UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 16, 2015
CSW INDUSTRIALS, INC.
(Exact Name Of Registrant As Specified In Charter)
| Delaware (State or Other Jurisdiction of Incorporation) |
001-37454 (Commission File Number) |
47-2266942 (IRS Employer Identification No.) |
5400 Lyndon B. Johnson Freeway, Suite 1300
Dallas, Texas 75240
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (972) 233-8242
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
CSW Industrials, Inc. (“CSWI”), currently a wholly owned subsidiary of Capital Southwest Corporation (“Capital Southwest”), will make a series of presentations to the investment community in anticipation of its spin-off from Capital Southwest. The slides to be used in connection with such presentations are furnished as Exhibit 99.1 to this Current Report on Form 8-K.
On September 8, 2015, the Board of Directors of Capital Southwest approved the spin-off of certain of its industrial products businesses through the pro rata distribution of shares of CSWI to holders of Capital Southwest’s common stock at the close of business on September 18, 2015 (the “Share Distribution”). The Share Distribution is expected to be completed on September 30, 2015. For additional information regarding the Share Distribution, see CSWI’s preliminary information statement filed as Exhibit 99.1 to CSWI’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on September 9, 2015.
The information furnished under this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by reference in such filing.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit No. |
Description | |
| 99.1 | CSWI Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: September 16, 2015
| By: | /s/ Joseph B. Armes | |||
| Name: | Joseph B. Armes | |||
| Title: | Chief Executive Officer | |||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | CSWI Presentation |
 Company Presentation
September 16, 2015
Exhibit 99.1 |
 2 Forward-Looking Statements • This presentation contains forward-looking statements within the meaning of The Private
Securities Litigation Reform Act of 1995 relating to, among other things, the
manner, tax-free nature and expected benefits associated with
the proposed spin-off of certain control assets of Capital
Southwest into a new, independent, publicly traded company, CSW Industrials, Inc. (“CSWI”), the expected timing of the completion of the transaction and the business, financial
condition and results of operations of Capital Southwest, including the
businesses of CSWI. Any statements preceded or followed by or
that include the words "believe," "expect," "intend," "plan," "should" or words, phrases or similar expressions or the negative thereof, are intended to
identify forward-looking statements. These statements are made on the basis
of the current beliefs, expectations and assumptions of the
management of Capital Southwest. There are a number of
risks and uncertainties that could cause Capital Southwest’s actual results to differ materially from the forward-looking statements included in this presentation. These risks and
uncertainties include, but are not limited to, risks relating to Capital
Southwest’s ability to complete the proposed spin-off
transaction and to achieve the expected benefits therefrom.
• In light of these risks, uncertainties, assumptions, and other factors inherent in forward-looking
statements, actual results may differ materially from those discussed in this
presentation. Other unknown or unpredictable factors could
also have a material adverse effect on CSWI’s actual future
results, performance, or achievements. For a further discussion of these and other risks and uncertainties applicable to CSWI and its business, see CSWI’s filings with the SEC, including
the Information Statement filed as an exhibit to CSWI’s Registration
Statement on Form 10. As a result of the foregoing, readers are
cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date of this presentation.
