Good morning, and welcome to the Worthington Industries' Fourth Quarter year-end 2014 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 Industries. If anyone objects, you may disconnect at this time. I'd like to introduce Ms. Cathy Lyttle, Vice President of Corporate Communications and Investor Relations. Ms. Lyttle, you may begin.

Thanks Michelle. Good morning, everyone. Thank you for joining us on our fourth quarter and year end conference call. We appreciate your flexibility as we responded to a request to move up our earnings call in deference to the World Cup game, Go USA. As a reminder, certain statements made on this call are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and could cause actual results to differ from those suggested. Please review our earnings release issued this morning for more details on those factors. If you'd like to listen to today's call again, a replay will be made available on our website. In the room with me are John McConnell, Chairman and Chief Executive Officer; Mark Russell, President and Chief Operating Officer; and Andy Rose, Vice President and Chief Financial Officer. John will get it started.

Well, thank you, Cathy, and good morning, everyone. We are very proud of our employees who once again delivered solid year-over-year improvement in the fourth quarter and of course very proud of our record results for fiscal 2014. Everyone is doing an excellent job on delivering on our stated goals. Let’s get more detail on that. We’ll go to Andy and Mark, and Andy will be up first.

Thank you, John and good afternoon everyone. The Company had a terrific fiscal 2014 recording the highest annual earnings per share in our history at $2.11. After adjusting for restructuring and non recurring charges, the record was even higher at $2.33 per share. EBITDA adjusted for impairment charges was $347 million, the second highest in our history but the previous record of $378 million in 2005 included significant inventory holding gains from rapidly rising steel prices, something we did not experience in 2014. The fourth quarter of fiscal 2014 improved over the prior year period, but less than we anticipated as a result of higher than normal cost in our Engineered Cabs business and lingering weather and production delays in our Cylinders energy business. Quarterly earnings per share adjusted for restructuring charges were $0.65 per share up from $0.60 a year ago. Restructuring and impairment charges totaled $0.21 per share in the fourth quarter and inventory of holding losses also hurt earnings by $0.01 per share. Several unique items impacted the quarter. The Company received a settlement of $4.9 million during the quarter related to our 2012 Cylinder recall. Net of all legal fees incurred the recovery was $3.6 million. The Company also booked a $2.7 million gain from insurance proceeds on our Austria acetylene plant which was destroyed by fire. Offsetting these gains was $2 million of purchase accounting adjustments from acquisitions. Impairment and restructuring charges totaling $0.21 per share were as follows. First, a $19 million impairment of our India cylinder operation as we will be winding down this investment. 40% of this charge or $7.6 million is attributable to our minority partner and is eliminated in the non-controlling interest line so the net impairment is $11.4 million. Second, a $2.5 million impairment charge related to the sale…

As Andy indicated, results for our Pressure Cylinders segment were mixed with a strong retail product performance offset by weaker results in energy products. Our retail torches and kits which include our 14 and 16 ounce cylinders were up 18% compared to last year as retailers continue to restock inventories depleted during the extreme weather and prepared for normal seasonal summer demand. Our popular Balloon Time product performed well as we expanded our business internationally from our facility in Portugal. We also completed our North American retail products facility consolidation project during the quarter, and we now have a manufacturing footprint that affectively supports the retail products business within Cylinders new P&L organizational structure. In our industrial sector, strong propane home heating demand drove excellent results for the quarter, with shipments up 27% compared to prior year. In our energy products business residual late winter conditions early in the quarter continued to hamper our shipment performance, particularly in the west, however drilling operations and well site completions recently picked up considerably in these geographies as major customers took advantage of warmer and drier conditions. We initiated transformation activities at our Kansas operation during the quarter. We are seeing solid opportunities for cost and margin improvement there. We also closed on the acquisition of Steffes, located in Dickinson, North Dakota which produces large holding tanks to serve the oil-rich Bakken Shale play. Integration of Steffes is going well and we are already seeing positive commercial impact from having expanded in this key geography. Our energy products outlook is bullish as we expand geographically and have new product solutions and diversify our customer base. Our Alternative Fuels segment saw an improvement in our CNG business, while the market for our LPG auto gas business in Europe continue to be impacted by weak…

Well, thank you both. It was a great quarter and well told account of it. This time we are happy to take any questions that you might have.

Certainly. (Operator Instructions). And your first question comes from the line of Luke Folta of Jefferies. Please go ahead.

Hi, good morning gentlemen.

