Investor Day 2018

Nov 28, 2018

Slides

Good afternoon. Welcome to the RPM International Link Investor Day. We're pleased that we have 100 investors and investment professionals who have joined about 40 RPM leaders, which kicked off with a trade show like presentation of products to focus on growth and innovation and let those investors that took the time to come to Baltimore for the trade show portion of our Investor Day to really get a sense of our operating leaders and our focus on growth. That is the hallmark of RPM, and we will touch on it briefly in this presentation, but it was important that we had an opportunity to showcase our products and our operating leaders because the vast majority of our presentation today will be focused on our operating improvement initiatives. This slide is regFG or regg, and it's important because we will be making a number of forecasts and projections over a 2 or 3 year period, all of which are subject to all kinds of changes between now and then. But we're very excited to be here and to present our 2020 MAP to Growth program. I'm going to start with a brief overview of where we've been as RPM. RPM was started by my grandfather in 1947, with his mission statement, hire the best people you can find create an atmosphere to keep them and let them do their jobs. This mission statement launched that entrepreneurial culture It has been the hallmark of our growth and success and that we may will remain the bedrock of RPM for decades to come. Slide 5 highlights RPM's organizational chart at May 31, 2018. With $5,300,000,000 in revenues organized by 6 groups in 3 reportable segments and the key strategic competitive advantage of leading brands, balance between consumer and industrial markets, growth balance between internal investment and acquisitions, connections, creating value across RPM Companies and sustainable shared value. For our 70 years, we have been fierce believers in pushing down as much decision making as possible to our operating groups and operating companies. This chart highlights RPM's performance in total shareholder return from the period of 2003 when I became CEO to 2016. Over this timeframe, we more than doubled the return of the S and P 500 and outperformed our peer group on a pretax basis to resolve an asbestos liability challenge. This strong performance resulted from the benefits of our prior reorganization in 1999 to 2001, our consistently top performance in organic growth in our industry, the last couple of years have challenged us in our industry. On this slide, Slide 7 are 4 particular areas that challenged our performance from 2015 through 2017. Foreign exchange headwinds, in part because RPM grew from that $1,900,000,000 business 2003, 90 percent of which was in North America to the $5,300,000,000 business it is today with 35% of our revenues generated outside of North was paid out over the last 3.5 years. We had 2 uncharacteristically poor performing acquisitions that we've talked to investors about in and Centa, and we and our industry have been facing a deep and prolonged challenge in raw material costs and availability up to and including today. As a result of these challenges, we were engaged with our board in a dialogue to talk about not only the changes that we needed to make to address near term challenges but what changes we should be making to position RPM for sustained future success with the goal of positioning our businesses and our platforms to help drive RPM to a 15 or $20,000,000,000 business in the coming years. So with that backdrop, let me tell you where we're going. Slide 10 are the 3 key elements of our 2020 MAP to Growth Initiative. The first and most important is maintaining our entrepreneurial growth culture. Competitive advantage of leading brands, entrepreneurial approach to customers in the marketplace in terms of problem solving sales, marketing, technical service, all the hallmarks that have allowed RPM to consistently deliver 1 or as we reorganize effective today from 6 groups to 4, and we moved to centralized strategy, structure and leadership in manufacturing, operations, procurement, IT, accounting and administration. And then the 3rd element is driving operational efficiency and continuous improvement throughout RPM and as a continuing part of our culture. When we complete this program, we will have for the fiscal year ended May 31, 2021. That's a 540 basis point improvement over the 2018 adjusted results We plan to do this two and a half years. RPM leaders following me in this presentation will be providing details in each of these categories. Slide 12 highlights our financial goals. When we accomplish the MAP to Growth Initiative, as of May 31, 2021. Revenues will have grown past $6,200,000,000, our gross profit will from $688,000,000 to $1,158,000,000 on an annualized run rate for the fiscal year ended May 31, 2021. A combination of our cost saving initiatives, operating improvement initiatives will also drive significant savings and working capital, as you can see on this slide. So that by May 31, 2021, we will have annualized operating cash from operations of more than $800,000,000. Again, we'll provide more details on cash flow later in the presentation. Over this timeframe, We intend to generate approximately $2,200,000,000 of cash from operations and to deploy $2,500,000,000 of that including 1,500,000,000 of return of capital to our shareholders through a combination of share repurchases and a continuation of our growing to position RPM for sustained profitable growth, creating superior value for its customers, entrepreneurs, associates and shareholders. And our vision to transform RPM into a more connected and efficient company on an operation focused on operational excellence and continuous improvement, to provide details on our operating improvement initiative and the underlying structure and the leadership that was put in place I'd like to call Steve Kanoop, head of our group restructuring to the podium. But before I do, I'd like to give a little bit of background on Steve who many of you don't know. Steve joined RPM in June of 1996. Prior to that, he worked at a major law firm doing M and A work very often on RPM deals. When he joined RPM, he was our Director of Corporate Development and then vice president of Corporate Development and worked on every major acquisition that RPM has completed since. During the growing asbestos challenge, I became frustrated with a lack of progress after 6 or 8 years, and so turned to Steve Kanoop and gave him the responsibility to put together a new legal team and to think of a different way of tackling this rising liability issue. Steve and his team were the architects of the SP H C Bondex bankruptcy process that ultimately resulted in a final resolution of the asbestos liability for RPM. We not only survived that, but as you saw in that chart, on total shareholder return, we thrived during that period, thanks to this strategy. That Steve was the architect of. Lastly, during that time, he learned how to be an operating company leader as he not only led the legal strategy, but was responsible for the $400,000,000 of operating company businesses that were in bankruptcy and ran them until we had our final resolution in 2015. So Steve is a well seasoned vastly experienced RPM leader who has been at the center of most of the solutions of our biggest challenges, and I'm pleased to have him as the head of our 2020 MAP to Growth program. Thanks, Mike. We very much appreciate the opportunity to provide details about our operational improvement initiatives that serve as the structural basis for the change underlying our 2020 MAP to Growth program. But before we address these initiatives, I thought it might be helpful to provide some context about the process we went through to get to this point. The seeds of our program were planted over the past 18 months, as we've strategically realigned from 6 groups to 4 more strategically aligned operating segments: construction, performance coatings consumer and specialty products. These realignments allowed us to begin seeking greater efficiencies in G And A manufacturing and distribution such that we have or will have close thirty locations, 12 of which are manufacturing plants reduced headcount by over 500 by the end of fiscal 2019. In the midst of these efforts, as everyone knows, we came to an agreement with Elliott Management in June of this year to structure and focus more intently on these operational improvement initiatives. We added 2 new directors John Ballback and Kirk Andrews, who together with Bob Livingston and Tom Gross, formed an operating improvement committee of the board whose charter is to work with management to conduct a comprehensive and rigorous review of our operations and provide the board with recommendations for margin improvement. And in conjunction with the formation of the Operating Improvement Committee, we engaged Alex Partners, a prominent national consulting firm to accelerate our efforts and provide expertise, analysis and best practice as benchmarking regarding potential improvement opportunities. It was also important that we engage every functional area of the company for manufacturing, procurement, IT, finance, tax and legal, in an RPM steering committee to make sure that our process was comprehensive with no stone left unturned. We drove our functional and consulting resources down and through our operating groups. This intensive 6 week diagnostic process began in mid July and culminated in an RPM report with conclusions and recommendations delivered to the operating improvement committee at the end of August. This diagnostic evaluation focused on significant opportunities