Good morning and welcome to the Worthington Industries' Fourth Quarter and Fiscal Year-end 2020 Earnings Conference Call. [Operator Instructions] I would now like to introduce Marcus Rogier, Treasurer and Investor Relations Officer. Mr. Rogier, you may begin.

Marcus A. Rogier - Treasurer and Investor Relations Officer

Thank you, Christine. Good morning everyone and welcome to Worthington Industries' fourth quarter fiscal 2020 earnings call. On our call this morning, we have John McConnell, Worthington's Chairman and Chief Chief Executive Officer; Andy Rose, Worthington's President; and our Chief Financial Officer, Joe Hayek.

Before we get started, I'd like to remind everyone 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 and could cause actual results to differ from those suggested. We issued our earnings release earlier this morning. Please refer to it for more detail on those factors that could cause actual results to differ materially. Today's call is being recorded and a replay will be made available later on our WorthingtonIndustries.com website.

At this point, I will turn the call over to John for some opening comments.

John P. McConnell - Chairman and Chief Executive Officer

Thank you, Marcus. As you read in our announcement last night, I have decided to transition out of the position of Chief Executive Officer, effective September 1, I'll remain Executive Chairman. Andy Rose has been appointed by the Board to become our next CEO commencing on the same effective date and retaining the position of President. These actions are the culmination of a well-thought through succession plan. It has been my privilege to lead this company as CEO for the past 27 years. I'm proud of our employees who come and work hard everyday to make a difference, especially in these challenging times.

Our company is in a great position to grow and I believe that the next decade will bring exciting opportunities. I'm confident that Andy and the entire leadership team, perhaps the strongest in our history, will deliver on those opportunities. I'll now turn the call over to our CFO, Joe Hayek to review the fourth quarter in detail. Joe?

Joseph B. Hayek - Vice President and Chief Financial Officer

Good morning, everyone. John, I know I speak on behalf of all of us at Worthington when I say how grateful we are for how you've led this company and for the impact that you had on us collectively and on so many of us as individuals. We're looking forward to your continued leadership as our Executive Chairman.

I'll now spend a few minutes reviewing the quarter and then we'll turn the call over to Andy. This quarter presented us and companies everywhere with unprecedented challenges. We continue to face significant uncertainty related to the coronavirus and associated shutdowns. These dynamics had a significant impact on demand and on our results. While the negative impacts of COVID-19 are easy to see, it has also brought out the best in our people. Across Worthington, we are very proud of the way our teams have supported each other, their communities, our customers and our business by keeping each other safe and finding innovative ways to navigate the evolving new normal. While this crisis has forced difficult decisions, we believe that our ‘people first' culture has been on full display and we will emerge stronger as a result.

In Q4, we reported earnings of $0.29 per share versus $0.66 in the prior year quarter. In addition to lower demand in several key end markets due to COVID-19, there were a few unique items in the quarter and includes the following. We incurred restructuring and impairment charges of $15.7 million or $0.20 per share in Q4 related to severance charges, the write-down of trade name associated with Armstrong European operations and our exiting the two remaining Engineered Cabs facilities that were not included in that sale. This compares to impairment charges of $8.5 million or $0.11 per share in Q4 of last year.

Estimated inventory holding losses in Q4 - sorry, estimated holding gains were $0.01 per share compared to losses of $0.11 per share in the prior year quarter. Consolidated net sales of $612 million decreased 35% from the prior year quarter, primarily due to significantly lower volumes in Steel Processing, a shift in mix in cylinders and our exit earlier this year from the Engineered Cabs business.

Gross profit declined in the quarter by $36 million from Q4 last year to $90 million, while gross margin in the quarter increased to 14.7% from 13.4% last year. Our effective annual tax rate was 25.1% for the current year versus 22% last year.

Our adjusted EBITDA was $67 million in Q4 compared to $89 million last year and our trailing 12-month adjusted EBITDA is now $300 million. We generated positive EBITDA in each month of Q4, a testament to our diversified mix of offerings and to our team's execution.

