WS - Earnings call transcript Q1 2025 | Worthington Steel, Inc.

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Operator

Thank you for standing by, and welcome to the Worthington Steel's First Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions] After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Melissa Dykstra, Vice President of Communications and Investor Relations.

You may begin.

Melissa Dykstra

Thank you, operator. to First welcome XXXX Fiscal and Call. Earnings morning, Worthington Quarter Steel's Year Good today, Geoff Vice we President call Vice our On have Financial Chief Executive Operating Tim Officer. Jeff President Chief and and Gilmore, Officer; Klingler, and Executive President Officer; Adams, Chief Steel's Worthington

uncertainties will closed. market certain Act. non-GAAP to adjust which certain actual meaning the get XXXX of basis. started, that on to Private presented financial those to could These are subject today items that Securities remind it that for our GAAP like we stand-alone a made results included Please are after and issued discussion forward-looking from Reform statements actual for which results the more risks are suggested. as Before those detail everyone results yesterday our reference Litigation to refer I'd to on statements noted cause and differ within the measures, cause could release materially. Unless in earnings factors differ today's reported, We

can today non-GAAP will GAAP made within later non-GAAP reconciliations a worthingtonsteel.com. call measure earnings recorded, be definitions each release. Today's You to our replay is available and being of on find and

call the to I'd to like Now turn Geoff Gilmore. over

Geoffrey Gilmore

everyone, Thanks, for Melissa. Good and joining morning, you thank us.

year The Worthington Steel first solid was fiscal quarter despite of for XXXX some headwinds.

we of Our laminations flat-roll teams and are find our and tailor-welded and to industry our dynamics we processing, and serving markets Demand steel our the focused steel customers stable, continue on solutions managing electrical serve. is blanks. customers in for

custom, and making unique a us partner. are solutions valued Our

for our and will we updates challenging go their transform products material needs. Today, through to transformer transition battery a focused fleet, vehicles strategy execute nation's of how making infrastructure. the and growth XX% hybrid than customers the which In solve growth fact, and more electrified we and including in steel on to our end will the market electric multiple to modernization improve light support more enabling on to continue first, we share processes, of supports steel cores growing electrical investments rapidly electrical the the vehicle by

leading strategic CapEx finally, Second, via margin utilizing selective accretive And transformation. to and growth. growth acquisitions,

be an much-needed Our believe while EV XX-month of continues transition some of And for on remain technology. for can some there and capacity. When technology well need supply as working anticipated, hybrid vehicle XX- infrastructure on of specialty is pockets to and the in the hybrid our energy add investments, the capitalize in comes Steel because traction to positive hybrid steel it margins, increase infrastructure. AI to steel capital motors. Electric laminations to reduce transformers. vehicles, and electrical continuous remain in to a continue than in and Worthington the to decarbonization is seeing backlog bullish continue as used transportation, renewable sources transmission invest drive models Automakers transformer system EV steel both automatic We used and improvement we growth. We to we hybrid for electrical electrified centers in to slower more the U.S. to well the adoption the acceptance we data and investment positioned and are the shift the continued electrical a markets.

some just the improvements will quarter, a and examples few and of the minutes. productivity. Klingler in efficiency share Over transformation Jeff drove innovation continued in transformation

strong and in in by our only philosophy culture also this business not empowered improvement, drive but communities. employees Our our our

our the From work. live our in to Over employees volunteering for many research together and to we each to at teams areas the raising ways. get day Bank, a across back Steel philosophy the maintaining support Worthington to came community exhibit money cancer summer, garden where Food

the made opportunity their we've and am to honored responding front us. Our growth I our bar we the accomplishments, had meeting. to the and of sales team, excited embodiment to set contributions customer this our the at Last to to national of opportunities commercial for progress philosophy recognize in high lead continues month, and team about am our needs. I

value-added risk end-to-end dedicated capabilities, our differentiate supply our innovating experienced for strategy. Our to thank breadth Worthington closing, chain processing management focused of and solutions for of price our like to executing and employees customers Steel. In remaining management, I'd continue employees one on our and each

for returns our Our well strategy and deliver to differentiation and grow position our us strong shareholders.

