IR OVERVIEW: Q3 FY2024
Notes to Investors
FORWARD-LOOKINGSTATEMENTS. Selected statements in this presentation constitute "forward-looking statements," as that term is used in the Private Securities Litigation Reform Act of 1995 (the "Act"). Worthington Enterprises, Inc. (the "Company" or "Worthington") wishes to take advantage of the safe harbor provisions included in the Act. Forward-looking statements reflect the Company's current expectations, estimates or projections concerning future results or events. These statements are often identified by the use of forward-looking words or phrases such as "believe," "expect," "anticipate," "may," "could," "should," "would," "intend," "plan," "will," "likely," "estimate," "project," "position," "strategy," "target," "aim," "seek," "foresee" and similar words or phrases. These forward-looking statements include, without limitation, statements relating to: expected cash positions, liquidity and ability to access financial markets and capital; outlooks, strategies or business plans; anticipated benefits of the separation of the Company's steel processing business (the "Separation); expected financial and operational performance of, and future opportunities for, the Company following the Separation; the Company's performance on a pro forma basis to illustrate the estimated effects of the Separation on historical periods; the tax
treatment of the Separation transaction; expected performance, growth, demand, financial condition or other financial measures; pricing trends for raw materials and finished goods; additions to product lines and opportunities to participate in new markets; anticipated working capital needs, capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain; the ability to make acquisitions, form joint ventures and consolidate operations and the projected timing, benefits and costs related thereto; expectations for the economy and markets; expectations for shareholder value; effects of the novel coronavirus ("COVID-19") pandemic; and other non-historical matters. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, those that follow: the uncertainty of obtaining regulatory approvals in connection with the Separation, including rulings from the Internal Revenue Service; the ability to successfully realize the anticipated benefits of the Separation; the impacts of the COVID-19 pandemic; the effect of conditions in national and worldwide financial markets, including inflation, increases in interest rates and economic recession, and with respect to the ability of financial institutions to provide capital; the impact of tariffs, the adoption of trade restrictions affecting the Company's products or suppliers, a U.S. withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; changing oil prices and/or supply; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company's products; volatility or fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities, labor and other items required by operations (especially in light of the COVID-19 pandemic and Russia's invasion of Ukraine); effects of sourcing and supply chain constraints; the outcome of adverse claims experience with respect to workers' compensation, product recalls or product liability, casualty events or other matters; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive, construction and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts; the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from transformation initiatives, on a timely basis; the overall success of, and the ability to integrate, newly-acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom; capacity levels and efficiencies, within facilities, within major product markets and within the industries in which the Company participates as a whole; the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, labor shortages, interruption in utility services, civil unrest, international conflicts (especially in light of Russia's invasion of Ukraine), terrorist activities or other causes; changes in customer demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability (especially in light of Russia's invasion of Ukraine), foreign currency exchange rate exposure and the acceptance of the Company's products in global markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; the effect of inflation, interest rate increases and economic recession, which may negatively impact the Company's operations and financial results; deviation of actual results from estimates and/or assumptions used by the Company in the application of its significant accounting policies; the level of imports and import prices in the Company's markets; the impact of environmental laws and regulations or the actions of the U.S. Environmental Protection Agency or similar regulators which increase costs or limit the Company's ability to use or sell certain products; the impact of increasing environmental, greenhouse gas emission and sustainability regulations or considerations; the impact of judicial rulings and governmental regulations, both in the U.S. and abroad, including those adopted by the U.S. Securities and Exchange Commission ("SEC") and other governmental agencies as contemplated by the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; the effect of healthcare laws in the U.S. and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase the Company's healthcare and other costs and negatively impact the Company's operations and financial results; the effect of tax laws in the U.S. and potential changes for such laws, which may increase the Company's costs and negatively impact its operations and financial results; cyber security risks; the effects of privacy and information security laws and standards; and other risks described from time to time in the Company's filings with the SEC, including those described in "Part I - Item 1A. - Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2023, and its subsequent filings with the SEC. Forward-looking statements should be construed in the light of such risks. It is impossible to predict or identify all potential risk factors. Consequently, readers should not consider the foregoing list to be a complete set of all potential risks and uncertainties. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made, which was March 20, 2024. The Company does not undertake, and hereby disclaims, any obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
