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EX-2.1 - EXHIBIT 2.1 - WORTHINGTON INDUSTRIES INCexh_21.htm
8-K - FORM 8-K - WORTHINGTON INDUSTRIES INCf8k_060717.htm

Exhibit 99.1

 

THOMSON REUTERS STREETEVENTS EDITEDTRANSCRIPT WOR -Worthington Industries Inc Conference Call to DiscussAmtrol IncAcquisition EVENT DATE/TIME: JUNE 05, 2017 /2:30PM GMT THOMSON REUTERS STREETEVENTS | www.streetevents.com | ContactUs ©2017 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

 

JUNE05,2017/2:30PM,WOR-WorthingtonIndustriesIncConferenceCalltoDiscussAmtrolIncAcquisition CORPORATE PARTICIPANTS B.AndrewRoseWorthingtonIndustries,Inc.-CFOandEVP CatherineMayneLyttleWorthingtonIndustries,Inc.-VPofCommunications&IR GeoffreyG.GilmoreWorthingtonIndustries,Inc.-PresidentofWorthingtonCylinderCorporation CONFERENCE CALL PARTICIPANTS JohnCharlesTumazosJohnTumazosVeryIndependentResearch,LLC-PresidentandCEO TylerLangeKenyonKeyBancCapitalMarketsInc.,ResearchDivision-Associate PRESENTATION Operator Good morning, and welcome to the Worthington Industries call to discuss Friday's announced acquisition of Amtrol. (Operator Instructions) This conference is being recorded at the request of Worthington Industries. If anyone objects, you may disconnect at thistime. I'dliketointroduceMs.CathyLyttle,VicePresidentofCorporateCommunicationsandInvestorRelations.Ms.Lyttle,youmaybegin. CatherineMayneLyttle-WorthingtonIndustries,Inc.-VPofCommunications&IR Thankyou,andgoodmorning.WelcometoourconferencecallwithregardtoAmtrol. Thisisareminderthatcertainstatementswemaketodayareforward-lookingwithinthemeaningofthe1995PrivateSecuritiesLitigationReform Act. These statements are subject to risks and uncertainties and could cause actual results to differ from thosesuggested. OurnewsreleasedetailingtheAmtrolacquisitionwentoutonFridaymorning,andwealsoprovidedaninvestorPowerPointwithadditionaldetails. Youcanreviewbothofthemonourwebsiteformoredetailonthosefactorsthatcouldcauseactualresultstodiffermaterially.Wearerecording thiscallandwillbemadeavailablelateratworthingtonindustries.com. With me today on the call are our CFO and Executive Vice President, Andy Rose; and Geoff Gilmore, President of the Pressure Cylinders business. Andy will provide some opening comments before we open it up to your questions.Andy? B.AndrewRose-WorthingtonIndustries,Inc.-CFOandEVP Thanks,Cathy.Goodmorning,everyone.I'mgoingtousethedocumentthatCathyreferenced,Worthington'sacquisitionofAmtrolthatwasposted to our website last week as a basis if you'd like to follow along for some openingcomments. OnFriday,June2,WorthingtonacquiredAmtrol,aleadingmanufacturerofpressurecylindersforwatersystems,plumbingandheating,ventilation andair-conditioningandgasstorage.Theapproximatepurchasepricewas$283millionandwasfundedprimarilybycashonourbalancesheet ofroughly$250millionanda$35milliondrawonourlineofcredit. Amtrolin2016generatedjustunder$250millionofrevenueand$38.5millionofadjustedEBITDA.Thebusinesshas3manufacturingfacilitiesin NorthAmericalocatedinRhodeIsland,MarylandandKentucky,withapproximately500employees.Andthenthebusinesshasonemanufacturing facilityinPortugalwithapproximately800employees.Worthingtonexpectsthetransactiontobeaccretivetoearningsinourfiscal2018,which beganonJune1. 2 THOMSON REUTERS STREETEVENTS | www.streetevents.com | ContactUs ©2017 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

 