Neither Capital Southwest nor CSWI assumes any obligation to
update these forward-looking statements to reflect any new
information, subsequent events or circumstances, or otherwise, except as may be required by law. |
 3 Pro-Forma and Non-GAAP Financial Information • The pro forma financial data in this presentation as of and for the fiscal year ended March 31,
2015 has been adjusted (a) to include the acquisition of substantially all the
assets of Strathmore Products, Inc. and (b) to give effect to the
proposed spin-off of CSWI and the related transactions. The
pro forma financial data in this presentation as of and for the three months ended June 30, 2015 has been adjusted to give effect to the proposed spin-off of CSWI and the
related transactions. The pro forma financial data does not purport (i) to
represent what CSWI's results of operations actually would have
been if the spin-off and Strathmore acquisition had occurred
prior to the fiscal year presented or (ii) to project CSWI's financial performance for any future period. • This presentation includes non-GAAP financial measures including EBITDA. Reconciliations to the
most directly comparable GAAP measures are included on page 32 of this
presentation. These measures should be considered in addition to
results prepared in accordance with GAAP, but are not a
substitute for GAAP results. |
 4 Transaction Overview • Structured as a tax-free spin transaction • Form 10 Registration Statement for CSWI initially filed with the SEC on
June 16, 2015; Amendment No.4 to Form 10 filed on September 9, 2015;
Registration statement declared effective on September 14, 2015
The separation is designed to unlock shareholder value
immediately and to enhance long-term shareholder value by
establishing two strong, independent companies with distinct
growth strategies Ticker
• CSWI Exchange • NASDAQ Exchange Ratio • 1 Share of CSWI for every 1 share of CSWC Expected Number of Shares • 15.6mm Record Date • September 18, 2015 Distribution of CSWI Shares • September 30, 2015 First Day of Regular-Way Trading • October 1, 2015 |
 5 Experienced Management Team Management team including subsidiary company executives averages 25 years of
experience in the industrial manufacturing and specialty chemicals
industries Executive Officers
Board of Directors
Michael Gambrell Former Executive Vice President of The Dow Chemical Company Linda Livingstone, Ph.D. Dean of The George Washington University School of Business William F. Quinn Executive Chairman and Founder of American Beacon Advisors Robert Swartz Lead director of the CSWI Board Executive Vice President and Chief Operating Officer for Glazer’s, Inc Joseph B. Armes Chairman and CEO Christopher J. Mudd President & COO Kelly Tacke CFO |
 I. Company Overview |
 7 Investment Highlights • Broad Portfolio of Leading Industrial Brands and Solutions • Sustainable Organic Revenue Growth and Operating Performance • Stable Platform for Acquisitions with Proven Track Record • Culture of Product Enhancement and Customer Centric Solutions • Diverse Sales and Distribution Channels Serving Attractive End Markets |
 8 CSWI Overview • A diversified industrial growth company with well-established, scalable
platforms • Deep domain expertise across three segments: Industrial Products Coatings, Sealants & Adhesives Specialty Chemicals • PF (1) 2015 Net Revenues: $325.0mm, PF (1) 2015 EBITDA: $60.1mm • PF (2) 2016Q1 Net Revenues: $88.9mm, PF (2) 2016Q1 EBITDA: $18.7mm • Broad portfolio of leading industrial products providing performance optimizing
solutions to our diversified customer base. Products include mechanical
products for heating, ventilation and air conditioning
(“HVAC”) and refrigeration applications, coatings and
