Csw Industrials, Inc. · NYSE:CSW
Csw Industrials — Investor Presentation (September 2015)
33 slides from Csw Industrials's investor presentation, Sep 16, 2015
Slide 1: Company Presentation
Exhibit 99.1 Company Presentation September 16, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements • This presentation contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 relating to, among other things, the manner, tax-free nature and expected benefits associated with the proposed spin-off of certain control as
Slide 3: Pro-Forma and Non-GAAP Financial Information
Pro-Forma and Non-GAAP Financial Information • The pro forma financial data in this presentation as of and for the fiscal year ended March 31, 2015 has been adjusted (a) to include the acquisition of substantially all the assets of Strathmore Products, Inc. and (b) to give effect to the proposed spi
Slide 4: Transaction Overview
Transaction Overview The separation is designed to unlock shareholder value immediately and to enhance long-term shareholder value by establishing two strong, independent companies with distinct growth strategies • Structured as a tax-free spin transaction • Form 10 Registration Statement for CSWI i
Slide 5: Experienced Management Team
Experienced Management Team Executive Officers Joseph B. Armes Kelly Tacke Christopher J. Mudd Chairman and CEO CFO President & COO Board of Directors Michael Linda William F. Robert Gambrell Livingstone, Ph.D. Quinn Swartz Former Executive Dean of The George Executive Chairman Lead director of the
Slide 6: I. Company Overview
I. Company Overview
Slide 7: Investment Highlights
Investment Highlights • Broad Portfolio of Leading Industrial Brands and Solutions • Sustainable Organic Revenue Growth and Operating Performance • Stable Platform for Acquisitions with Proven Track Record • Culture of Product Enhancement and Customer Centric Solutions • Diverse Sales and Distributi
Slide 8: CSWI Overview
CSWI Overview • A diversified industrial growth company with well-established, scalable platforms • Deep domain expertise across three segments: Industrial Products Coatings, Sealants & Adhesives Specialty Chemicals • PF(1) 2015 Net Revenues: $325.0mm, PF(1) 2015 EBITDA: $60.1mm • PF(2) 2016Q1 Net R
Slide 9: CSWI Corporate Culture
CSWI Corporate Culture CSWI’s corporate culture will SHAPE and GUIDE our company by helping each team member understand how to make his/her contribution to the company we serve. Our culture manifests the OBSERVED BEHAVIORS, the NORMS, and the DOMINANT VALUES of the company. Our culture should be eff
Slide 10: CSWI Corporate Culture (Cont'd)
CSWI Corporate Culture (Cont’d) Our corporate culture will be based on our core values: • Integrity • Respect • Excellence • Stewardship • Citizenship • Accountability • Teamwork 10
Slide 11: CSWI Business Segments
CSWI Business Segments Business Segment Legal Entity Industrial Brands 11
Slide 12: History of CSWI Businesses
History of CSWI Businesses 1949 1991 CSWC acquires CSWC acquires SureSeal founded in Jet-Lube founded in Glendale, CA Boise, ID CSWC acquires Design Water, 1937 RCT, Evolve and CSWC acquires OilSafe founded in CSWC acquires RectorSeal Houston, TX SmokeGuard 1961 1969 1973 1979 1989 2005 2012 2013 20
Slide 13: CSW Industrials employs over 750 individuals worldwide
• CSW Industrials employs over 750 individuals worldwide 13
Slide 14: CSWI Business Segments
CSWI Business Segments Well-balanced portfolio of businesses with strong organic growth profiles and numerous product line and strategic acquisition opportunities in each segment PF2015 Net Revenues (1) PF2015 EBITDA (1)(2) (3) Other (3) Other <1% Specialty <1% Specialty Chemicals Chemicals Industri
Slide 15: CSWI Key Growth Drivers
CSWI Key Growth Drivers Benefits resulting from the Share Distribution and Related Reorganization Leverage Existing Operational Excellence Customer Relationships, Brands and Solutions Focused Acquisitions that Leverage our Distribution Channels 15
Slide 16: II. Key Growth Drivers
II. Key Growth Drivers
Slide 17: Benefits from Reorganization
Benefits from Reorganization As an independent, publicly traded company, CSWI will have greater focus on its core businesses and greater flexibility to pursue growth opportunities including organic investments, product line and strategic acquisitions Post Spin-Off Structure Benefits from Spin-Off Sh
Slide 18: Leverage Existing Relationships and Products
Leverage Existing Relationships and Products Coatings, Key End Use Industrial Specialty PF2015 Sales Revenue Sealants & Markets (1) Products Chemicals by End Market (2) Adhesives Plumbing Other Architecturally Energy 3% Specified Industrial 14% Building Products 11% HVAC Plumbing 19% Energy Rail 14%
