Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — J.P. Morgan Diversified Industries Conference 2011
34 slides from Air Products And Chemicals's conference presentation, Jun 8, 2011
Slide 1: Investor Update
Investor Update Paul E. Huck Senior Vice President and Chief Financial Officer J. P. Morgan Diversified Industries Conference June 8, 2011
Slide 2: Forward Looking Statement
Forward Looking Statement Note: This presentation contains "forward-looking statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including earnings guidance, projections and targets. These forward-looking statements are based on management's reasonab
Slide 3: Air Products At a Glance
Air Products At a Glance Business Segment Sales Geographic Sales 33% 22% 39% 5% 41% 21% 32% 7% Tonnage United States Merchant Canada/Latin America Electronics & Performance Materials Europe Asia Equipment & Energy • $9B company • Diverse markets and geographies • Positioned for continued long-term v
Slide 4: Air Products Value Proposition
Air Products Value Proposition Profitable Growth • Stability - Long term contracts - Consistent and predictable cash flows - Strong balance sheet • Growth - Energy opportunities - Environmental solutions - Emerging markets • Improving returns - Margin improvement - Productivity - Increasing dividend
Slide 5: Air Products Supply Modes
Air Products Supply Modes Stability and Profitable Growth Onsite/Pipeline Package Gases & Specialty Materials 27% 40% 12% 21% 15-20 year Contracts Short-Term Contracts Limited Volume Risk Differentiated Positions Energy Pass through Onsite/Pipeline Liquid/Bulk Equipment & Packaged Gases & Services S
Slide 6: Financial Performance
Financial Performance 17% 15% 13% 11% Op Margin ROCE 9% FY04 FY08 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 6 non-GAAP, see appendix for reconciliation
Slide 7: Q2 Financials
Q2 Financials Fav/(Unfav) vs. ($millions, excluding items) Q2 FY11 Q2 FY10 Q1 FY11 Sales $2,501 11% 5% - Volume 11% 2% - Price 1% 1% - Energy/RM pass-thru (2%) 1% - Currency 1% 1% Operating Income $425 17% 5% Operating Margin 17.0% 80bp 10bp Net Income $309 16% 4% Diluted EPS ($/share) 1.41 15% 4% R
Slide 8: Macro Trends Drive Growth
Macro Trends Drive Growth Hydrogen Large-scale O2 Electronic Clean Water Energy Materials • Leading • Clean / efficient • Semiconduct • Wastewater, refinery H2 combustion or and TFT- drinking water supplier • Gasification LCD and water • Leader in H2 (IGCC, GTL, materials reuse fueling CTL, CTC) • S
Slide 9: Integrated Industrial Gas Model provides real benefits – locally and globally
Integrated Industrial Gas Model provides real benefits – locally and globally Supply Chain Market Global Leverage Tonnage/ Opportunity Scale Onsites • Co-product • New segments • Innovation economics − PG only • Productivity • Liquid − Bundled and best back-up • Sales practices Liquid/ − Greater • E
Slide 10: Integrated Model in China
Integrated Model in China Weihe PCEC • Onsite O2 & N2 • Largest Onsite • Liquid integration • Liquid integration Xingtai Steel • Existing Asset Purchase Beijing • New ASU • Liquid integration Xi’an Chengdu Shanghai PetroChina Guangzhou • First outsourced H2 for China Sanan Optoelectronics state-owne
Slide 11: Equity Affiliates
Equity Affiliates $2.3B revenue on 100% basis Important Source of Growth Italy Mexico India Thailand South Africa 11
Slide 12: Air Products: #1 Global H2 Position in high growth market
Air Products: #1 Global H2 Position in high growth market • Maintained 40+% share over 20 years (2 x closest competitor) • Significant Global Pipeline Networks • Highly probable Market Growth Drivers On-stream 2020 Increased On-stream Heavy Transportation On-stream 2010 Crude Fuels 2001 Air Products
Slide 13: Global H2 Market Growth
Global H2 Market Growth* ~10 BSCFD More geographically dispersed vs. earlier H2 investments 2800 MM scfd 800 MM scfd U.S. & Canada Europe 2500 MM scfd Asia 1500 MM scfd Latin America 2500 MM scfd Middle East & India *Based on estimates of H2 2008 -2018 awards, 13 on-stream by 2020
Slide 14: Hydrogen Pipeline Networks
Hydrogen Pipeline Networks Leading Global Hydrogen Provider Increasing Edmonton, Canada Refineries Global Sarnia, Canada Competitiveness via: Rotterdam • Higher Reliability Louisiana Thailand • Greater Southern Flexibility Singapore California • Improved Texas Efficiency • Economies of Scale 14
Slide 15: USGC H2 Pipeline Networks - 2010 / 2012
Air Products (Texas-Louisiana) USGC H2 Pipeline Networks - 2010 / 2012 TEXAS ExxonMobil • > 1billion SCFD LOUISIANA Baton Rouge of capacity ExxonMobil Motiva Marathon ExxonMobil Beaumont • > 20 plants Luling-2012 Geismar Lake Charles Motiva, • > 600 miles of ConocoPhillips, Citgo Valero pipeline dri
Slide 16: Tonnage Gases
Tonnage Gases Significant New Markets for Oxygen • Steel New Market - Asian infrastructure growth Growth for - Mill modernization Oxygen • Gasification 15% - Power - Feedstock independence 40% - Low BTU hydrocarbons 45% • Cleaner coal - Power - CO2 capture Steel Gasification 200,000-300,000 tons-per
Slide 17: Merchant Gases