sealants and high performance specialty lubricants We seek to
deliver solutions to our professional customers that provide
superior performance and reliability
(1) PF2015 includes Strathmore FY2014 results and other pro forma adjustments; Strathmore fiscal year ends December 31
(2) PF2016Q1 includes the financial results of Strathmore since the date of its acquisition (effective April 1, 2015) and other pro forma
adjustments |
 9 CSWI’s corporate culture will SHAPE and GUIDE our company by helping each team member understand how to make his/her contribution to the company we serve. Our culture manifests the OBSERVED BEHAVIORS,
the NORMS,
and the DOMINANT VALUES of the company. Our culture should be effective in REINFORCING certain behaviors and ERADICATING others. THE GOAL OF OUR CORPORATE CULTURE IS TO MAXIMIZE PERFORMANCE. CSWI Corporate Culture |
 10 Our corporate culture will be based on our core values: • Integrity • Respect • Excellence • Stewardship • Citizenship • Accountability • Teamwork CSWI Corporate Culture (Cont’d) |
 11 CSWI Business Segments Business Segment Legal Entity Industrial Brands 11 |
 12 History of CSWI Businesses 2015 1961 1969 CSWC founded in Dallas, TX 1937 founded in Houston, TX 1949 founded in Glendale, CA 1973 CSWC acquires RectorSeal CSWC acquires Jet-Lube 1991 founded in Boise, ID 2005 CSWC acquires SmokeGuard 1979 1989 1893 founded in Cleveland, OH CSWC acquires Whitmore 1942 founded in Syracuse, NY CSWC acquires Strathmore CSWC separates into CSWI and legacy CSWC CSWC acquires Balco 1957 founded in Wichita, KS 2014 2013 2012 CSWC acquires Design Water, RCT, Evolve and OilSafe CSWC acquires Airtec, G-O-N and QHi Rail CSWC acquires Novent and Rizza CSWC acquires SureSeal |
 13 • CSW Industrials employs over 750 individuals worldwide 13 |
 14 CSWI Business Segments Well-balanced portfolio of businesses with strong organic growth profiles and
numerous product line and strategic acquisition opportunities in each
segment PF2015 Net Revenues
(1) PF2015 EBITDA (1)(2) Total Net Revenues: $325.0mm Total EBITDA: $60.1mm Industrial Products 39% Coatings, Sealants & Adhesives 36% Specialty Chemicals 25% Other <1% Industrial Products 36% Coatings, Sealants & Adhesives 35% Specialty Chemicals 28% Other <1% (1) PF2015 includes Strathmore FY2014 results and other pro forma adjustments; Strathmore fiscal year ends December 31
(2) Reflects pro rata allocation of other pro forma adjustments of $3.2mm to segment EBITDA based on segment revenues
(3) Other includes CapStar, a real estate holding company, whose operations are not material to CSWI
(3) (3) |
 15 CSWI Key Growth Drivers Benefits resulting from the Share Distribution and Related Reorganization Leverage Existing Customer Relationships, Brands and Solutions Focused Acquisitions that Leverage our Distribution Channels Operational Excellence |
 II. Key Growth Drivers |
 17 Benefits from Reorganization Post Spin-Off Structure Shareholders Nasdaq-Listed Expected to be Listed on Nasdaq CSWI Businesses (*) • The RectorSeal Corporation (“RectorSeal”) • Jet-Lube, Inc. (“Jet-Lube”) • The Whitmore Manufacturing Company (“Whitmore”) • Balco, Inc. (“Balco”) • Strathmore Products, Inc. (“Strathmore”) • Smoke Guard, Inc. (“Smoke Guard”) 100% As an independent, publicly traded company, CSWI will have greater focus on its core
businesses and greater flexibility to pursue growth opportunities including
organic investments, product line and strategic
acquisitions •
Organize the CSWI businesses
around key market segments
• Grow the CSWI businesses by allocating capital more efficiently • Offer greater investor choice through separate entities • Unlock shareholder value • Increase management focus • Better align interests of management and stockholders Benefits from Spin-Off (*) Also includes CapStar, a real estate holding company, whose operations are not material to CSWI
