AirBoss of America Corp. Annual General Meeting

Transcription

1 AirBoss of America Corp. Annual General Meeting May 10, AirBoss of America Corp.

2 Forward Looking Information 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 information or 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. Statements containing forward-looking information 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 information 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 the forward-looking information. Numerous factors could cause actual results to differ materially from those in the forward-looking information, including without limitation: impact of general economic conditions; 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; AirBoss ability to successfully integrate acquisitions of other businesses and/or companies or to realize on the anticipated benefits thereof; 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 and non-compliance with environmental laws and regulations; potential product liability and warranty claims and equipment malfunction. This list is not exhaustive of the factors that may affect any of AirBoss forward-looking information. 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 information. All subsequent written and oral forward-looking information 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 this forward-looking information 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 2018 Annual Report to Shareholders under the heading Risk Factors. 2 AirBoss of America Corp.

3 Disclaimers This presentation has been prepared by AirBoss of America Corp. ( AirBoss ) for the sole purpose of providing preliminary information regarding AirBoss and its subsidiaries, and is not intended to provide all available information about AirBoss. The material presented is not intended to modify, qualify, supplement or amend any information disclosed under corporate and securities legislation of any jurisdiction and should not be relied upon as a representation of any matter that a potential investor should consider in evaluating AirBoss or used for the purposes of making investment decisions concerning AirBoss Securities. This presentation is not intended as and shall not constitute an offer, invitation, solicitation, or recommendation with respect to the purchase or sale of any securities of AirBoss in any jurisdiction. Non -IFRS Financial Measures Within this presentation, AirBoss may disclose financial measures such as EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS. These measures do not have any standardized meanings prescribed by IFRS. Such measures are neither required by, nor calculated in accordance with IFRS, and therefore are considered Non-IFRS financial measures. AirBoss discloses EBITDA and Adjusted EBITDA as financial measurements used by interested parties and investors to monitor the ability of an issuer to generate cash from operations for debt service, financing working capital and capital expenditures and paying dividends. They should not be considered as an alternative to, or more meaningful than, net income (or any other IFRS financial measure) as an indicator of the company s performance. Because EBITDA excludes some, but not all, items that affect net income, the EBITDA and Adjusted EBITDA presented by the Company may not be comparable to similarly titled measures of other companies. EBITDA represents earnings before interest income, interest expense, income taxes and depreciation and amortization. 3 AirBoss of America Corp.

4 Agenda Chairman s Welcome Official Business Business Updates Operational Update Update on Defense President s Address Strategic Overview and Key 2018/2019 Initiatives 2017 Results 2018 Q1 Update Chairman s Closing Remarks Questions 4 AirBoss of America Corp.

5 Strong Leadership Gren Schoch, Chairman and CEO Lisa Swartzman, President Daniel Gagnon Chief Financial Officer Chris Bitsakakis Chief Operating Officer Divisional President AirBoss Rubber Solutions Bradley Berghouse President AirBoss Flexible Products Thomas H. Ripley President AirBoss Defense 5 AirBoss of America Corp.

6 Business Update - Operations CHRIS BITSAKAKIS President, AirBoss Rubber Solutions Chief Operating Officer, AirBoss of America 6 AirBoss of America Corp.

7 AirBoss Operations: Areas of Key Focus Creation of a Safety Culture across all Operations Development of Organizational Talent Establishment of AirBoss Operating System Implementation of an ongoing growth strategy 7 AirBoss of America Corp.

8 Creating a Safety Culture The Internal Responsibility System (IRS): An Employee-Supervisor-Employer partnership in ensuring a safe and healthy workplace Everyone is responsible for their own and their colleagues safety An effective IRS does the following: Establishes a system of shared responsibility. Promotes safety culture and best practices across groups Ensures compliance Immediate Changes Establishment of monthly safety talks between supervisors and employees Practice of beginning every meeting with a safety topic Scheduling on one time safety stand down across company Monthly Safety Metrics at MOR meetings and Quarterly cross company safety reviews Initial Results (Q4 17 to Q1 18): 23% improvement in frequency rate 8% improvement in severity rate Much more work to do to establish the safety culture 8 AirBoss of America Corp.

9 Strengthening the Organization Director of Finance ARS Craig Michael 30 years finance and accounting experience 20 years rubber compounding and processing Director of Human Resources, Health, Safety and Environment for ARS Morris Eddy 25 years experience in HR, HSE 12 years rubber processing experience Sr. Vice President Operations for ARS Carl Champman 30 years experience in Operations/Engineering 22 years experience in Rubber Compounding, Rubber Processing, NVH Vice President Operations for AFP Chris Laycoe 25 years experience in Operations/Engineering 18 years experience in Rubber Processing and NVH Director of Continuous Improvement for ARS Michael Ciarroni 6 Sigma Master Blackbelt 10 years of Lean Enterprise Implementations, 7 years rubber processing Director of Continuous Improvement for ABD/AFP Brian Renzi B.S. in Mechanical Engineering 5 years experience in applying technical solutions to Lean six sigma initiatives 9 AirBoss of America Corp.