Sequentially through the quarter, we really saw the slowdown begin in late March. April was the most challenging month for us demand and profitability-wise, with May showing signs of recovery, particularly later in the month.

In Steel Processing, net sales of $328 million were down 44% from Q4 last year, due primarily to lower volumes. Total shipped tons were down 15% from last year, largely driven by reduced automotive and heavy truck demand associated with the COVID shutdowns. Our shipments to automotive customers, which in the 12 months ended February were 58% of Steel's revenue, were close to zero in both April and May. Direct tons declined by 32% year-over-year and were 45% of the mix compared to 55% in the prior year quarter. Toll tons rose by 4% year-over-year due primarily to our consolidation of the Worthington Samuel Coil Processing JV earlier in the fiscal year and due to strength in our toll coating JV.

Operating results in Steel Processing, a loss of $1.8 million in a typically strong seasonal quarter was down from operating profit of $14.9 million in Q4 last year, due to lower volumes, partially offset by a lack of inventory holding losses in the current period. Due to recent declines in steel prices, we do expect to have inventory holding losses in Q1.

Turning to Pressure Cylinders, net sales were $283 million, down 12% from the prior year quarter. The decline was primarily due to a change in mix of industrial products and lower volumes in our oil and gas business. Softness in the industrial products business was largely driven by continued weakness in our European operations. Economic conditions in Europe were soft prior to the shutdowns and conditions worsened during the quarter. Volumes increased for our consumer-facing cylinder products as sales were positively impacted by stay-at-home orders, partially offset by declines in product lines that rely on home or commercial installations, which were more difficult during the shutdowns. Cylinders operating income, excluding impairment and restructuring, was $22 million, down $2 million from the prior year quarter and operating margins on the same basis improved to 7.7% from 7.5%.

With respect to our JVs, equity income during the quarter was $17 million, down $12 million from the prior year quarter, excluding the write-down in Q4 of 2019 of our Chinese steel joint venture. The decrease was across the board as our JVs primarily serve the construction and automotive end markets. We received $45 million in dividends from our unconsolidated JVs during the quarter. For the year, equity income from our JVs was $115 million and we received $123 million in dividends, a cash conversion ratio of 107%.

Turning to the cash flow statement and the balance sheet, cash flow from operations was $81 million in the quarter and $337 million in the fiscal year, with free cash flow, totaling $57 million and $241 million in the same periods. During the quarter, we invested $24 million on capital projects and paid $13 million in dividends.

Looking at our balance sheet and liquidity position, funded debt at quarter end was essentially flat at $700 million. Interest expense of $7.5 million was down $2 million from the prior year quarter due to both a debt refinancing and lower debt balances. We ended Q4 with over $147 million in cash, up from $103 million at the end of Q3 and working capital increased by $11 million sequentially in the quarter to nearly $500 million. We have an additional $500 million available under our revolving credit facilities. Our net debt to trailing EBITDA leverage ratio at quarter end was roughly 1.8 times.

Yesterday, the Board declared a $0.25 per share dividend for the quarter, which is a $0.01 increase over the last quarter, payable on September of 2020. This will be the 10th consecutive year that we have increased our dividend.

Before I turn it over to Andy, I'd like to make a few comments related to our investment in Nikola Corporation. As we discussed on our Q3 call, we provided a seed investment to Nikola in 2015. On June 4, Nikola began trading as a public company and we own roughly 19 million shares. Those shares are subject to a lock-up, the terms of which we recently disclosed in an SEC filing. While there were no impact to our Q4 earnings related to our investment in Nikola, accounting rules will require us to mark our shares to market going forward, which at current prices will generate a significant gain in Q1. Since our shares are currently subject to a lock-up, we have not yet made any decisions regarding our holdings but we would like to congratulate Trevor, Mark and the entire Nikola team for what they have accomplished and we wish them continued success. I'll turn it over to Andy at this time. Andy?