100% |
 18 Ability to leverage customer base and cross-sell products across three segments Leverage Existing Relationships and Products Key End Use Markets (1) Industrial Products Coatings, Sealants & Adhesives Specialty Chemicals Plumbing Industrial HVAC Energy Rail Architecturally Specified Building Products Mining (1) Other key end use markets include Water well drilling, Power Generation, Marine, Cement and Aviation
(2) PF2015 includes Strathmore FY2014 results; Strathmore fiscal year ends December 31
PF2015 Sales Revenue
by End Market
(2) Architecturally Specified Building Products 11% Plumbing 19% HVAC 16% Mining 5% Industrial 18% Rail 14% Energy 14% Other 3% |
 19 $68.8 $79.3 $148.1 9 Acquisitions in Past 5 Years Including Strathmore Historical Acquisitions Strathmore Focused Acquisitions There are further attractive synergistic acquisitions available to achieve
higher growth and profitability
Capital Invested for Acquisitions ($mm)
Strategy & Execution Plan
• Identify and execute acquisitions that will broaden our portfolio of industrial brands and products, and support our business segments • Eliminate costs and overhead in strategic acquisitions and most non-manufacturing related costs in product line acquisitions • Focus on commercially proven products and solutions that: Are attractive to customers in our target end markets Currently have limited distribution Would benefit from a broader distribution network • Utilize strong free cash flow or third-party financing to fund these acquisitions (1) Strathmore purchase price of $68.8mm does not include potential earn out consideration of up to $16.5mm
(1) |
 20 • Focus on operational excellence in all aspects of CSWI’s business, leading
to improved efficiencies and increased profitability
• Examples of achieving savings through operational excellence: CSWI is consolidating the manufacturing of all lubricant and grease products currently manufactured in a Houston, TX facility to the Rockwall, TX facility to optimize capacity, efficiency and quality CSWI recently organized a technology summit among the technical and commercial leaders of our Coatings, Sealants & Adhesives and Specialty Chemicals segments in order to accelerate the process of leveraging best practices across these business segments CSWI expects to benefit from exploiting new opportunities by applying its best practices when integrating acquisitions Operational Excellence Continue to expand improvement initiatives and information sharing across CSWI’s entire platform, promoting best practices |
 III. Financial Overview |
 22 Combined Financials – Net Revenues Net Revenues ($mm, %) Highlights • Consistent mid double-digit net revenue growth (16.4%, 16.4% and 13.0% in FY2013, FY2014 and FY2015, respectively) supported by industry leading products in high growth end markets with a diversified customer base • Net revenue growth driven by a combination of robust organic growth and acquisitions 40.3% net revenue growth in PF2015 including acquisition of Strathmore Strong track record of capitalizing on product line and strategic acquisition opportunities $261.8 $63.2 $199.1 $231.7 $325.0 $88.9 40.3% 16.4% 16.4% 13.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% $ - $75.0 $150.0 $225.0 $300.0 $375.0 FY2013 FY2014 PF2015(1) PF2016Q1(2) Net Revenues Strathmore Net Revenues % Growth inc. Strathmore % Growth (1) PF2015 includes Strathmore FY2014 results and other pro forma adjustments; Strathmore fiscal year ends December 31
(2) PF2016Q1 includes the financial results of Strathmore since the date of its acquisition (effective April 1, 2015) and other pro forma
