Rpm International Inc. · NYSE:RPM
Rpm International — UBS Virtual Chemicals West Coast Mini Conference 2021
52 slides from Rpm International's conference presentation, Feb 23, 2021
Slide 1: UBS Virtual Chemicals West Coast Mini Conference
Frank C. Sullivan Chairman and CEO UBS Virtual Chemicals West Coast February 23, 2021 Mini Conference
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. These statements relate to our plans, expectations, estimates and beliefs of future events or our future financial performance and inv
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 FOUNDED: 1947 HEADQUARTERS: STOCK LISTING: Medina, OH NYSE (Symbol: RPM) 47 consecutive years of dividend increases FIS
Slide 4: MAP to Growth Goals
MAP to Growth 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, while mainta
Slide 5: MAP to Growth Drives Bottom-Line Success
MAP to Growth Drives Bottom-Line Success MANUFACTURING PROCUREMENT G&A • Consolidated manufacturing and • Center led procurement has narrowed • Realigned to four operating segments, distribution facilities; closed 25 out of and strengthen our supplier relationships. each with a new President. the 31
Slide 6: RPM 27% Ahead of Initial Targets
RPM 27% Ahead of Initial Targets $290 MM WAVES PLAN MAP 2020 $132 MM EBIT $106 Annualized $18 Run Rate $101 MM EBIT $69 $ in millions $290 $102 MM $45 $83 MM EBIT EBIT $41 MANUFACTURING $36 PROCUREMENT $25 G&A INITIAL INITIAL INITIAL TARGET TARGET TARGET TARGET WAVE 1 WAVE 2 WAVE 3 Sept 2018 – May 2
Slide 7: RPM Quarterly Performance
RPM Quarterly Performance FY2019 through FY2021 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Growth 2019 2020 2020 2020 2020 2021 2021 Sales 2.8% 0.9% 2.8% 2.9% -8.9% 9.1% 6.0% Adjusted EBIT* 22.4% 25.3% 22.0% 30.4% -11.5% 39.8% 29.7% Adjusted Diluted EPS* 21.6% 25.0% 31.0% 76.9% -8.9% 51.6% 39.5% * Adjusted EBIT growth an
Slide 8: Fiscal 2021 Second-Quarter Reported Results
Fiscal 2021 Second-Quarter Reported Results SEGMENT RESULTS CONSTRUCTI ON PRODUCTS GROUP Nov 30 Nov 30 Three months ended 2020 2019 % ($ in millions, except per share amounts) Sales $504 $500 +0.8% EBIT1 $74 $59 +25.0% C O N S O L I D AT E D PERFORM ANC E COATINGS GROUP Nov 30 Nov 30 Nov 30 Nov 30 T
Slide 9: Fiscal 2021 Second-Quarter Adjusted Results
Fiscal 2021 Second-Quarter Adjusted Results SEGMENT RESULTS CONSTRUCTI ON PRODUCTS GROUP Nov 30 Nov 30 Three months ended 2020 2019 % Sales $504 $500 +0.8% ($ in millions, except per share amounts) EBIT1 $78 $62 +26.8% C O N S O L I D AT E D EBIT Margin1 15.6% 12.4% +320 bps Nov 30 Nov 30 PERFORMANC
Slide 10: Fiscal 2021 Six-Month Reported Results
Fiscal 2021 Six-Month Reported Results SEGMENT RESULTS CONSTRUCTI ON PRODUCTS GROUP Nov 30 Nov 30 6 months ended 2020 2019 % Sales $1,051 $1,036 +1.5% ($ in millions, except per share amounts) EBIT1 $174 $144 +21.2% PERFORM ANC E COATINGS GROUP C O N S O L I D AT E D Nov 30 Nov 30 Nov 30 Nov 30 6 mo
Slide 11: Fiscal 2021 Six-Month Adjusted Results
Fiscal 2021 Six-Month Adjusted Results SEGMENT RESULTS CONSTRUCTI ON PRODUCTS GROUP Nov 30 Nov 30 6 months ended 2020 2019 % Sales $1,051 $1,036 +1.5% ($ in millions, except per share amounts) EBIT1 $181 $149 +21.5% C O N S O L I D AT E D EBIT Margin1 17.2% 14.4% +280 bps Nov 30 Nov 30 PERFORMANC E
Slide 12: Record Cash Flow Generated in FY21