for improvement in manufacturing, procurement, inventory management, administrative efficiencies and working capital. This chart expresses the diagnostic review that confirmed that our operations and our management and administrative footprint had become too complex and inefficient. We had have 155 plants, 67 of which operate on 1 shift. We have 218 warehouses, which followed suit naturally from this manufacturing footprint. We had 104 accounting locations, handling 163 auditable entities and 354 legal entities. With 75 separate ERP systems supporting these discrete entities. And at the same time, we had 5140 suppliers dispersed across the entire enterprise. So we, together with our consulting partners, saw tremendous opportunity from this data. But to get at these opportunities and to achieve the greatest benefit in the shortest amount of time, we realized that changes would be necessary. So as I noted, we have already realigned our businesses into 4 operating segments that serve common end markets have compatible manufacturing processes and can drive efficiencies in management and administration. This is step where we are taking a procurement and supply chain, information technology, and accounting and finance. You will hear exactly what those strategic changes mean in the presentations to Taking to more strategic perspective in this area in these areas at the corporate level required us to align resources to that new reality. I've as Frank mentioned, I've transitioned from President of the Specialty Products Group to full time leader of group restructuring and have been able to replaced at SPG by John McLaughlin, an RPM veteran, who you met this morning. Gordie Hyde, who you'll hear from later, has been elevated to RPM's President of Operations and has over 30 years of experience in the paints and coatings industry. Tim Kinzer has also been elevated to VP of Operations with an emphasis on building a center led procurement organization. Tim was the VP of Operations at DAP and has extensive experience in Building Materials Manufacturing And Supply Chain Logistics. Lani Duruso has recently been promoted to Chief Information Officer and has been the VP of IT at RPM for over 15 years. In that time, Lonnie has led over 50 ERP conversions and integrations for RPM. And then on the finance and administration side, Joe Tula, RPM's Director of Internal Audit, will be working with me and Rusty Gordon. Seek a more efficient organizational design of RPM's finance and accounting function. Before running internal audit, Joe coordinated our SOX compliance organization wide and has a keen understanding what's really important is that we've enhanced our resources at the group level to help drive these strategic initiatives and make sure that they cascade throughout the entire organization. So, that build up to our comprehensive program. Each project has dedicated teams attached to it, a timeframe for implementation, and savings goals. We have a robust savings tracker that is coordinated across functions and across business units to ensure that the benefits are showing up to the bottom line. We have regular interface with the operating improvement committee to ensure they remain involved in the details and the direction of the program. And anticipate continued momentum as we get fully operational such that we can meet and exceed the target set forth herein. We have the right discuss in greater detail our manufacturing strategy. Thanks Steve. And good afternoon to all of you. I appreciate the opportunity to talk to you about our manufacturing strategy as we work to accelerate manufacturing improvement in order to support profitable growth throughout RPM. I'd like to set the stage talking about RPM Manufacturing today or However, as it was, we've already started to make improvements and in order to explain where we're going. We continue to be highly decentralized and have for many years had our operations cluttered into 6 groups, which as you've heard have been consolidated now into 4. These groups, Heather Manufacturing, organized by individual business units, for manufacturing capacity, capital allocation and manufacturing strategy. In this decentralized structure, we're able to realize the need for margin improvement and a planned closure of 12 plants and our associated warehouses early this year, which we are presently on track to implement. However, we recognize this is not enough to return us to the leadership position in both growth and margin and that we had a need, excuse me, that we have indeed to do more to return ourselves to that leadership position in margin improvement. So, Steve told you about, we entered into a rapid assessment in this summer as we moved from 4 from 6 operating groups to 4. And in that change, we found that we deliver high value product and services that we do that with brute force And Manufacturing. And the results of brute force operations are high. Inventories, inefficiencies, and those types of things go forward. So these are findings that obviously screamed for a new strategy, not some incremental change. This new strategy, which we call center led, is intended to support our entrepreneurial culture that delivers high value in the marketplace, while focusing on the organization of our facility assets, consolidating our operations into fewer and efficient plants and where we have historically focused on facilities in support of a single Asset allocation is in the same context as the plant consolidations, manufacturing human capital and investment capital. We'll implement this strategy with a collaborative team led by myself that consists of Tim Kinzer, RPM's vice president of operations, responsible procurement, that you will hear from shortly, RPM's Vice President of And S and the 4 group vice presidents of operation. This group will operate as a team, guiding the implementation of $75,000,000 of manufacturing improvements, which we are targeting for the MAP 2020 growth initiative, growth initiative, as well as helping lead the RPM strategy of allocating human and investment capital in support of effective RPM Manufacturing. Essentially, the group will guide the development of the RPM Manufacturing System, MS 168, which is the establishment of plant management processes across all RPM facilities. Where we will employ tiered based and data driven operational reporting, monitoring and improvement. This tiered based reporting system standard versus actual establishes a cadence of hour by hour reporting on the shop floor to shift by shift reporting to the plant manager who reports South Upper Management on a weekly and monthly basis. This cadence of constantly monitoring and addressing performance forms the core of the The standards against which we'll measure our performance will be safety, quality, productivity and service, and the system will be recognizable to anyone who walks our plant floors. Operators and supervisors and team leaders will be able to talk with facts about the safety, quality and production performance, and this performance will be visually displayed so the corrective action can be taken whenever GAAP occurs between performance and standard. Similarly, operators will know their 3 leading causes of operational equipment effectiveness and yield boss because they are working on improvement hourly and throughout each shift in order to create ever improving standards and establish a culture and a regular of continuous operational improvement. So what this program is is a program focused on waste elimination, efficiency and margin enhancement. It's fact based and data driven for continuous improvement and it establishes standards on which performance is based and improvement is measured. What it isn't is some cookie cutter check the box program. It's not a program focused on some elegant tools the consultants love to sell you or program divorce from business performance. And we'll implement this strategy utilizing 3 tactics between now and the end of 2020. The first is attacking of 0 based yield and operational equipment effectiveness, OEE. Implementation of a program of 0 based yield and each of our plants will have us address less than world class process losses that we see across RPM facilities. By addressing quality and inventory cycle counts will deliver $14,000,000 of margin improvement. Similarly, addressing overall equipment effectiveness, we will improve uptime maintenance, we'll improve maintenance practices, and general equipment operation to deliver another $13,000,000 of margin performance. But besides delivering this $27,000,000 of margin performance, this work will be the catalyst for establishing the RPM Manufacturing System. And it is this new manufacturing system, MS 168, that will prepare our plants to operate more effectively across RPM Businesses, developing a culture that executes effectively rather than firefighting. Establishing this ability to execute, driving lower costs and higher quality will allow us in parallel to optimize utilization of our assets. We'll be moving manufacturing from inefficient small plants to larger plants that effectively implemented the good management processes that we are putting in place within the RPM Manufacturing System. Assets will be optimized in 3 ways. 1st, plants already targeted for closure will be completed, At the same time, we'll be studying all our North American plant systems where we have a single plant Ship plant whose manufacturing can be accommodated in larger, more efficient plants that are bracing our new manufacturing strategy and execution. Similarly, we'll be creating a European Manufacturing footprint in conjunction with G And A consolidations the more efficiently