Worthington Steel, Inc. · NYSE:WS
Worthington Steel — Investor Day (October 2023)
67 slides from Worthington Steel's investor day presentation, Oct 11, 2023
Slide 1: Worthington Steel Investor Day 2023
Worthington Steel Investor Day 2023 | October 11, 2023 A premier, value-added steel processor with blue-chip customers and expanded opportunities in electrical steel and automotive lightweighting
Slide 2: Notes to Investors
Notes to Investors FORWARD LOOKING STATEMENTS. Worthington Industries, Inc. (“Worthington”) and Worthington Steel, Inc. (“Worthington Steel” or the “Company) wish to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the “Act”). Statements
Slide 3: Notes to Investors
Notes to Investors the impact of environmental laws and regulations or the actions of the United States Environmental Protection Agency or similar regulators which increase costs or limit Worthington and/or the Company’s ability to use or sell certain products; the impact of increasing environmental
Slide 4: Notes to Investors: Non-GAAP Measures
Notes to Investors NON-GAAP MEASURES. These materials present certain financial measures that are not calculated in accordance with U.S. generally accepted accounting principles, or GAAP. Management believes these non-GAAP measures provide useful supplemental information on the performance of the Co
Slide 5: Today's Presenters
Today’s Presenters Geoff Gilmore Jeff Klingler Tim Adams President & EVP & VP & Chief Executive Officer Chief Operating Officer Chief Financial Officer 4
Slide 6: Agenda
Agenda TIME TOPIC PRESENTER 1:00 PM Premier Steel Processor Geoff Gilmore – Chief Executive Officer Why Invest in Worthington Steel Geoff Gilmore – Chief Executive Officer 2:00 PM Our One-of-a-Kind Steel Processing Business Jeff Klingler – Chief Operating Officer 2:30 PM Financial & Capital Allocati
Slide 7: Premier Steel Processor
PREMIER STEEL PROCESSOR GEOFF GILMORE PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 8: Our Philosophy, Our Vision
4.0M NET SALES1 OUR PHILOSOPHY Our people-first philosophy is rooted in the Golden $3.4B TONS DELIVERED1 Rule: we treat our employees, customers, suppliers and shareholders as we would like to be treated 4500 Net Sales by End-Market3 PEOPLE 16% OUR VISION 3% 6% To boldly lead the metals industry int
Slide 9: The Worthington Steel Legacy
THE WORTHINGTON STEEL LEGACY Worthington Industries Introduction of founded in 1955 with Worthington Worthington Industries a focus on providing Established market leading joint ventures Business first public stock offering custom processed steel to bring additional value to our customers System in
Slide 10: Corporate Citizenship and Sustainability
Corporate Citizenship and Sustainability Continuing a Long History of Developing Employees, Practicing Good Citizenship and Protecting the Environment Reducing Our Environmental Footprint Enhancing Our 53% Supporting $2.9M given through the Worthington Workforce Communities Industries Foundation in
Slide 11: Robust Manufacturing Network Delivers Value-Added Solutions
Robust Manufacturing Network Delivers Value-Added Solutions 31 Manufacturing Facilities Primarily Located in North America1 North America Region Key Operations Strategically Located Proximate to Suppliers and Customers Expertise in Optimizing Supply Chains and Total Landed Cost Asia Pacific Re
Slide 12: Critical Supplier to Customers and End Markets
Critical Supplier to Customers and End Markets Diversified, Blue-Chip Customer Base With Multiple Decades-Long Relationships AUTOMOTIVE CONSTRUCTION ELECTRICAL AGRICULTURE OTHER ~53% OF SALES ~12% OF SALES ~10% OF SALES ~6% OF SALES ~19% OF SALES Note: Sales based on trailing twelve months ended Aug
Slide 13: Play Video: Driving Steel Forward
us WORTHINGTON mm STEEL PLAY VIDEOS DRIVING STEEL FORWARD
Slide 14: Why Invest in Worthington Steel
WHY INVEST IN WORTHINGTON STEEL GEOFF GILMORE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 15: Why Invest
1 Unique Steel Processor Well Positioned for Significant Growth WHY INVEST WORTHINGTON STEEL 2 Market-Leading Supplier to Attractive End Markets 3 Strategy Driven by Strong Leadership Team 14
