Worthington Enterprises Inc Q4 2024 Earnings Call Transcript

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

Question: Brian Biros - Thompson Research Group - Analyst : Hey, good morning. This is actually Brian Biros on for Kathryn. Thank you for taking my questions. On ClarkDietrich, I know you touched on it during the prepared remarks, saw a big drop in the quarter, as you mentioned, margin compression, competition. I guess maybe, first off, can you parse out how much in that drop was price versus volume there? And I know you're facing a tough comp overall anyway. And then maybe just touch on the outlook for that part as we kind of settle into this new level after coming off the COVID highs?

Question: Brian Biros - Thompson Research Group - Analyst : Got it. And then maybe on the building products segment, margins were down, again, mostly on ClarkDietrich, as you mentioned. But then if you back out the JVs, it looked like the core margins there for the building products segment held in pretty well, given the headwinds of everything you mentioned. I guess can you just touch on the puts and takes there for the core building product margins?

Question: Brian Biros - Thompson Research Group - Analyst : Thank you. I'll pass it on.

Question: Charles Perron-PichT - The Goldman Sachs Group Inc - Analyst : Good morning, everyone. This is Charles Perron in for Susan. Thanks for taking my question.

Question: Charles Perron-PichT - The Goldman Sachs Group Inc - Analyst : Good morning. Maybe first, can you expand on the Hexagon Ragasco acquisition? Maybe how you found this deal, maybe the rationale behind the transaction, and the synergy that you think you can generate from both revenue and cost. I think you noted that it extends your portfolio and geographic footprint. Any details you can provide on that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 26, 2024 / 12:30PM, WOR.N - Q4 2024 Worthington Enterprises Inc Earnings Call

Question: Charles Perron-PichT - The Goldman Sachs Group Inc - Analyst : Got it. Thanks for the color. And maybe can you talk a little bit more about what you're seeing in the consumer segment? I was a little bit surprised by the volume decrease this quarter, I think, 16%. But what are you hearing from your customers and demand for your consumer product entering the summer months?

Question: Charles Perron-PichT - The Goldman Sachs Group Inc - Analyst : Got it. That's very good color, Joe. Thank you very much for the time.

Question: Daniel Moore - CJS Securities Inc - Analyst : Thanks. Good morning. I appreciate you taking questions. Maybe just talk a little bit about demand and activity levels at both WAVE and ClarkDietrich on a forward-looking basis. And then for ClarkDietrich, you mentioned this feels like it's troughing here. How do we think about your expectations for profitability for WAVE over the next several quarters as well?

Question: Daniel Moore - CJS Securities Inc - Analyst : Got it. Really helpful. And then you gave great color around kind of state of the market for both consumer and building products. Do we think about the first quarter or two being a little softer on a year-over-year basis before starting to kind of tick up in the fall? Is that the right way to kind of think about cadence as we look out first half of fiscal '25 and into the balance of the year?

Question: Daniel Moore - CJS Securities Inc - Analyst : Really helpful. And last one for me. Just in terms of the JV or the agreement with Hexagon for your sustainable energy solutions business, how does that enhance your competitive position as well as the organic growth and maybe margin potential on a longer-term basis? Thanks again for the questions.

Question: Daniel Moore - CJS Securities Inc - Analyst : On a combined basis with your -- as an equity owner as opposed to owning the overall. But what does Hexagon brings to the table that might incur kind of a longer-term opportunity? Thanks.

Question: John Tumazos - John Tumazos Very Independent Research LLC - Analyst : Thank you. Could you explain a little more about the Hexagon Composites business that you've acquired. Are they carbon fiber composites? Are they fiber reinforced plastics? Are they laminates? How does it go to market? How will Worthington make it better?

Question: John Tumazos - John Tumazos Very Independent Research LLC - Analyst : What is Type 4? And is this something that might be preferred by mainstream consumers because it isn't as heavy when we pick it up at the grocery store? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 26, 2024 / 12:30PM, WOR.N - Q4 2024 Worthington Enterprises Inc Earnings Call

Question: John Tumazos - John Tumazos Very Independent Research LLC - Analyst : Thank you for your explanation.

Question: Brian McNamara - Canaccord Genuity Group Inc - Analyst : Hi. Good morning, guys. Thanks for taking the question. I guess I'll try to ask about consumer products, perhaps in a different way given the big decline in volumes and sales. I know you guys flagged the pull forward last quarter and then there's been destocking as well. But were each kind of worse than you thought? And I guess my bigger question is, should volumes be up this year? Or are you expecting a drag similar to what we see in other outdoor businesses, which you have felt quite a bit of pain over the last couple of years? Any color there would be helpful.

Question: Brian McNamara - Canaccord Genuity Group Inc - Analyst : That's helpful. Thank you. I appreciate the color on the steel price declines impacting ClarkDietrich. I'm curious is that just a timing issue? And if so, how long does it typically take to catch up in terms of -- historically for ClarkDietrich?

Question: Brian McNamara - Canaccord Genuity Group Inc - Analyst : Got it. That's helpful. And then finally, maybe another one for Joe. I'm curious what your view is the true earnings power of the business. This is a question I've gotten a lot since you guys split from the steel company. You came in around $250 million in adjusted EBITDA, and we'll call it a noisy fiscal year. Is that a good starting run rate? Are you underearning? If so, what are the primary near-term drivers of margin expansion? Thank you.

Question: Brian McNamara - Canaccord Genuity Group Inc - Analyst : Great. Thanks a lot for the color, guys.