services the businesses needs in that part of the world. In Wave 2, we will implement the consolidations identified in wave 1 and then continue the consolidations in wave 3 based on learnings in wave 2. By the end of our 2020 MAP to Growth initiative, we have closed 31 plants and associated warehouses delivering $48,000,000 in margin improvement. And finally I include inventory reduction as the 3rd tactic in our implementation of the new RPM Manufacturing Strategy and its associated system. Inventory is the number one waste of failing inefficient manufacturing. Thus, as we improve the execution of a reduced manufacturing footprint, We will see changes in production planning and control that will improve inventory turns. In addition, as we optimize our manufacturing footprint, we have plants that effectively manufacture in small batches. These plants in an asset base that now serves all RPM will be utilized, relief, plans designed to manufacture large batches of the burden and complication of small batch processes trying to be performed in a large high volume SKUs can be manufactured to turn significantly more often. Thus, as you will hear, when we discuss working capital, will first reduce inventory in the consumer group by $50,000,000 and then spread that across the enterprise, reducing inventory by $146,000,000 by December 2020. Finally, I'd like to take a moment to summarize our new center led manufacturing strategy will implement a new RPM manufacturing system that more effectively executes and creates and actually demand plant environments of continuous improvement. This new system will drive 3 9 month waves where we will identify and implement incrementally $32,000,000 $26,000,000 of margin improvement that will result in a $75,000,000 margin improvement in fiscal year 2022 versus fiscal year 2018. Significantly that we believe will be accomplished. Now I'd like to turn the podium over to my operational counterpart, Tim Kinzer, who'll explain to you that it is not only on the plant floor where RPM will be fixing their operations. Jim? Thank you, Gordie, and good afternoon. I'm going to discuss the opportunities that we have identified in the procurement area and the structure changes that are being implemented To understand the changes that we are being implemented, it's important to first explain our current procurement structure. Which is for years there has been a collaborative approach with the implementation of the business intelligence system, which has allowed visibility across our operating companies to the others purchasing data. It is our plan to build upon the collaborative culture that exists with a center led structure. In this structure, we will have a team of RPM Corporate Associates that will lead the procurement strategy for RPM. Operating group purchasing personnel will have dotted line reporting to the RPM procurement team. This will allow greater leverage supplier consolidation, controls and consistency in our practices and policies. In September October, we finalized the structure and executed the hiring process for the team. We worked closely with Alex partners to analyze opportunities and assess the category priorities. This month, we onboarded the team members, held kickoff meetings, and have been formulating the category strategies. I will be leading 1 in packaging, 1 in logistics, and 1 in indirect. Responsible for developing a strategy for their categories collaborating with the operating group teams, strengthening strategic supplier relationships, maintaining master material lists and controlling the addition of new materials, driving value engineering activities and maximizing in sourcing. This is a significant change to how is for improved margin and working capital. In the past, operating groups could choose whether or not to participate in an RPM agreement. Going forward, we will require full participation and compliance with the agreements that are reached by the RPM team. To drive the activities and compliance through the operating groups, I will be chairing a procurement executive committee. That will be comprised of a senior leader from each of the operating groups. This committee will provide guidance to We will also have 2 subcommittees that will provide oversight to the value engineering and in sourcing as these two We've evaluated the categories of materials and quantified the addressable spend in each of the areas. We then assess the opportunities based on a review of our current practices and benchmarking data. In addition to the These in flight projects include distribution consolidation and direct sourcing of materials. As we have done with the manufacturing improvements, We are projecting that the total procurement savings will contribute $145,000,000 to our 2020 MAPTA growth plan. Wave 1 is primarily in flight projects and high priority projects. WAVE 23 are a combination of savings projects and commodity cycle recovery and totaled $60,000,000 $65,000,000, respectively. We are off to a great start with the procurement team, and I'm very excited to have the opportunity to lead the transformation of the RPM procurement model. I will now turn it back to Steve. So we're not just attacking the manufacturing and procurement opportunities that we that we just heard about. From an administrative perspective, our move to 4 operating groups has helped simplify our management structures and has provided administrative efficiencies already. As I noted earlier, these efforts have resulted in plans for significant headcount reductions as well as better strategic alignment and coordination among similarly situated businesses. But further material administrative synergies are planned as we undertake our efforts at becoming center led and many aspects of IT, finance and our legal functions. In our remaining time, we'd like to share the efforts we are making in those areas and we'll start with IT and Lonnie Dorusso, RPM's vice president, and Chief Information Officer. Thank you Steve. I'm here to talk about the corporate driven center led IT strategy and how it will support the MAP 2020 efforts going forward. The overall mission of this strategy is to centralize, consolidate and standardize on our systems technologies and business processes within our operating segments and across the entire organization. The diamond shaped graphics depicts the 2 components of this strategy, and I'll talk to each over the next few slides. First, let me provide an overview of the IT Executive Oversight Committee. Which I chair and who consists of our operating segment and corporate IT executives. This committee will drive the execution of this strategy. Their responsibilities include overseeing their respective operating segment integration efforts along with sharing our IT centers of excellence areas. This committee has existed for many years, but the objectives and enforce IT policy throughout the organization. As it pertains to our operating segment level component of the strategy, we will expedite our integration efforts centralizing the entire organization onto one of our 4 existing platforms, which includes ERP and other ancillary IT systems. Some of you may ask, why centralized on 4 instead of 1? We answered this question early on in this process, we concluded that centralizing on our existing platforms allows us to complete our integration efforts quicker will be less risky and disruptive to our operations and will be less costly and will allow us to get at our projected benefits faster because the majority of our 2, each operating segment has very strong IT staffs with many years of experience supporting these ERP systems. 3, the operating segment integration efforts will run concurrently allowing us to complete these migrations quicker. And lastly, as we integrate each operation we will continuously collapse and centralized support services, thus reducing expenses by eliminating redundancies. The dots on this map show where our operations are geographically concentrated It's within these geographic regions, we have identified additional opportunities to create other back office support service centers, not only in IT, but in accounting as well. As you look at this will execute their integration efforts in a similar manner and expect to achieve the same types of benefits as well. 1, by developing a global template based on common processes and leveraging standard features, by utilizing internal resources to expedite the process. Lastly, to govern the process. Ultimately, driving efficiency, productivity and improving the visibility and operational performance across their operating regarding our corporate wide component of this strategy, we have formed centers of excellence teams who will also identify further opportunities to centralize, consolidate and standardize across the entire organization. Again, these teams are chaired by the IT Executive Oversight Committee and includes other IT leaders from our operations to fill out the teams. Each team is formed, charters have been developed, and immediate areas of focus have been identified. These teams are stoked and feel there's plenty of hidden opportunities we can get at, which will provide additional cost reduction opportunities across the organization. I'm Rusty Gordon, RPM's Chief Financial Officer, and I'm going to talk to you today about our efforts I'd like to start by talking about the picture on the left side of the slide. Our margin acceleration plan really starts with customer. And there's certain areas when you step back a minute and think about RPM's history, where our structure has served us And our customers really appreciate the great local sales support, tech service, focus marketing, that