Merchant Gases Strong growth in Asia • Largest Liquid/Bulk Share in China among China Liquid global majors Share 2009 – Majors • Leading Merchant positions in Taiwan, Korea and Thailand • Leading Merchant Gases supplier in India • Generating growth through applications and product expertise Asia Mer
Slide 18: Merchant Gases: Applications technology drives higher growth
Merchant Gases Applications technology drives higher growth Benefits Markets Applications Quality Productivity Environment Cleanfire® HRi™ Burner Glass Freshline® Dual Mode Freezer Food NitroFAS™ II Wave soldering Electronic Packaging enhancement O2 Proprietary Nozzles Cement For a
Slide 19: Electronics Revenue > $1Billion
Electronics Revenue > $1Billion Onsite Gas Supply FY10 Revenue 60% Specialty Gases & Chemicals 29% 11% Enabling Equipment Services Onsite Gas Supply Specialty Gases & Chemicals Enabling Equipment 19
Slide 20: Electronics: High Growth Markets
Electronics High Growth Markets • Growth across all key markets 150% LED - IC silicon (MSI) = 8% PV - TFT-LCD = 12% 100% TFT-LCD - PV = 25% Silicon (MSI) - LED = 30% 50% • Majority positions with 0% industry leaders - #1 in IC, TFT-LCD and 2010 2011 2012 2013 foundry • #1 in Electronic industry 2010
Slide 21: Performance Materials
Performance Materials Earth-Friendly Solutions Replacing Toxic Higher Efficiency Renewable or Emitting Insulation Content Materials Materials • Water-based • Reduced energy • Natural-based construction consumption surfactants for materials • Lower carbon I&I cleaning • Low emission footprint • Enabl
Slide 22: Energy & Equipment Leveraging Sustainable Global Trends
Energy & Equipment Leveraging Sustainable Global Trends Alt Fuel Energy from Carbon BF Plus H2/CNG/ Waste Capture and LNG/HCNG Storage Existing Leverage Leveraging Products + Experience and Leadership New Offering Innovation : Technology for and External for Steel Solutions for Renewable Funding Ind
Slide 23: Sustainability at Air Products
Sustainability at Air Products Environmental Social Business Value Stewardship Responsibility Governance Providing Responsibly Improving Working with innovative managing the quality of integrity and solutions for our footprint life for our accountability the world’s through employees for our most pr
Slide 24: Outlook
Outlook FQ2 2011 EPS $1.41 • Higher Merchant volumes • Improved cost performance • Higher E&PM volumes EPS • Lower tax rate • Tonnage - lower bonuses and higher maintenance costs • Lower Equipment results EPS • Japan uncertainty FQ3 2011 EPS $1.42-$1.47 FY 2011 EPS $5.65-$5.75 24 Non-GAAP, see appen
Slide 25: The Air Products opportunity
The Air Products opportunity Stability Growth Results • Long term contracts, • Solid backlog and consistent and strong growth predictable cash flow opportunities in all • Double-digit EPS • Diversified across geographies growth markets, geographies • New growth • ROCE 3-5% above cost and distributio
Slide 26: Appendix Slides
Appendix Slides
Slide 27: Non GAAP Appendix: ROCE FY04 and FY08
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 25.3 42.4 46.5 30.8 Earnings before tax as report
Slide 28: Non GAAP Appendix: ROCE Tax Rate FY04 and FY08
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) Income from Cont. Ops. Before Tax, after Noncontroll
Slide 29: Non GAAP Appendix: FY04 and FY08 Operating Margin
Non GAAP Appendix: FY04 and FY08 Operating Margin ($ Millions) GAAP Measure Non GAAP Ajusts. Non GAAP Measure FY04 and FY08 - Total Co. FY04 FY08 FY04 (1) FY08 (2) FY04 FY08 Sales 6,163.2 10,414.5 6,163.2 10,414.5 Operating Income 836.9 1,495.8 (49.0) 26.3 787.9 1,522.1 Operating Margin 13.6% 14.4%
Slide 30: Non GAAP Appendix: Operating Margin Trend
Non GAAP Appendix: Operating Margin Trend ($millions) Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Sales 2,195.3 1,955.4 1,976.2 2,129.3 2,173.5 2,249.0 2,252.3 2,351.2 GAAP Operating Income 114.1 260.4 143.8 328.0 345.0 340.6 336.4 367.0 GAAP Operating Margin 5.2% 13.3% 7.3% 15.4% 15.9% 15.1% 14.9% 15.6
Slide 31: Appendix: Q2 FY11 Results and Guidance
Appendix: Q2 FY11 Results and Guidance ($ Millions, except per share data) Non GAAP GAAP Measure Adjustments Non GAAP Measure $ % $ % Q211 vs. Q210 - Total Co. Q211 Q210 Change Change Q211 (1) Q210 (1) Q211 Q210 Change Change Sales 2,501.3 2,249.0 252.3 11% 2,501.3 2,249.0 252.3 11% Operating Income
Slide 32: Appendix: ROCE
Appendix: ROCE $ Millions Quarter Ended Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Numerator Operating Income Reported 260.4 143.8 328.0 345.0 340.6 336.4 367.0 360.6 419.5 Equity Affiliate Income 27.0 28.5 32.2 26.9 32.2 32.5 35.3 27.8 31.7 Earnings before tax as reported 287.4 172.3 360.2 3
Slide 33: Appendix: ROCE Tax Rate
Appendix: ROCE Tax Rate Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Reported Income Before Taxes 257.4 144.8 332.3 340.3 343.3 338.9 371.5 357.4 421.8 Tax Expense 66.5 25.4 86.3 83.5 84.9 77.6 93.5 81.5 110.3 Tax Rate Reported 25.8% 17.5% 26.0% 24.5% 24.7% 22.9% 25.2% 22.8% 26.1% ITEMS Operating In
Slide 34: Thank you… tell me more
Thank you... tell me more AIR PRODUCTS ZZ
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