Rpm International Inc. · NYSE:RPM
Rpm International — Morgan Stanley Global Chemicals, Agriculture & Packaging Conference 2021
44 slides from Rpm International's conference presentation, Nov 10, 2021
Slide 1: Morgan Stanley Global Chemicals, Agriculture & Packaging Conference
Morgan Stanley Global Chemicals, Agriculture & Packaging Conference Frank C. Sullivan Chairman and CEO Russell L. Gordon VP-CFO November 10, 2021
Slide 2: Forward-Looking Statements & Regulation G
Forward-Looking Statements & 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 uncert
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 48 FOUNDED: 1947 HEADQUARTERS: Medina, OH NYSE STOCK LISTING: consecutive years (Symbol: RPM) of dividend increases FIS
Slide 4: Operating Groups Drive Growth & Efficiency Through Four Reportable Segments
Operating Groups Drive Growth & Efficiency Through Four Reportable Segments CONSTRUCTION PRODUCTS GROUP PERFORMANCE COATINGS GROUP FY21 Sales: $2.1 billion - 34% FY21 Sales: $1.0 billion - 17% Create and drive unique solutions Protecting, decorating and extending for the construction, restoration an
Slide 5: Strategic Balance: Repair & Maintenance vs. New Construction
Strategic Balance: Repair & Maintenance vs. New Construction* CONSTRUCTION PERFORMANCE PRODUCTS GROUP COATINGS GROUP 40% 60% ~30% 50% 50% CONSUMER GROUP ~70% SPECIALTY PRODUCTS GROUP 15% 50% 40% 85% New Repair & Specialty 10% Construction Maintenance OEM *Current estimates, which are subject to chan
Slide 6: Fiscal 2022 First-Quarter Financial Results | Consolidated
Fiscal 2022 First-Quarter Financial Results | Consolidated Earnings challenged by supply disruption and inflation 1Q 1Q 1Q % Change ($ in millions, except HIGHLIGHTS per share amounts) 2022 2021 2020 F22 vs F21 F22 vs F20 • Sales increased 2.7% to a first-quarter record $1.65 billion Sales $1,650 $1
Slide 7: 3 of 4 Segments Overcome Supply Challenges to Grow in Q1-F22
3 of 4 Segments Overcome Supply Challenges to Grow Top and Bottom Lines in Q1-F22 First-Quarter Ended August 31, 2021 30% 21.6% HIGHLIGHTS 20% 17.7% 15.2% 15.2%14.2% 14.5% • In spite of raw material 9.9% 10% 3.5% shortages, supply chain 2.7% 0% disruptions and inflation, 3 of 4 operating segments ge
Slide 8: Construction Products Group Q1 Results
Fiscal 2022 First-Quarter Financial Results CPG generated strong growth across nearly all businesses CONSTRUCTION PRODUCTS GROUP ($ in millions, except 1Q 1Q 1Q % Change per share amounts) 2022 2021 2020 F22 vs F21 F22 vs F20 Sales $644 $548 $536 +17.7% +20.2% EBIT1 $116 $100 $85 +15.7% +37.2% Adjus
Slide 9: Performance Coatings Group Q1 Results
Fiscal 2022 First-Quarter Financial Results PCG rebounding from pandemic as worksites reopen and energy markets recover PERFORMANCE COATINGS GROUP ($ in millions, except 1Q 1Q 1Q % Change per share amounts) 2022 2021 2020 F22 vs F21 F22 vs F20 Sales $286 $260 $297 +9.9% -3.9% EBIT1 $35 $29 $28 +22.6
Slide 10: Specialty Products Group Q1 Results
Fiscal 2022 First-Quarter Financial Results New leadership and emphasis on growth drives top-line SPECIALTY PRODUCTS GROUP ($ in millions, except 1Q 1Q 1Q % Change per share amounts) 2022 2021 2020 F22 vs F21 F22 vs F20 Sales $182 $158 $160 +15.2% +13.7% EBIT1 $25 $21 $23 +19.8% +5.5% Adjusted EBIT1
Slide 11: Consumer Group Q1 Results
Fiscal 2022 First-Quarter Financial Results Demand is strong, but material shortages limit sales growth; inflation challenges bottom line CONSUMER GROUP ($ in millions, except 1Q 1Q 1Q % Change per share amounts) 2022 2021 2020 F22 vs F21 F22 vs F20 Sales $538 $641 $479 -16.0% +12.3% EBIT1 $46 $133
Slide 12: Construction Products Group
Construction Products Group $2.1 billon Fiscal 2021 Sales GLOBAL BRANDS REGIONAL BRANDS Morgan Stanley Global Chemicals, Agriculture & Packaging Conference | 11/10/2021 12
Slide 13: Construction Products Group Target Markets
Construction Products Group Target Markets Bridge Rail Transit 6 sides of the Building + Floor (seamless) + Fire protection Highway Tunnel Water Power + Concrete BUILDING ENVELOPE INFRASTRUCTURE Air | Moisture | Thermal Concrete | Concrete Protection Morgan Stanley Global Chemicals, Agriculture & Pa
Slide 14: Performance Coatings Group
Performance Coatings Group $1.0 billon Fiscal 2021 Sales COATINGS FLOOR SYSTEMS INFRASTRUCTURE STRUCTURES PROTECTIVE COATINGS SEAMLESS INDUSTRIAL FLOORING RESURFACING & REPAIRING BRIDGES FRP GRATINGS & RAILINGS FIREPROOFING SYSTEMS FLOORS FOR COMMERCIAL SPACES SPECIALTY MAINTENANCE PRODUCTS OUTDOOR