Andy Rose - President

Thank you, Joe. Good morning everyone. This quarter had a lot of moving parts, but fortunately business conditions are improved. [Technical Issues] mentioned, we had some positive developments around our investment in Nikola. Most of our businesses operated under the essential business rules although demand levels fluctuated significantly depending on the end market and products. March was relatively normal from an earnings standpoint. April was essentially breakeven and May saw most of our businesses make money, albeit at lower levels, with the exception of those tied to automotive.

Our employees are to be commended for adapting quickly to these volatile business conditions, all while following strict safety guidelines and evolving protocols to protect those in and around our facilities. It's June and that means a new fiscal year, this year is particularly special because we're celebrating our 65th Anniversary. We have our philosophy and our people, who live it everyday, to thank for reaching this milestone.

We began the year with a strong balance sheet, low interest expense and significant cash and revolver availability. Assuming the economy continues to open back up here and abroad, we expect to see improvements in our businesses, particularly those that were hardest hit last quarter. As this occurs, we believe there will be opportunistic ways to allocate capital and drive value for shareholders. However, with the economic outlook still unclear, we will remain guarded on our approach until there's evidence of a broad-based recovery.

I would like to say thank you again to all of our employees for their hard work and dedication to Worthington Industries over the past several months. As an organization, we have adapted well to our new normal, and while we are hopeful the worst is behind us, we are prepared for whatever challenges lie ahead. Finally, I'd like to thank our Chairman, John McConnell and the Board of Directors for giving me the opportunity to lead this great company. I am humbled by the selection and highly motivated to continue the legacy started by John H. McConnell in 1955 and successfully expanded upon by John and continue delivering solid returns to our shareholders. We have a talented leadership team and great employees all across the company, which gives me high confidence that together we will deliver on these goals and more. We will now take any questions.

Question & Answers

Operator

[Operator Instructions] Your first question comes from the line of Seth Rosenfeld from Exane BNP. Your line is open.

Seth Rosenfeld - Exane BNP Paribas - Analyst

Good morning and thanks for taking my questions today, and congrats on a very strong quarter.

Andy Rose - President

Thank you, Seth.

Seth Rosenfeld - Exane BNP Paribas - Analyst

If I may, I just wanted to follow up with regards to Nikola and I understand you've already commented that you might be limited for all you can say given the lock-up, but if we can try - if you can give us a little bit of color, please, with how you think about this business from a strategic perspective. Worthington does have a number of stakes in businesses that have been long-standing. Would you do Nicola as something of a strategic long term holdings or a business that would be a potential disposal opportunity?

And then the follow-up, you did make a comment in your prepared remarks about kind of capital allocation, recognizing ways to drive value for shareholders, given where we are in the cycle. Were Worthington to dispose that stake in Nikola, how would you envision the potential capital allocation options, please, whether that'd be either shareholder returns or further investments in the business? Thank you.

Andy Rose - President

Yeah, Seth, with respect to any decisions around Nikola, we have not made any and we're not going to comment further at this point. I will tell you that from a capital allocation standpoint, Worthington historically has followed a balanced approach. We've been a dividend paying company for - since the first year we went public, and over the past 10 years, we've allocated capital to share repurchases to benefit our shareholders. We've also continued to pursue capex investments to reinvest in the company. And as you would well know, we're a profit-sharing company, so we share some of our profits with employees. So I would expect that, over time, regardless of what we do with Nikola, that we'll kind of follow a similar approach.

Seth Rosenfeld - Exane BNP Paribas - Analyst

Thank you, that's very clear. And just one follow-up, please, with regards to the timeframe of lock-ups. I think there has been some confusion in investors with regards to the timeline. Can you just walk us through this kind of staggered approach of this lock-up system, please? Thank you.

Joseph B. Hayek - Vice President and Chief Financial Officer

Sure. Seth, it's Joe. Rather than doing that on this call, it is filed with the SEC and we would just direct people to that document.

