Consistency and Sustainability with Growth Opportunities

Transcription

Consistency and Sustainability with Growth Opportunities
Consistency and Sustainability with
Growth Opportunities
Safe Harbor Statement
This presentation contains forward-looking statements regarding CLARCOR Inc.
(“we”, “CLARCOR” or “the Company”) within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements made in this presentation other than statements
of historical fact, are forward-looking statements, including any statements,
expressed or implied, regarding the expected financial performance of CLARCOR or
regarding CLARCOR’s strategic and operational plans. Although the Company believes
that its expectations and statements are based on reasonable assumptions, all
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the Company’s actual results, performance
or achievements to differ materially from the Company’s expectations by these
forward-looking statements. Additionally, the Company’s historical performance
offers no assurance with respect to its future performance. More information about
potential risk factors that could affect CLARCOR’s business and financial results is
included in the Company’s 2013 Annual Report on Form 10-K, which is available at
www.clarcor.com or www.sec.gov.
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Who is CLARCOR?
• Most diversified filtration company in the world
 95% of consolidated revenue is filtration based
 Serve more filtration markets than any other filtration company
 40% Engine-Mobile. 30% Air Filtration. 25% Process Liquid Filtration.
• Over 80% of our revenue is recurring aftermarket revenue
• Summary statistics
 $1.5 billion annualized sales*
 Approximately 6,500 global employees
 92 operating facilities in 18 countries
*Fiscal 2013 sales of $1.1 billion plus estimated $0.4 billion annualized sales from 2014 acquisitions of GE Air Filtration, Stanadyne Filtration and Bekaert Advanced Filtration
2
Who is CLARCOR?
• Leveraged to growing markets and trends
 Increasing filtration criticality and content
 Clean air and liquids
 Oil and natural gas transportation
and processing
 Emission regulations
Aerospace
(2%)
Distribution
(6%)
Other
Industrial
(5%)
 Fuel efficiency
Heavy-duty
Engine
 Power generation shift
from coal to gas
(40%)
Oil & Gas
(16%)
Total Sales
$1.5 Billion*
Gas Turbine
(9%)
Packaging
Industrial Air
*Fiscal 2013 actual sales of $1.1 billion plus estimated $0.4 billion annualized sales from 2014
acquisitions of GE Air Filtration, Stanadyne Filtration and Bekaert Advanced Filtration
(17%)
(5%)
3
Who is CLARCOR?
• Balanced filtration portfolio
 Air filtration:






Heavy-duty engine
Gas turbine air inlet
Natural gas transportation
HVAC
Air pollution control
Industrial air
 Liquid filtration:







Heavy-duty engine (fuel, lube, hydraulic)
Natural gas liquids
Fuel & water separation
Aviation fuel
Processed water
Air filtration
Oil drilling
Polymer and plastics filtration
Liquid
filtration
GE Air Filtration
Filtration Sales:
51% Air
49% Liquid
Stanadyne
Filtration
4
Who is CLARCOR?
• Culture of cost reductions through continuous improvement
 CLARCOR Management System (LEAN tools and common sense)
 Common facilities and people to support international growth
 Margin expansion in Industrial/Environmental filtration segment:
I/E Segment Operating Margin
12.0%
12.7%
11.1%
9.3%
8.4%
7.2%
7.3%
6.3%
2003
2004
2005
6.1%
6.1%
2006
2007
5.4%
2008
2009
2010
2011
2012
2013*
*Fiscal 2013 Industrial/Environmental Filtration segment operating margin included a non-cash charge related to the disposal of certain HVAC
equipment, various one-time costs related to the GE Air Filtration and Bekaert Advanced Filtration acquisitions and an allocated portion of a pension
settlement charge. The above table reflects 2013 GAAP operating margin adjusted to exclude these items. Please refer to our press release dated
January 15, 2014 (available at www.clarcor.com) for a reconciliation of this non-GAAP measure to our GAAP results.
