Rpm International Inc. · NYSE:RPM
Rpm International — Investor Day (October 2022)
66 slides from Rpm International's investor day presentation, Oct 7, 2022
Slide 1: Investor Day
Investor Day mM October 7, 2022
Slide 2: Forward-Looking Statements and Regulation G
Forward-Looking Statements and Regulation G This presentation contains “forward-looking statements” relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us and are subject to unce
Slide 3: Agenda
Agenda Overview v Frank Sullivan, Chairman & Chief Executive Officer MAP 2025 Tim Kinser, Vice President – Operations Capital Update Rusty Gordon, Vice President & Chief Financial Officer Sustainability at RPM Tracy Crandall, Vice President – Compliance & Sustainability, Associate General Counsel Co
Slide 4: Overview
Overview Frank Sullivan Chairman & Chief Executive Officer
Slide 5: 75 Years of RPM's Entrepreneurial Growth Culture
RPM’s Culture 75 Years of RPM’s Entrepreneurial Growth Culture RPM Investor Day | October 7, 2022 5
Slide 6: Driving Significant Improvements to Achieve Operating Efficiencies
RPM’s Transformation Driving Significant Improvements to Achieve Operating Efficiencies RPM Investor Day | October 7, 2022 6
Slide 7: Operating Groups Drive Growth & Efficiency
Operating Groups Drive Growth & Efficiency RPM Investor Day | October 7, 2022 7
Slide 8: Commitment to Total Shareholder Return
Commitment to Total Shareholder Return Comparison of Cumulative Total Return vs. S&P 500 and a Customized Peer Group $480 RPM OUTPERFORMED: RPM OUTPERFORMED: $430 S&P 500 by Peers by S&P 500 by Peers by RPM 17.7% 17.5% 9.3% 11.1% $220 $380 S&P 500 Peer Group $200 $330 RPM $180 $280 $160 S&P 500 Peer
Slide 9: MAP 2025
MAP 2025 Tim Kinser Vice President - Operations
Slide 10: Where We've Been
Where We’ve Been
Slide 11: What did we set out to do?
What did we set out to do? Strategy and Culture VISION To transform RPM into a more connected and efficient company focused on operational excellence and continuous improvement, while maintaining the strengths of its entrepreneurial culture. RPM Investor Day | October 7, 2022 11
Slide 12: MAP to Growth – Significant Operational Efficiency Improvement
MAP to Growth – Significant Operational Efficiency Improvement MAP to Growth Annualized Run Rate $ in millions $320 MAP Savings $290 $300 MAP Savings • Exceeded targets on efficiency improvements within our control $250 • Operational improvements driven by: $200 • Center-led manufacturing • Center-l
Slide 13: MAP to Growth Financial Results: Adapting to New Industry Conditions
MAP to Growth Financial Results Adapting to New Industry Conditions MAP initiatives helped RPM navigate compounding industry challenges Mar 2020 – COVID lockdowns Feb 2021 – Winter Storm Uri Mar 2021 – Supply chain disruptions begin Apr 2021 – Explosion at alkyd resin supplier 2021-2022 – Inflation
Slide 14: MAP to Growth Financial Results
MAP to Growth Financial Results MAP 2020 FY21 FY22 Goals Revenue $6.25B $6.1B $6.7B Gross margin 42.3%¹ 39.4% 36.3% Adjusted EBIT ² $1,000M $785M $708M Adjusted EBIT margin ² 16.0% 12.8% 10.6% Industry headwinds led to significant financial impact partially offset by controllable efficiency improvem
Slide 15: MAP – Laying the Foundation for Continued Successes
MAP – Laying the Foundation for Continued Successes Completed 75% of ERP Consolidated accounting migrations to 4 platforms locations and improved controls Implemented RPM-wide systems Repurchased $633M of stock to enhance data analytics since 2018 ¹ ² Optimized manufacturing Improved goal-setting /
Slide 16: What did we accomplish?
