robbins & myers, inc. -...

Q1 2009 Financial Results Conference Call January 8, 2009

Robbins & Myers, Inc.

Q1 2009 Investor Conference Call...January 8, 2009 1

In addition to historical information, this presentation contains forward-looking statements identified by use of words such as “expects,” “anticipates,” “believes,” and similar expressions. These statements reflect management’s current expectations and involve known and unknown risks, uncertainties, contingencies and other factors that could cause actual results, performance or achievements to differ materially from those stated. The most significant of these risks and uncertainties are described in our Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission and include, but are not limited to: the cyclical nature of some of our markets; a significant decline in capital expenditures in our primary markets; a major decline in oil and natural gas prices; reduced demand due to the general worldwide economic downturn and general credit market crises; increases in competition; changes in the availability and cost of our raw materials; foreign exchange rate fluctuations; work stoppages related to union negotiations; customer order cancellations; business disruptions caused by the implementation of business computer systems; the possibility of product liability lawsuits that could harm our business; events or circumstances which result in an impairment of assets; the potential impact of U.S. and foreign legislation, government regulations, and other governmental action, including those relating to export and import of products and materials, and changes in the interpretation and application of such laws and regulations; the outcome of audit, compliance, administrative or investigatory reviews; and decline in the market value of our pension plans’ investment portfolios affecting our financial condition and results of operations. Except as otherwise required by law, we do not undertake any obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date hereof.

We refer to non-GAAP financial measures, including EBIT, adjusted EBIT, EBITDA, and adjusted EBITDA, in this presentation. Please see the Appendix for a reconciliation of each of these measures to the most directly comparable GAAP financial measure. We believe non-GAAP measures are useful to investors in evaluating our ongoing operations and the impact of special items on our results.

Cautionary Statement Concerning Forward-Looking and Other Information


First Quarter Overview

•Healthy Financial Results in Q1»Sales, Orders Increased»Profitability Expanded»Operating Cash Flow Improved

•Recent Shareholder Value Creation Activities Completed»2 Million Shares Repurchased During Q1 for $39 Million»Quarterly Cash Dividend Increased to $0.04 per Common Share »Substantial Cash Balances and Borrowing Capacity Remain Available

•Business Environment Changing»Order Slowdowns in November and December»Demand for Energy-Related Products Remained Steady»Contingency Plans Activated

Stronger Business Positioned to Weather Challenging Environment

For the Quarter Ended November 30, 2008


Top-Line Growth in Q1 2009

Backlog, Energy Markets Support Top-Line Activity

-5% (+4% Ex-Acquisitions

& FX)

Orders

+3% (+6% Ex-Acquisitions

& FX)

Sales Backlog

Q1 FY ‘08 Q1 FY ’09

$174 $178$194 $185

(Millions)

$214 $224


Profit, Cash Flow Increases

Improved Business Disciplines, Tighter Controls, Effective Execution

(Millions, except DEPS)

13.4%14.8%

$0.40

$0.50

EBIT Margin Cash FlowDEPS

-$6

$0

From Operating ActivitiesReflects Feb. ’08 2-for-1 Split

Q1 FY ‘08 Q1 FY ‘09


EBITDA Update

$114 $121$132 $137 $141

Q1 08 Q2 08 Q3 08 Q4 08 Q1 09

Q1 2009 EBITDA of $30 Million Represents 14% Yr-Yr Growth

Trailing Four Quarters Adj. EBITDA

Adjusted EBITDA excludes restructuring costs and gains/losses from asset sales. See GAAP reconciliation tables in Appendix.


Changing Business Conditions

•Broad Global Slowdown Affected Our Order Rates in November and Continued into December

•Experiencing Slower Industrial Market Demand

•US Chemical Production and Utilization Rates Declined; Anticipating Slower Customer Demand

•Slowdowns Noted Across Pharma Markets

•Energy Markets Currently Uncertain»Declining Commodity Prices, Lower Rig Counts»Sustained Demand From Our Customers

Adapting to Changing Environment


Contingency Plans Activated

•Spending Deferred, Controls Tightened»Personnel»Capital

• Executing First-Level Contingency Plans»Headcount Reductions»Discretionary Spending Cuts»Supplier Price Reductions

•Evaluating Second-Level Contingency Plans»Structural Cost Changes»Personnel»Facilities