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Stanadyne Filtration Acquisition
• Purchased in May 2014 for $325 million
OEM Assemblies:
• Approximately $110 million annual sales
• Premier diesel fuel filtration franchise
 Best-in-class, proprietary technology
 Agriculture and construction market focus
Replacement Elements:
• Significant OE relationships
• Aftermarket represents > 70% of sales
 Substantial installed base of assemblies
 OE dealer networks
• Strong operating profitability
OE Relationships:
• Doing business as
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GE Air Filtration Acquisition
• Purchased in Dec. 2013 for $265 million
Gas Turbine Inlet Systems:
• Approximately $250 million annual sales
• Gas turbine filtration
 Significant entry to gas turbine filtration market
 Multi-year supply agreement with GE
 We bring focus on driving aftermarket growth
Gas Turbine Filter Elements:
 Opportunity to diversity with non-GE customers
• Industrial air filtration
 Pleated filter elements, bags and rolled goods
 Access to new markets and customer network
Industrial Filtration Products:
• Membrane technology
• Doing business as
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Engine/Mobile Filtration
Est. $14B Market
Heavy-duty Fuel, Lube and Air Filters
Channel Flow® Air Filters
On-Highway Trucking
Radial and Panel Filters
Railroad
Agriculture and Construction
Diesel Fuel Filtration Systems
and Elements
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Process/Liquid Filtration
Est. $12B Market
Natural Gas Transportation
Oil Drilling
Natural Gas Filter Vessels
Refining
Natural Gas Filter Elements
Aviation and Aerospace
Poroplate® Sintered Mesh Tubes
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Industrial Air Filtration
Est. $14B Market
Gas Turbine Filter Elements
HVAC Filters
Gas Turbine Air Inlet Systems
Filter Bags & Cages
Air Pollution Control Products
Pleated Filter Elements
10
Packaging
Battery
Spice
Health & Beauty
Flat Sheet Decorating
Smokeless Tobacco
Confection
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Filtration fundamentals
• Strategic focus on industries with the following characteristics:
 High share of aftermarket sales
 Extended product lifecycle
 Filtration offers critical customer value
 Barriers to entry
 Compliance and regulatory requirements
Gas
Turbine
Air Inlet
Industrial
Air
lkj;lkj;
Oil and
Natural
Gas
OnHighway
Trucking
Aero
space
lk’lk
Railroad
Engine
k;jkj
OffHighway
Engine
12
Growth – Power Generation & Natural Gas
• Attractive long-term energy growth profile, including shale plays
Source: BP World Energy Outlook 2035
• CLARCOR power generation and consumption exposure
 Gas turbine air inlet filtration
 Sand control products for oil drilling
 Natural gas transportation and processing
 Natural gas liquids
13
Growth – Emissions Standards
• Case study – CLARCOR Engine Mobile Solutions diesel fuel filters
Tier 2
(2005)
Pre-filter
w/lift pump
Tier 3/4 – NA and EU
(2008)
Final
filter
Pre-filter
w/lift pump
Pre
Filter
Tier 3/4 - Emerging
Mkts (2013)
Final
filter
Two Pre
Filters in
parallel
Pre-filter
w/lift pump
Final
filter
• Sales content per engine increased over 200% to meet new standards
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Growth – Geographic
92 facilities in 18 countries
HEADQUARTERS
Franklin, TN, USA
Legend
Baldwin
PecoFacet
Other
(63 U.S. facilities)
 Serve Chinese market with nearly every product line
 Growing oil and gas footprint in Middle East, Brazil and Southeast Asia
 Will continue to explore strategic international acquisitions
15
Growth – Technology
• Bringing innovative technologies to market
 New global R&D facility near Franklin, TN headquarters
 New oil & gas research center near Dallas, TX
 Proprietary filtration media: Protura® and PEACH®
 Technology and talent gained from acquisitions
 Increasing R&D spend every year
XtreamPure® High Flow Products
PEACH® Nano-Fiber Media
Oil & Gas Filtration Research Center
ProTura™ and ProTura NanoMatrix™
16
Growth – New Products and Markets
• New Products and Higher Margin Markets
 New Engine-Mobile distribution channels
 Solutions for emerging process liquid filtration needs
 Focus on high value-add applications, criticality of filtration need
Dust Collection Cartridges
Legacy® air filter product line
Next-gen Liquid Filters
Air Induction Systems
Metaledge® Self-cleaning
Filters
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Financial Performance
$Millions
Sales
EPS
$1,200
$2.50
$1,000
$2.00
$800
$1.50
$600
$1.00
$400
$0.50
$0.00
$200
1993
1995
1997
1999
2001
2003
2005
2007
2009
Compounded Annual Growth Rate 8%
2011
2013
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Compounded Annual Growth Rate 10%
*Years with 53 weeks have been adjusted to reflect 52-week equivalent. In the EPS table above, 2013 GAAP diluted earnings per share of $2.34 has
been adjusted to $2.47, which excludes the three selected items referenced in the footnote on slide 14. Please refer to our press release dated January
15, 2014 (available at www.clarcor.com) for a reconciliation of this non-GAAP measure to our GAAP results.
