Worthington Steel Inc Q4 2024 Earnings Call Transcript

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

Question: Martin Englert - Seaport Research Partners - Analyst : Wanted to circle back and discuss just the overall profitability within steel EBITDA per ton, and some of this you alluded to in the discussion, but excluding the holding losses for the quarter, which were fairly minimal, I mean the underlying EBITDA seemed like it might have been a high watermark versus history. I understand it's not exact apples-to-apples given the separation. And so you called out higher mix of galv and a favorable mix in tolling as maybe some of the drivers, but what I'm getting at is the sustainability of that type of underlying EBITDA or is this more of a, it was a good quarter. We had a favorable mix, higher galv, good margins on toll processing, and this is maybe a little bit of an anomaly relative to history.

Question: Martin Englert - Seaport Research Partners - Analyst : Okay. That's helpful. I appreciate that. Can you discuss what you're seeing? And again, you alluded to this when you talked about seasonality, but maybe a little bit more specific in July and overall automotive plan downtime. How is that looking maintenance schedules versus last year and versus history? And any comment as far as inventories in the auto supply chain that you're seeing? 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 27, 2024 / 12:30PM, WS.N - Q4 2024 Worthington Steel Inc Earnings Call

Question: Martin Englert - Seaport Research Partners - Analyst : I apologize for interrupting, but just to clarify, you're discussing negative 3% to 4% and up 6% to 8% versus the quarterly average for any given year is that seasonality?

Question: Martin Englert - Seaport Research Partners - Analyst : Versus the simple average. Sure. Got it.

Question: Martin Englert - Seaport Research Partners - Analyst : The planned downtime just looking at scheduled this year for the summer versus last year, you're not seeing any deviations or an extension on what's planned on being down versus last year.

Question: Martin Englert - Seaport Research Partners - Analyst : Okay. That's helpful. If I could, could you just provide an update on the electrical steel lamination business? I understand it's embedded in the overall business, but any kind of comment on how margins performed in the quarter, some goalposts on share of overall sales. And if there's anything else to add as far as the growth initiatives? I know you did touch on a lot of things in the prepared remarks, however, on that aspect. 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 27, 2024 / 12:30PM, WS.N - Q4 2024 Worthington Steel Inc Earnings Call

Question: Martin Englert - Seaport Research Partners - Analyst : Any goalposts on what the overall sales might have contributed for the quarter there or even the last year?

Question: Martin Englert - Seaport Research Partners - Analyst : Would you have any interest in going further downstream, potentially partnering with somebody to produce transformers?

Question: Martin Englert - Seaport Research Partners - Analyst : Okay. Excellent. I appreciate that. Nice job on the quarter. 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 27, 2024 / 12:30PM, WS.N - Q4 2024 Worthington Steel Inc Earnings Call

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : Question on some of the color you provided for the new business wins. I think you said 3 out of the 5 presses and 50% of the capacity related to Mexico and Canada, respectively, that you already gone out and secured business for? Would it be your goal in the months ahead to try to secure more business on that capacity? Or are you purposely leaving some open for spot? So I'm just trying to think about how you view the value of that capacity and leaving some open or wanting firm commitments.

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : And then I also had a question -- yes, can you hear me?

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : Okay. I also had a question on net working capital and just how we should think about the evolution over the next couple of quarters that did come in a bit above our expectations this quarter. And so trying to think about what that could look like in the next couple of quarters with -- particularly with some of the substrate costs coming down? 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 27, 2024 / 12:30PM, WS.N - Q4 2024 Worthington Steel Inc Earnings Call

Question: Philip Gibbs - KeyBanc Capital Markets - Analyst : And then lastly for me, you mentioned at our conference a few weeks ago that you're -- I think you're in the early innings of some structural things you're doing into the business in terms of either cost or efficiency relief. And I think that was also outlined in your Investor Day a few quarters ago in terms of embedding that 10% EBITDA margin goal. And so a long-winded question, but a way of asking where should we see some of those initiatives flow through? What are some of those initiatives? And can you just basically talk about that process and if we're on the right track here with the way that we're thinking about it in terms of what you're communicating?

Question: John Tumazos - John Tumazos Very Independent Research - Analyst : Thank you for the power of earnings, steel business is a tough place. Should we expect Worthington to generate cash in the August quarter from working capital given that the steel prices fell?