AirBoss of America Corp.
Corp.
Technology Based Solutions
Defense and Industry.
Infrastructure +
October, 2011
Defense+
Defense+
Heavy-Duty Conveyor Belts +
AirBoss of America Corp.
Agenda
Overview
Introduction
AirBoss Rubber Compounding
AirBoss Engineered Products
Management and Personnel
2
AirBoss of America Corp.
AirBoss of America Corp.
•
AirBoss of America Corp., develops, manufactures, and
sells rubber-based products for military, transportation,
and industrial markets in North America and Europe
EBITDA (C$ Millions)(1)
$30.0
$26.9
$30.4
$25.0
$17.0
$20.0
$15.0
$16.3
$11.7
$10.0
$5.0
$0.0
2007
2008
2009
2010
2011(1)
EBITDA
(1)
As per consensus analyst estimates
3
AirBoss of America Corp.
Investment Highlights
North America’s premier industrial rubber producer
•
2010 EPS $0.55
•
2011 EPS $0.65 EST
•
Low net debt
•
High insider ownership (24%) with management focused on enhancing shareholder value
Rubber Compounding
•
#1 supplier of rubber compounds to the North American mining and coal industries
•
Second largest rubber compound manufacturer in North America
•
Positioned to take advantage of tire company recovery
AirBoss-Defense
•
World leader in the supply of CBRN protective gloves and boots, including sole supplier to US
Military
•
Sole supplier of gas masks to Canadian DND
•
Actively seeking strategic acquisition opportunities
4
AirBoss of America Corp.
Agenda
Introduction
AirBoss Rubber Compounding
AirBoss Engineered Products
Management and Personnel
5
AirBoss of America Corp.
AirBoss Rubber Compounding - Overview
Overview
• Manufactures over 1,000 different un-vulcanized custom compounds from synthetic
or natural rubber for a wide variety of customers in North America
EBITDA Trend
$240
$200
$160
$120
$80
$40
$0
$20.0
(millions C$)
(millions C$)
Revenue Trend
2006
2007
2008*
2009
2010
2011 ( E ) Capacity
Note: 2009 EBITDA was negative due to inventory write-downs
$16.0
$12.0
$8.0
$4.0
$0.0
2006
2007
2008*
2009
2010
2011 ( E )
Capacity
AirBoss of America Corp.
Products +
Infrastructure
Oil & Gas
Cable & Wire
Heavy-duty Conveyor Belts
Mining
Tire & Track
Industrial Automotive
Defense
1
Compounded Rubber: 250 million pounds capacity
• AirBoss is one of North America's leading custom rubber mixers
with the capacity to supply over 250 million pounds annually.
• We continually invest in our manufacturing. Our main facilities in
Ontario and Quebec, are supplemented by a state-of-the-art
mixing facility in Scotland Neck, North Carolina.
7
AirBoss of America Corp.
AirBoss Rubber Compounding – Market Segments
70% of our compounds end up in a mine including conveyor belting,
off-road tire retreads, solid tires, truck bed liners and ball mill liners.
13%
7%
37%
9%
11%
Automotive
Mining/Industrial
Solid tire
Retread
Belting
Defense
8
AirBoss of America Corp.
Products
Heavy-duty
Conveyor Belts
1
Heavy-duty Conveyor Belts 37%
• AirBoss is the largest independent compound supplier in North
America to the conveyor belt industry.
• Principal uses are coal and hard rock mining
• Growth Potential – Oil Sands, South America, Australia
9
AirBoss of America Corp.
Products
Mining
1
Mining and Industrial 23%
• AirBoss supplies abrasion resistant compounds for mining truck
bed liners and ball mill liners
• Largest independent supplier of off road tire retread compounds
10
AirBoss of America Corp.
New Markets
Cable & Wire
1
Cable & Wire:
Expected Growth over next 24 months
• North American OEM tire markets
• New market segments such as wire and cable
• Major tire companies
11
AirBoss of America Corp.
Leveraging Existing Capacity
2011 at 75%
Moving to 90% in next year
Kitchener - Replacement Cost: US$50 million
Scotland Neck - Replacement Cost: US$15 million
12
AirBoss of America Corp.
AirBoss Rubber Compounding- Key Success Factors cont.
.
Competitive advantages
• Large capacity, state-of-the-art equipment and high level of
automation results in highest quality
•
•
•
•
Maximize efficiency due to larger batch size and shorter
production cycles
Utilize world-wide purchasing and strong technical staff in the
dedicated labs.
Ability to source raw materials worldwide
Accredited lab for product development
13
AirBoss of America Corp.
Agenda
Introduction
AirBoss Rubber Compounding
AirBoss Engineered Products
Management and Personnel
14
AirBoss of America Corp.
AirBoss Engineered Products
Overview
AirBoss-Defense accounts for over 70% of AirBoss Engineered
Products revenue
AirBoss Engineered Products
Revenue by Operating Division (est.)
AirBoss-Defense
Industrial Products Group
15
AirBoss of America Corp.
AirBoss-Defense
AirBoss-Defense manufactures protective wear for military and first response
applications including gas masks, rubber gloves, boots, over-boots for
military applications requiring CBRN contaminant protection, extreme cold
weather ("ECW") footwear protection for military use and rubber compounds
and pre-forms for military tank track repair.