What did we accomplish? Enhanced collaboration & coordination Adopted a culture for continued success • Connections Creating Value – increased intercompany interactions • Launched Global Shared Service Centers • Implemented RPM-wide systems to improve visibility, productivity and analytics capabilit
Slide 17: Corsicana – Generating Benefits from Collaboration
What did we accomplish? Corsicana – Generating Benefits from Collaboration • Purchased in September 2021 • First alkyds produced in October 2021 to help offset loss of large industry supplier • Supplier to all RPM segments • Strengthens and adds flexibility to supply chain RPM Investor Day | October
Slide 18: MAP 2020 was a milestone – not the finish line
What did we set out to do? Strategy and Culture MAP 2020 was a milestone – not the finish line We’ve put in place resources, systems and a culture to achieve continued financial and organizational success RPM Investor Day | October 7, 2022 18
Slide 19: Where We're Going
Where We’re Going
Slide 20: MAP to Growth: Margin Acceleration Plan
MAP to Growth Margin Acceleration Plan RPM Investor Day | October 7, 2022 20
Slide 21: MAP 2025: Margin Achievement Plan
MAP 2025 Margin Achievement Plan RPM Investor Day | October 7, 2022 21
Slide 22: MAP 2025 Goals
MAP 2025 Goals GOALS ¹ By May 31, 2025, RPM is targeting improvements to: $8.5B Revenue 42% Gross Margin 16% Adjusted EBIT Margin 1 – Projected goals are on an annualized run-rate basis to be fully realized in FY26 RPM Investor Day | October 7, 2022 22
Slide 23: MAP 2025 Revenue Bridge
MAP 2025 Revenue Bridge FY22 – FY25 Revenue Bridge ¹ • Forecast developed through $9,000 $485 $250 $8,500 bottom-up analysis $8,000 $1,057 • Core CAGR of 5% $7,000 $6,708 • Some examples of strategic $6,000 investments include: In millions • Carboline end-market diversification $5,000 • CPG enhanced
Slide 24: MAP 2025 Targeted Savings
MAP 2025 Targeted Savings Forecasted MAP 2020 successes MAP 2025 focus savings • Implemented MS-168 at over 40 larger • Expand MS-168 to additional facilities Manufacturing facilities • Continue to optimize footprint (MS-168) • Created center-led manufacturing • Execute new approaches to plant $120
Slide 25: MAP 2025: $465M in Savings by Workstream
Where We’re Going: MAP 2025 | $465M in Savings by Workstream Wave Plan by Workstream Annualized Total Annualized $185 M EBIT $465 M EBIT $500 $450 $30 $400 $120 $30M $100 $350 realized Annualized in Q1-23 $160 M EBIT $55 In millions $300 $30 $250 $215 $200 $85 Annualized $150 $120 M EBIT $45 $100 $6
Slide 26: MAP 2025: EBIT Bridge
Where We’re Going: MAP 2025 | EBIT Bridge FY22 – FY25 EBIT Bridge¹ $1,600 $465 $170 • Organic sales growth includes both core and strategic growth EBIT $1,400 $1,360 contributions $1,200 • MAP 2025 savings workstreams $40 $317 (CS-168, MS-168 and procurement) In millions $1,000 driving >50% of EBIT
Slide 27: MAP 2025 Financial Goals
MAP 2025 Financial Goals FY22 Target Dollars in millions Improvement CAGR ¹ Actuals FY25 Total Revenue $6,708 +$1,792 $8,500 6.1% Gross Profit $2,433 +$1,137 $3,570 10.0% % margin 36.3% +570 bps 42.0% SG&A $1,788 -$422 $2,210 ² 5.4% % of sales 26.7% +70 bps 26.0% Adjusted EBIT $708 ³ +$652 $1,360 17
Slide 28: Factors Impacting Speed to Achieve MAP 2025 Goals
Factors Impacting Speed to Achieve MAP 2025 Goals Global Energy Crisis Accelerated M&A Larger Commodity Recession Cycle Recovery Strong USD Strong GDP Growth - + Slower Target Faster RPM Investor Day | October 7, 2022 28
Slide 29: Capital Update
Capital Update Rusty Gordon Vice President & Chief Financial Officer
Slide 30: Current Capital Priorities
Current Capital Priorities Maintain Investment Favor Internal Growth 49 Years of Consecutive Grade Rating through Capex Dividend Increases Continue Share M&A with Reasonable Repurchases Above Valuation Pre-MAP levels RPM Investor Day | October 7, 2022 30
Slide 31: Debt Structure Provides Flexibility to Invest for Growth
Debt Structure Provides Flexibility to Invest for Growth • Modest repayment requirements through 2026 $2,000 • Credit facility provides flexibility for M&A $1,800 • $1.15 billion of total liquidity (cash + credit facility availability) as of 8/31/22 $1,600 • Following 2022 bond maturity, $1.65B of d
Slide 32: Sustainability at RPM
Sustainability at RPM Tracy Crandall Vice President – Compliance & Sustainability, Associate General Counsel
Slide 33: Sustainability = Building a Better World
