34 slides from Air Products And Chemicals's conference presentation, Feb 25, 2010
Slide 1: Morgan Stanley Global Basic Materials Conference
Morgan Stanley Global Basic Materials Conference Paul Huck, Senior Vice President and CFO February 25, 2010
Slide 2: Additional Information
Morgan Stanley Global Basic Materials Conference Additional Information • On February 11, 2010, Air Products Distribution, Inc., a wholly owned subsidiary of Air Products and Chemicals, Inc. ("Air Products"), commenced a cash tender offer for all the outstanding shares of common stock of Airgas, Inc
Slide 3: Certain Information Regarding Participants
Morgan Stanley Global Basic Materials Conference Certain Information Regarding Participants • Air Products and certain of its respective directors and executive officers may be deemed to be participants in the proposed transaction under the rules of the SEC. Security holders may obtain information r
Slide 4: Forward-Looking Statements
Morgan Stanley Global Basic Materials Conference Forward-Looking Statements • Note: This contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including earnings guidance and projections of the results of the Company’s propos
Slide 5: Offer to Acquire Airgas
Offer to Acquire Airgas
Slide 6: Airgas transaction highlights
Morgan Stanley Global Basic Materials Conference Airgas transaction highlights Consideration All-cash offer for all Airgas shares at $60.00 per share Premium Premium of 38% to Airgas’ closing price on 2/04/10 of $43.53 Accretion Expected to be substantially accretive to Air Products cash EPS in year
Slide 7: Compelling strategic and industrial logic
Morgan Stanley Global Basic Materials Conference Compelling strategic and industrial logic Creates one of the world’s leading integrated industrial gas companies • Largest industrial gas company in North America • Diversified across geographies and distribution channels with competitive positions in
Slide 8: Airgas at a glance
Morgan Stanley Global Basic Materials Conference Airgas at a glance Industries Served 2% 2% 2% Revenue (FY2009) $4.3B 3% 4% 7% 25% Total CAGR (over last 5 years) 19% 6% Same Store Sales Growth 7% 9% 27% 13% Industrial mfg. Repair & Maintenance Energy & Infrastructure Construction Medical Food & Beve
Slide 9: A world leading integrated industrial gas company
Morgan Stanley Global Basic Materials Conference A world leading integrated industrial gas company Air Products Airgas Pro-forma Revenues Revenues(1) Air Products Onsite Equipment & Onsite/Pipeline Liquid/Bulk 25% Equipment Services 37% 14% 10% & Services Liquid/Bulk 10% Specialty 17% Materials 14%
Slide 10: Benefits of an integrated industrial gas company
Morgan Stanley Global Basic Materials Conference Benefits of an integrated industrial gas company Mode of supply Integration benefit Tonnage Tonnage/Onsites • Co-product economics • Liquid back-up Liquid/Bulk • Sales coverage Bulk • Product supply/outlet Packaged Gases • Broader scope of industries
Slide 11: Synergies
Morgan Stanley Global Basic Materials Conference Synergies Supply Chain •Consolidate filling locations •Consolidate specialty gas plant locations •Move from local delivery to hub and spoke •Combine purchasing requirements •Utilize Shared Services for Packaged Gas operations and Product Management Ov
Slide 12: Growth acceleration
Morgan Stanley Global Basic Materials Conference Growth acceleration •New Offerings for US Packaged Gases −Integra® cylinders −300 BAR cylinders •Further expand Air Products’ offerings into key industries −Fabrication − Analytical −Construction − Medical −Pharmaceuticals − Food and Beverage •Utilize
Slide 13: GDP growth
Morgan Stanley Global Basic Materials Conference GDP growth ROW (13%) Japan North (5%) America (28%) Asia (excl. Japan) (35%) Europe (19%) GDP 2009 2013 Growth '09-'13 CAGR World 49.1 55.9 6.8 3.3% North America 15.0 16.9 1.9 3.0% Europe 16.6 17.9 1.3 1.9% Asia ex. Japan 8.3 10.7 2.4 6.6% Japan 4.5
Slide 14: Key measures
Morgan Stanley Global Basic Materials Conference Key measures Accretion/Dilution EBITDA Margin $0.80 26.0% $0.60 25.0% 24.0% $0.40 23.0% $0.20 22.0% $0.00 21.0% FY11 FY12 LTM-12/31/09 FY12 GAAP EPS Cash EPS • Transaction accretive in the • Synergies enable greater cash first year flow generation • S
Slide 15: Path forward . . .
