RPM International Inc. (RPM)

Investor Update

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Jul 22, 2019

Good afternoon. On my line. Welcome to, RPM's, investor luncheon. For 40 plus years, with 1 or 2 exceptions, we have been coming to New York to release our fourth quarter fiscal year end earnings. That was a tradition started by my father, Tom, who joined his father as Republic powdered metals, roof coatings company, out of the navy. It was a $2,000,000 business. And when Tom retired, about a decade ago, RPM was about $2,000,000,000 And one of our special guests here today, for our investor luncheon, is, our retired Chairman and CEO and Chairman of Meredith, my father, Tom Sullivan. Tom? We have a number of RPM colleagues here that you are welcome to chat with, particularly after our presentation. We wanted to get started, a little bit quickly today because, this presentation is being webcast We thought that was important because we will have, as part of this presentation, a brief 15 or 20 minute minute presentations by each of our group presidents, who are now also segment reportable segment presidents of RPM, And so you'll be hearing from each of them in about 10 minutes. I'd like to walk you through a little bit about our fourth quarter as well as our MAP to Growth operating improvement program, turn the podium over to each one of our 4 group presidents. I'll come back and make a few comments. And then we'll have a Q and A session, which I hope will be focused by all of you, on our group press and since they're here. I will be playing referee on questions. So I would encourage you to ask them about their background or the growth prospects of their company, products, markets, but please don't ask them about their margins we will deflect those until Q1. This is regulation Reg G for those of you that are following this, on the webcast, this is our forward looking statements for all of you This essentially means that anything we say about the future, you cannot hold against us. This is where RPM started, this past fiscal year. And so if you think back to June 1, 2018, the amount of change that has been enacted and undertaken at RPM, has been extraordinary. 6 of our Top 12 people in our org chart are gone through retirements or otherwise. As you'll see in a minute, we're changing from 6 groups reporting in 3 segments to 4 groups and 4 reportable segments. But as importantly, are the 6 key strategic drivers at the bottom of this page. So this page truly represented that entrepreneurial operating philosophy that RPM had lived by very successfully for 72 years and was really, adhered to and built in my 16 years as CEO and these key strategic drivers at the bottom, which you'll see in a few slides are changing. We've got a phenomenal history And that is something that throughout this operating improvement plan, we intend to keep. It's what makes RPM different and unique. We undertook our 2020 MAP to Growth program, something we've been working on for over a year and a half. We had a little help in kick starting it, last year. And, we, in publicly some specific details on November 28. The goal is to transform RPM into a more connected and efficient company focused and operational excellence and continuous improvement. We are building a new and better RPM. The combination of our entrepreneurial approach to the market and a culture of continuous improvement and operational excellence will be very difficult to beat in the marketplace and will get us to the next level of consistently delivering for our shareholders. This is the one page summary of our MAP to Growth program, which we unveiled on November 28, that talks about purpose to position RPM for sustained profitable growth, creating superior value for its customers, entrepreneurs, associates and shareholders, those constituencies that we care about and work for every day, a vision to transform RPM into more connected and efficient company focused on operational excellence and continuous improvement while maintaining the strength of its entrepreneurial culture. And the specific financial goals that were laid out on that Investor Day in November. We have made great progress in manufacturing, and these are annualized run rates. I'll talk about these specific factoring. We've closed 12 plants. We've instituted common reporting processes across all of our manufacturing facilities. And we are busy instilling a continuous improvement map and culture in each manufacturing operation in a lot of our operations. We have identified and executed on $25,000,000 in savings in the manufacturing category and growing. In procurement, we've identified and executed on $36,000,000 of savings from our new procurement process essentially centralizing the data, the information and negotiations with our key strategic suppliers. It will allow us to save a significant amount of money. We're ahead of the curve in terms of our original forecast for where we'd be at this time. And we're also going to end up being a better and more important customer to many of our largest suppliers. In G And A, we've identified and executed on $41,000,000 in savings. The biggest majority of that came out of our Consumer segment, who was first out of the box, in the MAP to Growth program, executing a significant restructuring in the fourth quarter of last year and having completed for plant closures in fiscal 2019. And so, we're ahead of the curve in terms of G And A as well. This chart was something we unveiled on November 28th. It's our waves plan for our MAP to Growth program as to how we're going to accomplish $290,000,000 of targeted savings. And as you can see in wave 1 that ended May 31, 2019, our original goal was to have affected $83,000,000 on an annualized basis of success going forward. And in fact, at May 31, we were at $102,000,000, as you can see in each of the categories of manufacturing procurement and SG and A. I think there's one important point I would make here is there's about a $7,000,000 swing in G And A, when we first designed the program, we loaded all of the facility closures into manufacturing. Well, it turns out in closing about 20 warehouse distribution centers, that that's part of SG And A. And so there's a $7,000,000 swing that would reduce the G and A numbers here and an increase manufacturing by like amount. This is a specific detail that we talked about on our call this morning, but in the supplemental slides that you can find on our website, provides more detail on the actual P and L impact of our MAP to Growth program in fiscal 2019. We achieved $53,000,000 of that $290,000,000 in savings. You can see in each of these categories manufacturing procurement and G and A, how it played out. $32,000,000 of that occurred in the 1st 9 months of fiscal 2019, and peers, even as it related to their calendar first quarters, people believe that that raw material cost environment peaked in the winter or early spring, we would concur with that. We are seeing a stabilization of our primary raw materials some declines in certain resins and other chemical raw materials, but we do see some persistence, in certain raw materials like silicones like metal packaging, that particularly both of those particularly impact our consumer segment. And then also some chemicals that we procure from China as a result of some of the trade activity and tariff activity. The $21,000,000 of MAPTA growth savings in our fourth quarter hit our bottom line. So year over year, we had about a $44,000,000 EBIT improvement in Q4. And $21,000,000 of that was directly attributable to MAP to Growth. And as we get through 2020, assuming there are no big geopolitical changes, we would expect to have a relatively stable raw material environment. We should see some margin recovery from some of our pricing activities that while it was behind the curve is finally starting to kick in. But with that stable environment, you'll be able to see quarter by quarter a meaningful contribution to our earnings leverage from our MAC to growth activities. We've got 2 new positions, at RPM and our senior leadership team. One is with us here today, Matt Radachek. Matt's been with RPM, for 12 years, Matt. Is that correct? 15, sorry, 15 years. He is vice president of Global Tax And Treasury and has done a phenomenal job in those areas. And has agreed to take on the senior leader role, an oversight of our investor relations activity. And so I feel really good with, with Matt Christine Schulte, Kathy Rogers, both of whom are here today, and Rusty and myself that we now have a really solid IR team that can be responsive to our investors, and really do the job that we need to do after some of the changes in the last year. The other changes with Michael Sullivan, as we have commented a few times, because I didn't want to scare any of our investors that we were adding more relatives of me to our senior leadership team. Mike is not related to me. Mike's about fifty seven years old. He's got a tremendous, background in manufacturing operations. He started out of school in vain and consulting was a Temple Inland in operational roles for more than a decade. And over the last decade was back in, consulting. He was part of the original Alex Partners team, that was tasked starting in June of last year of over a relatively short, 6 to 8 week period working with RPM leaders to establish the parameters and the goals of our MAP to Growth program. For some personal reasons, he left, Alex in the fall and, but stayed in touch with our key manufacturing people feels like he's got a, one good more run-in his career, and we're thrilled that he's going to do that at RPM, as vice president of operations and our chief restructuring officer, Gordie Hyde, Tim Kinzer, Ken Armstrong. All will be reporting, to Mike, He'll be reporting directly to our operating improvement committee of our board. And, he is showing up as the right person at exactly the right time to help sustain the momentum in our MAP to Growth operating improvement plan. I'm going to go through these slides very quickly This was our consolidated results on a GAAP basis that we reported this morning, both in terms of our press release and our conference call. These are our adjusted results that we talked to in great detail this morning. If you have any questions in our Q and A, we'd be happy to answer those. One of the points I want to make and started with the org chart at the beginning of this presentation is the fact that the change that we are undertaking is most profound in our culture. We know how to close plans. We know how to execute cost reductions, as most companies do. But when you look at this chart, 6 groups, we porting in 3 segments, that entrepreneurial model that had been the critical part of RPM and those key strategic drivers at the bottom. And you look at this chart, which is our new word chart, RPM's not at the at the top. We're in the middle. The key strategic drivers, entrepreneurial approach to customers with leading brands driving innovation and growth. Center led in operations, administration, driving efficiency and continuous improvement. And of course, the value of 168 which is how we expect our people to conduct business and to conduct themselves. Manufacturing operations procurement and much in the way of administration, either at the corporate headquarters or in each of our four groups. Opportunities for cost savings and greater efficiency are huge, but the challenges that our people have undertaken in this cultural change are also huge. And so it's working, and, we've got a lot more work to do. Next up, our presentations by each of our group presidents. We now have much better alignment with that new word chart not only are we becoming center led in a number of areas, whether it's a corporate or within each of these groups. But for the first time, we have 4 reportable segments with 4 leaders and leadership teams, it will position us to be much more competitive and more strategic It'll also position us to have more transparency to our investors. I would ask that you let each of our group presidents complete their presentation because we've got a relatively short timeframe this afternoon, after which, I'll conclude with a few slides, and then we'll answer your questions. I'll talk about each of them and then come up in order. Terry Horan, as you can see here, is a 33 year industry expert. He spent a lot of that 33 years at rustoleum and then left for some other opportunities and rejoined us a few years ago to run DAP DAP is an operating grinder, best working capital within RPM. And really when toe to toe with big companies but for more than a decade hadn't grown. Since Terry took over responsibility for DAP 3 years ago, they have grown at an organic compounded annual rate of low double digits, pretty extraordinary in terms of leadership change. Now Terry is president of our entire consumer group. Ronnie Holman, 38 years in the industry, 38 years with RPM, we acquired a small business in wood coatings called CCI in the early 90s, and Ronnie was in the lab. And he has worked his way up from being in the lab to running CCI, to running our wood finishes business, to being involved in multiple acquisitions and now stepping in to run our Specialty Products group. And Ronnie took on that responsibility effective June 1. Dave Dennstead 24 years of experience, in our industry, 20 of it with RPM came up through our Stonehard business, actually left, to go run a private business and then came back, has spent time with Ina's family as part of RPM in Europe. And is now the President of our Performance Coatings Group. And then Paula Hoogemboom, 20 years of experience in our industry, think he said 40 years of experience in business in general. And, Paul joined RPM as the head of our e commerce effort quickly became our CIO, then became Senior Vice President of Manufacturing And Operations, had an opportunity to go not only run, but help fix some challenging issues at our Tremco business. And as of June 1 is the group president of a $1,900,000 construction products group, which has some pretty extraordinary technologies and products and aligning that group also has some pretty extraordinary opportunities for growth and value creation. So with that, I'd like to introduce Terry Horan who's going to come up and talk about RPM's Consumer Group. Good afternoon. Well, it's my distinct pleasure to be here with you to discuss the consumer, the consumer group for RPM. And, you know, we have a broad range of products and categories that we participate in as part of the consumer group. I thought I'd start out by giving you an idea of how big the market is and a little bit of an overview of our business. In terms of how we look at what we call our total addressable market. It's about $20,000,000,000 in size, which gives us about a 9% share. So we view that as 91 percent opportunities. So there's a lot of growth potential for us as we look at this, this chart and this future and something we're very excited about. We go to business through distribution And we're very, very proud of our relationships, which we hold with the biggest and best in their, individual markets, retailers distributors, wholesalers, co ops, etcetera, around the world. So something that we're very proud of and built up over time, and we have great relationships. In addition, we go to market through a House of Brands approach. So as opposed to some companies, which might have just one brand and, other products under one brand, we choose to use different brands to target different user segments in different categories and then build those brands. And how it all comes together is through growth And as you've seen in our figures coming off of a great fourth quarter and a great fiscal year