Slide 16: Unique Steel Processor Well Positioned for Significant Growth
1 Unique Steel Processor Well Positioned for Significant Growth WHY INVEST WORTHINGTON STEEL 2 Market-Leading Supplier to Attractive End Markets 3 Strategy Driven by Strong Leadership Team 15
Slide 17: A One-of-a-Kind Business with a Unique Capability Set
Unique Market Leader Strategic A One-of-a-Kind Business with a Unique Capability Set #3 #1 #1 #1 #1 #2 Global manufacturer Producer of Tailor Trader of Steel Network of Independent Independent flat of electrical steel Welded Blanks in Futures by Volume Independent Producer of Hot rolled service cent
Slide 18: Unique Position in the Steel Supply Chain
Unique Market Leader Strategic Worthington Occupies a Unique Position in the Steel Supply Chain Mills WHERE WE OPERATE Service Centers Hot Roll Specialty Dimensional Melt Warehouse Conversion Processing Processing & Distribute Hot Roll Coil (HRC) Pickling / scale removal Specialty cold rolling, Slit
Slide 19: Joint Ventures Expand Our Processing Capabilities and Reach
Unique Market Leader Strategic Joint Ventures Expand Our Processing Capabilities and Reach TWB Serviacero Worthington Spartan Steel Coating WSCP1 (55%) (50%) (52%) (63%) • Partner: BAOSteel Tailored • Partner: Serviacero • Partner: Cleveland-Cliffs • Partner: Samuel, Son & Co. Blanks • Operates 3 st
Slide 20: Powered by the Worthington Business System
Unique Market Leader Strategic POWERED by the Worthington Business System TRANSFORMATION Leveraging Lean Practices and Technology • Systematic approach to business improvement • Optimizing working capital • Predictive analytics and automation enhance efficiency, reduce downtime and improve safety IN
Slide 21: Leveraging Business Intelligence
Unique Market Leader Strategic Leveraging Business Intelligence Price Risk Management Business intelligence minimizing risk across key inputs Pricing Mechanisms A portfolio of pricing mechanisms to align with customer needs Business Optimization Protect our margins and minimize working capital expos
Slide 22: Our Unique Positioning
Unique Market Leader Strategic Our Unique Positioning Sustained Growth in Recessionary Automotive Environment Drives Growth Through Market Cycles Shipped Tons by Fiscal Year (millions) Entrenched Strategic Customer Operating Relationships Footprint 4.2 4.3 4.1 4.0 3.9 3.8 3.9 3.6 3.6 3.4 Customized
Slide 23: Why Invest
1 Unique Steel Processor Well Positioned for Significant Growth WHY INVEST WORTHINGTON STEEL 2 Market-Leading Supplier to Attractive End Markets 3 Strategy Driven by Strong Leadership Team 22
Slide 24: Well Positioned to Capitalize on Key End Market Trends
Unique Market Leader Strategic Well Positioned to Capitalize on Key End Market Trends Decarbonization of Transportation Energy Transition Infrastructure Tempel TWB Galvanized Tempel Tempel Galvanized Electrical Steel Tailored Steel Electrical Steel Electrical Steel Steel Laminations Blanks Laminatio
Slide 25: Automotive Decarbonization
Unique Market Leader Strategic Automotive Decarbonization Projected Vehicle Production by Propulsion System – 2022 vs. 2030 CY 2022 CY 2030 9% 7% 26% 65% 28% 65% CY 2022 CY 2030 CY 2022 CY 2030 6% 12% 22% 19% 28% Europe 49% 13% 58% 23% 65% 82% 23% North America Greater China Source: S&P Global Mobil
Slide 26: Renewables Increasing Share of Power Generation
Unique Market Leader Strategic Renewables Year-over-Year Growth Increasing Share of (terawatt hours, 2022 vs. 2021) Power Generation Renewables *540 14% Global Electricity Nuclear -124 Generation (terawatt hours) Hydro 45 1% Legacy 183 62% 64% *Of incremental electricity generation in 2022, renewabl
Slide 27: Infrastructure Growth Driving Transformer Equipment Demand
Unique Market Leader Strategic Infrastructure Growth Driving Transformer Equipment Demand Near Term (Through 2026) Long Term (2026 Through 2040) $18.8B $7.7B $6.1B 2021 Transformer Grid Hardening Renewables Energy Storage Data Centers 2026 Transformer Grid Decarbonization EV 2040 Transformer Equipme
