Rpm International Inc. · NYSE:RPM
Rpm International — Morgan Stanley Global Chemicals, Agriculture & Packaging Conference 2019
31 slides from Rpm International's conference presentation, Nov 12, 2019
Slide 1: Morgan Stanley Global Chemicals, Agriculture & Packaging Conference
Morgan Stanley Global Chemicals, Agriculture & Packaging Conference November 12, 2019 Russell L. Gordon, Vice President & Chief Financial Officer Scott Copeland, Senior Director – Planning and Financial Analysis RPM International Inc.
Slide 2: Forward-Looking Statements & Regulation G
Forward-Looking Statements & Regulation G This presentation contains “Forward-Looking Statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from expectations and are subject to certain risks and uncertainties such as those described in R
Slide 3: RPM At A Glance
RPM At A Glance A world leader in specialty coatings, sealants, building materials and related services. Q U I C K FA C T S MANUFACTURING FACILITIES IN 26 COUNTRIES DIVIDEND RECORD 46 FOUNDED: 1947 HEADQUARTERS: Medina, OH NYSE STOCK LISTING: consecutive years (Symbol: RPM) of dividend increases FIS
Slide 4: Positioning RPM for the Next Level of Growth & Value Creation
Positioning RPM for the Next Level of Growth & Value Creation HISTORY OF 2020 MAP BUILDING A ENTREPRENEURIAL TO GROWTH BETTER RPM GROWTH Extraordinary Transforming RPM into a Combining 72-year history more connected and entrepreneurial legacy of growth, innovation efficient company and the disciplin
Slide 5: World Leader in Coatings, Sealants and Building Materials
World Leader in Coatings, Sealants and Building Materials $5.6 billion (May 31, 2019) Consumer Segment Specialty Segment Industrial Segment $1.9 billion (34%) $800 million (14%) $2.9 billion (52%) Entrepreneurial Operating Philosophy • Competitive Advantage of Leading Brands • Balance Between Consum
Slide 6: Operating Groups Drive Growth & Efficiency
Operating Groups Drive Growth & Efficiency Through Four Reportable Segments CONSTRUCTION PERFORMANCE PRODUCTS GROUP COATINGS GROUP Proforma Sales: $1.9 billion - 34% Proforma Sales: $1.1 billion - 20% CONSUMER FY19 SALES: SPECIALTY GROUP PRODUCTS GROUP $5.6 BILLION Proforma Sales: $1.9 billion - 34%
Slide 7: Construction Products Group Overview
Construction Products Group Overview PRODUCT CATEGORIES TARGET MARKETS FISCAL 2019 PROFORMA SALES: • Construction Sealants & BUILDING ENVELOPE Adhesives Air | Moisture | Thermal $1.9 BILLION • Coatings & Chemicals 34% of RPM total • Roofing Systems • 6 sides of the Building • Concrete Admixture & Re
Slide 8: Construction Products Group Leading Brands
Construction Products Group Leading Brands GLOBAL BRANDS REGIONAL BRANDS 11/12/2019 8
Slide 9: Performance Coatings Group Overview
Performance Coatings Group Overview PRODUCT CATEGORIES: TARGET MARKETS: • High-Performance Flooring • Manufacturing • Petrochemical FISCAL 2019 PROFORMA SALES: Solutions • Bridge & Highway • Transportation $1.1 BILLION • Corrosion Control & • Food & Beverage • Marine 20% of RPM total Fireproofing Co
Slide 10: Performance Coatings Group Leading Brands
Performance Coatings Group Leading Brands COATINGS FLOOR SYSTEMS INFRASTRUCTURE FRP GRATING PROTECTIVE COATINGS SANITARY FLOORS FOOD & BEVERAGE RESURFACING & REPAIRING BRIDGES FIBERGLASS REINFORCED PLASTIC GRATINGS FIREPROOFING SYSTEMS FLOORS FOR COMMERCIAL SPACES BUILDING MAINTENANCE SERVICES RAILI
Slide 11: Consumer Group Overview