in terms of growth, We've outpaced the market growth by more than 2x, really on a compound annual growth rate over the past 5 years. Certainly more than that in the past year. So in total, we have about 17 category platforms that we participate in, within our businesses. And today, we're very focused in terms of number 1, not taking our foot off the gas in terms of driving that growth. At the same time, improving our leverage is job 1, And then we're doing that through this one team concept, which we've developed and driving operational excellence throughout our entire organization and all that we do every day. Some of the marquee brands, which you'd be familiar with, are listed here And certainly, when you think about those in the particular categories they compete in, when it comes to small project paints, Worldwide, rustoleum is the number one brand, in that space. And when we think about cocks and sealants, DAP is the number one brand in North America. In that area. Verathane has become the fastest growing brand in interior wood care within North America, and we're excited about the future there. Zinsor is the number one brand with professionals, who is a target market of Zinsor, when it comes to satisfaction, customer satisfaction within North America. And when you think about wall repair and spackle and products in that space, DAP is the number one player there. Next, I'd like to talk a little bit about our users and the applications. So we target, 4 different user segments within the consumer group. DIY, we're, well known for the makers, which is a unique group, which is, kind of in between a DIY and professional, if you will. These are folks which view their projects very differently than DIYers do more creative bend, more of a social interaction in terms of how they communicate with each other and and, how we could communicate with them. But they'll take on different tasks versus a DIY. DIY person might replace a doorknob or perhaps a faucet, a maker is somebody that might build their own new kitchen cabinet. They might create new, whatever, decorations throughout their home. Professionals and we have several verticals of professionals that we cater to within the consumer group. Professional painters. We have, remodelers, homebuilders, and we'll talk about some new channels, which we're going into in a little bit. And lastly is industrial. We have a core, industrial business within rustoleum. That's actually how rustoleum was started as a company was in the industrial space. And we maintain that business today. But the focus here, the main point I want to make to you is that it's understanding these different targets at a level beyond what anyone else can or will do, that gives us a point of differentiation in the marketplace. So in the past 24 months alone, we've talked over 30,000 of these folks. And learned about the projects they're taking on, how they go about them, challenges that they're facing, unmet needs they might have, what are workarounds in their projects, things that we can help bring solutions to and provide, new products to satisfy them. We think about our business in terms of our key success factors, as a group. And, at the top is, what is our operating philosophy and most important to us is we really have this user intimacy I just spoke of. And a customer intimacy with our trade customers. So something that we want to, always be differentiated in, in terms of adding value to our customers by providing them that user insight and other things, to make sure that we are satisfying their needs beyond any competitor. Driving into innovation and not just innovation, but invention and disruption wherever we can, we want to operate that with more speed as we look forward. It's not just about growth. It's about profitable growth for us. And we have more focus than ever on that area. And ultimately it comes together in our culture. We have what we believe is a unique culture where it's a fun place to work. People enjoy it. They like the pride that we take in it, and they like the spirit and the competitive spirit that we take to the market every day. We talk about, basically where we're at in terms of doing business today. And, you could see kind of geographically, some of the markets, where we participate in. We have 3500 associates within the consumer group today. 19 different global manufacturing locations. But in addition to the global manufacturing locations that we have within the consumer group, we have access to all of the RPM assets around the world. So we have, from my colleagues, in the industrial side of things and, in specialty areas, The ability to make products in their plants, which we can take and, bring to market under our brands and to our channels allows us to go further faster than we'd be able to do if we were on our own. Lastly, just a point of data here. 21 percent of our sales are generated outside the U. S. Today within the consumer group. This is the number, which, in my opinion, is way too small. It's not how I see the world. And I think that we've got, great opportunity although that business is growing for us. So we created the actual structure of the consumer group in January. And since then, we've been very busy about bringing this together. And our objectives were to create a lean management team to lead this group to provide focus around growth first and always as well as brands and building brands and, platforms we wanted to think about segmenting our companies in terms of what is customer facing, what is true to driving and keeping our entrepreneurial spirit alive and well. And then what are the functions which are more back office, as we thought about each function. We want to create a 1 team culture, where everybody is working together for the same mission and, growing in the same direction. And certainly, we want to leverage, the best talent that we have within the group to carry over, perhaps that was it might have been a person who has just had a DAP position before is now a leader of the group, and responsible for that function for rasolium and DAP, which provides talent and growth opportunities, but it also gains efficiencies. But most importantly, we're putting the best people in those roles. So in terms of the customer facing areas, we're talking about sales, marketing, R and D, customer service, and technical service. Again, these are dedicated to each of our businesses, and they're solely focused on those particular products. Categories and customers within that space. And then we have the back office areas, which are very critical to our business, but areas where we could create some leverage inefficiencies and, again, create that a team of talent leadership which represents the entire group in the areas of manufacturing procurement, finance, IT, legal, human resources and M and A. So all of this has been done, really since January. So we've created a lot of change in our organization I could say that we're off to a great start and, the culture has been very responsive. And, personally, I'm pleased with where we're at to date. As we look ahead to fiscal year 2020, again, with our focus on sales growth, 1st and foremost, we expect a minimum of growing 2x, the market growth, whatever that ends up being. But we're in the area of, mid single digits, in terms of our sales expectation, as Frank mentioned this morning, driving our profit margin is obviously very, very important for us. And we have the catch up of the pricecost cost price relationship. Innovations, when we bring new innovations to the marketplace, that's an opportunity for us to, to improve our profit margins. Manufacturing efficiencies is something that we're very busy about and also something we're very excited about as we look to each one of our manufacturing operations and look to, minimize waste and improve our overall equipment efficiencies throughout our organization, and not just in the plants, but also in our S and LP processes so that we can work smoother and more efficiently throughout our supply chain. Procurement leverage has been discussed, this morning, And obviously, the restructuring savings is something which, the consumer group led in the fourth quarter of last year and throughout this year, we benefited from that. So as we think about how do we win And how do we drive that growth? We think about what are our differentiators in terms of driving success? And certainly at the top of the list is our people. And that is continuously trying to raise the bar in terms of the talent that we attract and we retain and we promote we truly are chasing the A team in all aspects of our business, practicing customer intimacy and all that we do at every touchpoint with all of our customers. Whatever region channel they might be. A mindset around listening, learning and leading. We always want to be listening. That's why we do the market research that we do. That's why we have the relationships, we foster relationships we have with our customers. We don't believe that we have all the answers. So we want to have a continuous mindset around learning and then taking that to the market. And creating all of that driving into an innovation machine, where we want to be known by our customers as the company, which is bringing more innovation to the market and more impactful innovation to the market on a regular basis. At a minimum, our quality is going to exceed our users' expectations. And that's something where we always continue to push ourselves, again, raising the bar. And when we bring new products to the market. We don't think about just replacing another product on the shelf of a competitor as we think about how do we grow the pie? How do we create category growth because that's where everybody wins, and we take that responsibility on very seriously. When we think around the globe, we think about having a local focus not just trying to transplant what works in North America to other important regions, other very large regions, but we've got to have a local presence with local knowledge, local intelligence and create products and solutions, which are right for those markets. And then what do we do beyond the product and beyond price in terms of value added services. I'll give you an example here of, one of those such services, which is category management, something that we're very, very proud of in the consumer group is that we have over, what we have now 25 years of category management experience. Rust Oleum, was a company that pioneered category management into the home improvement space back in 1995. And today, we practice category management And we actually have a category captain status with more than 20 of the top retailers in our space. That represents over 39,000 store locations. And to give you an idea of the kind of work we do, we create over 15,000 unique and customized planograms, based on particular retailer needs, and regional needs, that they might have. So that's something that we put together. And then you know, we focus in on the consumer research I mentioned before, a true differentiator, proprietary consumer research, which we can add value and educate our retailers on what's going on, where they know their consumer at a macro level, we're helping them know the consumer in these aisles and in these categories better. And then finally, we have a huge amount of data, which we have collected through these different sources. And, and you combine the market research we do plus retailer point of sale and put all that data together. We've created our own proprietary, data warehouse system, which really allows us the ability to get unique looks at our categories on a daily basis at our fingertips. This is something where it's a true differentiator for our group and we're very proud of. And it really leads to building stronger relationships with our customers every day. And we do have competitors. We have, we have many competitors and many good ones. What I've listed here is 9 of our, categories, our platforms, which we compete in across the top and, vertically, the different competitors that we have. So it gives you an idea that we face up against many different companies some across several of our categories and some just in certain categories. But you could see the type of companies that we're up against. And again, the excellent companies. What I've listed here also is who has a number 1 or 2 market share in each one of these categories. And you can see that the RPM Consumer Group has 6 of the 9, either categories where we have an either number 1 or number 2 position in. So we're proud of that, but we're still hungry for the other ones. And our number 2 is we'd like to get to number 1s So, there's work ahead for us. But this gives you an idea of a bit of our competitive landscape. So when we get specific about growth opportunities looking ahead, first is acquisitions. Here's a a sampling of some of our recent acquisitions, which we've completed. And, brands which we brought to the market. But this is an area, as Frank mentioned, we're all very active in, on an everyday basis, looking for, opportunities, building relationships with, potential companies that could join the RPM portfolio and certainly a great growth opportunity for us as we look to continue to grow. Innovations is something which is the lifeblood of everything that we do. And again, we push ourselves here to not just bring out new products, but to reinvent, categories wherever we can. And, you know, there's some examples here, which are, I could list, I could go through all of these, but, if you look at Universal, for instance, Universal's a line of spray paint that rustoleum brought the marketplace, which really redefined the spray paint experience for the users. We gave them an advance formula with greater durability and performance, which applies to any substrate. But also, we did it in a patented ergonomic delivery system, which was new and different for the market. And that has stuck around and proven the test of time at, at this point and has taken the average retail up from little less than $4 to around $7, on these products. So you could see what could happen when you could bring true innovation and differentiation to the marketplace. International is an area which we are, we've reconstructed actually just recently. We've appointed a new president of international and we reorganized our organization around global regions. Before we had more of a mindset, if I was to critical of ourselves of a North American company doing business Internationally. And now we're going to be acting more as a global company. That's our aim and our intent. We're going to be investing and expanding our regional capabilities because we know we have to be experts in every region in which we compete. And, and we're certainly going to leverage the business model, which we have in place. And in addition, leverage RPM assets around the globe wherever it can help us go further faster. Lastly's new channels, And it's interesting to note that our DAP business has, been around for over 150 years, and our rustoleum business is coming up on 100 years. But we're still within the last two years. These are all new channels we've just entered. And some of these channels are very big. And have great growth opportunities for us ahead. Some of the channels come through via acquisitions. So if you look at HVAC installation and mining for instance, those are all channels that we wouldn't have penetrated had we not bought the touch and foam business, polyurethane foam business. So it's open doors for us, and then we could bring other products into those spaces as well. So, we're excited about all four of these quadrants as we look for, to continue our growth into the future. So when we think about