Seth Rosenfeld - Exane BNP Paribas - Analyst

Okay, thank you very much.

Operator

Your next question comes from the line of Phil Gibbs from KeyBanc Capital Markets. Your line is open.

Phil Gibbs - KeyBanc Capital Markets - Analyst

Congratulations to John and Andy. Andy, I know the transition will be sooner, so I'm congratulating you both on this.

Andy Rose - President

Thanks, Phil.

Phil Gibbs - KeyBanc Capital Markets - Analyst

First question just is on the Cylinder side. I think, Joe, you mentioned in your prepared remarks and clearly, I guess, in hindsight, not a huge surprise based on the stay-at-home orders but what are you seeing now, I guess, in the consumer business? Is that strength in the camping and DIY and - growing, is that all staying solid for you all?

Joseph B. Hayek - Vice President and Chief Financial Officer

So the quarter and the new fiscal year is all of three weeks old, Phil, and yeah you're right, the mix in Cylinders shifted. It was very difficult for the contractors to enter people's homes. It was very difficult for anything to happen on commercial construction sites over in Europe, automotive and things like that were soft, but the product lines of ours that were - are consumer-facing, we saw a benefit. And so that continued into May and into the first couple of weeks of June. The watchword for all of us right now is still, unfortunately, uncertainty because we can't predict whether those things will continue unabated for the next 12 months or not, but you are at a seasonally strong time for outdoor activities, which we think drove some of that strength in Q4. And moving forward, we would expect, after knowing anything else, for the trends to be seasonally normal.

Phil Gibbs - KeyBanc Capital Markets - Analyst

Thanks for that.

Andy Rose - President

Phil, that business, as you would have had a sense is - has proven in the past to be counter cyclical. This is obviously a different situation with a virus sort of driving the economic decline, but it's behaving similar to in the past and potentially even a little bit stronger.

Phil Gibbs - KeyBanc Capital Markets - Analyst

Okay. When we look at WAVE in that business, from what I understand has a high repair and remodel component to the commercial construction [Technical Issues] as that business right now or things kind of where they have been?

Andy Rose - President

Yeah, I think as it relates to WAVE and to a certain extent ClarkDietrich as well, I mean, commercial construction was obviously impacted, probably more so in some of the bigger cities that were as fast like New York City. But you know their demand was off during the quarter. There is longer term implications here, some are probably positive and there is certainly some that are negative. The work-from-home trend, obviously for the long run, has some negative implications that they're not building as many commercial office buildings. But as you said, WAVE is a high percentage, sometimes as high as 60% or 70% repair and remodel business. And so what that means for existing office buildings, probably a lot of reconfiguration, workstations and the way people work and social distancing continues, so there could be some positive impacts there too. So these are the - it's really hard to predict, kind of where this thing goes. But in the short run, though, their volumes were off just because activity is down.

Phil Gibbs - KeyBanc Capital Markets - Analyst

Thanks, Andy. And looking at the Steel Processing business, clearly a big automotive component. I would think March was still okay, April was the biggest impact. In May you started to come out of this or thought of it as you pre-positioned for the restarts. And I know you've got some new businesses sprinkled in there as well sort of trying to consolidate. So, is there going to be a big change in your mind in just aggregate volumes in that figures in the first quarter or given the fact that March was still good and now we're recovering some, that things could be reasonably stable? Just trying to understand, a lot of moving pieces with all the toll business that's being thrown in there now.

Andy Rose - President

Sure. And, yeah, Phil, interestingly, the shutdowns in automotive were in mid-March and our shipments were still pretty reasonable for another 10 days post. And so as a consequence, on the back end, our shipments lagged the restart since, I think, there was some inventory on hand. And so as we look into - our big end markets there are automotive construction, ag and heavy truck and so as we look at IHS forecast and things like that, as the automotive D3 and others ramp back up, we would expect to have our results be impacted and have a reasonable correlation. Those IHS forecast continue to bounce around a little bit and some of those restarts have been a bit bumpy. But any time you do take 58% of your business and have it to be a zero for a couple of months, it's really tough to overcome and certainly that is not going to be zero in June.