Slide 28: Federal Infrastructure Investment is Supported by Steel
Unique Market Leader Strategic Federal Infrastructure $128B Power & Water Infrastructure Investment is Supported by Steel $54B Transit, Clean Energy Transport & EV Charging $135B Airports, Roads & Bridges $500+ Billion of Investment Will Require $17B Port & Waterways ~45M Tons of Steel $66B Passenge
Slide 29: Why Invest
1 Unique Steel Processor Well Positioned for Significant Growth WHY INVEST WORTHINGTON STEEL 2 Market-Leading Supplier to Attractive End Markets 3 Strategy Driven by Strong Leadership Team 28
Slide 30: Three Strategic Growth Pillars Expected to Drive Our Next Phase of Growth
Unique Market Leader Strategic Three Strategic Growth Pillars Expected to Drive Our Next Phase of Growth Focused, strategic investments Expand value-added offerings Drive continuous improvement in the rapidly growing electrical through disciplined strategic using the steel market capex and acquisiti
Slide 31: Proven Management Team Focused on Value Creation
Unique Market Leader Strategic Proven Management Team Focused on Value Creation Nearly 200 Combined Years of Experience Managing Through Steel Price Cycles and Shifting Macroeconomic Climates with Proven Ability to Execute M&A GEOFF GILMORE JEFF KLINGLER TIM ADAMS JOE HEUER MELISSA DYKSTRA President
Slide 32: Our One-of-a-Kind Steel Processing Business
OUR ONE-OF-A-KIND STEEL PROCESSING BUSINESS JEFF KLINGLER EVP & CHIEF OPERATING OFFICER
Slide 33: Our Success Begins with Safe and High Performing People
Unique Market Leader Strategic Our Success Begins with Safe Employee Safety is Top of Mind and High Performing People • 18 Worthington Steel facilities are ISO 45001 certified (41)% • SafeWorks programs, policies and employee engagement initiatives are the core of our safety culture 3.70 “ 24 Month
Slide 34: Our Differentiated Business Model Drives Worthington Steel Forward
Unique Market Leader Strategic Our Differentiated Business Model Drives Worthington Steel Forward Beginning with Material Worthington Steel Offers a Wide Range of Value-Added Serving Customers Across from our Mill Partners Processing Capabilities and Services Attractive End Markets Entrenched Strate
Slide 35: Materials Support and Solutions Team
Unique Market Leader Strategic Materials Support and Solutions Team World Class Technical Team Technical Service Offerings 21 400+ Consistent Quality Control & Field & Plant Metallurgists Years of Combined Experience Assurance Knowledge Product 6 4 Experts “Cradle to Grave” Development Material Scie
Slide 36: Case Study: Identifying and Solving for Pitted Steel
Unique Market Leader Strategic CASE STUDY: Identifying and Solving for Pitted Steel PROBLEM ANALYSIS SOLUTION Customer was paying for buffing and Microstructurally examined the Defined optimized processing and polishing to reduce a rough appearance on steel and determined process microstructure para
Slide 37: The Worthington Business System Drives Continuous Improvement
Unique Market Leader Strategic The Worthington Business System Drives Continuous Improvement Goal: Margin Expansion Through Operational Excellence Focus: Columbus Tandem Mill Objectives • Improve gauge-reduction performance to reduce scrap and processing time • Leverage insights from various holisti
Slide 38: Carbon Flat Rolled Steel Processing
Carbon Flat Rolled Steel Processing Market leading provider of carbon flat-rolled steel – a key supplier across the value chain 37
Slide 39: High Quality Steel Processing for North American Customers
Unique Market Leader Strategic High Quality Steel Processing for Hot Roll Conversion North American Customers 15 Manufacturing Locations Pickling Hot Dip Galvanizing North America Region Specialty Processing Cold Rolling Temper Passing Heavy Gauge Blanking Annealing Asia Pacific Region Dimensional P
Slide 40: Electrical Steel Laminations
Electrical Steel Laminations Tempel is a leading manufacturer of precision magnetic steel laminations for the automotive, transformer, industrial motor, and generator industries • Acquired Tempel Steel on December 1, 2021 39