ThebusinessofAmtrolstrengthensprimarilyourIndustrialGasandConsumerProductsPressureCylindersbusinesses.Thetwobusinessesare primarily50%waterendmarketand50%industrial.Bothofthosebusinessesareleadersintheirrespectivemarkets.We'realsocombiningthetwo leadingplayersintheNorthAmericanrefrigerantmarketinWorthingtonandAmtrol.Andthenfinally,withthewaterbusiness,we'readdinga stablewatertankproductlinethatwillhelpstrengthenourwholesaleandretailConsumerProductsbusiness. MovingontoPage3,justacoupleofcommentshere.Worthington,asofourfiscalthirdquarterendedFebruary,hadadjustedtrailingEBITDAof about$400million.WiththeadditionofAmtrol,thataddsabout10%toourEBITDA.Andwiththepurchasepricebeingprimarilyfundedbyidle cashonourbalancesheet,wewillactuallyreducetheoverallleverageofthecompany. OnPage4,thereisabreakdownofthetwoprimaryproductlineshere:IndustrialProductsandConsumerProducts.I'lljustpointoutacoupleof thingsonthispage.ThefirstbeingthattheIndustrialProductlinehasabout$127millionofrevenueforcalendar2016andConsumerProductline hasabout$121millionofrevenue,whichisprimarilycomposedofthewaterproductlines.Thenicethingaboutthisacquisition,itisverycloseto ourcore.Thebusinesseshaveverysimilarmanufacturingprocesses.WhenyoucompareWorthingtonandAmtrol,theyselltheirproductsthrough thesamesaleschannels,beitthelargeindustrialgasmajorsorrefrigerantbuyersontheindustrialsideorthroughbig-boxretailandthewholesale plumbingchannelontheConsumerProductsside.Andinterestingly,inmanycases,wealsohavethesameendusersofbothproducts. OnPage5,there'safacilityoverview.Asyoucanseehere,thefootprintofbothcompaniesiscomplementary.WorthingtonoperatesitsIndustrial GasbusinessesandConsumerProductsbusinessesinColumbus,Ohio,inPortugalandAustria.Amtroloperatesthosesamebusinessesin RhodeIslandandKentuckyprimarilyintheU.S.andinPortugalinEurope.There'ssignificantopportunitiesheretooptimizeproduction.Wewill rolloutourTransformation2.0playbookovertime,focusingoncommercial,supplychainandoperationsefficiencies,andtherewillcertainlybe anopportunitytobestpracticeboththegoodthingsthathappenedatWorthingtonandatAmtrol. OnPage6,I'mnotgoingtospendalotoftimeonthispage,butjusttohighlight,yousee,sortofthe3pillarsofWorthington'sstrategy,our acquisition,transformationandinnovation.Obviously,thisisanacquisitionthatwefeelverygoodaboutbecauseit'srightinourcore.Butthere arealsosignificantopportunitiestoleverageourTransformationplaybookatAmtrol.Andthenfinally,oneofthenicethingsaboutAmtrolisour focusoninnovationatWorthingtonthatstartedahandfulofyearsagoreallywillgetanadditionalliftbecauseAmtrolhasalonghistoryanda strongnewproductdevelopmenteffort,andtheyactuallyhavesometerrificproductsthathavebeendevelopedrecentlythatweseeexpanded potentialfor. OnPage7isoursummaryoftheinvestmentthesisforAmtrol.AsImentionedearlier,itlinesupverywellwithouracquisitionstrategy.It'san opportunitytoutilizeavailablecashinahighlyaccretivemanner.ItfitswithourstrategytoleverageM&A.It'safairpriceforanacquisitionwhen youfactorin$6millionto$8millionofestimatedsynergies.Wethinkit'saverygoodprice.Andalsoimportant,itstrengthensourmarketpresence bothintheindustrialandtheconsumerproductsarenas. Withthat,IwillclosemyopeningcommentsandpassitovertoGeoffGilmore,andhe'sgoingtogiveafewcommentsofhisown. GeoffreyG.Gilmore-WorthingtonIndustries,Inc.-PresidentofWorthingtonCylinderCorporation Thanks,Andy.Justafewquickcommentshere.First,I'mobviouslyveryexcitedabouttheacquisition,whichismyfirstasthe--inmynewroleas thePresidentofPressureCylinders,andtherestoftheteamisquiteexcitedaswell.AsAndysaid,Imean,this,Iguess,remindsmeverymuchof theacquisitionsIwasinvolvedwithinmyformerjobasPresidentofSteel.Anditalignsverywellwithourcorecompetencies,whetherthat's manufacturingorevenhowweservethecustomerandthecustomeroverlap,specificallywholesale,refrigerantandretailcustomers. Theotherthingexcitingaboutthisisexpandingourproductofferingintheexistingchannels.Specificallywholesaleandretail,wherewe'renow goingtoincludewellwaterandexpansiontanks.AndthentheexcitementofextendingourreachintoEuropeasAmtrolistheleaderinLPGin Europe,soanotherveryexcitingpieceoftheacquisition.AndthenAndyalsomentionedthere'salotofobvioussynergiesandwethinkthisis highlysynergistic.Butwhatthey'vedonewithinnovationandnewproductdevelopmentoverthelast5yearsisveryimpressivetous,sothat's somethingthatwe'regoingtolearnalotaboutandbeabletoleverage,wethink,insomeofourotherbusinesses. JUNE05,2017/2:30PM,WOR-WorthingtonIndustriesIncConferenceCalltoDiscussAmtrolIncAcquisition 3 THOMSON REUTERS STREETEVENTS | www.streetevents.com | ContactUs ©2017 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

