Worthington Enterprises, Inc. · NYSE:WOR
Worthington Enterprises — Worthington Industries — Investor Day (November 2019)
38 slides from Worthington Enterprises's investor day presentation, Nov 13, 2019
Slide 1: Steel Processing Review
UA STEEL PROCESSING REVIEW e GEOFF GILMORE EXECUTIVE VP & COO
Slide 2: Steel Processing Overview: Vision, Who We Are Today, Growth Strategy
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 Top 5 purchaser of flat rolled
Slide 3: Steel Processing Profile
Sales By End Market Sales by Product Mix FY19 FY19 AUTO CORE PRODUCTS Profile STEEL PROCESSING AGRICULTURE CONSTRUCTION HEAVY TRUCK Carbon flat rolled steel processing - Broad range of metal products in sheet, coil and strip configurations, as well as a number of processing capabilities from special
Slide 4: Value drivers in action: Transformation
Value drivers in action: Transformation Data driven LEAN events to improve our businesses Example of Transformation project at core steel facility Issue: Sales & operations planning receiving inaccurate information resulting in buying unneeded material and taking line time away from other orders Wha
Slide 5: Heidtman Steel Cleveland Acquisition
Heidtman Steel Cleveland Acquisition Acquired for $30 million in October 2019 Consistent with strategy of consolidating higher value-added niches Expands pickling capabilities and strengthens position in northeast Ohio region Close to our core and expect synergies from consolidation 278,000 square-f
Slide 6: Value drivers in action: Innovation, tailor welded applications
Expanded applications into truck frames improving light weighting, crash energy management, and material utilization Less than 20 applications all tailored blanks 50+ applications by expanding capabilities to also include tailor welded coils, aluminum blanks and hot formed blanks Value drivers in ac
Slide 7: 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* excl. Restructuring $143 $93 $40 $6 % of sales 6.3% 3.8% 6.0% 1.2% Capital Expenditures $32 $39 $9 $8 Avg Invested Capital $510 $550 $542 $538
Slide 8: Pressure Cylinders Review
iW PRESSURE CYLINDERS REVIEW & Ne GEOFF GILMORE EXECUTIVE VP & COO
Slide 9: Pressure Cylinders Overview: Vision, Who We Are Today, Growth Strategy
Vision To be recognized as the world’s leading producer of pressure vessels and related products, offering unmatched safety, quality, service and commitment to our customers Who We Are Today Leading global manufacturer of pressure cylinders and related products, serving over 4,000 customers in 90+ c
Slide 10: Pressure Cylinders Profile
Profile Sales By SBU SBU Product Mix Industrial Products - Broad line of pressure cylinders and cryogenic vessels, tanks and trailers for industrial gas storage and transportation Consumer Products – Market-leading brands with products for jobsite, home and outdoor activities Oil & Gas Equipment - C
Slide 11: Value drivers in action: Transformation at Amtrol facility
Value drivers in action: Transformation Applying our business system to an acquired facility to improve performance Example of Transformation Event at acquired Amtrol facility Issue: Low on-time delivery and extended lead times were negatively impacting customer relationships and ability to sell mor
Slide 12: Value drivers in action: Innovation, cannabis extraction cylinders
Creating innovative solutions to meet the needs of customers and expand into new markets Value drivers in action: innovation Cannabis Extraction Cylinders Need for cleaner alternative to traditional steel 100# tank identified Voice of customer work conducted to understand need and size opportunity R
Slide 13: Cylinders earnings growth driven by 16 acquisitions
Cylinders has experienced meaningful earnings growth over the past 10 years driven by 16 acquisitions Value drivers in action: m&a Cylinders Sales ($M) 10.8% CAGR Cylinders Operating income ($M) 11.8% CAGR
Slide 14: 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* excl. Restructuring $80 $63 $16 $30 % of sales 6.6% 5.3% 5.4% 9.7% Capital Expenditures $33 $38 $10 $7 Avg Inves
Slide 15: Worthington Industries Break
4 WORTHINGTON INDUSTRIES BREAK
Slide 16: WAVE Review
4 LA WAVE REVIEW DOUG WISEL CFO, WAVE
Slide 17: WAVE Joint Venture Overview
Established in 1860 $975 million in sales 2018 11 plants in North America; 2,500 employees Market leader; strongest brand Established in 1955 $4.35 billion sales in fiscal 2019 70 facilities in 7 countries; 10,500 employees Leading global diversified metals manufacturing company WAVE Joint Venture O
Slide 18: WAVE Profile