they receive from that they really don't care too much about, such as where we process payroll or where we accomplish general ledger accounting. There are certain activities that are invisible almost to the customer, and those are areas that we can target for streamlining for more efficiency. This next slide shows a byproduct of RPM's tremendous growth As Frank mentioned, when he became CEO, 10% of our sales were outside North America. Today, it's closer to 35%. And as we've grown, whether through acquisition or Internationally, We have developed a complicated organization structure. As you can see here, we have 104 accounting locations 633 personnel involved with this function. And these accounting locations really blanket Europe, the U. S. The UK. In fact, there's so many dots over the UK. You can't even see it on the map. Asia Pacific, I'd point out as well. Is only 2% of RTM sales, and it's almost 20% of the accounting locations. So I mentioned earlier that there's certain areas, where RPM structure has not, has been a challenge. And one of those challenges has come through the way of increased regulation. Increased regulation in Sarbanes Oxley has not been kind to a decentralized holding company such as RPM, and that we have a number of small business units with small office staffs, and they are often overwhelmed with the segregation of duties we're acquired under SOX. But there's good news, there's an opportunity to reduce complexity and have better controls at lower cost. And those are not mutually exclusive. We can have our cake and eat it too. We can have better controls and lower cost by breaking down the we're going to work in partnership with Lonnie And IT who's going to be paving the way with consolidating ERP systems. And that'll allow us to consolidate accounting locations as well. And I want to be clear here, we're not talking about centralizing accounting and finance at RPM headquarters. When we discuss center led, what we're talking about is enlisting our 4 group CFOs with myself in a council that's going to optimize our finance organization, leverage our best practices, and set policy and direction. Our goal here is to help And I'm not sure we'll get down to 4 accounting locations for our 4 groups, but I'm very sure that we're going to do a lot better than 100 and 4 low patients. Speaking of center led, we've already accomplished this in our legal function at the end of FY18 We centralized litigation management at corporate with 1 new hire, and we did the same in Europe with an existing RPM attorney. This has allowed us to have a more consistent and strategic approach to managing our risk. It's also more efficient. We've been able to reduce the number of operating group general councils from 5 to 3 and eliminate 4 administrative positions along the way as well. We're going to do the same thing in our compliance function, where we're hiring 2 personnel at corporate headquarters. And this will alleviate In our legal department, we're also making investments in technology to improve our efficiency and effectiveness We have invested in a litigation management system that's going to audit invoices, track our spending versus budget. And keep updates on our status of litigation. Also, we've invested in a contract management system to recognize the generation of contracts required by our operating companies and standardize those agreements such as distributor agreements or commission agreements. Also down the road in the future, we're looking at using artificial intelligence to automate a lot of our compliance and audit tasks, we can use bots, for example, to search through our contracts and financial data for certain red flags that require further action. Finally, another step we're taking is we're reducing the number of outside law firms that we use And by consolidating the number of firms, we can better leverage our spending. We can also negotiate better rates and reduce the learning curve since we'll have the same lawyers working, repeatedly with RPM Companies. So to summarize SG and A, we're looking at savings of $70,000,000. Wave 1, we've already kicked off, we already disclosed some restructuring and risk activity in our Consumer segment in the fourth quarter of FY18. In the first quarter of this year. We had similar activity in our Industrial And Specialty segment. Wave 2 here shows, that we're starting to consolidate the number of accounting locations. That really accelerates in wave 3 as we collapse ERP systems and that allows us to consolidate more administration. So to summarize, as RPM has grown and our 4 groups have grown. We've reached the point where we have the scale to really improve efficiency. As I stated, Our margin acceleration plan really starts with the customer. We're going to do what matters most to our customers And those things that don't matter are areas that we're gonna do as efficiently as we as we can. You saw some new faces today, We have some new personnel to help us get this accomplished. And the good news, we should also talk about RPM's growth This is going to help RPM's growth in that we're going to have better platforms to integrate bolt on acquisitions. And we can trolls. And we can leverage those in the future so that our top line growth can fall through to the bottom line. And the last point I'll emphasize here is that this is more than a project. This is significant cultural change. So this will be going on the cash we plan to generate over the next 3 years and what we plan to do with the cash First of all, I'd like to talk about working capital improvement. We've targeted a reduction of 230,000,000 of improvement in working capital. We've always been higher than our peer group on this metric And this reduction would get us down to some of our peers' level. As Gordie mentioned earlier, twothree of this will come from inventory, the rest from extending payable terms. Tim is going to lead this on the procurement side in terms of extending payable terms. And as Gordie mentioned, on the operational side, we're going to improve efficiency and reduce inventory as well. In terms of capital allocation, the first thing or the first priority I should mention is as we look at how we allocate capital, the number one priority is what we call protect the house it's to protect our investment grade rating. That's very important to RPM because we want to continue to do acquisitions year in, year out and good economic cycles and bad. We need to have that access to the capital markets that an investment grade rating provides. So we're gonna make sure we protect that and protect those metrics before we get to the other ways of allocating capital. One part of this pie I'd like to direct you to is the orange portion share repurchase that has not been significant for our PM for a lot of years. Over that time, there's been a big slice of this pie called asbestos, and I'm pleased to report that we made our last payment to the asbestos trust in May. So that's in the past. And now that's been replaced by share repurchase. Dividends are also a part of this. We've raised our dividend 45 straight years, provides a predictable return for our shareholders we'd like that to continue. And then, M and A spending as well, We're going to continue to do acquisitions. We just did a look back over the last 5 years with our board and saw that our acquisitions yield an internal rate of return of close to 20%. So that's really good, and we'll keep that going. This slide really shows the amazing impact that we can have by simultaneously improving working capital and improving margins. Our operating cash flow more than doubles from 'eighteen to 'twenty one. And for those interested, the tax reflected here, reflects about a 25 percent effective tax rate. Over the 3 years, as Frank mentioned, we'll generate over $2,000,000,000 of cash. $1,000,000,000 going towards share repurchase. We made a big step towards that $1,000,000,000 yesterday when we redeemed our convertible notes, for mostly cash. And as a result of that, we were able to remove 3,300,000 shares from our from our diluted, EPS calculation and also do so without increasing debt levels. We've also done open market repurchases of a little over $80,000,000 this year. So we're well on our way towards the $1,000,000,000 of share repurchase. Also, this chart shows a continuation of M and A and dividends And, the biggest portion again is repurchase. If you look at the $1,000,000,000 of EBIT that Frank showed earlier, our stock price today, looks like a good investment. So we will keep that up. So that's all I have, and I'll turn it back to Steve. So as we've noted previously, our plan is detailed, comprehensive and implementation teams have been identified to achieve this $290,000,000 in savings that is in manufacturing procurement and the G And A area. We're knee deep in wave 1. We expect to have in place $83,000,000 of improvement in fiscal 2019 that will benefit 2020. Wave 2 then continues our progress throughout fiscal 2020 focused most intently on the benefits coming from our efforts in the procurement area. And then finally, wave 3 is the culmination of our 2020 MAP to Growth program, but what I like to believe is that Wave 3 embeds the notion of continuous improvement and solidifies our efforts around these areas of strategic change. I think as you heard from the team that there's a great commitment and excitement to get after it and we're on it and ready to go. Frank? So I'd like to conclude with, this financial table. This financial table highlights the annualized run rate we expect to be at, at May 31, 2021. And, it was also a process that we went through with our board as a top down check on our MAP to