Good morning.

Congrats on the success.

Thank you.

A few questions. Firstly, on CNG market, you touched on it. Can you talk a bit more about what you're seeing in the type III market, just one of your -- we are seeing some signs that growth is still good, but maybe a little less than expected heading into this year, and perhaps a bit of pricing pressure on the type III side. And also you and I talked briefly about it, but what's the most recent thoughts in terms of what your outlook is in terms of participating in the type IV market, where there seems to be a pretty healthy amount of growth?

Well, as you indicated Luke, we do not make the type IV, we only make type III. Type III for those of who don’t know is a aluminum inner with a composite outer and type IV is a plastic inner, with a composite outer. And we only make the aluminum lined version, and actually Luke what we are seeing is pretty strong. We are particularly in the larger sizes have the longest lead times that we’ve ever had but we are basically sold out of the type III. So the people who preferred type III consider them a safer –and a more robust design are giving us strong demand for the product. Type IV, we continue to evaluate that.

Okay. When you say sold out, is that for the year?

Well the lead time would vary by size, Luke, but I could tell you the lead times are as long as we have seen.

Okay, all right. And then on Angus, so revenues are up a bit sequentially, but it looks like the loss was I think the worst we've seen so far. You called out a mix issue in the quarter. Is this something that is kind of the way the book is starting to develop now going forward, given where the demand is and isn't, or is this something really specific to this particular quarter and something I guess we should see results improve over the next several quarters as that sort of normalizes? How do you think about that going forward absent a big pickup in demand, broadly speaking?

Yeah, and maybe my comments were a little confusing, but I wouldn’t say it was so much of a mix issue; it’s more of a cost issue. We’re investing a lot in the cabs business right now with respect to people, systems, process improvements and so their cost structure is pretty loaded up right now. We are focusing on quality, service, delivery, safety, trying to get those metrics where we expect them to be and then you know we can grow the business from there. So, there may be a little bit of mix in there but that wasn’t the intent of my comments. Luke Folta – Jefferies: Okay. So but I guess, going forward, absent a change in demand, would you kind of expect to operate at this sort of run rate for a bit?

Yeah, I would say some of these costs are somewhat temporary, it’s hard to say whether it’s next quarter or the following quarter when those cost come out, a lot of it’s going to depend on as we get the improvement in the underlying operating metrics, but I would suggest maybe for the next few quarters we’re going to run on elevated cost structure there. The one thing that could obviously help is if demand in their largest end market which is construction picks up that that will help the profit picture there. Luke Folta – Jefferies: Okay. And then just on the share repos and just how we think about leverage, would you just remind us what your target is there in terms of over the course of the year to the extent that there's cash flow left over from operations and you haven't made acquisitions? Just I guess where do you feel comfortable in terms of taking the balance sheet and what we can expect in terms of share buybacks this coming year?

Well, with respect to leverage the way we think about it is we want to remain an investment grade company and if you look at how the rating agencies think about that, that’s about 2.5 times debt to EBITDA, it’s kind of a theoretical cap, you could probably go higher than that on an interim basis. Right now we are leveraged at sort of 1.4 times, so we have certainly a fair amount of capacity there. The way we think about share repurchases is we don’t actually set a specific target in terms of dollars or shares other than we obviously would like to neutralize dilution you know from option exercises where we can. But we kind of prioritize our capital thinking about CapEx, we want to fund the CapEx that we need to grow our business, we want to look for acquisition that we can find companies that with our strategy of higher margins, higher growth and markets and we can get them at attractive prices, we’ll do that and we’ll pay our dividend and then if we have capital left over and we think you know the market is attractive in terms of where the prices will jump in with excess capital to repurchase shares, but you know in my comments I did mention that we see a lot of positive things happening across almost all of our businesses and you know if you look at kind of we just went through our strategic planning process with our Board, we are pretty excited about where we are headed as a company and so we think there’s pretty good value there. Luke Folta – Jefferies: Thanks. And one more if I could. Just on the steel price outlook, your view from the trenches, it seems like you should probably be seeing some supply come back online from some of the outages earlier in the year, and the iron ore seems to be kind of moving again on the Great Lakes system, so that shouldn't be as much of a constraint going forward. And imports are at a, I think, ten-year high or something like that, or multiyear high this past month. It's kind of strange to see how stable the steel price has been. There's been some kind of weakness on the periphery, but just in light of heading into the typically seasonally slower period with imports as high as they are, what do you think is causing this sort of stability in pricing? And the spread between US and imported prices is so wide, I don't believe that's I guess a normal source of supply for you. But it's got to be at least somewhat tempting, I would think, to the extent that there's opportunities available. Just any thoughts in terms of how to think about the market conditions right now would be great.

