FINAL - GenCorp - Gabelli Presentation - Sept 2012[1]
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Transcript of FINAL - GenCorp - Gabelli Presentation - Sept 2012[1]
Ideas Powering Freedom
Gabelli 18th Annual AircraftSupplier Conference
Dick Bregard –Vice President & Deputy to the President – Aerojet-General Corporation
Kathy Redd – Vice President, Chief Financial Officer & Assistant Secretary – GenCorp Inc.
Forward Looking Statements
2Gabelli Conference - September 2012
Certain information contained in this report should be considered “forward-looking statements” as defined by Section
21E of the Private Securities Litigation Reform Act of 1995. All statements in this report other than historical information
may be deemed forward-looking statements. These statements present (without limitation) the expectations, beliefs,
plans and objectives of management and future financial performance and assumptions underlying, or judgments
concerning, the matters discussed in the statements. The words “believe,” “estimate,” “anticipate,” “project” and
“expect,” and similar expressions, are intended to identify forward-looking statements. Forward-looking statements
involve certain risks, estimates, assumptions and uncertainties, including with respect to future sales and activity levels,
cash flows, contract performance, the outcome of litigation and contingencies, environmental remediation and
anticipated costs of capital. A variety of factors could cause actual results or outcomes to differ materially from those
expected and expressed in our forward-looking statements. Important risk factors that could cause actual results or
outcomes to differ from those expressed in the forward-looking statements are described in the section “Risk Factors” in
Item 1A of our Annual Report to the Securities Exchange Commission on Form 10-K for the fiscal year ended November
30, 2011 and in our Form 10-Q for the period ended May 31, 2012. Additional risk factors may be described from time to
time in our future filings with the Securities and Exchange Commission.
Company Overview
3Gabelli Conference - September 2012
GenCorp Overview
4
LTM 5/31/12 net sales of $930.2 million
Aerojet - $921.3 million
Real Estate - $8.9 million
LTM 5/31/12 Adjusted EBITDAP(1) of $113.0
million (12.1% margin)
Funded backlog of $882 million
Total backlog of $1,314 million
LTM 5/31/12 free cash flow(1) of $68.2 million
LTM 5/31/12 operating cash flow of $91.9
million
Key Capabilities Enabling
Space and Launch Systems
Tactical Systems
Missile Defense and Strategic Systems
Advanced Programs
Specialty Metals
Significant Real Estate Holdings
(1) Non-GAAP Measure
$565 $566$674
$811 $804$902 $882
$718
$912
$1,035
$1,191
$1,377$1,422
$1,314
$0
$400
$800
$1,200
$1,600
FY06 FY07 FY08 FY09 FY10 FY11 Q2 2012Funded Backlog Total Contract Backlog
Funded and Total Backlog
Net Sales
$621.1
$745.4 $742.3$795.4
$857.9$918.1 $930.2
$0
$200
$400
$600
$800
$1,000
FY06 FY07 FY08 FY09 FY10 FY11 LTM5/31/12Net Sales
Gabelli Conference - September 2012
($ in millions)
($ in millions)
Distinct Businesses Concentrated inAttractive Growth Markets
Gabelli Conference - September 2012 5
Real Estate
TacticalPropulsion
Missile DefenseSystems
Satellite & SpacecraftPropulsion
Rio Del Oro
Glenborough /
Easton Place
Westborough
Mission critical provider of full-spectrumpropulsion capabilities
Value realization for 6,000 acres
Hillsborough
Aerojet
Strategic