Growth initiatives and goals. As you heard today, this program has truly been built from the bottom up by these different areas that generated savings that we will be getting over the next two and a half years. With our board from a top down perspective, We looked at the revenue growth, a CAGR here of 5.6% and felt that that was reasonable in light of the 6.7% compounded annual growth rate that we've experienced over the last 20 years. We looked at a compounded annual growth rate, of gross margins, which are improving from 41.7 percent to 45.4% and felt that in light of the improvements that we've identified and the benefits that we would expect to receive from a mart from a commodity cycle margin recovery that this too seem to be reasonable in light of our program. And then we finally looked at the SG and A as a percent of sales. And while it continues to grow to support, sales, marketing, customer service, product innovation, it will be growing at a much more modest 3.7% pace, and the rest is simply math. And that math allows our EBIT to grow from $563,000,000 of adjusted EBIT at May 31, 2018 to over $1,000,000,000 on an annualized run rate for the fiscal year ending May 31, 2021. A comment on the EPS range here of $4.90 to $5.30. Given our forecast, we believe that we'll likely be at the lower end of that range on an adjusted basis for the fiscal year end May 31, 2021, but on an annualized run rate, we should be operating at the higher end of that range which will obviously be realized in So in conclusion, we're excited. This has been a very, intense very focused program across all of RPM. As you've heard, it does incorporate some cultural change. Particularly in our manufacturing and operations area and back end, we are committed to maintaining that entrepreneurial approach to the market that has been the hallmark of RPM's growth and success. And when we achieve our vision for RPM, to be a more connected and efficient company focused on operational excellence and continuous improvement while maintaining the strength of its entrepreneurial culture we will truly be tough to be. So I thank you for your attention today, and we're going to take just a minute to gather our leaders, up here on the stage. After which we'll be happy to answer your questions. Good. Right up front. Obviously had a big influence on results over the last several years. So we have assumed that foreign exchange would be stable, over this timeframe. All of the run rates there, except for revenues in that EPS range, at May 31 or annualized run rates. So that $1,000,000,000 of EBIT is the annualized run rate that we would be expecting to be operating at, not the actual results that we're forecasting for that year. And that's because we will continue to be executing the 3rd wave of our MAP to Growth program up through December 31, 2020. So for the 1st 7 months of our 2021 fiscal year. On the raw material front, You saw those 3 waves. I think it's safe to say that we expect that the process improvement that Tim is leading will drive somewhere in the neighborhood of $80,000,000 of procurement savings. And that last notion in Wave 3 of 65,000,000 is our best guess at what the benefits of a raw material, commodity cycle recovery would be. Obviously that number is going to be higher or lower, based on how raw materials react, as this commodity cycle, which has been long and deep, winds down, which at some point it will. Yes. It's from the baseline that we're experiencing today. Yes, sir. I'll start over. It's Cliffordansom. I get a little, I know Alex well. And I, but I always get a little nervous when people keep citing cost savings and headcount reductions, when you're talking about continuous improvement. Do you have anything that'll make me feel better about that? I think the right person to answer that Gordie Howe, who's leading our manufacturing efforts. Gordie? Yes. And I tried to make it as clear as possible, but it's not just all cost reduction. And improvements is that it is a change in the way we manage our plants from establishing standards and performing against those standards on a daily basis, being able to understand the difference in the gaps between those standards and improving them and and delivering that all the way across our plant management processes. Yes, there's going to be some reductions because we have an awful lot of capacity that, we don't need, and we're going to consolidate that. But the bottom line, the big thing is, is this manufacturing system is going to create a cadence continuous improvement. With the resources we have, we're going to do a whole lot more as we grow. I would just add that up until this year, we did not have any RPM wide manufacturing metrics or measurements to measure performance. And those are being established across all our sites today, and that'll make a huge difference. Yes, sir. Thank you. Ghansham Panjabi at Baird. Thanks again for hosting us. On the working capital reduction, which seems pretty ambitious at 230 can you give us some of the buckets associated with that, including SKU rationalization if that is part of the bucket? And second, the 3% organic growth you've targeted through fiscal year 2021 how much of that will, is that net of all the SKU rationalization? Could you repeat the second part of that question? The 3% organic growth is that net of the SKU rational session. Thank you. Sure. As it relates to SKU rationalization, we don't plan anything out of what is ordinary that our business would do on a regular basis, in terms of the core of products that you've seen, for instance, this morning, what we have been looking at and are executing, is the shutdown of some small operations typically overseas seeds that were planted in developing countries that after 3 or 4 years are not bearing the profitability that we want to see. So the reduction in revenues over this timeframe, which could be as much as $60,000,000 to $80,000,000, going to be generated more by product line or, foreign locations, that may be closed or rationalized. As it relates to the buckets, again, I think, Gordie Hyde and Tim Kinzer would be best positioned to answer questions about working capital. Corty? In terms of the inventory, once again, it's a change in our process and the way we're going about manufacturing. So instead of having a business focused on their own business and low turning SKUs and high volumes, we're able to use all of our assets across, so we can use small batch of plants and large batch plants. And when we get to large batch plants that have those large volume SKUs, we're just going to turn them more often because they're not going to have to be planning to break into a run because they've got a small batch to run. That's going to be run-in another facility. And, and in terms of the breakdown, that's how we're getting to that, $146,000,000 worth of inventory reduction. Frank? Yes. Hi, Frank Mitsch Fermium Research. RPM has been known I guess as an acquirer of choice, a preferred party to go to when an executive is looking to sell his family owned business or or what have you. And part of it was you would, you would bring them on board and let them continue to run the company as is. Now you're going to more of a centralized strategy. Do you have any concerns as to your ability to continue the impressive track record of acquisitions? I think Rusty mentioned 20% IRRs. How do you think about that? And I guess the flip side of that, as you look at your portfolio today and you've done this, done this review, are you thinking about any possible divestitures? So the first part of the question related to acquisitions, I think we've had a good track record of completing acquisitions that we integrate and still retain the entrepreneur. Rustolium has done that as well as anyone at RPM. I was at the Restolium Sales Meeting in June and the Son and Grandson, of Miracle sealants were there. Are going to be product managers of that category and that business and that product line, even though those businesses, back end activities will be integrated into rustoleum. We acquired a company in Minnesota called Citadel, which is the basis for the rock solid product line. Patrick Ilfree, the inventor and the owner operator still with rustoleum, driving growth in their floor coatings, even though once again, that's been integrated. So we've had good success in that. We intend to continue to maintain the brands that we're buying and maintain the sales forces and the distribution and the innovation that comes with it. And if there are opportunities to integrate production and or integrate back office, like the few examples I gave, we'll do those. And I think we'll still have significant edge over many of our industry competitors and how we handle acquisitions and the reputation that we have. On divestitures, we do not have, plans for any divestitures at this point in time, but that's something that we look at with our board on a regular basis. In the back? I'm Charlie Rose with Cruiser Capital. Like to understand a bit about how Elliott, how their involvement here has gone on how their board influenced. And obviously, you're doing a very substantive. And I had the pleasure of meeting Frank in Boston about a couple of months ago, we actually intimated that you need to take a fresh look at how the company would function going forward. I'd like to understand the process you've gone through a bit about how you see that process because you've obviously drank the Kool Aid. And I like the Kool Aid, but you're telling a fabulous story. I'd like to understand how they and you form a relationship and how that relationship will continue in a constructive way. And more importantly, how does the