Record Cash Flow Generated in FY21 ($ in millions) SUMMARIZED CASH FLOW AND FREE CASH FLOW METRICS 6 mo Ended 6 mo Ended Nov 30 Nov 30 2020 2019 Net Income $309 $184 Stock-based Compensation $ 21 $ 13 Depreciation & Amortization $ 73 $ 78 Working Capital $ 121 $ 72 Accrued Compensation & Benefits ($
Slide 13: 5-Year and 10-Year Cumulative Total Return
5-Year and 10-Year Cumulative Total Return Among RPM, the S&P 500 and a Customized Peer Group RPM’S TOTAL RETURN HAS OUTPERFORMED S&P 500 by 44% the and its Peers by 19% over the past 10 years This graph compares the cumulative five-year and ten-year total return provided stockholders on RPM Interna
Slide 14: Delivering Value to Shareholders
Delivering Value to Shareholders Only 41 publicly traded U.S. companies have an equal or better record* $2.6+ billion $1.50 Paid $1.25 $1.00 47 Consecutive Years of Dividend $0.75 Increases $0.50 $0.25 $0.00 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19
Slide 15: Operating Groups Drive Growth & Efficiency
Operating Groups Drive Growth & Efficiency Through Four Reportable Segments CONSTRUCTION PERFORMANCE PRODUCTS GROUP COATINGS GROUP FY20 Sales: $1.9 billion - 34% FY20 Sales: $1.1 billion - 20% CONSUMER FY20 SALES: SPECIALTY GROUP PRODUCTS GROUP $5.5 BILLION FY20 Sales: $1.9 billion - 35% FY20 Sales:
Slide 16: Strategic Balance: Repair & Maintenance vs. New Construction
Strategic Balance: Repair & Maintenance vs. New Construction* CONSTRUCTION PERFORMANCE PRODUCTS GROUP COATINGS GROUP 40% 60% ~30% 50% 50% CONSUMER GROUP ~70% SPECIALTY PRODUCTS GROUP 15% 50% 40% 85% New Repair & Specialty 10% Construction Maintenance OEM *Current estimates, which are subject to chan
Slide 17: FY 2020 Global Sales by Region
FY 2020 Global Sales by Region $ in millions CONSOLIDATED $5,507 OUTSIDE NA EUROPE $1,362 $936 – 17% NORTH AMERICA $4,145 – 75% AFRICA/MIDDLE EAST ASIA/PACIFIC $64 – 1% $152 – 3% SOUTH AMERICA $210 – 4% UBS Virtual Chemicals West Coast Mini Conference 2/23/21 17
Slide 18: RPM is Positioned to Grow in New Markets and Product Channels
RPM is Positioned to Grow in New Markets and Product Channels $ in billions Pleasure Marine Cleaners, Powder Coatings, $1.1 Coatings, $0.50 $6 Caulks, Sealants & Cleaning/Restoration, Adhesives, $5 $0.25 Fluorescent Colorants, Wood Wood Care, $3 $0.150 Coatings, $10 Primers, $3 Food Coatings, $5 Sma
Slide 19: Construction Products Group
Construction Products Group $1.9 billon Fiscal 2020 Sales GLOBAL BRANDS REGIONAL BRANDS UBS Virtual Chemicals West Coast Mini Conference 2/23/21 19
Slide 20: Construction Products Group Target Markets
Construction Products Group Target Markets 6 sides of the Building • Bridge • Tunnel + Floor (seamless) • Rail • Water + Fire protection • Transit • Power + Concrete • Highway BUILDING ENVELOPE INFRASTRUCTURE Air | Moisture | Thermal Concrete | Concrete Protection UBS Virtual Chemicals West Coast Mi
Slide 21: Construction Products Group Innovative New Products
Construction Products Group Innovative New Products Insulated Concrete Forms Eucon Baracade WPT Outsulation Securock Construct stronger, highly A water-repellent admixture ExoAir 430 energy efficient concrete used to improve the durability A collaborative solution structures capable of and surface i
Slide 22: Performance Coatings Group
Performance Coatings Group $1.1 billon Fiscal 2020 Sales 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
