Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — RW Baird Industrial Conference 2010
30 slides from Air Products And Chemicals's conference presentation, Nov 9, 2010
Slide 1: Investor Update
Investor Update Presentation by Robert Dixon Senior Vice-President Merchant Gases RW Baird Industrial Conference Chicago November 9, 2010
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including earnings guidance; projections; targets; plans and expectations regarding growth opportunities, new projects, applica
Slide 3: Additional Information
ADDITIONAL INFORMATION On February 11, 2010, Air Products Distribution, Inc. (“Purchaser”), 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. (“Airgas”) not already owned by Air
Slide 4: 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 5: Air Products Supply Modes
Air Products Supply Modes Durable Business Models 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 Packaged Gases & Liquid/Bulk Equipment & Services Specialty
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: Integrated Industrial Gas Model
Integrated Industrial Gas Model Mode of Supply Integration Benefit Tonnage/ Onsites Tonnage • Co-product Gen Gas economics brings tonnage to bulk customers • Liquid back-up Liquid/ Bulk • Sales coverage Bulk • Product Microbulk brings bulk to cylinder customers supply/outlet • Market segment Package
Slide 8: Integrated Gases Model provides real benefits – locally and globally
Integrated Gases Model provides real benefits – locally and globally Supply Mode Balance provides… - More high quality growth opportunities - PG-only verticals, bundled buying segments, access to small LB customers - Risk mitigation - Diversified customer and market position Density enables low cost
Slide 9: 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 1,700 TPD ASU • Liquid integration Xi’an Chengdu Shanghai PetroChina Guangzhou • First outsourced H2 for China Sanan Optoelectronics
Slide 10: Equity Affiliates
Equity Affiliates $2.3B revenue on 100% basis Important Source of Growth Italy Mexico India Thailand South Africa 10
Slide 11: Merchant Gases: Solid Growth & Performance
Merchant Gases Solid Growth & Performance Revenue by • Targeting double-digit growth Region (FY’10) • Applications expertise • Growth in Asia / Eastern & Central Europe • 20% operating margin target Sales Operating Income & Margin NA Liquid Bulk $MM $MM 20% Europe Liquid Bulk 4000 800 Europe Package
Slide 12: Merchant Gases: Strong growth in Asia
Merchant Gases Strong growth in Asia • Largest Liquid/Bulk Share in China among China Liquid global majors Share 2009 – • Leading Merchant positions in Taiwan, Korea Majors and Thailand • Leading Merchant Gases supplier in India • Generating growth through our value-added technology Asia Merchant Re
Slide 13: Global Differentiators Delivered Locally
Merchant Gases Global Differentiators Delivered Locally Specialized Freshline® Reliable Supply, Dual Mode Freezer onsite telemetry A winning combination! 13
Slide 14: Enabling our Customers' Success
Merchant Gases Enabling our Customers’ Success • Quality of soldering joints in printed circuit board assembly is subject to the formation of wastes/impurities during wave soldering process • AP technology experts have developed next generation “NitroFAS™ II” inerting technology to improve solder qu
Slide 15: 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 Sept 2020 Increased On-stream Heavy Transportation On-stream Sept 2010 Crude Fuels Sept 2
Slide 16: USGC H2 Pipeline Networks 2010 / 2012
Air Products (Texas-Louisiana) USGC H2 Pipeline Networks -2010 / 2012 TEXAS • Over 1billion SCFD ExxonMobil LOUISIANA Baton Rouge of capacity ExxonMobil Motiva Marathon Beaumont • Over 20 plants ExxonMobil Geismar Luling-2012 Lake Charles • Over 600 miles of Motiva, ConocoPhillips, Valero pipeline d
Slide 17: Tonnage Gases: Significant New Markets for Oxygen
Tonnage Gases Significant New Markets for Oxygen • Steel New Market - Asian infrastructure growth Growth for - Mill modernization Oxygen • Gasification 15% - Power 40% - Feedstock independence - Low BTU hydrocarbons 45% • Cleaner coal - Power - CO2 capture Steel Gasification 200,000-300,000 tons-per
Slide 18: Electronics: High Growth Markets
Electronics High Growth Markets • Solid growth in existing 150% LED and higher growth in new PV markets 100% TFT-LCD - IC silicon (MSI) = 8% Silicon (MSI) - TFT-LCD = 12% 50% - PV = 25% 0% - LED = 30% 2010 2011 2012 2013 • Majority market share positions with industry leaders - #1 in IC, TFT-LCD and
Slide 19: Equipment and Energy
Equipment and Energy Positioned for continued growth • ~$0.5 billion in FY’10 sales • Broad customer base - Oil & gas, utilities, chemicals and metals • Products - LNG heat exchangers, large air separation units, hydrocarbon separators, helium containers, hydrogen fueling systems • Strategy - Levera
Slide 20: Macro Sustainability Trends Drive Growth
Macro Sustainability 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 fuelin
Slide 21: FY'11 Full Year Outlook
FY’11 Full Year Outlook • FY’11 overall… expecting a • FY’10 Adjusted Diluted EPS $5.02 continued, gradual, global - Merchant loading economic recovery - Tonnage new projects/loading - E&E similar to last year • WW manufacturing growth - E&PM loading - Global 3% - 4% - Pension headwind - US 3% - 4%
Slide 22: The Air Products opportunity
The Air Products opportunity Stability Growth Results • Long term contracts, consistent • Solid backlog and and predictable cash strong growth flow opportunities across all • Double-digit EPS • Diversified across geographies growth geographies and • New growth distribution • ROCE 3-5% above cost opp
Slide 23: Appendix Slides
Appendix Slides
Slide 24: 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 25: 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 26: 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 27: 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 28: Appendix: ROCE
Appendix: ROCE $ Millions Quarter Ended Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Numerator Operating Income Reported 348.6 393.7 373.1 114.1 260.4 143.8 328.0 345.0 340.6 336.4 367.0 Equity Affiliate Income 42.4 46.5 30.8 24.5 27.0 28.5 32.2 26.9 32.2 32.5 35.3 Earnings before tax
Slide 29: Appendix: ROCE Tax Rate
Appendix: ROCE Tax Rate Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Reported Income from Cont. Ops. Bef. Tax 352.1 400.7 361.1 102.1 257.4 144.8 332.3 340.3 343.3 338.9 371.5 Noncontrolling Interest (4.5) (7.6) (4.8) (5.0) (1.6) (4.8) - (5.0) (6.4) (8.1) (5.9) Income from Cont. Ops. Befor
Slide 30: Thank you... tell me more
Thank you... tell me more AIR PRODUCTS ZZ
Air Products and Chemicals — RW Baird Industrial Conference 2010 on 6ix