company metrics get influenced in a recessionary Sure. So the core question was related to, our engagement with Elliott Management. And, they first contacted us at the end of January I thought of, who would be a good wingman, if you will, to partner with our dialogue with Elliot. Immediately thought of Steve Kanup for some of the reasons I mentioned earlier. And, to say that our early meetings were, easy and light would be incorrect. They were very challenging, to us. But I think they quickly realized that we were on this path already And, and I think we both managed the process, such that it relatively quickly went from a challenging process to a very constructive introduced themselves to us, already marched down the path of engaging a major consulting firm to do a soup to nuts analysis. We had our 3rd meeting with them, and we highlighted who that firm was, with Elliott. We signed an NDA and shared with them some of the early stages of the operating improvement initiatives that we had been working on. And when we expressed that this was a, the consulting arm of a big 4 accounting firm, Elliot suggested that they didn't have very good experience, with the consulting arms of the big four firms that they were expensive and very high level, and they had a way of continuing their engagement. So we ask who they like. And they said they liked AlixPartners. So indirectly, we connected with AlixPartners and they came and gave us a presentation. And to an earlier question, they very quickly appeared to be more roll up your sleeves, get in your plants with senior people kind of folks. That we that in contrast, connected with pretty quickly. And interestingly enough, we engaged Alex before we announced our settlement with Elliott. It was a good suggestion, and we were moving in that direction anyways. It would probably take a couple of beers in a few hours to talk about the whole dialogue. But I will tell you, contrary to questions we've had or things that people perceive, our engagement, with Elliott in the addition of the 2 directors that we have has been very constructive and very helpful. I think Steve Kanoop jumped to the enthusiasm side of this before I did. But this has been a great process for us. And it's highlighted a couple of things about our business that has been very helpful and will pay off beyond this 2020 MAP to Growth period. Do they own stock? I don't know how much stock they own. I know that at the date of our settlement agreement, as part of one of the addendums, they highlighted their specific ownership at that time, and it was 3.1%. I believe mostly through various derivative contracts and what amount of stock they own today, I do not know. Can you just come back to the other question about the metrics of the company and a recession? So historically, RPM has managed fairly well through recessions. We've had 2 down years in revenues in our history, and I would expect this to manage fairly well, in recessions As we've seen over the last couple of years, a risk factor in RPM today that did not exist 10 years or 20 years ago is our exposure to foreign exchange. We've got really good leaders and really strong businesses in places like, Turkey and places like Brazil and places like South Africa. Relatively small, but really well run continuing to grow business in Argentina. And all those places have been clobbered from a currency perspective, aside from larger currencies. So that's a risk that exists today and will continue to exist that we need to communicate more on and figure out how to manage Yes, sir. I follow your logic on value of retaining prior owners and driving innovation, but how do you incentivize all your employees to drive productivity? And then a question for you, Cory, how do you incorporate benchmarking in these metrics that you're setting goals for the manufacturing plants? I guess I could answer the first question and then let Gordie answer the question about benchmarks. I think the entrepreneurial culture that we have and the structure that we have, particularly on sales and marketing and how you meet and compete in the marketplace has been very attractive to entrepreneurs and self starters. There aren't layers of sales to marketing people. Nobody's gotta wait for a decision come from the corporate headquarters. And so we have attracted and internally grown people that like that. John McLaughlin, who, Steve Kanute mentioned, who was at DAP for a while and is now, the group president of our Specialty Products group at one point in a presentation internally, talking about himself. He was prior at USG. He was at a big, cosmetic company. And he said that one of the things he found unique about RPM is that the only place he's been where people that have real ambition don't aspire and conspire to the corporate headquarters. In fact, everybody wants to stay away from the corporate headquarters. And, that culture has been developed over 30 years, and it's a very healthy culture. And, and, intend to continue that. On the manufacturing metrics, I think Gordy is in a better position to talk about that. Well, that's one place where elk's partners have been very, very helpful. So obviously they've been in multi lots and lots and lots of different places. So it can bring a lot of help along the benchmarking. And then RPM, why it's the best home for entrepreneurs, It's also a good place where people in our industry find that this is a better place to work and a lot more challenging and a lot more exciting. So we bring in people from our competitors who bring with them some knowledge on metrics that exist in the industry and allows us to help us that benchmarking. Kevin McCarthy, Vertical Research Partners. Two questions, Frank. I was wondering if you could comment on the total cash cost. Required to achieve the $290,000,000 in savings that you target across manufacturing procurement and SG and A and how that will flow through your financials And then second, recognizing that we're a few days from the end of your fiscal quarter. So I wonder if you could comment on the demand trends that you're seeing across the business, over the last few months? I think Steve could address both of those. We're expecting between $125,000,000 $130,000,000 of cash costs, depending on how things shake out over the course of the period. And in terms of the current business you know, things are still, somewhat difficult in the top line, raw materials are still, a headwind for us. But I think that, what Frank has said in the past is is coming through, which is sequentially, we're starting to improve. And we'll start to see some of that improvement. You know, low low single digit growth for the quarter, I would say. Yes, sir. Mike. Hey, Frank. Mike Sison, KeyBanc. So two quick questions. When you think about, you have 155 plants, you're choosing plants to shut down. I was wondering if you can give us a little bit of feel of how you're choosing them. Do you know the returns and capital by each plan? Are there are there certain hurdle rates for plants that survive? And then Frank, in terms of a, kind of a macro question, you went from six segments to four you know, a lot of companies are kind of going completely the other way. You've seen companies split businesses into 3, 2, maybe just spend a little bit of time on why these four segments make sense together and what are the synergies between the 4 that that make these four segments, create more value together than separate. So I'll answer the question about segments and then turn it over to Steve and Gordy, on terms of selection of plans and how we think about that. In the four segments, I think they're natural fit. We have run a very decentralized structure for a long time. Part of the success we had, from 2003 to 2016 was the restructuring we did earlier when we reorganized from 40 independent reporting groups to the 6 group structure that we had through this past year. So that allowed us to line up companies that serve common markets and common customers and get at some of that manufacturing an administration efficiency, but it was done entirely at the group level. It had not been driven on an RPM wide basis. The four groups we have today make sense to us. Paul Huggenboom is leading a construction products group, and, quite sizable and they're very common products, very common markets. And the best in class in construction products globally today at Cica, We got some room to make up there, in terms of products, in terms of innovation, and in terms of brands, we go head to head with them and compete and win in almost every major market. But we're not as efficient on the back end. So it needed a better coordination in terms of how we allocate capital and how we think about competing regionally. And so now we've taken Euclid Chemical And Tremco, Roofing And Tremco sealants and flow crete a number of other construction products company and put them under the leadership of a, a real proven leader, and everybody's excited about it. Think the same thing is true in our consumer products group. You've got exceptional brands, great powerhouse at rustoleum, a great business at DAP, a good sub brands in Zinser and all the other, categories there. And so while we would intend to keep the sales forces and the technical service and the customer service and all the marketing independent and focused, The opportunities to coordinate the back end amongst those groups beyond where they are today are significant and we intend to do that. Same is true in each of the other categories or groups, except for our specialty products group, which is really an interesting, collection of entrepreneurial businesses that aren't as well connected as the consumer construction