Gabelli 8 th Annual Specialty Chemicals Conference

Transcription

1 Gabelli 8 th Annual Specialty Chemicals Conference March 22, 2017 Barry M. Slifstein, Vice President Investor Relations 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 forwardlooking 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 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 $4.8 billion Consumer Segment $1.6 billion (34%) Specialty Segment $732 million (15%) Industrial Segment $2.4 billion (51%) RPM INTERNATIONAL INC. 3

4 Entrepreneurial Operating Philosophy Decentralized at Operating Companies Centralized at Corporate Sales Marketing Product Development Customer Service Technical Support Treasury Capital Allocation Global Sourcing Insurance & Benefits M&A Budgeting & Planning RPM INTERNATIONAL INC. 4

5 Unique Competitive Advantage Construction Chemicals $180 billion global market Paint & Coatings Consumer Specialty Industrial RPM INTERNATIONAL INC. 5

6 Consumer Deliberate Strategic Balance Specialty Specialty OEM 50% Commercial Construction 10% 40% Repair & Maintenance 70% Residential Construction 15% 85% 50% Industrial Commercial Construction 50% RPM INTERNATIONAL INC. 6

7 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. 7

8 Diverse INDUSTRIAL Global Brands 51% 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. 8

9 SPECIALTY Niche Businesses 15% 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. 9

10 Growth Strategy Acquisitions International Expansion Connections Creating Value Product Innovation RPM INTERNATIONAL INC. 10

11 Acquisition Strategy The Best Home for Entrepreneurial Companies Key requirements: Acquisition Focus: Key Takeaways: Niche market leaders Strong GP margins Retain entrepreneurial management team Geographic expansion New markets Product line integrations (70%) Stand-alone businesses (30%) 150+ acquisitions Few divestitures RPM INTERNATIONAL INC. 11

12 International Expansion: 2005 vs North America $2,202 $3,467 86% 72% South/Latin America $42 $ % 4.5% Dollars in millions Europe $251 $929 10% 19% Africa/Middle East $34 $76 1.3% 1.5% Asia/Pacific $27 $ % 3% TOTAL $2,556 $4,814 RPM INTERNATIONAL INC. 12

13 Connections Creating Value: Euclid Group Global Construction Chemicals Business 52% North America 1% Europe, Asia & Africa 47% Latin America Ready-mix Precast Bridges Parking Garages Masonry Flooring/Pavement Water/Wastewater Utility Vault Repairs Underground Decorative RPM INTERNATIONAL INC. 13

14 Connections Creating Value: Euclid Group Global Construction Chemicals Business 10% North America 89% Europe, Asia & Africa <1% Latin America Automotive Distribution Education Food Electronics Healthcare Hospitality Manufacturing Retail Transportation RPM INTERNATIONAL INC. 14

15 Connections Creating Value: Euclid Group Global Construction Chemicals Business Product lines Channels to market Technologies Synergies Management teams Business culture Global account management RPM INTERNATIONAL INC. 15

16 New Product Innovations RoofTec AlphaGuard RPM INTERNATIONAL INC. 16

17 Consistent Financial Performance RPM INTERNATIONAL INC. 17

18 Fiscal years ended May 31 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 17.7% 6.9% 10.8% Organic & Acquisition Growth 11.0% 4.3% 9.1% 2.2% 6.7% 6.9% -7.5% 2.6% -10.1% Organic Revenue Growth -7.5% (1) 0.3% -7.8% 8.5% 1.9% 11.7% 3.1% 6.6% 8.6% 7.2% 0.9% 2.1% 5.2% Acquisition Growth, Net of Divestitures Organic $714 mm 39.5% M&A $1,095 mm 60.5% Total $1,809 mm 100.0% 5.2% -0.2% 6.7% -1.9% (1) Represents SPHC deconsolidation in fiscal 2010 (approx. $300 mm in sales) and reconsolidation in January fiscal 2015 (approx. $400 mm in sales) 8.1% 7.3% 5.0% (1) 4.8% RPM INTERNATIONAL INC. 18