Consumer Group Overview PRODUCT CATEGORIES: TARGET MARKETS: FISCAL 2019 PROFORMA SALES: • Small-Project Paints & Coatings • Do-it-Yourself $1.9 BILLION • Primers, Caulks & Sealants • Makers • Hobby & Craft Products • Professionals 34% of RPM total • Specialty Coatings • Contractors • Wood Stains & F
Slide 12: Consumer Group Leading Brands
Consumer Group Leading Brands #1 Supplier in the #1 Caulk & Fastest Growing #1 Primer Brand #1 Brand of Wall Small Project Sealant Supplier Supplier of Wood in Customer Repair and Paint Category in North America Finishes in North Satisfaction Spackle in North Worldwide America among America Professi
Slide 13: Specialty Products Group Overview
Specialty Products Group Overview PRODUCT CATEGORIES: TARGET MARKETS: FISCAL 2019 PROFORMA SALES: • Fluorescent Pigments • Food, Pharm, • Marine, Fuel, $0.7 BILLION • Wood Stains, Finishes & Cosmetics Furniture 12% of RPM total Treatments • Furniture & Protection, • Powder Coatings Cabinetry Cosmeti
Slide 14: Specialty Products Group Leading Brands
Specialty Products Group Leading Brands #1 Supplier of World Leading #1 in North Global Market Daylight Distributor of America for Leader in Water- Fluorescent Professional Professional Based, Antifouling Colorants Restoration and Touch-up and Paints for the Worldwide Cleaning Solutions Repair Produ
Slide 15: 2020 MAP to Growth Overview
2020 MAP to Growth Overview PURPOSE VISION To position RPM for sustained, profitable growth To transform RPM into a more connected creating superior value for its customers, and efficient company focused on entrepreneurs, associates and shareholders. operational excellence and continuous improvement
Slide 16: Center-Led Manufacturing Strategy
Center-Led Manufacturing Strategy Our Manufacturing Has Prioritized Obsessive Customer Service Over Efficiency – We Can Do Both Opportunities to improve: Yields with better package fill control and material composition of finished goods OEE (Overall Equipment Effectiveness) via engineered availa
Slide 17: Center-Led Procurement Strategy
Center-Led Procurement Strategy Global Procurement CENTER-LED A central group to coordinate procurement, leverage spending, set policy, maintain master material lists and share leading practices. Operating Group Purchasing Initiative Categories Key Levers These areas represent over CHEMICALS $1.5 bi
Slide 18: Center-Led Accounting, IT and Administration Strategy
Center-Led Accounting, IT and Administration Strategy Corporate Driven Centralized and Regional Shared Service Centers Reduce the number of - • Legal entities (364), • Auditable entities (163) and, 4 EXCELLENCE AREAS IT CENTERS OF • Accounting locations (104) to centralized and regional accounting a
Slide 19: MAP to Growth Wave Key Achievements: Manufacturing
MAP to Growth Wave 1 Key Achievements: Manufacturing • Identified and executed on targeted $25 mm in annualized savings • Closed 12 plants MANUFACTURING • Instituted common reporting process • Instilling continuous improvement culture 11/12/2019 19
Slide 20: MAP to Growth Wave Key Achievements: Procurement
MAP to Growth Wave 1 Key Achievements: Procurement • Identified and executed on $36 mm in annualized savings • $16 mm ahead of target PROCUREMENT • Formed team from core operations • Working with vendors on supply chain finance • Improved costs by becoming a stronger partner with major suppliers 11/
Slide 21: MAP to Growth Wave Key Achievements: G&A
MAP to Growth Wave 1 Key Achievements: G&A • Identified and executed on $41 mm in annualized savings • $3 mm ahead of target G&A • Reduced more than 600 positions* • Closed 20 warehouses and non-plant locations • Implementation of shared service center • One-third of ERP consolidations complete *Rep