Luke, this is Mark. We do see that spread and it is you know by our estimation at or near an all time high particularly compared to the Chinese price. And the US price looking forward, we don’t use anything different than the forward curve. We run a balanced position in terms of price risk at all times and the forward curve is backward dated. The forward prices are a little lower than the cash and that kind of makes sense when you think about it, but we wouldn’t guess anything different than the forward price if we did we’d trade it. And in terms of stability, we like stability. We have the means to deal with volatility now that we didn’t have before but we like stable pricing and we hope it continues. Luke Folta – Jefferies: All right, great. I’ll turn it over. Thank you.

Okay. Thank you. And the next question comes from the line of Phil Gibbs of KeyBanc. Please go ahead.

Good morning.

Good morning.

Thanks for taking my questions. The first one is just on the net working capital, Andy, and how we should think about that moving forward to build here. But it looks like a conservative build because it was paying down some accounts payable or liabilities. But how do we think about that?

Yeah, I mean we don’t obviously forecast or give you a forecast on that front. Well I would say in this quarter there was some payables also steel had a very strong quarter. You know their volumes ramped up pretty substantially quarter-over-quarter and so as that happens they are going to see some build. Over the last several years, steel has taken working capital out of their business. The average day’s inventory in that business is at or around 60 on the tons basis. And we use to run 85, 90 days. So, there has been capital coming out. I’d say that going forward, steel thinks they can continue to drive down inventories, but the gains aren’t going to be nearly as significant. They’re going to hopefully three or five days gains.

Okay.

But as volume comes back they’re going to need to add some inventory to the system and probably fund some receivables too.

Just as far as the -- I think you gave the adjusted earnings as $0.65. How does that comp to the $0.21 headwind and the $0.07 tailwind? So, I was coming up with a net $0.61. What else are you including in that adjustment to get to the $0.65?

Well, there’s some theoretical debate. I guess that we have internally about the insurance proceeds from the recall litigation. We had $12.5 million of expense over the last couple of years related to that recall, most of it was in accrual, but we took as soon as we found out about it and that was about 9.7 and then we took another 2.5 over the next 18 months. Would you consider that operating earnings or not, it’s certainly one time in nature for this quarter, but when you look year-over-year which is the way we manage our business I would count it so you can take that for what it’s worth. The other thing I would say is we had $2 million worth of purchase accounting in the quarter from acquisitions that’s obviously account driven and -- so I think you should get some credit for that.

Was the purchase price accounting in that number? Were you excluding that purchase price accounting?

Yes.

Okay. And then the tolling versus the direct business when you include TWB, what was that breakout in the quarter?

Well TWB is only an adjustment for the -- hang on just one second. Yeah, Phil, the TWB adjustment is only pertains to the direct number. But there is no TWB effect in the tolling number.

Yeah. I understand that piece, Mark, just asking the general percentage, if you have it?

I don’t have that.

Yes, we don't have it at our fingertips.

Okay.

We’ll look at that if we can find we’ll give it to you.

Okay. And then just last question is on the cryogenics front. What are you seeing there and is there any implications from all the geopolitical actions that we’ve seen that creates or diminishes opportunities that you have there? And would you expect to be selling out that second Turkish facility when that comes online in another year? Thanks.

Yes. That’s a great question. Phil, the new Bandirma facility, which we think would be the best cryo facility in the world when it’s complete; it is not for the Turkish market at all. We’ll sell to Turkish customers of course, but we’re building that facility to supply product into the rest of the world, Europe primarily but also in the North America until we can ramp up production further in North America. We also feel like where we are going to Bandirma is in a very stable area. It’s a world-class industrial park for the multinational companies who will be our neighbors, who are our neighbors, and close to the port, it’s a good a facility, low cost structure, we like it.

Thank you.

Okay. Thank you. And the next question, it comes from the line of Aldo Mazzaferro of Macquarie. Please go ahead.

Yeah. Hi, gentlemen, how are you? I’m traveling. I didn’t quite hear all the call or get to read the press release in great detail, but I just wanted to ask about your steel buying program at this point. I heard you mentioned that you see the backwardation and I think that’s probably about $40 or so of discount into the summer. I’m wondering, are you able to buy imports a little below the market at this point or are the import priced more or less right in line with the domestic on the current spot basis?

