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air products & chemicals 2007 Sep18 BofA
 

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    air products & chemicals 2007 Sep18 BofA air products & chemicals 2007 Sep18 BofA Presentation Transcript

    • Bank of America 37th Annual Investment Conference September 18, 2007 Mike Hilton VP and GM, Electronics and Performance Materials
    • Forward-Looking Statements NOTE: This presentation contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this presentation regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, overall economic and business conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by Air Products; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; consequences of acts of war or terrorism impacting the United States’ and other markets; the effects of a pandemic or epidemic or a natural disaster; charges related to portfolio management and cost reduction actions; the success of implementing cost reduction programs and achieving anticipated acquisition synergies; the timing, impact and other uncertainties of future acquisitions or divestitures or unanticipated contract terminations; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the impact of new or changed tax and other legislation and regulations in jurisdictions in which Air Products and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized. The company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this presentation to reflect any change in the company’s assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forward-looking statements are based. 2
    • Air Products At a glance $9B in sales FY’06 Diverse markets and geographies Positioned for continued long-term value creation FY06 Geographic Sales FY06 Segment Sales ROW Canada/Latin Tonnage (2%) Merchant America (4%) Gases Gases (25%) (31%) Asia United States (16%) (49%) Equipment & Energy Healthcare (6%) (6%) Europe (29%) Electronics & Chemicals Performance (10%) Materials (22%) 3
    • Value Proposition Profitable Growth Stability – Long term contracts – Consistent and predictable cash flows – Strong balance sheet Earnings growth – Volume loading – Pricing/margins – Productivity Improving margins – Strong deal quality – Good progress to date – Continued opportunity 4
    • Supply Modes Durable Business Models 10, 15 and 20-year contracts Take-or-pay minimum volumes Contractual energy pass-through Equipment & Formula escalation Services 19% Onsite/Pipeline 34% 3-5 year contracts Package Gases & Liquid/Bulk Regional business Specialty Materials 21% Cost pass-through/surcharges 26% % of consolidated revenues 5 (excludes Chemicals segment)
    • A Healthy Report Card Three consecutive years FY04 FY05 FY06 $7.8 $7.0 $8.9 Sales ($B)…………… $3.50 $2.53 $2.93 EPS* ($/share)……....... 9.3% 10.0% ORONA* (%) ………….. 11.3% SG&A as % of Sales*.... 12.2% 14.2% 13.5% Balance Sheet…………. “A” rating Dividend increase & Shareholder Value……. share repurchase 6 * Comparisons are non-GAAP. See appendix slide for GAAP reconciliation.
    • Consolidated ’07 YTD Financials: Continued Solid Performance Q3 YTD Q3 YTD FY06 FY07 Change Sales ($B) $6.5 $7.5 16% Diluted EPS ($/share)* $2.56 $3.21 25% ORONA (%)** 10.9% 12.2% 130bp SG&A as a % of Sales* 12.4% 11.8% (60bp) * Continuing Operations 7 ** Comparisons are non-GAAP, see appendix for reconciliation
    • Electronics & Performance Materials: A natural extension of what Air Products does best $2B+ segment under-pinned by technology, innovation Franchise positions / global leadership Strategic positions with leading customers Operationally excellent global supply chain Global process engineering capability Leading edge applied technology 8
    • Electronics Continued Strong Growth….. Global Leader ~$1.3 billion bulk gas, specialty material and equipment business Driven principally by: – Semiconductor (~85%) – LCD (~10%) Strong Volume Growth: – 20% CAGR over last 4 years Business Trends: – New materials for 45nm – Asia growth – Product simplification & controlling the value chain 9