Slide 22: Waves Plan Summary
Waves Plan Summary: Wave 1 Exceeds Initial Target by 23% Annualized Run Rate to Benefit 2022: $106 MM EBIT WAVES PLAN MAP 2020 $106 Annualized Run Rate Annualized to Benefit 2021: $101 MM EBIT Run Rate Annualized Run Rate $ in millions to Benefit 2020: $290 $102 MM $101 $83 MM EBIT EBIT $41 MANUFACT
Slide 23: $53 Million Wave Realized Savings Impact to FY19
$53 Million Wave 1 Realized Savings Impact to FY19 $ in millions Category Q1-Q3 FY 19 Q4 FY19 FY 19 Manufacturing $6 $5 $11 Procurement $4 $4 $8 G&A $22 $12 $34 TOTAL $32 $21 $53 • Figures show actual impact measured by financial performance from completed projects (not annualized run rate) • $32 mi
Slide 24: Fiscal 2019 Fourth-Quarter Adjusted Results
Fiscal 2019 Fourth-Quarter Adjusted Results ($ in millions, except per share amounts) SEGMENT RESULTS C O N S O L I D AT E D INDUSTRIAL Three mos. ended May 31 2019 2018 % Three mos. ended May 31 2019 2018 % Sales $809 $813 (0.5)% Sales $1,601 $1,558 +2.8% EBIT $116 $109 +5.9% CONSUMER Gross Profit
Slide 25: $26 Million Wave Savings Impact to Q1 FY20
$26 Million WAVE 1 Savings Impact to Q1 FY20 $ in millions Category Q1 FY20 Manufacturing $7 Procurement $7 G&A $12 TOTAL $26 • Figures show actual impact measured by financial performance from completed projects (not annualized run rate) 11/12/2019 25
Slide 26: Fiscal 2020 First-Quarter Adjusted Results
Fiscal 2020 First-Quarter Adjusted Results SEGMENT RESULTS CONSTRUCTI ON PRODUCTS GROUP ($ in millions, except per share amounts) Three mos. ended August 31 2019 2018 % C O N S O L I D AT E D Sales $536 $517 +3.6% EBIT $87 $71 +23.1% Three mos. ended August 31 2019 2018 % PERFORM ANC E COATIN GS GRO
Slide 27: Reclassification of Shipping Costs Puts RPM SG&A on Par with Peers
Reclassification of Shipping Costs Puts RPM SG&A on Par with Peers SG&A GROSS PROFIT • In Fiscal 2020, classified shipping AS A PERCENT OF SALES MARGIN costs to customers as part of COGS instead of SG&A 31.8% 40.6% • Change does not impact EBIT • Puts RPM in line with peers and other manufacturers 3
Slide 28: Why RPM is a Great Investment Opportunity
Why RPM is a Great Investment Opportunity Improved competitiveness in = markets served and ability to generate greater Continuous improvement shareholder returns culture focused on greater + operational effectiveness Values-driven in manufacturing, entrepreneurial growth procurement, culture drives
Slide 29: Unique Products and Services Along With Deep Diversification
Our Unique Products and Services Along With Deep Diversification Allow More Stable Growth Premium brand strategy that offers speed, service, customized and advanced formulations Industry leading technical specialists with a focus on application efficiency and solving unique problems consistently
Slide 30: Global Opportunities for RPM to Continue to Grow
Global Opportunities for RPM to Continue to Grow Sustainability: Increasing demand for sustainable products that are user friendly, environmentally safe, stable and provide greater energy efficiency Technology: Expanding demand for new fire protection and hygienic/sanitary technologies, increase
Slide 31: Hire the best people you can find
“Hire the best people you can find. Create an atmosphere that will keep them. Then let them do their jobs.” Frank C. Sullivan, 1947 31
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