Rpm International Inc. · NYSE:RPM
Rpm International — Investor Presentation (July 2003)
31 slides from Rpm International's investor presentation, Jul 30, 2003
Slide 1: RPM International Inc - Consumer essential, industrial products, leading consumer brands
Industrial RPM International Inc 2628 Pearl Road • P.O. Box 777 • Medina, Ohio 44258 Phone: (330) 273-5090 • Fax: (330) 225-8743 • www.rpmintl.com July 21, 2003 Consumer essential INDUSTRIAL products leading CONSUMER brands
Slide 2: Disclaimer on Forward-Looking Statements
Disclaimer on Forward-Looking Statements This presentation contains forward-looking statements based on management's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control
Slide 3: Regulation G
Regulation G This presentation includes certain company data that do not directly conform to generally accepted accounting principles, or GAAP, and certain company data that has been restated for improved understanding and comparability, or pro forma. Management believes that the inclusions of non-G
Slide 4: Investment Highlights / Overview
Investment Highlights / Overview $2.1 billion in revenues in two primary divisions Industrial (50-55%) and Consumer (45-50%) Approximately 75% U.S., 25% International Maintenance oriented products and services Balanced portfolio of leading brand names Global leader (#1/#2) in markets served Strong m
Slide 5: Organizational Structure and Operating Philosophy
Organizational Structure and Operating Philosophy Entrepreneurial spirit at operating level Localized customer / market focus Retain and motivate best people Mike Tellor Rust-Oleum Bob Senior Zinsser Chuck Pauli RPM II Jeff Korach Tremco David Reif StonCor John McLaughlin DAP Consumer Division Indus
Slide 6: Industrial Division - 50-55%
Industrial Division - 50-55% Leading brands in huge markets Flooring Systems Roofing Systems Corrosion control, fireproofing products, and secondary containment linings
Slide 7: Industrial Division - (continued)
Industrial Division - (continued) Leading market share in many specialty niche markets Marine coatings Fluorescent pigments Exterior finishing systems
Slide 8: Consumer Division - 45-50%
Consumer Division - 45-50% #1 or #2 in many markets served Rust preventative, specialty and general purpose paints and coatings Caulks, sealants and patch and repair products Primer-sealers, premium wall covers, and wall covering preparation and removal products
Slide 9: Unique Customer Base
Unique Customer Base RPM is in all the right places Consumer Industrial Grow with customers regionally and globally Recognized as providers of unique solutions by world's leading companies
Slide 10: Financial Performance Track Record - Net Sales
Financial Performance Track Record 55 out of 56 years of record net sales 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Net Sales ($MM) 114.4 118.693 128.691 142.736 160.572 289.7 338.9 385.3 438 493.2 571.7 619.6 680.1 768.4
Slide 11: Financial Performance Track Record - Net Income
Financial Performance Track Record (1) Restructuring years 53 out of 56 years of record net income, interrupted only by the 2000/2001 restructuring program and the 2003 asbestos charge 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Slide 12: Consecutive Years of Dividend Growth
29 Consecutive Years of Dividend Growth Important part of total return to long-term investors Indicative of stability of business and integrity of financial reporting Value enhanced by recent tax change 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 19
Slide 13: Asbestos Liability
Asbestos Liability Bondex subsidiary - acquired 1966 DIY patch/repair product - discontinued 1977 Cost-sharing with insurers - 90% / 10% Claims acceleration recent years Exhaustion of insurance to cover Bondex asbestos liability Consultants engaged to estimate future liability Pertinent state tort r
Slide 14: Asbestos Liability - (continued)
Asbestos Liability - (continued) $140MM pre-tax charge taken as of May 31, 2003 $88MM after-tax; ($0.76) per share, diluted Estimated costs to cover known claims and provision for estimate of future claims believed to be sufficient to cover asbestos related costs for approximately three years Study
