Worthington Enterprises, Inc. · NYSE:WOR
Worthington Enterprises — Worthington Industries — Investor Day (November 2019)
62 slides from Worthington Enterprises's investor day presentation, Nov 13, 2019
Slide 1: Investor Day
G bas W worth: vt Miele: INVESTOR DAY MAKERS OF BETTER
Slide 2: Presenters
PRESENTERS ANDY ROSE GEOFF GILMORE DOUG WISEL JOE HAYEK PRESIDENT EXECUTIVE VP & COO CFO, WAVE VP & CFO
Slide 3: Agenda
1-4 Introduction / Safe Harbor – Marcus Rogier 5 - 24 WII Overview & Strategy – Andy Rose 25 - 38 Business Unit Reviews – Geoff Gilmore Steel Review AGENDA Cylinders Review Break 40 - 45 WAVE Review – Doug Wisel 46 - 56 WII Capital Allocation, Shareholder Value, Consolidated Financial Review – Joe H
Slide 4: Safe Harbor Statement
SAFE HARBOR STATEMENT Worthington Industries wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “Act"). Statements by the Company which are not historical information constitute "forward looking statements" within the meaning
Slide 5: 5
5
Slide 6: Vision
VISION TO BE THE TRANSFORMATIVE PARTNER FOR OUR CUSTOMERS, A POSITIVE FORCE IN OUR COMMUNITIES AND EARN EXCEPTIONAL RETURNS 6
Slide 7: Our Expertise
OUR EXPERTISE MATERIALS SUPPLY INSIGHTS & PURCHASING MANUFACTURING SCIENCE CHAIN ANALYTICS 7
Slide 8: Net Sales of $4.35 Billion
NET SALES OF $4.35 BILLION INCLUDING OUR SHARE OF UNCONSOLIDATED JVS 8
Slide 9: Broad Manufacturing Footprint
BROAD MANUFACTURING FOOTPRINT 7 0 O P E R A T I N G L O C A T I O N S , 9 J O I N T V E N T U R E S STEEL PROCESSING PRESSURE CYLINDERS OTHER JOINT VENTURES UPDATED NOVEMBER 2019 9
Slide 10: Largest Purchaser of Flat Roll Steel Behind Automakers
• • • • • • • • LARGEST PURCHASER OF FLAT ROLL STEEL BEHIND AUTOMAKERS 10
Slide 11: Industries We Serve
INDUSTRIES WE SERVE TRANSPORTATION CONSTRUCTION AGRICULTURE INDUSTRIAL TOOLS OUTDOOR LIVING WATER ENERGY 11
Slide 12: Culture Enables Strategy
OUR PHILOSOPHY CULTURE ENABLES STRATEGY 12
Slide 13: We Are Makers of Better
WE ARE MAKERS OF BETTER At Worthington Industries, “better” is a mindset. A measuring tool. A directional compass. It’s a commitment all of us at Worthington share. We don’t strive to be better for better’s sake. We do it because our customers, employees, shareholders and communities deserve better.
Slide 14: Introducing
INTRODUCING
Slide 15: Makers of Better Video
Click here for Makers of Better Video 15
Slide 16: $4.35B Trailing 12 Month Net Sales
$4.35B TRAILING 12 MONTH NET SALES 08/31/19 TTM INCLUDING OUR SHARE OF UNCONSOLIDATED JVS NET SALES BY END-MARKETS* OPERATING/EQUITY INCOME BY SEGMENT TTM** $216 MILLION 14% 34% 11% 18% 4% 4% 3% 27% 9% 39% 37% Automotive Construction Industrial Consumer Products Steel Cylinders WAVE / Other / JVs Ag
Slide 17: Growth Strategy
GROWTH STRATEGY Working together using technology, analytics and automation enables us to deliver… Successful innovation, transformation, and acquisitions that drive value for customers and earn exceptional returns for our shareholders. All with Our Philosophy at the center. 17
Slide 18: Complementary Value Drivers Are Well Established
COMPLEMENTARY VALUE DRIVERS ARE WELL ESTABLISHED TRANSFORMATION INNOVATION ACQUISITIONS Broad based business system Innovation as a discipline: Focus on the core: focused on: • New product development • Consolidate higher value add markets • Data-driven decision making • Product design & engineering
Slide 19: Clear Business Strategies That Are Communicated
OPERATING GOALS WE HAVE CLEAR BUSINESS STRATEGIES THAT ARE COMMUNICATED 19
Slide 20: World Class Business System
OPERATING GOALS WE HAVE A WORLD CLASS BUSINESS SYSTEM DESIGNED TO MAXIMIZE OPERATING PERFORMANCE 20
Slide 21: Comprehensive Acquisition Playbook