10 AirBoss Operating System Based on the Philosophy of the Toyota Way: Continuous Improvement Tied to a long-term vision, meeting challenges with focus and creativity to realize our goals. We improve our business operations continuously, always driving for innovation and evolution. Go to the Source to find the facts to make the correct decisions. Respect for People We respect others, make every effort to understand others opinions, take responsibility and build mutual trust. We stimulate personal and professional development, share the potential opportunities and maximize individual and team performance. Solving Root Problems and Drive Organizational Learning Go and see for yourself to understand the situation Make decisions 10 AirBoss slowly of America by consensus, Corp. considering all options Become a learning organization through relentless reflection.

11 Driving Growth Rubber Solutions Focus on Organic Growth Setting of growth targets by region Identification of key conquest accounts Monthly and Quarterly Reviews with Commercial Team Drive towards best in class conversion costs Established industry baseline New scrap reduction initiatives Raw Material testing prior to compounding Statistical Process Control to identify trends Formula design vs Customer specifications Increase capacity through cycle time reductions Elimination of downstream bottlenecks R&D culture focused on solving problems Use of nanotechnologies to create unique compounds Partner with Universities to push the research envelope Create a sustainability strategy with market demand 11 AirBoss of America Corp.

12 Driving Growth Rubber Solutions Focused Customer relationships Sales Purchasing Development Engineering Executive Executive Using a flagship plant as a sales tool Enhance the customer experience Reinforce technical capabilities Create a professional atmosphere that differentiates ARS from other custom compounders 12 AirBoss of America Corp.

13 6s plan: Sort, Set in order, Shine, Standardize, Sustain, Safety 13 AirBoss of America Corp.

14 6s plan: Sort, Set in order, Shine, Standardize, Sustain, Safety 14 AirBoss of America Corp.

15 Compound Operations 15 AirBoss of America Corp.

16 Driving Growth - Automotive Improve Operational Efficiencies Drive costs out of the operation to improve competitive ability Aggressive improvements in labour efficiency Elimination of all key variances by year end Drive Best in Class Quality and Delivery GM Supplier of the year award 5 years running Ford Delivery Scores in April best in AFP history Honda continues to show confidence and has awarded a 2021 program Develop Relationships with engineering teams By creating trust between technical teams we can drive product development Target non automotive customers Tank tracks Marine applications and Agricultural Equipment 16 AirBoss of America Corp.

17 Driving Growth - Automotive Drive Product Development upscale Less risk of commoditization Less competition from overseas suppliers Greater opportunity for higher value add products 17 AirBoss of America Corp.

18 Driving Growth AirBoss Defense Key for continued profitability in Defense is execution Inclusion of manufacturability analysis during stage gate process Development of more sophisticated capacity planning models Development of supply chain options that allow for flexibility during manufacturing ramp up or increased demand Improvement in test methods that ensure compliance while not becoming a bottleneck 18 AirBoss of America Corp.

19 New Growth Opportunities Review of core business expansion into underserved Geographies Review of product line extensions into more highly engineered products Target opportunities to increase scale or breadth in key businesses and drive synergy savings Investigate acquisition opportunities that could drive increased capacity utilization in all business units 19 AirBoss of America Corp.

20 BUSINESS UPDATE - DEFENSE TOM RIPLEY President, AirBoss Defense 20 AirBoss of America Corp.

21 AirBoss Defense at a Glance We are a market-leading provider of mission critical Chemical, Biological, Radiological and Nuclear ( CBRN ) solutions. We are one of only a few CBRN global protection equipment providers. For over 40 years we have maintained sole-source supplier or spec d in positions of protective overboots, gloves, respirators, filters, extreme cold weather boots, and shelter systems to the US DOD, Canadian DND, and most western/nato militaries. Our products are highly engineered, made with proprietary rubber formulations, and developed by our in-house team of engineers. CBRN products are highly consumable in nature with identical products required for both warfare and training. 21 AirBoss of America Corp.

22 AirBoss Defense Global Defense Update Persistent and pervasive CBRN threat continues to drive our market. Geo-political instability drives force posturing. US Marines stationed in Norway US Military expansion on the Korean Peninsula Syria CBRN events The threat environment remains extremely dynamic. US Marines with MRF 17.2 conduct a ski movement during Exercise White Claymore in Bardufoss, Norway. 2/2/18. (Business Insider 4/16/18) 22 AirBoss of America Corp.