Slide 19: Focused Acquisitions
Focused Acquisitions Capital Invested for Acquisitions ($mm) Strategy & Execution Plan $148.1 • Identify and execute acquisitions that will broaden our portfolio of industrial brands and products, and support our business segments $68.8 • Eliminate costs and overhead in strategic acquisitions and mo
Slide 20: Operational Excellence
Operational Excellence • Focus on operational excellence in all aspects of CSWI’s business, leading to improved efficiencies and increased profitability • Examples of achieving savings through operational excellence: CSWI is consolidating the manufacturing of all lubricant and grease products curren
Slide 21: III. Financial Overview
III. Financial Overview
Slide 22: Combined Financials – Net Revenues
Combined Financials – Net Revenues Net Revenues ($mm, %) Highlights • Consistent mid double-digit net $375.0 100.0% revenue growth (16.4%, 16.4% and $325.0 13.0% in FY2013, FY2014 and FY2015, respectively) supported by $300.0 80.0% $63.2 industry leading products in high $231.7 growth end markets wi
Slide 23: Strong Organic & Acquisition Growth
Strong Organic & Acquisition Growth (1) Net Revenues ($mm, %) Highlights ($ millions) $300 • 15.3% total net revenue CAGR over the last three fiscal years $261.8 $250 $15.2 $231.7 Strong compounded organic net $7.3 revenue growth of 7.0% as a $199.1 $200 result of CSWI’s focus on end $24.7 $171 mark
Slide 24: Combined Financials – Margins
Combined Financials – Margins Operating Income ($mm, %) Highlights $70.0 70.0% $60.0 $47.2 60.0% • Attractive operating and EBITDA $50.0 $6.4 50.0% margins with potential improvement $37.9 $40.0 $32.2 40.0% from integration of businesses and $30.0 30.0% 16.2% 16.4% 14.5% 17.3% shared best practices
Slide 25: Combined Financials – Capital Investment & ROIC
Combined Financials – Capital Investment & ROIC Capital Expenditures ($mm, %) Highlights $20.0 $15.5 15.0% • Historical capital expenditures to net $15.0 12.0% revenue ratio averaged 5.7% in the 7.8% 6.5% $9.6 9.0% last three years $10.0 6.0% 3.0% 2.1% Capital expenditures declined in 3.0% $1.9 PF20
Slide 26: Segment Financials – Net Revenues
Segment Financials – Net Revenues Net Revenues ($mm) Highlights $350.0 $325.0 • 27.8% net revenue CAGR over the last two fiscal years, including $300.0 $63.2 Strathmore $250.0 $231.7 • Recent growth primarily attributable $52.1 to an increase in sales volumes in the $199.1 $200.0 $47.0 Industrial Pr
Slide 27: Segment Financials – Margins
Segment Financials – Margins Operating Income ($mm) Highlights $55.0 $47.2 $6.4 • Many products enjoy strong margin $37.9 $40.0 $32.2 $11.4 profiles due to high performance and $9.4 $25.0 $7.7 quality and loyal customer bases $12.6 $19.7 $15.3 $10.9 $10.0 $13.4 $15.9 $13.0 $4.1 $9.7 • Margin expansi
Slide 28: Strong Balance Sheet (PF as of June 30, 2015)
Strong Balance Sheet (PF as of June 30, 2015) Total Capitalization Indebtedness x PF 2015 x PF 2015 (1) (1) ($mm) Amount EBITDA ($mm) Amount EBITDA Cash and Cash Equivalents (2) $45.6 Debt: RectorSeal Line of Credit $12.5 0.2x Debt: Whitmore Secured Term Loan 13.6 0.2x Current Portion of Long-Term D
Slide 29: CSWI vs. Industrial Goods Peers
CSWI vs. Industrial Goods Peers 2011–2014 Net Revenue CAGR 30.0% 24.6% 24.3% 25.0% 22.1% 20.0% 15.7% 15.0% 13.0% (1) 10.0% 8.6% 6.6% Median: 5.7% 4.8% 5.0% 2.4% 1.9% 0.8% 0.0% (5.0%) (3.1%) CSWI with MEI CCF CSWI w/o CTS LFUS GRC NNBR ASTE ORBK CMCO LXU Strathmore Strathmore 2014 EBITDA Margin 25.0%
Slide 30: CSWI vs. Specialty Chemicals Peers
CSWI vs. Specialty Chemicals Peers 2011–2014 Net Revenue CAGR 30.0% 24.6% 25.0% 20.2% 20.1% 20.0% 15.7% 15.0% 7.5% (1) 10.0% 6.2% 3.9% 2.9% Median: 3.4% 5.0% 2.0% 0.0% (0.2%) (5.0%) (10.0%) (5.1%) (6.6%) CSWI with FTK LNDC CSWI w/o IOSP TG WDFC ZEP KOP FF KRA OMN Strathmore Strathmore 2014 EBITDA Ma
Slide 31: Appendix
Appendix
Slide 32: EBITDA Reconciliation
EBITDA Reconciliation ($mm) FY2013 FY2014 PF2015 PF2016Q(3) Operating Income $32.2 $37.9 $44.0 $14.3 Depreciation 3.9 5.3 5.9 1.7 Amortization 2.8 3.9 4.6 1.7 Strathmore Operating Income 6.4 Strathmore D&A (1) 2.4 Other Pro Forma Adjustments (2) (3.2) 1.1 EBITDA $38.9 $47.1 $60.1 $18.7 (1) Strathmor
Slide 33: Historical and Pro Forma Financial Results
Historical and Pro Forma Financial Results ($mm) FY2013 FY2014 FY2015 PF2015 PF2016Q1(3) Net Revenues Industrial Products $73.3 $93.0 $118.4 $118.4 $40.0 Coatings, Sealants & Adhesives 42.6 47.0 52.1 115.3 28.4 Specialty Chemicals 82.4 90.7 89.7 89.7 20.2 Other (1) 0.9 1.0 1.6 1.6 0.3 Consolidated N
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