 

Andbacktothesynergies.Again,sosimilartowhatwedidatsteel.Ithinkwe'rereallyabletounderstandthisbusiness,theassumptionsthatwe builtupandwherewehavethebestopportunitiesandthen,Iguess,mostimportantly,havetheconfidencethatwe'regoingtobeabletoexecute. Andthenlastly,justlikecylinders,thebusinesstoday,Worthingtoncylinders,Amtrolhasbeentheleaderinalltheirbusinesses,whetherthatbe wellwaterandexpansiontanksaswellastheLPGside.Andthenrecently,thisFriday,astheannouncementcameout,Ithinkworthnoting--I talkedaboutourexcitement.IthinkwesawequalexcitementfromtheAmtrolfacilities.IpersonallywasatRhodeIslandattheirheadquarters.But wehadrepresentativesandindividualsatthefacilityinPortugal,Paducah,Kentucky,Baltimore,Maryland,soallthelocations,andweremetwith equalexcitement.Andinfact,gotstandingovationsafteralltheintroductorycomments.SoIthinkyou'vegottwocompaniesveryexcited.They performedextremelywellintheirmarkets,andwe'rereallylookingatthisasmoreofamergerofequals.Thesearen'tdistressedassets.It'sa high-performingorganizationwithgreatpeople,andwe'rereallylookingforwardtogettinginandlearningandbringingthebestofbothcompanies intoone.Thankyou. CatherineMayneLyttle-WorthingtonIndustries,Inc.-VPofCommunications&IR Sowiththat,wewouldlovetobeabletoopenitupforyourquestions. QUESTIONS AND ANSWERS Operator (OperatorInstructions)AndwewillgotothelineofTylerKenyonwithKeyBancCapital. TylerLangeKenyon-KeyBancCapitalMarketsInc.,ResearchDivision-Associate Justcongratulations,bytheway.Butjusttostartoffhere,anysenseyoucanprovideusastowhatthetoplinehaslookedlikeforthisbusinessand kind of what the margin trend has been over the last 5 years orso? B.AndrewRose-WorthingtonIndustries,Inc.-CFOandEVP Intermsofgrowth?Isthatthequestion,Tyler? TylerLangeKenyon-KeyBancCapitalMarketsInc.,ResearchDivision-Associate Yes.Justintermsof,yes,therevenuetrajectoryoverthelastcoupleofyearsandjustthemargintrendaswellandjusthowweshouldbethinking about kind of the growth of both the industrial side of this business and the consumer side movingforward. B.AndrewRose-WorthingtonIndustries,Inc.-CFOandEVP Yes.Imean,it'sgoingtofollow--thetoplineisgoingtofollowreallythebusinessesthatwecurrentlyhave.SoIndustrialGas,whatI'vealwayssaid isit'skindofgoingtofollowGDP.AndthenwithConsumerProducts,Ithinktheirbusinessisnodifferentthanours,whichisprobablymid-single digitswiththepotentialforhigherfromnewproductdevelopmentintroductions.Andtheyhave--inparticularinEuropewithatleastonenew product,havealittlebithighergrowththanthatoverthelastcoupleofyears.ButIthink,generallyspeaking,thisone,it'sprobablykindoflowto mid-singledigitsoveralliswhatyouwouldexpect. JUNE05,2017/2:30PM,WOR-WorthingtonIndustriesIncConferenceCalltoDiscussAmtrolIncAcquisition 4 THOMSON REUTERS STREETEVENTS | www.streetevents.com | ContactUs ©2017 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

 

