Worthington Steel Inc Q1 2025 Earnings Call Transcript

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

Question: Martin Englert - Seaport Research Partners - Analyst : Hello, good morning, everyone. You just touched on here within autos. You noted some slower start-up of newer programs that rolled out from previous models and programs. And then you noted some changes in program needs for steel. Is that correct?

Question: Martin Englert - Seaport Research Partners - Analyst : You think lower ramp-up of the newer models, it's kind of essentially some pent-up demand within autos, where as those get rolling forward, you would expect more of a normalized demand pull, I guess. It sounds like it inhibited some activity within autos in recent history here. 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 26, 2024 / 12:30PM, WS.N - Q1 2025 Worthington Steel Inc Earnings Call

Question: Martin Englert - Seaport Research Partners - Analyst : What was -- why do you think there was a shift away from direct volumes and the pivot towards tolling, I guess, what prompted that, like, what was behind that?

Question: Martin Englert - Seaport Research Partners - Analyst : Got it. I know looking back a quarter ago, there was a pretty favorable mix when you look at it excluding holding gains, losses on underlying unit EBITDA for steel. This quarter seem to pivot back to something, I guess, maybe characterize as possibly more normalized. Is that a fair assumption or a read through that looking at the current fiscal 1Q underlying EBITDA taxes holding gains and losses, that's more normalized in the ballpark?

Question: Martin Englert - Seaport Research Partners - Analyst : What are you seeing as far as just covering out and looking at gal-coated products, what are you seeing as far as demand and availability out there? Are you seeing any notable shifts versus what you saw a quarter or two quarters ago?

Question: Martin Englert - Seaport Research Partners - Analyst : You're able to say roughly like what kind of utilizations you're running galvanized there. What I'm curious about is, of course, trade case, and if there's more volume coming back to the domestic market, would you be able to coke more there and maybe serve a bit more volume into the moderate market or spot market outside of your traditional customer base, if there's a need for it in the United States.

Question: Martin Englert - Seaport Research Partners - Analyst : Okay. Appreciate it, helpful. Thank you very much.

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : Good morning. I know last quarter you gave us an update on electrical steel maybe mid-longer term contract wins and allocated capacity at both the Canadian facility and Mexican facility. Anything new to report there in terms of dialogue with your customers? 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 26, 2024 / 12:30PM, WS.N - Q1 2025 Worthington Steel Inc Earnings Call

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : And then the equity income, I think it was a little over $1 million in the quarter. Last year, it was $9 million. Is that a volume impact? Is that -- or is that where you're seeing some of the model changeovers on the automotive comparisons? Or is it FIFO hits? Or is it all of the above because that was certainly softer than what we anticipated and I think obviously softer than what you would expect moving forward over the long run?

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : It's which one of those things is a stronger impact versus the other?

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : And then lastly for me on the side of Tempel. I mean it sounds like you're in the early innings of integration of IT systems and other new business practices. What type of returns are you anticipating from some of these things? I think you mentioned the kind of meaningful longer-term cost savings and things of that nature. So trying to understand where your mindset is at regarding the project. 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 26, 2024 / 12:30PM, WS.N - Q1 2025 Worthington Steel Inc Earnings Call

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : Thank you so much.

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : Thank you very much for your service to the company and the good results. The laser welded blank business had $200,000 more equity income actually, minority interest a little over $200,000 more net income for Worthington. And that's very automotive related also. Could you explain why the laser welded blank business was up bucking the trend of the consolidated rest of the company?

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : So that product is so differentiated that you can raise prices even when hot-rolled sheet exchange prices were dipping below $700 a ton.

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