Worthington Enterprises, Inc. (WOR) Earnings Call Transcript & Summary

Good day, and welcome to the Worthington Industries 2020 Annual Meeting of Shareholders. I would now like to turn the conference over to John McConnell, Executive Chairman. Please go ahead.

Thank you, and good afternoon, and welcome to Worthington Industries Annual Shareholders Meeting. I am John McConnell, Executive Chairman. On the call with me today for our virtual meeting are President and Chief Executive Officer, Andy Rose; Vice President and Chief Financial Officer, Joe Hayek; and Senior Vice President of Administration, General Counsel and Secretary, Dale Brinkman. I now call the meeting to order. Mr. Brinkman will record the minutes. I have Mr. Brinkman's affidavit that written notice of this meeting was given beginning August 12, 2020, to all shareholders of record as of July 31. Our inspector of election is Mr. Gary Wozniak of Broadridge. If you have not yet voted and wish to do so, I ask that you begin that process now. You need to have your control number to complete your vote. If you've already voted, you do not need to vote again. If there are questions you may have related to our annual meeting or our business, you may now send those through our website. Just follow the instructions for submitting a question. If any questions are submitted, we can answer them when we finish the formal part of our meeting. We will now proceed with our annual meeting. Mr. Brinkman informs me that we have a quorum, I will ask Mr. Brinkman to present the matters before the meeting.

Thanks, John. The first item is the election of 4 directors, each to serve a term of 3 years beginning at the 2023 -- or ending at the 2023 Annual Meeting of Shareholders. The company's Board of Directors has nominated Michael J. Endres, Ozey K. Horton, Jr., Peter Karmanos, Jr. and Carl A. Nelson, Jr. There were no other nominations submitted in accordance with the company's bylaws. The second item is the approval of an advisory vote on the compensation of the executive officers of the company in the form of the following resolution: Resolved, that the shareholders of Worthington Industries, Inc. approve, on an advisory basis, the compensation of the company's named executive officers as disclosed in the company's proxy statement for its 2020 Annual Meeting of Shareholders pursuant to the executive compensation disclosure rules and Item 402 of SEC Regulation S-K, including the compensation discussion and analysis, the fiscal 2020 summary compensation table and the related executive compensation tables, notes and narratives. The third item is the approval of the third amendment of the Worthington Industries stock option plan to extend the period of time during which stock options may be granted in the form of the following resolution: Resolved, that the third amendment for the Worthington Industries, Inc. 2010 Stock Option Plan is set forth in Appendix 2 to the proxy statement of the company for the Annual Meeting of Shareholders held on September 23, 2020, be, and the same hereby is, approved. And the fourth and final item is the ratification of the selection of KPMG as the company's independent registered public accounting firm for fiscal 2021.

The company's Audit Committee has selected KPMG to serve as the company's independent auditors for the fiscal year ending May 31, 2021. We have 2 representatives from KPMG on the call with us today for this meeting, Mercedes Varela and Brian Ramsey. Prior to reviewing the results of the voting, Mr. Hayek will review the financials of our fiscal year 2020 as well as our first quarter results. Our quarterly conference call was held in this afternoon just prior to this meeting. A recording of that call is available on our website. Joe, please begin.

Thanks, John. I'll start with a few key recent business developments, many of which we feel highlight the strength of our balance sheet and our balanced allocation of -- balanced capital allocation process that we'll use to continue to drive growth and reward our shareholders. During Q1, we sold 11.5 million shares of Nikola Corporation common stock, realizing gross pretax proceeds of $488 million. We also donated 500,000 or $20 million worth of Nikola's shares to the Worthington Industries Foundation to establish a charitable endowment. Following these sales, we own just over 7 million shares of Nikola common stock. During the quarter, we repurchased just under 1.5 million shares of our common stock, $54.3 million at an average price of $37.19 per share. Following the repurchases, we have approximately 6.2 million shares remaining under our share repurchase authorization. And earlier today, the Board did declare a $0.25 per share dividend, which will be paid in December of 2020. Next, we'll discuss the financial results. Net earnings in fiscal 2020 were $130 million or $2.39 per share. Our results were down from the prior year largely due to a volatile steel pricing environment and the negative impact associated with coronavirus-weighted shutdowns in our Q4. While the negative impacts of COVID-19 are evident in our results, it has also brought out the best in our people, and we are very proud of the way our teams responded during a challenging time. While uncertainty remains, we have a strong balance sheet and are well positioned to opportunistically allocate capital and drive long-term shareholder value. Now we'll turn to the businesses. Steel Processing generated sales of $1.9 billion and operating income of $46 million in fiscal 2020. The steel business is heavily tied to the automotive industry and as such, was negatively impacted by the COVID-related automotive shutdowns in our Q4. Now I'll turn to Pressure Cylinders. Cylinders generated $1.1 billion in sales and $81 million of operating income. Cylinders business is rather diversified and has demonstrated strong performance during the year, particularly for some of our consumer-facing products that experienced increased demand in Q4 as people stayed home and many restaurants were closed. Turning to our joint ventures. That portfolio generated $96 million of equity income for fiscal 2020 excluding impairment and special items. Our JVs have managed to produce regular cash dividends that closely approximate their equity income. And during the year, we received $113 million in dividends from our JVs, which did include a special dividend related to the sale of WAVE's international operations. Now we'll turn to the financing of the company. At fiscal year-end, we had $700 million of debt outstanding. And during the year, we incurred interest expense of $32 million, which was down compared to the prior fiscal year as we reduced our debt balance and refinanced a portion of our debt at lower interest rates during the year. As John mentioned, earlier today, we announced results for our first quarter fiscal 2021 and delivered earnings per share of $0.64, excluding restructuring and impairment charges and special items compared to $0.62 per share in the prior year quarter. At this point, I will turn the call back over to John.