CBRN Products
include:
AirBoss Moulded Glove
AirBoss Lightweight Over-boot
C-4 Gas Mask
16
AirBoss of America Corp.
AirBoss Engineered Products; AirBoss-Defense highlights
•
Sole supplier of CBRN protective hand wear and foot wear to
Canada, US and many NATO countries
•
Sole supplier of gas mask to Canadian DND
•
Also supply ECW products and tank repair products
17
AirBoss of America Corp.
AirBoss Engineered Products; AirBoss-Defense Sales Trend
AirBoss-Defense volumes positively impacted by
replacing older, less effective competing technologies
Sales Trend
$80
$70
(millions C$)
$60
$50
$40
$30
$20
$10
$0
2008
2009
2010
2011
18
AirBoss of America Corp.
AirBoss-Defense key success factors
CBRN Protection Technology
•
•
US Military testing confirms that AirBoss-Defense products offer
significantly superior performance
Proprietary rubber compounds
Commitment to New Product Development – next generation
products
•
•
•
Injection moulded CBRN boot - cost reductions of between $6 and $8 per pair
Gas mask – Next generation light weight
Joint advancement of “sensor” science with Canadian
government
19
AirBoss of America Corp.
AirBoss-Defense Growth Opportunities
In addition to new products
•
Geographical market expansion
•
First Response and Fire - Honeywell
20
AirBoss of America Corp.
Financial Data
YE Dec. 31
Revenue (mm)
EBITDA (mm)
EV/EBITDA
EPS f.d.
P/E
CFPS
P/CF
Net debt (cash)
Book Value
P/BV
¹ Analyst Estimates
2009A
$210.0
$16.3
9.3x
$0.26
20.8x
$0.42
13.1
$21.7
$2.94
2.4x
2010
$240.4
$26.9
6.2x
$0.55
12.7x
$0.79
8.9x
$10.5
$3.35
2.1x
2011E¹
$252.3
$30.4
6.1x
$0.65
8.2x
$0.90
5.9x
$3.98
1.3x
AirBoss of America Corp.
Summary
•
Industry leaders in both main business segments
•
Growth opportunities in both
•
Strong financial position provides strategic acquisition flexibility
22
AirBoss of America Corp.
Summary
•
Strong Working Capital 2.45:1
•
Debt reduced by 2/3 over last 2 years
•
Dividend increased from $0.05 per year to $0.15 per year
•
9 month EBITDA increase of 82%
23
AirBoss of America Corp.
Market Data
Close Price - As at October 7, 2011
52 week High-low
Shares Outstanding (000s)
Free float %
Avg. Volume (last 100 days)
$5.30
$7.44 - $4.85
23,610
76%
13,168
TTM EBITDA (000s)
$31,035
Net Debt (000s)
$22,392
Market Cap (000s)
$125,307
Enterprise Value (000s)
$147,699
Valuation
Trailing LTM EV/EBITDA
Trailing LTM P/E - Basic
24
AirBoss of America Corp.
Agenda
Introduction
AirBoss Rubber Compounding
AirBoss Engineered Products
Management and Personnel
25
AirBoss of America Corp.
Management
•
Gren Schoch, Chairman of the Board
Gren Schoch is a professional engineer and ran a successful engineering and geological services company, MPH Consulting, between
1976 and 1995. In 1982, he also founded and chaired Petromet Resources, a junior oil and gas exploration company that was sold to
Talisman Energy for more than $900 million in 2001. Since 1989, Gren has been the Chairman and substantial shareholder of AirBoss.
•
Robert Hagerman, President and Chief Executive Officer
Robert Hagerman obtained his CA designation in 1976 and was employed in the Montreal and later the London office of Price Waterhouse
for 12 years in Audit, Insolvency, and Mergers and Acquisitions. Robert, one of the original founders and directors of AirBoss, was
appointed CEO in 1992 and has been instrumental in growing the Company ever since.
•
Stephen Richards, Vice President, Finance and CFO
Stephen Richards obtained his CA designation in 1988 and was employed with Ernst & Young over a seven year period involved in various
Audit, Insolvency and Management Consulting assignments. His primary responsibilities in his career with various transportation and
manufacturing companies included strategic planning, systems development and performance improvement. In his previous role Mr.
Richards served as Vice President of Finance for Clarke Inc., a TSX-listed transportation company, and joined AirBoss in April, 2005.
•
Robert Dodd, Executive Vice President
Robert Dodd has held either Director or VP roles at 3 previous employers prior to joining AirBoss. At Trelleborg, he was on the Board of
Directors of their North American company TSS US Inc. Robert has a proven change management track record and also has prior
expertise in developing and executing business strategies for both international and domestic markets in an executive capacity. With his
prior experience of developing acquisition targets in India and Brazil and his recent achievement of establishing a green field site in
Shanghai, China, Robert brings a wealth of international and diverse experiences to his role within AirBoss.
•
Earl Laurie, President, AirBoss-Defense Division
Earl Laurie has run the sales, marketing and contract administration of the defense products business of Acton–International Inc. since
inception. With the purchase of Acton-International by AirBoss in 1999 and the reorganization into AirBoss Engineered Products (“AEP”) in
2005 Mr. Laurie is now responsible for the operations of AirBoss-Defense, the defense products division of AEP and has been instrumental
in its growth.
26
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