Slide 41: Delivering Electrical Steel Laminations to Customers Globally
Unique Market Leader Strategic Delivering Electrical Steel Electric Motor Laminations Laminations to Customers Globally 5 Manufacturing Locations North America North RegionAmerica Region Transformer Laminations Asia Pacific Region China India Electrical Steel Other Processing Locations 40
Slide 42: Offering a Full Suite of Electrical Steel Capabilities
Unique Market Leader Strategic Offering a Full Suite of Electrical Steel Capabilities Providing a ‘One-Stop’ Shop to Service Our Customers’ Most Demanding and Performance-Critical Applications Design & Engineering Precision Tooling Design Rapid Prototyping Stamping Core Assembly Annealing Aluminum I
Slide 43: Electrical Steel Applications Across the Automobile
Unique Market Leader Strategic Electrical Steel Applications Across the Automobile Variable Cam Timing Motor Windshield Wiper Motor Electric Turbo Motor Electric Traction Cabin HVAC Motor Sunroof Motor Transmission Motors Fluid Pump Motor Liftgate Motor Fuel Pump Motor Hybrid Motor / 48V BAS Electri
Slide 44: Supporting the Transition to a More Sustainable Future
Unique Market Leader Strategic Supporting the Transition to Provider of Critical Electrical Steel Solutions for a More Sustainable Future an Increasingly Electrified Energy Infrastructure Providing laminations for motors, generators, and transformer cores used in: 3 1 1 2 4 Power Generation Renewabl
Slide 45: Lightweighting
Lightweighting The TWB Company is a North American leader in Tailor Welded Solutions with products used to reduce weight, lower cost, improve material utilization and consolidate parts • Formed in 1992, the TWB Company is a joint venture between Worthington Steel (55%) and BAOSteel Tailored Blanks (
Slide 46: Lightweighting Solutions for North American Customers
Unique Market Leader Strategic Lightweighting Solutions for We create value for our customers through North American Customers lightweighting, material utilization and cost management 11 Manufacturing Locations Tailor Welded Finished Blanks Part North AmericaNorth Region America Region Asia Asia Pac
Slide 47: New Product Development to Meet Evolving Customer Needs
Unique Market Leader Strategic New Product Development to Meet Evolving Customer Needs Driving Market Share Gains and Customer Intimacy Through a “Voice of Customer” Approach to New Product Development Continued Enhancements to Core Offerings At the Forefront of EV Battery Box Design 3rd Generation
Slide 48: A sophisticated business built on a legacy of customer-focused innovation
A sophisticated business built on a legacy of customer-focused innovation. 47
Slide 49: Financial & Capital Allocation Overview
FINANCIAL & CAPITAL ALLOCATION OVERVIEW TIM ADAMS VP & CHIEF FINANCIAL OFFICER
Slide 50: Financial Highlights
Unique Market Leader Strategic Financial Strong growth potential with exposure to fast growing end markets Highlights Well Positioned Balance sheet strength and ample liquidity to capitalize on market opportunities to Drive Strong Shareholder Value Creation. Disciplined strategic capital investments
Slide 51: Key Financial Metrics
Unique Market Leader Strategic Key Financial Metrics Trailing Twelve Months ended August 31, 2023 Net Sales Volume Adjusted EBITDA $3.4B 4.0M tons $244M (7.1% EBITDA Margin) Free Cash Flow1 Capex Net Debt2 $228M $52M $120M (1.5% of Net Sales) at separation Note: Metrics are presented as of the trail
Slide 52: History of Resilient Performance
Unique Market Leader Strategic History of Resilient Performance Net Sales ($M) & Volumes (M Tons) Adjusted EBITDA ($M) | Margin (%) $4,069 $290 $3,608 $266 $3,439 $244 $206 Strategic Acquisitions: 13% $2,127 7% 7% 6% 4.2 4.3 4.0 4.0 FY2021A FY2022A FY2023A TTM (Aug) Adjusted EBITDA ($M) EBITDA Margi
Slide 53: Margin Expansion Opportunities: Levers for Improved Performance
Unique Market Leader Strategic Margin Expansion Opportunities: Levers for Improved Performance Strategy to Target Double-Digit Adj. EBITDA Margins 10%+ 7% TTM (Aug) Adj. Worthington Business Product Mix New Products Acquisitions Long-Term Target EBITDA Margin System Adj. EBITDA Margin Strategy to Wo
