NYSE Investor Presentation

Transcription

1 NYSE Investor Presentation July 24, 2017 Frank Sullivan, Chairman and CEO RPM INTERNATIONAL INC. 1

2 Forward-Looking Statements & Regulation G This presentation contains Forward-Looking Statements as defined in the Private Securities Litigation Reform Act of Actual results may differ materially from expectations and are subject to certain risks and uncertainties such as those described in RPM s periodic reports and statements filed with the Securities and Exchange Commission and available through the company s website, The company does not intend to update any forward-looking statements made in this presentation. This presentation includes certain company data that do not directly conform to generally accepted accounting principles, or GAAP, and certain company data that has been restated for improved clarity, understanding and comparability, or pro forma. All non-gaap data in this presentation are indicated by footnote. Tables reconciling such data with GAAP measures are available through our website, under Investor Information/Presentations. RPM INTERNATIONAL INC. 2

3 About RPM $5 billion SEGMENTS Consumer $1.7 billion (34%) Specialty $714 million (14%) Industrial $2.6 billion (52%) GROUPS Entrepreneurial Operating Philosophy Competitive Advantage of Leading Brands Balance Between Consumer and Industrial Markets Growth Strategy Balanced Between Internal Investment and Acquisitions Connections Creating Value Sustainable Shared Value RPM INTERNATIONAL INC. 3

4 Leading Brands Consumer Specialty Industrial RPM INTERNATIONAL INC. 4

5 Market-Leading CONSUMER Brands 34% of net sales PRODUCT CATEGORIES Small-Project Paints Primer-Sealers Caulks & Sealants Hobby & Craft Products Wood Stains & Finishes Rust-Preventative Paints Concrete Coatings SEGMENT OVERVIEW Value-added partner Market innovation leader Category management Higher retailer price points/margins Immediate full-chain distribution 80% U.S. vs. 20% ROW RPM INTERNATIONAL INC. 5

6 Diverse INDUSTRIAL Global Brands 52% of net sales PRODUCT CATEGORIES Construction Sealants Roofing Systems Flooring Systems Corrosion Control Coatings FRP Gratings/Components Waterproofing Coatings Concrete Admixtures & Repair Fireproofing Coatings SEGMENT OVERVIEW Fragmented global markets Less cyclical repair & maintenance Low customer concentration 50% U.S. vs. 50% ROW RPM INTERNATIONAL INC. 6

7 SPECIALTY Niche Businesses 14% of net sales PRODUCT CATEGORIES Exterior Insulating Finishes Fluorescent Pigments Powder Coatings Marine Coatings Wood Stains & Finishes Restoration & Cleaning Solutions Edible Coatings SEGMENT OVERVIEW Generate higher margins Serve smaller niche markets Independent, entrepreneurial 70% U.S. vs. 30% ROW RPM INTERNATIONAL INC. 7

8 New Product Innovations SkyBEAM AlphaGuard RPM INTERNATIONAL INC. 8

9 Connections Creating Value: Euclid Group Global Construction Chemicals Business Recent Initiatives Increte secures Genting Casino project in Malaysia via Flowcrete Asia Euclid products launched in India via Flowcrete plant in Chennai New Viapol (Brazil) and Toxement (Colombia) plants to manufacture Flowcrete and RPM Belgium products RPM INTERNATIONAL INC. 9

10 43 Consecutive Years of Dividend Increases $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 Acquired Yield on Original Investment Today 2.2% 10 yrs. 5.8% 25 yrs. 11.5% Dividend per share + 9.1% 10/6/16 $1.9 billion Paid $0.00 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 Only 46 of all 19,000 U.S. publicly traded companies have an equal or better record The compounding benefit of reinvesting a growing cash dividend first envisioned by a $25 mm company in 1973 continues today in a $5 bb company paying out +$155 mm per year RPM INTERNATIONAL INC. 10

11 Consistent Financial Performance: Superior Shareholder Return Comparison of Cumulative Total Return Among RPM International Inc., the S&P 500 Index, a Current Peer Group and Prior Peer Group Outperform: S&P 500 by 70% Current Peers by 28% RPM Prior Peer Group RPM S&P 500 Prior Peer Group Current Peer Group Ten-year comparison based on $100 invested on 5/31/07 in stock or index including reinvestment of dividends. Fiscal year ending May 31. Prior Peer Group includes Akzo Nobel N.V., Ferro Corporation, GCP Applied Technologies Inc., H.B. Fuller Company, Masco Corporation, PPG Industries, Inc., and The Sherwin-Williams Company. Current Peer Group includes Akzo Nobel N.V., Axalta Coating Systems Ltd, Ferro Corporation, GCP Applied Technologies Inc., H.B. Fuller Company, Masco Corporation, PPG Industries, Inc., and The Sherwin- Williams Company. Current Peer Group S&P /07 5/08 5/09 5/10 5/11 5/12 5/13 5/14 5/15 5/16 5/17 RPM International Inc S&P Prior Peer Group Current Peer Group RPM INTERNATIONAL INC. 11

