tsx industrial and clean technology investor presentation ... q3 2017... · the financial strength...
TRANSCRIPT
Forward Looking Statements
Certain statements in this presentation contain forward-looking statements about the objectives of PFB Corporation (“PFB” or the “Corporation”) and management’s expectations, beliefs, intentions or strategies for the future.
Future events are subject to certain risks, uncertainties and assumptions that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such risks, uncertainties and assumptions include, but are not limited to: general economic conditions; actions by government authorities; actions by regulatory authorities; availability of raw materials; changes in raw materials prices; foreign exchange rates; interest rates; competitor activity; industry pricing pressures; seasonality of the construction industry; and weather.
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PFB Corporation Overview
Our Strategic Focus:
PFB Corporation (“PFB®”) is a vertically-integrated manufacturer of products based on our core competency in expanded polystyrene foams (“EPS”). We own or lease a total of nine facilities in Canada and five in the USA.
We are industry leaders and the only vertically integrated EPS company in North America; expert in EPS resin, building science applications, and geotechnical applications of our engineered EPS foam products.
Our innovative designs and high-quality building products for insulated residential and commercial structures, engineered geotechnical products used as soil replacement in foundations, road and bridge construction and protective packaging products on both a custom and a commodity basis are available nationally.
Value-added, “green” products provide sustainable alternative to traditional building products and address demand for energy-efficient building structures – 35% of energy consumption is in buildings.
The financial strength of PFB Corporation is evident from our strong balance sheet, our focus on revenue streams in both Canada and the USA., our organic and acquisitive revenue growth and our achieving a targeted return on capital as well as capacity utilization.
Dividend Policy:
Quarterly dividend $0.08 ($32 pa)
• Last dividend increase Q3 2017
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http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00019343
Link to public disclosure at:
Third Quarter Ended September 30
2017 2016
Sales 28,649$ 28,838$
Net income 1,519$ 1,936$
Per share 0.23$ 0.29$
Adj. EBITDA 3,240$ 4,066$
Per share 0.48$ 0.61$
Nine Months Ended September 30
2017 2016
Sales 77,512$ 76,475$
Net income 1,041$ 3,543$
Per share 0.16$ 0.53$
Adj. EBITDA 5,034$ 9,109$
Per share 0.74$ 1.36$
Last Twelve Months September 30
2017 2016
Sales 102,570$ 100,915$
Net income 2,186$ 4,379$
Per share 0.33$ 0.65$
Adj. EBITDA 8,030$ 11,535$
Per share 1.18$ 1.72$
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is an absolute measure of our operating performance and provides an indication of the results generated by our business activities prior to how the activities are financed, how assets are depreciated and amortized, or how results are taxed.
PFB Brands - Molecules to Mansions Product Strategy
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• PFB Corporation is a vertically integrated manufacturer of EPS based insulating building products
EPS Resin Raw Material
Custom Homes Group
Building Materials Building Products
Reaction
Design – Log and Timber Fabrication Log, Timber and SIP Installation - Project Services
Deliver to Market
Bundle
INPUT
Deliver to Market
Styrene Pentane
Manufacture EPS
P U L L
B to B
B to C
Blank Panels or Ready-To-Assemble
Foundations and Walls
Insulating Concrete Forms
• Advantage ICF Systems® (Insulating Concrete Forms)
Designed to build insulated foundations and walls from concrete in residential & commercial markets
• Key benefits include - higher energy efficiency, lower utility costs, environmentally friendly, lower jobsite labor costs and flexibility in design
®
Product Solutions – Building Products and Building Materials
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®
Structural Insulating Panels
• Insulspan® Structural Insulating Panel Systems are structural elements used for walls and to replace roof trusses
• Provides an energy-efficient structural envelope
• Higher effective thermal resistance and lower air infiltration than conventional stick-frame systems
• Supports recent building code changes to higher R value requirements
• Shortens construction time - saves labor
®
EPS Product Solutions
• Plasti-Fab is a leader in the North American EPS industry
Provides customers with EPS Product Solutions, often including custom design for energy efficient buildings & other applications
• Market segments include roofing, exterior finish systems, reseller channel, OEM, road and bridge soil replacement as engineered geotechnical applications
Durofloat
Custom Packaging Solutions
Exterior Finish Systems
Engineered Geotechnical Products
Durofoam
Sloped & Flat Roofing Insulation
PlastiSpan/EnerSpan Insulation
PFB Custom Homes Group
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Log and Timber Homes
• Producer of mountain style homes which contain a combination of logs and or timbers and inclusion of ICF’s and SIP’s
• Premier designer and producer of luxury log homes and timber frame homes with a Total Home Solution®
High Performance Homes
• Net zero capable high performance home envelops
• Utilizes advanced energy efficient building techniques, including SIPs and ICFs
Timber Framing
• Producer of traditional timber frame homes which are highly energy efficient, due to the inclusion of ICFs and SIPs
• Award-winning M.T.N Design is the in-house group which provides design services for PFB Custom Homes Group
• M.T.N offers full service design from conceptual drawings through engineered construction docs
PFB Facility Locations
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Legend
EPS Moulding Facilities
SIPS Manufacturing Plant
Corporate Office
Manufacturing & Design Centre
Custom Homes Group