innovation, I wanted to give you just a snapshot of the, the scope of innovation, the kind of the magnitude of innovation that we do bring to the marketplace. We do make a very big impact in the market, when we talk about innovation, we take it very seriously, and we keep our pipeline very full and we want to get faster at it, and we want to get stronger at it as we look ahead. But there are some big numbers here that we bring to the market every year. And again, we were not just trying to introduce a product, but we're trying to introduce a product to become a brand, to become a platform. So kind of a land and expand mindset Also, at the same time, as we're doing this, we're getting very, very diligent about SKU rationalization. So we're not just looking to bring more and more to our inventory, but we're also looking to take out the products which are at the bottom X percent on a regular basis. So that's become a more disciplined process for us over the past year and, we'll improve our working capital numbers as we move forward. So with that, I would like to conclude and just PM, you could think about us in terms of the people that are very busy and very dedicated to level and all that they do and how they do their projects, where their problems are in solving them through innovation and making our innovation differentiated in a sustainable way that we could be successful for the long term. So with that, I'm going to turn it over to Ronnie Holman, the group president for our Specialty Products Group. Thank you. Thank you, Terry. As, was noted, as he began, it is a distinct pleasure to provide you with information about our Specialty Products group today, identified in the lower right quadrant of the screen. We, unlike Rust Oleum, who is a house of brands, We're a house of many companies. And each of them has their own entrepreneurial flair and we'd like to support that and continue to grow these businesses. We're concentrated predominantly in the United States, a little bit slips up into Canada for us We have 4 companies that have locations in the UK, 1 in Belgium, have a joint venture in South Africa too in Australia to in New Zealand. Due to the nature of our businesses and the narrow segments that our companies operate in, We divide our group up 4 ways to give them each more attention as they seek to grow their markets. First group is materials and ingredients. Next is the OEM Industrial Group followed by Specialty Products Group Or Specialty Coatings Group, rather, and Legend Brands. I'd like to share a little bit about each of these groups and the companies that reside in those. First one I'd like to speak about is the Mantros group This is a company whose primary market are ingredients, preservatives and coatings for foods, pharmaceuticals, nutraceuticals, Primary brands include Matros Hauser, Nature Seal, Verdecote, Semper Fresh, Holton Foods, and a number of smaller brands. As well. We have sales in interesting market to be in right now with the change in the way people think about their foods and and the items they consume Our greatest opportunity in front of us right now is to capitalize on that presence, or current thought of organic and sustainable initiatives One of the largest opportunities that could change the face of our company is biodegradable packaging. We make coatings that oftentimes are organic, and we can have a huge opportunity to change paper to act like plastic. Yet when it goes to landfill, it degrades quickly, working actively on that. The other thing is with our time constraints and our busy lives, We like to buy foods that may not be totally prepared, but they're on their way. So sliced apples. If you wonder why why my apples in this bag, not turn brown like the apples I slice at home, we have that technology. That is our spot in the marketplace. But we have the opportunity to expand that into other pre prepared pre sliced produce such as lettuce, avocados, pre sliced potatoes, etcetera. Also in the, materials and ingredients group is deglobe, They're the market leader for fluorescent pigments and dyes. If you look at the screen, you see those colors. Those fluorescent colors are bold. They're vibrant. They grab your attention quick, almost twice as quick as conventional colorants, and they hold it 20% longer. So great marketing tool and we need to be selling those virtues. We market under the dayglow radiant and Dane brands uses are numerous. It could be toys for children, cosmetics, apparel. The the uses are almost endless. We'll have almost 50% market share in the day in the fluorescent colorants industry. If you look at the other side of that graph, you see many, many competitors. So it gets pretty splintered beyond us and all of our competitors are based in Asia. So it means we can have pricing pressures at times as well. Our challenge is to work with our customers to work with their customer. If we want to sell more fluorescence into the toy industry, we don't go to the people who are molding plastics. We need to work with our customers who are those molders to go to the Fisher process of the world, to go to the Procter gambles of the world, and sell them on the virtues of this eye catching ability of our fluorescent pigments and dyes. There's also opportunity in the cosmetic and personal care consumer goods, people like color. So we have an opportunity there. We have formaldehyde free pigment that our competitors do not have that are useful in apparel. And then internally, we do a lot with the other RPM companies for pigment dispersions and custom resin development. 1 of the most unique companies inside RPM is the Legend Brands Group. RPM products across the four seg are there to protect, prolong the life of, to preserve. We have a company that makes predominantly, makes equipment. But our equipment does the same thing. It protects, prolongs life and preserves your properties. So our 3 companies inside Legend Brands Group are dryese Sapphire Scientific and then the Kimspec and Prochem. Product lines, dry ease makes products to, to, remediate water damage, whether that water comes from flooding, whether it comes from burst water pipes, leaks, what have you, or hurricanes. We deal with a lot of storm And we're there. We don't wish a hurricane on anyone, but we're there to help restore their lives back to normal when they come along. Interesting thing about that. Flood damage can be so severe. We get very little business from it at times. If insurance companies come in and say, Now it's too we're not going to work with that. We want to replace rather than restore. It's an interesting dynamic as we try to grow our business. We have spikes in business from year to year that we have to deal with. Sapphire Scientific makes a professional cleaning equipment So the people that you call to come to your house clean carpets typically use our products, truck mounted carpet cleaning, We also have other non janitorial equipment. And then we manufacture the chemicals that are used by our own equipment companies, but also in the janitorial business, with Kim spec and Prochem. Our largest growth opportunity seems to be coming in a unique spot for us. We have a large percentage of the equipment market for storm remediation, water remediation for carpet cleaning, but there's a growing number of people who want to do it for themselves. Whether they don't want someone else an outsider in their home, whether they want to do it more frequently, whether they just trust their own quality of work better, but they want better equipment than they can currently buy on the store shelves. They want industrial quality equipment. So it's a huge opportunity in front of us. That we're seeking to move into. We also have significant engineering and fabricating skills and we'd like to move those into some adjacent markets. Our real claim to fame is air movers, fans. And we've been able to take that technology as an example and create air movers to go in automobiles, high performance engines to keep them cooler sold through O'Reilly Auto Parts Not where we would typically expect to find ourselves, but it is a fundamental competency that we have. We need to take that to more locations. The OEM Industrial Group, OEM stands for original equipment manufacturers. These are companies who sell products going into factories. The unique thing about this and the most beautiful thing about this is these are annuity sales. Once you land that customer, They can't tend to order from you every week, twice a week, couple times a month. So the sales go on and on and on. So long as you do the right things to keep them as your customer. The challenge is there are strong competitors in these markets typically tend to be Sharon Williams Axon Nobel, Axalta, PPG and always a handful of niche of local competitors as well. We tend to be small players in the with the unique strategy in these market segments and that allows us to continue to grow. First company in the OEM Industrial Group is TCI, manufacturer of powder coatings. The differentiators for this business is our speed of manufacturing, our custom color capabilities and our ability to make our products work very well. We oftentimes are able to go in with a higher price than our competitors and offer an overall cost reduction through application efficiency gains. We have less than 10% market share. Again, the competitors I mentioned earlier, and we have our executing a premium brand strategy that focuses on that speed, service customized formulation and advanced formulation. We're also evolving into a one stop shop. If you are applying coatings to metal, we have our own manufactured powder coatings We sell BASF E coat and we're working with finished works to develop our own line of liquid metal coatings and that is gaining traction as we speak. We're also recognized that some segments don't allow the margins that we want to make. And so we are implementing a segment strategy. Today, our focus, we're focusing in 3 areas, appliance, automotive and architectural. We will move into other segments, but we will also move out some segments that just aren't right for us or for RPM. 2nd group company in the OEM Industrial Group is Mohawk Finishing Products, They are the market leader in touch up and repair products predominantly for wood surfaces also a bit for leather and they sell distribution coatings also sold as you would imagine, furniture manufacturers, cabinetry manufacturers, flooring installers, retail furniture stores who want to prep that furniture before it's delivered. Our real expertise is development of products and techniques to allow people to do invisible repairs to wood. 80% of the furniture that sold at retail has some kind of repair done to it before it comes to your house, go home and try and find it. We're pretty good. Our growth opportunities, if we look at the market segment we work in, it's pretty mature right now. But our real opportunity is looking at the consumer market where people want to go through their homes, touch after cabinets, touch up the millwork, touch up their doors and such. And we need to be able to give the people confidence that they are capable and very able to do that. We have products placement in Home Depot at Lowe's. We're having success with those and expect that to expand. We have almost no market share in Continental Europe, Mainland Europe. And we believe that's an opportunity as well moving forward and there's the opportunity to expand into adjacent markets, where metal fabrication and other items were made. Morrells is the market leader of wood finishes in the UK with 28 selling branches, all offering same or next day delivery of products. We have about a third of the market as our own. Our primary competitor is Sharon Williams or distributors offering some of the who are set up orders of product for them. And with that comes a problem. Their finishers don't have the expertise nor do they gain expertise because they don't finish every day, how to use product. Our opportunity is to continue to expand our products by making them easier and easier and easier to use fewer and fewer problems. Hope to plan to continue to expand our development of our high performance waterborne coatings again, an environmentally friendly opportunity. We have a joint venture in South Africa. We'd like to add branches there. And we are selling now through distribution in Eastern Central Europe, as well as in the Scandinavian countries. Copco protection products is the technology leader in wood treatment and preservation. We are able to do what our competitors can't. We can treat wood to prevent termite damage, moisture damage, mold, mildew, and we can do that without pressure treating. We have a carrier system that carries the active ingredients to the core of the wood. We're also in farm and forest market, and we're leveraging our expertise by developing these carrier systems to carry herbicides into unwanted plants. About 85 percent of our products are custom formulated to meet a specific mer need. We are not the commodity player in this market, and, and for those people that want those cheap, products, those less expensive products, copper's lines are the market leaders there. We have a fairly small market share But if you need true performance to meet your specific needs, we're the player for you. In Farm And Forest, the interesting thing with that is this is kind of exciting for us is that our competitors are out trying to create the latest, greatest, urban to help the farming countries in the world. We focus in a different way. We focus on our adjuvants that reduce the demand for herbicides by making smaller amounts more efficient and work better than we do it with an organic additive that has no repercussions to health. So I think we all agree that lessening the use of herbicides in this world would be a good thing. The last company in OEM Industrial Group is finished works. They're a distributor of liquid coatings, predominantly wood coatings that we're basic in but also liquid metal coatings. We supply not only the coatings for the finish for our customers for those finishing rooms, we supply everything else what they need they need spray boots, if they need filters, if they need sandpaper, rags, whatever it is in the finishing room, we want to offer all of it. We're the number one distributor of Kremlin's spray equipment in the country, and we offer repair services for it. We do all this on a local basis through 9 different selling branches. The thing that makes us so successful is as being local and the speed at which we can do it with. Less than 10% market share, so there's a lot of opportunity in front of And this has been one of the real growth engines to the Specialty Products group that continues to grow high single digits, low double digits every year for us. Primary competition, same group of people we've spoken about earlier. Our strategy is to be the one stop shop. We want our salespeople to work within about 100 mile radius of our blending center, and we want to continue to remain nimble with a lot of state. Our growth opportunity, add more locations, just continue to add a location periodically. And for our mature locations, We want to continue to add product to them, give products to them that they can go out and sell rather than drive past that shop. It's finishing metal. Let's stop in with our new liquid metal coatings. The Specialty Coatings group, the first company will touch on there pet it there manufacturer of marine coatings. They're the 2nd largest in a relatively flat market space. Our claim to fame is below the waterline. Antifouling bottom paints, and we're the leader in waterborne antifouling technology. We have less than 50% market share you see Axo Nobel and the differentiator