adjustments |
 23 $171 $174.4 $224.4 $246.6 $24.7 $7.3 $15.2 $171 $199.1 $231.7 $261.8 $ - $50 $100 $150 $200 $250 $300 FY2012 FY2013 FY2014 FY2015(2) Organic Acquisition ($ millions) Strong Organic & Acquisition Growth Net Revenues ($mm, %) Highlights • 15.3% total net revenue CAGR over the last three fiscal years Strong compounded organic net revenue growth of 7.0% as a result of CSWI’s focus on end markets with attractive growth trends Additional 8.1% contribution to total net revenue CAGR from acquisitions over the last three fiscal years including product line and strategic acquisitions (1) Acquisition revenue calculated based on standard rolling 12 months method
(2) FY2015 net revenues do not include Strathmore (1) |
 24 Combined Financials – Margins Operating Income ($mm, %) Highlights • Attractive operating and EBITDA margins with potential improvement from integration of businesses and shared best practices EBITDA margins higher than those of peers, partly due to CSWI’s loyal and diverse customer base that recognizes the performance and quality of the products and solutions Disciplined product line acquisition strategy Continued improvement of profitability through targeted investments in manufacturing processes EBITDA ($mm, %) $6.4 ($3.2) $32.2 $37.9 $47.2 $15.4 16.2% 16.4% 14.5% 17.3% (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ($10.0) $ - $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 FY2013 FY2014 PF2015(1) PF2016Q1(2) Operating Income Strathmore Other PF Adj. % Margin (1) PF2015 includes Strathmore FY2014 results and other pro forma adjustments; Strathmore fiscal year ends December 31
(2) PF2016Q1 includes the financial results of Strathmore since the date of its acquisition (effective April 1, 2015) and other pro forma
adjustments $18.7
$8.8 ($3.2) $38.9 $47.0 $60.1 19.6% 20.3% 18.5% 21.0% (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ($10.0) $ - $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 FY2013 FY2014 PF2015(1) PF2016Q1(2) EBITDA Strathmore Other PF Adj. % Margin |
 25 Combined Financials – Capital Investment & ROIC Capital Expenditures ($mm, %) Highlights • Historical capital expenditures to net revenue ratio averaged 5.7% in the last three years Capital expenditures declined in PF2015 and PF2016Q1 primarily due to completion of facility expansion project for Whitmore • Average ROIC of 12.5% for the last three years, including Strathmore and other PF adjustments Excluding other PF adjustments of $3.2mm results in ROIC of 12.6% in PF2015 PF2016Q1 annualized ROIC of 13.7% ROIC (3) (%) $1.9 $15.5 $15.0 $9.6 7.8% 6.5% 3.0% 2.1% 0.0% 3.0% 6.0% 9.0% 12.0% 15.0% $ - $10.0 $20.0 FY2013 FY2014 PF2015(1) PF2016Q1(2) Capital Expenditures % of Net Revenues (1) PF2015 includes Strathmore FY2014 results and other pro forma adjustments; Strathmore fiscal year ends December 31
(2) PF2016Q1 includes the financial results of Strathmore since the date of its acquisition (effective April 1, 2015) and other pro forma
adjustments (3)
ROIC calculated using average balance of invested capital (defined as net debt
plus equity); NOPAT assumes 38% tax rate 13.2%
12.6% 12.1% 13.7% 0.0% 3.0% 6.0% 9.0% 12.0% 15.0% FY2013 FY2014 PF2015(1) PF2016Q1(2) |
 26 Segment Financials – Net Revenues Net Revenues ($mm) Highlights • 27.8% net revenue CAGR over the last two fiscal years, including Strathmore • Recent growth primarily attributable to an increase in sales volumes in the Industrial Products segment and in the Coatings, Sealants & Adhesives segment • Net revenues by geography (PF2015) (1) PF2015 includes Strathmore FY2014 results and other pro forma adjustments; Strathmore fiscal year ends December 31