products or performance coatings groups are. Interestingly enough, one other reason we're going to this, and we hope we have the leeway regulatory wise to get there in 18 months. Is another Steve Knoop story as we were dealing with with our board more than a year ago about what changes would we have to make One of the Ahash thieves had as one of our 6 group presidents was, I'm not only a group president, I'm your only segment president, And so me and my team listen to your investor calls, I think a little more intently, And my CFO can provide guidance on what to write in the MD and As to Rusty and his team, because I'm running a segment, and my people know we're a segment And when investors ask questions about the Specialty Products group, which is his segment, I think we're better aligned. So part of what we're doing is moving not only from 6 groups to 4, but we hope by the end of this process, So probably likely sometime around December 31, 2020, we will change our reporting from 3 segments to 4. And we will be much better aligned in terms of how we're led, how we're structured, and the visibility and transparency that that our investors will see. So that's also a significant piece of why we're moving in that direction. On the, how we're choosing what plants and what assets, I think Steve and Gordy are better, people to answer that. So I'll talk about it from the ten thousand foot level and then Gordy can chime in. You know, we think about it in 2 separate ways, which is we think about it from, common manufacturing processes and technologies. In terms of combinations. And then we also think about it from a geographic perspective. And so that's really our guiding principle. And obviously, the plans to have greater, room for growth with less investment. And so we are really kind of evaluating that in terms of plant efficiency. And frankly, the investment it's going to take to bring a plant up to the next level. And so I'll let Gordie kind of talk about it maybe at the next level down, but that's the evaluation process we're going through right now. I guess the only thing I would add to that is, it's also this back to this focus on the customer that we want to be able to maintain. So it's delivering the lowest costs, while we have high value products, we also want to deliver the lowest possible costs to those customers. And so while we add a lot of businesses that have very high value products, they can get away with that for a while until they start to mature. And so we need to take a look at those common processes and take those products and put them in plants where we can deliver the customer at a lower cost to manufacture and also deliver effectively and have that product available to So an awful lot of focus, where our customers are, what their demands are, and how do we get those products to them most effectively. Yes, in the back. John? Hey, John McNulty, BMO Capital Markets. Look, Frank, it seems certainly by the presentation, it seems like there are a lot of opportunities with the taking the divisions down to less silos or having a less siloed approach And it certainly seems like the opportunities are there on the cost side. Do you see any on the revenue side as well when you think about the taking breaking down the silos a little bit and having the divisions work a little bit more for the total corporate good? The answer is yes, we see tremendous opportunities there. I think you saw today, with Ronnie Holman in the wood finishes group and what they're doing on behalf of Rostolium, not just in terms of production, but in terms of color development and having a product that that can really go they can take it to the market and be really competitive The acquisition that we just did with Nudura for the insulated concrete forms with Drive It is a powerhouse in terms of combining those opportunities. And so breaking down those silos work between Tremco and and, and drive it is is commencing. And so what did our our goal is that not that the groups that that these companies are in shouldn't be a limiting factor in terms of what they can do for each other. And so I think that that that cultural change is in the in the infancy we're already starting to see the benefits of it. And so I think that that's a real powerful thing. So one other example, we've talked about the tremendous growth in the restoration roof restoration coatings that Tremco has developed. For proprietary products, they've gone in about 5 or 6 years from single millions to $100,000,000 and Ed Voorhees, as President and CEO of rustoleum and his team, and Paul Hoganboom and JK Milliken who are here at Tremco Roofing and their team, are cooperating on bringing that technology into, some of the customer base of rustoleum. And what's interesting is traditionally, we shared technology on a cooperative basis such that a Tremco technology would go to market in a rustolium can. That's happening. But rustolium is also introducing Tremco to some of their customers to sell the Tremco brand. In the channels, Tremco can't get to on its own. So I would expect more of that to happen in the coming years. And, it's exciting when it happens. And when it happens and we celebrate it, it leads to more cooperation. And again, that's, that's the good part of our culture on front end side that I see continuing to enhance our ability on the revenue side. Yes. Thank you. Quick question on the earnings per share forecast. That does not include share buybacks, right? Just wanted to make sure. That does include share buybacks. That does include share buybacks. It does include share buybacks. When you look at the compounded annual growth rate of EBIT, of about 21.5% that's on the slide. And then the earnings per share would be in the in the low to slightly better, slightly worse. The principal reason for that is fiscal 2018, I think we had an 18% or 20% tax rate. And we're assuming a 26 percent or 27 percent tax rate for fiscal 2021. We have, as of today, including the redemption of the convertible bond and 1,300,000 shares in the open market. Already repurchased or eliminated on a fully diluted basis about 4,600,000 shares and we'll continue that. The second question I had was on CapEx, doesn't look like your run rates are coming down in spite of so much plant consolidation that you're doing? Why aren't you getting high returns on your Capital Spring. Courtney, do you want to answer that question on, the questions on CapEx run rate over the next 3 years? That's a hard question to answer. Basically, we're looking at our CapEx spending to be pretty much the same as it is. Now we're going to have less facilities, less roofs, less things to maintain. But we're also starting to consolidate manufacturing into other facilities. So as we spend on equipment or infrastructure so that we can move and close one facility, which keeps us from having to spend CapEx Our CapEx run rate is pretty much going to be the same through this, 2020 map to growth initiative. But I think we'll have a better answer to that on a go forward basis, as we better, develop the manufacturing footprint that we're moving to. Yes, Jeff. Jeff Zekauskas at JP Morgan. Just two brief questions first. How much is the IT spending to or the IT outlays to bring you down for this year of $83,000,000 run rate. How much will you realize in 2019? And then lastly, are management's compensation is management's compensation now tied to these targets? Go ahead. We'll answer the IT question. Go ahead. The cost of the IT conversions and migrations over the next 3 years, is at a run rate of about $40,000,000 to $50,000,000. And it's included in the total capital, assessment of $220,000,000. So it's already inclusive to that. It's included in there. Okay. Yes. On the compensation piece, the answer is yes. You know, we've, I think we've done a pretty good job. We'd certainly love to get your feedback of tying compensation to performance. My compensation reflects that over the last 2 years, and not terribly happy about it. And so we have a equity compensation piece, that covers about the 30 top leaders of RPM And that and a couple elements of what's been an ongoing, what we call Per's performance or unrestricted stock piece. For the first time for a broader group of people will be tied to the consolidated, not just these targets, with the consolidated participation in our equity programs. And so we have tied a significantly larger number of RPM leaders, including operating leaders, equity compensation to these RPM consolidated targets, not just to their individual group or operating company targets, and we think that's appropriate, particularly in the face of the program that we're undertaking. And then the third piece was What's the achieved cost synergies you expect this year versus the $83,000,000 run rate? I didn't hear the question. You repeat the question, Jeff? In your slide deck, you say this year you're going to knock out on a run rate basis $83,000,000 in costs. So how much would we actually achieve this year? Sure. We get roughly. What's that? Roughly. Yes, roughly about, call it, $25,000,000 or $30,000,000 this this year, mostly in the 3rd and 4th quarters. Okay. Thank you. When I look at the numbers and, you know, on your projections and just stopping at the EBITDA level, all of this is calculated assuming you are going make acquisitions and grow the top line at 5.6%. So let's pretend for a second that we are not going to make any acquisitions and top line will be 3 And can you still achieve that 560 basis points improvement in the EBITDA margin if you don't have the top line and the accretive acquisitions, which you usually do. So two things on that. In the model, we modeled in the