Phil Gibbs - KeyBanc Capital Markets - Analyst

Thank you all very much.

Andy Rose - President

Sure.

Operator

Your next question comes from the line of John Tumazos from John Tumazos Very Independent Research. Your line is open.

John Tumazos - John Tumazos Very Independent Research - Analyst

Thank you very much. I want to thank John McConnell for his service to the company. It's been a pleasure and an honor to work with you for 30 or so years.

John P. McConnell - Chairman and Chief Executive Officer

Thank you, John. Pleasure to work with you.

John Tumazos - John Tumazos Very Independent Research - Analyst

I want to congratulate Andy and the others on their promotions and Mark Russell, who is not on the call, for leaving Worthington and finding a good gig at Nikola.

John P. McConnell - Chairman and Chief Executive Officer

I'm sure he'll appreciate that.

John Tumazos - John Tumazos Very Independent Research - Analyst

With regard to the core businesses, there has been a little bit of uppity [Phonetic] in the economy. Could you tell us if there are impacts from suppliers' or customers' permanent shutdowns? I'm thinking of U.S. steel idling, Great Lakes; Ecorse, Michigan; Cliffside idling; Hampstead, [Phonetic] Maryland; Dearborn, Michigan, some of the auto plants that are permanently closed. Fortunately, you're not exposed to the airline industry or travel and entertainment so much. But are there any changes that you have to make and maybe, those are the changes you are making because your customers and suppliers are changing.

Joseph B. Hayek - Vice President and Chief Financial Officer

So, John, it's Joe. A couple of thoughts. The first is that we haven't had any material disruptions from a supply chain perspective. We certainly dealt, as everybody did, with shutdowns and other disruptions. We don't think that any of those will have a material impact on our business that we see it right now. Ultimately, we feel like the steps we've taken and some of the great work that our teams have done positions us exceptionally well with customers. We've been able to take care of our customers, we're able to offer them stability and solutions that we think are unique to us and so we love where we're positioned, but we also need to reach as high as we'd like to, we need reasonable demand and some of that is out of our control, but we are thinking about that both long-term and short term every day and we like where we are for now.

Andy Rose - President

And John, maybe just to add a few other color or comments here. We, a number of years ago, developed secondary and tertiary sources of supply on the steel side for really all of our products, because we didn't want to take the risk of a shutdown really cramping our supply, so we're pretty well prepared for that. I'm sure there will be some shifts that happen, but we do have other sources of supply around that deal. The only other thing that comes to mind for me is there has been, as it related to the auto restarts, some parts suppliers that are supplying the OEMs, where they had to delay production or idle facilities for days or weeks because they don't have all the parts they need. That's not necessarily direct to us, but it does impact our shipments of steel.

John Tumazos - John Tumazos Very Independent Research - Analyst

Could you give us some color on the Serviacero and ArtiFlex being in the red in the quarter? Were there charges to those or was it just no revenue and some steel holding loss in each case?

Joseph B. Hayek - Vice President and Chief Financial Officer

It's the latter, John.

John Tumazos - John Tumazos Very Independent Research - Analyst

If I could ask one last, and thank you for putting up with me, accounting question about Nikola, couple of questions. So in the next quarter, if you report a mark-to-market, that's going to be a non-cash pre-tax item. Does it have any tax implication, first?

Joseph B. Hayek - Vice President and Chief Financial Officer

We will - we would only pay a tax on a realized gain.

John Tumazos - John Tumazos Very Independent Research - Analyst

Will you provide for taxes that are deferred or is it just not in the tax line at all?

Joseph B. Hayek - Vice President and Chief Financial Officer

Yeah, it wouldn't be in the tax line at all.