Slide 54: Operating Cash Flow Generation
Unique Market Leader Strategic Operating Cash Flow Generation Operating Cash Flow ($M) Operating Working Capital1 ($M) $850 $1,600 $890 $865 $315 $646 $280 $551 $481 $396 $153 $39 FY2021A FY2022A FY2023A TTM (Aug) FY2021A FY2022A FY2023A TTM (Aug) Capex $29 $36 $45 $52 Operating Working Capital ($M)
Slide 55: How Worthington Steel Mitigates Volatility in Steel Pricing
Unique Market Leader Strategic How Worthington Steel Mitigates Volatility in Steel Pricing Historical Steel Price ($/ton) How Worthington Steel Manages Volatility $2,000 $1,600 • FIFO method used to cost inventory $1,500 • During times of significant steel price $1,000 increases, inventory holding g
Slide 56: Capital Investments Intended to Strengthen and Grow Market Position
Unique Market Leader Strategic Capital Investments Intended to Strengthen and Grow Market Position Capital Expenditures ($M) ~$35-40M / Year Expected Go Forward Run-Rate Maintenance Capex Spend Strategic Capital Investments $16 $12 • Increasing Lightweighting Capabilities / Capacity $8 • Hot Galvani
Slide 57: Focused Strategic Investments in Electrical Steel
Unique Market Leader Strategic Focused Strategic Investments in Electrical Steel Mexico: Increase Capacity to Meet Growing xEV Demand • Expect to invest in a capacity expansion over 24-36 months • Adding ten new presses designed to produce electrical steel laminations used in xEV traction motors • B
Slide 58: Expand Value-Added Offerings
Unique Market Leader Strategic Expand • Focus on opportunities that are accretive to earnings & Value-Added margins Offerings • Seek adjacent capabilities to broaden portfolio and enhance our strategic position Through Capex Add zinc shot pot & Acquisitions • Acquisitions target businesses with pote
Slide 59: Modest Leverage and Ample Liquidity
Unique Market Leader Strategic Modest Leverage and Ample Liquidity Illustrative Example of Potential Capital Commentary Structure, Subject to Change (US$M) • Intend to establish a flexible capital structure Total Debt1 $150 with modest leverage and ample liquidity (-) Cash1 (30) • Worthington Steel
Slide 60: Disciplined Framework Designed to Drive Shareholder Value
Unique Market Leader Strategic Disciplined Framework Designed to Drive Shareholder Value Maintain Ample Liquidity and Financial Flexibility to Support Strategic Initiatives and Resiliency Through the Cycle Organic Strategic Shareholder Growth M&A Return • Maintain operations in • Target acquisition
Slide 61: Concluding Remarks
CONCLUDING REMARKS GEOFF GILMORE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 62: Reasons to Invest in Worthington Steel
1 Unique Steel Processor Well Positioned for Significant Growth REASONS TO INVEST 2 Market-Leading Supplier to Attractive End Markets 3 IN WORTHINGTON STEEL Strategy Driven by Strong Leadership Team 61
Slide 63: Questions
QUESTIONS ws: WORTHINGTON Mp. STEEL
Slide 64: Appendix
Appendix ws: WORTHINGTON Mp. STEEL
Slide 65: Update on Separation Into Two World-Class Companies
Update on Separation Into Two World-Class Companies Key Events Expected Timing Public Announcement of Separation September 29, 2022 Public Form 10 Filing October 4, 2023 Investor Day Presentation October 11, 2023 Target for Start of Regular Way Trading December 2023 Note: There can be no assurance t
Slide 66: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The steel processing business of Worthington Industries, Inc. Fiscal Year Ended TTM (Worthington Steel) has provided in this presentation certain May 31, August 31, financial information that has not been prepared in accordance with (In millions) 2021 20
Slide 67: Our Philosophy
OUR PHILOSOPHY adopted in 1961, is the foundation of our culture EARNINGS SUPPLIERS The first corporate goal for Worthington Industries is to earn money for its We cannot operate profitably without those who supply the quality materials we shareholders and increase the value of their investment.