Q4 2024 Worthington Enterprises Inc Earnings Call

June 26, 2024

and many more.

Operator: Good morning and welcome to the Worthington Enterprises 4th quarter of fiscal 2024 earnings conference. All participants will be able to listen only until the question-and-answer session of the call. This conference is being recorded at the request of Worthington Enterprises. If anyone objects, you may disconnect at this time.

Operator: Good morning, and welcome to the Worthington Enterprises fourth quarter fiscal 2024 earnings conference call. All participants will be able to listen only until the question and answer session of the call. This conference is being recorded at the request of Worthington Enterprises. If anyone objects, you may disconnect at this time. I'd like to introduce Marcus Rogier. Treasurer and Investor Relations Officer, Mr. Rogier, you may begin.

Speaker Change: Good morning and welcome to the Worthington Enterprises fourth quarter fiscal 2024 earnings conference call. All participants will be able to listen only until the question and answer session of the call.

Speaker Change: This conference is being recorded at the request of Worthington Enterprises. If anyone objects, you may disconnect at this time. I'd like to introduce Marcus Rogier, Treasurer and Investor Relations Officer, Mr. Rogier, you may begin.

Marcus Rogier: I'd like to introduce Marcus Rogier, Treasure and Investor Relations Officer. Mr. Rogier, you may begin.

Marcus Rogier: Thank you, Krista. Good morning, everyone, and welcome to Worthington Enterprises' 4th quarter of fiscal 2024 earnings call. On our call today, we have Andy Rose, Worthington's president and chief executive officer, and Joe Hayek, Worthington's chief financial and operations officer.

Marcus A. Rogier: Thank you, Krista. Good morning, everyone.

Marcus A. Rogier: Thank you Krista. Good morning everyone and welcome to Worthington Enterprises' fourth quarter fiscal 2024 earnings call.

Marcus A. Rogier: And welcome to Worthington Enterprises' fourth quarter fiscal 2024 earnings call. On our call today, we have Andy Rose, Worthington's President and Chief Executive Officer, and Joe Hayek, Worthington's Chief Financial and Operations Officer. Before we get started, I'd like to note that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risk and uncertainties that could cause actual results to differ from those suggested.

Speaker Change: On our call today we have Andy Rose, Worthington's President and Chief Executive Officer, and Joe Hayek, Worthington's Chief Financial and Operations Officer.

Operator: Before we get started, I'd like to note that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risks and uncertainties that could cause actual results to differ from those suggested.

Speaker Change: Before we get started, I'd like to note that certain statements made today are forward-looking within the meaning of the 1995 Private Securities Litigation Reform Act.

Speaker Change: These statements are subject to risk and uncertainties that could cause actual results to differ from those suggested.

Operator: We issued our earnings release yesterday after the market closed. Please refer to it for more detail on those factors that could cause actual results to differ materially.

Speaker Change: We issued our earnings release yesterday after the market closed. Please refer to it for more detail on those factors that could cause actual results to differ materially.

Operator: In addition, our discussions today will include non-GAAP financial measures. A reconciliation of these measures with the most appropriate comparable gap measure is included in the earnings press release, which is available on our Investor Relations website.

Speaker Change: In addition, our discussion today will include non-GAAP financial measures. A reconciliation of these measures with the most appropriate comparable GAAP measure is included in the earnings press release, which is available on our investor relations website.

Operator: Today's call is being recorded, and a replay we've made available later on our website.

Marcus Rogier: This point, I will turn the call over to Andy for opening remarks.

Speaker Change: Today's call is being recorded and a replay will be made available later on our website.

Marcus A. Rogier: We issued our earnings release yesterday after the market closed. Please refer to it for more detail on those factors that could cause actual results to differ materially. In addition, our discussions today will include non-GAAP financial measures. A reconciliation of these measures with the most appropriate comparable GAAP measure is included in the earnings press release, which is available on our investor relations website. Today's call is being recorded, and a replay will be made available later on our website. At this point, I will turn the call over to Andy for opening remarks.

Andy Rose: Thank you, Marcus, and good morning. I want to welcome you to Worthington Enterprises' fiscal fourth-quarter earnings call. We had a respectable quarter with adjusted EBITDA of $63 million and adjusted earnings per share of $0.74. We also had a busy quarter on the M&A front, further executing on our strategy and positioning our portfolio for long-term success. The last year and a half has been a lot of work positioning us as a stand-alone business, but our teams have transitioned well to driving towards above-market growth through innovation and M&A. I could not be more proud of the continued focus and hard work that our people carry out every day.

Andy Rose: Thank you, Marcus, and good morning.

Speaker Change: At this point, I will turn the call over to Andy for opening remarks.

Andy Rose: I want to welcome you to Worthington Enterprises' fiscal 4th quarter earnings call. We had a respectable quarter with adjusted EBITDAV of 63 million and adjusted earnings per share of 74 cents. We also had a busy quarter on the M&A front, further executing on our strategy and positioning our portfolio for long-term success. The last year and a half was a lot of work positioning us as a standalone business, but our teams have transitioned well to driving towards above-market growth through innovation and M&A. I could not be more proud of the continued focus and hard work that our people carry out every day.

Andy Rose: We recently announced two transactions, the acquisition of Hexagon Rogasco and the formation of a joint venture of our Sustainable Energy Solutions business with Hexagon Composites. Both transactions are great examples of how we are good stewards of capital and create long-term value for our shareholders. First, we acquired Hexagon Regasco, a global market leader in lightweight composite liquefied propane gas cylinders used for leisure, household, and industrial applications. Hexagon Regasco pioneered composite technology for liquid gas cylinders in 2000 and, with its highly automated manufacturing facility in Norway, today makes the most efficiently produced and quality consistent composite LPG cylinder in the world, selling into a hundred countries.

Andy Rose: Thank you, Marcus, and good morning.

Andy Rose: I want to welcome you to Worthington Enterprises Fiscal Fourth Quarter Earnings Call.

Andy Rose: We had a respectable quarter with adjusted EBITDA of $63 million and adjusted earnings per share of $0.74.

Andy Rose: This acquisition is now part of our building products segment and complements our operations in Portugal, expands our product portfolio, and extends our global reach. Second, we also announced the formation of a joint venture in our sustainable energy solutions business with Hexagon Composites, the global leader in the storage and transport of hydrogen and compressed natural gas. Worthington has a long history of establishing joint ventures with strong partners to make a business better and maximize long-term value creation.

Andy Rose: We also had a busy quarter on the M&A front, further executing on our strategy and positioning our portfolio for long-term success.

Andy Rose: The last year and a half was a lot of work positioning us as a stand-alone business, but our teams have transitioned well to driving towards above-market growth through innovation and M&A. I could not be more proud of the continued focus and hard work that our people carry out every day.

Andy Rose: We recently announced two transactions: the acquisition of Hexagon Regasco and the formation of a joint venture of our sustainable energy solutions business with Hexagon Composites. Both transactions are great examples of how we are good stewards of capital and create long-term value for our shareholders. First, we acquired Hexagon Regasco, a global market leader in lightweight composite liquefied propane gas cylinders used for leisure, household, and industrial applications. Hexagon Regasco pioneered composite technology for liquefied gas cylinders in 2000, and with its highly automated manufacturing facility in Norway, today makes the most efficiently produced and quality-consistent composite LPG cylinder in the world, selling into 100 countries.

Andy Rose: We recently announced two transactions, the acquisition of Hexagon Regasco and the formation of a joint venture of our sustainable energy solutions business with Hexagon Composites.

Andy Rose: Both transactions are great examples of how we are good stewards of capital and create long-term value for our shareholders.

Andy Rose: First, we acquired Hexagon Regasco, a global market leader in lightweight, composite, liquefied propane gas cylinders used for leisure, household, and industrial applications.

Andy Rose: Hexagon Regasco pioneered composite technology for liquid gas cylinders in 2000, and with its highly automated manufacturing facility in Norway, today makes the most efficiently produced and quality consistent composite LPG cylinder in the world, selling into a hundred countries.

Andy Rose: This acquisition is now part of our building product segment and complements our operations in Portugal, expands our product portfolio, and extends our global reach.

Andy Rose: This acquisition is now part of our building products segment and complements our operations in Portugal, expands our product portfolio, and extends our global reach.

Andy Rose: Second, we also announce the formation of a joint venture of our Sustainable Energy Solutions business with Hexagon Composites, the global leader in the storage and transport of hydrogen and compressed natural gas. Worthington has a long history of establishing joint ventures with strong partners to make a business better and maximize long-term value creation. The hydrogen market has been slow to develop in the US and Europe, and this partnership will provide a better platform to capitalize on opportunities as they emerge. Our remaining ownership interest will no longer be reported on a consolidated basis, but rather earnings will flow through equity income.

Andy Rose: Second, we also announced the formation of a joint venture of our Sustainable Energy Solutions business with Hexagon Composites, the global leader in the storage and transport of hydrogen and compressed natural gas.

Andy Rose: Worthington has a long history of establishing joint ventures with strong partners to make a business better and maximize long-term value creation.

Andy Rose: The hydrogen market has been slow to develop in the U.S. and Europe, and this partnership will provide a better platform to capitalize on opportunities as they emerge. Our remaining ownership interest will no longer be reported on a consolidated basis, but rather earnings will flow through equity income.

Andy Rose: The hydrogen market has been slow to develop in the U.S. and Europe , and this partnership will provide a better platform to capitalize on opportunities as they emerge.

Andy Rose: Our remaining ownership interest will no longer be reported on a consolidated basis, but rather earnings will flow through equity income.

Andy Rose: This strategic move results in a reduction of invested capital, higher earnings in the prospect of a brighter future for our SES business.

