Demanding Conditions
Products in Demand
ANNUAL MEETING
MAY 12, 2009
2008
ANNUAL MEETING
2008 RECAP
2008
2007
$ 259.4
$ 209.3
MARGIN
30.3
18.6
EXPENSES
14.9
13.6
INCOME FROM
CONTINUING OPERATIONS
15.4
5.0
300%
EBITDA
17.0
11.7
45%
SALES
* Read in conjunction with Annual Report
2008
Q1 2009
SALES
OPERATING INCOME
OTHER EXPENSE
EBIT
EPS
2009
$53,085
2008
$55,134
1,655
1,835
471
$ 1,184
(451)
$ 2,286
$0.02
$0.04
* Read in conjunction with 1st Quarter Report
2008
Q1 2009
•
Results were Defense Driven
 Sales Increase 35%
 Margin Increase 75%
 Mix, Volume and Exchange
•
Rubber Compounding
 Sales down 16% better than industry average
 2008 high priced inventory gone by April
 Volume improvements noticeable in April
* Read
in Conjunction with 1st Quarter Report
2008
OTHER INCOME (EXPENSE)
EXCHANGE (LOSS) GAIN
OTHER INCOME
(1) Unrealized Loss
2009
2008
$(647) (1)
$277
176
174
$(471)
$451
2008
EXCHANGE
FORWARD CONTRACTS
ARC INV HEDGE
US
DEFENSE
NET RECEIPTS HEDGE
TOTAL
AVG RATE
$9 MILLION
$15 MILLION
US
$24 MILLION
$0.82
MARCH
0.80 Non-Cash Loss $431K
APRIL
0.85 Gain of $800 K
2008
BALANCE SHEET
MARCH
2009
DECEMBER
2008
$ 36.3
$ 32.2
WORKING CAPITAL RATIO 2.2 TO 1
1.6 TO 1
NET WORKING CAPITAL
DEBT
$ 39.3
$ 45.8
CASH PROVIDED BY
OPERATIONS
$ 4.8
$ 1.5
(1) March '08
12%
14%
(1)
2008
RUBBER COMPOUNDING DIVISION
2008
Customer Diversification 2005 vs. 2008
# of customers over $0.5 MM
Top 41 accounts as % of total
# Top accounts w/good growth
% US sales
% Canadian sales
% International sales
Lbs sold from SN facility
2005
29
98.8%
55.0%
44.9%
0.1%
0
2008
35
99.1%
17
59.2%
39.6%
1.2%
22.9 MM
2008
Market Segment shifts (2005 to 2008)
Focused growth Segments
•
•
Defense total (Internal & External)
Mining
Increased by 175%
Increased by 32%
De-emphasized Segments
•
•
Automotive
Tires Total
Reduced by 12%
Reduced by 38%
2008
New project activity
• 103 MM lbs of NPD opportunities - 23 MM lbs in 2009/early 2010.
• Kitchener trials to yield 13.8 MM lbs/year.
• Scotland Neck trials to yield 6.4 MM lbs/year.
2008
Employee’s
• In 2008 absenteeism was down 42.5% versus 2005.
• In 2008 we saw the following Health and Safety improvements
versus 2005
# recordable injuries down by 42.5%
# of lost time days down 76.4%
# of light duty days down 44.4%
2008
ARC Operational Performance 2008 vs. 2005
•
•
•
•
•
Throughput/hr has increased by 19.4%
Downtime has been reduced by 20.1%
% rework is down by 12.4%
PPM returns are down by 43.4%
On-time delivery has improved so much that’s its now a
significant competitive advantage.
• We have maximized/optimized efficient equipment.
• Kitchener’s break even point has been reduced by 20%.
2008
2005 to 2008 key initiatives implemented
•
•
•
•
•
Developed a segmented sales approach and focus.
Targeted new markets/segments.
De-centralized operational functions.
Improved speed to market.
Reduced system wide waste with focus only on value added
activities
• Global procurement enhancement.
2008
Conclusions and Outlook for ARC
•
•
•
•
•
•
ARC’s customer base is more diversified than ever.
ARC’s global footprint is a competitive advantage and expanding.
ARC operationally is performing very well.
ARC is now a better place to work for our associates and they continue to
make ARC a great company.
ARC has a healthy balance sheet and is solid financially
As our addressable markets consolidate only the strong suppliers with survive
– ARC is a strong supplier.
2008
What can you expect to see next?
•
•
•
•
ARC will expand rapidly into traditionally non core segments/markets.
Stress in the markets will provide opportunities for those in a solid enough
position to take advantage of them - we will be there for the long haul.
We will continue to build on our US presence via our new Scotland Neck
facility.
We are a solid #2 in the America’s and heading for #1.
2008
AIRBOSS-DEFENSE
2008
DEFENSE 2009
• 2007
SALES
$27 MILLION
• 2008
$38 MILLION
• 2009
Another 30% to 40% possible
40%
2008
AIRBOSS-DEFENSE
CBRN VOLUME FORECAST - OVERBOOTS
Overboots
800000
600000
Overboots
400000
200000
0
2008
2009
2010
2011
2008
AIRBOSS-DEFENSE
CBRN VOLUME FORECASTS - GLOVE
Gloves
1000000
800000
600000
Gloves
400000
200000
0
2008
2009
2010
2011
2008
AIRBOSS-DEFENSE
2nd Quarter production changes to meet demand:
•
•
•
Injection moulding 3 shifts, 7days/week
Overboot capacity increased
U.S. Expansion project
2008
AIRBOSS-DEFENSE
U.S. EXPANSION
• Location announcement 30 days
• In production 1st Quarter 2010
• Injection Moulding
 Gloves
 Next Generation Overboot
2008
AIRBOSS-DEFENSE 2009
• Volume increases, favorable product mix and exchange will
positively impact profitability
• Most of net U.S. $ receipts locked in at $0.82 for 2009
• 2010 will be even more exciting
2008
Chairman’s Closing Comments
•
•
•
•
•
AirBoss has recorded operating profits since 1995
We continue to see growth for the future
Defense sales increases in 2009 and further expansion in 2010
Rubber Compounding Division returning to normal profitability
Exploring value added opportunities
2008
Chairman’s Closing Comments cont’d.
• Continuation of Dividend Policy

Semi-annual dividend
 2.5 cents payable to shareholders of record June 30, 2009
 Issuer Bid to purchase up to 1.8 million Company shares
2008
THANK YOU!
CUSTOMERS
SHAREHOLDERS
DIRECTORS
EMPLOYEES
2008
FORWARD LOOKING STATEMENT DISCLAIMER
This report contains forward-looking statements, which reflect managements best
judgment based on factors currently known but involve significant risks and
uncertainties. Actual results could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including but not
limited to risks more fully described in the “Risk Factors” section of the Company’s
Annual Report, and other risks detailed in filings with the Ontario Securities
Commission. Forward-looking information provided pursuant to the safe harbor
established by recent securities legislation should be evaluated in the context of these
factors.
2008
Question and Answer Period
Thank-you