Profile Contribution to WI Equity Income ($M) MARKETS CORE PRODUCTS 6.7% CAGR Sustainable revenue and EBITDA growth with creative fabricated architectural metal components, focusing on superior customer value, industry leading manufacturing, and talent development resulting in low cost construction
Slide 19: Value drivers in action: Innovation, meeting design trends
Meeting current design trends Value drivers in action: innovation Providing creative solutions to customers to address their need for speed and lower their total cost Market Dynamics Skilled labor shortage Integrated ceiling solutions Integrated ceiling solutions Compressed construction schedules In
Slide 20: WAVE product portfolio and installation savings
ARCHITECTURAL SPECIALTIES AXIOM $ WAVEPRODUCTPORTFOLIO United Healthcare 36 110 Armstrong Traditional Typical room installation (minutes for 196 SF) Armstrong Traditional 115 200 Armstrong Traditional Armstrong Traditional Drywall framing 67% savings Perimeter pockets 43% savings ACOUSTICAL TILE AND
Slide 21: Value drivers in action: Transformation, operations excellence
Workforce Talent Development Advancement of Critical KPIs Project Execution Velocity & Performance Maturing Lean Culture Maintenance Reliability Steel & Aluminum Price Risk Management Indirect Spending Freight Inventory / S&OP Mass Customization Manufacturing Purposeful Digitalization WAVE AXIOM Man
Slide 22: Financial Overview & Shareholder Value
FINANCIAL OVERVIEW “it. & SHAREHOLDERVALUE ———™ JOE HAYEK VP & CHIEF FINANCIAL OFFICER
Slide 23: Financial goals
Financial goals 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
Slide 24: 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 $ Millions Debt Maturity Private Placement 4.60% Public Bond 4.55% FIXED RATE A/R Sec.* L+ .75% R
Slide 25: 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 Capital Expenditures Acquisitions Dividends Share Repurchases Reinvest in the business to create value and support growth FY20
Slide 26: 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 business be
Slide 27: Consolidated Results
Consolidated Results *Adjusted for restructuring and non-recurring items. See supplemental data schedules in appendix for reconciliation of adjustments. $ 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
Slide 28: Successful joint venture portfolio
Successful JV portfolio built with trusted partners who help make a business better versus the alternative of going solo JVs managed to produce regular cash dividends that closely approximate earnings Successful Joint Ventures Business Ownership Created WAVE Architectural and acoustical grid ceiling
Slide 29: Meaningful JV Earnings
*Excludes Restructuring and Impairment Charges DIVIDEND to WII (CASH FLOW) EQUITY EARNINGS* Equity Earnings $ MILLIONS WAVE (50%) $82.7 $78.3 $77.5 $82.3 $22.0 $23.9 ClarkDietrich (25%) $14.6 $17.3 $9.8 $8.6 $3.5 $4.1 Servicero (50%) $6.3 $7.2 $8.8 $8.1 $0.8 $0.2 Artiflex (50%) $10.3 $7.0 $4.9 $2.0
Slide 30: Delivering on Goals
DELIVERING ON GOALS *Adjusted for restructuring and non-recurring items. See supplemental data schedules in appendix for reconciliation of adjustments Delivering on investor goals over the long-term Adjusted EBITDA* ($ millions) Free Cash Flow ($ millions)
Slide 31: Rewarding Shareholders
REWARDING SHAREHOLDERS Continuing to reward and return capital to our shareholders over the long-term Quarterly dividend ($/share) Share Repurchases (million shares)
Slide 32: 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 allocatio
Slide 33: Q&A
4 WORTHINGTON INDUSTRIES Q&A
Slide 34: Makers of Better: Investor Day Replay
y Ll ( MAKERS OF BETTER | WORTHINGTONINDUSTRIES.COM FOR INVESTOR DAY REPLAY
Slide 35: Supplemental Data
4 WORTHINGTON INDUSTRIES SUPPLEMENTAL DATA
Slide 36: Supplemental Data: Adjusted EBITDA / Free Cash Flow
Supplemental Data Adjusted EBITDA / Free Cash Flow Note: FY2019 results were negatively impacted by a $13 million charge in Cylinders related to a tank replacement program in Q3 which is included in the numbers above. Cash Flow ($ in Millions) FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Annual
Slide 37: Supplemental Data: Adjusted Operating Income / EPS
Supplemental Data Adjusted Operating Income / EPS *FY2018 reflects pre-tax restructuring charges of $54 million ($0.45/share) as well as a one-time benefit of $0.49/share due to the Tax Cuts and Jobs Act. FY2019 reflects a pre-tax restructuring gain of $3 million ($0.01/share). 3M FY2019 reflects $1
Slide 38: 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
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