AGM 2021

Sep 29, 2021

Slides

Good day, and welcome to the Worthington Industries Inc. 2021 Annual Meeting of Stockholders. I would now like to turn the conference over to John McConnell. Please go ahead. Thank you. Good afternoon and welcome Welcome to Worthington Industries Annual Meeting of Shareholders. I am John McConnell, Executive Chairman. On the call with me today for our virtual annual meeting are President and Chief Executive Officer, Andy Rose Vice President and Chief Financial Officer, Joe Hayek and Vice President, General Counsel and Secretary, Patrick Kennedy Ms. Amy Pavich of Broadridge Corporate Insure Solutions, our transfer agent has been appointed to serve as the Inspector of We also have 2 representatives from KPMG LLP, The company's independent registered public accounting firm on the call with us today for the annual meeting, Brian Ramsey and Mark Scheerhold. I now call the annual meeting to order. We remind you that any forward looking statements made by the company's management during this annual meeting are subject to the Safe Harbor statement found in the company's SEC filings. Mr. Kennedy will record the minutes of this annual meeting. I have Mr. Kennedy's affidavit that a written notice of the Internet availability of proxy materials for this annual meeting was mailed beginning August 16, 2021 to all shareholders of record as of August 2, 2021, the record date of this annual meeting. On August 16, 2021, the company provided these shareholders of record with access to our online proxy materials, Including the company's written notice of this annual meeting, the company's 2021 annual report for the fiscal year ended May 31, 2021 and the company's proxy statement and the form of proxy solicited on behalf of the company's Board of Directors. Although This annual meeting is a virtual meeting. You will be able to participate in the annual meeting, vote your common shares and submit your questions by visiting the website or this annual meeting identified in the company's proxy materials. If you have not yet voted your common shares and wish to do so, we ask that you begin that process now through that website. You will need to have your control number shown in the box on your proxy card or the notice of Internet availability of proxy materials to complete your vote. If you have already voted, you do not need to vote again. If there are questions you may have related to this annual meeting or the company's business, You may now send them in through the website for this annual meeting. Just follow the instructions for submitting the question. If you have any questions if any questions are submitted, we will answer all valid questions after we finish the formal part of this meeting. We will now proceed with our annual meeting. Mr. Kennedy informs me that we have a quorum present represented by the shareholders participating Person or by proxy. I will ask Mr. Kennedy present the matters before this annual meeting. Thank you, John. The first matter is the election of 3 directors, each to serve a term of 3 years to expire at the 2024 Annual Meeting of Shareholders. The company's Board of Directors has nominated John B. Blystone, Mark C. Davis and Sydney A. Rebeau for reelection to the Board of Directors. There were no other nominations submitted in accordance with the company's code of regulations. The second matter is an advisory vote on the approval of the company's executive compensation as reported in the proxy statement for this annual meeting. The company is asking shareholders to approve the following advisory resolution, resolved that the shareholders of Worthington Industries Inc. The company prove on an advisory basis the compensation of the company's named executive officers as disclosed in the company's proxy statement for its 2021 annual meeting of shareholders Pursuant to the executive compensation disclosure rules in Item 402 of SEC Regulation SK, including the compensation discussion and analysis, the fiscal 2021 summary compensation table and the related executive compensation tables, notes and narratives. The third matter is the ratification of Selection of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending May 31, 2022. The company's audit committee has selected KPMG LLP to serve in this capacity. And the 4th and final matter is a vote on a shareholder proposal related to the company's climate policy, If that shareholder proposal is properly presented at this annual meeting, the shareholder proposal was submitted by As You Sell on behalf of Lutra Living Trust. A representative of As You Sow will now present the shareholder proposal on pre recorded statement that has been provided to the company. As a reminder, the company's directors are recommending the shareholders vote against the shareholder proposal submitted by As You I will now ask the recorded statement from Diana Myers, a representative of the as you so be played. Ladies and gentlemen, thank you for the opportunity to present Item number 4, Addressing Net 0 Greenhouse Gas Reduction Goals. I am Diana Myers speaking on behalf of shareholder representative, As You Sell. This proposal asks Worthington to disclose its ambitions for net 0 emissions set interim short, medium and long term greenhouse gas reduction goals and disclose its strategic plans to achieve its decarbonization targets. These are collectively indicators 1 through 5 of the Climate Action 100 plus Net Zero Benchmark, a framework developed by investors to ensure climate accountability from companies and promote transparency around climate disclosures for shareholders. The CA 100 Plus Coalition is made up of 6 15 investors with over $55,000,000,000,000 of These investors are increasingly concerned about material climate risk to their companies and their portfolios. They recognize that the cost of climate change are growing and it is becoming increasingly difficult to avoid losses associated with climate change. BlackRock's CEO, one of the largest asset managers in the world, writes that there is no company whose business It is imperative that companies like Worthington set net zero climate goals and disclose a plan for how their business model will be prepared to compete and thrive in a net zero economy. Currently, our company discloses its on-site Scope 1 and 2 greenhouse gas emissions. It is also undertaking limited energy efficiency programs for its manufacturing facilities. These steps, while a good start, are no longer adequate to the task at