Robbins & Myers, Inc.

April 17th 2012Yen-Hua Huang (Gina)

Cheng- Yuan HuangYu-Te Hung (Ted)

Te-Chi Kuo (William)

AgendaOverviewMacroeconomicsIndustry DescriptionsCompany DescriptionsFinancial Analysis and CompetitorsProjections and ModelsRecommendation

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

Robbins Myers

Process Solutions

Group

Process Solutions

Group

Fluid Management Group

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.

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.

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

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

Company Overview

markets.

Enterprise Business Profile

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 AnalysisStrengths:

1.Higher profit margin (vs. competitor) 2.Aftermarket sales, Customers-led

Weaknesses:1.Impairment in the value of Goodwill2.Currency fluctuation risks

SWOT Analysis

Enter into hedging transactions, primarily currency swaps

SWOT AnalysisOpportunities: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 AnalysisThreats:1.Regulatory and legal developments2.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

Relevant Stock Price

Source from yahoo finance

Joel Greenblatt (in

million)

MultiplesCompany's

NameMarket Cap

Current PE

Forward PE

Profit Margin

P/B P/S ROE ROA

RBN 2.2B 12.78 12.55 18.17% 2.01 2.2611.76

%8.76

%

SPW 3.88B 18 12.41 3.31% 1.76 0.72 8.54%3.72

%

WFT 10.49B 35 7.67 2.02% 1.12 0.83 2.96%4.10

%

Oil equip 655B 25 NA 8.50% 5.3 NA 9.70% NA

Diversified Machinery 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 3.92

Target Price from Multiple 58.7804

DuPont Analysis2008 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

•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.

Robbins & Myers Sees Big Spurt From Shale Oil

Drilling

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

Growth of FMG

FMG

• 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.

Growth of PSG

PSG

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."

Good News 4/12/2012

Source from RBN website

Required Return

Current Shares (in thousands)

Shares Outstanding 45,886.00

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%

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

Risks

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

Recommendation

Put in our watch listWe already have shares of Diamond Offshore Drilling, Inc. in our Portfolio.