12 Successful Acquisition Strategy RPM INTERNATIONAL INC. 12

13 Key Requirements for Acquisitions Best home for Entrepreneurial Companies Niche businesses with leading brands Above average gross profit margins Entrepreneurial leadership that stays 70% product line integrations 30% stand-alone Achieve revenue synergies New channels New geographies RPM INTERNATIONAL INC. 13

14 FY Acquisition Review SEGMENT TYPE LEADERSHIP 17% 48% 30% 39% 35% 70% 61% Industrial Consumer Specialty Product Line Stand-Alone Remains Retired/ Integrated RPM INTERNATIONAL INC. 14

15 Core Consumer Market Highlights FY RPM INTERNATIONAL INC. 15

16 Consumer Segment Market Share Performance #1 in North American Wood Repair category due to recent market share gains #1 market share position in Caulks & Sealants category strengthened by recent market share gains Launched Dynagrip high-performance construction adhesives; won 2017 Gold Award from National Retail Hardware Association RapidFuse adhesives recent launch gained placement in home centers, hardware channel, lumber yards and food & drug RockSolid expanded into Home Depot & Lowes Wood Stain continues to gain market share at Home Depot and Wal-Mart Woodcare new distribution in Australia, South Africa and Chile Wood Stain loss at Lowes Small project paint gains at Wal-Mart and hardware channel Fastest growth is from consumer products in international markets RPM INTERNATIONAL INC. 16

17 Fiscal 2017 Recap RPM INTERNATIONAL INC. 17

18 Consistent Financial Performance Consolidated Sales +1.3% +8.5% +11.7% +8.0% +7.3% +5.0% +4.8% +3.0% Net Income +39.4% +16.1% +11.5% +14.5% +20.9% +10.7% +9.8% -3.5% Note: Specialty Products Holding Corp. (SPHC) was deconsolidated on May 31, 2010 and reconsolidated on Jan. 1, Net income excludes adjusted items. RPM INTERNATIONAL INC. 18

19 Fiscal 2017 Recap & Fiscal 2018 Expectations FY 2017 RECAP DAP capacity constraints Higher pension expense Continued unfavorable FX FY 2018 EXPECTATIONS Capacity added Slightly favorable FX easing RPM INTERNATIONAL INC. 19

20 Fiscal 2017 Recap & Fiscal 2018 Expectations FY 2017 RECAP DAP capacity constraints Higher pension expense Continued unfavorable FX Facility closures/severance Kirker & Synta underperformance Continued decline in oil & gas FY 2018 EXPECTATIONS Capacity added Slightly favorable FX easing No longer a drag/lower cost base Stabilized at lower base Easier comps/approaching bottom RPM INTERNATIONAL INC. 20

21 Fiscal 2017 Recap & Fiscal 2018 Expectations FY 2017 RECAP DAP capacity constraints Higher pension expense Continued unfavorable FX Facility closures/severance Kirker & Synta underperformance Continued decline in oil & gas Favorable raw material costs Sluggish global economy FY 2018 EXPECTATIONS Capacity added Slightly favorable FX easing No longer a drag/lower cost base Stabilized at lower base Easy comps/approaching bottom Moving higher More positive European outlook 9 acquisitions; $221 mm sales $125 mm incremental sales RPM INTERNATIONAL INC. 21

22 Fiscal 2017 Recap & Fiscal 2018 Expectations FY 2017 RECAP DAP capacity constraints Higher pension expense Continued unfavorable FX Facility closures/severance Kirker & Synta underperformance Continued decline in oil & gas Favorable raw material costs Sluggish global economy FY 2018 EXPECTATIONS Capacity added Slightly favorable FX easing No longer a drag/lower cost base Stabilized at lower base Easy comps/approaching bottom Moving higher More positive European outlook 9 acquisitions; $221 mm sales $125 mm incremental sales RPM INTERNATIONAL INC. 22

23 Fiscal 2018 Guidance RPM INTERNATIONAL INC. 23

24 Assumptions Regarding FY 2018 Outlook Industrial Segment: low-to-mid-single-digits Steady U.S. economy, particularly commercial construction Neutral oil and gas sector Modest growth in Europe Challenges in Brazil Specialty Segment: low-single-digits Contributions from FY17 acquisitions Steady organic growth, driven by fluorescent pigment, marine and woodcare businesses NatureSeal patent expiration Consumer Segment: mid-single-digits Steady U.S. housing market Improved conditions in Europe Stabilized Kirker business Capex relatively flat FY18 tax rate in line with FY17 Expect quarterly volatility $0.10 per share FY18 benefit from FY17 restructuring $0.10 per share contribution from FY17 acquisitions Fiscal 2018 guidance $ $2.95 RPM INTERNATIONAL INC. 24

25 Good Value in a Great Company Hire the best people you can find. Create an atmosphere that will keep them. Then let them do their jobs. Frank C. Sullivan, 1947 RPM INTERNATIONAL INC. 25