Slide 15: Performance Coatings Group Target Markets
Performance Coatings Group Target Markets • Customer Targets: End Users, Contractors, Architects & Engineers • Solving clients’ largest and most complex problems differentiates our products and services • Installation services encompass 40-50% of demand, complemented by niche technologies and know h
Slide 16: Consumer Group
Consumer Group $2.3 billon Fiscal 2021 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 17: 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 Morgan Stanley Global Chemical
Slide 18: Specialty Products Group
Specialty Products Group $0.7 billon Fiscal 2021 Sales #1 Supplier of World Leading #1 in North America Global Market Leader Daylight Fluorescent Manufacturer of for Professional in Water-Based, Colorants Worldwide Professional Touch-up and Repair Antifouling Paints for Restoration and Products for
Slide 19: Specialty Products Group Target Markets
Specialty Products Group Target Markets Packaging, Safety Equipment, Furniture, Cabinetry, Food, Pharma, Cosmetics Agriculture, Forestry, Lumber Apparel Construction Pleasure Marine, Fuel, Restoration & Cleaning OEM Appliance, Auto, Marine Outdoor Recreation Equipment & Chemicals Morgan Stanley Glob
Slide 20: Global Sales by Region | Fiscal 2021
Global Sales by Region | Fiscal 2021 CONSOLIDATED $6.1 billion OUTSIDE NA EUROPE $1.5 billion $1.1 billion – 17% NORTH AMERICA $4.6 billion – 75% AFRICA/MIDDLE EAST ASIA/PACIFIC $69 million – 1% $154 million – 3% SOUTH AMERICA $219 million – 4% Morgan Stanley Global Chemicals, Agriculture & Packagin
Slide 21: 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 22: MAP to Growth Successfully Completed
MAP to Growth Successfully Completed Cost Saving Target Exceeded by $30 Million Center-Led Manufacturing WAVES PLAN Annualized Run Rate • Launched MS-168 manufacturing system $ in millions $86 $320 • Reduced manufacturing footprint by 28 facilities EBIT EBIT • Consolidated production to more strateg
Slide 23: RPM Quarterly Performance
RPM Quarterly Performance FY2019 through FY2021 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Growth 2019 2020 2020 2020 2020 2021 2021 2021 2021 Sales 2.8% 0.9% 2.8% 2.9% -8.9% 9.1% 6.0% 8.1% 19.6% Adjusted EBIT* 22.4% 25.3% 22.0% 30.4% -11.5% 39.8% 29.7% 32.2% 10.6% Adjusted Diluted EPS* 21.6% 25.0% 31.0% 76.9% -8.9
Slide 24: 3-Year Cumulative Total Return
3-Year Cumulative Total Return Among RPM, the S&P 500 and a Customized Peer Group RPM’S TOTAL RETURN HAS OUTPERFORMED the S&P 500 by 22% and its Peer Group by 10% over the past 3 years This graph compares the cumulative three-year total return provided to stockholders on RPM International Inc.’s com
Slide 25: RPM is Positioned to Grow in New Markets and Product Channels
RPM is Positioned to Grow in New Markets and Product Channels $ in billions Cleaning/Restoration, $0.3 Powder Pleasure Marine Cleaners, $6 Coatings, $1.10 Coatings, $1 Caulks, Sealants & Adhesives, $5 Fluorescent Colorants, $0.2 Wood Care, $3 Wood Primers, $3 Food Coatings/Preservatives, Coatings, $
Slide 26: Innovative New Products Drive Organic Growth
Innovative New Products Drive Organic Growth Insulated Concrete Forms Construct stronger, highly energy efficient concrete structures capable of withstanding hurricanes. Nudura’s new XR35 form significantly increases insulation performance. Pyrocrete 341 A cementitious fireproofing that provides hyd
Slide 27: Acquisition Program Targets Niche Businesses with Leading Brands
Acquisition Program Targets Niche Businesses with Leading Brands Broadened focus beyond 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 28: 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 29: Strategic Investments to Drive Growth and Efficiency
Strategic Investments to Drive Growth and Efficiency Manufacturing Center of Excellence Good Position in New Platform for Emblematic of Technology End Markets Building Maintenance New RPM Culture Date 6/7/21 Date 8/2/21 Date 9/7/21 Acquired Acquired Purchased Acquired By Carboline (PCG) Acquired By
Slide 30: Growth Opportunities & Positive Trends
Growth Opportunities & Positive Trends MARKET OPPORTUNITIES INDUSTRY TRENDS Abrasives & Infrastructure Nesting Schools Reopening Wall Paint Building Wall Single-Source Energy Efficiency Envelope Systems Construction Morgan Stanley Global Chemicals, Agriculture & Packaging Conference | 11/10/2021 30