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Stock Performance
October 2014
Value of $10,000 Invested in Dec 1999 (CAGR)
$90,000
$80,000
$84,947
(15.7%)
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$23,367
(6.0%)
$10,000
$13,628
(2.1%)
$0
1999
2000
2001
2002
2003
2004
CLARCOR
2005
2006
S&P 500
2007
2008
2009
2010
2011
2012
2013
Russell 2000
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2014 Financial Highlights
For the third quarter ended August 30, 2014
• Diluted EPS of $0.82 (44% increase from prior year)
 Record third quarter performance
 Net sales growth of 38% over the prior year, including results from acquisitions
 Adjusted* diluted earnings per share growth of 24% from prior year
• Sales highlights:
 Organic sales growth of 7% compared to last year’s third quarter
 U.S. heavy-duty engine aftermarket sales up 8%, railroad filtration sales up 12%
 Oil and gas filtration sales growth of 7%, dust collection system sales up 32%
• Integration of three fiscal 2014 acquisitions remains on track
• Increased dividend by approximately 18%
*See note on slide 22 for description of adjustments and related information
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2014 Financial Highlights
For the nine months ended August 30, 2014
• Diluted EPS of $1.98 (17% increase from prior year)
 Net sales growth of 32% over the prior year, including results from acquisitions
 Adjusted* diluted earnings per share growth of 18% from the prior year
• Sales highlights:
 Organic sales growth of 6% compared to last year’s first nine months
 U.S. heavy-duty engine aftermarket sales up 8%, railroad filtration sales up 12%
 Oil and gas filtration sales growth of 7%, dust collection system sales up 37%
 Gas turbine system sales up 30% and aftermarket sales up 23% compared to prior year
• Driving growth and innovation initiatives
 New global R&D facility near headquarters
 Construction of new $40 million US distribution center on track
*See note on slide 22 for description of adjustments and related information
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2014 Financial Highlights*
$Millions
Third Quarter Ended
Nine Months Ended
Change
8/30/2014
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
400.2
Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . .
8/31/2013
$
$
Change
%
8/30/2014
8/31/2013
$
289.1
$ 111.0
38%
$ 1,099.5
135.5
96.5
38.9
40%
Selling and administrative expenses. . . . .
72.6
46.8
25.8
Operating profit. . . . . . . . . . . . . . . . . . . . . .
62.8
49.7
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . .
42.2
Diluted EPS. . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.83
$
$
%
833.0
$ 266.5
32%
363.2
276.2
87.0
31%
55%
204.8
143.3
61.5
43%
13.1
26%
158.5
132.9
25.5
19%
33.7
8.5
25%
107.5
90.2
17.4
19%
0.67
$ 0.16
24%
0.34
18%
$
2.12
$
1.79
$
Percentages:
Gross margin. . . . . . . . . . . . . . . . . . . . . . . . . .
33.8%
33.4%
33.0%
33.2%
Selling and administrative % of sales. . . . .
18.2%
16.2%
18.6%
17.2%
Operating margin. . . . . . . . . . . . . . . . . . . . . .
15.7%
17.2%
14.4%
16.0%
Effective tax rate. . . . . . . . . . . . . . . . . . . . . . .
31.2%
31.8%
31.3%
31.8%
*The third quarter and first nine months of 2014 contained integration, purchase accounting and deal related costs associated with three
acquisitions in the current fiscal year. In addition, the first nine months of 2014 contained a bargain purchase gain related to the Bekaert Advanced
Filtration acquisition. The third quarter and first nine months of 2013 contained two pre-tax, non-cash charges aggregating $7.7 million consisting
of a $4.6 million loss on the disposal of equipment and a $3.1 million charge to account for the settlement of a final pension obligation. The table
above reflects 2013 and 2014 third quarter and year-to-date GAAP results adjusted for these items. Please refer to our press release dated
September 17, 2014 (available at www.clarcor.com) for a reconciliation of these non-GAAP measures to our GAAP results.
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