there is they own topside. If it's out of the water, they have the predominant market share. This is a very mature market. It's a market for the very wealthy new product introductions are fueling growth for us. We're clawing our way into the top side market. We're offering repair and maintenance products. And we're offering tools to our customers that make them more customer facing. If you want to know I've got this boat, and I need new bottom paint on it, and I'd like to have it done in the next 3 weeks so I can put it out for the summer. How much is it? Well, it's gonna we'll have you a quote in 2 weeks. It's not doesn't make people very happy. So we're supplying tools to enable our customers to respond quickly Tech, they make specialty fuel additives, whether it's for co weather, diesel, marine applications. We just launched in FY19 an additive program for propane. It's the only technically proven additive program for propane in the world that we're aware of. We have opportunities to grow this business through international expansion. And if we can take our marine fuel, which is we sell more marine fuel than all the major fuel suppliers in the country at dock. And if we can take our technology and move it into commercial, marine applications is a big opportunity for us and to move it to the retail shelves. Guardian protection products is a supplier of furniture protection plans, if you go buy a piece of furniture to retail store, chances are, they're going to try and sell you a warranty as you leave the store. To protect against rips, tears, burns, stains, any number of things that could happen in a home. We work with an underwriter to supply those products. We supply call center services. The real growth opportunity here is how do we expand that outside of furniture for ourselves. Can we offer the same warranty for kitchen cabinetry, Whole Home, HVAC, pleasure, Maureen, the list goes on and on and on. So real opportunity for growth. Carker, if you followed RPM very long, you've heard of Carker, We're a manufacturer of nail polishes for the cosmetics industry. We're the number 3 player in that industry. Say that there is opportunity for us to grow, maybe move into the number 2 spot. We've had several actions taken with Kirker relating to our MAP 2020 efforts. We know what our costs are. We have made ourselves more efficient and we believe we can grow this business. It is an opportunity for us to develop new products with bio based solvents, has market attraction right now to the people using those products. So if I were you and I were sitting out there, I would say, why would RPM want all these small companies operating with some level of autonomy in their market space. The thing that I would tell you is inside our group, there's their synergies. Finish works. They don't just sell their products. They sell mohawk products. They sell cop coat products. They sell bat products. They sell a few carbo line products. There's joint development efforts between finished works and TCI on little liquid metals program. Carbilines participating in that to some degree. Legend Brands is actually making parts for our Mohawk touch up and repair products. And then if there's a real strategy internally, it's consolidating common functions. Where can we find synergies by putting accounting together? Getting to a common ERP platform, sharing legal, and S and a number of other actions inside our group. Probably the one that's the most exciting to me is when we look at synergies inside RPM. Terry mentioned earlier, working inside other companies. Wood finishes group manufacturers a significant amount of wood care products for the vast growing barathane product line he spoke about. Dayglow provides technical resin development for a number of our companies and pigment dispersions for use in our own coatings. Peddons working with Carbonite now to develop anti filing marine tanks for the commercial shipbuilding industry, finished works, wood coatings company developed an advanced technology for a roofing system for the construction products group. It's kind of interesting when you take these small businesses with unique technologies and a unique view of the world and see what it can do inside the Greater RPM. The last thing that I would add is sometimes in these unique markets, these niche markets, there's an opportunity for a little bit better margin. So we plan to capitalize on that as well. So our goal going forward is to do more. Do do it faster, do better. So with that, I'd like to hand off to Dave Denstead, President of Performance Coatings Group. Good afternoon. Guys, ready to pivot a little bit here, or these are not products that you've seen on colors. This is industrial. So this is the industrial part of your presentations between myself and Paul Hoganboom. And if we do this right, you'll understand a little bit more about what we do. And how our pieces are connected as Ronnie suggests on the asset side behind the scenes like customer facing very, very different. So Thanks for taking the time. It's an honor for me to be able to talk to you on behalf of some of RPM's strongest, our strong industrial brands. We have a wide variety to talk about in a little bit of time, in the spirit of my colleagues, what I'm going to try to do is tell you a little bit about what we do, how we do it, talk about the uses and also explain a little bit how we're different and most importantly most fund the markets we can go after and how we're going to grow. This is a level of transparency we've not done before on the industrial side. So bear with me and Paul as we kind of go through what we do. Our group focuses as the name applies on coatings. There are a lot of players who call themselves in the coating space So where I will focus is explaining on what subset of the coating space is of interest to us, which is not necessarily as broad as some of our peers, our perceived competitors holistically we protect surfaces. That's what we work on. And what we'll do is focus on the PCG, our Performance Coatings Group part, the top right corner. The slide is now familiar to you from Frank and my peers. We focus on solving problems and that includes problems in the coating space, the flooring space both industrial and commercial flooring, polymer solutions, We solve problems of fireproofing. We also have FRP, which is fiberglass reinforced structures. And we do a great deal in the infrastructure space. That means bridge repair, road and highway repair. And we offer both products and services So this is new construction. This is also maintenance and repair. I'll dive into these applications a little bit and tell you more about what we do. But I guess we should begin with the end and say that in the end, where PCG is focusing and where we expect to see results going forward is in speed, scale, innovation. That's how we're going to continue to succeed. And I'll tell you a little bit more about that as we go through. So agenda is same as my colleague we'll focus a little bit on markets. We'll tell you a little bit about who we are, what we do, typical uses of our products and services. And also talk about the competitive landscape. We'll spend quite a bit of time on growth and our market share so you can understand how we view our markets and what we're doing about them. It's important to start with at the segment overview level that we are a group of brands We have a lot of great brands. At the end of the day, they are industrial in nature. If you are in the polymer flooring space, or the industrial coating space or fireproofing FRP infrastructure repair. If you're in these spaces, you will know some are all these brands. They are leaders in what they do. Their combination of niche players in very big markets and in some cases, relatively big players in tighter markets. Some are more regional powerhouses and others are more global in nature, which provides opportunities. We'll talk about that when we get to the growth component. What we like to focus on is the get it right first part of the market. What I mean by that is we like to focus on the hardest problem and figure that out and solve them for our customers. If we do that well, we tend to keep the work. We like to find parts of the market that have no tolerance for delay or repair. If you can find those, that's where we is where we can take total responsibility for getting it right the first time. That's where we really succeed. That could be anything. It could be semiconductor clean rooms, can be meat and poultry facilities that need to be USDA compliant or compliance to the local markets. It can be a bottling beverage line where they can't afford the shutdown. It can be a pharmaceutical facility. It can be an offshore plat form in the Gulf where we certainly can't get there to do a repair. We try to find these markets where you have to get it right first. And when we do that, it works very well for us. And we're enticed by brands, companies, people that see the world the same way, and we try to motivate and invest to continue to grow that space. So what will surprise some of you to know a little bit about RPM, a little bit about our space specifically, is we are a combination of both products and services. That is to say that we try to create environment where we can offer both products and in some cases, our products with an install, literally becoming a contractor. And the origins of this are pretty straightforward. Most of the brands that we have come from solving technical issues for demanding customers. So that meant we've had to evolve and pivot over the years to create that environment where give us your biggest problem. We'll solve it and please come back. So what we have then in the end is a innovative group of products. This is time tested materials and products that are well known for solving complex problems. As well as new innovative products. And in all cases, our customers are demanding the best in class delivery, the best in class quality and field service for highly technical issues. But then we also complement this in some cases with as you can see almost half our revenues representing services. No finger pointing. You produce the product, you install the product, if there's a problem, you're taking total responsibility for that. Now those services include not just turnkey, can be technical consultations, they can be inspections, supervision and actually installation of the product. Our customers in this case are the professional contractor, the engineer, the owner, the architect, and many other touching points as well as the plant floor operator. All these are decision makers and influencers to what we do every day And in the industrial space, as I told you, we're mostly industrial products. This is very uncommon. This is not something you typically see. What we aren't, which might be of interest for those that are familiar with our space, you don't find our products for the most part in DIY. You don't see our stuff on the shelf of other third party locations. We go direct. We service our customers directly and we own the channel. So we have that direct relationship and direct tie to our facilities. So this is a highly different approach from many of our competitors, and I'll expand on that a little bit more. We focus on niche products and solutions that solve complex problems. That's not necessarily to be the biggest, but to be the preferred solution in our space. So I'll paraphrase the oracle of Omaha Warren Buffett, but you said we try to stick with businesses. We believe we understand. This is a complex space. We don't tend to drift greatly outside that space because we're really good at what we do. This promotes stability growth, great customer relationships, and perhaps just as importantly, more predictable cash flows. In the interest of time, I won't focus on all our brands. I'll just briefly mention some of our brands here that are some of the leaders in what they do. Carbon as an example, they are in the industrial coating space. You would know them as well. As I said, in fireproofing, also have a wide variety of both primary and secondary containment solutions for chemical environments, stone hard, world leader in industrial flooring and polymer flooring. This market has changed a lot. It also includes now commercial applications, which I'll talk a little bit more about. USL, they provide turnkey solutions that is contractor solutions where they both manufacture and install bridge repair, highway repair, road repairs, solving problems. They also have injectable ground technologies to help enhance the life of existing infrastructure in our aging infrastructure environment And we have fiber grade and for the layman FRP types of products are used to replace steel in some applications That might be because there's too much corrosion might be because there's a weight issue. This stuff is significantly lighter. Or it might be just because of maintenance as a concern along the lines. So FRP is a alternative to steel in some applications. So Let's talk a little bit about our applications. Frankly speaking, the Nastier, the environment, the more likely it is to see one of our products or specify one of our technologies. If it's complicated or it's hard, it tends to be where you find us. We have a variety of applications, and that can be anywhere from a mining facility where you have chemical attack It could be an offshore platform where you're exposed to the elements and it could be a beautiful architectural steel structure where your fireproofing has to be surrounding a beam but exposed to the elements, but you still need to fireproof that structure to get your rating. All these are, again, one stop shop items, they've got to get it right the first time. They can't come back and fix it, and it's going to cause downtime and complications for the owners that they do. That's where we tend to focus. We also restore and replace a lot of decks and floors. We work to be number 1 and number 2 in this space. We protect a lot of different types of services and that can be in food, beverage, water, wastewater treatment, manufacturing, semiconductor, oil and gas, any part of the energy sector, commercial spaces and it's both institutional and public sector. So on the institutional side, you might have a school that needs to turn around to get their floor installed very quickly before school opens or a prison kitchen. That needs to be repaired right away so they can get back in there. Or on the public sector side, you might have a plant or warehouse they can't afford to shut down. They need to get in there and get out and make sure someone takes total responsibility. These are common applications. And as I mentioned earlier, Flooring is evolving, right? So customer preferences New York tends to lead in this market of architectural designs, more fluid designs, less more of the tile approaches aesthetically. So there's a commercial piece of the market where aesthetics and durability are changing in terms of the perception requirements and we're well positioned in that space. It's also uncertain times in some markets and we're seeing a lot of our customers instead of building that brand new shiny plant in these changing times, whether it's geopolitical or trade war or just macroeconomics They're repairing their existing facilities. They want to put another 5 to 10 years into them as opposed to move to the next big facility repairing these facilities is something we're uniquely positioned in. And being global, and I'll explain a little bit of how global we are in a few slides, We also have at least 2 advantages. 