TylerLangeKenyon-KeyBancCapitalMarketsInc.,ResearchDivision-Associate Okay.Appreciatethat.AndIknowyoutouchedonitalittlebitthere,butjustwantedtohearalittlebitaboutsomeoftheopportunityfromjust someofthenewproductintroductionsandsomeoftheworkthat'sbeendoneoverthelastcoupleofyearsthereatAmtrol.Ithinkparticularly youmentionedacompositehigh-pressureindustrialgascylinder.Anywaytothinkabouttheprogressofthosenewproductskindofentering intothemarketandkindofwhattheopportunitiesarethere? B.AndrewRose-WorthingtonIndustries,Inc.-CFOandEVP I may pass this one to Geoff and let him sort of give you some color. I don't want him to give away all of his secret sauce, though. So go ahead, Geoff. GeoffreyG.Gilmore-WorthingtonIndustries,Inc.-PresidentofWorthingtonCylinderCorporation Notaproblem.Ithinkataveryhigherlevel,letmebreakthisupinto2pieces.Let'sfirsttalkwaterandtalkmorespecificallyNorthAmerica.Ithink whatthey'vedoneverygoodhereiscontinuingwithproductenhancements.Sothey'reintroducingsameproductwithaspecificenhancement everycoupleyears.Andthey'vereallydoneanicejob,Ithink,workingcloseandgettingvoiceofcustomer,information,tounderstandthoseneeds tocontinuetobringtheseenhancementstomarket.Andthat'sbeenaverygoodjobtokeepthemquitecompetitiveinthemarketplace.Andin additiontothat,theydoaverygoodjobastheyrollouttheseproductenhancementsornewproductswithbranding.Ithinkthey'veavoided channelconflictandhavedoneanicejobreallyintroducingnewproductsbutkeepingtheseparationtoavoidcannibalizationinsomecases.So that'showIlookatthewaterpiece.AndIthinkthere'sstillgreatopportunityforthatand,again,forustolearnfromwhatthey'redoingandapply thattosomeofourotherSBUs.NowwhenIlookatEuropeandIlookmoreatLPG,different--somedifferentmarketconceptsandgo-to-market strategies.Ithinkthey'realittlebitclosertotheendconsumerandsomeoftheneedsthere,butthey'vedoneanew--agoodjobdevelopingand introducingTypeIII-typeproducts,hopefullyTypeIVinthefuture,again,reallymeetingcustomerneeds.Someofthishasbeensupportedcertainly bymorefavorableregulationsinsomecountries.Butitstartsthere.Ithinkwhatwegetmostexcitedaboutis,whereitstartswiththeregulation, nowyougettheconsumer,andI'mtalkingthetrueendcustomerthatreallylikestheproductsandit'sstartingtodrivesomeoftheirgrowthgoing forward,wehope. Operator (OperatorInstructions)AndwewillgotothelineofJohnTumazoswithJohnTumazosVeryIndependentResearch. JohnCharlesTumazos-JohnTumazosVeryIndependentResearch,LLC-PresidentandCEO DoesAmtrolpossessanytechnologiesorparticularknow-howthatWorthingtondidn'talreadyhave,forexample,inrefrigerantmarkets? GeoffreyG.Gilmore-WorthingtonIndustries,Inc.-PresidentofWorthingtonCylinderCorporation Andy,youwantmetoanswerthat,isthatfine? B.AndrewRose-WorthingtonIndustries,Inc.-CFOandEVP Sure. JUNE05,2017/2:30PM,WOR-WorthingtonIndustriesIncConferenceCalltoDiscussAmtrolIncAcquisition 5 THOMSON REUTERS STREETEVENTS | www.streetevents.com | ContactUs ©2017 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

 