OPERATING GOALS WE HAVE A COMPREHENSIVE ACQUISITION PLAYBOOK 21
Slide 22: We Innovate to Grow
OPERATING GOALS WE INNOVATE TO GROW 22
Slide 23: We Use Data, Analytics and Automation
OPERATING GOALS WE USE DATA, ANALYTICS AND AUTOMATION TO IMPROVE OUR BUSINESSES 23
Slide 24: We Are a Technology Leader in Our Industries
OPERATING GOALS WE ARE A TECHNOLOGY LEADER IN OUR INDUSTRIES 24
Slide 25: Steel Processing Review
iW STEEL PROCESSING REVIEW € GEOFF GILMORE EXECUTIVE VP & COO
Slide 26: Steel Processing Overview
STEEL PROCESSING OVERVIEW Vision To be the safest and most trusted flat rolled steel processor in the markets we serve providing unique, effective, and differentiated steel supply chain solutions to our customers Who We Are Today • Market leader in coated, hot rolled, and specialty strip products •
Slide 27: Steel Processing Profile
SALES BY END MARKET PROFILE AUTO F Y 1 9 Automotive 59% Other STEEL PROCESSING 13% AGRICULTURE Wholly-Owned Heavy Truck Consolidated JVs 7% Agriculture Construction Unconsolidated JVs 9% 12% 27 FACILITIES SALES BY PRODUCT MIX in North America F Y 1 9 (9 wholly owned / 18 JV Owned) CORE PRODUCTS CONS
Slide 28: Value Drivers in Action: Transformation Days
VALUE DRIVERS IN ACTION: TRANSFORMATION Data driven LEAN events to improve our businesses Example of Transformation project at core steel facility What we did to drive improvements: Issue: Sales & operations planning receiving inaccurate information Analyzed historical forecasts and shipment data
Slide 29: Value Drivers in Action: M&A
VALUE DRIVERS IN ACTION: M&A Selective acquisitions to consolidate higher value add niches (strip, coated, pickling, blanking) Heidtman Steel Cleveland Acquisition • Acquired for $30 million in October 2019 • Consistent with strategy of consolidating higher value-added niches • Expands pickling capa
Slide 30: Value Drivers in Action: Innovation
VALUE DRIVERS IN ACTION: INNOVATION TWB provides tailor welded applications for light weighting and safety critical components and has successfully increased applications in vehicles and expanded into truck frames 2010 Less than EXPANDED applications into truck frames improving APPLICATIONS 20 light
Slide 31: Steel Processing Financials
STEEL PROCESSING FINANCIALS $ millions FY 2018 FY2019 3M FY2019 3M FY2020 Sales $2,253 $2,436 $660 $523 Adj. EBITDA* $177 $122 $48 $14 % of sales* 7.9% 5.0% 7.3% 2.6% Operating Income* $143 $93 $40 $6 excl. Restructuring % of sales 6.3% 3.8% 6.0% 1.2% Capital Expenditures $32 $39 $9 $8 Avg Invested
Slide 32: Pressure Cylinders Review
iW PRESSURE CYLINDERS REVIEW =< & \v GEOFF GILMORE EXECUTIVE VP & COO
Slide 33: Pressure Cylinders Overview
PRESSURE CYLINDERS OVERVIEW Vision To be recognized as the world’s leading producer of pressure vessels and related products, offering unmatched safety, quality, service and commitment to our customers Who We Are Today • Leading global manufacturer of pressure cylinders and related products, serving
Slide 34: Pressure Cylinders Profile
PROFILE SALES BY SBU F Y 1 9 Industrial Products 52% PRESSURE CYLINDERS Oil & Gas Equipment 9% Consumer Products 17 FACILITIES 39% in North America and Europe SBU PRODUCT MIX F Y 1 9 CORE PRODUCTS Oil & Gas Water 9% 10% EU Low Industrial Products - Broad line of pressure cylinders Pressure and cryog
Slide 35: Value Drivers in Action: Transformation
VALUE DRIVERS IN ACTION: TRANSFORMATION Applying our business system to an acquired facility to improve performance Example of Transformation Event at acquired Amtrol What we did to drive improvements: facility Root cause problem solving to identify best opportunities for Issue: Low on-time delive
Slide 36: Value Drivers in Action: Innovation