1 is as our customers grow and go global, we can follow them because we have assets on the ground around the world And secondly, especially in these spaces I've been mentioning to you, they're looking for a high level of consistency in terms of product and services and we're uniquely positioned to offer those. And just as well, we also do a lot of infrastructure repair. It is evident in most corners of the world that we have a infrastructure issue. Aging infrastructure. Most independent reports explain not just here in the U. S, but just about anywhere in the world. We need to work on our infrastructure and continue to repair it. No matter what your politics are geopolitically, the money tends to stay in the country and it does help the local community infrastructure is an ongoing and growing piece of what we do. And again, in this space, we offer products, unique solutions, unique brands, we also offer services where we take total responsibility for the longevity of those materials because no one wants to be replacing bridge materials once your repair is done. We're well positioned in this space and we're very proud of that. And while this whole coalesces too, we get be in a lot of different iconic structures. We're proud to be associated with some of the more iconic structures out there, whether that's again for the layman, if you think about when you're tire has to be repaired on your car. You jack it up and replace your tire well. London Tower Bridge every so often you have to replace every single bearing on this thing. Jack up the bridge, replaced these custom bearings from this very important bridge, very complex structure replace those bearings and lower it back down. We were uniquely positioned to offer those solutions onto that bridge. Or Cleveland, at the Rock And Roll Hall of Fame, we've offered commercial floors there. Fireproofing throughout the world is particular pictures from one of the Middle Eastern, prestigious airports or right here in our backyard, whether it's Campari's U. S. Headquarters right here in Manhattan or you also see here a picture of Madison Square Garden where we did all the seeding areas all the kitchens and a lot of the concourses. These were all solutions that we provided through our wide range of products. So Our products, we succeed because we have the right references, the right approvals and the right reputation. And just highlighting a few of our many, many products because we don't have time. I'll point out pyrocrete, which is a high density cementitious fireproofing material for a wide variety environments, but particularly for, more hazardous environments. Carboguard, a standard product for the industry, protecting steel of any sort, but particularly strong in the transportation and rail sector. StoneClad, a 70 plus year developing product line with new technologies that offers long term solutions, whether it's industrial, commercial, food and beverage for a long term facility maintenance and expand and USL have a wide variety of technologies including metal plates and functioning flexible joints for high movement control, whether it's a bridge or 2 buildings up against one another, where again, we take responsibility. So a wide range of solutions from surface protection to corrosion protection to movement accommodation. This is where we tend to focus. Let me tell you a little bit about the markets we serve. So PCG, our Performance Coatings group is one of the more global pieces of RPM, Generally, our sales are 55% or so in the U. S. They go as high as 60% depending on the year. And there's a handful of variables you can appreciate. One being just FX, but GDP impact projects, acquisitions we're doing. We're very global nature and certainly exposed to a reasonable amount of FX. We connect where we can help. You've heard so many other colleagues and you'll hear from Paul, I'm sure, talk about how we're taking advantage of these other assets. I am not a spray paint guru, but if assets and resources on the ground can help another group get on the ground in an exotic part of the world, we work together to do that. That helps us keep our entrepreneurial culture, but also takes advantage of the assets that we have on the ground. We have 30 plants, about half of those are in North America, as you would suspect, as you would see in the revenue. Where we have 38 countries where we have people on the ground and we sell every year into 120 or more countries. So we have a pretty diverse portfolio of geographies and markets that we operate in. And when it comes to markets, I certainly don't have the time to talk in great detail about these specific, applications, but we're pretty diversified. Food and beverage, oil and gas, manufacturing, healthcare, marine, pulp and paper, you can read the list. Like most industrial companies, we have a slight exposure to energy, oil and gas, mining, etcetera, because we're industrial in nature, but we're very diversified by our nature in many industries, fairly recession proof. This helps us diversify our portfolio and offer our wiring solutions for our customers. Our market sizing You know, as Frank had explained earlier and Rusty expanded on, RPM PCG is $1,100,000,000 this last fiscal year. And we see the market as roughly 24,000,000,000 that we're going after. A couple of quick comments, for those that pay attention to peers and competitors or perceived competitors. They'll mention things like the Performance Coating Industry is 160,000,000,000 And I'm not suggesting that's wrong. I'm just acknowledging that we are looking at a small subset of a very Grand pie to where we focus because it fits our solution set, it fits our margin profiles, it fits the way we service our customers, So it's a much smaller subset of a much larger pie that we focus upon. And that same thing goes for infrastructure. I mean, you could find reports that would tell you infrastructure is a $1,000,000,000,000 industry. There's a small section of that that fits our space relatively well that we're going after. As the same goes for polymer flooring and FRP. So the good news is is mathematically in a market where we're taking a very conservative approach to the size of the markets We are $1,000,000,000 on a $24,000,000,000 market that we're currently going after. So we're very excited about that. And we do have a wide range of competitors. We like to compete and we have very worthy competitors in multiple spaces, some have better distribution models, some have more assets. In general, we are not really competing directly with them. So we are competing, which is our advantage with departments or divisions within a much larger structure. And to be clear, that's not the way we operate. We play in the same place, but only partially, we don't do residential. We don't do automotive. We don't have coil coatings. We compete with departments and we structure our divisions and brands around only doing the things that we do. We see this as a no hedge strategic advantage over our competitors that helps us out execute them long term. How are we different? I've run through a couple of these things. So I'll keep this part brief and just acknowledge where we have the greatest strengths 1st and foremost. We have resort and try and be in locations our customers need us to be. We have divisions that offer services. As I said, consultation, engineering related turnkey in nature, that provide one stop shop. We have a broad portfolio of products as I explained and we are influencers. And to give you context for that, There's many, many complex projects. You may or may not understand that our 3 to 5 years in advance before the bid is going out, There's designs and discussions happening on the complexity of a job. In order to uniquely position yourself on those projects, you need to work with the architect, the engineer, the end users, years years in advance. It is an incredibly long expensive and time consuming and patient required process. If you do that though, you can influence the industry, you can influence where the directions of where things go and you can be uniquely specified in position in your markets. That's where we focus. And most importantly, as I probably beat this dead horse, I apologize as we try to stay local. So we have more feeds in the streets doing the things we do next to customers all around the world. More salespeople, more technical people, And this helps us do a bunch of things well, but certainly forge stronger relationships with our customers. It also helps us navigate changes. And to support our industry as it evolves. And our industry is and continues to evolve. So Now for the fun part, where's the growth in these markets that I'm trying to identify and tell you are large, even in my conservative Well, there's growth in a handful of areas. I'll touch on each one of these on the slide, but holistically, Growth is a prerequisite to what we're doing. We have to grow and in full transparency, it is a very hard slog. You know, we have really worthy competitors and in some cases, and mature even declining markets and demanding customers. We win year after year by out executing. That's our focus. And we do this. We grow by expanding our organic service model expanding our turnkey contractor model, getting where our customers are going. We bolt on unique brands of services and products that complement what we do well every day. We expand our influence and we innovate, create new technologies. We want to save our waves to cross prosperity. We'll not save our way to prosperity. We have to invest in R&D and we do. And in combination with all these things, as Frank has explained in some details, since November last year as we focus on scale, improving our efficiency. Mostly, this is asset consolidation and procurement, and we're all aligned in doing so. So briefly, let me talk briefly about organic. There is no panacea to be clear. It's a hard battle every day. We have to be nimble. We have to be fast. Feats on the street working with the specifiers, the users and concerned parties to make sure we're working on these projects particularly, as I mentioned, these long term projects where you have to be in the gate early on to get on. What does this do? This creates unique relationships. We're at the forefront of our space. We have the ability to get specified as I said into a unique position and advise a consult for the industry, not just our customers, but the industry itself. Whether that's hospital or hygienic environments, food and beverage, etcetera, and we create sustainable long term approaches for our brands and our people so we can continue to grow and differentiate. Easier said than Nud, by the way. Next is acquisitions. So if you looked historically at this last 5 year period now that Performance Coatings group is broken out, you take a hard look at the acquisitions. We do more than our fair share of the acquisitions. They're relatively small in nature generally. They complement our larger approach they're small in size. And there is, to be clear, much consolidation in our space. But if you look closely, there is a lot of fragmentation still in the market. And we see that as a great opportunity for us externally to continue to grow our businesses. And here again, RPM, despite the changes that we're going through as we grow maintain our commitment to not hurting the culture of what got great bands to where they are. And working very, very hard to integrate the strategies they had into our larger strategy and take advantage of the consolidation of assets where possible than their specifications. Again, we try to influence our space. We try to work closely with all the decision makers over a long terms with feet on the streets with highly technical, highly commercial personnel to continue to differentiate ourselves. So we can be the preferred decision, preferred product in the decision making process. The more complex the decision making processes, the higher probability is that we can be positioned And we're going to innovate. Again, we won't save our way to prosperity. For that's fireproofing technologies, industrial coating, new flooring products, which I alluded to earlier, changes to the marketplace. We are very well positioned, for example, with cannabis as it grows into these markets as these regulations are developed. These are all unique markets where we find ourselves in a position to grow because of the way we approach the market, as well as in commercial spaces. Outside of just the industrial, which would have been our focus point historically, up until really just 15 years ago. So I finished with this slide. We're in the middle of a realignment. Frank has discussed this in some detail and for a long time, If we're honest, we have accepted, we can outgrow our competitors, but we don't have to out leverage them. It's something we were never very good at. And we've worked hard at trying to address this more recently and we're getting relatively quick results and asset consolidation and improving what we do in the non customer facing parts of our business that won't impact our culture and won't impact our relationship. It's an opportunity and it will take time to get there and we're committed to doing it. So on top of the differentiation that I've discussed today, We expect to scale better in the future than we have historically. So we can grow, and consistent with what Frank's larger initiatives So I wrap up by saying, I hope you found this presentation helpful and interesting and you understand a little bit more about where we grow and where opportunities are. Rusty spoke earlier about PCG's alignment, culture matters, strategy matters, but in all sincerity execution is what the most important part is. And I sincerely feel that this means we have to focus on our people. We do have the best leaders We have the most customer focused staff in the business. And that's how we're going to get this done and out execute. We have a diverse group of people Evedura's group of brands and markets. This is all to our advantage. We'll execute with good people and we will grow in scale. Our execution is about speed, scale, and innovation. So with that, I'll turn it over to Paul Hogum to talk on behalf of Construction Products Group. Good afternoon. Frank covered earlier with you today the strategic realignment map to growth on the operating side. So I'll be able to share with you bringing our group together, the construction products group is really pretty profound in what it allows us to do in the market. And I look forward to sharing that with you. So first, if you go back to the earlier one, as you see us in that upper left hand quadrant, that's really our brands. So our global brands are these 9, and I'll cover 2 of these today. And we have regional brands, 1 in Brazil and 1 in North America. Fundamentally, if you think of the two markets that we serve, if you think of a building as a six sided box, we serve all six sides from an air moisture and thermal management perspective. And then any of the concrete to construct that building, the floors within, and then anything to do with either fire stopping if there's a fire to prevent it from moving or fire protection to keep this structure integral so that you can evacuate the people. On the other half of the markets we address, it's infrastructure. So it's anything to do with concrete or concrete protection. We love REIT. So those would be all your major structures that you see around you. RPM's theory of competition, since 1947, you heard Frank over the years always talks about being highly decentralized and entrepreneurial. And the way that I always like to describe that is keeping decision making absolutely as close to the customer as possible. And we seek to maintain that both at an RPM level and certainly within our group, And then really the added theory of competition, Dave touched on it. It's really getting