Morgan Stanley Global Basic Materials Conference Path forward . . . Litigation • Commenced litigation in Delaware Tender offer • Offer commenced Feb 11 Air Products • Financing committed committed to Regulatory process completing the • Prepared to make transaction appropriate divestitures Proxy cont
Slide 16: Air Products Financial Performance
Morgan Stanley Global Basic Materials Conference Air Products Financial Performance FY04 thru FY08 H109 H209 Q110 Sales ( CAGR/ % chg vs PY ) 14% (16%) (25%) (1%) Operating Margin * 12.8% 1.8% 14.6% 13.2% 15.5% 15.9% EPS Cont Ops.* 21% (24%) (16%) 20% ROCE (4 quarter trailing)* 9.6% 3.4% 13.0% ROCE
Slide 17: We have Multiple Growth Opportunities
Morgan Stanley Global Basic Materials Conference We have Multiple Growth Opportunities Energy Environment Emerging Markets Hydrogen for refining Oxyfuel Electronics across Asia Oxygen for gasification Carbon capture Equity Affiliate positions LNG heat exchangers Multiple Gas Applicat
Slide 18: Merchant Business Applications Driven Growth
Morgan Stanley Global Basic Materials Conference Merchant Business Applications Driven Growth Cleanfire® HRi™ Efficient oxygen burner plant design A winning combination! 18
Slide 19: Merchant Business
Morgan Stanley Global Basic Materials Conference Merchant Business Winning New Customers with Industrial Gases Integra® Cylinders 19
Slide 20: Tonnage Gases Hydrogen Still Fueling Future Growth
Morgan Stanley Global Basic Materials Conference Tonnage Gases Hydrogen Still Fueling Future Growth Outsourcing 15% Clean Fuels 15% Conversion 45% Refinery Conversion Crude 25% Low-Conversion High-Conversion Refinery Refinery Transportation Fuel 46% Transportation Fuel 82% Other 20% Residual Fuel 34
Slide 21: Tonnage Gases Significant New Markets for Oxygen
Morgan Stanley Global Basic Materials Conference Tonnage Gases Significant New Markets for Oxygen •Steel −Asian infrastructure growth −Mill modernization •Gasification −Power −Feedstock independence −Low BTU hydrocarbons •Cleaner coal −Power −CO2 capture 200,000-300,000 tons-per-day new oxygen capac
Slide 22: Tonnage Gases Growth from new investments
Morgan Stanley Global Basic Materials Conference Tonnage Gases Growth from new investments Projected 2010 Superior returns: • Marathon Garyville • Ann Joo Steel Malaysia Continuous • XOM Baton Rouge • US Steel Nanticoke, Ont. improvement • Total Port Arthur • Shadeed Steel Oman Operating • XOM Bayto
Slide 23: Electronics Significant Opportunity in Thin-Film PV
Morgan Stanley Global Basic Materials Conference Electronics Significant Opportunity in Thin-Film PV •Flat panel experience = differentiated advantage in thin film technologies •Comprehensive offerings and turnkey solutions through SunSource™ Solutions portfolio 1 GW facility = $100+MM in annual rev
Slide 24: Equity Affiliates Important Source of Growth
Morgan Stanley Global Basic Materials Conference Equity Affiliates Important Source of Growth Italy Mexico India Thailand South Africa 24
Slide 25: FY'10 Full Year Outlook Update