• PFB operates 13 facilities across the US and Canada with 400 employees
• The only vertically integrated EPS company in North America
• PFB’s widely distributed manufacturing capabilities allow it to maintain strong customer relationships and reduce production risk
Facility Network
PFB Sustainability Culture - (www.pfbsustianability.com)
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Impacts: Social - Environmental - Economic
• Reduce energy and water consumption
• Reduce GHG/VOC emissions
• Reduce waste to landfill
Global Reporting Initiatives (GRI) • Set Targets • Measure
performance • Transparency
Safety
Employees Customers Shareholders • Communities
Stakeholders
Value added and innovative Products
and Services
Support of local communities and
charitable foundations
Employee personal and professional
development
Brand promise:
• Quality • Service • Expertise
Consistent and reliable dividend
policy
Return on Capital
Profitable revenue growth
Environment of Respect and Opportunity
Environmental solutions including
GreenGuard Certifications
Industry Market Share
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Insulation Demand
• 47% of the USA insulation market is controlled by Owens Corning, Dow Chemical, CertainTeed, Johns Manville and Knauf Insulation
• 12% of the USA insulation market is comprised of companies with over $160 MM in sales *
Includes: Firestone Building Products, Atlas Roofing, Bayer, Carlisle Companies and BASF
• Resins typically manufactured by chemical companies, PFB is the only vertically integrated EPS company in North America
* Compiled from Freedonia Group, Inc. 2015 data
2014
NA Largest Insulation Manufacturers % Market $MM Sales
Owens Corning 18.2 1,400
Johns Manville 11.8 880
Certain Teed 8.0 600
Dow Chemical 4.7 350
Kanuf Insulation 4.7 350
Revenue Growth by Market Segment
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Revenue Mix – Geography
• PFB has a demonstrated a track record of revenue growth despite oil producing region downturn in Canada
• The Company has significant and growing exposure to the U.S. building sector
USA Segment revenue as a percentage of total revenue was 17% in 2011 and is 35% in the last twelve months
• US core EPS operations continue to show growth
• Impact of recent CAD dollar valuation on US revenues
• Delay of several US homes group projects into Q4 due to hurricane activity
USA Segment Operating Performance
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Effects of Forex Fluctuations Raw materials are priced and purchased in USD
• Higher CAD USD values reduce cost of sales • Higher CAD USD values improve gross margin
Revenues generated in the USA are converted into CAD
• Higher CAD USD values decrease USA revenues in CAD terms
• Lower CAD USD values has the effect of discouraging competitors from abroad in Canada
USA Segment Q3 2017 2016
Sales $ 9,076 $ 9,883
Operating income $ 352 $ 885
USA Segment Nine months September 30
Sales 25,772$ 26,533$
Operating income 397$ 1,910$
USA Segment LTM
Sales 35,810$ 34,554$
Operating income 1,159$ 1,941$
All amounts in Canadian dollars
USA Segment Q3 2017 2016
Sales 7,243$ 7,573$
USA Segment LTM 27,280$ 26,222$
All amounts in USA dollars
North America Spot Styrene USD / lb
13 $0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17
Aggressive run-up in Styrene spot price due to an atypical confluence of conditions in the market.
PFB responded with price increase to customers effective Q2 which are taking hold.
Styrene spot prices are forecast to continue to reduce into Q4 from current levels into more typical ranges
Financial Condition September 30, 2017
September 30, 2017 September 30, 2016
Cash $ 7,205 $ 13,966
Current assets 32,129 37,203
Current liabilities 14,645 13,704
Non-current liabilities 13,572 15,838
Shareholders’ equity $ 49,961 $ 50,443
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PFB continues to generate a strong balance sheet with a strong cash position. Recent Q1 ROFO to repurchase key property from a long term lease obligation
effectively transferred principal lease obligations into long term debt (mortgage) along with a one time cash down payment securing a strategic property and resulting in improved go-forward cash flows.
Share holder equity remains stable, impacted only slightly by foreign exchange asset valuations due a stronger CAD dollar at Q3.
PFB Corporation Valuation
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Share Price
Capitalization Ownership
Institutions, 3.0%
Management & Insiders, 71.1%
Other, 25.9%
Aeonian Capital – 44.1%
(In C$MM unless indicated) 52W Low 52W High Current
Price (1) $7.95 $9.98 $8.50
Shares outstanding 6.7
Market Capitalization $57.0
Plus: Net Debt (2) $5.0
Total Enterprise Value $62.0
2017
TEV / EBITDA (3) 7.71
Dividend yield 3.8%
(1) Closing price as at October 19, 2017
(2) Includes total Finance lease obligations, Long term debt plus Credit facility drawn
less: Cash as at September 30, 2017
(3) LTM ended September 30, 2017
TEV / Adjusted EBITDA (3) 7.71 Dividend yield 3.8%
Management & Board of Directors C. Alan Smith
President & Chief Executive Officer, PFB Corporation and President, Aeonian Capital Corporation Mr. Smith is a graduate of the University of Alberta with a Bachelor of Commerce and is a member of the Canadian Institute of Chartered
Accountants. He was appointed Chairman of the Board and Chief Executive Officer of PFB Corporation in January, 1993. Since 1981, through an affiliated company, Aeonian Capital Corporation has provided equity capital and management to early stage and emerging companies in the natural resources and high technology sectors
Frank B. Baker PFB Board Member & Retired Businessman
Bruce M. Carruthers Chief Operating Officer, PFB Corporation
Donald J. Douglas President & CEO, Jetstream Capital
John K. Read President, Picante Capital Corp.
William H. Smith, Q.C. Principal, William H. Smith Professional Corporation
Gordon G. Tallman Corporate Director
Edward H. Kernaghan Executive Vice President, Kernaghan Securities, Ltd.
Vanessa H. Rennie Vice President, Aeonian Capital Corporation
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