Slide 23: Performance Coatings Group Target Markets
Performance Coatings Group Target Markets Manufacturing Metals & Mining Pulp & Paper Technology Bridge & Highway Water Wastewater Transportation Marine Commercial Spaces Food & Beverage Pharmaceutical Healthcare Offshore Oil & Gas Petrochemical Power Renewable Energy UBS Virtual Chemicals West Coast
Slide 24: Performance Coatings Group Innovative New Products
Performance Coatings Group Innovative New Products Pyrocrete 341 Soilok Stoncrete EFX A cementitious fireproofing This grout can stabilize soil, A troweled, epoxy mortar that provides hydrocarbon shut off water intrusion and system that has the look and fire, jet fire and cryogenic contain hazardous
Slide 25: Consumer Group
Consumer Group $1.9 billon Fiscal 2020 Sales #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 A
Slide 26: Consumer Group Target Markets
Consumer Group Target Markets • User Targets: DIY/Makers, Professionals, Industrial • Understanding targets’ needs and unmet needs drives innovation machine • Over 30,000 user insights have been gained in the past 24 months alone DIY DIY MAKERS PROFESSIONALS INDUSTRIAL UBS Virtual Chemicals West Coa
Slide 27: Consumer Group Innovative New Products
Consumer Group Innovative New Products BEFORE AFTER HOME Floor Coating SmartCoat Eclipse Wall Repair Patches A durable, two-step coating Advanced paint and primer in Quickly and effectively fix the that transforms the look of one, a next-generation, most common drywall outdated floors in just one in
Slide 28: Specialty Products Group
Specialty Products Group $0.6 billon Fiscal 2020 Sales #1 Supplier of World Leading #1 in North Global Market Daylight Manufacturer of America for Leader in Water- Fluorescent Professional Professional Based, Antifouling Colorants Restoration and Touch-up and Paints for the Worldwide Cleaning Soluti
Slide 29: Specialty Products Group Target Markets
Specialty Products Group Target Markets Food, Pharma, Packaging, Safety Agriculture, Cosmetics Equipment, Forestry, Lumber Apparel Furniture and Appliance, Auto, Marine, Fuel, Restoration & Cabinetry Marine, Furniture Cleaning Construction Protection, Equipment & Cosmetics Chemicals UBS Virtual Chem
Slide 30: Specialty Products Group Innovative New Products
Specialty Products Group Innovative New Products TRU-CORE for VerdeCoat Underwater Antifouling Engineered Woods A new “green” barrier coating Protection Kit Fully penetrates wood from specially formulated for Running Gear Guardian the inside out with anti- packaging using ingredients provides superi
Slide 31: Acquisition Program Targets Niche Businesses with Leading Brands
Acquisition Program Targets Niche Businesses Broadened focus beyond with Leading Brands coatings and sealants to adjacent product categories, such as sanding, cleaning and others. ✓ Successful, niche businesses with ★ Achieve revenue synergies leading brands ★ New channels ✓ Above average gross prof
Slide 32: Intercompany Connections Drive Value Creation
Intercompany Connections Drive Value Creation Rust-Oleum and Tremco Leveraging Rust-Oleum’s retail relationships to expand the reach of Tremco’s product to contractors large and small Tremco and Fibergrate Connect to bring new rooftop safety solutions to market Wood Finishes and Rust-Oleum Wood Fini