will operations. our comment on Klingler Jeff Next,

Jeffrey Klingler

good Geoff, operational our overview and efforts. by our I'd start morning, to Thanks, like highlighting everyone. safety

level facilities highest of were reaching our recognized Over Program. for Health our the Environmental Safety X Safeworks the and quarter, of

and of in Cambridge, XXXX. These Michigan, our stronger #X audits, initiatives improvement after Our Worthington return for the make fiscal productivity, and the and and to in Puebla emphasis Mexico implementing Monroe, management targeted facilities our Monroe higher teams execution Ensuring returns. great company Safeworks responsiveness and to system customer the of in XXX% shift every is place continuous Steel This environmental priority. criteria program work plans. and enables Ontario, our safely safety met home creating a Middletown, program safety better Silao, risk and multiple and continues reduction led employees Ohio;

our a of As we Sales XXXX, to made same fiscal period at our market the first saw from sales. a automotive QX year of operational when XX% up quarter, decrease XX% our quarter X up year year the start largest let's end XXXX automotive made with for fiscal what the ago look overview in we markets.

a year. volume XX% on Our the direct automotive XXXX quarter decreased market the to sale basis in first shipped prior fiscal of to the compared

as variance direct toll to and to We sale expected some model opted processing. the change business several customers their of

remains prepare market automotive solid adjusted customer behind were the X potential during orders We for our suppliers a strategy. track. Overall, largely unexpectedly were pulling key challenged Additionally, some last back those for strike. We Detroit as of them believe their and put year on pricing ahead one believe and has we quarter that us. issues commercial is to customers the

calendar and quarter, North market pre-COVID units our production help XXXX compared believe While XXXX, to We at track to but is flat solutions or for year calendar off provide the next up production this timing which likely in levels will reach remains production was light we production to vehicle value-added year X. XX.X share American on customers. gain continue to million end

largest XXXX, in opportunity. the same will the continue XX% OEM the hybrid EV and our anticipate making to customers Mexico of remains prior on capitalize adoption as this us Construction Capital our Our our in growth sales plug-in investments facility the to up of fiscal quarter. first grow. market to electrical as steel quarter industry in second market, continues allow year

category. In a experienced we diverse framing in with past, we market. products, the in serve, large combined and [ the is submarkets in discussed have the we As strength metal ] building construction strings Cobalt and

Canada end XXXX online expansion capacity respective Our of be on with year at continue and time facilities. and on in to calendar budget coming and expanded the transformer projects in Mexico steel lamination electrical core those

our to our technology being The continue and on are receive We pipeline. customers equipment about schedule. filling TWB is remain from licensed interest at currently ablation our capabilities and using additional installed we

skilled transformation. On note, enhance customers customer continues understand in into X acquired Tempel electrical ERP and strong years Germany We Europe like successful project over steel related with well. The very facility Nagold, initial Our who our benchmark few is addition entire project of through of their a to to the and business a The will progressing people transformation interest will commitments. data at highly provide gain Tempel a share as examples expected. projects. team take approximately of I'd the place the to the Nagold, at move

also last mentioned may quick starting report that You work, a transformation we from recall already facilities quarter, results in we story realized work-in-progress. that launching are are this are our one even seeing we functions. our pleased corporate reducing phase. I of process I during though mapping I'm the from wins shared about just to

by early are the time number these decrease For a tasks PCs involved IT it configure instance, to the to XX% in takes reduced This to decreased be by believe process contractor and small and we've It's tasks stages. Over day We've to and changes the important while more ways departments needed XX%. wins add hire the lead XX%. and mindset time savings will but in streamline very transformations. important valuable we've to distribute that complete happening of note work, less more time the an will cost start the up work perform our among we making what and identified to time, by to every employees payroll significant will desirable. these transformation to employees

our work want congratulate to exceptional award to Components and team, wrap team and quality vehicle Steel recently award your our at Tata's facility to We employees commitment contributions. electric comments, recognizes the best supplier that As received in up all thank contribution for their a Auto Congratulations our in innovation, motor motor program. India. and you The for great Tempel excellence Tata vehicle I Worthington manufacturing. in electric to I my to

turn Tim I'll over financial the talk Now through call the to Adams results. to

Timothy Adams

and Thank you, good Jeff, morning.