19 Balanced Business = Steady Growth Consolidated Sales +11.7% +8.0% +7.3% +5.0% +4.8% Net Income +11.5% +14.5% +20.9% +10.7% +9.8% Industrial Sales +9.9% +2.3% +3.7% +2.8% (3.5%) EBIT +21.3% (3.5%) +8.3% +4.3% +1.4% Consumer Sales +10.7% +16.1% +11.4% (0.2)% +2.1% EBIT +9.7% +31.2% +19.5% +9.1% (2.1%) Specialty Sales +45.4% +22.9% +17.6% +49.7% +60.1% EBIT +0.6% +14.7% +23.8% +10.5% +64.0% Note: Specialty Products Holding Corp. (SPHC) was deconsolidated on May 31, 2010 and reconsolidated on Jan. 1, Net income and EBIT exclude one-time items taken in FY2012, FY2013 and FY2015. RPM INTERNATIONAL INC. 19

20 Consistent Financial Performance: 30-Year Growth Profile $5,000 $4,000 Sales $3,000 $2,000 $1,000 $0 10.1% 30-yr. CAGR $350 $300 $250 $200 $150 $100 $50 $0 Net Income 11.5% 30-yr. CAGR Note: Specialty Products Holding Corp. (SPHC) was deconsolidated on May 31, 2010 and reconsolidated on Jan. 1, 2015 Note: Net income excludes one-time adjustments taken in FY2013 and 2015, and asbestos charges taken from FY2003-FY2008 RPM INTERNATIONAL INC. 20

21 43 Consecutive Years of Dividend Increases $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 Acquired Yield on Original Investment Today 2.4% 10 yrs. 5.8% 25 yrs. 11.5% Dividend per share + 9.1% 10/6/16 $1.9 billion Paid $0.00 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 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 $4.8 bb company paying out +$145 mm per year RPM INTERNATIONAL INC. 21

22 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 RPM S&P 500 Prior Peer Group Current Peer Group Outperform: S&P 500 by 86% Current Peers by 25% RPM Prior Peer Group Current Peer Group S&P 500 Ten-year comparison based on $100 invested on 5/31/06 in stock or index including reinvestment of dividends. Fiscal year ending May 31. Prior Peer Group includes Akzo Nobel N.V., Ferro Corporation, H.B. Fuller Company, Masco Corporation, PPG Industries, Inc., The Sherwin- Williams Company and The Valspar Corporation. Current 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 /06 5/07 5/08 5/09 5/10 5/11 5/12 5/13 5/14 5/15 5/16 RPM International Inc S&P Prior Peer Group Current Peer Group RPM INTERNATIONAL INC. 22

23 5-Year Strategic Plan 2020 Vision RPM INTERNATIONAL INC. 23

24 2020 Vision: $7 Billion in Annual Revenues RPM Growth Goals: Organic & Acquisitions 5-year consolidated net sales CAGR of 8.5% 5.0% organic 3.5% acquisitions Debt/capital structure <60% Incremental interest 5% pre-tax Consolidated tax ~30% Steady EBIT margin improvement over five-year period Macroeconomic Assumptions U.S. GDP approx. 2-3% (no recession) Stable-to-improving economies in Europe & Latin America Stable capital markets / normal access to capital Stable oil prices Stable global currency market vs. U.S. dollar CAGR Organic 3.5% 5.0% CAGR Acquisitions RPM INTERNATIONAL INC. 24

25 International Expansion: 2005 vs vs Vision of $7 billion in Revenues North America $2,202 $3,195 $4,200 86% 70% 60% South/Latin America $42 $251 $ % 5.5% 10% Dollars in millions Europe $251 $942 $1,400 10% 20% 20% Africa/Middle East $34 $86 $ % 1.9% 3.5% Asia/Pacific $27 $121 $ % 2.6% 6.5% TOTAL $2,556 $4,595 $7,000 RPM INTERNATIONAL INC. 25

26 2020 Vision: Building Billion Dollar Brands RPM INTERNATIONAL INC. 26

27 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. 27