Andy Rose: This strategic move results in a reduction of invested capital, higher earnings, and the prospect of a brighter future for our SES business. I would like to welcome the entire Hexagon-Rogasco team to Worthington Enterprises, and we are already working hard alongside the Hexagon Composites team to maximize the potential of our newly formed JV. The changes above mean our consumer products and building products businesses are now the primary pillars of Worthington Enterprises. We will continue to implement the Worthington business system of transformation, innovation, and M&A to enable us to achieve accelerated growth and profits.

Andy Rose: This strategic move results in a reduction of invested capital, higher earnings, and the prospect of a brighter future for our SES business.

Andy Rose: I would like to welcome the entire Hexagon Regasco team to Worthington Enterprises, and we are already working hard alongside the Hexagon Composites team to maximize the potential of our newly formed JV. The changes above mean our consumer products and building products businesses are now the primary pillars of Worthington Enterprises. We will continue to implement the Worthington Business System of Transformation, Innovation, and M&A to enable us to achieve accelerated growth and earnings. We are particularly focused today on further enhancing our innovation capabilities, so we can bring more and better products to market faster and incorporate sustainable technologies that will deliver significant value to our customers and make us a more valuable partner.

Andy Rose: I would like to welcome the entire Hexagon-Rogasco team to Worthington Enterprises, and we are already working hard alongside the Hexagon Composites team to maximize the potential of our newly formed JV.

Andy Rose: The changes above mean our consumer products and building products businesses are now the primary pillars of Worthington Enterprises.

Andy Rose: We will continue to implement the Worthington Business System of Transformation, Innovation, and M&A.

Andy Rose: We are particularly focused today on further enhancing our innovation capabilities so we can bring more and better products to market faster and incorporate sustainable technologies that will deliver significant value to our customers and make us a more valuable partner. As evidenced in collaboration with our customer GALP, our NEXE IoT Solution Series recently received a design award from the IF Design Foundation and won gold in the Business to Consumer Household Appliance category of the renowned German Innovation Award.

Andy Rose: to enable us to achieve accelerated growth and earnings.

Andy Rose: As evidence in collaboration with our customer Golf, our next CIT solution series recently received a design award from the IFF Design Foundation and one gold in the Business to Consumer Household Appliance category from the renowned German Innovation Awards. Additionally, our Halo Elite series griddle was recognized as the best grills of 2024 by CNET and one of the ten best grills of the year by The Wall Street Journal. Our expertise in strategic M&A, which is showcased by the hexagon transactions, will help us drive growth and higher returns as we add new products, new brands, and consolidate markets.

Andy Rose: As evidenced in collaboration with our customer GALP, our NEXE IoT Solution Series recently received a design award from the IF Design Foundation and won gold in the Business to Consumer Household Appliance category from the renowned German Innovation Awards.

Andy Rose: Additionally, our Halo Elite Series Griddle was recognized as the best grill of 2024 by CNET and one of the 10 best grills of the year by the Wall Street Journal. Our expertise in strategic M&A, which was showcased by the Hexagon transactions, will help us drive growth and higher returns as we add new products, new brands, and consolidate markets. We will continue to be disciplined stewards of capital, not only making new investments to deliver long-term value creation but also redeploying capital in situations where we can earn a better return. There is no better example of this than the transactions just completed. We're off to a good start as Worthington Enterprises, and Joe will now walk you through the numbers. Okay?

Andy Rose: Additionally, our Halo Elite Series Griddle was recognized as the Best Grills of 2024 by CNET and one of the 10 Best Grills of the Year by the Wall Street Journal.

Andy Rose: Our expertise in strategic M&A, which is showcased by the Hexagon Transactions, will help us drive growth and higher returns as we add new products, new brands, and consolidate markets.

Andy Rose: We will continue to be disciplined stewards of capital, not only making new investments to deliver long-term value creation, but also redeploying capital in situations where we can earn a better return. There is no better example of this than the transactions just completed.

Andy Rose: We're off to a good start as Worthington Enterprises, and Joe will now walk you through the numbers.

Andy Rose: There is no better example of this than the transactions just completed.

Joe Hayek: Joe, thank you. Andy, and morning everybody. On a gap basis and Q4, we reported a loss from continuing operations of 64 cents a share versus earnings of a dollar one per share in the prior year. There were several unique items that impacted our quarterly results, including the following. We incurred pre-tax restructuring impairment in one-time charges of $74 million or $1.38 per share during the current quarter. These charges were primarily related to the sale of 51% of our sustainable energy solution segment as part of the formation of a joint venture with Hexagon Composites, a global leader in the clean energy space.

Andy Rose: We're off to a good start as Worthington Enterprises, and Joe will now walk you through the numbers. Joe? Thank you, Andy, and good morning, everybody. On a gap basis, in Q4 we reported a loss from continuing operations of 64 cents a share versus earnings of $1.01 per share in the prior year.

Joseph B. Hayek: Thank you, Andy, and good morning, everybody. On a gap basis, in Q4, we reported a loss from continuing operations of $0.64 a share versus earnings of $1.01 per share in the prior year. There were several unique items that impacted our quarterly results, including the following. We incurred pre-tax restructuring, impairment, and one-time charges of $74 million, or $1.38 per share, during the current quarter. These charges were primarily related to the sale of 51% of our Sustainable Energy Solutions segment as part of the formation of a joint venture with Hexagon Composites, a global leader in the clean energy space.

Andy Rose: There were several unique items that impacted our quarterly results, including the following.

Andy Rose: We incurred pre-tax restructuring, impairment, and one-time charges of $74 million or $1.38 per share during the current quarter.

Andy Rose: These charges were primarily related to the sale of 51% of our sustainable energy solutions segment as part of the formation of a joint venture with Hexagon Composites, a global leader in the clean energy space.

Joe Hayek: Results in the prior year quarter were negatively impacted by 18 cents per share due to several items, largest being corporate costs that were eliminated at the time of separation, along with costs related to the separation of our steel processing business and other smaller non-recurring items. Including these items, we generated adjusted earnings from continuing operations of 74 cents per share in the quarter, compared to $1.19 per share in Q4 of last year. Custall day and net sales in the quarter of $319 million decreased 13.6% from 369 million in the prior year due to lower volumes across all of our segments, compared to a very strong Q4 last year.

Joseph B. Hayek: Results in the prior year quarter were negatively impacted by 18 cents per share due to several items, the largest being corporate costs that were eliminated at the time of separation along with costs related to the separation of our steel processing business and other smaller non-recurring items. Excluding these items, we generated adjusted earnings from continuing operations of 74 cents per share in the current quarter compared to $1.19 per share in Q4 of last year.

Andy Rose: Results in the prior year quarter were negatively impacted by 18 cents per share due to several items, the largest being corporate costs that were eliminated at the time of separation along with costs related to the separation of our steel processing business and other smaller non-recurring items.

Andy Rose: Excluding these items, we generated adjusted earnings from continuing operations of 74 cents per share in the current quarter, compared to $1.19 per share in Q4 of last year.

Joseph B. Hayek: Consolidated net sales in the quarter of $319 million decreased 13.6% from $369 million in the prior year due to lower volumes across all of our segments, compared to a very strong Q4 last year. Gross profit for the quarter decreased to $79 million from $94 million in Q4 a year ago. However, despite the lower volumes, gross margin decreased only slightly to 24.8% from 25.5% and was up sequentially.

Andy Rose: Consolidated net sales in the quarter of $319 million decreased 13.6% from $369 million in the prior year due to lower volumes across all of our segments compared to a very strong Q4 last year.

Joe Hayek: A gross profit for the quarter decreased to 79 million from 94 million in Q4 a year ago. Despite the lower volumes, gross margin decreased only slightly to 24.8% from 25.5% and was up sequentially. Joseph had even done Q4 was 63 million, down from 94 million in Q4 of last year, and are trailing 12-month adjusted EBITDA is now $251 million, with a trailing 12-month adjusted EBITDA margin of 20.1%. The respect to cash flows and our balance sheet, cash flows from operations was $45 million in the quarter, and free cash flow was $34 million. During the quarter, we invested $11 million on capital projects, which included $5 million related to the previously mentioned facility modernization projects.

Andy Rose: Gross profit for the quarter decreased to $79 million from $94 million in Q4 a year ago.

Andy Rose: Despite the lower volumes, gross margin decreased only slightly to 24.8% from 25.5% and was up sequentially.

Joseph B. Hayek: Adjusted EBITDA for Q4 was $63 million, down from $94 million in Q4 of last year, and our trailing 12-month adjusted EBITDA is now $251 million, with a trailing 12-month adjusted EBITDA margin of 20.1%. With respect to cash flows and our balance sheet, cash flows from operations were $45 million in the quarter, and free cash flow was $34 million. During the quarter, we invested $11 million in capital projects, which included $5 million related to the previously mentioned facility modernization project.

Andy Rose: Adjusted EBITDA on Q4 was $63 million, down from $94 million in Q4 of last year. And our trailing 12-month adjusted EBITDA is now $251 million, with a trailing 12-month adjusted EBITDA margin of 20.1%.

Andy Rose: With respect to cash flows and our balance sheet, cash flows from operations was $45 million in the quarter, and free cash flow was $34 million.

Andy Rose: During the quarter, we invested $11 million on capital projects, which included $5 million related to the previously mentioned facility modernization projects.

Joe Hayek: We spent 12 million on acquisitions, which was primarily a deposit for the Hexagon Regasco acquisition, which closed on June 3rd, and we paid $8 million in dividends. We also received $43 million in dividends from our unconsolidated JVs during the quarter, a 100% and 6% cash conversion rate on that equity income. For the full fiscal year, we spent approximately $19 million in cap X related to the facility modernization projects, and we have about $60 million remaining spend on those projects, which will be spread out over the next two years, and they're expected to be completed by early fiscal 2022.