related some first compared results on quarter, are $XX.X provide with started year a year quarter former to first current stand-alone prepared with per zero. recognition second quarter solid the carve-out per color a quarter final the by compared a or net consolidated would a earnings million We I quarter share. The like fiscal court earnings owners our is prior basis. everyone earnings on The quarter, that share current Tempel. year pre-acquisition year indemnified to ruling $X.XX the as $XX.X which remind for to of a Before which reporting basis I on included matter quarter, the we Tempel of was million prior of with or $X.XX tax and of results were impact

a tax expense and quarter refund. However, was consolidated matter. The the Worthington to unique with matter items, per million Tempel pretax and $X.X discussed in of $X.XX joint expense or a $X.XX million adjusted million venture, XXXX matter, while share to the The payable our to associated Samuel a income our $X.X related charge for results to or including of pretax assets QX of related XXXX share XXXX miscellaneous prior we $X.X per $X.X tax recognized relates at separation included impairment year we Tempel the indemnity QX Processing. related million Coil indemnification several

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

year gross quarter, direct with earnings. Gross our was to margin margin million, impact line spreads, million to direct of rate $XX.X costs prices unfavorably Serviacero an $XX lower QX, per steel share per In pretax within impacted in impact estimated with compared volume as addition, toll were year estimated expectations in inventory the lower direct but prior unfavorable is pretax offset or adjusted losses and earnings due processing. Equity we due mix first higher impacted inventory higher million from by primarily by associated prior per holding swing million. EBIT lower estimated of million improved including the decreased being than pretax the Lower or material $XX.X of movements. SG&A pretax to due $X.XX of a and quarter, down holding prior quarter, of the well partially $X.XX share $XX.X decrease exchange $X.XX by as volumes. quarter to toll million spreads, primarily due in incremental inventory company. $XX.X EBIT the reported year equity lower lower This was which Serviacero direct of $X.X to was stand-alone was share. In or spreads first holding the from million adjusted gain an $XX.X the lower of had losses we which

Next, throughout $XXX some the May. in trended our I'll quarter, per and on provide market market ton ton at content lower August, approximately $XXX bottoming per for pricing Steel shipments. down the

$XX to and several per American prices announced the throughout in pretax we the holding XXXX million in of fiscal of initiatives ton first the there steel been decrease in fair North July basis. Flat second million a estimate lower steel-related the the market slightly million approximately most $XX quarter increased With August, than since will and could quarter. holding expect in estimated losses inventory inventory estimated $XX.X We on holding approximately Recently, market. in losses trade pricing, $XX of have be be losses inventory prevailed QX mid-August.

our in of the have expect were would sales quantified or $XX term. Net While more lower lower not quarter a within Direct to shipped year pricing quarter. primarily current we over prices mix an year a prior automotive the from more down which volume sales prior down volumes prior was XX% due in in the offset in direct the X% was market approximately quarter. volume offset upward year which value-added X during by processing. We made year the pressure our million quarter, impact, on million, to shipments direct than these volume cases to X% business, reduced year quarter, up million tons both that quarter, partially market. and to proportion sales and greater of X% we was $XXX construction-related included toll steel the by prior the increase favorable compared with result over the longer mix the down Direct the higher

in the a compared basis, to automotive due replacement while sales automotive Our year-over-year volumes construction direct launch to down end platforms increased market shipments programs. their experience volume to for delays volume programs X% several to the XX% well the specific as was year to several the prior as quarter. life, decrease primarily The on market reaching was continue while of lower our

lower XX% our volume healthy, and of automotive indicative not taking be business, the Our sales. our related platforms is book expanding. health specific are overall to automotive of book believe to business of year-over-year which we of up We continues of the

in with cautiously the about to mill. our look year-over-year, automotive We primarily due partnership customers. Toll automotive down our coming X% toll are continuing forward optimistic and pickling volumes quarters were tons lower to with the

cautiously toll of quarters. volume and be blanking for the weighted are tailor-welded heavily value-added towards to demand higher optimistic volumes mix the appears few next automotive market, to galvanizing. Similar more including products, overall the about However, steady. as was we