Morgan Stanley Global Basic Materials Conference FY’10 Full Year Outlook Update ● FY’10 overall… expecting a FY’09 Adjusted Diluted EPS $4.06 gradual and modest recovery – Merchant loading – Tonnage new projects/loading ● WW manufacturing growth – E&E similar to last year – Globally up 1% to 2% –
Slide 26: The Air Products Opportunity
Morgan Stanley Global Basic Materials Conference The Air Products Opportunity STABILITY GROWTH RESULTS • Long term contracts, • Solid backlog and • Double-digit EPS growth consistent and strong growth predictable cash flow opportunities across all • ROCE 3-5% above cost of geographies capital • Dive
Slide 27: Thank you
Thank you www.airproducts.com
Slide 28: Non GAAP Appendix – Year over Year Deltas
Morgan Stanley Global Basic Materials Conference Non GAAP Appendix – Year over Year Deltas ($ Millions, except per share data) GAAP Measure Non GAAP Ajusts. Non GAAP Measure BP FY04 and FY08 - Total Co. FY04 FY08 FY04 (1) FY08 (2) FY04 FY08 CAGR Change Sales 6,163.2 10,414.5 6,163.2 10,414.5 14.0% O
Slide 29: Non GAAP Appendix – Half Year Deltas
Morgan Stanley Global Basic Materials Conference Non GAAP Appendix – Half Year Deltas ($ Millions, except per share data) First Half FY09 Second Half FY09 6 months 6 months GAAP Measure Q109 Q209 to date Q309 Q409 to date Sales 2,195.3 1,955.4 4,150.7 1,976.2 2,129.3 4,105.5 Operating Income 114.1 2
Slide 30: Non GAAP Appendix – ROCE FY04 and FY08
Morgan Stanley Global Basic Materials Conference Non GAAP Appendix – ROCE FY04 and FY08 $ Millions FY04 FY08 Quarter Ended Q403 Q104 Q204 Q304 Q404 Q407 Q108 Q208 Q308 Q408 Numerator Operating Income Reported 181.7 200.2 231.3 223.7 380.4 348.6 393.7 373.1 Equity Affiliate Income 17.8 19.2 19.8 21.8
Slide 31: Non GAAP Appendix – ROCE Tax Rate FY04 and FY08
Morgan Stanley Global Basic Materials Conference Non GAAP Appendix – ROCE Tax Rate FY04 and FY08 Q104 Q204 Q304 Q404 Q108 Q208 Q308 Q408 Reported Income from Cont. Ops. Bef. Tax 169.0 187.6 221.8 217.6 364.9 352.1 400.7 361.1 Noncontrolling Interest (1.9) (4.1) (3.3) (2.5) (6.1) (4.5) (7.6) (4.8) In
Slide 32: Non GAAP Appendix – First/Second Half FY09 and Q1 FY10
Morgan Stanley Global Basic Materials Conference Non GAAP Appendix – First/Second Half FY09 and Q1 FY10 $ Millions Quarter Ended Q308 Q408 Q109 Q209 Q309 Q409 Q110 Numerator Operating Income Reported 393.7 373.1 114.1 260.4 143.8 328.0 345.0 Equity Affiliate Income 46.5 30.8 24.5 27.0 28.5 32.2 26.9
Slide 33: Non GAAP Appendix – ROCE Tax Rate FY09 and Q1 FY10
Morgan Stanley Global Basic Materials Conference Non GAAP Appendix – ROCE Tax Rate FY09 and Q1 FY10 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Reported Income from Cont. Ops. Bef. Tax 400.7 361.1 102.1 257.4 144.8 332.3 340.3 Noncontrolling Interest (7.6) (4.8) (5.0) (1.6) (4.8) - (5.0) Income from Cont. Op
Slide 34: Non-GAAP Appendix: FY10 Guidance
Morgan Stanley Global Basic Materials Conference Non-GAAP Appendix: FY10 Guidance ($ Millions, except per share data) FY10 Guidance vs. FY09 Diluted EPS Continuing Ops FY09 GAAP $3.00 FY09 Global Cost Reduction Plan $0.94 FY09 Pension Settlement $0.02 FY09 Customer Bankruptcy and Asset Actions $0.10