VALUE DRIVERS IN ACTION: INNOVATION Creating innovative solutions to meet the needs of customers and expand into new markets Cannabis Extraction Cylinders • Need for cleaner alternative to traditional steel 100# tank identified • Voice of customer work conducted to understand need and size opportuni
Slide 37: Value Drivers in Action: M&A
VALUE DRIVERS IN ACTION: M&A Cylinders has experienced meaningful earnings growth over the past 10 years driven by 16 acquisitions CYLINDERS SALES ($M) CYLINDERS OPERATING INCOME ($M) $1,212 $85 $1,001 $58 $468 $30 2010 2015 08/31/19 TTM 2010 2015 08/31/19 TTM 37
Slide 38: Pressure Cylinders Financials
PRESSURE CYLINDERS FINANCIALS $ millions FY2018 FY2019 3M FY2019 3M FY2020 Sales $1,206 $1,208 $300 $304 Adj. EBITDA* $127 $105 $26 $41 % of sales* 10.6% 8.7% 8.7% 13.4% Operating Income* $80 $63 $16 $30 excl. Restructuring % of sales 6.6% 5.3% 5.4% 9.7% Capital Expenditures $33 $38 $10 $7 Avg Inves
Slide 39: Break
4 WORTHINGTON INDUSTRIES BREAK
Slide 40: WAVE Review
4 WAVE REVIEW DOUG WISEL CFO, WAVE 0)
Slide 41: WAVE Joint Venture Overview
WAVE JOINT VENTURE OVERVIEW • Established in 1955 • Established in 1992 • Established in 1860 • $4.35 billion sales in fiscal 2019 • 27 year-old 50/50 JV leveraging the • $975 million in sales 2018 • 70 facilities in 7 countries; 10,500 strength of both partners • 11 plants in North America; 2,500 e
Slide 42: WAVE Profile
PROFILE CONTRIBUTION TO WI EQUITY INCOME ($M) $82 $71 $54 $33 WAVE (50% JV) 5 facilities in North America 2005 2010 2015 2019 CORE PRODUCTS MARKETS Sustainable revenue and EBITDA growth with creative fabricated OVER Product Price architectural metal components, focusing on superior customer value, i
Slide 43: Value Drivers in Action: Innovation
VALUE DRIVERS IN ACTION: INNOVATION Providing creative solutions to customers to address their need for speed and lower their total cost Market Dynamics Integrated ceiling Integrated ceiling solutions solutions Skilled labor shortage Integrated ceiling Compressed Creative interior design solutions c
Slide 44: Value Drivers in Action: Innovation
VALUE DRIVERS IN ACTION: INNOVATION Providing creative solutions to customers to address their need for speed and lower their total cost Typical room installation WAVE PRODUCT PORTFOLIO UnitedHealthcare Drywall (minutes for 196 SF) framing Traditional 67% 110 savings Armstrong 36 Armstrong Tradition
Slide 45: Value Drivers in Action: Transformation
VALUE DRIVERS IN ACTION: TRANSFORMATION Applying LEAN and other tools to reduce cost and address customer needs OPERATIONS EXCELLENCE SUPPLY CHAIN TRANSFORMATION Leverage Evaluate All Critical Mass WAVE AXIOM Purposeful Worthington Components of Customization Manufacturing Digitalization Transformat
Slide 46: Financial Overview & Shareholder Value
FINANCIAL OVERVIEW : & SHAREHOLDER VALUE a VP & CHIEF FINANCIAL OFFICER
Slide 47: Financial Goals
F IN A N CIA L G O A L S • GROW EBITDA & FREE CASH FLOW EVERY YEAR • 10%+ RETURN ON CAPITAL • RAISE MARGINS • REDUCE EARNINGS VOLATILITY • BALANCED CAPITAL ALLOCATION • MODEST LEVERAGE / AMPLE LIQUIDITY (INVESTMENT GRADE) • RIGOROUS CAPITAL DISCIPLINE 47
Slide 48: Strong Capital Structure & Liquidity to Support Strategy
STRONG CAPITAL STRUCTURE & LIQUIDITY TO SUPPORT STRATEGY Strong balance sheet with investment grade credit ratings and nearly $600 million of liquidity available to grow business and reward shareholders 600 500 400 $ Millions 300 $500 200 $250 100 $200 $150 $50 $33 $33 $35 0 2020 2021 2022 2023 2024
Slide 49: Balanced Capital Allocation Strategy
BALANCED CAPITAL ALLOCATION STRATEGY Strong cash flows and significant liquidity support balanced approach to capital allocation focused on growth and rewarding shareholders NEARLY $3 BILLION OF CAPITAL DEPLOYED OVER PAST 10 YEARS Reinvest in the business to create value and support CAPITAL growth