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

our expansion previously Wednesday, million Mexico variety and ended $X cash, with down working we quarter, And electrical cash related capital of steel share million On year-end. $XX.X trailing $XX.X a the sheet, the including free dividend million basis, flow. expenditures to million on projects, is of quarter balance quarterly a We announced $X.XX the $XXX.X payable per During quarter. in XX, December decreased during of a generated announced operating the regard million on Canada. XXXX. In XX-month which spent $XX capital to we of from first we

and August Our first we good at net value near-term your a was Worthington Steel at on debt had quarter, our ABL resulting and performing happy in be both Everyone a high million, $XX our a on Worthington long-term to stakeholders summary, to of point, for million. In be $XXX At is questions. at XX debt team continues focused driving would take basis. level. very this Steel

Operator

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

Martin Englert

autos. within here on touched just You

Is previous You program noted programs models programs. of noted rolled some newer that then slower and correct? you out changes And from start-up some that in needs for steel.

Jeffrey Klingler

program that's you which of I'm not and for some think sure they needs we delays We sales correct. did customer from noted in commercial changeover and who We steel. strategy to impacted there, retool a us. But have we are any had sort that changes behind rebounded had us. -- did model their

Geoffrey Gilmore

discounts incentivize anticipated. think, were the was on to delay doing. and I or and And then X, And -- strategy the Definitely retooling offer their touched lastly, slow in Martin, maybe this definitely our as a Jeff model third the first competitors changeover.

so year-over-year, look looming, bit you as of a had auto the was there we well. If ahead quite pull strike

a So was that difference.

Martin Englert

recent of history the activity Do It it's think pent-up models, it here. get rolling you pull, within a Where demand within in that would some newer you expect slower as essentially like autos guess. some more of I autos? normalized ramp-ups of inhibited forward, sounds demand kind those

Geoffrey Gilmore

point more at it out Yes, little When you're be and slow Martin, share your end in a time. bit that missing up that commercial you're our sacrificing sales, assumption normalized. probably being would will market strategy on you're

and build share I needs structure, that think structure where Market its should to normalized shift will a auto auto way see you'd I -- say. more it will work So out.

Martin Englert

why away there and the like was a that? think pivot you what towards that, volumes direct prompted was do What -- I from what shift tolling, guess, behind was

Geoffrey Gilmore

question. Good Yes.

predominantly, So toll to saw a galvanizing. customers we Number bit of simply getting shift. do where areas were there's us X more a one, for looking you

piece one was So that of it.

piece hire some then do model blanks, to business material of piece a with own their Another was to a customers bigger obviously us tailor-welded out where maybe toll was processing. and and negotiate the in it just shift and preference

we made the change. that certainly a one was that decision but supported, So they and was

Martin Englert

a Okay. holding quarter at mix steel. was EBITDA it ago, Got it. there losses unit I when know gains, looking pretty look on underlying a excluding back for you favorable

pivot and This I looking underlying more back current something, normalized those a that's to a to fair gains the fiscal quarter in EBITDA seem XQ as maybe guess, holding ex assumption possibly more Is the that or losses, that at characterized normalized. ballpark? readthrough

Timothy Adams

is Martin, this Yes. Tim.

direct to a what it was, than our towards saw had galvanized I So that trying little in right? a the in we was galvanized in hey, we think we products. proportion sales, higher rest what QX was of of mix prior QX was signal the weighted were

historical say to looking fair that's it. if meets average, So and that would way at I QX average you're a look historical a at pretty

Martin Englert

seeing What Are as seeing as products -- there? far availability solely demand and saw are looking or versus out X you ago? what just are you far a shifts what quarter notable gal-coated and you at as you any carving as seeing quarters out

