Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — Q3 2008 Earnings Presentation
24 slides from Air Products And Chemicals's earnings presentation, Jul 23, 2008
Slide 1: Q3 FY08 Earnings Conference Call
Q3 FY08 Earnings Conference Call July 23, 2008
Slide 2: Forward-Looking Statements
Forward-Looking Statements NOTE: This document contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this do
Slide 3: Portfolio Management Actions
Portfolio Management Actions z Completed sale of remaining Polymer Emulsions assets to Ashland, Inc. – $0.08 gain on sale (discontinued operations) z Decided to sell U.S. Healthcare business – ($1.09) impairment charge – Moving results to discontinued operations in fiscal Q4 – $0.11 accretive to EPS
Slide 4: EPS up 18%
EPS up 18% Q3 FY08 Q3 FY07 Change As-reported diluted EPS $0.32 $1.28 - Discontinued Operations 0.09 0.04 + U.S. HC charge/PY Tax 1.09 (0.12) Continuing Operations EPS $1.32 $1.12 $0.20 } Volume $0.06 Price / raw materials (0.02) $0.04 Cost 0.00 Currency/FX 0.06 Equity Affiliates income 0.06 Fewer s
Slide 5: Consolidated Q3 Financials
Consolidated Q3 Financials Fav/(Unfav) vs. ($Millions, Continuing Operations) Q3 FY08 Q3 FY07 Q2 FY08 Sales $2,808 16% 8% SG&A as a % of Sales 11.4% 80bp 60bp Operating Income $382 9% 5% Operating Margin % 13.6% (100bp) (40bp) Net Income $288 16% 7% Diluted EPS $1.32 18% 7% ROCE 12.5% 50bp 10bp ORON
Slide 6: Merchant Gases
Merchant Gases Fav/(Unfav) vs. Q3 FY08 Q3 FY07 Q2 FY08 Sales $973 19% 8% - Volume 5% 5% - Price 4% 1% - Currency 8% 2% - Acquisitions 2% - Operating Income $177 20% 6% Operating Margin 18.2% 20bp (30bp) z Volume growth in all regions, strong signings z Higher energy costs 6
Slide 7: Merchant Gases: Q3 Sales Analysis vs PY
Merchant Gases: Q3 Sales Analysis vs PY North America Europe Asia Sales % change 11% 23% 21% - Volume 4% 1% 15% - Price 7% 3% 2% - Currency - 15% 4% - Acquisitions - 4% - z Higher volumes globally 7
Slide 8: Tonnage Gases
Tonnage Gases Fav/(Unfav) vs. Q3 FY08 Q3 FY07 Q2FY08 Sales $976 26% 13% - Volume - (3%) - Nat’l gas/RM pass thru 23% 15% - Currency 3% 1% Operating Income $126 4% 13% Operating Margin 12.9% (260bp) 10bp z Higher natural gas pricing suppresses margins 8
Slide 9: Electronics & Performance Materials
Electronics & Performance Materials Fav/(Unfav) vs. Q3 FY08 Q3 FY07 Q2 FY08 Sales $580 9% 3% - Volume 6% 3% - Price 1% - - Currency 2% - Operating Income $70 13% 4% Operating Margin 12.1% 40bp 10bp z Electronics sales 5% (1%) z Performance Materials volume 5% 7% 9
Slide 10: Equipment & Energy
Equipment & Energy Fav/(Unfav) vs. Q3 FY08 Q3 FY07 Q2 FY08 Sales $107 (20%) 2% Operating Income $4 (75%) (60%) Sales Backlog $228 (15%) 12% z New ASU orders 10
Slide 11: Healthcare
Healthcare Fav/(Unfav) vs. Q3 FY08 Q3 FY07 Q2 FY08 Sales $172 9% 1% − Volume 1% (1%) − Price/mix - - − Currency 8% 2% Operating Income $13 54% 39% Operating Margin 7.6% 220bp 210bp z Continued growth in Europe, selling U.S. business z Excludes ($315MM) impairment charge 11 Comparison is non-GAAP, se
Slide 12: FY 2008 Guidance
FY 2008 Guidance Prior quarter guidance $4.95 - $5.05 - U.S. Healthcare to Disc. Ops. 0.11 Adjusted Guidance 5.06 5.16 + Guidance Increase 0.10 0.05 Current full year Guidance FY2008 $5.16 - $5.21 - Q1-Q3 Diluted EPS (non-GAAP) 3.79 Q4 FY08 Guidance $1.37 - $1.42 12