Slide 33: RPM is Building a Better World
RPM is Building a Better World From homes and to infrastructure, workplaces, …RPM’s products are trusted by consumers and precious and professionals worldwide to beautify landmarks… structures, protect them from harsh environments, prolong their lifecycles and enhance their sustainability. UBS Virtu
Slide 34: Appendix
APPENDIX Reconciliations of Non-GAAP Measures to GAAP Measures
Slide 35: Consolidated Statements of Income
Consolidated Statements of Income ($ in thousands, except per share and percent data) (Unaudited) Three Months Ended November 30 2020 % 2019 % % Change Net Sales $ 1,485,915 $ 1,401,292 6.0 Cost of Sales 899,743 60.6 871,894 62.2 Gross Profit 586,172 39.4 529,398 37.8 SG&A 399,418 26.9 403,357 28.8
Slide 36: Consolidated Statements of Income
Consolidated Statements of Income ($ in thousands, except per share and percent data) (Unaudited) Six Months Ended November 30 2020 % 2019 % % Change Net Sales $ 3,092,586 $ 2,874,056 7.6 Cost of Sales 1,852,759 59.9 1,769,904 61.6 Gross Profit 1,239,827 40.1 1,104,152 38.4 SG&A 795,370 25.7 803,923
Slide 37: Non-GAAP Financial Measures
Non-GAAP Financial Measures The following are the non-GAAP financial measures used in this presentation: • EBIT is defined as earnings (loss) before interest and taxes. Management uses EBIT, as defined, as a measure of operating performance, since interest expense, net, essentially relates to corpor
Slide 38: Free Cash Flow Generation (Non-GAAP Measure)
Free Cash Flow Generation (Non-GAAP Measure) ($ in thousands) Fiscal Year Ended May 31, 2020 2019 2018 2017 2016 Cash Flows from Operating Activities: Net income $ 305,082 $ 267,687 $ 339,257 $ 184,671 $ 357,458 Depreciation and amortization 156,842 141,742 128,499 116,773 111,039 Working capital an
Slide 39: Adjustments Detail
Adjustments Detail (a) Inventory related charges reflect the following in fiscal 2021: Charges recorded in Cost of Goods Sold that reflect product line and SKU rationalization at our Consumer Segment and the reversal of prior period product line and SKU rationalization inventory charges due to the s
Slide 40: Reconciliation of Reported to Adjusted EPS
Reconciliation of "Reported" to "Adjusted" EPS (Unaudited) Reconciliation of Reported Earnings per Diluted Share to Adjusted Three Months Ended November 30 Earnings per Diluted Share (All amounts presented after-tax): 2020 2019 Reported Earnings per Diluted Share $ 0.98 $ 0.59 Inventory-related char
Slide 41: Reconciliation of Reported to Adjusted EPS
Reconciliation of "Reported" to "Adjusted" EPS (Unaudited) Reconciliation of Reported Earnings per Diluted Share to Adjusted Six Months Ended November 30 Earnings per Diluted Share (All amounts presented after-tax): 2020 2019 Reported Earnings per Diluted Share $ 2.37 $ 1.41 Inventory-related charge
Slide 42: EBIT (Non-GAAP Measure): RPM Consolidated
EBIT** (Non-GAAP Measure): RPM Consolidated ($ in thousands, except per share and percent data) Three Months Ended November 30 (Unaudited) 2020 2019 Net Income $ 127,884 $ 77,322 Provision for Income Taxes 39,072 24,431 Income Before Income Taxes 166,956 101,753 Interest Expense 21,266 26,341 Invest
Slide 43: EBIT (Non-GAAP Measure): RPM Consolidated