acquisitions at $605,000,000 at a 40% gross margin and at a, common EBIT margin. So it actually served to bring down the gross margins and we just modeled them in on a steady state basis without getting too cute. Secondly, I can tell you definitively that not we or anybody else can achieve the margin enhancement that we're targeting here if you don't keep your top line. You cannot cut costs fast enough to chase a declining revenue base. And there's a lot of examples of that in the marketplace today. And we're very confident in those, revenue targets. As I said, our compounded annual growth rate over the last 20 years has been 6.7%. I think you'll see, I know you'll see this year and next year some enhancement to what we consider organic growth through price which has not been a critical element prior to the last year in our organic growth, but executing on our competing and winning in the marketplace with our companies and our like Nudura is critical to our achieving these results. The cost savings will be there, but the margin enhancement requires that we maintain or grow Hi, Mike Harrison with Seaport Global. I wanted to ask you a little bit about visibility and your current level of visibility on your business. Versus what you expect in the future. I would think with all of these ERP systems, all of these different P and Ls you're dealing with that in, in a lot of cases right now, you're the last to know, when something's going wrong. Do you expect that when all this said and done, that you're able to manage the business more effectively on a go forward basis. I think we will be able to manage the business more effectively. I don't think we have a visibility problem in terms of what is happening in our business. We don't have very good visibility out beyond 3 or 4 months in terms of what's happening in the marketplace. And so hopefully, as we get a little streamlined, that will improve. In some of our businesses, we do operate in a backlog, so they do have good visibility as to what coming over the next 6 or 9 months, but in many of our businesses, we do not. But, I don't think it's a control issue. Rusty Gordon referenced this it's the regulatory environment that's not kind to a decentralized structure. So you got too many accountants addressing SOX controls in small operations and it's not productive. So we've got a good visibility and we have a good control environment but it's too costly. And I think we can, both streamline, be more efficient, spend less money than the process, have a even better control environment. From that perspective. Thank you, Cliff Ransom. One of the things that happens in the creation of a continuous improvement culture as the behavior characteristics of the leadership has to change. Have you come across any major challenges to how you manage this business and as you look forward how you will manage this business. So I think, with cultural change, that's certainly true. I guess the best way I can answer that and then have Steve tackle that as well. There are some longstanding RPM leaders that a year ago, people might assume would be up here who are not because they were impediments to the change that needed to be made. And so we have made, a number of changes of leaders of some of our businesses most recently in Europe. We made a senior leadership change in our corporate office. We accelerated a leadership change at rustoleum. And, all those were necessary because we had great leaders that could step in those roles. And in many instances, the people they replaced were impediments, the change we needed to make. So the question is that we made changes about how we go about each day. We're making significant changes that are, are process driven on the plant floor everywhere. And I suppose it's the equivalent of Gordy showing up with his friends from Alex Partners and saying, I am from corporate, and I'm here to help. Which has not been normally part of our culture, but in our manufacturing culture, it's true. And Steve, Kanoux has developed a different rhythm that works for him, and I'll let him address that in terms of how he manages our operating leadership and manages the process of this reorganization. Steve? Well, it's been a big change. I mean, the fact of the matter is we've got the the the people up here who have risen to a new role and a more strategic role and thinking about that. And I I think what we didn't really get into was at our operating groups too, we've been elevating these resources to focus on these, systemic changes. So whether it's in the construction products group or consumer, we've we've elevated resources there to focus on this on a daily basis. And so The rhythm of of working on these issues with our operating groups is embedded in our daily life now. And and whether it's it's monthly or weekly reviews, I mean, the the changes in the strategy and the, the issues of of of, this program are in the forefront. And the and the the things that we have to overcome. And the fact of the matter is I've been really happy with the, the attitude and the, the cultural change that's happening at our at our organizations. I think that that was one of our our major concerns about this type of program, but it's been embraced. And Gordie can explain at the shop floor. I think that we've seen that, that people people wanna get better. And they understand that there's, a lot of challenges out there in the world. And they see this as an opportunity to maintain the aspects of our culture that are really, really positive and yet become world class in other areas that we have otherwise said we weren't really touching. And so I think that it's a real opportunity for us. Gorti? Yes, I think as you get on our plant floor, you get with plant managers and they've been waiting for this. So They have, embracing this opportunity. It's supported from the top down now. They see it across RPM. And for the first time, we are going across the groups, across the businesses, and we're communicating from one plant to other plant best practices. Benchmarks and those types of things, and people are bracing that. And people like to improve. It's exciting for them. John. John Roberts, UBS. It was mentioned you had a 20 percent IRR on recent acquisitions. I assume that excludes Kirker and Cinta And maybe you could break that down. Your small ones, I'm perceiving much better than your big ones, but you say you want to do more big ones in the future. The question relates to acquisitions. And our board asked us to, to, go as we've looked at capital allocation in face of this, and comparing internal investment with cherry purchases and our acquisition program to do a 5 year look back. And we did but we also did a reassessment because we spent plenty of time looking at Kirkland Cinta for the board. They didn't ask for it in that five look back because it turned out that Kirkland sent that had been done 6 years ago. So we didn't dodge that. Here's the outcome of that. The IRRs that Rusty talked about over that 5 year period on the small and medium sized deals on a collected basis is 18.8%. We're good at it. It's a really important part of our growth, and we're good at getting product lines that our companies can accelerate the growth on even more. And so that becomes part of our organic growth. There were 2 takeaways from that where we've not been very successful. And again, these are Kirk or incentive aside. Number 1, this is Kirker. And the other one that's not been very successful for us, and we're working on it from an operating perspective may end up being a key manufacturing point for us is SPS. Okay. What do Kirker and SPS have in common? This is my fault. They were both high margin, they were both unique, either of them had a brand. They were private label producers. It broke every rule that we've been talking about since my father started doing acquisitions. So rule number 1 is don't talk yourself into non branded private label producers because they happen to have high margins for a particular reason. Then the other rule that or lessen that we learned is the small ones that haven't succeeded have tended to be very small faraway locations that are freestanding. So if we do an acquisition in Norway and it's $5,000,000 or $6,000,000 and it's a great strategic fit, but the operating company isn't paying much attention to it. It tends not to do very well. We've had a handful of those And so the lessons, from that review with our board is our small bolt on product line acquisition and where it's appropriate having a family business choose RPM is working great. And those are unlevered IRRs. So I would tell you that we're doing as well as most of the private equity firms who compete in that space. But we ought to stay away from we ought to stick to our rules that we tell people for 40 years and we broke them twice in the last 6 years and we paid the price. And we can't fritter away capital in small chunks by buying small freestanding locations that are far away that people don't pay attention to. That appears to be the last of our questions. I want to just conclude by thanking everybody for being here. Particularly appreciate your investment in RPM. And, I also want to thank all the RPM leaders that showed up to to man the trade show. We had a fun dinner last night. And quite candidly, these are the people that drive our growth drive innovation in our industries and make RPM what it is today. And, we are all excited about this. When we combine that entrepreneurial approach of RPM with a world class backend from a competitive standpoint, we're going to kill everybody. We can't wait to get there. So thank you very much for being here, and thanks for your investment in RPN