(2) PF2016Q1 includes the financial results of Strathmore since the date of its acquisition (effective April 1, 2015) and other pro forma
adjustments (3)
Related to rental income from CapStar, a real estate holding
company Other (3)
$0.9 $1.0 $1.6 $0.3 $82.4 $90.7 $89.7 $20.2 $73.3 $93.0 $118.4 $40.0 $42.6 $47.0 $52.1 $28.4 $63.2 $199.1 $231.7 $325.0 $88.9 $ - $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 FY2013 FY2014 PF2015(1) PF2016Q1(2) Specialty Chemicals Industrial Products Coatings, Sealants & Adhesives Strathmore US 80% Non-US 20% |
 27 Segment Financials – Margins Operating Income ($mm) Highlights • Many products enjoy strong margin profiles due to high performance and quality and loyal customer bases • Margin expansion driven by targeted investments to further improve manufacturing processes, including: Lower manufacturing costs Increased production utilization Improved product quality • Strathmore acquisition reduced Coatings, Sealants & Adhesives margins in PF2015 and PF2016Q1 but are expected to increase with integration execution Operating Income Margin (%) (5) (1) PF2015 includes Strathmore FY2014 results and other pro forma adjustments; Strathmore fiscal year ends December 31 (2)
PF2016Q1 includes the financial results of Strathmore since the
date of its acquisition (effective April 1, 2015) and other PF adjustments (3) Operating income for Coatings, Sealants & Adhesives for PF2016Q1 excludes $2.3mm of Strathmore acquisition costs (4) Related to rental income from
CapStar, a real estate holding company (5) PF2015
operating margins do not reflect pro forma adjustments for corporate overhead $0.1 $0.1 ($0.1) $0.0 ($3.2) ($1.2) $13.4 $15.9 $13.0 $2.7 $10.9 $12.6 $19.7 $9.7 $7.7 $9.4 $11.4 $4.1 $6.4 $32.2 $37.9 $47.2 $15.3 ($5.0) $10.0 $25.0 $40.0 $55.0 FY2013 FY2014 PF2015(1) PF2016Q1(2,3) Other (4) Other PF Adj. Specialty Chemicals Industrial Products Coatings, Sealants & Adhesives Strathmore 5% 10% 15% 20% 25% FY2013 FY2014 PF2015 PF2016Q1(3) Specialty Chemicals Coatings, Sealants & Adhesives Industrial Products |
 28 Strong Balance Sheet (PF as of June 30, 2015) Total Capitalization Highlights (1) PF2015 EBITDA represents 12 months ending March 31, 2015 and includes Strathmore FY2014 results and other pro forma adjustments;
Strathmore fiscal year ends December 31
(2) Excludes restricted cash and bank time deposits • Strong balance sheet with ample liquidity Current available cash and cash equivalents sufficient to easily meet CSWI’s liquidity needs for at least the next 12 months Indebtedness x PF 2015 ($mm) Amount EBITDA (1) Debt: RectorSeal Line of Credit $12.5 0.2x Whitmore Secured Term Loan 13.6 0.2x Strathmore Acquisition Debt 69.1 1.1x Total Debt $95.2 1.6x Less: Cash and Cash Equivalents (45.6) Less: Bank time deposits (8.4) Net Debt $41.3 0.7x x PF 2015 ($mm) Amount EBITDA (1) Cash and Cash Equivalents (2) $45.6 Debt: Current Portion of Long-Term Debt 4.5 0.1x Long-Term Debt, Less Current Portion 90.7 1.5x Total Debt $95.2 1.6x Total Stockholders’ Equity $238.6 Total Capitalization $333.8 |
 29 CSWI vs. Industrial Goods Peers 2011–2014 Net Revenue CAGR 2014 EBITDA Margin 24.6% 24.3% 22.1% 15.7% 13.0% 8.6% 6.6% 4.8% 2.4% 1.9% 0.8% (3.1%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% CSWI with Strathmore MEI CCF CSWI w/o Strathmore CTS LFUS GRC NNBR ASTE ORBK CMCO LXU Median: 5.7% 21.1% 20.7% 20.6% 19.8% 19.4% 15.6% 15.6% 14.7% 13.5% 12.5% 12.2% 10.2% 7.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% CCF CSWI w/o Strathmore LFUS CSWI Industrial Products Segment CSWI with Strathmore GRC MEI CTS ORBK CMCO LXU NNBR ASTE Median: 14.1% (1) Median excludes CSWI and CSWI segments (1) (1) Note: Net revenue growth and margins based on calendarized financials, revenue growth figure is a 3-year CAGR
|
