Fmc Corporation · NYSE:FMC
Fmc — Credit Suisse First Boston 16th Annual Chemical Conference 2003
26 slides from Fmc's conference presentation, Sep 19, 2003
Slide 1: Credit Suisse First Boston 16th Annual Chemical Conference
Credit Suisse First Boston 16 th Annual Chemical Conference September 18 th , 2003 William G. Walter Chairman, President and CEO
Slide 2: Disclaimer
Disclaimer Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: These slides and the accompanying presentation contain “forward-looking statements” that represent management’s best judgment as of the date hereof based on information currently available. Actual results of
Slide 3: FMC Corporation
FMC Corporation Diversified chemical company with leading market positions in industrial, consumer and agricultural markets globally ($ million, 12/31/02) FMC Sales: $ 1,852.9 EBITDA: $ 313.7 Margin: 16.9 % Industrial Chemicals Specialty Chemicals Agricultural Products Sales: $ 753.4 Sales: $ 488.2
Slide 4: Industrial Chemicals: Group Overview
Industrial Chemicals: Group Overview 2002 Consolidated Sales: $753.4 million [GRAPHICS] Excludes phosphorus chemicals sales at Astaris JV of $445.7 million, largely in North America v #1 North American manufacturer of soda ash, peroxygens and phosphorus chemicals v Backward integration into natural
Slide 5: Industrial Chemicals: Financial Performance
Industrial Chemicals: Financial Performance ($ in millions) [GRAPHIC] – ’01-’02 recession and overcapacity – Capacity mothballs and shutdowns – Significant cost savings in 2002 – In 2003, weak performance at Astaris to result in lower earnings 1 Incudes $79.2 million of phosphorus sales prior to for
Slide 6: Industrial Chemicals: Price Recovery
Industrial Chemicals: Price Recovery Businesses are in various early stages of recovery v Price recovery in hydrogen peroxide – Volume growth of 2-3% expected in 2003 – Effective capacity utilization above 90% – 5-cent price increase announcement now in negotiation for 2004 v Improving capacity util
Slide 7: Specialty Chemicals: Group Overview
Specialty Chemicals: Group Overview 2002 Consolidated Sales: $488.2 million [GRAPHIC] v BioPolymer: – Adds structure, texture and stability to food – Acts as a binder & disintegrant for dry tablet drugs – Market leader in each product line v Lithium: – One of two global, integrated manufacturers – F
Slide 8: Specialty Chemicals: Financial Performance
Specialty Chemicals: Financial Performance ($ in millions) [GRAPHIC] – BioPolymer growth of 5% CGR driven during the ‘00-’02 period – Decline in lithium sales due to exit of commodity lithium carbonate – Good growth in 2003 to be highlighted by steady BioPolymer growth and a recovery in lithium Note
Slide 9: Specialty Chemicals: Growth Platforms
Specialty Chemicals: Growth Platforms Leading positions in enabling chemistries with high growth rates v BioPolymer franchises in food ingredients and pharmaceutical formulation: – Leading global position in markets growing at 3-5%: microcrystalline cellulose, carrageenan and alginates – Industry le
Slide 10: Agricultural Products: Group Overview
Agricultural Products: Group Overview 2002 Consolidated Sales: $615.1 million [GRAPHIC] v Manufacturer of proprietary, branded insecticides and herbicides v Key crops: cotton, corn, rice, cereals and vegetables v FMC differentiated by: – Concentration in insecticides – Focus on select crops and regi
Slide 11: Agricultural Products: Financial Performance
Agricultural Products: Financial Performance ($ in millions) [GRAPHIC] – Global crop recession since 1997 – Steady ’00-’02 sales growth in pyrethroid insecticides of 5% CAGR – Sulfentrazone row crop peak in 2000 – 2002 refocusing on insecticides, key crops and select regions – Modest growth in 2003
Slide 12: Agricultural Products: Productivity and Growth
Agricultural Products: Productivity and Growth Cost reduction and focused R&D to drive earnings growth v Production outsourcing strategies to continue to result in significant cost savings v Nearer-term revenue growth to be driven by new labels and promising ISK chemistry: – New labels in core, pate
