3 AirBoss of America Corp., develops, manufactures, and sells rubber-based products for military, transportation, and industrial markets in North America and Europe The company was founded in 1989 as IATCO Industries, Inc. and changed its name to AirBoss of America Corp. in AirBoss of America Corp. is headquartered in Newmarket, Canada (1)Excludes Railway division which was sold in December 2008 (2)As per consensus analyst estimates AirBoss of America Corp. EBITDA (C$ Millions) (1)
4 Investment Highlights North America’s premier industrial rubber producer Profitable Company since 1995 2008 adjusted EPS of $0.29 (P/E of 9.7x) Rubber Compounding #1 supplier of rubber products to the North American mining and coal industry Second largest rubber compound manufacturer in North America Low exposure to the automotive sector. Gaining market share from competitors that are highly exposed to this challenging sector Industry ripe for consolidation AirBoss-Defense World leader in the supply of CBRN protective gloves and boots AirBoss-Defense is an operating division of the Engineered Products segment Sole source supplier of gas masks to Canadian DND US Expansion to service increased demand for US military Actively seeking acquisition opportunities Relatively high insider ownership (23%). Highly motivated management team with a focus on enhancing shareholder value.
7 AirBoss Rubber Compounding Overview Represents approx. 65% of total revenue Manufactures over 1,000 different un-vulcanized custom compounds from synthetic or natural rubber, strengthening agents and various additives and chemicals, for a wide variety of customers in North America Total mixing capacity of over 200 million pounds annually Overview Note: Excludes H.O. Costs
8 AirBoss Rubber Compounding History Dec. 1996, purchased the former Uniroyal Goodrich north tire plant in Kitchener Ontario. Plant had 100 million lbs capacity and 25 million lbs of business In two years sales were increased to 95 million lbs Oct. 2000, Kitchener doubled rubber compounding capacity to ~ 180 million lbs capacity through the installation of a new mixer. Feb. 2007, new facility in Scotland Neck, NC was fully operational with production capacity of ~ 50 million lbs. Kitchener- Replacement Cost: US$50 millionScotland Neck- Replacement Cost: US$15 million
9 AirBoss Rubber Compounding Products ARC manufacturers over 1,000 different un-vulcanized custom compounds from synthetic or natural rubber, strengthening agents and various additives and chemicals. Formulas are developed by ARC ’ s chemists and technical staff to meet specific customer requirements. End uses for the rubber compounds include: Conveyor Belting, Mining and Industrial, Solid Tire, Defense, and Auto and Truck Parts. 44% 25% 12% 10% 9% Conveyor BeltingSolid Tire Defense Auto and Truck Parts Mining and Industrial
10 AirBoss Rubber Compounding Key Success Factors Operating in a challenging environment, leading the industry Leading supplier to mining and coal product manufacturers Targets non-automotive/high volume applications Low proportion of automotive customers Tire company equivalent technology Equipment and development capabilities State of the art, highly automated equipment Accredited development lab Ability to source raw materials worldwide Will benefit in 2 nd half of 2009 as a result of lower raw material input costs
11 AirBoss Rubber Compounding Key Success Factors cont. Product quality and consistency Industry consolidator with downstream acquisition opportunities Competitive advantages Large capacity, state-of-the-art equipment and high level of automation Maximize efficiency due to larger batch size and shorter production cycles Utilize world-wide purchasing and strong technical staff in the dedicated labs. Consistent output
12 AirBoss Engineered Products Overview AirBoss Engineered Products generates approx. 35% of AirBoss of America’s consolidated revenue This segment consists of two operating divisions: AirBoss-Defense and the Industrial Products Group AirBoss-Defense accounts for over 70% of Engineered Products revenue
13 AirBoss-Defense manufactures protective wear for military and first response applications including gas masks, rubber gloves, boots, over-boots for military applications requiring CBRN contaminant protection, extreme cold weather ("ECW") footwear protection for military use and rubber compounds and pre-forms for military tank track repair. Products include: AirBoss Engineered Products AirBoss-Defense – Products AirBoss Moulded GloveAirBoss Lightweight OverbootC-4 Gas Mask