John Tumazos - John Tumazos Very Independent Research - Analyst

It's not - this is no tax, nothing. It's just a paper write-up and write-down every quarter, hopefully never a write-down. Next question and this is a hypothetical. If you, at a later stage, dividend that Nikola shares to the Worthington shareholders and let all of us decide whether we're excited about the electric or hydrogen trucks, would that be a taxable event for Worthington or for us or would it just be a return of capital? And if you can't answer this right now, I apologize for being so specific.

Joseph B. Hayek - Vice President and Chief Financial Officer

It's quite all right. Hypothetically, the tax consequences for us would be the same as they would be in any given scenario. So we would pay the corporate tax and our - the shareholders would pay whatever is appropriate for them.

John Tumazos - John Tumazos Very Independent Research - Analyst

So you would pay taxes if you distributed the shares?

Joseph B. Hayek - Vice President and Chief Financial Officer

That is our understanding from talking to people that are experts in tax, yes.

John Tumazos - John Tumazos Very Independent Research - Analyst

If I may just interject, I'm not an auto analyst, but I like what I've read about Nikola, I like that it's focused on one product. Where I'm uncomfortable is that Tesla makes high-end cars, economy cars, trucks, wants to build charging stations in every state, tries to do too much, I think that Nikola has a more focused model and Mark is a business man who know it's what works on nuts and bolts. If you just held Nikola for a while and let it grow, I'd be very comfortable as a minor but happy Worthington shareholder.

Andy Rose - President

Thank you, John.

John Tumazos - John Tumazos Very Independent Research - Analyst

All the best.

Operator

Your next question comes from the line of Edward Collery from SC Fundamental. Your line is open.

Edward Collery - SC Fundamental - Analyst

Hi, guys, good morning and thanks for taking my question. I fitted a fire alarm test launch here, so sorry if anyone in here is hearing that. Two quick questions from me. The first is, maybe a longer term question, I'd be interested to get your thoughts on - the 10-K mentioned that the shift from steel to other channels [Phonetic] in car [Indecipherable], but that doesn't seem to affect the business much. So I'm just wondering if you can provide maybe some more context around the topics of competition and obsolescence. And specifically I'm wondering if you guys are seeing any long term threats from technological disruptions or maybe new forms of competition either in your end markets or I mean your new legacy competitors in your specific business lines?

Andy Rose - President

Yeah, we're having a little bit of a hard time hearing you. I heard parts of your question. I think, with respect to technological obsolescence, I don't think we're experiencing a lot of that right now in our, I'll call it, product lines or different businesses. I didn't really catch the first part of your question though.

Edward Collery - SC Fundamental - Analyst

Yeah, that was mostly the question. Can you hear me better now?

Andy Rose - President

A little bit, yes.

Edward Collery - SC Fundamental - Analyst

All right. Sorry about that. Yeah, I'm just wondering if you're seeing any new forms of competition or if shifts in your end markets are maybe going to be - are in long term impact in demand for your products.

Joseph B. Hayek - Vice President and Chief Financial Officer

Yeah. Long term - this is Joe, long term, it's hard to say. We certainly realize that people can enter and things can happen. With respect to sort of newer entrants to competition, I mean, we always have several competitors in all of our business. They are different, whether you're talking about steel or cylinders or our joint ventures, we haven't noticed anybody in the last 90 days that's emerged on the scene, but rest assured, we make it our business to know who those folks are and we try and compete as successful as we can with them.

Andy Rose - President

And I guess I might just add, one of the things that we have experienced is the current environment politically is somewhat protectionist for the U.S., which is, I think, helps some of our products and one of the outcomes of COVID is it's likely to be near-shoring or re-shoring of certain critical products and supply chains. And I think we are well-positioned to benefit from that, for sure. I think we've seen some of that already, but more to come, likely.