Sustainability = Building a Better World Building a Better World is about engaging associates throughout RPM in our ongoing commitment to create a sustainable future using our values of transparency, trust and respect. These values fuel our continued focus on solutions that grow our business, drive
Slide 34: Sustainability Report – Released in August of 2022
Sustainability Report – Released in August of 2022 RPM Investor Day | October 7, 2022 34
Slide 35: Our Approach
Our Approach RPM Investor Day | October 7, 2022 35
Slide 36: 2025 Sustainability Goals
2025 Sustainability Goals Reduce our Scope 1 and 2 greenhouse Reduce our waste to Identify and gas (GHG) emissions landfill by 10% and implement additional from our facilities by increase recycling by opportunities for 20% per ton of 20% per ton of water reuse and production and production from our
Slide 37: Our Products
Our Products AlphaGuard, a liquid applied Nudura Insulated Concrete Kop-Coat and AGPRO roofing system, keeps tons of Forms (ICFs) provide superior produce adjuvants that material out of stressed energy efficiency by lowering increase crop yields and can landfills each year because it utility costs,
Slide 38: Our People
Our People Tremco RISE (Roofing Diversity and Inclusion Training and Development Individuals Succeed through We embrace the ways our Using associate feedback to Education) associates are different, develop new and improved This program helps educate a including their background, initiatives focused
Slide 39: Our Processes
Our Processes Environmental, Health and Water Stress Analysis MS-168 Safety We completed a water stress Closed older/redundant Maintaining safe and analysis for all manufacturing inefficient locations sustainable operations for locations in 2021, which Focused on operational our associates, communit
Slide 40: Significant Sustainability Gains Achieved to Date
Significant Sustainability Gains Achieved to Date Environmental Sustainability Impact of Map to Growth MS-168 – 2015-20211 [1] Assumptions and estimation methodology used for 2015 differs from the calculation and estimation methodology used for 2021 given the limited data available for 2015. [2] 201
Slide 41: Our Governance: Board of Directors
Our Governance Board of Directors • Governance and Nominating Committee - oversight responsibility • Our three most recently appointed board members are: • Ellen M. Pawlikowski, General (Retired) of the United States Air Force • Elizabeth F. Whited, Executive Vice President – Sustainability & Strate
Slide 42: Objectives for Driving Continued Progress
Objectives for Driving Continued Progress • Develop People and Products Goals • Develop renewable energy strategy • Update materiality assessment • Improved data analytics in risk assessment process • Further assess and model climate change risks to report using TCFD framework • Meet 2025 goals • Tr
Slide 43: Construction Products Group
Construction Products Group Paul Hoogenboom CPG Group President
Slide 44: Strategic Realignment to Drive Growth & Efficiency
Strategic Realignment to Drive Growth & Efficiency AIR • MOISTURE • THERMAL 6 sides of the Building + Floor (seamless) + Fire protection + Concrete INFRASTRUCTURE Concrete Concrete Protection RPM Investor Day | October 7, 2022 44
Slide 45: Strong Financial Performance Since MAP to Growth Introduction
Strong Financial Performance Since MAP to Growth Introduction CPG CPG CPG Sales Adjusted EBIT ¹ Adjusted EBIT Margin ¹ $ in millions $ in millions 14.7% $400 $366 $2,486 14.0% $2,500 $350 12.0% 10.6% $1,900 $300 $2,000 10.0% $250 $201 $1,500 8.0% $200 $150 6.0% $1,000 $100 4.0% $500 $50 2.0% $0 $0 0
Slide 46: Trusted Brands
Trusted Brands GLOBAL BRANDS REGIONAL BRANDS RPM Investor Day | October 7, 2022 46
Slide 47: Markets
Markets • Bridge 6 sides of the Building • Rail + Floor (seamless) • Transit • Highway + Fire protection • Tunnel + Concrete • Water • Power BUILDING ENVELOPE INFRASTRUCTURE Air | Moisture | Thermal Concrete | Concrete Protection RPM Investor Day | October 7, 2022 47
Slide 48: RPM Theory of Competition
RPM Theory of Competition MAP 2025 1947 Decision Making The Wolfpack + as Close to the Customer as Possible RPM Investor Day | October 7, 2022 48
Slide 49: CPG Theory of Competition
CPG Theory of Competition … platforms … CREATE + DRIVE “Good platforms make it easy to do hard things.” - IPP THE MARKET … solve unique problems … “CPG wins when we solve unique problems.” - PGH … new scientific truth … “ A new scientific truth does not triumph by convincing its opponents and making
Slide 50: Create + Drive the Market