Protecting Profitability and Strategic Priorities


Fluid Management Group Q1 Results

•Orders Grew 2% to $84mm»+8% Ex-Currency»Healthy Demand from Energy Markets,

Slowing Demand for Industrial Pumps

•Sales Grew 14% to $82mm

•EBIT Margin Expanded 450 Bps to 30.0%»Favorable Volume, Pricing, Mix

•Contingency Plans Currently Addressing Industrial Pump Operations

Leveraging Leadership Position

$72.4$82.3

Q1 2008 Q1 2009

$18.4

$24.6

Q1 2008 Q1 2009

Sales

EBIT

(Millions)


Process Solutions Group Q1 Results

•Orders Grew 6% Organically (Ex-Currency & Acquisitions)»Large European Projects Booked in

Q1»Inquiry/Quotation Activity Weakening

•Sales Increased 2% or 4% Organically

•EBIT Margins Fell 170 Bps to 9.5%»Mix Impacts in Asia

•Contingency Plans Focused in Western Markets

Remain Focused on Improving Profitability

$72.3$70.8

Q1 2008 Q1 2009

$8.0$6.9

Q1 2008 Q1 2009

Sales

EBIT

(Millions)


-$1.4

$1.5

Romaco Group Q1 Results

•Orders -21% or -8% Ex-Currency»Strong September Orders; Weak

Orders in November & December

•Sales -23% or -17% Ex-Currency

•Business Posted Loss in Q1»Q1 Included $0.5mm Cost for

Restructuring Sales Organization»Profitability Improvement Dependent

on Volume Increases

•Broad-Based Contingency Plans Being Developed

Major Projects Delayed or Deferred

$23.4

$30.3

Q1 2008 Q1 2009

Sales

EBIT

(Millions)

Q1 2008 Q1 2009


2009 Enterprise Focus Areas

•Lean Implementations and Continuous Improvement

•Key Account Management

•New Product Development and Commercialization

•Acquisitions

•Employee and Management Development Programs

•Respond to Changing Conditions By Adjusting Our Cost Structure

Strategic Direction Remains Intact


2009 Outlook

•Current Market Activity and Backlog Provide Short-Term Visibility

•Current Order Intake and Quotation Levels Create Pressure, Especially on H2 ’09 Performance

•End of Q1 Currency Exchange Rates Assumed for Remainder of Year

•Expect Cap-Ex Levels Under $20 Million, Down from Previous Guidance of $25-$30 Million


2009 DEPS Forecast

2008 2009

•2009 Forecast Reflects Lower Sales Levels and Effects from Contingency Plans

•2009 Full-Year Forecast Includes Approximately $0.11 of Expected Benefit from Q1 Share Repurchases

Full Year Second Quarter

$0.40-$0.50

$0.04

0.170.18

2008 2009

$2.17$1.80-$2.00

$2.52

$0.43

NOLsSp. Items

Sp. Item 0.02NOLs 0.02

$0.47


Summary

•Culture of Continuous Improvement Gaining Traction in Each Business Platform

•Greater Focus on Professional Sales Skills, Planning and Key Account Management Programs

•Balance Sheet Supports Organic and Strategic Growth Initiatives Including Modest Acquisitions

•Attractively Positioned with Leading Niche Products Serving Primary End Markets – Energy, Chemical and Pharmaceutical

•End Market Demand and Visibility are Changing; Proactively Managing the Cost Structure While Scouting for Opportunities to Extend Competitive Positions

•Successful Management Team With Experience in Challenging/Uncertain Markets

Focused on Creating Long-Term Shareholder Value

Financial Highlights



Q1 Income Statement Highlights(Millions, Except DEPS)

