Transcript SWOT Analysis

Robbins & Myers, Inc.
April 17th 2012
Yen-Hua Huang (Gina)
Cheng- Yuan Huang
Yu-Te Hung (Ted)
Te-Chi Kuo (William)
Agenda
Overview
Macroeconomics
Industry Descriptions
Company Descriptions
Financial Analysis and Competitors
Projections and Models
Recommendation
Brief Description:
Robbins & Myers, Inc. (NYSE: RBN) is a
leading supplier of equipment and systems for
global energy, chemical and other industrial
markets. It is Houston based. Its business
includes products and services sold under many
brands, such as Robbins & Myers, T-3, Monyo,
Chemineer, Pfaudler and Edlon.
Source from RBN website
Brief Description
Robbins
Myers
Fluid
Management
Group
Provides mission-critical products
to customers in upstream oil & gas
markets for use in drilling and
exploration, production and
completion, as well as pipeline
transmission infrastructure.
Process
Solutions
Group
Aims at customers in industrial,
chemical, pharmaceutical,
wastewater treatment, food
and beverage, and other end
markets.
Fundamental Numbers at a Glance
Macroeconomics
-There is no slowdown in the energy sector.
-A sharp downturn in energy and mineral
exploration and production in late 2008.
-New orders emerge due to strong oil demand.
-A turning point formed in 2011 that the
subsequent gains has not been offset. Besides, the
oil & gas equipment industry is expected to grow at
an annualized rate of 4.6% through 2017.
-Shale gas starts to play a role in the growth.
Macroeconomics:
- Trade-weighted index
- World price of crude oil correlates demand
from mining
- World price of steel
Source from IBIS world
Industry at a Glance:
on Mining, Oil & Gas Machinery Manufacturing
Source from IBIS
Industry at a Glance:
on Mining, Oil & Gas Machinery Manufacturing
Source from IBIS world
Industry at a Glance:
On Diversified Machinery Manufacturing
Source from IBIS world
Industry at a Glance: Industry Cost Structure
Company Overview
1.The company traces its origins back to the 1889, and has
3,387 employees worldwide.
2. The sales of 2011 were $820 million, 72% higher than the
2010 number of $478 million
Enterprise Business Profile
markets.
Product (FMG)
Source from RBN website
Product(PSG)
Source from RBN website
Operating Strategy
O T-3 manufactures and repairs pressure, flow
control and wellhead equipment for drilling
and completion of oil and gas wells
O Expands Robbins & Myers’ attractive energy
business.
O Creates opportunities for combined
companies to reduce costs.
Operating Strategy
Operating Strategy
O Designs, manufactures and markets
packaging and secondary processing
equipment for the pharmaceutical,
healthcare, food and cosmetic industries
O focused on engineered solutions for key
customers.
SWOT Analysis
Strengths:
1.Higher profit margin (vs. competitor)
2.Aftermarket sales, Customers-led
Weaknesses:
1. Impairment in the value of Goodwill
2. Currency fluctuation risks
SWOT Analysis
Enter into hedging transactions, primarily currency swaps
SWOT Analysis
Opportunities:
1.horizontal drilling is not only an
effective way to reach these reserves,
but also an effective way to improve
drilling economics
Source from RBN website
SWOT Analysis
Threats:
1. Regulatory and legal developments
2. Competition in our markets could
cause our sales to decrease. (scenario
DCF)
3. Product liability lawsuits(liability
insurance coverage)
2 years stock performance
Source from Yahoo Finance
Competitors
Company's
Name
Ticker
Stock
Price
Forward
P/E
EPS
EBIT/TA
EBIT/EV
Robbins &
Myers Inc.
RBN
50.09
12.55
3.92
0.79
0.06
SPX
Corporation
SPW
75.68
12.41
3.55
0.45
0.06
Weatherford
International
Ltd.
WFT
13.81
7.67
0.34
0.17
0.07
Relevant Stock Price
Source from yahoo finance
Joel Greenblatt
Company's
Name
EBIT
Tangible
assets
Enterprise
Value
(in million)
EBIT/TA
EBIT/EV
Sum
Robbins &
Myers Inc.
131.343
165.626
2040
0.79
0.06
0.85
SPX
Corporation
316.8
698.7
5330
0.45
0.06
0.51
Weatherford
International
Ltd.
1217
7283
17720
0.17
0.07
0.24
Multiples
Company's
Name
Market Cap
RBN
2.2B
12.78
SPW
3.88B
WFT
Oil equip
Diversified
Machinery
Current PE Forward PE
Profit Margin
P/B
P/S
ROE
ROA
12.55
18.17%
2.01
2.26 11.76% 8.76%
18
12.41
3.31%
1.76
0.72
8.54% 3.72%
10.49B
35
7.67
2.02%
1.12
0.83
2.96% 4.10%
655B
25
NA
8.50%
5.3
NA
9.70%
NA
902.59M
10
NA
8.20%
5.7
NA 11.90%
NA
Target Price from Multiple
Current Price
$50.09
Average P/E
14.995
EPS
Target Price from Multiple
3.92
58.7804
DuPont Analysis
2008
2009
2010
2011
Profit Margin
11.10%
9.78%
5.33%
16.33%
Assets Turnover
91.03%
66.18%
58.53%
51.84%
Equity multiplier
167.76%
164.94%
166.39%
135.71%
Return on Equity
16.96%
10.68%
5.19%
11.49%
Assets Breakdown
Robbins & Myers Sees Big
Spurt From Shale Oil Drilling
•As horizontal drilling methods for oil in unconventional shale
plays have grown, drilling equipment maker Robbins & Myers
(RBN) has enjoyed a spurt of new orders.
•The firm has logged six straight quarters of double- or triple-
digit revenue and profit gains. In its most recent quarter,
reported March 27, earnings shot up 35% from the earlier year
to 84 cents a share while revenue jumped 39% to $255.9
million.
Growth of FMG
Demand for our energy products and
services remained robust and industrial
demand improved. Our primary objectives
for this segment are to increase our
manufacturing capacity to meet current
demand
FMG
Growth of PSG
• pricing has not fully recovered for European
chemical market capital goods. Our primary
objectives are to reduce operating costs in
developed regions, increase manufacturing
capabilities in low cost areas and increase
aftermarket opportunities.
PSG
Good News 4/12/2012
CEO of RBN, Peter C. Wallace said:
•"So whether gas rigs are up or oil rigs
are up, it really makes little difference
to us.“
•"What generally matters is the total
number of rigs along with the service
intensity of the rigs."
Source from RBN website
Current Shares (in thousands)
Required Return
45,886.00
Shares Outstanding
Current Share Price
$50.09
Beta
1.45
Equity Value
$2,298,429.54
Debt
$445.00
Leverage (Debt/Equity Ratio)
0.02%
Tax Rate
31.88%
Risk Free Rate (adjusted)
3.22%
Market Risk Premium
5%
CAPM (80%)
10.47%
ROE(20%)
11.08%
Cost of Equity
10.59%
Cost of Debt
12.38%
WACC
10.59%
Risk Premium
0.5%
Required Return
11.09%
Risks
•Put more eggs in the same basket
•Competition in our markets could cause our sales
to decrease
•Goodwill
Recommendation
Current RBN Price
$50.09 (2012/4/16)
P/E Multiple Price
$58.78
DCF Model Price
$44.08~$47.14
Target Price
$47.02~$49.47
Put in our watch list
We already have shares of Diamond Offshore Drilling, Inc. in
our Portfolio.