I think we discussed that a little bit week or two ago. And as you build up all the cost of that import including managing the price risk, it pretty erases all of that. So, at this point the import with some notable exceptions for specific product are not attractive to us at these points, when you have the all-in costs including the price risk.

Great. So would you, just switching a little bit into the demand side market. Could you talk a little bit about some of the sectors of the market that haven’t been performing well? I heard you say Cat says mining business is still weak, and I know that. But the smaller manufactured parts and things that would be under like a general manufacturing business. How is that trending? Do you think it’s better than seasonal demand?

No. I don’t. I think its petty flat overall and it’s the same story as before. Generally commercial construction is weak and mining is weak. Those are the two weakest parts that we see.

Right. And then finally, Mark on the aluminum, the TWB investment you’re making into laser weld or not laser weld but just weld the aluminum pieces, can you talk about how that might propel you into the automotive area as they move it more towards aluminum? Is that why you’re investing in that?

We have -- we do process aluminum in both of those, the join venture -- the joint venture we have with US Steel and the joint venture we have with WISCO, both process aluminum. And the WISCO joint venture on iron and steel has a capability. We have put that capability in to weld Tailored Welded Blank, two dissimilar pieces of aluminum and we’re doing with the friction stir welding because of the metallurgical properties of the aluminum. But that’s a neat capability and gives us the ability to be pretty much agnostic about which material does the automaker uses. If it's aluminum, we will processor or if its’ steel, we will process it.

Right. Got it. Okay. Thank you.

Okay. Thank you. (Operator Instructions) And you have a question from the line Nathan Littlewood of Credit Suisse. Please go ahead.

Good morning guys, and thanks for the opportunity. I just have a couple of questions, the first on your SG&A line. I know there’s been a few changes to accounting this year, and there's also a number of one-offs in the reported figures with respect to various deals that you've done. I'm just wondering. When you look forward, what do you see as a sort of normalized SG&A cost for the business these days?

Most of the SG -- well, first of all, just as it relates to this quarter, Nathan, the $4.9 million litigation is in SG&A, so the -- if you looking at the comparison from last year’s fourth quarter, that really explains the increase. The business has done a pretty good job of controlling SG&A. I know from a corporate standpoint we’re expecting it to be relatively flat. Usually the increases are driven by our acquisitions. So as we’re acquiring companies, we’re adding in that SG&A. You may see some modest increase as our business continues to expand. I don’t expect significant growth in that line.

Okay. So if we took out $5 million or so for litigation, then we could just annualize the fourth quarter number, then, would be the sort of best estimate?

That’s one way you could do it, yes.

Okay, cool. The other question was just on volumes for the Steel Processing business. They seem to be going very, very well. And you guys are continuing to sort of perform over and above the MSCI numbers. That seems to be a pattern that some of the other publicly listed service centers just sort of reporting as well. Just wondering if you could talk a little bit about the fundamental drivers behind that, and is that a sort of trend or pattern that we could expect to continue for some time? I mean, the inference one has to make here is that there's a lot of smaller private businesses that are losing market share very, very rapidly. And I don't imagine that that can go on indefinitely?

Nathan, I don’t -- you have more information than we do on that. And we’re not privy to who they are taking business from and who else is taking business and who they are, are they taking it from. And I could tell you that in our case, so it has been pretty systematic. We’ve been taking share further consistently, and as I indicated that looks set to continue just based on their customers, the volume we’ve won already that still in transition.

Right, okay. Thanks very much guys. I'll turn it over to someone else.

Okay. Thank you. And there are no further questions in queue. Please continue.

Yeah. Just in response to Phil’s question around volume at TWB, the direct -- if you include TWB volumes, the direct percentage is 59% versus 41% for toll. If you exclude TWB that mix shifts to 54% direct, 46% toll, it basically 100,000 tons of the volume is attributable to TWB.

Well, thank you, Andy for that clarification. We appreciate your interest and joining us on the call today. We remain very confident that we will continue to produce improving results going forward. Thank you.

Okay. Thank you, and ladies and gentlemen, this conference will be made available for replay after 12.30 p.m. today through July 3rd at midnight. You may access AT&T Executive Replay System at any time by dialing 1800-475-6701 entering the access code 329211. International participants dial 3203653844 and again that access is 329211. And that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.