Slide 15: Consolidated Statements of Income (as reported)
Consolidated Statements of Income (as reported)
Slide 16: Consolidated Statements of Income (pro forma 2003, excluding asbestos charge)
Consolidated Statements of Income (pro forma 2003, excluding asbestos charge)
Slide 17: Consolidated Statements of Income (as reported)
Consolidated Statements of Income (as reported)
Slide 18: Consolidated Statements of Income (pro forma 2003, excluding asbestos charge)
Consolidated Statements of Income (pro forma 2003, excluding asbestos charge)
Slide 19: Consolidated Balance Sheets
Consolidated Balance Sheets
Slide 20: Strong Cash Flow Generation
RPM > Strong Cash Flow Generation Fiscal Year Ended May 31 Gin millions) 2003 2003" 2002 2001 2000 1999 Net Income $ 35 $ 123 $102 $ 63 $ 41 $ 95 Depreciation & Amortization 59 59 57 82 79 62 Working Cap. & Other Op. Activities 67 (21 32 0) (18) &) Capital Expenditures 42 42 40 54 63 63 Dividends 59
Slide 21: Growth Strategy
Growth Strategy Target: 12-15% EPS Growth Strong entrepreneurial businesses Synergistic integrations / product lines Strategic platforms / businesses Multiple avenues for continuing growth Operating leverage from recent restructuring, permanent reduction of cost base Institutionalized cost containme
Slide 22: The Case for Growth: Industry Overview - Opportunity for Growth
The Case for Growth: Industry Overview-Opportunity for Growth Note: Several RPM companies totaling approximately $375 MM in global sales have been excluded from analysis above due to inapplicability with indicated markets ($ in millions) Source: Adhesives and Sealants Council, RPM Source: NPCA, RPM
Slide 23: Revenue Growth Exceeds Industry Averages
(1) Restructuring years (2) Through December 31, 2002 Revenue Growth Exceeds Industry Averages Organic Revenue Growth Acquisition Growth, Net of Divestitures CAGR (94-03) Total = 10.8% Organic = 4.2% M&A = 6.6% GDP = 3.2%(2) (Fiscal year ended May 31,) 1994 1995 1996 1997 1998 1999 2000 2001 2002 20
Slide 24: Well Recognized Industry Consolidator
Well Recognized Industry Consolidator Completed more than 90 acquisitions last 30 years Completed more than 50 acquisitions since 1991 M&A strategy: 3-Pronged approach Stand-alone niche businesses: Entrepreneurial Day-Glo TCI Powder Coatings Businesses that are integrated into existing operations: S
Slide 25: M&A Criteria
M&A Criteria Recognized leading brand in large markets or dominant player in smaller niche markets with gross margins greater than 40% Strong management team with track record of growth; willing to stay and run business as part of RPM Complementary product line that can be quickly integrated into an
Slide 26: EBITDA Margins Improving Since Restructuring
(1) Restructuring years (2) Excluding asbestos charge EBITDA* Margins Improving Since Restructuring Fiscal Year (May 31) 1997 1998 1999 2000 2001 2002 2003 Permanently lowered cost base Greater focus on operational efficiency Leverage of economic recovery (1) (1) *Earnings before interest, income ta
Slide 27: RPM Five Year Strategic Plan: 2007
RPM Five Year Strategic Plan: 2007 Mike Tellor Rust-Oleum Bob Senior Zinsser John McLaughlin DAP Consumer Division DAP New Co(s). Rust-Oleum CBG Rust-Oleum IBG Martin Mathys Rust-Oleum Europe New Co(s). Zinsser Thibaut Mantrose Haeuser New Co(s). Chuck Pauli RPM II Jeff Korach Tremco David Reif Ston
Slide 28: The Best Home for Entrepreneurial Companies in the Markets We Serve
The Best Home for Entrepreneurial Companies in the Markets We Serve "Hire the best people you can find. Create an atmosphere that will keep them. Then let them do their jobs." - -Frank C. Sullivan 1947
Slide 29: Reconciliations of Non-GAAP Measures to GAAP Measures
Reconciliations of Non-GAAP Measures to GAAP Measures
Slide 30: Free Cash Flow (Non-GAAP Measure)
Free Cash Flow (Non-GAAP Measure)
Slide 31: EBITDA (Non-GAAP Measure)
> EBITDA‘ (Non-GAAP Measure) "2D (hihousands) Fiocal Years Ended May 34, Fre ee ee. ie: | Het income S7O315 $87EG7 904545 GHOSE HOSS $05,907 ‘Ale Restructuring cherges end releted costs sggar ‘Ale Special asbestos here 40.000 ‘Ade Provsien tr inccmetares S743 81719 85051 S07EI BSA 52ST — 1258 Adie I
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