 30 CSWI vs. Specialty Chemicals Peers 2011–2014 Net Revenue CAGR 2014 EBITDA Margin 24.6% 20.2% 20.1% 15.7% 7.5% 6.2% 3.9% 2.9% 2.0% (0.2%) (5.1%) (6.6%) (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% CSWI with Strathmore FTK LNDC CSWI w/o Strathmore IOSP TG WDFC ZEP KOP FF KRA OMN Median: 3.4% 26.6% 22.0% 21.5% 20.7% 19.5% 19.4% 18.9% 18.3% 14.7% 9.3% 8.0% 7.9% 7.8% 5.5% 5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% CSWI Coatings, Sealant & Adhesives Segment w/o Strathmore FTK FF CSWI w/o Strathmore CSWI Coatings, Sealant & Adhesives Segment with Strathmore CSWI with Strathmore CSWI Specialty Chemicals Segment WDFC IOSP TG OMN KRA ZEP LNDC KOP Median: 8.7% (1) Median excludes CSWI and CSWI segments (1) (1) Note: Net revenue growth and margins based on calendarized financials, revenue growth figure is a 3-year CAGR
|
 Appendix |
 32 EBITDA Reconciliation (1) Strathmore D&A includes $1.8mm of additional D&A as a result of application of acquisition method of accounting
(2) Other pro forma adjustments include incremental expenses related to operating as a stand alone independent company, net of $2.3mm and
$1.5mm of nonrecurring charges related to the Jet-Lube
integration into Whitmore and Strathmore acquisition costs for June 30, 2015 and March 31, 2015, respectively. Incremental expenses include compensation, professional service fees, director fees, compliance costs, rent and office
expenses (3)
PF2016Q1 includes the financial results of Strathmore since the date of its
acquisition (effective April 1, 2015) and other pro forma adjustments
($mm) FY2013 FY2014 PF2015 PF2016Q(3) Operating Income $32.2 $37.9 $44.0 $14.3 Depreciation 3.9 5.3 5.9 1.7 Amortization 2.8 3.9 4.6 1.7 Strathmore Operating Income 6.4 Strathmore D&A (1) 2.4 Other Pro Forma Adjustments (2) (3.2) 1.1 EBITDA $38.9 $47.1 $60.1 $18.7 |
 33 (1) Related to rental income from CapStar, a real estate holding company (2) Other pro forma adjustments include incremental expenses related to operating as a stand alone independent company, net of $1.5mm of
non-recurring charges related to the Jet-Lube integration
into Whitmore and Strathmore acquisition costs (3)
PF2016Q1 growth % compared to FY2015Q1 results; FY2015Q1 results do not include
Strathmore ($mm)
FY2013 FY2014 FY2015 PF2015 PF2016Q1(3) Net Revenues Industrial Products $73.3 $93.0 $118.4 $118.4 $40.0 Coatings, Sealants & Adhesives 42.6 47.0 52.1 115.3 28.4 Specialty Chemicals 82.4 90.7 89.7 89.7 20.2 Other (1) 0.9 1.0 1.6 1.6 0.3 Consolidated Net Revenues $199.1 $231.7 $261.8 $325.0 $88.9 Net Revenue Growth % Industrial Products NA 26.9% 27.3% 27.3% 16.7% Coatings, Sealants & Adhesives NA 10.3% 11.0% 145.6% 124.2% Specialty Chemicals NA 10.2% (1.1%) (1.1%) (6.5%) Other (1) NA 14.0% 59.3% 59.3% 17.2% Consolidated Net Revenue Growth % NA 16.4% 13.0% 40.3% 29.2% Operating Income Industrial Products $10.9 $12.6 $19.7 $19.7 $9.7 Coatings, Sealants & Adhesives 7.7 9.4 11.4 17.8 1.8 Specialty Chemicals 13.4 15.9 13.0 13.0 2.7 Other (1) 0.1 0.1 (0.1) (0.1) 0.0 Other Pro Forma Adjustments (2) - - - (3.2) 1.1 Consolidated Operating Income $32.2 $37.9 $44.0 $47.2 $15.4 Operating Income Margin % Industrial Products 14.9% 13.5% 16.6% 16.6% 24.2% Coatings, Sealants & Adhesives 18.2% 19.9% 21.9% 15.5% 6.5% Specialty Chemicals 16.3% 17.5% 14.5% 14.5% 13.5% Other (1) 17.4% 8.5% (7.2%) (7.2%) 8.4% Consolidated Op. Income Margin % 16.2% 16.4% 16.8% 14.5% 17.3% Operating Income Growth % Industrial Products NA 15.1% 56.5% 56.5% 42.3% Coatings, Sealants & Adhesives NA 21.1% 22.0% 90.5% (46.7%) Specialty Chemicals NA 18.3% (18.0%) (18.0%) (29.1%) Other (1) NA (44.3%) N/M N/M 28.6% Consolidated Op. Income Growth % NA 17.6% 16.1% 24.6% 8.6% Historical and Pro Forma Financial Results |