Jeffrey Klingler

last Sure. is think we Martin. going year Klingler, XX.X the at automotive is would about despite as to Overall, flat be This small describe Ultimately, market Jeff relatively million solid quarter. the units. the setback I

important 'XX. pretty optimistic and cautiously us. calendar large flat there. markets construction very market for is So When us, going We're for other comes diverse it about to which very the into

ordering challenges face of to came a continue to for really prices number that rest higher this throughout did The a in of spots, And a of late saw during strong to impact commodity the an have muted customers they starting with 'XX positive pullback in year, there. lower some boat, interest interest summer. expect then demand the increased experienced year, but here bright that are heavy grain to off -- rates late sort however, expected the see and cut the year truck rates is be bins likely calendar We input the with in market ag same costs. We higher we in 'XX.

to last through the the that expect of We year. remainder

However, year expecting the we're calendar some into going there. next improvement

Geoffrey Gilmore

Martin, markets. all -- good from you Jeff the overview on I think

we asked feel think that's there and optimistic have about And I is galvanized. you an Obviously, Jeff's be would election. specifically to that, I comments and another we're stable. book going demand mirror like coated

stable. stress to going we're So

and I lower think get we most the with would feeling mirror beyond that optimistic we rates, galvanized markets overall. interest serve those now. with as right But comments that product,

Martin Englert

be able say you're you case. to What more I'm able galvanized your curious outside it into Are And if traditional serve course volume the market market what you roughly bit moderate the running or domestic the more of if spot maybe States? utilizations customer a and there there's base, like coming to a cope the to need back kind of there's would more for trade United market, about in volume there? is

Geoffrey Gilmore

certainly, the the coming that on Well, the constantly of some galv trade announcements The already way would be that importance impact and we trying the transformation, to open to free we're an continuous cases, have and our focusing that's answer the from that, in. just and seeing have capacity down up we slowing of team improvement. certainly, capacity, to

for create that us. some opportunities certainly, So could

after that certainly, think most that certainly we share. but there additional and where capacity market we of have have be go I is we able Spartan. is open to we'd And market also probably would out excited be would Delta,

Operator

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

Philip Gibbs

to wins dialogue and I allocated longer-term on and terms facility. electrical Canadian maybe the gave both your with facility an know new steel mid- at customers? there of last Anything to capacity report in contract Mexican quarter, update us you

Jeffrey Klingler

nothing new. Yes, specifically

business some for We future the Mexico. online in coming capacity have that's additional won

online fill much So pretty we've of those the business spoken got coming some for. are additional presses. X X to and installed

by but other the just months summarize guess X to very arriving will of in Mexico. Same and in saying in to within will want begin. I lot like positive in got would X of some along specific coming there The who capacity couple a sign installation around Canada next a be of I nothing we've up activity the advance in thing the customer communication Mexico. customers additional for then it X capacity and Canada, additional

Geoffrey Gilmore

the mind capabilities different all customers' the add need know you this capacity, increase produce service point, then in adding providing we products provide this, Hence, ship. And today, our is what keep and want customers demand that to at us can Phil, to to which million to $XX in continue can and we be because than to investment it's we're news. good able

Philip Gibbs

then And income. the equity

Last changeovers seeing that was it that a a -- think was $X volume model the forward in and the some where Or you little $X I above is the the was automotive million hits? over Is the is year, comparisons? than think million. softer that long would quarter. anticipated of that you're all we Is it than because Or over or impact? it FIFO obviously expect it is certainly I what of moving what softer run? on

Timothy Adams

Phil, this is Tim.

key So didn't out on and I down with Serviacero you making we on the to we remains project guys a -- strong fundamentally One want thing slitter new are start our there. strategy. update of progress part was Serviacero

coming. results weighted X But and they're things the is same. installed So a The of combination the seeing in both first of we've the is of volume new December. Serviacero's kind impact what new slitter you're by should got of be

showed decreases significant holding basis. gains year-over-year a in First, on Serviacero inventory

also last the is And So we're and were seeing gains second, the of they this had significant volatility then they Mexican of year. peso. what smaller year impact the much, much

of depreciating know, show So a volatile last the last impact over the the while an quarter, as peso. we're peso current appreciating results of showing in been the highly you the Serviacero's peso year, impact XX months. And has

those a both combination of it's things. So

Philip Gibbs

a of impact other? versus is one things the those stronger Which

Timothy Adams

weighted No, weighted. Equally they're equally this quarter.

