AirBoss Investor Presentation. Click to edit Master title style

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1 AirBoss Investor Presentation

2 Agenda Overview Introduction AirBoss Rubber Compounding AirBoss Engineered Products Management and Personnel 2

3 Introduction

4 Investment Highlights North America s premier industrial rubber producer 2012 EPS $0.31 Dividend $0.20 Low net debt High insider ownership (27%) 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 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 4

5 Highlights 2012 Highlights: Opened R&D facility in Bromont, Quebec North Carolina plant improvements complete No operating debt Purchased 836,865 shares under NCIB Dividends increased 32% $0.31 EPS 5

6 The Company AirBoss of America Corp., develops, manufactures, and sells rubber-based products for military, transportation, and industrial markets in North America and Europe $30.0 $25.0 $20.0 EBITDA ($millions) $15.0 $10.0 $5.0 $ (1) 2011 (1) 2012 (1) 2013 E (1)Reported in $USD in accordance with IFRS

7 Highlights Q Highlights: Compounding volumes increase 17% compared to Q $0.09 EPS 7

8 Agenda Overview Introduction AirBoss Rubber Compounding AirBoss Engineered Products Management and Personnel AirBoss Rubber Compounding 8

9 Rubber Compounding

10 (millions C$) Rubber Compounding Overview Manufactures over 1,000 different un-vulcanized custom compounds from synthetic or natural rubber for a wide variety of customers in North America $240 $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Rubber Compounding Revenue $20.0 $16.0 EBITDA Trend $12.0 $8.0 $4.0 $ * E * ECapacity Note: 2009 EBITDA was negative due to inventory write-downs 10

11 2012 Accomplishments In 2012 the major accomplishments were: Securing multi-year contract with major tire company Completing major productivity focused capital improvements in North Carolina This year the focus continues on emerging markets and our product development focus 11

12 Market Segments Products + Infrastructure Oil & Gas Products Cable & + Wire Infrastructure Heavy-duty Conveyor Belts Oil & Gas Cable Mining & Wire Heavy-duty Tire & Track Conveyor Belts Mining Industrial Tire Automotive & Track Industrial Defense Automotive Defense Compounded Rubber: 250 million pounds capacity 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. 12

13 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

14 Market Segments 70% of our compounds end up in a mine including conveyor belting, offroad tire retreads, solid tires, truck bed liners and ball mill liners 4% 4% 3% 6% 36% 8% 10% 12% 17% Belting Retread Other mining Automotive Tolling Industrial Raw materials Defense Other 14

15 Market Segments Products + Infrastructure Oil & Gas Cable & Wire Heavy-duty Conveyor Belts Mining Tire & Track Industrial Automotive Defense Heavy-duty Conveyor Belts 36% 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 South America, Australia

16 Market Segments Products + Infrastructure Oil & Gas Cable & Wire Heavy-duty Conveyor Belts Mining Tire & Track Industrial Automotive Defense Mining and retread 29% AirBoss supplies abrasion resistant compounds for mining truck bed liners and ball mill liners Largest independent supplier of off road tire retread compounds

17 Product Development Additional analytical test equipment added to North Carolina office 2013 new product volume is on track with projections. Great progress has already been made on products and market sectors

18 Oil & Gas: Why is it exciting for AirBoss? The industry CAGR% for the next 5 years is projected to be approx. 9% The average sell price/lb. in this segment is more than twice that of base business Corresponding increase in margins and profitability

19 Agenda Overview Introduction AirBoss Rubber Compounding AirBoss Engineered Products Management and Personnel 19

20 AirBoss Engineered Products

21 AEP Revenues AEP Revenue split 57% 43% Defense Industrial $80 $75 $70 $65 $60 $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 $20.0 AEP Revenue AEP EBITDA $17.5 $15.0 $10.0 $7.5 $5.0 $2.5 $ E E $

22 AirBoss Defense AirBoss-Defense manufactures protective wear for military and first response applications including gas masks, rubber gloves, boots, overboots for military applications requiring CBRN contaminant protection, extreme cold weather ("ECW") footwear protection for military use and rubber compounds. CBRN Products include: AirBoss Moulded Glove C-4 Gas Mask AirBoss Lightweight Over-boot 22

23 Competitive Advantages 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 23

24 AirBoss Defense Sole supplier of CBRN protective hand wear and foot wear to Canada, US and many NATO countries Sole supplier of gas masks to Canadian DND

25 2012 Acomplishments Inauguration of new R&D CBRN Center of Expertise Assembly of prototype AirBoss Low Burden Mask (LBM) Proof of Carbon Monolith concept Creation of new Extreme Cold Weather Mukluk (Price negotiations under way for first contract). Materials selection and initial design concepts on next generation CBRN protective glove 25

26 Bromont R&D CBRN Center of Expertise: Benefits Benefits: Consolidation of sales, contracting, R&D and administration staff. Improved recognition by government, academic and industrial developmental partners. Increased access to provincial, federal and foreign developmental funding. Proximity to broad R&D and scientific community in Bromont (Parc Scientific Bromont). Professional location for customer meetings and presentations. 26

