Worthington Enterprises Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kathryn Thompson - Thompson Research Group - Analyst : Thank you for taking my question today.

Question: Kathryn Thompson - Thompson Research Group - Analyst : Good morning. Focus on getting more on the ClarkDietrich relative weakness in the quarter. How much is due to more timing versus cancellation of projects? And is there any -- just any additional color if there are regions or end markets that have been more sluggish versus others?

Question: Kathryn Thompson - Thompson Research Group - Analyst : Yeah. And that was kind of a tag on to the follow-up. Given the steel pricing, it's kind of two part with that, at least to what's going with inventory in the field. So is it, what insight do you have in terms of inventories right now because there may need to be a little bit of catch-up. But then also, how does ClarkDietrich win with these mega projects? Thank you.

Question: Kathryn Thompson - Thompson Research Group - Analyst : Perfect. Excellent. Thanks so much.

Question: Susan Maklari - Goldman Sachs - Analyst : Thank you. Good morning, everyone.

Question: Susan Maklari - Goldman Sachs - Analyst : Good morning. My first question is just talking more broadly about the health of the consumer. You mentioned that the volumes came in a little lighter relative to perhaps some expectations. Can you just talk across the business and especially in the consumer segment, what's your hearing from your retail partners? And how you would characterize the state of demand in the consumer as we head into the fall and the winter?

Question: Susan Maklari - Goldman Sachs - Analyst : Okay. That's helpful color. And then can you also talk a bit about the price cost dynamics across both the consumer segment and the building products segment as the steel prices have come down? Any thoughts on how that's trending and where that could go over the next couple of quarters? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 25, 2024 / 12:30PM, WOR.N - Q1 2025 Worthington Enterprises Inc Earnings Call

Question: Susan Maklari - Goldman Sachs - Analyst : Okay. And then, can I sneak one more in, which is the WAVE JV was a really nice bright spot in the quarter. Can you just talk about what the dynamics you're seeing there? And how you're thinking about the performance as we go into year -- the calendar year-end?

Question: Susan Maklari - Goldman Sachs - Analyst : Okay. Thanks for taking all the questions. Good luck with everything.

Question: Brian McNamara - Canaccord Genuity - Analyst : Good morning, guys. Thanks for taking the questions. So I'm curious, I mean, obviously, numbers came in well below, I guess, our expectations. What was the biggest surprise or delta in the quarter relative to your expectations like 90 days ago?

Question: Brian McNamara - Canaccord Genuity - Analyst : Got it. And I guess the evidence you're seeing that gives you confidence that we're at the bottom of this kind of post-pandemic heating and cooking

Question: Brian McNamara - Canaccord Genuity - Analyst : Great. And then finally, I mean, have you seen any kind of mood change with your customers in building products? I think 90 days ago, maybe a 50 bp rate cut was kind of out of the expectation since the Fed announcement last week? Any kind of mood change or more willingness to invest kind of thing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 25, 2024 / 12:30PM, WOR.N - Q1 2025 Worthington Enterprises Inc Earnings Call

Question: Brian McNamara - Canaccord Genuity - Analyst : Great. Thanks, guys. Best of luck.

Question: Daniel Moore - CJS Securities, Inc. - Analyst : Hi, this is will on for Dan.

Question: Daniel Moore - CJS Securities, Inc. - Analyst : Good morning. This is Will on for Dan. A lot of questions have been answered. So I just thought I would ask your balance sheet remains arguably undercapitalized relative to your cash generation even after the Hexagon acquisition. What are your priorities for capital development? And is M&A still your primary focus? Would you consider returning cash to shareholders or would you prefer to continue to build liquidity for larger potential deals down the line? Thank you.

Question: Daniel Moore - CJS Securities, Inc. - Analyst : All right. That's all from me. Thank for answering our questions.

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : Thank you.

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : In terms of your building products, what fraction of it would you say is tied to housing as opposed to commercial construction?

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : In terms of your consumer strategy, it would appear since the pandemic, staples costs more globally, food, et cetera, my insurance premiums, they try to raise them 50% a year, cut back coverage, things like that. I spent a month in Europe every summer. And where I go in Greece, the fisherman catch three kilo, three men on a boat and they sell it for EUR20, EUR30 a kilo, so they make EUR20 or EUR30 a night. And it's hard work lifting the nets. It would seem like there's a strong argument that the consumer is strapped around the world and maybe with global warming, agriculture is tougher and tougher in food stays expensive. So, why pay large multiples to acquire consumer businesses, you paid $88 million or $89 million for Hexagon and there's $71 million in new goodwill and intangibles. And why not sell one or two underperformers or flat performers and buy back a little stock?

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : I can ask one more. The old Worthington Industries would buy back stock in 0.5 million or 1 million share chunks. I know we're smaller with the de-merger. But was there a reason why you just put your toe in the water for 150,000 shares. Did the program start the last week of the quarter or something like that?

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : Congratulations. Well done.

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : Thank you.