Edward Collery - SC Fundamental - Analyst

Okay. And I'm sort of wondering, the efforts to improve mileage and cars doesn't seem to have hurt the business in any appreciable way and I wouldn't think, but just want to confirm with you guys that a shift towards electric vehicles, probably does to parts of demand for your products, but just, I want to confirm that.

Andy Rose - President

I mean we haven't experienced any appreciable demand loss from electric vehicles. You know that as more and more electric vehicles hit the road, we expect there could be some demand loss there, but I will tell you the counter to that from our vantage point is, we believe we are the best and most efficient steel processor in the country and it's an opportunity for us frankly to take market share and we've done that recently. And we have products that benefit from that, right? TWB our laser welding business is capitalizing on light weighting and other things that are going on in automotive. So it's a threat potentially down the road, but it's a huge opportunity for us right now.

Edward Collery - SC Fundamental - Analyst

Okay, great. Thank you. And then my second question is regarding the lock-up agreements that you guys mentioned. I'm just wondering how you guys came to the terms of that lock-up agreement. Was it a unique negotiation you guys undertook or are all the early investors covered by similarly structured agreements or do they have more typical six-month lock-ups?

Joseph B. Hayek - Vice President and Chief Financial Officer

I appreciate the question, not something that we can - we're planning on talking about. Thank you, though.

Edward Collery - SC Fundamental - Analyst

Okay, got it. Thanks guys.

Operator

Your next question comes from the line of Seth Rosenfeld from Exane BNP. Your line is open.

Seth Rosenfeld - Exane BNP Paribas - Analyst

Thank you for taking some follow-up questions. If I may, just with regards to the Steel Processing business, a few follow-ups there. You commented in your prepared remarks, expectations for some windfall losses in fiscal Q1. Are you able to give us any color on potential scale of those windfall losses perhaps in reference to past periods? And then secondly, with regards to the automotive order book, I was wondering if you are able to give a little bit more color with regards to current order intake and perhaps how that might compare to somewhat normal pre-COVID levels. You did note that I think half of your furloughed workers are already coming back to work as of end of June. Should we think about that as something of a proxy for volumes? Thank you.

Andy Rose - President

Yeah, I mean the ramp-up has been a little bumpy partly because of some of the supply chain issues for parts and other things and different facilities opening up at different times for our customers. But I guess what I would point you to, Seth, is the IHS data in terms of demand for this year, they are saying 13.3 million, maybe 13.5 million cars versus original forecast of 16.5 million and obviously we lost six to eight weeks of production already. So we do expect that it will be ramping back up to kind of a normalized level if it hasn't already, probably not there quite yet, but certainly by July. And the shutdowns are going to be less in July for the automotive changeover. So I would expect, we're getting getting back to normalized levels here pretty soon.

I'm not sure I understood the first part of your question or that we expect shocks to…

Seth Rosenfeld - Exane BNP Paribas - Analyst

No, sorry, for the inventory holding losses.

Andy Rose - President

Oh, okay.

Joseph B. Hayek - Vice President and Chief Financial Officer

Yeah, that one, Seth, I know you've been you've been around us for a while, it's really based on the decline in steel prices, and if you look at hot rolled per ton over the course of time, and now just look at what happened sort of starting in March, you could probably get a pretty reasonable proxy for it. The one thing I did actually want to correct, one of John's Tumazos' question, was around the tax. We would - probably it would be netted, but we would likely record a deferred tax in Q1 on the gain on our investment in Nikola.

Seth Rosenfeld - Exane BNP Paribas - Analyst

Thank you very much.

Joseph B. Hayek - Vice President and Chief Financial Officer

Sure.

Operator

[Operator Instructions] And there are no further questions at this time. I turn the call back over to the company.

John P. McConnell - Chairman and Chief Executive Officer

Thank you all for joining us for our fourth quarter earnings call. We look forward to continuing to produce good results for you and hope you finish your day well and stay safe.

Andy Rose - President

Thanks everybody.

Operator

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WORTHINGTON ENTERPRISES INC

Q4 2020

Earnings Transcript

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