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Q3 FY2024 Highlights
Consolidated net sales declined 8.5% year over year, but gross margin increased to 23.1% from 22.8% and Adj. EBITDA margin increased to 21.1% from 20.3% helping to offset the lower sales
Building Products Adj. EBITDA margin increased to 35.8% from 31.6% in the prior year quarter helping to partially offset a 19% reduction in net sales due to an unfavorable shift in product mix along with 2% lower volumes
Consumer Products Adj. EBITDA was up 22% compared to the prior year quarter on a 2% increase in sales as Adj. EBITDA margin increased to 19.3% compared to 16.1%
Consumer Products acquired an 80% ownership stake in an affiliate of HALO Products Group, LLC, an innovative, asset light provider of pizza ovens, pellet grills, griddles and accessories, for approximately $9 million
Free cash flow1 for Q3 was $40 million, including $13 million in cash outflows related to separation expenses
Capex for Q3 was $10 million, which included $5 million related to our two facility modernization projects
Declared $0.16 per share dividend, payable in June 2024
1 Free cash flow is a non-GAAP measure calculated as net cash provided by operating activities ($50M) less investment in property, plant and equipment ($10M) | 3 |
Q3 FY2024 Highlights - Financial Summary
$ Millions except EPS | Q3 | Q3 |
Worthington Enterprises Consolidated | FY 2024 | FY 2023 |
Net Sales | $317 | $346 |
Adj. EBITDA | $67 | $69 |
% Margin | 21.1% | 20.3% |
Adj. EPS | $0.80 | $0.81 |
Building Products Segment | ||
Net Sales | $148 | $184 |
Adj. EBITDA | $53 | $58 |
% Margin | 35.8% | 31.6% |
Consumer Products Segment | ||
Net Sales | $133 | $131 |
Adj. EBITDA | $26 | $21 |
% Margin | 19.3% | 16.1% |
Sustainable Energy Solutions Segment | ||
Net Sales | $35 | $32 |
Adj. EBITDA | ($3) | $0 |
Refer to appendix for reconciliation of Adjusted EPS and Adjusted EBITDA to the comparable GAAP measure. | 4 |
Q3 FY2024 - Unique Items Impact to Earnings
Q3 FY2024 | ||
Worthington Enterprises Consolidated | $ Millions after tax | Diluted EPS |
Net Earnings - Continuing Operations (GAAP) | $22 | $0.44 |
One-time tax effects of business separation | $9 | $0.18 |
Settlement & transfer of legacy Defined Benefit Pension Plan | $6 | $0.12 |
Separation costs incurred during quarter | $2 | $0.05 |
Net restructuring and other expenses | $1 | $0.01 |
Adj. Net Earning - Continuing Operations (Non-GAAP) | $40 | $0.80 |
Refer to appendix for more additional reconciliation of Adjusted Net Earnings and Diluted EPS to the comparable GAAP measure. | 5 |
ibdrootprojectsIBD-NYtrillium2020664375_116. Investor Day Presentations 3. WOR Enterprises2023.09.29 - Investor Day - WOR Enterprises Shell_v78.pptx
W O R T H I N G T O N E N T E R P R I S E S
A m a r k e t - l e a d i n g d e s i g n e r a n d
m a n u f a c t u r e r o f i n n o v a t i v e B u i l d i n g P r o d u c t s , C o n s u m e r P r o d u c t s , a n d S u s t a i n a b l e E n e r g y S o l u t i o n s
Worthington Enterprises
KEY INVESTMENT HIGHLIGHTS
- Established Portfolio of Market-Leading Brands with High Barriers to Entry
- Strong Underlying Secular Trends Enabling Steady Long-Term Growth
- Business Model Drives High Free Cash Flow and Returns
- Worthington Business System Accelerates Growth and Profitability
- Innovation For Highly Engineered Products Drives Incremental Sales and Margin
- Guided by Our Philosophy - a People-First,Performance-Based Culture
- Low Leverage and Ample Liquidity Provides Financial Flexibility
1 TTM figures as of Q3 FY2024. Sales exclude pro-rata share of unconsolidated JV sales. Percentages may not add up to 100% due to rounding.
FOUNDED IN
1955
NET SALES OF
$1.3 BILLION1
Net Sales by End-Market1
40%49%
11%
Building Products Consumer Products
Sustainable Energy Solutions | 7 |
Established Portfolio of Market-Leading Brands…
80%+ of Adjusted EBITDA comes from brands and products with leading market positions
Ceiling | Metal | Hand Torch | Camping | Portable | Vertical | Well Water | ||||||
Suspension | Framing | And Fuels | Fuel | Helium Tanks | Residential | Tanks | ||||||
Systems | Heating Tanks | |||||||||||
Note: FY2023 period. North America only. Based on management estimates.
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…With High Barriers-to-Entry
High Margin, Asset-Light Business
Model, Generating Strong Cash Flow
and Returns
Highly Engineered Solutions - Meeting Rigorous Specifications in Highly Regulated Markets
Reliability, Speed & Product Quality - Exceptional Quality, Service, and Supply Chain Solutions
Robust Industry Knowledge - 68-Year History Providing Specialized, Technical Industry Expertise
Innovative Products and Services - Driving Innovation Into Mature Markets
Manufacturing at Scale - Automation Enabling Enhanced Efficiency in Production Across Niche Markets
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Our Products Serve Markets that are Well Positioned to
Capitalize on Strong Secular Trends
GOVERNMENT STIMULUS | ENVIRONMENTAL | POPULATION SHIFT |
AND SUPPORT | INVESTMENT | |
Ceiling | Metal | Tools | HVAC | H2 & CNG | Propane | Refillable | Lawn & | BBQ / | Foam & | ||
Solutions | Framing | Products | Systems | Systems | Solutions | Garden | Grill Products | Adhesive | |||
Multiple Federal | Increasing investments | Population trends |
funding bills support | in environmental | |
support increased | ||
long-term construction | projects at the | |
need for new and | ||
and supply chain | corporate and | |
re-modeled homes | ||
investment | government level | |
RE-SHORING AND
NEAR SHORING
Industrial Metal HVAC
Products Framing Products
Manufacturing
investment in the U.S. in early stages of multi-year resurgence
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Worthington Enterprises Inc. published this content on 21 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 March 2024 15:47:08 UTC.