Propulsion
Key Investment Considerations
6Gabelli Conference - September 2012
Large, diversified and well positioned program portfolio
Strong revenue and backlog visibility
Substantial Real Estate holdings additive to financial flexibility
Extended history of growth, increased profitability and strongcash flow generation
Proven management team focused on continued improvement
Aerojet
7Gabelli Conference - September 2012
Market Leader in Propulsion
Market leader in U.S. tactical missile propulsion,maneuvering propulsion systems for defensive missiles,in-space propulsion and government research anddevelopment of propulsion technology
Major role in next generation in-space satellite andexploration propulsion development
Critical to the Department of Defense (DoD) and NationalAeronautics and Space Administration (NASA)
Well-positioned in growth market segments
Gabelli Conference - September 2012 8
Aerojet Business Strategy
Deliver excellent performance in ourcore business
Drive initiatives across all aspectsof the operating model to maximizeour competitive posture
Create value by enhancing andexpanding the core and diversifyinginto broader markets
Deliver Drive Create
9Gabelli Conference - September 2012
Aerojet Core Competencies
10
Critical National Asset, Aligned with Long-Term DoD and
NASA Budget Priorities
National Priorities Core Competencies Current Programs Future Needs
Advanced Extra High Frequency (AEHF) Cubesat
Mobile User Objective System (MUOS) Leonidas
Global Positioning Satellite (GPS) Space Situational AwarenessSpace Based Infrared systems (SBIRS) Responsive Space
Small Satellites
Tube-launched Optically Wire-guided (TOW) Triple Target Terminator (T3)
Javelin Next Generation Missile (NGM)
Tomahawk GMLRS Plus (motors and warheads)Griffin
Guided Multiple Launch Rocket System (GMLRS)
Army Tactical Missile System (ATACMS)
Patriot Advanced Capability - 3 (PAC-3) PAC-3 Missile Segment Enhancement (MSE)
Terminal High Altitude Area Defense (THAAD) SM6Exoatmospheric Kill Vehicle (EKV)/GBI SM3 Blk 2B and targetsStandard Missile SM3 Blk 1B and SM3 Blk 2A
D-5 Post Booster Control system (PBCS) D-6 PBCS
MMIII Propuslion system Rocket Engine (PSRE) MMIV PSRELarge Class (LC)92" Second Stage Conventional Prompt Global Strike (CPGS)
Long Range Strike (LRS)
Evolved Expendable Launch Vehicle (EELV)
Delta 2
Taurus 2
Orion Solar Electric Propulsion (SEG) TUG
Blue Origin Multi Purpose Crew Vehicle (MPCV)Sundancer Commercial Crew (Dream Chaser, CST-100)
Command, Control,
Communications,
Computers,
Intelligence,
Surveillance and
Reconnaissance
(C4ISR)
In Space Propulsion
Ballistic Missile
Defense (BMD)
Solid/Liquid/Controllable
Propulsion, PressureVessels
Space AccessSolid, LiquidPropulsion
Strategic DeterrenceSolid Propulsion,
Warheads
Space ExplorationSolid, Liquid and
Electric Propuslion
Support the Current
War
Warheads, Solid
Propulsion
Advanced Booster
Gabelli Conference - September 2012
11
Diversified Program Portfolio…
Major Programs
Over 200 Long Term Contracts
Product line diversity allows continued growth and is the result of…
Strategic focus to create and maintain broad spectrum of propulsion and energetic products
Growing demand for our innovative energy management technologies
Solid and liquid propulsion teams brought together thus exploiting potential product line synergies
Program Primary Customer End Users Program Description Program Status