all the leverage of being part of the 5.6 $1,000,000,000 company and really acting together. And so I always think of the wolf pack that way, and, there's a whole story about how these wolf packs are organized But that's really the big change that we're doing is doing both of these at the same time and absolutely not losing on the right. Within my group, our theory of competition to add to those 2 elements is create and drive the market. So often people talk about how do they serve the market. We look to actually create the market, and I'll share with you three specific examples today of how we do that. And then these are 2 of my favorite quotes. One is from the, innovation partnership program on Silicon Valley. Peter DeAmanda runs that from X Prize fame and something anybody who knows Peter, his goal is to put the first private, thing into space and he accomplished that. And his point of view is the single most powerful innovation is a platform and it's a platform that allows, hard things to be done easy. And that's a lot of how we think. And the other is, stole this from Peter Theal, co founder of PayPal, also founder Palantir, which is seeking to solve a unique problem. And through that, solving that unique problem, being able to create differentiation and really not being a competitive space where a competitor is because you've really been the only one that could solve that problem. So if you look at how our group is structured, I'm going to briefly today cover of these platforms. Any one of these could be an all day presentation with me. So I'll cover 2 examples, coming up. But then, what you see in these platforms forms is they're highly, highly differentiated in our technology that separates us from anybody in the market. It means we can get high. We deliver high value to our customers. And we can get paid for that high value. And the and then the second part of that is solving a unique problem. Also, this pyramid is inverted. When I first came to Tremco years ago, we were in a more traditional structure top down. And in a top down structure, really your regions, any region or part of the world, the size what they will or won't sell. So starting in Tremco 6 years ago, we drove that from the top based upon our strategic technologies. And that is really how we have now structured this group, that all that is driven strategically from the top and, everything below that is a slave to that strategy. So the first, area that I want to talk about on one of our strategic platforms is AlphaGuard Vulcan. And what you're looking at here is Fordfield. That's one of our projects in 2016. So in this market space, which is commercial, no slop roofing, low no slope roofing. The the conventional business model is called run to failure. And you see the math behind what run to failure would look like for a structure of this. This is in a ultra high cost in an urban environment. That's $35 a square foot. You run that asset to failure. That's a $12,000,000 solution. How to open up the building and that building doesn't become very useful. In this case, a public building, and it's hard to use when that, when that building is open. So in our case, We're able to restore that roof to a better than new condition. It will never again have to be reroofed for the life of the building. And we do that for less than half the cost. So this is what we would call the fluid applied market. It's a $796,000,000 market in North America today, That's 14 percent of a $5,640,000,000 materials only market, and that's, If you come back, if I were to present to you a year from now, we're the ones driving that market share higher and higher, 16%, 18, 20, And, I think that'll be well over half the market at a very, very quick rate. We've been doing this for 6 years, and we've changed this market share So we're basically creating and driving that market. There's a rule of thumb that's 2 to 1 on services to, to the materials here. So that's an $11 plus 1,000,000,000 market. We have over 600 people in the field today in a service group to support our customers contractors, the A And E, the architecture engineering environment, and the design professionals So we have a very large position in that services. And as this whole market shift happens, that only brings our position in supporting that market to a higher and higher market share. So if you're going to restore the roof, right, there's 6 more, there's 5 more sides to that building, And so within, within our, group, we have the ability to restore the facades. Notice there's no market share data or dollars on this slide. We're creating this market from scratch. We had this technology for the last 20 years. It was sort of very opportunistic, when we pursued it and over the last 2 years, we put a dedicated group together. So when I sit with my executive team about what the size of this market is, if I go back, you know, my logic is, wait a minute, one side here, there's four sides here. So let's go four times these numbers, right? And then I cut them a break and I say, well, I'll only do a 4th of The math behind this is staggering. Typical projects that were involved at today, a great example, we're the high rise in Houston. They're looking at a $50,000,000 side replacement, we're able to solve that for them, less than $2,000,000, right, and very, very little disruption. So Back to this example, this is a real example up in Minneapolis. There are many of these buildings. Tens of 1000 of these all built in the 1970s, 80s, even 90s. And this is an example where this condo association is looking at a $15,000,000 window replacement over a couple year period of time. It'll probably take them 2 years to get any contract availability to do the work. We came in. So you see the before picture, within that window in the upper left hand side, within that window picture, probably three, four areas that are all getting leaks in that building. And basically, we have a gasket overlay system. We're the largest manufacturer of gasketing of this type in North America. Were unique in this gasket system and being able to create a gasket that's durable enough for this application. So this is a great example, something that would have taken $15,000,000 probably would have been done 4 years later. We did that summer over a couple of year period of time. So I'm also going to cover with you on this project key macro trends in the industry. I have 11 of them here. I'll just cover 4 specifically to this project. The first is a labor shortage. You'd have a large crew of people if this was a window replacement project. This project can be done with two people sitting on a normal window cleaning swing stage, right? So that also makes it highly safe. It's a much more safe project environment than a typical window replacement. I also talk about unmaintainable buildings. Buildings even today are not being constructed to be maintained. So what we're doing is attacking all of these non maintainable situations and bringing maintenance to them. And this is a great example of where, without our gasketing system, the only solution this type of a building is a full window replacement. Gotta take the occupants out floor by floor. You need at least 3 to 5 good days of work. If you're Minneapolis, you can't work about half the year. So this gets me back to climate change. So what we're seeing is very, very volatile climates. And and an example of that is, again, you typically need 3 to 5 good days of weather to work on a project like this. We can work year round on this project in Minneapolis in freezing conditions or in in cold or wet conditions, hot conditions. And all we need is about a 2 hour weather window with and we can go to work. So this is, a good example of just how these 4 key macro trends just in this one app occasion. There are there are others here with an interest in time. Hopefully, get a sense of, how powerful this type of a solution is. So I just did two examples of restoration. So you see a little red extra restoration. What if we were to build the building, what I call right or durable in the first case? So what you're looking at here is, there was a hurricane, Michael down in the Panhandle. And, this is Mexico Beach. And there's actually a very famous video footage of where the local, local TV stations thought it was fascinating that in Mitch and the absolute devastation down there There's this one house standing. It looks perfect, right? This is a new a new dura house, insulated concrete forms, we really believe it's the most durable way to build your structure, most energy efficient with that energy efficient comes a high occupant comfort, and it's, from a, total embodied energy cost that is the most sustainable way to put a building together. So this was an acquisition we did less than a year ago. They came to us with sixteen people that are doing field sales. Gonna bring another 380, right? So this growth, which has already been dramatic in the last 5 years, led by Nudura, they're an industry leader. They have a whole next generation system coming out. And by a factor of 20, we're gonna bring this message to the Salesforce These buildings can be created 25 plus stories up. There are really 2 sort of competing thoughts going on in, how to modernize construction. 1 is modular. You build them off-site and you truck them there. The other is this approach, what I call a legal approach. I could train you in a couple of days to start putting this building together and it literally resembles putting legos together and then really just pouring the concrete into the form when you're finished I think this is, we think this is going to get tremendous market share, again, very, very fast as we bring our 380 feet in the street to bring this forward. So hopefully these are 3 Good examples for you to take away that when I say we create and drive the market, that we really do have those differentiated platforms by which to do that. So at this point, I really just want to quickly emphasize on our executive leadership team. While this group is new that was put together, We've all known each other a long time. And over the last 2 years, there was a lot of conversation between us about our approach to the market what would really differentiate us, make us, highly distinguishable. And so we really function together as a team of 6 Each of us owns 1 or more of these platforms. Sometimes we own them together, and we work as one team to really drive the business from the form on forward, right, down into the markets. Our global footprint really by putting this group together, we, for the first time, have true global scale, And as Dave mentioned, we do also work together across our groups. I work with Rostolium and Dave and also Ronnie on a global basis, but this really gives us again, for the first time, a very, very solid global footprint. Back to the competitive landscape, I really, if you go back to the quote I like from Peter Thiel this I'll read it. All happy companies are different. Each one earns a monopoly by solving a unique problem. All failed companies are the same. They fail to escape competition. So big part of our theory of competition is actually to not compete, right? It says, define those highly unique areas that are highly differentiated have the technology that separates us, solve that unique problem. And then we really stand alone from any competitors and, and bringing that high value to our and to our shareholders. This would be a typical peer group that will be, compared to financially and Frank, I accept that. So This is the original slide that I put up, and I want to tell, 3 quick little stories off of this. So this notion of good platforms make it easy to do hard things not only applies for our group, but it applies for RPM. And I think that, you know, as Frank put together, we've really changed, what was a hierarchical view of RPM at the top to really RPM being at the center. So the, number 1, what's happening in our space, more and more, the buying decision is either influenced or made by a chief chairman officer. That's a, that's a purchasing professional, not somebody who's gonna care that I have the most restorable roof technology in the world. Right? So We partnered up with Restolium in this example because they've excelled at serving that market for over 20 years. And as we partnered with Restolium, and how to address what we call that CPO or chief procurement officer market. Once we figured that out, then we're partnering with Dave, because one of the things that a CPO values is reducing their supplier base. So the RPM story where we can bring all these companies together to that professional buyer is highly compelling. And now, and now, today, I get the halo effect at Tremco for doing this by working closely with Dave's key platform companies, carbine, stoneheart, and fiber So that's my first example. The second is DIY and 2 step distribution. Restolium excels at that, and there are many parts of CPG, which don't. So again, we have, a very, very close partnership with, restoring and addressing those markets together. And the third is, how we work together in the, specialty products group. And there are 4 examples on technology and, one on a business model, and we don't have enough time to go into each one. So I'll just tell One quick story that involves Legend Brands. If you remember from, from, Ronnie's presentation, they do two things. They dry buildings out and they clean surfaces. And so, we were with a major institutional customer telling our roof restoration story. And they said, oh, that's a great story, but we're not allowed to restore our roofs. And we said, well, why is that? They said, we're in an EPA non tainment zone. We're not allowed to wash or clean them. That water's not allowed to go in the runoff. So I got the call and then, called up Ronnie. We went out to see legend brands. And they have unique technology that returns hospitality rooms to service in 1 hour for water capture. So part of what drives our whole roof restoration business today is called rooftech. It's an OEM system based on next generation legend technology. It allows us to clean and prep a roof and same day coat that roof full water capture. So we have unique competitive advantage in the roofing space who knew Ronnie, right? We stole it from the hotel industry. So at the end of that meeting, we say, well, what else do you guys do? They say we dry out buildings. So They really built that industry and, they're iconic. They train 8000 people a year out of the insurance industry. But what they never knew is that roof assemblies get wet. 3 out of every $4 typically in a roof replacement project is to dry out a roof, right, basically to rip out all that wet material replace it with something that does nothing more than replace what you have and then put the new membrane on. So we've been working with Legend Brands for the last 5 years basically just dry that roof out, which makes it restorable, put the top coat on and you're done. So that's just one of the examples that are or 5 more here, but there's a lot of those all throughout RPM where we work together, the 4 of us together. And so, with those three examples, I really just want to close that, RPM itself is a fantastic platform to do really hard things and make them easy. Thank you. I'm gonna finish, with just a few slides, after which, we will assemble these four gentlemen and answer most of your questions. We talked about a reclassification of shipping costs, on today's call. One of the things that we became aware of was that forever and ever, RPM has taken our distribution cost, our shipping cost to customers, and put it in SG And A. There's a simple fix for anybody doing modeling. To do that, we would have to footnote in our annual