Fmc Corporation · NYSE:FMC
Fmc — Credit Suisse First Boston Meetings (November 2003)
38 slides from Fmc's conference presentation, Nov 14, 2003
Slide 1: FMC Corporation
FMC Corporation Credit Suisse First Boston Meetings November 13 th , 2003 William G. Walter Chairman, President and CEO Exhibit 99.1
Slide 2: Safe Harbor Statement
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 the Compan
Slide 3: Use of Non-GAAP Terms
These slides contain certain “non-GAAP financial terms” which are defined on FMC’s Investor Relations web site ( http://ir.fmc.com ) in the Glossary of Financial Terms section. In addition, in the Conference Calls and Presentations section, we have provided reconciliations of non- GAAP terms to the
Slide 4: FMC Corporation
FMC Sales: $1,852.9 EBITDA: $313.7 Margin: 16.9% Industrial Chemicals Sales: $753.4 EBITDA: $130.3 Margin: 17.3% Agricultural Products Sales: $615.1 EBITDA: $99.0 Margin: 16.1% Specialty Chemicals Sales: $488.2 EBITDA: $116.3 Margin: 23.8% FMC Corporation Diversified chemical company with leading ma
Slide 5: FMC's Strengths
FMC’s Strengths Leading market positions Global presence Diversified business mix and high-quality customer base Diversified and integrated cost structure Focused R&D and strong applications expertise Proven management with extensive industry experience
Slide 6: FMC Valuation vs S&P Chemicals Index
S&P 400 Chemicals Index Components FMC Valuation Source: Bloomberg Financial and SEC Filings For all our strengths, we continue to be grossly undervalued
Slide 7: Unlocking Shareholder Value
Unlocking Shareholder Value Maximize and realize operating leverage Create greater financial flexibility Focus the portfolio on higher growth businesses
Slide 8: Maximize and Realize Operating Leverage
Maximize and Realize Operating Leverage Capacity utilizations continue to tighten following capacity mothballs and steady demand growth Price recovery has begun in hydrogen peroxide, and price outlook in soda ash is improving Timing of selling price recovery to take several years Recovery to be enha
Slide 9: Creating Greater Financial Flexibility
Creating Greater Financial Flexibility Expected 2003 Performance: Working capital reductions of $30-35 million in 2003 Flat capital spending versus 2002, well below D&A Astaris keepwells of $60 million in 2003 2003 free cash flow of $30-40 million Outlook for 2004 and beyond: Keepwells to cease in 2
Slide 10: Focus the Portfolio on Higher Growth Businesses
Specialty Chemicals Agricultural Products Industrial Chemicals Expected 5-yr. Sales Growth (CGR %, ’02-’07) Note: Size of bubble corresponds to 2002 EBIT $’s Note: For presentation purposes, EBIT is used as proxy for OPAT; sales growth is used as a proxy for OPAT growth; and EBIT/Capital Employed is
Slide 11: Focus the Portfolio on Higher Growth Businesses
No Yes Yes Licensing/ Partnering No D&A Flat-to- lower Ind. Chemicals << D&A D&A $’s Cap. Expend. Increase Increase $’s R&D No Yes Bolt-on Acq(s). Ag. Products Spec. Chemicals Growing Specialty Chemicals Maintaining and enhancing value of Ag Products business Managing Industrial Chemicals for cash F
Slide 12: Focus the Portfolio on Higher Growth Businesses
Dispose of product lines, markets or divisions consistently performing below the cost of capital Divest those businesses in which another company places a higher value Opportunistically manage the portfolio to achieve focus Focus the Portfolio on Higher Growth Businesses
Slide 13: Significant Earnings Leverage
Significant Earnings Leverage Recovery in Industrial Chemicals Growth in Agricultural Products and Specialty Chemicals Debt reduction of $300 million by the end of 2006 FMC strategies to add $4 per share to today’s trough levels
Slide 14: FMC Corporation - Industrial Chemicals
FMC Corporation Credit Suisse First Boston Meetings November 13 th , 2003 Michael Wilson Vice President and Group Manager Industrial Chemicals
Slide 15: Industrial Chemicals: Group Overview
South America 9% North America 55% Europe/Middle East/Africa 30% Asia 6% Alkali (Soda ash) 49% Peroxygens 21% Foret 30% Industrial Chemicals: Group Overview #1 North American manufacturer of soda ash, peroxygens and phosphorus chemicals Backward integration into natural resources Low-cost, proprieta
Slide 16: Industrial Chemicals: Financial Performance
$126 $87 $28 19.6% 16.2% 17.3% ($ in millions) $906 $822 $753 $1,000 2000 2001 2002 0% 5% 10% 15% 20% 25% 30% Revenue Capital Expenditures EBITDA Margin 1 Incudes $79.2 million of phosphorus sales prior to formation of Astaris JV. ’01-’02 recession and overcapacity Capacity mothballs and shutdowns S
Slide 17: Industrial Chemicals: Outlook
Industrial Chemicals: Outlook Price recovery in hydrogen peroxide Volume growth of 2% expected in 2003 Effective capacity utilization above 90% Price increase announcements now in negotiation for 2004 Higher expected energy costs in 2004 as hedges roll over Improving capacity utilization in soda ash
Slide 18: Price Recovery in Hydrogen Peroxide
Last Peak Price Recovery in Hydrogen Peroxide In North America, about ~1 cent per lb. increase in hydrogen peroxide has been achieved in 2003 with more expected in 2004
Slide 19: Improving Capacity Utilization in Soda Ash
Source: Isonex/USGS and FMC 1987 1991 1995 1997 Industry Price Effective Capacity Util. Last Peak Improving Capacity Utilization in Soda Ash Soda ash price increase of $7 per ton announced in North America; acquisition of American Soda by Solvay 1993 2001 1989 1999 2003