Slide 50: M&A Strategy Re-Focused
M&A STRATEGY RE-FOCUSED Focus on strategic acquisitions close to our core and with an emphasis on strong cash flow We will leverage our core competencies but be willing to think differently Key M&A criteria: • Fit with existing businesses strategic plan/growth initiatives? • Does it make our busines
Slide 51: Consolidated Results
CONSOLIDATED RESULTS $ millions, except EPS FY2018 FY2019 3M FY2019 3M FY2020 Sales $3,582 $3,760 $988 $856 Adjusted EBITDA* $397 $330 $105 $78 % of sales 11.1% 8.8% 10.6% 9.1% Operating Income* $195 $142 $52 $26 % of sales 5.5% 3.8% 5.3% 3.1% EPS* $3.05 $2.60 $0.92 $0.62 Avg Invested Capital $1,696
Slide 52: Successful Joint Ventures
SUCCESSFUL JOINT VENTURES Serving automotive and construction end markets OVER • Successful JV portfolio built with trusted partners who help make a $930M business better versus the alternative of going solo • JVs managed to produce regular cash dividends that closely approximate earnings in dividen
Slide 53: Meaningful JV Earnings
MEANINGFUL JV EARNINGS JVs managed to produce regular cash dividends that closely approximate earnings $ MILLIONS $160 DIVIDEND to WII $140 (CASH FLOW) $120 $115 $110 $103 $101 EQUITY EARNINGS* $100 *Excludes $102 $101 Restructuring and $80 $90 Impairment Charges $87 $60 $40 $30 $29 $20 $30 $20 $0 2
Slide 54: Delivering on Goals
DELIVERING ON GOALS DELIVERING ON INVESTOR GOALS OVER THE LONG -TERM Adjusted EBITDA* ($ millions) $407 $397 $347 $328 $346 $330 $300 $250 $249 $187 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18 FY '19 Free Cash Flow ($ millions) $269 $241 $212 $142 $155 $166 $176 $145 $138 $101 FY
Slide 55: Rewarding Shareholders
REWARDING SHAREHOLDERS CONTINUING TO REWARD AND RETURN CAPITAL TO OUR SHAREHOLDERS OVER THE LONG-TERM Quarterly dividend ($/share) $0.23 $0.24 $0.20 $0.21 $0.18 $0.19 $0.15 $0.12 $0.13 $0.10 $0.10 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18 FY '19 FY '20 Q1 Share Repurchases (mill
Slide 56: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS • Growth strategy focused on value drivers of innovation, transformation and acquisition to enhance margins • Solid free cash flow and ample liquidity to execute on strategy • Rigorous capital discipline focused on high cash flow investments • Balanced approach to capital a
Slide 57: Q&A
4 WORTHINGTON INDUSTRIES Q&A
Slide 58: For Investor Day Replay
y MAKERS OF BETTER WORTHINGTONINDUSTRIES.COM FOR INVESTOR DAY REPLAY
Slide 59: Supplemental Data
4 WORTHINGTON INDUSTRIES SUPPLEMENTAL DATA
Slide 60: Supplemental Data: Adjusted EBITDA / Free Cash Flow
SUPPLEMENTAL DATA ADJUSTED EBITDA / FREE CASH FLOW FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Annual Annual Annual Annual Annual Annual Annual Annual Annual Annual Net Income $ 45.2 $ 115.1 $ 115.6 $ 136.4 $ 151.3 $ 76.8 $ 143.7 $ 204.5 $ 194.8 $ 153.5 Interest Expense 9.5 18.8 19.5 23.9 26.7
Slide 61: Supplemental Data: Adjusted Operating Income / EPS
SUPPLEMENTAL DATA ADJUSTED OPERATING INCOME / EPS $ millions, except EPS FY2018 FY2019 3M FY2019 3M FY2020 Operating Income $142 $145 $51 ($19) Restructuring and non recurring* 54 (3) 1 45 Operating Income Adjusted $195 $142 $52 $26 EPS $3.09 $2.61 $0.91 ($0.09) Restructuring and non recurring* (0.0
Slide 62: Contact / Safe Harbor Statement
CONTACT SAFE HARBOR STATEMENT Worthington Industries wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “Act"). Statements by the Company which are not historical information constitute "forward looking statements" within the
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