23 Courtesy CBRNe World Magazine, February 2018, pg. 4-5

24 AirBoss Defense Product Portfolio Overview Wearables Masks & Filters Collective Protection Provides CBRN extremity protection, including gloves, overboots and extreme cold weather footwear protection Provides the optimal combination of the highest degree of protection with ease of use and limited mobility restrictions Respiratory protection systems and replacements for military and first responder use Provide 24 hours of continuous protection against Chemical Warfare Agents and are impermeable to all biological agents Military-grade, rapidly deployable and corrosionresistant decontamination shelters and camp systems serving both military and civilian customers Fully outfitted with respiration, filtration, protection and patient isolation control 40% Provides 24 hours of protection against chemical warfare agent threats Compatible with all CBRN suits Made from durable molded materials and ballistic polycarbonate lenses, masks and respirators provide superior protection with minimum war fighter burden 24 AirBoss of America Corp.

25 AirBoss Defense Wearables Product Portfolio Product Description AMG / JB2GU Ambidextrous, molded CBRN protective glove MALO / AFS Molded CBRN protective overboot Bunny Boot Legacy extreme cold weather protective boot ECWM Next-generation extreme cold weather warfare boot Fire Boots Only manufacturer of rubber based Fire Boots in North America 25 AirBoss of America Corp.

26 AirBoss Defense Mask & Filter Product Portfolio Product Description LBM Mask Next-generation, lightweight, low-burden CBRN protective mask C4 Mask Legacy CBRN protective mask Filters CBRN protection against a variety of dangerous chemical and biological agents C420 PAPR Military-grade, NIOSH-certified PAPR FlexAir PAPR Compact and lightweight PAPR for medical and commercial use 26 AirBoss of America Corp.

27 AirBoss Defense Collective Protection Portfolio Product Description Shelter Systems Rapidly deployable CBRN protective shelters and tent systems Mass Casualty Decontamination Systems State-of-the-art mass decontamination system Contaminated Human Remains Pouch Rugged, leak-proof body bag Isolated Contamination Transportation Patient (ISOPOD) CBRN protective isolation and transport chamber 27 AirBoss of America Corp.

28 PRESIDENT S ADDRESS LISA SWARTZMAN President, AirBoss of America 28 AirBoss of America Corp.

29 President s Address Lisa Swartzman President 29 AirBoss of America Corp.

30 President s Address Our Mission Our Mission: AirBoss is an integrated group of complementary businesses whose mission is to leverage our polymer based technology and engineering expertise to create long term value as a supplier, employer and investment of choice. Our Commitment: We are committed to the development and delivery of innovative solutions that consistently outperform our peers, producing predictable, sustainable and profitable growth for our shareholders. We are dedicated to maintaining our core values and integrity in our dealings with our customers, our people and our supplier partners. 30 AirBoss of America Corp.

31 Building on our Strengths for the Future 31 AirBoss of America Corp.

32 2017 YEAR IN REVIEW 32 AirBoss of America Corp.

33 2017 Summary Financials 2017 In USD$000 s except for EPS Rubber Solutions Engineered Products Corporate Consolidated Net Sales 125, , ,855 Gross Profit 19,603 24,917 44,520 EBITDA 16,622 13,467 (2,436) 27,653 Net Income 12,632 EPS (f.d.) 0.54 Summary Statistics 2017 Gross Margin 15.6% 15.2% 15.4% 2017 EBITDA Margin 13.3% 8.2% 9.5% 33 AirBoss of America Corp.

34 AirBoss of America Corp.

35 Q Summary Financials In USD$000 s except for EPS Rubber Solutions Engineered Products Q Corporate Consolidated Net Sales 36,078 44,471 80,549 Gross Profit 5,431 7,234 12,665 EBITDA 4,723 4,262 (1,467) 7,518 Net Income 3,198 EPS (f.d.) 0.14 Summary Statistics Q Gross Margin 15.1% 16.3% 15.7% Q EBITDA Margin 13.1% 9.6% 9.3% Q Gross Margin 18.4% 13.9% 15.9% Q EBITDA Margin 16.4% 7.0% 10.0% 35 AirBoss of America Corp.

36 PEOPLE PROCESS SYSTEMS BUILDING AN EVEN STRONGER PLATFORM FOR GROWTH Leveraging Talent 36 AirBoss of America Corp. Data Driven Analytics & Metrics Integrated Systems

37 THANK YOU Employees Shareholders Board of Directors Bankers Analysts 37 AirBoss of America Corp.

38 CEO s Closing Comments 38 AirBoss of America Corp.

39 AirBoss Value Proposition Long Term Value Creator Outperforming TSX Strong dividend growth Insider = biggest single group of Shareholders Strong Balance Sheet Strong growth potential Management aligned with shareholders 39 AirBoss of America Corp.

40 AirBoss 12 Month Performance 40 AirBoss of America Corp.

41 AirBoss - 5 year Performance 41 AirBoss of America Corp.

42 Dividend History Dividends up >550% in 10 years $ $ AirBoss of America Corp.

43 Acknowledgements 43 AirBoss of America Corp.