GeoffreyG.Gilmore-WorthingtonIndustries,Inc.-PresidentofWorthingtonCylinderCorporation John,Idon'tthinkso.Idon'tthinkthere'sanytypeoftechnologyorspecificknow-how.Ithinkfromhowyou'reaskingthatquestion,Ithinkwhere theymaydifferfromusandspecifically--andwhatthey'vedonewithwaterandLPG,it'samoredisciplinedprocesses.We'redoingsomereally nicethingshereatWorthingtononinnovationandnewproductdevelopment,asyouknow.Ijustthinkthattheywereabitaheadofthecurve withthedisciplineandsomeoftherelationshipsthey'vebuiltuphererecentlywiththecustomersbasedoninnovation.Andthat'stheknow-how, Ithink,we'rereallygoingtobeabletoadoptandgetsomebestpracticesfrom. JohnCharlesTumazos-JohnTumazosVeryIndependentResearch,LLC-PresidentandCEO Andy,isitokaytoaskageneralWorthingtonquestiononthiscall? B.AndrewRose-WorthingtonIndustries,Inc.-CFOandEVP Sure. JohnCharlesTumazos-JohnTumazosVeryIndependentResearch,LLC-PresidentandCEO I'mnotreallyconcernedsomuchabouttheshortterm,likethecurrentquarter.Giventhepro-business,pro-jobcreationdemeanorofthecurrent federalgovernmentoratleastattempteddemeanor,doyouseeyourcustomersbeingmorewillingtoinvestmoreconfidentholdinginventory? DoyouseeanybenefitstoWorthington'sbusinessfrompotentiallymorefavorableregulatoryclimate? B.AndrewRose-WorthingtonIndustries,Inc.-CFOandEVP Yes.Imean,Ithinkcertainlylessregulationiscertainlygoingtobegoodforus.Imean,theonenicething,whichI'mgoingtogobacktomaybe theacquisitionalittlebit,whichisWorthington,generally,asyouknow,isprimarilyaNorthAmerican-centricmanufacturer.Mostofourother operationsoutsidetheU.S.areinEurope.Wedohaveafewscatteredaroundvariousothercontinents.ButIthinkthetoneandcertainlytheintent ofthisadministrationistostrengthenU.S.manufacturing,andsothat'sgoingtobegoodforus.AndIwouldsaythisacquisitionfitsrightinto that.NowthisoneissortofhalfEurope,halfU.S.Buttheproductsarecertainlyavailableforsaleglobally,andhopefullythatisabenefittous. JohnCharlesTumazos-JohnTumazosVeryIndependentResearch,LLC-PresidentandCEO Arethereanyspecificexamplesofyourcustomersthathaveexpandedfactoriesormadecapitalinvestmentsinthelastsixmonthsthatyouthink areduetoregulatorychanges? B.AndrewRose-WorthingtonIndustries,Inc.-CFOandEVP It'shardtosay.Certainly,you'vereadaboutsomeinthepressaroundautomotive,wheredecisionshavebeenmadeeithernottoinvestinternationally ortoinvestmoredomestically.It'shardformetosaywithcertaintywhetherthosethingsare--wereintendedtobethatwayinitiallyorjustitwas sortofconsistentwiththecurrentthinkingoftheadministration,soit'saconvenientstoryline.Soit'shardformetosay.ButIcertainlythinkas longasourcurrentadministrationisinplace,thestarswillalignformoredomesticinvestment. JohnCharlesTumazos-JohnTumazosVeryIndependentResearch,LLC-PresidentandCEO Doyouhaveanycustomersthatareuncomfortableifthepriceofsteelis$50or$100higherintheU.S.thanoverseasbecauseoftradeprotection? JUNE05,2017/2:30PM,WOR-WorthingtonIndustriesIncConferenceCalltoDiscussAmtrolIncAcquisition 6 THOMSON REUTERS STREETEVENTS | www.streetevents.com | ContactUs ©2017 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

 

B. Andrew Rose -Worthington Industries, Inc. -CFO andEVP Yes, that's probably a bridge too far for me to answerfrom... JohnCharlesTumazos-JohnTumazosVeryIndependentResearch,LLC-PresidentandCEO You're not worried about losing any customers because ofthat? B. Andrew Rose -Worthington Industries, Inc. -CFO andEVP Because of the discrepancy in steelprices? JohnCharlesTumazos-JohnTumazosVeryIndependentResearch,LLC-PresidentandCEO If the U.S. has a price premium,yes. B. Andrew Rose -Worthington Industries, Inc. -CFO andEVP I don't think in our Steel Processing business that's the case. I just think the supply chain benefits locally are much better. So anyway, I don'twant to go too far down the path, John, of talking general Worthingtonhere. Operator (OperatorInstructions) Catherine Mayne Lyttle -Worthington Industries, Inc. -VP of Communications &IR And hearing none, I think we will let everybody go and say thank you for joining us on the call. We look forward to speaking with you later this month, June 29, for our fourth quarter earnings call. Have a greatweek. Operator Thank you. And ladies and gentlemen, that does conclude your conference call for today. Thank you for your participation and forusing AT&T Executive TeleConference Service. You may nowdisconnect. JUNE05,2017/2:30PM,WOR-WorthingtonIndustriesIncConferenceCalltoDiscussAmtrolIncAcquisition 7 THOMSON REUTERS STREETEVENTS | www.streetevents.com | ContactUs ©2017 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

 

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