Joseph B. Hayek: We spent $12 million on acquisitions, which was primarily a deposit for the Hexagon-Rogasco acquisition which closed on June 3rd, and we paid $8 million in dividends. We also received $43 million in dividends from our unconsolidated JVs during the quarter, a 106% cash conversion rate on that equity income. For the full fiscal year, we spent approximately $19 million in CapEx related to facility modernization projects, and we have about $60 million remaining to spend on those projects, which will be spread out over the next two years, and they're expected to be completed by early fiscal 2027.

Andy Rose: We spent $12 million on acquisitions, which was primarily a deposit for the Hexagon-Rogasco acquisition which closed on June 3rd, and we paid $8 million in dividends.

Andy Rose: We also received $43 million in dividends from our unconsolidated JVs during the quarter, a 106% cash conversion rate on that equity income.

Andy Rose: For the full fiscal year, we spent approximately $19 million in CapEx related to the facility modernization projects, and we have about $60 million remaining to spend on those projects, which will be spread out over the next two years, and they're expected to be completed by early fiscal 2027.

Joe Hayek: Looking at our balance sheet and liquidity positions, we ended the quarter with an exceptionally strong balance sheet, $298 million of long-term funded debt, carrying an average interest rate of 3.6%, and buying with $244 million of cash yielding around 5%. We used approximately $84 million of this cash in early June to complete the hexagon regasco acquisition, net of proceeds that we received from hexagon related to the JVs formation. Continue to operate with extremely low leverage, ending the quarter with a net debt to trailing EBITDA leverage ratio of less than a quarter turn, and we're well positioned with the ample liquidity, including a $500 million undrawn bank credit facility.

Joseph B. Hayek: Looking at our balance sheet and liquidity positions. We ended the quarter with an exceptionally strong balance sheet, $298 million of long-term funded debt carrying an average interest rate of 3.6%, combined with $244 million of cash yielding around 5%. We used approximately $84 million of this cash in early June to complete the Hexagon-Rogasco acquisition net of proceeds that we received from Hexagon related to the JV's formation, continue to operate with extremely low leverage ending the quarter with a net debt to trailing EBITDA leverage ratio of less than a quarter turn and we are well positioned with ample liquidity including a 500 million dollar undrawn bank credit, Yesterday, the Worthington Enterprises Board declared a dividend of $0.17 per share for the quarter, which is payable in September of 2024.

Andy Rose: Looking at our balance sheet and liquidity positions.

Andy Rose: We ended the quarter with an exceptionally strong balance sheet, $298 million of long-term funded debt carrying an average interest rate of 3.6%, combined with $244 million of cash yielding around 5%.

Andy Rose: We used approximately $84 million of this cash in early June to complete the Hexagon-Rogasco acquisition net of proceeds that we received from Hexagon related to the JVs formation.

Andy Rose: We continue to operate with extremely low leverage, ending the quarter with a net debt to trailing EBITDA leverage ratio of less than a quarter turn, and we are well positioned with ample liquidity, including a $500 million undrawn bank credit facility.

Joseph B. Hayek: This is a 6% increase relative to the dividend last quarter, and we're very pleased to be able to continue rewarding our shareholders as we balance growth in our market-leading businesses with capital returns to shareholders. We'll now spend a few minutes on each of these businesses.

Joe Hayek: Yesterday, the working-to-9 enterprises board declared a dividend of 17 cents per share for the September of 2024. This is a 6% increase relative to the dividend last quarter, and we're very pleased to be able to continue rewarding our shareholders as we balance growth in our market-leading businesses with capital returns to shareholders.

Andy Rose: Yesterday, the Worthington Enterprises Board declared a dividend of $0.17 per share for the quarter, which is payable in September of 2024.

Andy Rose: This is a 6% increase relative to the dividend last quarter, and we're very pleased to be able to continue rewarding our shareholders as we balance growth in our market-leading businesses with capital returns to shareholders.

Joe Hayek: We're now spending a few minutes on each of the businesses. In consumer products, net sales in Q4 were $125 million dollars, down from $149 million a year ago. The decrease was a result of lower volumes, which were down 17.9% to Q4 last year. Just the EBITDA for the consumer business was 17 million, and a just the EBITDA margin was 13.6% in Q4, or to 30 million, and 19.8% in the prior year. The decline in a just the EBITDA compared to the prior year quarter was primarily a result of lower volumes in our outdoor living products, and slightly higher SGNA related to our tools business, as we are investing in that business for future growth.

Joseph B. Hayek: Consumer Products Net Sales in Q4 were $125 million, down from $149 million a year ago. The decrease was a result of lower volumes, which were down 17.9% from Q4 of last year. Adjusted EBITDA for the consumer business was $17 million, and the adjusted EBITDA margin was 13.6% in Q4 compared to $30 million and 19.8% in the prior year. The decline in adjusted EBITDA compared to the prior year quarter was primarily a result of lower volumes in our outdoor living products and slightly higher SG&A related to our tools business as we are investing in that business for future growth.

Andy Rose: We'll now spend a few minutes on each of the businesses.

Andy Rose: And consumer products net sales in Q4 were $125 million down from $149 million a year ago.

Andy Rose: The decrease was a result of lower volumes, which were down 17.9% to Q4 of last year.

Andy Rose: Adjusted EBITDA for the consumer business was $17 million and adjusted EBITDA margin was 13.6% in Q4, right to $30 million and 19.8% in the prior year.

Andy Rose: The decline in adjusted EBITDA compared to the prior year quarter was primarily a result of lower volumes in our outdoor living products and slightly higher SG&A related to our tools business as we are investing in that business for future growth.

Joe Hayek: We had a tough comp relative to the prior year when that business generated record results, but we also believe that consumers have pulled back on discretionary purchases. And, as we discussed last quarter, Q4 was also negatively impacted by volume that was pulled forward into Q3. While there are indications that consumers continue to be challenged by inflation and are spending less on non-essentials, the median age of a home in the U.S. is now over 40 years, and long-term trends favor companies with innovative tools and solutions used to repair and maintain those homes. In addition, our outdoor living products continue to win praise from publications and consumers, and we believe destocking has run its course, and demand for those products moving forward will be more correlated with point of sale results.

Joseph B. Hayek: We had a tough comp relative to the prior year when that business generated record results. We also believe that consumers have pulled back on discretionary purchases, and as we discussed last quarter, Q4 was also negatively impacted by volume that was pulled forward into Q3. While there are indications that consumers continue to be challenged by inflation and are spending less on non-essentials, the median age of a home in the U.S. is now over 40 years, and long-term trends favor companies with innovative tools and solutions used to repair and maintain those homes.

Andy Rose: We had a tough comp relative to the prior year when that business generated record results, but we also believe that consumers have pulled back on discretionary purchases, and as we discussed last quarter, Q4 was also negatively impacted by volume that was pulled forward into Q3.

Andy Rose: While there are indications that consumers continue to be challenged by inflation and are spending less on non-essentials, the median age of a home in the U.S. is now over 40 years, and long-term trends favor companies with innovative tools and solutions used to repair and maintain those homes.

Joseph B. Hayek: In addition, our outdoor living products continue to win praise from publications and consumers, and we believe de-stocking has run its course, and demand for those products moving forward will be more correlated with point-of-sale results. We have a solid lineup of market-leading brands that are an important and affordable part of outdoor living activities, celebrations, and home improvement projects, and we remain optimistic heading into our new fiscal year. Voting products generated net sales of $154 million in Q4, down 12% from $175 million a year ago.

Andy Rose: In addition, our outdoor living products continue to win praise from publications and consumers, and we believe de-stocking has run its course and demand for those products moving forward will be more correlated with point-of-sale results.

Joe Hayek: We have a solid line up of market leading brands that are an important and affordable part of outdoor living activities, celebrations, and home improvement projects, and we remain optimistic heading into our new fiscal year. Loading products generated net sales of 154 million in Q4, down 12 percent from 175 million a year ago. The decrease was driven by a less favorable product mix and lower volumes, especially in the large format heating and market, which continued to see some destocking. We are optimistic that this destocking cycle runs course this summer, and demand will return to a more normal seasonal, normal levels in time for the fall heating season.

Andy Rose: We have a solid lineup of market-leading brands that are an important and affordable part of outdoor living activities, celebrations, and home improvement projects, and we remain optimistic heading into our new fiscal year.

Andy Rose: Voting products generated net sales of $154 million in Q4, down 12% from $175 million a year ago.

Joseph B. Hayek: The decrease was driven by a less favorable product mix and lower volumes, especially in the large format heating end market, which continued to see some destocking. We are optimistic that this destocking cycle will run its course this summer, and demand will return to a more normal seasonal normal levels in time for the fall heating season.

Andy Rose: The decrease was driven by a less favorable product mix and lower volumes, especially in the large format heating end market, which continued to see some destocking.

Andy Rose: We are optimistic that this destocking cycle will run its course this summer and demand will return to a more normal seasonal levels in time for the fall heating season.

Joe Hayek: Our water business continued to improve on the top and bottom lines, and our cooling and construction products have returned to seasonally normal volumes as well. Loading products generated adjusted EBITDA of 52 million in the quarter, and adjusted EBITDA margin was 33.6 percent compared to 65 million and 37.1 percent in Q4 last year. The decrease was largely driven by lower equity earnings at Carttitri. It continues to do a great job taking care of its customers, but slightly lower volumes and pricing competition from regional players has created some margin compression for them. Carttitri contributed 12 million for the quarter compared to a near-record 25 million in the prior year quarter.

