most of the the rest the most

John Tumazos

million. So $X anything else insignificant, less than is

Timothy Adams

assets acquisitions I tell acquisition acquisitions. the the We the the you ever recent tell you but we've I in did did Again, can can't XXXX. numbers, in We biggest done. the strip Gibraltar of acquisition Rome are were those all most cold-rolled is the Those from XXXX.

the goodwill some those those Shiloh will So be leftover the But will Tempel X would be the from ones and done -- biggest there items. we've acquisition.

the would majority represent those So in goodwill. what's of vast

John Tumazos

not and Rome were near below have se, They Those glamor historic Gibraltar might businesses or per been book value. right?

Timothy Adams

They were solid businesses.

John Tumazos

like weren't today. Electrical sexy They Steel

Timothy Adams

one You to that's that, say at could suppose it. look way I

Geoffrey Gilmore

It sexy seemed then. back

Timothy Adams

good are those businesses. And

So...

John Tumazos

the I'm of And in -- old depreciation at 'XX accumulated looking million account spent 'XX. the CapEx, $XXX. So 'XX Worthington $XXX to about

I galvanizing to X CapEx What the it's the do are depreciation or a would the line, which probably And $XXX I'm worth from account? be think you're is 'XX Delta, probably pieces So the to Ohio sure X history. part think galvanizing X, maybe of biggest depreciated. than the biggest of line accumulated present, lot million was fully big Delta of X. a depreciated your business. more it's If you

Timothy Adams

to It's X. refreshing not constantly that. We're depreciated

it build upgrade you it is it you not and and continue capacity. expand So like to don't

to -- our So Spartan we've want our keep years done condition. of a we and in at number of the Delta all keep assets and facilities to the projects said over market-ready before, we've

to increase of looking of that, can we the ways out get for so because more efficiency it. capital constantly to do So and capacity success we're of Delta, spend

John Tumazos

was trying a wasn't me. excuse s**t it I say asset, dog to

Timothy Adams

don't... no, not No, all. at We

John Tumazos

Depreciation Delta and is Spartan.

Timothy Adams

that will don't on. That's we the you of back off to something I number have my circle to head. top know

John Tumazos

did reason is I'm from not The added of the they fresh a one accumulated And use of back was start question, adjustments back the thinking to LTVs comparison. I that the bad asking they to accounting emergence as one just depreciation. bankruptcy,

something. there some but accumulated but depreciation though is dollar, XXX don't not sure as on -- looking the I'm I'm account, cents it's So think in that I value it's

adding XX trying to I'm the book the if Tim. trying books. price the X $XX book just and value that the back And where the That's adjusted to depreciation is interim November steel quarter stock, reconcile or tangible value book accumulated the value after to figure the tangible and value, value I'm rebound So between $XX. buy out is good to all. book

Timothy Adams

Thank Yes, you bet. you.

Operator

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

Geoffrey Gilmore

everybody thank you Christmas.Thank few you. Merry in showing a forward a and We'll just to and interest again to participating I Worthington look Steel. wanted to in months wish for talking everybody

Operator

call. This concludes today's conference

You may now disconnect.

Worthington Steel (WS) 22 Dec 232024 Q2 Earnings call transcript