Slide 13: FMC's Strengths
FMC’s Strengths Great businesses in a diverse portfolio v Leading market positions v Global presence v Diversified business mix and high-quality customer base v Diversified and integrated cost structure v Focused R&D and strong applications expertise v Proven management with extensive industry exper
Slide 14: FMC Valuation
FMC Valuation For all our strengths, we continue to be grossly undervalued Enterprise Value to Trailing EBITDA* (as of September 16th, 2003) [GRAPHIC] S&P 400 Chemicals Index Components Source: Bloomberg Financial and SEC Filings *Reconciliation to GAAP measure available at Conference Calls and Pres
Slide 15: Unlocking Shareholder Value
Unlocking Shareholder Value v Maximize and realize operating leverage v Create greater financial flexibility v Focus the portfolio on higher growth businesses
Slide 16: Maximize and Realize Operating Leverage
Maximize and Realize Operating Leverage Industrial Chemicals price recovery is only a matter of time v Capacity utilizations continue to tighten following capacity mothballs and steady demand growth v Price recovery has begun in hydrogen peroxide, and price outlook in soda ash is improving v Recover
Slide 17: Maximize and Realize Operating Leverage
Maximize and Realize Operating Leverage About ~1 cent per lb. increase in hydrogen peroxide has been achieved in 2003; several more cents possible in 2004 [GRAPHIC]
Slide 18: Maximize and Realize Operating Leverage
Maximize and Realize Operating Leverage Soda ash price announcements for 2004 have begun; consolidation continues with Solvay’s acquisition of American Soda [GRAPHIC] Source: Isonex/USGS and FMC
Slide 19: Creating Greater Financial Flexibility
Creating Greater Financial Flexibility v Reduce working capital by at least $25-30 million in 2003 v Manage capital expenditures at or below D&A v Generate strong free cash flow beginning in 2004 v Reduce net debt by $300 million by the end of 2006
Slide 20: Creating Greater Financial Flexibility
Creating Greater Financial Flexibility Very little free cash flow to reduce debt in 2003, but significant free cash possible in 2004 and beyond Expected EBITDA* ~$300 --------Increasing------ ® Pre-Tax Interest** $100 -------Decreasing------ ® Capital Expenditures $ 85 -----Relatively Flat---- ® Leg
Slide 21: Creating Greater Financial Flexibility
Creating Greater Financial Flexibility Restructuring and refinancing the Astaris JV v Weak Astaris performance in 2003 despite cost savings – Lower sales due principally to 4-5% drop in selling prices – Lack of a $25 million power resale benefit ($12.5 million to FMC) – Over $40 million decline in o
Slide 22: Focus the Portfolio on Higher Growth Businesses
Focus the Portfolio on Higher Growth Businesses Key metrics: profit contribution, return on capital and sales growth [GRAPHIC] Note: “EBIT” and “Capital Employed” defined in Glossary of Financial Terms on the web at http://ir.fmc.com
Slide 23: Focus the Portfolio on Higher Growth Businesses
Focus the Portfolio on Higher Growth Businesses v Growing Specialty Chemicals v Maintaining and enhancing value of Ag Products business v Managing Industrial Chemicals for cash $’s R&D Licensing/ Partnering $’s Cap. Expend. Bolt-on Acq(s). Spec. Chemicals Increase Yes ³ D&A Yes Ag. Products Increase
Slide 24: Focus the Portfolio on Higher Growth Businesses
Focus the Portfolio on Higher Growth Businesses Opportunistically manage the portfolio to achieve focus v Dispose of product lines, markets or divisions consistently performing below the cost of capital v Divest those businesses in which another company places a higher value
Slide 25: Significant Earnings Leverage
Significant Earnings Leverage FMC strategies to add $4 per share to today’s trough levels v Recovery in Industrial Chemicals v Growth in Agricultural Products and Specialty Chemicals v Debt reduction of $300 million by the end of 2006 [GRAPHIC]
Slide 26: FMC Corporation
FNC FMC Corporation
FMC — Credit Suisse First Boston 16th Annual Chemical Conference 2003 on 6ix