Joseph B. Hayek: Our water business continued to improve on the top and bottom lines, and our cooling and construction products have returned to seasonally normal volumes as well. Voting products generated adjusted EBITDA of $52 million in the quarter, and adjusted EBITDA margin was 33.6% compared to $65 million and 37.1% in Q4 of last year. The decrease was largely driven by lower equity earnings at Clark Tee Tree. That team continues to do a great job taking care of its customers, but slightly lower volumes and pricing competition from regional players have created some margin compression for them.

Andy Rose: Our water business continued to improve on the top and bottom lines and our cooling and construction products have returned to seasonally normal volumes as well.

Andy Rose: Voting products generated adjusted EBITDA of $52 million in the quarter and adjusted EBITDA margin was 33.6% compared to $65 million and 37.1% in Q4 of last year.

Andy Rose: The decrease was largely driven by lower equity earnings at Carte Dietre.

Andy Rose: That team continues to do a great job taking care of its customers, but slightly lower volumes and pricing competition from regional players has created some margin compression for them.

Joseph B. Hayek: Our teacher contributed $12 million for the quarter compared to a near record $25 million in the prior year. WAVE continued to deliver very strong results, seeing relative strength in volumes across multiple end markets and contributed equity earnings of $28 million in the quarter, up from $24 million a year ago. For the year, WAVE generated record equity earnings of $103 million for us.

Andy Rose: Our teacher contributed $12 million per the quarter compared to a near record $25 million in the prior year quarter.

Joe Hayek: Wave continued to deliver very strong results, seeing relative strength in volumes across multiple end markets and contributed equity earnings of $28 million in the quarter, up from $24 million a year ago. For the year, Wave generated record equity earnings of $103 million for us. The building products team has done a very good job managing through the destocking that occurred in fiscal 2024 while enhancing its value proposition for customers, and they are very well positioned as demand trends normalize. In Q4, sustainable energy solutions generated net sales and adjusted EBITDA of $40 million and $1 million compared to $45 million and $4 million a year ago.

Andy Rose: Wave continued to deliver very strong results, seeing relative strength in volumes across multiple end markets, and contributed equity earnings of $28 million in the quarter, up from $24 million a year ago. For the year, Wave generated record equity earnings of $103 million for us.

Joseph B. Hayek: The building products team has done a very good job managing through the destocking that occurred in fiscal 2024 while enhancing its value proposition for customers, and they are very well positioned as demand trends normalize. In Q4, Sustainable Energy Solutions generated net sales and adjusted EBITDA of $40 million and $1 million, compared to $45 million and $4 million a year ago. As I mentioned earlier, during the quarter, we sold an interest in our sustainable energy solutions business to Hexagon Composites, effectively turning that business into an unconsolidated JV, of which we own 49%.

Andy Rose: The Building Products team has done a very good job managing through the destocking that occurred in fiscal 2024 while enhancing its value proposition for customers, and they are very well positioned as demand trends normalize.

Andy Rose: In Q4, Sustainable Energy Solutions generated net sales and adjusted EBITDA of $40 million and $1 million, compared to $45 million and $4 million a year ago.

Joe Hayek: As I mentioned earlier, during the quarter we sold an interest in our sustainable energy solutions business to Hexagon Composites, effectively turning that business into an unconsolidated JV of which we own 49%. This occurred on May the 29th, so Q4 and historical results for SES are being reported in other, along with unallocated corporate expenses. Going forward, starting with our physical 2025 Q1, any profits or loss related to SES will flow through equity to the income within corporate and other.

Andy Rose: As I mentioned earlier, during the quarter we sold an interest in our sustainable energy solutions business to Hexagon Composites.

Andy Rose: Effectively turning that business into an unconsolidated JV, of which we own 49%. This occurred on May the 29th, so Q4 and historical results for SES are being reported in other, along with unallocated corporate expenses.

Joseph B. Hayek: This occurred on May the 29th, so Q4 and historical results for SES are being reported in OTHER along with unallocated corporate expenses. Going forward, starting with our fiscal 2025 Q1, any profits or losses related to SES will flow through equity income within corporate and other. At this point, we're happy to take any questions that people might have.

Andy Rose: Going forward, starting with our fiscal 2025 Q1, any profits or loss related to SES will flow through equity income within corporate and other.

Operator: At this point, we're happy to take any questions that people might have. Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the Q. If you would like to withdraw that question, again, press star one.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw that question, again, press star 1. Your first question comes from Kathryn Thompson with Thompson Research Group.

Andy Rose: At this point, we're happy to take any questions that people might have.

Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw that question, again press star 1.

Kathryn Thompson: Your first question comes from Kathryn Thompson with Thompson Research Group. Please go ahead.

Speaker Change: Your first question comes from Kathryn Thompson with Thompson Research Group. Please go ahead.

Operator: Good morning.

Brian Byros: Hey, good morning. This is actually Brian Byros on for Kathryn. Thank you for taking my question. Good morning, Brian. Good morning.

Brian Biros: This is actually Brian Byros on for Kathryn. Thank you for taking my questions.

Speaker Change: Hey, good morning. This is actually Brian Byros on for Katja Jancic.

Operator: Good morning, Brian. Good morning.

Unknown Executive: On Clark Easter, I touched on it there in the prepared remarks, you know, saw a big drop in the quarter. March Compression, Competition. I guess first off, can you parse out how much of the drop was price versus volume there? And I know it's 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.

Speaker Change: Thank you for taking my questions.

Clark Yeager: I'm Clark Yeager. Can I touch on it there in the prepared remarks? Big drop in the quarter. You mentioned March compression, competition.

Speaker Change: Morning Brian . Morning. On Clark Easter can I touch on it there in the prepared remarks you know saw a big drop in the quarter you mentioned

Brian Biros: I guess, first off, can you parse out how much in that drop was price versus volume there? I know it was based on the top comp overall anyway, and then maybe you can touch on the outlook for that part as you kind of set on to the new level after coming off the COVID highs? Sure, Brian.

Speaker Change: Marks and Compression, Competition. I guess maybe first off, can you parse out how much in that drop was price versus volume there? And I know it's facing a tough comp overall anyway. And maybe just touch on the outlook for that part as we kind of settle into this new level after coming off the COVID highs.

Joseph B. Hayek: Sure, Brian. So it wasn't all that related to volumes. Volumes were slightly down, but they hung in pretty well. It was, in fact, a margin compression story.

Joe Hayek: So it wasn't all that related to volumes. Volumes were slightly down, but they hung in pretty well.

Brian Byros: Sure, Brian . So it wasn't...

Speaker Change: All that related to volumes. Volumes were slightly down, but they hung in.

Joe Hayek: It was, in fact, a margin compression story. And remember, there are two thirds new and steel prices fluctuating. There are people that competitors that do different things. And so they've done a great job of maintaining share and taking care of their customers. We look at this quarter and their performance this quarter as feeling pretty profy.

Brian Byros: pretty well. It was, in fact, a margin compression story, and

Joseph B. Hayek: And, you know, I remember they're two-thirds new and, you know, steel prices are fluctuating. There are people that, competitors that do different things. And so they've done a great job, you know, kind of maintaining share and taking care of their customers. You know, we look at this quarter and their performance this quarter as kind of feeling pretty troughy, you know, and so if you kind of annualize that, that should be reasonable.

Brian Byros: I remember they're two-thirds new and steel prices fluctuating. There are competitors that do different things. And so they've done a great job kind of maintaining share and taking care of their customers.

Brian Byros: You know, we look at this quarter and, you know, their performance this quarter as kind of feeling pretty troughy, you know, and so if you kind of annualize that, that should be reasonable.

Joe Hayek: And so, if you kind of annualize that, that should be reasonable.

Joe Hayek: Got it. And then maybe on the building product segment, the margins were down again, mostly on Clark Yeager, as you mentioned, but then see, if you back out the JVs, it looked like the core margins there for the building product segment. So then, pretty well given the headwind of everything you mentioned.

Joseph B. Hayek: and then maybe on the building product. Margins were down again, mostly on Clark Dietrich, as you mentioned, but then if you back out the JVs, it looks like the core margins there for the building product 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?

Speaker Change: And then, maybe on the building product segment,

Speaker Change: Margins were down, again, mostly on Clark-Dietrich, as you mentioned, but then, see, if you back out to JVs, it looked like the core margins there for the building product 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?

Joe Hayek: I guess can you just touch on the puts and takes there for the core building product margins? Yeah, it again feels where we are right now. I think it was seven and a half percent EBITDA margins XJVs. That also feels thoroughly the higher margin products that we have are really where the destocking has been the most acute. And so you think about that kind of large format heating market this summer. We think that the stocking runs its course. And so when the fall heating season cracks back up, we anticipate some more growth there and some return to normalcy.

Joseph B. Hayek: Yeah, it's it again, feels like where we are right now. I think it was seven and a half percent EBITDA margins for XJVs. That also feels troughy.

Speaker Change: Yeah, it's, it's again...

Speaker Change: feels where we are right now. I think it was seven and a half percent EBITDA margins, XJVs. That also feels troughy. The higher margin products that we have are really where the destocking has been the most acute.

Joseph B. Hayek: The higher margin products that we have are really where the destocking has been the most acute, and so you think about that in the large format heating market. This summer, we think that destocking has run its course. And so, when the fall heating season cranks back up, we anticipate some more growth there and some return to normalcy. And that really ought to help their margins, along with continued improvements in the water business and then in the cooling business.

Speaker Change: And so you think about that in a large format heating market.

Speaker Change: This summer, we think that de-stocking runs its course, and so when the fall heating season cranks back up...

Andy Rose: And that really ought to help their margins, along with continued improvements in the water business and then in the pooling business.

Speaker Change: We anticipate some more growth there and some return to normalcy, and that really ought to help their margins along with continued improvements in the water business and then in the pooling business.