Create + Drive the Market “Platforms…Solve Unique Problems…A New Generation…” STRATEGIC TECHNOLOGY PLATFORMS (12) #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 R&D + Manufacturing + Supply Chain + M&A Consultative Sales + Technical Support + Training Direct + Specialty Distribution + Self-Perform Regional
Slide 51: Restoration…the roof
Restoration…the roof Asset Management: eliminate run-to-failure Cost of Neglect / Run-To-Failure 2012 2015 2018 2022 MACRO TRENDS SF Wet 5,000 25,000 50,000 170,000 • Labor shortage Cost/SF $40 $40 $40 $40 • Less “feet in the street” Replace $ $200K $1M $2M $6.8M • “Unmaintainable” buildings • Zero
Slide 52: Restoration…4 more sides of the building
Restoration…4 more sides of the building AFTER · Air and watertight · Utilizing existing glass · Clean interior sight line · No occupant displacement BEFORE · Neoprene rubber · Visual degradation MACRO TRENDS · Air and water leakage · Residue on glass from degradation • Labor shortage · Staining • L
Slide 53: Restoration…Insulated Concrete Forms (ICF)
X Restoration…Insulated Concrete Forms (ICF) FAST FACTS · First net-zero school in North America (2010) · Cost comparable to “conventional” schools · International recognition, extensive national press of ICF technology MACRO TRENDS · PV sqft 25% of “conventional” construction · Tornado-resistant wa
Slide 54: Before and After Restoration Examples
Before After Parking Garage Restoration: Before After Facade Restoration: Roofing + HVAC Restoration: Before After RPM Investor Day | October 7, 2022 54
Slide 55: Strategic Realignment to Drive Growth & Efficiency
Strategic Realignment to Drive Growth & Efficiency “Good platforms make it easy to do hard things.” AIR • MOISTURE • THERMAL - IPP 6 sides of the Building + Floor (seamless) + Fire protection + Concrete INFRASTRUCTURE Concrete Concrete Protection RPM Investor Day | October 7, 2022 55
Slide 56: "Life's Most Persistent and Urgent Question"
“Life’s Most Persistent and Urgent Question” RPM Investor Day | October 7, 2022 56
Slide 57: Conclusion
Conclusion Frank Sullivan Chairman & Chief Executive Officer
Slide 58: Takeaways
Takeaways 1 Culture of collaboration, efficiency and entrepreneurial growth 2 MAP improvements led by manufacturing, procurement and commercial initiatives 3 Strong balance sheet with flexibility to invest in growth projects 4 Sustainability is an integral part of RPM’s operations and culture 5 CPG’
Slide 59: Thank you for your interest in RPM
Q&A Thank you for your interest in RPM RPM Investor Day | October 7, 2022 59
Slide 60: Appendix: Reconciliation of Non-GAAP to GAAP Measures
Appendix Reconciliation of Non-GAAP to GAAP Measures
Slide 61: Non-GAAP Financial Measures
Non-GAAP Financial Measures The following are the non-GAAP financial measures used in this presentation: *Interest (Income) Expense, Net includes the combination of interest (income) expense and investment (income) expense, net. **EBIT is defined as earnings (loss) before interest and taxes. Managem
Slide 62: Adjustment Detail For RPM Consolidated for Fiscal Years 2021 and 2022
Adjustment Detail For RPM Consolidated for Fiscal Years 2021 and 2022 a) Charges recorded in Cost of Goods Sold related to inventory write-offs in connection with restructuring activities, partially offset by subsequent recoveries and revisions of accrual estimates. b) Reflects restructuring charges
Slide 63: EBIT (Non-GAAP Measure): RPM Consolidated Fiscal Years 2021 and 2022
EBIT** (Non-GAAP Measure): RPM Consolidated Fiscal Years 2021 and 2022 ($ in thousands, except per share and percent data) (Unaudited) NOTE – Refer to “Non-GAAP Financial Measures” slide for definitions of non-GAAP measures identified (*) in the table above and “Adjustments Detail” slide for further
Slide 64: EBIT (Non-GAAP Measure): Construction Products Segment: Fiscal Year 2022
EBIT** (Non-GAAP Measure): Constructions Products Segment: Fiscal Year 2022 ($ in thousands, except per share and percent data) (Unaudited) Fiscal Year Ended May 31, 2022 2021 Income Before Income Taxes $ 396,509 $ 291,773 Add: Interest Expense, Net* 6,673 8,030 EBIT** (non-GAAP measure) 403,182 299
Slide 65: Adjustment Detail For RPM Consolidated for Fiscal Year 2019
Adjustment Detail For RPM Consolidated for Fiscal Year 2019 RPM Investor Day | October 7, 2022 65
Slide 66: EBIT (Non-GAAP Measure): Construction Products Segment: Fiscal Year 2019
EBIT** (Non-GAAP Measure): Constructions Products Segment: Fiscal Year 2019 RPM Investor Day | October 7, 2022 66