14 Strong relationships and history of significant sales with the US, Canadian and UK militaries as well as most NATO countries. Selected as sole supplier of CBRN over boots and CBRN Type 2 gloves to the US Military Joint Services (“USJS”) procurement initiative: Original contract worth up to US$78 million for boots and US$90 million for gloves if options exercised over 5 year term. Awarded UL certification in 2006 for world’s first NFPA compliant rubber firefighter boot that provides CBRN Contract to supply gas masks to the Canadian DND with a potential value of $14 million over 5 years. AirBoss Engineered Products AirBoss-Defense – Highlights
15 AirBoss Engineered Products AirBoss-Defense – Financial Overview AirBoss-Defense EBITDA positively impacted by volume, product mix and exchange
16 AirBoss-Defense Key success factors CBRN Protection Technology US Military testing confirms that AirBoss-Defense products offer significantly superior performance Proprietary rubber compounds Economies of scale is enhanced through increased product volume Commitment to Product Development – next generation products Injection moulded boot Gas mask Joint advancement of related polymer science with Canadian government
17 AirBoss-Defense is expanding in the U.S. market New US manufacturing site in production January 2010 Burlington VT location operating at two shifts in February Capacity for surge in orders of gloves and boots Next Generation CBRN footwear More efficient injection moulding manufacturing will increase margins Actively seeking complementary acquisitions AirBoss-Defense U.S. Expansion
18 AirBoss Engineered Products Industrial Products Group – Products Industrial Products Group produces calendared and extruded rubber products used in the manufacture of industrial and recreational products. Produces non-vulcanized products for tire re-treading, recreational vehicles and other industries. Products sold in North America to companies requiring large-scale high volume calendered (rubber on fabric) or extruded rubber including reinforced moulded products. 3 customers account for > 80% of total the approx $24 million in annual sales.
19 Financial Metrics AIRBOSS OF AMERICA CORP.
20 Summary Overview AirBoss-Defense will continue to experience an increase in demand and $17 to $20 EBITDA range probable depending on exchange Historical EBITDA for the Rubber Compounding division is $12 to $14 million; A return to normalized levels is possible within the next two years Strong balance sheet with strong working capital and declining debt Seeking acquisitions in Defense and polymer products
22 Management Gren Schoch, Chairman of the Board Gren Schoch is a professional engineer and ran a successful engineering and geological services company, MPH Consulting, between 1976 and In 1982, he also founded and chaired Petromet Resources, a junior oil and gas exploration company that was sold to Talisman Energy for more than $900 million in Since 1989, Gren has been the Chairman and substantial shareholder of AirBoss. Robert Hagerman, President and Chief Executive Officer Robert Hagerman obtained his CA designation in 1976 and was employed in the Montreal and later the London office of Price Waterhouse for 12 years in Audit, Insolvency, and Mergers and Acquisitions. Robert, one of the original founders and directors of AirBoss, was appointed CEO in 1992 and has been instrumental in growing the Company ever since. Stephen Richards, Vice President, Finance and CFO Stephen Richards obtained his CA designation in 1988 and was employed with Ernst & Young over a seven year period involved in various Audit, Insolvency and Management Consulting assignments. His primary responsibilities in his career with various transportation and manufacturing companies included strategic planning, systems development and performance improvement. In his previous role Mr. Richards served as Vice President of Finance for Clarke Inc., a TSX-listed transportation company, and joined AirBoss in April, Robert Dodd, Executive Vice President Robert Dodd has held either Director or VP roles at 3 previous employers prior to joining AirBoss. At Trelleborg, he was on the Board of Directors of their North American company TSS US Inc. Robert has a proven change management track record and also has prior expertise in developing and executing business strategies for both international and domestic markets in an executive capacity. With his prior experience of developing acquisition targets in India and Brazil and his recent achievement of establishing a green field site in Shanghai, China, Robert brings a wealth of international and diverse experiences to his role within AirBoss. Earl Laurie, President, AirBoss-Defense Division Earl Laurie has run the sales, marketing and contract administration of the defense products business of Acton– International Inc. since inception. With the purchase of Acton-International by AirBoss in 1999 and the reorganization into AirBoss Engineered Products (“AEP”) in 2005 Mr. Laurie is now responsible for the operations of AirBoss-Defense, the defense products division of AEP and has been instrumental in its growth.