Andy Rose: Yeah, I think Brian, you know, Joe's talked about in the past some of the opportunities, particularly in the water segment there, and we're starting to see the results of a lot of good work by the team in terms of improving the profitability of that segment. So that probably helped during the quarter as well.

Brian Byros: Yeah, I think Brian , you know, Joe's talked about in the past some of the opportunities, particularly in the water segment there, and we're starting to see the results of a lot of good work by the team in terms of improving the profitability of that segment, so that probably helped during the quarter as well.

Brian Byros: Thank you. I'll pass it on.

Operator: Your next question comes from the line of Susan Maklari with Goldman Sachs. Please go ahead.

Speaker Change: That's it. Thank you. I'll pass it on.

Speaker Change: Sure.

Speaker Change: Your next question comes from the line of Susan Maklari with Goldman Sachs. Please go ahead.

Charles Perron: Good morning, everyone. This is Charles Perron and for Susan.

Charles Perron: Good morning, everyone. This is Charles Perron speaking in for Susan.

Operator: Thanks for taking my question.

Operator: Sure.

Charles Perron: Thanks for taking my question. Good morning, Charles. Good morning.

Speaker Change: Good morning, everyone. This is Charles Perron for Susan. Thanks for taking my question.

Operator: Good morning, Charles. Good morning.

Andy Rose: Maybe first, can you expand on the Exagon-Rogasco acquisition, maybe how you found this deal, maybe the rationale behind the transaction, and the synergies 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?

Charles Perron: Maybe first, can you expand on the exact on a Regasco acquisition? Maybe how you found this deal that maybe the rational behind the transaction and the synergies you think you can generate from both revenue and cost. I think you noted that it extends your portfolio and geographic footprint.

Speaker Change: Sure. Good morning, Charles.

Speaker Change: Good morning. Maybe first, can you expand on the Exagon-Rogasco acquisition, maybe how you found this deal, maybe the rationale behind the transaction, and the synergies 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?

Andy Rose: Any details you can provide on that? Yeah, I mean, Joe can maybe give you some details about where the transaction came from, but it was, you know, the Hexagon announced publicly they were going to put the business up for sale last year. And so we were aware of it, and honestly, it's a perfect strategic fit for us because we're one, we're already in the business in Europe. And hexagon is the clear market leader in type four for this type of product. So there are, there are and will be synergies for us. We I don't think we've said sort of publicly because we have to get in and understand the business better, but one of the things that I will tell you is already happening is.

Joseph B. Hayek: Yeah, I mean, Joe can maybe give you some details about where the transaction came from, but it was, you know, the hexagon announced publicly that they were going to put the business up for sale last year. And so we were aware of it. And, honestly, it's a perfect strategic fit for us. Because we're one, we're already in the business in Europe, and hexagon is the clear market leader in type four for this type of product.

Speaker Change: Yeah, I mean Joe can maybe give you some details about where the transaction came from but it was you know the Hexagon announced publicly they were going to put the business up for sale

Speaker Change: last year. And so we were aware of it. And and honestly, it's a it's a perfect strategic fit for us. Because we're one we're already in the business in Europe , and Hexagon is the clear market leader in type four

Joseph B. Hayek: So there are, and will be, synergies for us. We I don't think we've said anything like that sort of publicly because we have to get in and understand the business better. But one of the things that I will tell you is already happening is, you know, this is probably the most automated cylinder manufacturing plant in the world. And not only is it probably hard to measure synergy here, but they're going to be able to help us with some of our existing operations in terms of bringing technologies and processes that they already have. So not only is it a great product, and they're a market leader in the product set that they have, but there should be some benefits for us as well.

Speaker Change: For this type of product. So there are there are and will be synergies for us We I don't think we've said sort of publicly because we have to get in and understand the business better but one of the things that I will tell you is already happening is

Joe Hayek: You know, this is probably the most automated cylinder manufacturing plant in the world, and not only it's probably hard to measure a synergy here, but they're going to be able to help us. With some of our existing operations in terms of bringing technologies and processes that they already have, so not only is it a great, is it a great product in their market leader in the product set that they have, but there should be some benefits to us as well.

Speaker Change: This is probably the most automated cylinder manufacturing plant in the world, and it's probably hard to measure a synergy here, but they're going to be able to help us.

Speaker Change: with some of our existing operations in terms of bringing technologies and processes that they already have so Not only is a great. Is it a great product and they're A market leader and in the product set that they have but there should be some benefits to us as well

Joe Hayek: Yeah, and Charles Andy, Andy's absolutely right. The, you know, the conversation started honestly around the regasco business, but Hexagon Composites is a great company in, you know, the clean energy space. And so the, you know, the conversation morphed and grew into ultimately one that included the JV. And we know we couldn't be happier with the team and the people and the cultural similarities between Hexagon and Worthington. And so this was really, this was really kind of the only company on the planet that we could have done these transactions with, and it's early, right. It's only kind of three and a half weeks in, but so far, so good on both fronts.

Joseph B. Hayek: Yeah, and Charles, Andy's absolutely right. The conversation started, honestly, around the Regasco business, but Hexagon Composites is a great company in the clean energy space, and so the conversation morphed and grew into, ultimately, one that included the JV, and we couldn't be happier with the team and the people and the cultural similarities between Hexagon and Worthington. And so this was really kind of the only company on the planet that we could have done these transactions with It's only three and a half weeks in, but so far, so good on both fronts.

Speaker Change: Yeah, and Charles, Andy, Andy's absolutely right. The...

Speaker Change: You know, the conversation started, honestly, around the Ragasco business, but...

Speaker Change: Hexagon Composites is a great company in

Speaker Change: You know, the clean energy space. And so the conversation morphed and grew into ultimately one that

Speaker Change: Included the JV and we couldn't be happier with the team and the people and the cultural similarities between Hexagon and Worthington and so

Speaker Change: This was really, this was really kind of the only company on the planet that we could have done these transactions with, and it's early, right, it's only three and a half weeks in, but so far so good on both fronts.

Joseph B. Hayek: 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 that decreased this quarter, I think 16%. But what are you hearing from your customers and demand for your consumer product entering the summer months?

Charles Perron: Got it.

Operator: Thanks for the collar.

Charles Perron: And maybe can you talk a little bit more about what you're seeing on the consumer segment. I was a little bit surprised by the volume to create decreased this quarter. I think 16%. But why are you hearing from your customers and demand for your consumer product entering the summer months. Yeah, it's a great question. You know, we talked about this some in Q3, but the folks that we follow and I know that you guys keep track of Charles, you know, have all sort of suggested that there is some softness in consumer spending, particularly in kind of outdoor living spaces, which was really primarily where the decrease in volumes were.

Speaker Change: Got it. Thanks for the caller. And maybe, can you talk a little bit more about what you're seeing on the consumer segment? I was a little bit surprised by the volume that decreased this quarter, I think 16%. But what are you hearing from your customers and demand for your consumer product entering the summer months?

Joseph B. Hayek: Yeah, it's a great question. You know, we talked about this some in Q3, but the folks that we follow, and I know that you guys keep track of Charles, you know, have all sort of suggested that there is some softness in consumer spending, particularly in kind of the outdoor living spaces, which is really primarily where the decrease in volumes were. But in December, January, February, we almost became a victim of our own success because there were the storms and there was that very cold weather, and our retail customers needed additional supply and needed kind of surge volumes, and we were in a position, because of some of the good work of the consumer team, to be able to provide those additional Camping Gas Cylinders and other products to them.

Speaker Change: Yeah, it's a great question. You know, we talked about this some in Q3, but the folks that we follow, and I know that you guys keep track of, Charles.

Speaker Change: have all sort of suggested that there is some softness in consumer spending, particularly in the outdoor living spaces, which is really primarily where the decrease in volumes were.

Joe Hayek: But. But in December, January, February, we almost became a victim of our own success because there were the storms and there was that very cold weather, and our retail customers needed additional supply and needed kind of surge volumes. And we were in a position because of some of the good work of the consumer team to be able to provide those additional camping gas cylinders and other products to them, and then they were effectively full in Q4. And so what normally what you would have seen is a little bit of a slower Q3 and a stronger Q4.

Speaker Change: Unknown Speaker In.

Speaker Change: December , January , February , we almost became a victim of our own success because there were there were the storms and there was that very cold weather and our in our retail customers

Speaker Change: needed additional supply and needed kind of surge volumes. And we were in a position because of some of the good work of the consumer team to be able to provide those additional

Joseph B. Hayek: And then they were effectively full in Q4. And so, normally, you would have seen a little bit of a slower Q3 and a stronger Q4, but that was flipped on its head this year. I will tell you that, you know, I think Andy mentioned this earlier, it's almost as if there's still some dislocation and some kind of different factors that are influencing seasonality as things continue to get back to normal from COVID.

Speaker Change: Camping Gas Cylinders and other products to them and and then

Speaker Change: They were effectively fooled in...

Andy Rose: Q4 and so what normally what you would have seen is a little bit of a slower Q3 and a stronger Q4 You know, that was flipped on its head this year I will tell you that you know, and I think Andy mentioned this earlier. It's it's almost as if

Joe Hayek: That was flipped on its head this year. I will tell you that I think Andy mentioned this earlier; it's almost as if there's still some dislocation and some different factors that are influencing seasonality as things continue to get back to normal from COVID. But as soft as those sales were in Q4, they were far softer than they normally are. We didn't lose market share; nothing happened in that regard, and thus far, against only three and a half weeks, volumes in the outdoor living space have bounced back to pretty close to normal.

Andy Rose: There's still some dislocation and some kind of different factors that are influencing seasonality as as things continue to get back to normal from COVID, you know, but as

Joseph B. Hayek: But as you know, soft as those sales were in Q4, they were far softer than they normally are. We didn't lose market share, you know; nothing would have happened in that regard. And thus far, again, it's only three and a half weeks, volumes there in the outdoor living space have bounced back to pretty close to normal.

