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Robbins & Myers, Inc.

Robbins & Myers, Inc. April 17 th 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.

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Robbins & Myers, Inc.

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  1. Robbins & Myers, Inc. April 17th 2012 Yen-HuaHuang (Gina) Cheng- Yuan Huang Yu-Te Hung (Ted) Te-Chi Kuo (William)

  2. Agenda Overview Macroeconomics Industry Descriptions Company Descriptions Financial Analysis and Competitors Projections and Models Recommendation

  3. Brief Description: Robbins & Myers, Inc. (NYSE: RBN) is a leading supplier of equipmentand 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

  4. Robbins Myers Process Solutions Group Fluid Management Group Brief Description 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. Aims at customers in industrial, chemical, pharmaceutical, wastewater treatment, food and beverage, and other end markets.

  5. Fundamental Numbers at a Glance

  6. 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.

  7. Macroeconomics: • Trade-weighted index • World price of crude oil correlates demand • from mining • World price of steel Source from IBIS world

  8. Industry at a Glance: on Mining, Oil & Gas Machinery Manufacturing Source from IBIS

  9. Industry at a Glance: on Mining, Oil & Gas Machinery Manufacturing Source from IBIS world

  10. Industry at a Glance: On Diversified Machinery Manufacturing Source from IBIS world

  11. Industry at a Glance: Industry Cost Structure

  12. CompanyOverview 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

  13. Enterprise Business Profile markets.

  14. Product (FMG) Source from RBN website

  15. Product(PSG) Source from RBN website

  16. T-3 acquisition Operating Strategy • T-3 manufactures and repairs pressure, flow control and wellhead equipment for drilling and completion of oil and gas wells • Expands Robbins & Myers’ attractive energy business. • Creates opportunities for combined companies to reduce costs.

  17. Operating Strategy

  18. Divestiture of Romaco packaging business Operating Strategy • Designs, manufactures and markets packaging and secondary processing equipment for the pharmaceutical, healthcare, food and cosmetic industries • focused on engineered solutions for key customers.

  19. SWOT Analysis Strengths: 1.Higher profit margin (vs. competitor) 2.Aftermarket sales, Customers-led Weaknesses: • Impairment in the value of Goodwill • Currency fluctuation risks

  20. SWOT Analysis Enter into hedging transactions, primarily currency swaps

  21. Opportunities: 1.horizontal drilling is not only an effective way to reach these reserves, but also an effective way to improve drilling economics SWOT Analysis Source from RBN website

  22. Threats: • Regulatory and legal developments • Competition in our markets could cause our sales to decrease. (scenario DCF) • Product liability lawsuits(liability insurance coverage) SWOT Analysis

  23. 2 years stock performance Source from Yahoo Finance

  24. Competitors

  25. Relevant Stock Price Source from yahoo finance

  26. Joel Greenblatt (in million)

  27. Multiples

  28. Target Price from Multiple

  29. DuPont Analysis

  30. Assets Breakdown

  31. 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.

  32. 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

  33. FMG

  34. 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.

  35. PSG

  36. 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

  37. Required Return

  38. Risks Put more eggs in the same basket Competition in our markets could cause our sales to decrease Goodwill

  39. Recommendation Put in our watch list We already have shares of Diamond Offshore Drilling, Inc. in our Portfolio.

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