GMLRS Lockheed Martin U.S. Army Tactical solid rocket motors Production
Tactical Tomahawk Raytheon U.S. Navy Tactical solid rocket motors and warheads Production
PAC-3 Lockheed Martin U.S. Army Tactical solid rocket motors Development/Production
Javelin Lockheed Martin/Raytheon U.S. Army Tactical solid rocket motors Production
TOW Raytheon U.S. Army Tactical missile warheads Production
Standard Missile Raytheon U.S. Navy, MDA Tactical solid rocket motors, throttling divert andattitude control systems and warheads
Development/Production
Atlas V United Launch Alliance U.S. Air Force,Commercial, NASA
Solid "strap-on" booster motors, upper stagethrusters and separation motors
Production
THAAD Lockheed Martin MDA Tactical solid rocket motors Development/Production
EKV Raytheon MDA Liquid propulsion divert and attitude controlpropulsion systmes
Development/Production
Orion Lockheed Martin NASA Propulsion systems and engines for humanspaceflight system
Development/Qualification
Taurus 2/Antares Orbital NASA, Commercial Provide booster engines for launch vehicle Qualification/Production
In-Space Propulsion Lockeed-Martin, Loral,Boeing, Orbital, Astrium,European Launch VehicleJoint Venture, ThalesAlenia Space
Various Electric and liquid spacecraft thrusters, propellanttanks and bi-propellant apogee engines, altitudecontrol thrusters, integrated propulsion systemsand thrusters
Development/Production/Qualification
Gabelli Conference - September 2012
…With Enduring Program Life Cycles
Programs 1980 1990 2000 2010 2020
Guided MultipleLaunch Rocket System(MLRS)
Tactical Tomahawk
Patriot AdvancedCapability (PAC-3)
Javelin
TOW
Standard MissilePropulsion
Atlas V
THAAD
Exoatmospheric KillVehicle (EKV)
Standard Missile-3
Orion
12
EXTENDED RANGE MLRSGUIDED MLRS
MK106 MK11 MK135
EXTENDED RANGE
INTERCEPTOR (ERINT)
PATRIOT ADVANCED CAPABILITY -3 MISSILE SEGMENT ENHANCEMENT
2A 2B BUNKER BUSTER
MK30/MK 56 MK104 MK72
1B 2A
BLK0 GRIFFINBLK1
Revenue Sustainability and Stable Financial Base
Gabelli Conference - September 2012
13
Substantial Customer-FundedResearch and Development (R&D)
Research & Development
Technology Diversity and Product Line Synergies
Drive Competitive and Innovative Product Pipeline
GenCorp maintains an active research anddevelopment effort primarily supported bycustomer funding
Accounted for approximately 95% of cumulativeR&D expenses from 2009 - 2011
80% increase in company-funded R&D from2009 - 2011
Provides GenCorp a competitive advantage bylaying the groundwork for long-term productioncontracts
Top Current Development Programs
Program Mission AreaPrimary
CustomerEnd-Users
Standard Missile(SM-3)
Missile Defense RaytheonU.S. Navy,
MDA
OrionSpace &Launch
Lockheed Martin/Orbital
NASA
PAC-3 Tactical Lockheed Martin U.S. Army
EKV Missile Defense Raytheon MDA
THAAD Missile Defense Lockheed Martin MDA
Year Ended
($ in millions) 2009 2010 2011
Customer-Funded $ 245 $ 284 $ 276
Company-Funded 15 17 27
Total $ 260 $ 301 $ 303
Gabelli Conference - September 2012
14
Steady Increase in Backlog…
Significant new contract awards include:
Triple Target Terminator (T3)
Griffin missile propulsion upgrade
SM-3 Block IIB
Iridium Next Propulsion Program
Significant follow-on contract awards:
Aegis Ballistic Missile Defense StandardMissile-3 Throttling Divert Attitude ControlSystem
THAAD
Standard Missile MK-72 and MK-104
GMLRS
PAC-3
EKV
Incremental Contract Awards Provide Visibility Towards Future Growth
$565 $566
$674
$811$804
$902 $882