Andy Rose: You know, soft as those sales were in Q4, they were far softer than they normally are. We didn't lose market share, you know, nothing.

Andy Rose: have happened in that regard. And thus far, again, it's only three and a half weeks, volumes there have, in the outdoor living space, have bounced back to pretty close to normal.

Charles Perron: Got it. That's a very good color, Joe. Thank you very much for the time.

Operator: Got it. That's very good color.

Operator: Thank you very much for the time.

Operator: Sure, thanks, Charles.

Speaker Change: Got it. That's very good color, Joe. Thank you very much for the time.

Daniel Moore: Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Operator: Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Joseph B. Hayek: Sure. Thanks, Charles.

Speaker Change: Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Operator: Thanks, good morning. I appreciate you taking questions.

Daniel Joseph Moore: Thanks. Good morning. Appreciate you taking the questions. Good morning.

Clark Yeager: Hello, I'm Clark Teacher. Good morning.

Daniel Joseph Moore: Thanks. Good morning. I appreciate you taking the questions.

Joe Hayek: I can just talk a little bit about demand and activity levels. You know if it's both wave and Clark's feature, it's on a forward motion basis, and then you know for Clark's feature you can mention this feels like it's dropping here. How do we think about you know we are expectations for profitability for wave over the next several quarters as well.

Daniel Joseph Moore: Maybe just talk a little bit about the demand and activity levels, you know, at both Wave and Clark Dietrich on a forward-looking basis. And then, you know, for Clark Dietrich, you mentioned this company feels like it's dropping here. How do we think about your expectations for profitability for Wave over the next several quarters as well?

Daniel Joseph Moore: Good morning. Let me just talk a little bit about demand and activity levels, you know, at both Waze and Clark Dietrich on a forward-looking basis. And then, you know, for Clark Dietrich, you mentioned this company feels like it's dropping here.

Daniel Joseph Moore: How do we think about, you know, your expectations for profitability for WAVE?

Joe Hayek: Yeah, I mean we've talked about this in past quarters. You know, these businesses, even though they're both sort of commercial construction related, are a little bit different in a little bit different places in the cycle. Clark D. Trick is more on the front end of construction; wave a little bit more on the back end of construction. You know there's probably a it's a little bit confusing in terms of the demand profile for these businesses. But I would say overall, right now demand is basically steady. I mean you know quarter to quarter it may be up, maybe down in each of these businesses.

Andy Rose: Yeah, I mean, we've talked about this in past quarters, you know, these businesses, even though they're both sort of commercial construction related, are a little bit different in a little bit different places in the cycle. Clark Dietrich is more on the front end of the construction wave, a little bit more on the back end of construction.

Daniel Joseph Moore: Over the next several quarters as well.

Speaker Change: Yeah, I mean, we've talked about this in past quarters, you know, these businesses, even though they're both sort of commercial construction related, are a little bit different in a little bit different places in the cycle. Clark Dietrich is more on the front end of construction wave a little bit more on the back end of construction.

Andy Rose: You know, it's probably It's a little bit confusing in terms of the demand profile for these businesses. But I would say overall, right now, demand is basically steady. I mean, quarter to quarter, it may be up, may be down in each of these businesses. But, you know, there is some change in the steel price market. Right now, it's declining.

Speaker Change: You know, there's probably a few...

Speaker Change: It's a little bit confusing in terms of the demand profile for these businesses, but I would say overall right now demand is basically steady I mean

Joe Hayek: But you know there is some change in the steel price market right now; it's declining. And so both of these businesses are currently selling sort of higher price steel. And so, over the coming months, as steel prices come down, they'll have the benefit of lower price steel flowing through; that also impacts price, and that's really what happened for Clark D. Trick in this quarter is when steel prices start to decline. The market for metal framing declines quite quickly for wave. It's a little bit stickier, and you know both teams are doing a good job of trying to maintain price in that environment.

Speaker Change: And that's, you know, quarter to quarter, it may be up, may be down in each of these businesses.

Speaker Change: There is some change in the steel price market, right now it's declining, and so both of these businesses are currently selling sort of higher priced steel.

Andy Rose: And so both of these businesses are currently selling sort of higher-priced steel. And so over the coming months, as steel prices come down, they'll have the benefit of lower-priced steel flowing through. That also impacts price, and that's really what happened for Clark Dietrich in this quarter: when steel prices start to decline, the market for metal framing declines quite quickly. For Wave, it's a little bit stickier. And, you know, both teams are doing a good job of trying to maintain price in that environment.

Speaker Change: Over the coming months as steel prices come down they'll have

Speaker Change: The benefit of lower price steel flowing through that also impacts price and that's really what happened for Clark Dietrich in this quarter is

Speaker Change: When steel prices start to decline, the market for metal framing declines quite quickly.

Speaker Change: For Wave it's a little bit stickier and you know both teams are doing a good job of trying to maintain price in that environment but you know as demand softens a little bit it becomes more more difficult for them, but

Joe Hayek: But you know, as demand softens a little bit, it becomes more more difficult for them.

Andy Rose: But, you know, as demand softens a little bit, it becomes more difficult for them. But, you know, we feel, as Joe mentioned earlier, we feel pretty good about both these businesses and their ability to kind of maintain profit levels going forward.

Joe Hayek: But you know we feel you heard Joe mention earlier we feel pretty good about both these businesses and their ability to kind of maintain profit bill profit levels going forward.

Speaker Change: You know, we feel, you heard Joe mention earlier, we feel pretty good about both these businesses and their ability to kind of maintain profit levels going forward.

Speaker Change: Got it. Really helpful. And then, you know, you gave great color around, you know, kind of state-of-the-market for both consumer and building products.

Joseph B. Hayek: Got it, really helpful. And then, you know, you gave great color around the kind of state of the market for both consumer and building products. Do we think about the first quarter or two being softer on a year over year basis before starting to kind of, you know, pick up in the fall? Is that the right way to think about cadence as we look out, you know, the first half of fiscal 25 and into the balance of the year?

Speaker Change: Do we think about the first quarter or two, you know, being a little softer on a year-over-year basis before starting to kind of, you know, take up in the fall? Is that the right way to kind of think about cadence as we look out, you know, first half of fiscal 25 and into the balance of the year?

Joseph B. Hayek: Yeah, I think that probably depends a little bit, Dan. I mean, I think there are certain product lines or value streams for us where that would be true, you know, and there are others that are on a little bit of a different trajectory. So, you know, a little bit of a mixed bag, but, generally speaking, the headwinds that have been out and around haven't gotten worse.

Dan: Yeah, I think that probably depends a little bit, Dan. I mean, I think there are...

Speaker Change: Certain product lines or value streams for us where where that would be true You know and there are others that are on a little bit of a different trajectory. So

Speaker Change: A little bit of a mixed bag, but generally speaking...

Speaker Change: The headwinds that have been out and around haven't gotten worse. I don't think they've gotten materially better.

Joseph B. Hayek: You know, I don't think they've gotten materially better. And so we're comfortable operating in the environments that we're in, and our teams are working hard to be nimble and to, you know, continue to enhance their value propositions and, you know, take share when they can. And as demand trends normalize, they feel, and we feel like they're in pretty good shape.

Speaker Change: And so, we're comfortable certainly operating in the environments that we're in and our teams are working hard to be nimble and to...

Speaker Change: you know, continue to...

Speaker Change: Enhance your value propositions and, you know, take share when they can and as demand trends normalize, they feel like, and we feel like, they're in pretty good shape.

Andy Rose: Yeah, I don't think it's hard to forecast what the economy is going to do. But you know, there's sort of pluses and minuses that I think are impacting our businesses in material ways. One, obviously, we have a lot of infrastructure spending from the government that's still sort of coming through the pipeline. That's positive. We have interest rates, which is impacting the housing market and, you know, slowing repair and remodel there. That's, that's obviously a negative employment, is obviously holding up pretty good.

Speaker Change: Yeah, I don't, it's hard to forecast what the economy is going to do, but you know, there's sort of

Speaker Change: Pluses and minuses that I think are impacting our businesses in material ways. One, obviously, we have a lot of infrastructure spending from the government that's still sort of coming through the pipeline. That's a positive.

Speaker Change: We have interest rates, which is impacting the housing market and, you know, slowing repair and remodel there. That's that's obviously a negative employment

Andy Rose: But consumers are sort of dialing back some of their discretionary spend, so I don't know whether that's a net negative or a positive. Financial markets are still pretty strong, so there's sort of puts and takes that, at least from my vantage point, solve for kind of, you know, somewhat of a steady economy with, you know, a little bit of noise here and there and different products in different markets.

Speaker Change: is obviously holding up pretty good, but consumers are sort of dialing back some of their discretionary spend, so I don't know whether that's a neutral.

Speaker Change: Financial markets are still pretty strong, so there's sort of puts and takes that, you know, at least from my vantage point, solve for kind of, you know, somewhat of a steady economy with, you know, a little bit of noise here and there in different products and different markets.

Daniel Joseph Moore: Really helpful. And last one for me, just in terms of the JV or, you know, the agreement with Hexagon for your sustainable energy solutions business, how does that enhance your competitive position as well as, you know, the kind of organic group and maybe margin potential on a longer term basis? Thanks again for the question.

Speaker Change: Really helpful. And the last one for me, just...

Speaker Change: In terms of the JV or, you know, the agreement with Hexagon for your sustainable energy solutions business, you know, how does that enhance your competitive position as well as, you know, the kind of organic growth and maybe marginal potential on a longer term basis? Thanks again for the questions.