report exactly what that cost was. So you can see that going back in history. We are making that reclassification to position our SG and A and our cost of sales more consistently with all of our peers, and, with most manufacturers. You can see the impact on our P and L for the fiscal year that ended May 31, 2019. These are GAAP results. On an adjusted result, for 2019, SG and A would be about 27.8 percent and gross profit margin would be 38 0.1%. I want to make 2 points here. The last bullet point there is critical. This supports our MAP to Growth findings. I think there was an, a sense that we were overspenders in SG And A, not true. At 28%, we're consistent with our peers, including one of our larger peers who's renowned for cost discipline. Our challenge is in cost of sales, too many plants, all of our plants running independently from each other, no continuous improvement program, a cooperative purchasing effort, but not a centralized purchasing effort, and we are addressing all of that. In the next two years, our gross margins will be in excess of 40% once again, but on this reclassified basis, and it will stay there, and we're excited about it. This is a little bit more detail on outlook for the balance of the year. Rusty talked today, about our guidance for the first quarter sales growth of 1.5% to 2% EBIT growth around 20. Our first quarter will actually be a little subdued relative to what we expect in the following quarters of fiscal 2020, mostly because we get off to a rough start in June, all weather related, it negatively impacted consumer negatively impacted our construction products group. The good news is, is that with some sunshine in July, both of those businesses seem to be back on track. For the full year, you can see, the sales growth range and the EPS it's driving and we've talked about our expectations for growth by segment, which you can see here as well. Here's more detail on the year. You start with adjusted EBIT for fiscal 2019 of $568,000,000, and we did some quick calculations of what the normalized leverage in a stable raw material environment would be based on 2.5% to 4% growth, which you can see somewhere in the range of $26,000,000 to $43,000,000. Obviously, in a stable raw material environment with the efficiencies we've already gained the incremental dollar of growth hits our bottom line nicely. We had $102,000,000 on an annualized run rate of wave 1. We expect $49,000,000 of wave 1 MAP to Growth savings to flow through our P and L in fiscal 2020. We expect somewhere in the neighborhood of $27,000,000 to $32,000,000 of wave 2 to hit our P and L in fiscal 2020 most of wave 2 will be in manufacturing and operations. It's back end loaded, and there's little or no additional s and A savings, as the next round of that will be in wave 3, consistent with the completion of our ERP implementation and consolidation programs. And so you could see what that range does in terms of EBIT growth on an adjusted basis year over year in the 20% to 24% range. On very modest revenue growth. If we have trade piece around the world, if the Fed drops interest rates and it's sparks or resurgence of the growth we saw in North America. And if we can see Europe perk up at all, because it's been flat to slightly down, and we can generate the growth rates that we talked about on November 28th when we first revealed MAP to Growth, these numbers could get better. And then you see the adjusted EPS growth and how that is impacted both by an expectation for a slightly higher tax rate. Higher interest expense and then the positive impact of our share repurchase program. The most important reason to believe in this page are the 4 gentlemen you just heard from. Repositioning in four segments And what we're doing at RPM is really, really exciting for us. We've got the best leadership team we ever have had. We have the best brands and the best businesses in our industry, and we are positioned both to continue that entrepreneurial outperformance in terms of serving our customers in serving, the marketplace while at the same time really focused on driving operational efficiency and continuous improvement. In our businesses. And that's going to make RPM even more competitive and even a better value for our shareholders. With that, we'd be pleased with my colleagues, from our different segments to come up here. And I will be the referee of answering, any questions that you may have for the next 20 or 30 minutes. Okay. All right. Thanks. So over time and situationally, like new customer load ins have had varying degrees of impact on businesses at any time. You had mentioned some new wins on the quarter, and even then kind of continuing wins, I think, like, Verathane, probably in Home Depot, but What was the impact on the consumer business to the quarter? Was there higher sales normal? Were it, you know, maybe I guess your costs associated with marketing different products? Can you just expand on that? Sure. I'll have Terry Horan answer that question. I presume it's principally about our consumer segment. We are going to stay away from specific sales and earnings beyond what we said in the call today. And, the first detail that you'll get on, earnings by segment will be when we report our first quarter results. So if there's a way to tackle that, Terry, without talking about still somewhat earnings, good luck. No, I don't know how to answer that without disclosing numbers to be perfectly honest with you, but you're exactly right. I mean, we get, wins, drive our business and, and drive our sales and earnings and period. And, we've been winning. And, the WoodCare, when we've been open about, when that took place. And, that continues to do well and we beat our expectations, with that program. And we've got a lot of other wins lined up as well. So we'll give more detail in, at the end of Q1. Thank you. Staying with the consumer, you are planning in growing internationally, which you haven't done in the past. Could you touch about the cost of doing that and what it would do to your margins versus what you announced with the target in November of 2018? Sure. The question, is related to international growth goals in consumer. And I think how much will that cost whether in dollars or margins. And, over what time frame, I would also add, do you expect to start to have an impact there, Terry? Yes. So we've been doing business internationally, but we're going to be doing it in a different organizational fashion. As we look at the markets and organize ourselves around regions. So it's not that we're entering markets for the first time per se, but looking to penetrate them deeper. The cost involved is is going to vary by region, in terms of our priorities, which we haven't finalized yet, We're in a, I mentioned that we just brought in a new leader of our international business and new president, within the last 30 days. So we're really in a, a point in time right now where we're laying out our strategy and our, our specific plans. So I don't have a lot more to comment on that. I would add, that we could be giving up as much as a point of margin in the consumer segment of what we otherwise might be able to achieve to support some of those investments We talked in fiscal 2019 about rebuilding the ad spending in our consumer segment, which we accomplished for the most part in fiscal 2019, not entirely, but we had some ad budgets that were cut in prior years. We had to rebuild those. And so that was some of an impact. So it will take some time. And those, as we've had in some of our other businesses, those investments will come to fruition nicely and if they don't, those are expenses we can eliminate in the future. Thank you. And if I may ask one more question about Kirker, which is now part of the specialties. So now that it is all by itself with the specialty focus, is that something that is going to belong to the portfolio looking forward over the longer term or really you have no business in nail polish? So the question is around Kirker. And it it was never really integrated into our Consumer segment, but we reported it as part of our Consumer segment. I think the challenges we've had with Kirker are well known. I'll remind people of those, and it's part of the challenge that we dug in terms of earnings, it was a $60,000,000 or $70,000,000 business that we bought that was highly profitable. In 2 years, it grew to $100,000,000. Its profitability was huge. And then through some poor decision making by the, as I said previously, the son-in-law of the founder who was also a Duke graduate we'll never make that mistake again. We had a couple, a couple challenges and that revenue base was cut in half. And it went from hugely profitable to breakeven. It really did not ever serve consumers. And so we woke up and said, even though it's product ended in consumers hands, it was a specialty OEM provider to the fashion houses. And so it appropriately belongs in the specialty products group, and that's where it is. And with that kind of history of Kirk, I'll let Ronnie answer about where do we go from here. So in my view of things, Kirker is, is up sorts of toll manufacturing, but our value add is the research and development that we do. So we bring new styles, new techniques and such to the, to the cosmetic industry. Today, that, that industry's kind of been rocked on its heels a bit. And so it's struggling, but we've taken the appropriate actions inside Kirker with MAT 2020, and we actually closed 2 facilities last year. And have positioned it to be profitable, a company that can go forward as long as we choose to take it forward. It is in a difficult growth industry. But do we see opportunities to make, certainly make nice improvements in that industry? Thank you, Vincent Andrews from Morgan Stanley. You talked earlier this morning about, on the MAP to 2020 program, you obviously are a little bit ahead of targets you mentioned you weren't sure whether it was a pull forward or was actually, upside. So I guess the question is, is when you talk about it internally, if it winds up not being upside and it winds up being a pull forward, what was it that happened, versus it just being upside? So the question relates to, map the growth. I can tell you on the $290,000,000 savings target, we're ahead of the curve. And we are adding new categories as we speak. There's a whole new area in indirect spend and logistics with a different firm than what we've been working with. It came through one of our new directors And so that's just one example. We have had some plants, that we thought we might close that for instance, around Brexit, we're not. Then we've had other opportunities, to look at consolidating manufacturing. We're at in the process of consolidating much of our distribution in the UK as a model from 12 different independent RPM operating company warehouse distribution centers to 1. I talked earlier about the cultural change and that's cultural change. And so it's pretty exciting, but it's pretty challenging. And so those opportunities are there. I don't know if there's anything that comes to mind from my colleagues in response to that question, but we're highly confident we'll be ahead of the curve on the savings I did comment that we're probably 12, 6 to 12 months behind our absolute growth goals of $1,000,000,000 in EBIT 60% EBIT margin because of the persistence of raw material challenges to our whole industry. And because we're operating at a lower growth rate, than what we had planned on. You'll recall our November 28 growth assumptions were 5.6%. Happened to be consistent with our prior 20 year CAGR. That's not the environment that we're in today. You look at the leverage we put on the bottom line this quarter, And we would expect to put leverage on our bottom line around 20% plus or minus depending on what's happening. You give us 2 or 3 more points of growth. And that 6 to 12 month behind will get caught up real quick. Any thoughts on what's happening mapped to growth wise within your groups or across RPM? I mean, I'd say Frank we're accelerating. So this idea that we're not reaching our goals, I think the opposites happening, the more we get into it, the more it's part of our culture, the more we're finding more opportunity, and I think we're just going faster. Just as a follow-up to that, with Consumer having been out in front of the other segments, timing wise, you talk a little bit about the learnings from that that you're applying to the other 3 segments? And is there anything fundamentally different about what you need to do on the cost side and the other three segments from what you've already done in consumer, that means that the risk profile of the other actions, is it all different? Or should we really take the confidence from your achievements and consumer and apply it to the other segments as well. So the question, again, is around MAP to Growth. I think you can apply the confidence building that the things that we're doing, are working. A quarter like this is really important. 1st and foremost, for our associates, so that they appreciate that all the hard work they've been doing and all the things that we've been asking them to do are paying off and they're worth it. And that we can, and this is still learning where we will have missteps and mistakes, but it's one thing to look on paper at operating efficiency and say, I can close Rusty's plant and transfer his production to Cathy's factory and they should be able to do it much more efficiently with the same quality. It doesn't always work exactly that smoothly, and it takes trust building across RPM. But as we get those wins, it will build the capacity to do more of that. And so again, that's part of the 6 to 12 months as to whether we get it done sooner or get it done later. And, the one area that I will acknowledge that we are behind because we weren't smart enough to realize it is our working capital goals. We'll get there But our smart business people in front of closing a factory and transitioning it have built inventory, because they don't want to screw up their customers. And so that's it's a simple now that didn't dawn us at the time. So that's one of the learnings that I think we are sharing with you, which is We ought to do better over time than that $230,000,000 cash conversion from working capital, but it's going to take us a little longer because our businesses are doing smart things in front of consolidation, whether it's manufacturing or warehouses. Frank? Yes. Hi, Frank, Mitch, Fermium Research, or as Rosemary called me earlier today, the other Frank Paul, as I'm listening to your presentation, and I'm looking at, at $800,000,000 opportunity today, but you indicated that that should be over half the market at some point, so over $2,800,000,000 or so. And then I heard, talk about the Nudura opportunity where you're expanding the Salesforce by 20x. These sound like large numbers, And so I want to see if I'm actually hearing that correctly. And if so, over what sort of time frame should we be anticipating to see these, the major growth take place in some of those, those areas. Yes, I think the data behind the market share, I think we've been consistently moving that needle at an accelerating rate. So I think in the last year, we moved it by 2% of the market. And I think we're just picking up more and more momentum. It's a relatively, new trend in terms of we only started to focus on driving the market in 2013. So we're really, are just really hitting only half of my Salesforce is really focused on this today. So that's sort of the data behind that in terms of how that market share is accelerating. And those are just numbers straight out of straight out of industry. And, I think on the Salesforce side, again, that's just