Philip Gibbs

anticipating that of mentioned of longer-term things? practices. side Tempel. of these I sounds What think early things for you meaningful then integration kind returns you're it Okay. are type from innings the I of in on of savings the me like mean of some cost nature. of lastly new systems other business you and And IT the and

So trying regarding where is to your understand project. at the mindset

Geoffrey Gilmore

to to ask give have get from you to now, getting it's implemented, some I'm just XXX% savings to it's what on I right type going because getting we quantify data going term timely focused of stay for it's any and type Phil. we're hard set grace to to good going the mean start we be to baseline, ERP longer until for of difficult and us us time compare.

calls to we're think those you you some to versus is what when doing several to achieved opportunities sure carbon our we're able just lot has there. in I'm success identified, that come. What flat-rolled Jeff continuous differences as be there's Klingler we've we're business. There's just have and with I could those highly imagine, calling improvement think I I tell the can we can X quantify in. we'll those, commit just been events, and going more various like last we're over sharing having start to and as optimistic a achieving

Operator

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

John Tumazos

the blank for -- And business income very the trend Could consolidated laser-welded little the the you $XXX,XXX up interest more explain a income net of equity rest why was Worthington. the that's laser-welded Sure, blank more bucking actually, over of minority automotive-related business also. company? had $XXX,XXX

Timothy Adams

John, this Yes, Tim. is

we TWB. had costs, and to We recovery up is the other costs, on do spreads Serviacero those. But some at to costs up the easy answer and at some would... our were absolutely Serviacero-- I had have TWB, spreads So sorry, I freight there I recover my were to prices raise or of think brain.

John Tumazos

product below that ton? prices hot-rolled so you exchange even when can raise $XXX a that So were is sheet dipping differentiated prices

Timothy Adams

It product. It typically high it's cold It's very It's -- correct. differentiated. hot-roll rolled. based. a That's galvan value-added is not is

we and able cost did -- standpoint, we there and a situations inflation to to we bit. So going little we could price an were where and -- from recover able had the push have through to those are best when is everybody these

John Tumazos

because where I going Butler. southwest electrical to they're Or going transformers. were you their Weirton the mill phases steel and for Weirton announced scrap Worthington transformer Weirton And to build in could and any Cliffs transformers in start to there that the make -- integrated it from guess, are Would the that process take be they make going plan? sales bypass of the be product? from to before steel intermediate from to opportunity

Geoffrey Gilmore

-- are Yes. we making electrical I I that steel announced certainly at that point. mean don't They're electrical making scenario fit they be today laminations will transformer this transformers. steel know as they announcing they know. cores, into and where

So your to of a part more theoretically, a could disruption. that yeah see they the latter don't as we importantly, be or suggesting, customer. But John, question

XX- backlog. As years. grow we've XX to said, GDP next there's is XX-month an market the That for faster going than to much

not business. And continue going So importantly, Cleveland-Cliffs more entering to disrupt will that we're our to space certainly support customers. our

continue market. with to laminations be than are create and leap for it's and value, trying customers to going to them. better Partnering Our them industry partner more going experts we're us steel it's ever electrical shareholder with a that win-win And at making us transformers. making to the to experts is versus of into

Operator

Geoff final closing that And remarks. for call some will question-and-answer concludes over the back now I to our Gilmore turn session.

Geoffrey Gilmore

Thank getting Great Steel great call forward to Worthington joining showing the Thank in performing the and balance day. Have questions, and back you. interest the a of this morning. soon. you look for with quarter we you and

Operator

concludes you Thank for your participation. today's This call. conference

disconnect. You may now

Worthington Steel (WS) 26 Sep 242025 Q1 Earnings call transcript