27 Bromont R&D CBRN Center of Expertise: Capabilities Base Material Synthesis Product Demonstrators Validation Testing Capabilities: Polymer Synthesis Carbonization Preform moulding TIC penetration testing TIC gas testing (filter option) Air-flow / Pressure drop 3D CAD - Design Rapid Prototyping Physical property testing Knowledge base: Rubber and plastic polymers Adhesives Optics Carbonisation Sorbent impregnation Nano materials 27

28 Key developments and product launches: AirBoss Low Burden Mask (LBM) Low Burden Mask: First fully functional mask planned for fall 2013 Full industrialization by summer 2014 Features: Lightweight & compact Low breathing resistance Single or dual filter capability (patented) 4 sizes assure best fit and high protection factor Full visor incorporating fragmentation protection Excellent optics & field of view Multiple accessories 28

29 Key developments and product launches: AirBoss Carbon Monolith Filters Carbon Monolith Filters: 2013: Complete performance assessment, ongoing impregnation work and proven scale process 2014: Development of functional filter prototypes Features: Game changing technology Lighter Smaller Lower breathing resistance Higher sorptive capacity Conformal shape capability Broader TIC protection 29

30 Business development Initiatives Initiatives: Broader international representation, with dedicated resources in the Middle-East and Central Asia. Increased partnering in key markets to provide full system solution. Increased sales presence internationally, both at tradeshows and in direct customer meetings. Increased collaboration with Canadian government and Canadian trade associations regarding the penetration of international markets. New communication plan and standardization of marketing and promotional materials. 30

31 Business development Successes Successes: Multiple awards of CBRN kits, including expanded accessories. 40% increase in specific end-users of AirBoss Defense products in the last 2 years. 18 new MALO off-shore customers in Increasing users of C4 Gas Mask. International orders received in 2013 already exceed all of

32 Outlook

33 2013 Outlook Rubber Compounding Major tire tolling volumes are expected to remain steady in the first two quarters before rising in August or September. New export business for new mining products expected to gradually increase throughout the year. New markets, including oil and gas, will be further penetrated. Overall volumes anticipated to rise for the remainder of the year 33

34 2013 Outlook - Engineered Products Industrial products performing well with stable raw material costs Defense product sales show a small increase in 2013 and are largely supported by existing contracts. Defense could outperform these estimates if a US CBRN glove order is received or a significant gas mask contract in new territories Click currently to edit being Master explored. title style New products on track to impact 2014 and

35 Summary Industry leaders in both main business segments Growth opportunities in both Strong financial position provides strategic acquisition flexibility 35

36 Summary Strong Working Capital 2.85:1 Debt reduced by 25% over last 2 years Dividend increased from $0.15 per year to $0.20 per year 36

37 Market Data Close Price - As at May 2, 2013 $ week High-low $ $4.20 Shares Outstanding (000s) 22,553 Free float % 73% Avg. Volume (last 6 months) 23,420 TTM EBITDA (000s) $15,996 Net Debt (000s) $10,215 Market Cap (000s) $111,637 Enterprise Value (000s) $121,852 Avg. Analyst Estimates $0.42 EPS for

38 Agenda Overview Introduction AirBoss Rubber Compounding AirBoss Engineered Products Management and Personnel 38

39 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 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 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, 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. 39

40 Forward Looking Statement Disclaimer Certain statements contained or incorporated by reference herein, including those that express management s expectations or estimates of future developments or AirBoss future performance, constitute forward-looking statements within the meaning of applicable securities laws, and can generally be identified by words such as will, may, could expects, believes, anticipates, forecasts, plans, intends or similar expressions. These statements are not historical facts but instead represent management s expectations, estimates and projections regarding future events and performance. Forward-looking statements are necessarily based upon a number of opinions, estimates and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies. AirBoss cautions that such forward-looking statements involve known and unknown contingencies, uncertainties and other risks that may cause AirBoss actual financial results, performance or achievements to be materially different from its estimated future results, performance or achievements expressed or implied by those forward-looking statements. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including without limitation: impact of general economic conditions; its dependence on key customers; cyclical trends in the tire and automotive, construction, mining and retail industries; sufficient availability of raw materials at economical costs; weather conditions affecting raw materials, production and sales; AirBoss ability to maintain existing customers or develop new customers in light of increased competition; changes in accounting policies and methods, including uncertainties associated with critical accounting assumptions and estimates; changes in the value of the Canadian dollar relative to the US dollar; changes in tax laws and potential litigation; ability to obtain financing on acceptable terms; environmental damage caused by it and noncompliance with environmental laws and regulations; potential product liability and warranty claims and equipment malfunction. This list is not exhaustive of Click the factors to that edit may affect Master any of AirBoss title forward-looking style statements. All of the forward-looking information in this presentation is expressly qualified by these cautionary statements. Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent written and oral forward-looking statements attributable to AirBoss or persons acting on its behalf are expressly qualified in their entirety by this notice. Forward-looking information contained herein is made as of the date of this presentation and, whether as a result of new information, future events or otherwise, AirBoss disclaims any intent or obligation to update publicly these forward-looking statements except as required by applicable laws. Risks and uncertainties about AirBoss s business are more fully discussed in the Management s Discussion and Analysis of Financial Condition and Results of Operations in the 2012 Annual Report to Shareholders under the heading Risk Factors. 40

41 Questions?