    • Performance Materials Growth through Differentiation A global platform with >$700MM in sales #1 or #2 positions in targeted markets – Performance based sale 3 key product lines + new initiatives platforms – Epoxy curing Agents – Specialty Surfactants – Polyurethane Additives ~50% of sales outside of North America Formulated products that drive leadership positions Global supply chain, R&D, applied technology infrastructure 10
    • Electronics & Performance Materials Performance Metrics $MM $MM Operating Income & Margin Sales 250 15.0% 2500 10% CAGR 200 12.0% 2000 150 9.0% 1500 100 6.0% 1000 50 3.0% 500 0 0.0% 0 2004 2005 2006 2007E 2004 2005 2006 2007E • Strong top line growth over the past 4 Revenue by region ($, FY07F) years • Excellent profit and return improvement Asia (40%) • Near term focus on further improvement: North America (40%) Electronics Performance Materials - continued strong hit rate - mix improvement Latin America - portfolio restructuring - growth in adjacent (2%) Europe markets (18%) 11
    • Our FY’07 Commitments Achieve 12.5% ORONA this year Add Photo Capture profitable growth Improve Healthcare performance Simplify Electronics Restructure Chemicals Drive productivity to the bottom line 12
    • Beyond 2007 Growth Levers Large ($25MM+) projects on stream …10 in 2008 – 6 in Tonnage – 4 in Electronics Geographical Expansions – Central and Eastern Europe – Middle East – India – Asia New applications/products/markets – Energy – Performance Materials Productivity – Expand gross margins – Electronics/Healthcare/Europe business improvement 13 – Leverage SAP
    • Beyond 2007 Sustainable Double-Digit Growth At Superior Returns Targeting EPS growth between 10-15% 6-7% Market growth 2-4% New geographies/applications/products 2-4% Productivity/margin expansion 10-15% Total More Focused, Less Cyclical, Higher Growth, Higher Returns 14
    • Thank you tell me more www.airproducts.com
    • Appendix: Non GAAP Reconciliation ($ Millions, except per share data) GAAP Measure Proforma adjusts Non GAAP Measure Stock Option Expense FY04 FY05 FY06 FY04 FY05 FY06(1) FY04 FY05 FY06 Sales 7,031.9 7,768.3 8,850.4 7,031.9 7,768.3 8,850.4 SG&A 956.2 1,013.6 1,080.7 39.4 38.5 995.6 1,052.1 1,080.7 SG&A% of Sales 13.6% 13.0% 12.2% 14.2% 13.5% 12.2% Diluted EPS - Continuing Ops $2.66 $3.06 $3.29 (0.13) (0.13) 0.21 $2.53 $2.93 $3.50 (1) Global cost reduction plan charge 16
    • Appendix: ORONA Non-GAAP Reconciliation $ Millions Quarter Ended Jun-05 Sep 05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Operating Income Operating Income 257.6 258.0 253.5 282.6 291.9 232.9 332.3 324.7 364.6 Proforma Option Expense (11.1) (14.9) Global Cost Reduction Plan - - - - - 72.1 - - - Op Inc ex Global Cost Red/incl Option Expense 246.5 243.1 253.5 282.6 291.9 305.0 332.3 324.7 364.6 Assets Total Assets 10,309.8 10,408.8 10,624.9 11,032.5 11,290.8 11,180.7 11,500.0 11,878.0 12,568.8 Less Investment in Equity Affiliate 661.3 663.7 679.4 718.2 736.4 728.3 765.6 796.2 817.9 Less Current Assets Disc Ops 103.0 100.7 100.5 102.5 83.3 - - - - Less Non-Current Assets Disc Ops 142.1 133.5 130.7 128.5 126.4 - - - - Net Assets from Cont Ops 9,403.4 9,510.9 9,714.3 10,083.3 10,344.7 10,452.4 10,734.4 11,081.8 11,750.9 ORONA ex Global Cost Reduction Plan with Option Expense in all periods 4 Qtr Trailing Op Income 939.0 947.6 974.4 1,025.7 1,071.1 1,133.0 1,211.8 1,253.9 1,326.6 5 Qtr Avg Net Assets from Cont Ops 9,421.3 9,511.2 9,627.2 9,699.1 9,811.3 10,021.1 10,265.8 10,539.3 10,872.8 ORONA ex Global Cost Red. Plan w/ Option Exp. 10.0% 10.0% 10.1% 10.6% 10.9% 11.3% 11.8% 11.9% 12.2% ORONA for the Quarter (Op inc x 4 / 2 pt avg net assets) 10.3% 10.3% 10.5% 11.4% 11.4% 11.7% 12.5% 11.9% 12.8% 17