hand. To avoid the worst impacts of climate change, every company must take responsibility for its enterprise wide greenhouse gas emissions, including supply chain and product emissions to keep global warming at 1.5 degrees. It is in Worthington's best interest to take advantage of this opportunity to become a climate leader rather than a laggard and to ensure it is prepared for the transition to a net zero economy. We urge a yes vote on this resolution asking Worthington Industries to report its ambitions and timeframes for reducing emissions in alignment with science based climate standards. Thank you for the opportunity to present on this important issue. Thank you, Ms. Myers. The matters submitted for consideration at this annual meeting are now ready to be acted upon. Prior to reviewing the results of the voting, Mr. Hayek will review the company's financial results for fiscal 2021 as well as our fiscal 2022 Q1 results. Our quarterly earnings conference call was held this afternoon just prior to this annual meeting. A recording of that call is available on the corporate website. Joe, it's all up to you. Thank you, John. We'll go through our presentation and highlight some of our financial metrics from fiscal year 2021. Net earnings excluding restructuring impairment and other non recurring items in fiscal 2021 was $282,000,000 or $5.24 per share. We generated record results in fiscal 2021 as demand from our major end markets recovered relative to the COVID related shutdowns we experienced in late fiscal 2020. We certainly faced a challenging operating environment in fiscal 2021, which included Steel supply shortages, semiconductor slowdowns and limited labor availability, but our team stepped up to the challenge to work safely and continue to serve the needs of our customers. That effort led to meaningful year over year earnings growth. Now a couple of comments on the Financial strength of the company. We have a strong balance sheet with low cost debt and solid cash flows. Fiscal year end, we had $710,000,000 of debt and incurred annual interest expenses of $30,000,000 both of which have trended down in the last Our cash balance was $640,000,000 at fiscal year end. The solid operating cash flows enabled us Continue to return capital to shareholders and grow our business. These cash flows were supplemented by the exceptional return we realized on our investment in Nikola Corporation, generated a one time pre tax cash proceeds of $634,000,000 We believe we are well positioned to continue to pursue Turning to some key recent developments. Effective with the start of fiscal 2022, we divided our Pressure Cylinder segment into 3 new reporting segments: Consumer Products, Building Products and Sustainable Energy Solutions. This change better aligns our businesses around the attractive end markets that we serve and should provide investors with additional insights on each business' performance. In June, we announced the acquisition Shiloh's U. S. Blank Light Business for $105,000,000 The business generated adjusted EBITDA of $20,000,000 in calendar 2020. We believe it will be a valuable and strategic addition to our steel processing segment and our TWB joint venture, enabling us to expand our higher margin laser welded and blanking offerings, both of which play an important role in light weighting efforts in the automotive market. In August, We extended the maturity of our $500,000,000 unsecured revolving credit facility to August 2026. Following that extension, our next debt maturity not until August of 2024. The credit facility remains undrawn and should provide ample liquidity future business needs. During the Q1 of fiscal 2022, we repurchased 1,000,000 shares of our common stock for 60 point $8,000,000 That follows the more than 4,000,000 shares we repurchased during fiscal 2021. Following the Q1 repurchases, Approximately 8,300,000 shares remaining under our share repurchase authorization. Earlier today, the Board declared a $0.28 per share dividend, which will be paid in December of 2021. Also, earlier today, we announced results from our Q1 of fiscal 2022. In the quarter, we delivered record earnings per share of $2.46 per share excluding restructuring and impairment charges and special items compared to $0.64 in the prior year quarter. As I mentioned previously, We divided Pressure Cylinders into new reporting segments and today was the 1st day we reported our results under the new structure. For our Q1 of fiscal 2022, we reported consolidated net sales of $1,100,000,000 and adjusted EBIT of 174,000,000 Steel Processing contributed the majority of sales and $107,700,000 of EBIT. Steel continued to experience healthy demand, But their metrics also benefited significantly due to the current high steel price environment as well as inventory holding gains. While smaller in size, our Building Products and Consumer Products segments have a higher margin profile and contributed $48,800,000 $20,600,000 respectively to EBIT. Sustainable Energy Solutions had an EBIT loss of $2,600,000 during the quarter as this business is in the early stages positioning itself to serve the growing hydrogen and compressed natural gas economies over the long term. At this point, I will turn the call back over to John. Thank you, Joe. Voting on the matters presented for consideration at this annual meeting has closed. I will ask Mr. Kennedy to present the results of the voting. The report of the Inspector of Election shows that in excess of 89% of the outstanding common shares of the company were represented at this annual meeting. The 3 director nominees of the Board of Directors were re elected to the Board by the company's shareholders. The advisory resolution to approve the company's executive compensation was approved by the company's shareholders. The selection of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending May 31, 2022 was ratified by the company's shareholders. The shareholder proposal has failed to obtain the requisite votes. Thank you, Patrick. Brian Ramsey and Mark Sharehold, representatives of KPMG LLP, the company's independent registered public accounting firm are present at this annual meeting. Are there any questions for Mr. Ramsey or Mr. Sherwood? At this time, we have no questions submitted to the website for this annual meeting. So with no other matters to address, I declare our 2021 Annual Meeting to Shareholders adjourned. Thank you for joining us today. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.