$718
$912
$1,035
$1,191
$1,377$1,422
$1,314
$0
$400
$800
$1,200
$1,600
FY06 FY07 FY08 FY09 FY10 FY11 Q22012
Funded Backlog Total Contract Backlog
Funded and Total Backlog
Of our 2011 total contract backlog, approximately46% is expected to be filled within one year
($ in millions)
Gabelli Conference - September 2012
15
…Leads to Revenue Growth and VisibilityAerojet Revenue
Strong and Predictable Business Mix Supports Improving Credit Profile
$614.6
$739.1 $725.5$787.2
$850.7$909.7 $921.3
$0
$200
$400
$600
$800
$1,000
FY06 FY07 FY08 FY09 FY10 FY11 LTM5/31/12
Highly visible revenue
Long term programs
Diverse and attractive contract base
Deep customer relationships
55%41%
4% Fixed-Price
Other
Cost-Reimbursable
36%
30%
34%26%
23%14%
19%
11%7%
Customers End UsersContract Type
Raytheon
LockheedMartin
All OthersNASA
U.S. AirForce
U.S.Navy
Missile DefenseAgency (MDA)
U.S.Army
Other
($ in millions)
Gabelli Conference - September 2012
5/31/12 LTM Aerojet Revenue Composition
Leading Change Focus Areas
16
Deliver Excellent Results Throughout the Transition
Key Player Recognized Leader
Initiatives
Enterprise Integration
Leadership Development
Program Management
Systems Engineering
Technology Development
Make/Buy Process
LEAN Manufacturing
Supply Chain
Shared Services
Business Systems
Knowledge Sharing
Gabelli Conference - September 2012
Easton Development Company, LLC
17Gabelli Conference - September 2012
Substantial Real Estate Holdings
GenCorp owns approximately 12,200 acres ofland in the Sacramento metropolitan area ofwhich 6,000 acres are undergoing entitlement
Development Agreement completed in 2011 for1,400 acres; project fully entitled
Located along a key growth corridor
Development opportunity with desirable in-filllocation
Regional long-term demographics are strong forpopulation and job growth
Real Estate holdings provide additional financialflexibility & value creation opportunities
18
Business Overview Regional Context
Easton ProjectsEnvironmentally
Unrestricted AcresEnvironmentallyRestricted Acres
TotalAcres
EntitledAcres
LimitedEntitlement
Acres
Glenborough & Easton Place 1,043 349 1,392 1,392 –
Rio del Oro at Easton 1,818 491 2,309 – 2,309
Westborough At Easton 1,387 272 1,659 – –
Hillsborough at Easton 532 97 629 – 629
Office Park and Auto Mall 47 8 55 55 -
Gabelli Conference - September 2012
Easton
6,044 Acres
18,508 Housing Units
12.7 Million Square FeetCommercial / Retail
19
Financial Overview
Gabelli Conference - September 2012
Net Sales and Adjusted EBITDAP
$ in millions
Adjusted EBITDAP (1)(2)
$ in millions
$621.1
$745.4 $742.3
$795.4
$857.9
$918.1 $930.2
0
100
200
300
400
500
600
700
800
900
1,000
2006 2007 2008 2009 2010 2011 LTM5/31/12
Aerojet Real Estate
Net Sales (1)
Notes: (1) From continuing operations
(2) Non-GAAP Measure
$59.1
$97.4 $95.4 $96.4
$110.7$115.4 $113.0
9.5%
13.1% 12.9%12.1%
12.9% 12.6%12.1%
0%
5%
10%
15%
20%
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 2011 LTM5/31/12
Consolidated Margin
Gabelli Conference - September 2012 20
Funded Awards and BacklogFunded Backlog
$565 $566
$674
$811 $804
$902$882
0
100
200
300
400
500
600
700
800
900
1,000
2006 2007 2008 2009 2010 2011 2012Q2
Funded Awards
$ in millions$ in millions
$687
$756
$845
$931
$850
$1,016$1,068
0
200
400
600
800
1,000
1,200
2006 2007 2008 2009 2010 2011 5/31/12LTM
Gabelli Conference - September 2012 21
As of November 30, 2011
Cash Flow
($32.1)
$2.0$6.7
$36.0
$131.2
$55.7
$68.2
(60)