Joseph B. Hayek: Sure, so I think you're asking about the margin profiles for SES, you know, for us.

Speaker Change: Sure, so I think you're asking about the margin profiles for SES, you know, for us.

Joseph B. Hayek: On a combined basis, you're an equity owner as opposed to owning the whole thing, but what does Hexagon bring to the table that might ensure a longer-term opportunity?

Speaker Change: On a combined basis, you're an equity owner as opposed to owning the overall, but what does Hexagon bring to the table that might entrench the longer-term opportunity?

Joseph B. Hayek: Sure, so what happens immediately, right? It's an unconsolidated JV, and their profits or losses will roll through equity income. So I think that was $130, $140 million in revenue in 2024, which will now kind of essentially operate just through equity income.

Speaker Change: Sure, so what happens immediately, right, is the revenue from SES drops out of RP&L, right? It's an unconsolidated JV.

Speaker Change: and their profits or losses will roll through equity income. So I think that was $130, $140 million in revenue in...

Speaker Change: 2024, which which will now kind of potentially operate just through equity income, but

Joseph B. Hayek: But that business got immediately better the day that we formed the JV. We really picked a fantastic partner; Hexagon is a leader in that space. They have terrific knowledge of Type 4 and are really on top of a lot of things that are happening around the globe. And so the company will be managed, if you will, to maximize its own potential. What we did doesn't change the end market that they're operating in.

Speaker Change: That business got immediately better the day that we formed the JV. We really picked a fantastic partner. Hexagon is a leader in that space. They have terrific knowledge around Type 4.

Speaker Change: and really are on top of a lot of the things that are happening, you know, around the globe. And so,

Speaker Change: The company will be managed, if you will, to maximize its own potential. What we did doesn't change the end market that they're operating in. And so we still believe that the...

Joseph B. Hayek: And so we still believe that the markets are very attractive longer term, but it's going to take three plus years for those markets to really develop enough and mature enough to have that be, you know, a scalable, very profitable business. With the addition of kind of hexagon as a 49% owner along with us at 49% and then the local management team owning 2% at JV, we feel really good about their ability to operate in any environment and, hopefully, If you remember the history here...

Speaker Change: Markets are very attractive longer term, but it's going to take three plus years for those markets to really...

Speaker Change: develop enough and mature enough to have that be, you know, a scalable, very profitable business. But

Speaker Change: with the

Speaker Change: addition of kind of hexagon as a 49% owner along with us 49% and then

Speaker Change: The local management team owning 2% of that, JV, we feel really good about their ability to operate in any environment and hopefully drive meaningful share gains for the venture as we go forward.

Joseph B. Hayek: If you remember the history here, SES really started out as an industrial gas business. And we've made investments in type four, which is where hexagon is a market leader, but we haven't been able to really optimize those investments. And so that's really where they're going to be able to sort of help with the transition. But, you know, what's going on right now in that market is that the hydrogen economy is slow to emerge.

Speaker Change: If you remember the history here, SES really started out as an industrial gas business.

Joseph B. Hayek: And the type one market is slow, particularly in Europe, because of what's going on with the European economies, the war in Russia and Ukraine. And so, you know, we were excited to have a partner that's going to bring some expertise and some extra lift to the JV.

Speaker Change: We've made investments in Type 4, which is where Hexagon is a market leader, but we haven't been able to really optimize those investments, and so that's really where they're going to be able to sort of help with the transition.

Speaker Change: What's going on right now in that market is the hydrogen economy is slow to emerge and the Type 1 market is slow, particularly in Europe , because of what's going on with the European economies, the war in Russia and Ukraine.

Speaker Change: We're excited to have a partner that's going to bring some expertise and some extra lift to the JV.

Operator: Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research. Please go ahead.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research. Please go ahead.

John Charles Tumazos: Could you explain a little more about the Unknown Exegon Composite 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?

Speaker Change: Thank you.

John Charles Tumazos: Could you explain a little more about the...

John Charles Tumazos: and the Hexagon Composite business that you've acquired. Are they carbon fiber composites?

John Charles Tumazos: Fiber reinforced plastics, are they laminates?

John Charles Tumazos: [inaudible]

Speaker Change: How does it go to market? How will Worthington make it better?

Andy Rose: It's a type four cylinder, John, that essentially is in the propane market. That is the product that they're selling, which is a carbon fiber, I guess 100% carbon fiber with plastic wrap cylinder.

Speaker Change: Yeah, so...

Speaker Change: I guess 100% carbon fiber with plastic wrapping cylinder. So that's the basic product, the market that they sell or markets that they sell into are very customized. So

Andy Rose: So that's the basic product; the market that they sell, or the markets that they sell into are very customized. So, most of their customers have a very specific type of product that they're looking for. And so there are some aspects that are customized in the manufacturing process. You know, they go to market, they have their own sales force, they have global coverage in terms of their marketplace, although I would tell you that they don't sell a lot into the U.S. today, and so that's an opportunity where we can, we think we can help, uh... leverage what they've already got on a global basis. So I don't Sorry, John, the only thing I would add is that he's absolutely right.

Speaker Change: Most of their customers have very specific type of product that they're looking for. And so there's some aspects that are customized in the manufacturing process.

Speaker Change: You know, they go to market, they have their own sales force. They have global coverage in terms of their marketplace, although I would tell you that they don't sell a lot into the US today. And so that's an opportunity where we can, we think we can help

Speaker Change: leverage what they've already got on a global basis. So I don't know if that sort of fits your question, but feel free to follow up with if not yet. John , I would add

Joseph B. Hayek: It's a nicely profitable business. You know, they had 20-ish percent EBITDA margins in calendar 2023. And, you know, we make them better through a lot of channels and a lot of the relationships that we have in place. But I would also tell you, and this is what we look for in anything that is attractive to us from an M&A perspective, is that they're going to make us better. You know, they will absolutely complement our operations on the continent in Europe and Portugal very well. And their expertise, and Andy mentioned this, in running a very automated, high-class, world-class facility will help us globally with our own manufacturing footprint.

Speaker Change: Sorry, John , the only thing I would add is...

Speaker Change: We make them better by a lot of the channels and a lot of the relationships that we have.

Speaker Change: in places. But I would also tell you, and this is what we look for in anything that is attractive to us from an M&A perspective is, you know, they're going to make us better. You know, they they will absolutely complement our operations on the continent in Europe and Portugal very well.

Speaker Change: And their expertise, Andy mentioned this, their expertise in running a very automated, high-class, world-class facility will help us globally with our own manufacturing footprint.

John Charles Tumazos: 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?

Speaker Change: 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

Joseph B. Hayek: So if you think about where this gets sold, and you think about maybe the comparison would be something you'd go to your exchange here in the States, right? You would take your steel cylinder, maybe it's made by, or maybe it's branded Blue Rhino Amerigas or somebody else, and you exchange that tank. In Europe, it's quite different.

Speaker Change: Grocery Store

Speaker Change: So if you if you think about where this gets sold

Speaker Change: And you think that maybe the comparison would be...

Speaker Change: something you'd go to your exchange here in the States, right? You would take your steel cylinder, maybe it's made by, or maybe it's branded Blue Rhino, Amerigas, or somebody else.

Joseph B. Hayek: And these cylinders are used as the primary source of heating and cooking fuel in somebody's apartment or in somebody's home, right? They don't have natural gas lines running all over the place the way that we do here in the States. And so there are, and the customers are primarily the gas companies who are then providing this service to their customers, the residents.

Speaker Change: and you exchange that tank. In Europe , it's quite different.

Speaker Change: And these cylinders are used as the primary source of heating and cooking fuel in somebody's apartment or in somebody's home, right? They don't have natural gas lines running all over the place the way that.

Speaker Change: We do here in the States and so there is.

Speaker Change: And the customers are primarily the gas companies who are then providing this service to their customers, the residents.

Joseph B. Hayek: And so weight matters quite a bit. And so this composite cylinder is far lighter than its steel equivalent. It's more expensive, but it is, in a lot of cases, absolutely worth it for customers and for consumers. And so that's really the reason that composite tanks have taken hold the way that they have.

Speaker Change: And so there are people carrying these tanks up and down stairs all over the place, and so weight matters quite a bit. So this composite cylinder is far lighter than its steel equivalent is. It's more expensive.

Speaker Change: But it is, in a lot of cases, absolutely worth it for customers and for consumers. And so that's really the reason that composite tanks have taken hold the way that they have.

John Charles Tumazos: Thank you for the explanation. Sure.

Speaker Change: Thank you for the explanation.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from Brian McNamara with Canaccord Genuity. Please go ahead.

Speaker Change: Sure.

Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from Brian McNamara with Canaccord Genuity. Please go ahead.

Brian Christopher McNamara: Hey, good morning, guys. Thanks for taking the call.

Brian Christopher McNamara: 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 a pull forward last quarter and then there's been the stocking as well, but we're 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've seen in other outdoor businesses, which have felt quite a bit of pain over the last couple of years?

Brian Christopher McNamara: Hey, good morning guys. Thanks for taking the question.

Brian Christopher McNamara: Thanks, guys. I guess I'll try to ask about consumer products, perhaps in a different way, given the big decline in volumes and sales.

Brian Christopher McNamara: I know you guys flagged a pull forward last quarter, and then there's been the stocking as well. But we're 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've seen in other outdoor businesses, which have felt quite a bit of pain over the last couple of years? Any color there would be helpful.

Andy Rose: Any color there would be helpful.

Andy Rose: Yeah, I think, you know, we've gone through a couple of unique years in this business, Brian, where we had a huge bump from COVID because people were camping and cooking and doing lots of things at home. Then we had sort of a de-stocking year where all of the retailers loaded up on product because sales were so high. And so we had an abnormally low year. And I think the, you know, the expectation is that this year, we're starting to get back to kind of normal.