Q12009

Q12008

Orders

Ending Backlog

Net Sales

Gross Profit

Gross Margin

EBIT

EBIT Margin

ETR

Net Income

DEPS

$184.8

223.6

178.0

68.0

38.2%

26.4

14.8%

34.0%

$17.2

$0.50

$193.9

214.2

173.5

62.9

36.2%

23.2

13.4%

35.4%

$13.9

$0.40

-5%; +4% Organic; Book-to-Bill>1.0

+3%; +6% Organic

Higher Backlog Despite Currency Translation Headwinds

Effective Execution, Mix

30% Flow-Through Ex-Currency

+25%; No Benefit From Share Repurchases


Operating Currencies UpdateUSD per EUR

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1-Se

p-07

1-Oc

t-07

1-No

v-07

1-De

c-07

1-Ja

n-08

1-Fe

b-08

1-M

ar-

08

1-Ap

r-08

1-M

ay-

08

1-Ju

n-08

1-Ju

l-08

1-Au

g-08

1-Se

p-08

1-Oc

t-08

1-No

v-08

1-De

c-08

USD per GBP

1.251.351.451.551.651.751.851.952.052.152.25

1-Se

p-07

1-Oc

t-07

1-No

v-07

1-De

c-07

1-Ja

n-08

1-Fe

b-08

1-M

ar-

08

1-Ap

r-08

1-M

ay-

08

1-Ju

n-08

1-Ju

l-08

1-Au

g-08

1-Se

p-08

1-Oc

t-08

1-No

v-08

1-De

c-08

USD per CAD

0.650.70

0.750.80

0.850.90

0.951.00

1.051.10

1-Se

p-07

1-Oc

t-07

1-No

v-07

1-De

c-07

1-Ja

n-08

1-Fe

b-08

1-M

ar-

08

1-Ap

r-08

1-M

ay-

08

1-Ju

n-08

1-Ju

l-08

1-Au

g-08

1-Se

p-08

1-Oc

t-08

1-No

v-08

1-De

c-08

FY 09 Plan Rate

-14% -16% -15%

• Primary Foreign Currencies are Euro, British Pound, Canadian Dollar

• Significant Currency Exchange Rate Changes Impacted Q1 Results

• Expect Every 10% Currency Change to Create Approximately $0.12 Full Year EPS Impact


Q1 Working Capital Highlights

109.6111.2

154.4173.5

Q1 2008 Q1 2009

$264.0$284.7

NWC as % Sales 16.0% 15.4%

(Millions)

Current Assets Excluding Cash

Less: Current Liabilities

Excluding Debt

Equals:Net Working Capital

(NWC)

Velocity Measure Eliminates FX Bias, Demonstrates Yr-Yr

Progress in Q1


$32.6

$103.3$107.5

$74.3

$108.0

$37.0

$0

$20

$40

$60

$80

$100

$120

Q1 2007 Q1 2008 Q1 2009

Q1 Capital Structure Update(Millions)

Cash

Debt

• Over Past 12 Months, Repaid $70mm Senior Notes and Repurchased $39mm Common Shares

• $150mm Revolver Remains Undrawn» Current Agreement

Expires December 2011» $32mm Committed to

Stand-By L/Cs

• $30mm Senor Notes Due May 2010

Questions?



Appendix-Reconciliations

Reconciliation of Net Income to EBIT, EBITDA, Adjusted EBIT and Adjusted EBITDA

Trailing Four QuartersQ1 2008 Q1 2009 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009

Net income 13,938$ 17,208$ 54,030$ 62,435$ 75,682$ 87,402$ 90,672$ Interest expense 727 53 4,430 3,864 2,656 2,031 1,357 Income taxes 7,955 8,957 38,158 40,453 45,250 39,099 40,101 Minority interest 601 176 1,722 2,015 2,339 2,132 1,707 EBIT 23,221 26,394 98,340 108,767 125,927 130,664 133,837

Minority interest (601) (176) (1,722) (2,015) (2,339) (2,132) (1,707) Depreciation & amortization 3,996 4,093 16,611 16,223 16,526 16,249 16,346 EBITDA 26,616 30,311 113,229 122,975 140,114 144,781 148,476

Special items:Property sale gain (1,303) (2,402) (2,402) (1,934) (1,934) Business disposition gain - - (5,697) (5,697) (5,697) Restructuring costs, business disposition loss 2,281 421 - - -

Adjusted EBIT 23,221$ 26,394$ 99,318$ 106,786$ 117,828$ 123,033$ 126,206$ Adjusted EBIT margin 15.6%

Adjusted EBITDA 26,616$ 30,311$ 114,207$ 120,994$ 132,015$ 137,150$ 140,845$

Note: EBIT, EBITDA, adjusted EBIT, and adjusted EBITDA are non-GAAP measures. We use these measures to evaluate our businesses, andwe allocate resources to our businesses based on EBIT. EBIT, EBITDA, adjusted EBIT, and adjusted EBITDA are not measures of performance calculated in accordance with accounting principles generally accepted in the United States and should not be considered as an alternative to net income as a measure of operating results. None of these are measures of cash available for use by management.

robbins & myers, inc. -...

Documents