EBIT** (Non-GAAP Measure): RPM Consolidated ($ in thousands, except per share and percent data) Six Months Ended November 30 (Unaudited) 2020 2019 Net Income $ 308,670 $ 183,818 Provision for Income Taxes 99,655 60,784 Income Before Income Taxes 408,325 244,602 Interest Expense 43,011 54,658 Investm
Slide 44: EBIT (Non-GAAP Measure): Construction Products Segment
EBIT** (Non-GAAP Measure): Construction Products Segment ($ in thousands, except per share and percent data) (Unaudited) Three Months Ended November 30 2020 2019 Income Before Income Taxes $ 71,832 $ 57,123 Add: Interest Expense, Net* 2,141 2,074 EBIT** (non-GAAP measure) 73,973 59,197 Restructuring
Slide 45: EBIT (Non-GAAP Measure): Construction Products Segment
EBIT** (Non-GAAP Measure): Construction Products Segment ($ in thousands, except per share and percent data) (Unaudited) Six Months Ended November 30 2020 2019 Income Before Income Taxes $ 170,182 $ 139,803 Add: Interest Expense, Net* 4,251 4,101 EBIT** (non-GAAP measure) 174,433 143,904 Inventory-r
Slide 46: EBIT (Non-GAAP Measure): Performance Coatings Segment
EBIT** (Non-GAAP Measure): Performance Coatings Segment ($ in thousands, except per share and percent data) (Unaudited) Three Months Ended November 30 2020 2019 Income Before Income Taxes $ 24,047 $ 33,320 Add: Interest (Income), Net* (9) (25) EBIT** (non-GAAP measure) 24,038 33,295 Inventory-relate
Slide 47: EBIT (Non-GAAP Measure): Performance Coatings Segment
EBIT** (Non-GAAP Measure): Performance Coatings Segment ($ in thousands, except per share and percent data) (Unaudited) Six Months Ended November 30 2020 2019 Income Before Income Taxes $ 52,561 $ 61,377 Add: Interest Expense, Net* 22 104 EBIT** (non-GAAP measure) 52,583 61,481 Inventory-related cha
Slide 48: EBIT (Non-GAAP Measure): Consumer Segment
EBIT** (Non-GAAP Measure): Consumer Segment ($ in thousands, except per share and percent data) (Unaudited) Three Months Ended November 30 2020 2019 Income Before Income Taxes $ 88,368 $ 34,456 Add: Interest Expense, Net* 64 56 EBIT** (non-GAAP measure) 88,432 34,512 Inventory-related charges (a) (1
Slide 49: EBIT (Non-GAAP Measure): Consumer Segment
EBIT** (Non-GAAP Measure): Consumer Segment ($ in thousands, except per share and percent data) (Unaudited) Six Months Ended November 30 2020 2019 Income Before Income Taxes $ 221,089 $ 93,614 Add: Interest Expense, Net* 127 161 EBIT** (non-GAAP measure) 221,216 93,775 Inventory-related charges (a)
Slide 50: EBIT (Non-GAAP Measure): Specialty Segment
EBIT** (Non-GAAP Measure): Specialty Segment ($ in thousands, except per share and percent data) (Unaudited) Three Months Ended November 30 2020 2019 Income Before Income Taxes $ 28,406 $ 18,762 Add: Interest Expense, Net* 73 7 EBIT** (non-GAAP measure) 28,479 18,769 Restructuring expense (b) 495 81
Slide 51: EBIT (Non-GAAP Measure): Specialty Segment
EBIT** (Non-GAAP Measure): Specialty Segment ($ in thousands, except per share and percent data) (Unaudited) Six Months Ended November 30 2020 2019 Income Before Income Taxes $ 48,855 $ 42,089 Add: Interest Expense (Income), Net* 155 (19) EBIT** (non-GAAP measure) 49,010 42,070 Restructuring expense
Slide 52: EBIT & EBITDA (Non-GAAP Measures)
EBIT* & EBITDA (Non-GAAP Measures) *EBIT is defined as earnings before interest and taxes, while EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a per
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