Slide 31: Go-Forward Strategy to Drive Sustained Growth
Go-Forward Strategy to Drive Sustained Growth Go-Forward Strategy • Maintain positive MAP to Growth momentum and complete remaining projects • Leverage resources across RPM to manage supply chain challenges and meet customer needs • Identify new operational improvement program opportunities through
Slide 32: RPM is Building a Better World Through…
RPM is Building a Better World Through… Talent Development: Sustainable Products: RISE Roofing Training Sustainable Processes: Restoration Water Reduction Morgan Stanley Global Chemicals, Agriculture & Packaging Conference | 11/10/2021 32
Slide 33: Delivering Value to Shareholders
Delivering Value to Shareholders Only 41 publicly traded U.S. companies have an equal or better record* $2.8+ billion $1.75 Paid 48 $1.50 $1.25 Consecutive $1.00 Years of Dividend $0.75 Increases $0.50 $0.25 $0.00 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '1
Slide 34: Return to Fortune 500
Return to Fortune 500 RPM ranks 489 in first return to list since 1994 “Our return to the prestigious Fortune 500 for the first time since 1994 is an enormous achievement for RPM, particularly when you consider that we reached this milestone amidst a global pandemic that strained economies worldwide
Slide 35: Appendix: Reconciliations of Non-GAAP to GAAP Measures
Go-Forward Strategy to Drive Sustained Growth APPENDIX Reconciliations of Non-GAAP to GAAP Measures October 6, 2021 Morgan Stanley Global Chemicals, Agriculture & Packaging Conference | 11/10/2021 35
Slide 36: Consolidated Statements of Income
Consolidated Statements of Income ($ in thousands, except per share and percent data) (Unaudited) Three Months Ended August 31, 2021 % 2020 % % Change Net Sales $ 1,650,420 $ 1,606,670 2.7 Cost of Sales 1,037,069 62.8 953,015 59.3 Gross Profit 613,351 37.2 653,655 40.7 SG&A 418,850 25.4 395,953 24.6
Slide 37: 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 38: Adjustments Detail
Adjustments Detail (a) Charges recorded in Cost of Goods Sold that inventory write-offs in connection with restructuring activities at our Consumer, Construction Products and Performance Coatings segments, partially offset by subsequent recoveries and revisions of accrual estimates. (b) Reflects res
Slide 39: 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 Earnings per Diluted Share (All amounts presented after-tax): August 31, 2021 August 31, 2020 Reported Earnings per Diluted Share $ 1.04 $ 1.39 Restructurin
Slide 40: EBIT (Non-GAAP Measure): RPM Consolidated
EBIT** (Non-GAAP Measure): RPM Consolidated ($ in thousands, except per share and percent data) Three Months Ended August 31, (Unaudited) 2021 2020 Net Income $ 134,795 $ 180,785 Provision for Income Taxes 46,676 60,584 Income Before Income Taxes 181,471 241,369 Interest Expense 21,109 21,745 Invest
Slide 41: EBIT (Non-GAAP Measure): Construction Products Segment
EBIT** (Non-GAAP Measure): Construction Products Segment ($ in thousands, except per share and percent data) Three Months Ended August 31, (Unaudited) 2021 2020 Income Before Income Taxes $ 114,357 $ 98,349 Add: Interest Expense, Net* 1,870 2,110 EBIT** (non-GAAP measure) 116,227 100,459 Inventory-r
Slide 42: EBIT (Non-GAAP Measure): Performance Coatings Segment
EBIT** (Non-GAAP Measure): Performance Coatings Segment ($ in thousands, except per share and percent data) Three Months Ended August 31, (Unaudited) 2021 2020 Income Before Income Taxes $ 35,077 $ 28,514 Add: Interest (Income) Expense, Net* (82) 31 EBIT** (non-GAAP measure) 34,995 28,545 Inventory-
Slide 43: EBIT (Non-GAAP Measure): Specialty Products Segment
EBIT** (Non-GAAP Measure): Specialty Products Segment ($ in thousands, except per share and percent data) Three Months Ended August 31, (Unaudited) 2021 2020 Income Before Income Taxes $ 24,556 $ 20,449 Add: Interest Expense, Net* 35 82 EBIT** (non-GAAP measure) 24,591 20,531 Restructuring expense (
Slide 44: EBIT (Non-GAAP Measure): Consumer Segment
EBIT** (Non-GAAP Measure): Consumer Segment ($ in thousands, except per share and percent data) Three Months Ended August 31, (Unaudited) 2021 2020 Income Before Income Taxes $ 45,915 $ 132,722 Add: Interest (Income) Expense, Net* (75) 62 EBIT** (non-GAAP measure) 45,840 132,784 Inventory-related ch
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