Slide 20: Turnaround in Phosphorus Chemicals
Weak Astaris performance in 2003 Lower sales due principally to 4-5% drop in selling prices Lack of a $25 million power resale benefit ($12.5 million to FMC) Resulting, expected FMC keepwell obligation of over $60 million Significant restructuring at Astaris during 2003-2004 Exit of commodity STPP C
Slide 21: FMC Corporation - Agricultural Products
FMC Corporation Credit Suisse First Boston Meetings November 13 th , 2003 Milton Steele Vice President and Group Manager Agricultural Products
Slide 22: Agricultural Products: Group Overview
Insecticides 78% Herbicides 22% South America 29% North America 40% Europe/Middle East/Africa 16% Asia 15% 2002 Consolidated Sales: $615.1 million Agricultural Products: Group Overview Manufacturer of proprietary, branded insecticides and herbicides Key crops: cotton, corn, rice, cereals, fruits and
Slide 23: Agricultural Products: Financial Performance
$22 $22 $21 17.1% 16.1% 15.4% ($ in millions) $653 $615 $665 $700 2000 2001 2002 0% 5% 10% 15% 20% 25% Revenue Capital Expenditures EBITDA Margin Agricultural Products: Financial Performance Declining global chemical crop protection market since 1996 Multi-faceted competitive rivalry Steady 2000-02
Slide 24: Agricultural Products: 2003 Performance
Agricultural Products: 2003 Performance YTD EBIT up 11% compared with last year Improved margins from manufacturing cost reductions and favorable product mix Strong non-crop sales Significant (and fundamental) improvements in our Brazil business Alliances in Europe exceeding expectations Solid cash
Slide 25: Agricultural Products: Driving Earnings Growth
Agricultural Products: Driving Earnings Growth Focus on select products, regions and markets Productivity to result in significant expected cost savings Manufacturing outsourcing strategies continue SG&A leverage across focused products and regions Global supply chain efficiencies: reducing SKU’s an
Slide 26: FMC Corporation - Specialty Chemicals
FMC Corporation Credit Suisse First Boston Meetings November 13 th , 2003 Ted Butz Vice President and Group Manager Specialty Chemicals
Slide 27: Specialty Chemicals: Group Overview
BioPolymer 73% Lithium 27% South America 8% North America 46% Europe/Middle East/Africa 31% Asia 15% Specialty Chemicals: Group Overview One of two global, integrated manufacturers Focus on specialty products - pharmaceuticals and energy storage devices Lithium: Adds structure, texture and stability
Slide 28: Specialty Chemicals: Financial Performance
$39 $28 $24 $488 $472 $489 ($ in millions) 23.8% 26.0% 25.9% $600 2000 2001 2002 0% 5% 10% 15% 20% 25% 30% Revenue Capital Expenditures EBITDA Margin 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 t
Slide 29: Specialty Chemicals: Strong 2003 Performance
Specialty Chemicals: Strong 2003 Performance YTD 2003 results highlight improved performance over 2002 Sales up 7.6% Segment earnings up 17.7% BioPolymer and Lithium show good earnings improvement Strong Euro benefits earnings 4th Quarter, as expected, should be flat with prior year Full year result
Slide 30: Specialty Chemicals: BioPolymer Sales Mix
Specialty Chemicals: BioPolymer Sales Mix Estimated 2003 Sales: $370 Million Mix by market Mix by product
Slide 31: Specialty Chemicals: BioPolymer Growth
Specialty Chemicals: BioPolymer Growth Continued drive for productivity improvements Commercialization of new technology initiatives In food ingredients: Improvement following 2003 weakness in nutritional beverages In pharmaceuticals: Continuation of growth trend achieved over last several years Inc
Slide 32: Strong BioPolymer Franchises
New Process technology Industry thrives on innovation Alternative gum systems Narrow product / customer mix Strong position in oral care Dedicated sales and technology teams Excellent customer relationships Personal Care Technology alliances to expand beyond traditional excipients Good position with
Slide 33: Specialty Chemicals: Lithium Sales Mix
Specialty Chemicals: Lithium Sales Mix Estimated 2003 Sales: $140 Million
Slide 34: Specialty Chemicals: Lithium Growth
Achieve above hurdle rate return on investment in 2004 In pharmaceutical synthesis: High single-digit growth in specialty organics and butyllithium Quarterly timing driven by campaign runs of our customers In energy storage: Double-digit growth foreseen in use of lithium Improved profitability throu
Slide 35: FMC Corporation - Chief Financial Officer
FMC Corporation Credit Suisse First Boston Meetings November 13 th , 2003 Kim Foster Senior Vice President and CFO
Slide 36: Financial Objectives
Financial Objectives Maximize free cash generation through disciplined working capital management and capital spending Monetize assets for cash: Real estate Asset divestitures Reduce debt $300 million of debt by the end of 2006
Slide 37: Creating Greater Financial Flexibility
Creating Greater Financial Flexibility *Includes Astaris interest Free cash flow of $30-40 million in 2003; to be higher in 2004 2003 2004 2005 2006 Expected EBITDA ~$300 --------Increasing---------- Sale of Assets $ 13 TBD TBD TBD Working Capital Benefit ~$ 35 TBD TBD TBD Pre-Tax Interest* $100 ---
Slide 38: FMC Corporation
FMC Corporation
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