straight math. That's the power of bringing a great company and a great concept like Nudura in. And as we got to know, the owner, Murray Snyder, who's fantastic, I said, Murray, how well do you think your story is known? He said, I think you can go into 9 out of 10 design professional today, and they don't understand the ICF market, the fact that you have by far the largest feet in the street to bring that message forward, he said, My only concern for the years ahead of us is capacity. We immediately green lighted a huge capacity, CapEx project for him and his next generation technology. So I think that it, the numbers behind the Salesforce are just what they are. And by getting the right platforms in that in this case are just highly differentiated and have a very, very high value proposition, that's where we live, right? That's our sweet spot. So, I look forward to, I think in the just in the next year alone, our awareness of that market is going to be X times larger than it was just by simple math of those 380, added 380 feet in the street. All right. Very helpful. And then Frank, if I could just follow-up on a comment you made on the conference call where you anticipated adding about $100,000,000 of revenues through M and A in fiscal 2020. And I believe you said that that was about half of what you had originally budgeted or thought about and so forth. I mean, as I look at this very diverse sort of portfolio, it wouldn't be hard to imagine that you might be able to do that original $200,000,000 target or what have you. Can you talk a little bit about why you might feel that fiscal 2020 is only maybe adding $100,000,000 in sales? So a couple of things. The question is related to our M and A activity. Last year, we did $120,000,000 of acquired companies in terms of revenues. So typically in these smaller deals, we'll announce the company and its product range and its revenues, but not any of the details around the purchase. That seems like the pace we're on. And, I think it's in part because everybody is heads down on the MAP to Growth program. And there still are only 168 hours in the week. And we are asking quite candidly with some of our activities fewer people at RPM to do more stuff. And some of this stuff is temporary. Some of this stuff is new muscle memory that we have to build in terms of continuous improvement. So it's taking a lot of time and energy to really focus on that and get it done right. I think this quarter and hopefully the next couple of quarters will demonstrate to all our investors that this is the right priority for us now. So it's taken away a little attention on that. I do think that just like the Shoal acquisition that we completed in June with construction products. There is a pipeline of, and we will bump into $5,000,000 $10,050,000,000 acquisitions, and we'll execute those. And those will be integrated. And that's not a distraction. That's just supporting what we've always done, but what we can do better It'd be nice to bump into $150,000,000 or $200,000,000 deal. There are sizable private companies out there that we've had relationships with for a long time, but you never really know when, they wake up and decide the times right to sell. So if we're lucky, we'll bump into a deal that's sizable enough that we can look back and say, Hey, on average, we did meet that $200,000,000 a year of M and A over a 3 year period. And also if we're lucky and this would be good for the whole economy, if there would be a little trade piece in economic activity would perk up again. These earnings leverage numbers would get somewhat better. Yes. Jeff Zekauskas from JP Morgan. You've described your acquisition strategy as selectively going after, sort of niche markets And you've all you're also engaged in a large cost reduction program that will take place over a multiyear period. But it's also the case that, another coatings company, Axalta is, seeking strategic options. And it's roughly the size of RPM. And everyone sees that there are large raw material synergies but they're different from RPM in that they have a large automotive focus. Why why is a company like Axalta not within your acquisition purview, if it isn't or is it? So the question is about Axalta, which, recently engaged somebody to look at strategic options. And I think a lot of people are understanding that to be in a possible sale. I will tell you in terms of where we are going, away from that holding company structure to a more centralized effort, a number of areas, a much more efficient operational manufacturing distribution center that our ability to continue to be that great home for entrepreneurial companies is alive and well at RPM within our specialty products group. Everywhere else, we, construction, performance coatings and consumer, we are becoming more integrated, which will give us an ability down the road to look at larger acquisitions and believe that we can achieve for a multibillion dollar deal. So our goal is to put our head down and get there. For Axalta in particular, if, if you ask me, who at RPM today, has great relationships or expertise on the coating side with GM Ford Chrysler, BMW, Toyota, out of 15,000 employees, the answer is no one. There are rumors out there that for a potential buyer there's 100 of 1,000,000 of dollars of synergies. I don't believe that in a business that's been private equity owned for a long time, private equity outfits leave 100 of 1,000,000 of dollars on the table. And so I happen to believe that to buy that business at a value, that their shareholders are going to want, you're going to have to have some industry specific synergies that we don't have today. And that's as candid as I could be. Give us a couple more quarters or maybe another year to where we're building the confidence internally and with you, on this MAP to Growth program and how that's fundamentally changed RPM. And then I think our appetite and our belief that we could do larger deals that require bigger synergies will have grown. Thank you for that. If I can just ask one small unrelated question. In the cash flow commentary in your press release, there was a line about $100,000,000 in receipts that didn't come through in fiscal 2019 that would come through in fiscal 2020. Is the meaning of that that your working capital was overstated by, I don't know, $100,000,000 or $50,000,000 to $100,000,000 because your receivables were too high? Or what's the real cash flow change from that from those receipts coming later in 2020? So on an annualized basis, our cash flow is what it is and always has been. We like a lot of other companies, including some of our big retailers in their January fiscal year ends, had a practice in some of our businesses in relationship to year end targets. We had a lot of compensation like a lot of people targeted at different elements at year end, would, provide discounts on receivables or stretch out payables. And we have taken an entirely different RPM approach to our working capital. We have negotiated longer terms, in some cases, substantially longer terms with a big chunk of our raw material waste, along with the promise of, Hey, if I extend my payment terms from this to that, guys aren't going to call me on May 30 and say, I'm holding your checks for 2 weeks. We're not taking discounts or giving discounts to accelerate receivables collection in May when we can when we could get the same ones in June. And so the difference year over year in fourth quarter cash flow, because of that has already been made up as we completed the month of June. And it's smart and there's a couple of things that we're doing get it in terms of compensation, in terms of planning, getting away from too much tied to fiscal year results. And working with these gentlemen and their group CFOs on regular 2 quarter forecasts and having a much more flexible, planning process as opposed to a static process where too much compensation was tied to performance to a plan that was set a year prior and was driving some decision making that was kind of odd. Not unique to RPM. There's plenty of companies out there where their customers and suppliers all know. If you wait until their fiscal year end, you can get paid quicker or you're going to get paid later that day is done. Mike Sasan KeyBanc. Frank, I was wondering maybe you could have each of the segment heads talk about which of the 3 buckets in the map 2020 plan is most important. I can imagine imagine everyone's equally, is there a certain one that really drives each of your segments going forward? I think that's a great question. And I'll let each of the group presidents answer that, starting with Terry. Yeah. Obviously, they're all critical to us. For me, in the consumer group, the one that I would, put at the top of the list is the operation improvements. And, And it's not as much, just about the amount of savings, that we plan on generating, but really the change in cultural behavior and our plants and how we operate. And really trying to make that systematic and becoming more disciplined and lean in what we do every day. Ultimately driving down our costs and making us more competitive and profitable. But to me, that one is, it's the biggest mindset and impact our whole organization. With the specialty products group I don't think I can tell you that one is any more critical than the other. We've this past year we closed several facilities We've already closed one in June of this year, a couple more in progress. So finding, manufacturing efficiencies, and, and reducing future assets and capital spends to support those is very critical, but we tend to be smaller groups. Our raw materials are sometimes unique So the procurement piece of the map 2020 is making a significant impact We had a difficult June, but the great thing was we saw those savings hit the P and L. And then, as Terry alluded to, manufacturing efficiencies are also showing up We've built them into our goals targets and objectives for FY 2020. And so efficiencies are there. Quite honestly, I don't want them to slow down. If anything, let's accelerate some of these fit events, finding operational efficiencies to help our group and help our team. To your point, my our group, it's a little different. You can imagine since we have more service components, operational savings as a factor, but not holistically the largest factor. So a rare challenge in seeing opportunities is as we've transparently shared, we're greatly decreasing. ERP platforms were all on. One of the most global pieces along with Paul And the greatest opportunity we have beyond the operational side is the back office functions overall administrative and all their nature. And using those through common platforms and doing some labor arbitrages to create a more scalable platform as we grow. For all our background functions. So that's the operational component. But that is you can do these things without our ERP, but if you're in the middle of the ERP, it's silly to do them lift and shift and then do it again. So that's a timing exercise that challenges us with this process. And then on the commercial side, the more positive side is Scale is not just about saving money, it's about incremental revenue. And if you could take really good data, and have a really good team of people on the field that uses that data and exploits it in a better way. So they have more virtual tools to help them do their jobs, whether it's 1 more quote or 1 more sales call or 1 more technical visit per day or per month, that's scale. So that's the other side of the component for us. Yes. I think I'm with Ronnie that no one particular area is more important than the other, but I'm well known. In my reviews within my group, it's all about speed go faster, go faster. So that's the one element for me that's most precious is how to figure out how to basically do this faster, which one gets done what we have. And 2, as I shared earlier, we're getting so much additional opportunity that's flooding at us out of this process. I think, we're target rich. So it's all about how fast we can go and speeds the, speeds the objective. And then one quick follow-up for Terry in terms of consumer. I saw kind of the dreaded Amazon picture up there. And just wondering if that's an opportunity. Are you helping customers sell on more online? Is do you see more of your sales going that route? And is that, something that is a growth opportunity over time? Yes. So the question was about our channels of distribution and, online sales. And if we're seeing that growing, We do see it growing. It's not necessarily just with one retailer or another. In fact, the majority of our Our traditional customers have beefed up their e commerce initiatives significantly and we're enjoying great growth with them as well. So all that being said, our categories aren't the biggest e commerce type categories, if you will, but the growth is nice and the percentage growth is very good. If I could follow-up on the M and A, when you talk about the potential of a $100,000,000 privately owned, family owned type of acquisition going forward, are you still going to be able to do them? Because obviously, what you are going to propose is not for them to continue to work the way they used to accept, have your financial power, so to speak. Sure. The question relates to our traditional M and A activities. In our Specialty Products group, that's what we do. And, It's the traditional RPM value proposition, and nobody in the industry is better at it. I suspect that we would have room for that in our performance coatings group in some unique areas. One of the beauties of RPM is We have room for differing of opinion. I have a strong opinion on about them what to say, but, I'll give you an exception to it. I'm not interested in being the best home for anybody in consumer, or construction products the way our PM was in the past. I'm interested in building global integrated businesses that have a collection of leading brands. And the consumer products group is very much there, in terms of where they are in North America, and they've got to take that model around the globe. The construction products group is relatively new, and Paul is working hard to integrate that. The exception is, and this is where it could be proven true everywhere is rustoleum has acquired a number of businesses in the cleaning category, and the best example is Crud Cutter, We brought her from a guy named, Ed Rice, whose father was the owner, completely integrated that product line. Ed Rice is there as the category manager of the cleaning products. So somehow, rustoleum's been able to take a business use the RPM reputation completely integrate it, but keep the entrepreneur. They've also done that in a unique flooring product line as well. So our reputation will still help us, but we are aggressively, particularly in consumer and construction products going to be integrating into these, integrated operating entities on the back end. But being a home of multiple brands across multiple opportunities. And we're really excited about that. If there are no other questions, I'd like to thank everybody for taking time to come be with us today for our luncheon and for also helping us have a, a nice audience for the introduction of our 4 new segments, and the 4 great leaders that we have leading them I'd like to thank everybody who participated on the, the webcast. And thank you for your investment in RPM, We're pleased with our fourth quarter. We're excited about the future. And we look forward to talking with all of you in the coming months. And to providing you the details in our first quarter of our 2020 fiscal year on October 2nd. Thank you very much, and have a great day.

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