Brian Christopher McNamara: Yeah, I think, you know, we've gone through a couple of unique years in this business, Brian , where we had a huge bump from COVID because people were camping and cooking and doing lots of things at home.

Brian Christopher McNamara: Then we had sort of the de-stocking year where all of the retailers loaded up on product because sales were so high and

Brian Christopher McNamara: So we had an abnormally low year. And I think the, you know, the expectation is that this year, you know, we're starting to get back to kind of normal.

Andy Rose: Demand patterns or demand levels, which probably should be up a little bit from last year. You know, the last two quarters, as Joe kind of touched on, have been a little odd from a seasonality standpoint, but partly related to, you know, our ability to service retailers and load up their inventories in anticipation of storms and other things. And then, you know, it led to a little bit of softness this fourth quarter.

Brian Christopher McNamara: Demand patterns or demand levels, which probably should be up a little bit from last year.

Speaker Change: You know, the last two quarters, as Joe kind of touched on, have been...

Speaker Change: A little odd from a seasonality standpoint, but...

Speaker Change: Partly related to, you know, our ability to service retailers and load up their inventories in anticipation of Storms and other things and then you know, it led to a little bit of softness this fourth quarter. So

Andy Rose: So, you know, I would say, overall, we feel like we're getting back to kind of a normalized pattern and a normalized demand level. I think, I may not get this number exactly right, but I think 45-ish, 46 million. Thanks a year kind of expectation, but we'll see.

Speaker Change: I would say, you know, overall, we feel like we're getting back to kind of a normalized pattern and a normalized demand level. I think, I may not get this number exactly right, but I think 45-ish, 46 million.

Speaker Change: Thanks a year kind of expectation, but we'll see.

Brian Christopher McNamara: That's helpful. Thank you. I appreciate the color on the steel price declines impacting Clark-Dietrich. I'm curious, is that just a timing issue? And if so, how long does it typically take to catch up, historically, for Clark-Dietrich?

Speaker Change: That's helpful. Thank you. I appreciate the color on the steel price declines impacting Clark-Dietrich. I'm curious, is that just a timing issue? And if so, how long does it typically take to catch up historically for Clark-Dietrich?

Joseph B. Hayek: So the yeah, steel prices decline, and I think it gets a little mucky from a competitive perspective, right, because you're having to buy forward based on what you believe your demand plan looks like. And so yeah, there's probably a lag.

Speaker Change: Yeah, so steel prices decline and I think it gets a little

Speaker Change: Mucky from a competitive perspective right because you're having to buy forward based on what you believe your demand plan looks like and so yeah there's probably a lag of you know a few months right

Brian Christopher McNamara: That's helpful. And then, finally, maybe another one for Joe.

Joseph B. Hayek: I'm curious what your view is on 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 and adjusted EBITDA on a, we'll call it, a noisy fiscal year. Is that a good starting run rate? Are you under-earning? If so, what are the primary near-term drivers of margin expansion?

Speaker Change: That's helpful. And then finally, maybe another one for Joe.

Brian Christopher McNamara: Thank you.

Speaker Change: I'm curious what your view is of 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 and adjusted EBITDA on what we'll call a noisy fiscal year.

Speaker Change: Is that a good starting run rate? Are you under-earning? If so, what are the primary near-term drivers of margin expansion? Thank you.

Joseph B. Hayek: Sure, when we talk about this internally, you know, for us to get where we want to go, which is not $251 million, it is clearly higher than that on an annualized EBITDA basis. But we know we need base business improvement. That is, we've talked about this, not every single one of our businesses is running at full speed, and we've got plans, and we're thinking constantly about ways to make those businesses better.

Speaker Change: Sure, when we talk about this internally, you know, for us to get where we want to go, which is not...

Speaker Change: $251 million is clearly higher than that on an annualized EBITDA basis, but we need base business improvement.

Speaker Change: That is, we've talked about this, not every single one of our businesses is running at full speed and we've got plans and we're thinking constantly about ways to make those businesses better. The recovery we've seen and the earnings power of the water business is a great example of that.

Joseph B. Hayek: The recovery we've seen and the earnings power of the water business is a great example of that. Second, the second thing that we need is just kind of a normalized operating environment, right between every single one of our businesses and every single one of our value streams having a COVID bump and either had or is, you know, living through the tail end of kind of the COVID hangover as things kind of get back to where they ought to be at a higher level. And so, you know, the normal operating environment for us doesn't have to be 0% interest rates and all that kind of stuff.

Speaker Change: The second thing that we need is just kind of, I'll call it a normalized operating environment, right?

Speaker Change: Yeah, every single one of our businesses and every one of our value streams had a COVID bump and either had or is, you know, living through the tail end of kind of the COVID hangover as things kind of get back to where they ought to be at a higher level. And so

Speaker Change: You know, normal operating environment for us.

Joseph B. Hayek: But just, you know, the lack of a headwind can ultimately become a tailwind. That that ultimately will be a driver for us and then us executing on our strategic growth drivers, right, continuing to innovate, continuing to leverage transformation to take cost out and drive margins higher, and then ultimately to make really good, thoughtful strategic M&A decisions. Andy mentioned this, and it's 100% true. The Ragasco acquisition and the SES formation of a JV are two good examples of that.

Speaker Change: doesn't have to be 0% interest rates and all that kind of stuff, but just, you know, the lack of a headwind can ultimately become a tailwind.

Speaker Change: that ultimately will be a driver for us and then us executing on our strategic growth drivers by continuing to innovate, continuing to leverage transformation to take cost out.

Speaker Change: and to drive margins higher, and then ultimately to make really good, thoughtful, strategic M&A decisions.

Speaker Change: Andy mentioned this, and it's 100% true, the Ragasco acquisition and the SES formation of a JV are two good examples of that, and so I don't have a crystal ball, and we can't tell you where our earnings ultimately...

Joseph B. Hayek: And so I don't have a crystal ball. And you know, we can't tell you where our earnings ultimately should be in a given period of time. But based on those factors, we feel like we have a great team, and we feel like we have all the tools. And so if we get a handful of those kind of hurdles, you know, Matt, we ought to be able to grow from here.

Speaker Change: should be in a given period of time. But based on those factors, we feel like we have a great team. And we can we feel like we have all the tools. And so if we get, you know, a handful of those kind of

Andy Rose: And you may recall from Investor Day, you know, I think we said in our materials that our goal is to grow six to 8% of our top line per year. I would be disappointed if, over the next three to five years, we don't exceed that. You know, I certainly think we can grow at double digit rates. Our goal is to get to 24% EBITDA margins. And you know, there are a lot of different ways, a lot of different tools in our toolkit, launching new products that are innovative; you can typically get higher margins for those, and then and then doing, you know, a creative M&A transaction.

Speaker Change: hurdles, you know, met.

Speaker Change: We ought to be able to grow from here. And you may recall from Investor Day, you know, I think we said in our materials, you know, our goal is to grow six to eight percent top line per year. You know, I would be disappointed if over the next three to five years we don't exceed that.

Speaker Change: You know, I certainly think we can grow at double-digit rates. Our goal is to get to...

Speaker Change: 24% EBITDA margins. And, you know, there's a lot of different ways, a lot of different tools in our toolkit. And Joe mentioned some of them, obviously our transformation playbook, which is how we make our businesses better.

Speaker Change: Launching new products that are innovative you can typically get higher margins for those and then and then doing you know accretive M&A transactions so

Andy Rose: So I think we have strategies, we have great teams, we've got the ability to execute on those, and if we do that, you know, we should be able to accomplish those goals over the next, you know, period of time. You know, short of what the economy does, I have no idea, but right now, it feels pretty good.

Speaker Change: I think we have strategies, we have great teams, we've got the ability to execute on those, and if we do that, we should be able to accomplish those goals over the next period of time. Short of what the economy does, I have no idea, but right now it feels pretty good.

Operator: Great. Thanks a lot for the call, I guess.

Brian Christopher McNamara: Great. Thanks a lot for the call, guys.

Operator: Sure.

Andy Rose: This concludes the question-and-answer session, and I will now turn the call back over to Andy Rose, Chief Executive Officer, for closing remarks. Great. Thanks everyone. As I said less quarter, we are very proud of our history in who we are today, but we are excited about beginning the first full fiscal year as Worthington Enterprises. We have excellent strategies being driven by an experienced and highly motivated team of professionals and significant available capital to drive returns for our shareholders. So we're excited about our future and appreciate you being here with us today.

Speaker Change: Great. Thanks a lot for the call, I guess.

Andy Rose: This concludes the question and answer session, and I will now turn the call back over to Andy Rose, Chief Executive Officer, for closing remarks.

Speaker Change: Sure.

Speaker Change: This concludes the question and answer session, and I will now turn the call back over to Andy Rose, Chief Executive Officer, for closing remarks.

Andy Rose: Great. Thanks, everyone.

Andy Rose: Great, thanks everyone. As I said last quarter, we are very proud of our history and who we are today, but we are...

Andy Rose: As I said last quarter, we are very proud of our history and who we are today, but we are excited about beginning the first full fiscal year as Worthington Enterprises. We have excellent strategies, being driven by an experienced and highly motivated team of professionals, and significant available capital to drive returns for our shareholders. So we're excited about our future and appreciate you being here with us today.

Andy Rose: Excited about beginning the first full fiscal year as Worthington Enterprises. We have excellent strategies, being driven by an experienced and highly motivated

Andy Rose: team of professionals and significant available capital to drive returns for our shareholders. So we're excited about our future and appreciate you being here with us today.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Q4 2024 Worthington Enterprises Inc Earnings Call

Request a DemoDemo

WOR

Worthington Industries

Earnings