(40)
(20)
0
20
40
60
80
100
120
140
2006 2007 2008 2009 2010 2011 LTM5/31/12
Notes: (1) Includes cash from Continuing and Discontinued Operations
(2) Non-GAAP Measure
Free Cash Flow(1)(2)
($13.1)
$23.8$28.0
$50.3
$148.1
$76.8
$91.9
(40)
(20)
0
20
40
60
80
100
120
140
160
2006 2007 2008 2009 2010 2011 LTM5/31/12
Cash From Operations(1)
Gabelli Conference - September 2012 22
$ in millions $ in millions
Cash Equivalents and Net Debt
$381.4
$354.0 $347.9
$312.3
$188.5
$138.4
$99.8
0
50
100
150
200
250
300
350
400
2006 2007 2008 2009 2010 2011 Q22012
Notes: (1) Includes cash and cash equivalents, restricted cash and marketable securities
(2) Non-GAAP Measure
Net Debt (2)
$81.0$92.3 $92.7
$126.3
$208.2
$188.0
$150.2
0
50
100
150
200
250
2006 2007 2008 2009 2010 2011 Q22012
Cash and Cash Equivalents(1)
Gabelli Conference - September 2012 23
$ in millions $ in millions
Historical Metrics
Net Leverage (1)
6.4x
3.6x 3.6x3.2x
1.7x1.2x
0.9x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
2006 2007 2008 2009 2010 2011 Q22012
Liquidity(2)
$141.2
$172.3 $172.7$185.5
$273.2 $270.9
$239.6
0
50
100
150
200
250
300
2006 2007 2008 2009 2010 2011 Q2 2012
Gross Debt Cash and Cash Equivalents
(1) Defined as funded debt less cash and cash equivalents/adjusted EBITDAP
(2) Defined as Revolver availability plus cash and cash equivalents.
$426.4$446.3 $440.6 $438.6
$396.7
$326.4
$250.0
0
100
200
300
400
500
2006 2007 2008 2009 2010 2011 Q2 2012
$81.0$92.3 $92.7
$126.3
$208.2$188.0
$150.2
0
50
100
150
200
250
2006 2007 2008 2009 2010 2011 Q2 2012
Gabelli Conference - September 2012 24
$ in millions $ in millions
$ in millions
Credit and Debt Maturity Profile
0
50
100
150
200
250
FY2012 FY2013 FY2014 FY2015 Beyond FY2015
Revolver (Unfunded) maturing November 2016
Term Loan maturing November 2016
9.5% Senior Subordinated Notes maturing August 2013
4.0625% Covertible Subordinated Notes Put in December 2014(1)
Other Debt (2)
Other financing lines/facilitiesavailable:
•$35M surety bond line•$10M lease line of credit•$5M P-card/T-card line
$ in millions
Debt Maturities As of May 31, 2012
Outstanding Letters of Credit - $60.6(1) Although debt matures in December 2039, projections assume notes do not convert and are put back to Company in December 2014
(2) Includes $250k of 2.25% Convertible Subordinated Debentures not put back to Company in November 2011 (due November 2024)
Total Funded Debt: $250.0M
Moody’s S&P
B1 B
$ in millions
Debt Maturities As of November 30, 2009
0
40
80
120
160
200
240
CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 Beyond 2014
Revolver (Unfunded) maturing June 2012
4.0% Contingent Convertible Subordinated Notes put tocompany in January 2010
2.25% Convertible Subordinated debentures maturingNovember 2024(2)
Term Loan maturing April 2013
9.5% Senior Subordinated Notes maturing August 2013
Outstanding Letters of Credit - $84.5
Total Funded Debt: $438.6M (1)
Moody’s S&P
B3 CCC+
Gabelli Conference - September 2012 25
Summary Highlights
Large, diversified and well positioned program portfolio
26
Strong revenue and backlog visibility
Substantial Real Estate holdings additive to financial flexibility
Extended history of growth, increased profitability and strongcash flow generation
Proven management team focused on continued improvement
A Proud Heritage – and an Exciting Future!
Gabelli Conference - September 2012
Ideas Powering Freedom
Gabelli 18th Annual AircraftSupplier Conference