Slide 13: FQ4 '08 Financial Outlook
FQ4 ’08 Financial Outlook FQ3 2008 EPS $1.32 FQ3 2008 EPS $1.35 (excl. U.S. Healthcare) z Higher Merchant Gases pricing z Higher Tonnage results z Higher Electronics & Perf Materials results z Lower taxes z Lower Equity Affiliates income FQ4 2008 EPS $1.37 - $1.42 (excl. U.S. Healthcare) 13 Comparis
Slide 14: Capital Spending Outlook
Capital Spending Outlook On-site FY2008 PP&E CapEx $1.2B Merchant Capital leases 0.2 Support Total $1.4B On-site FY2009 Forecast Merchant Total $1.7-$2.0B Support On-site includes long-term contracts reported in our Tonnage, Electronics and Merchant Gas business segments. Merchant includes liquid &
Slide 15: FY2009 Outlook
FY2009 Outlook z Volume and price growth ~6-7% – Merchant – Tonnage – Electronics & Performance Materials z Equipment & Energy similar to 2008 z Productivity to expand margins and returns – Electronics product line rationalization – Transactional shared services/SAP – Improved decisions from SAP inf
Slide 16: Appendix slides
Appendix slides _- § =
Slide 17: Appendix: Q3 Sales Analysis
Appendix: Q3 Sales Analysis Change versus Q3 FY07 Q2 FY08 Total Consolidated 16% 8% Comprised of: z Base business growth 3% 2% – Volume 3% 1% – Energy & Equip segment (2%) - – Price 2% 1% z Acquisitions/Divest. 1% - z Nat’l gas/RM pass thru 7% 5% z Currency 5% 1% 17
Slide 18: Appendix: Operating Margins ex U.S. Healthcare and Q2 Pension Charge
Appendix: Operating Margins ex U.S Healthcare and Q2 Pension Charge ($ Millions) Q308YTD - Total co. GAAP measure Q308YTD Sales 7,886.9 Operating Income 777.8 Operating Margin 9.9% Adjustments Sales - U.S. Healthcare (187.1) Operating Income - U.S. Healthcare 344.9 Operating Income - Q208 Pension Ch
Slide 19: Appendix EPS Reconciliation
Appendix EPS Reconciliation 19
Slide 20: Appendix: Comparisons to Prior Periods
Appendix: Comparisons to Prior Periods ($ Millions, except per share data) FY08 FY07 Non GAAP Non GAAP Non GAAP GAAP Measure Adjustment Adjustment Adjustment Non GAAP Measure % Change % Q308 Q208 Pension Q307 Tax Non GAAP Q308 vs. Q307 - Total Co. Q308 Q307 Change Impairment Settlement Adjustment Q3
Slide 21: Appendix: ROCE
Appendix: ROCE $ Millions Quarter Ended Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Numerator Operating Income Reported 249.6 265.4 276.4 220.1 317.4 308.6 352.4 373.1 372.0 338.2 67.6 Equity Affiliate Income 25.2 22.2 19.9 24.2 27.3 27.6 29.5 30.0 25.3 42.4 46.5 Earnings before tax as re
Slide 22: Appendix: ROCE Tax Rate
Appendix: ROCE Tax Rate Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Reported Income from Cont. Ops. Bef. Tax and Min. Int 248.7 262.1 266.6 206.9 305.6 298.8 337.7 361.1 356.3 341.5 74.5 Minority Interest (4.8) (5.2) (4.8) (4.1) (5.1) (4.4) (5.2) (6.1) (6.1) (4.5) (7.6) Income from Cont.
Slide 23: Appendix: ORONA
Appendix: ORONA $ Millions Quarter Ended Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Operating Income Op. Inc. Reported 249.6 265.4 276.4 220.1 317.4 308.6 352.4 373.1 372.0 338.2 67.6 Disclosed Items: Global Cost Reduction Plan - - - 72.1 - - - 13.7 - - - Pension Settlement charge 10.3 2
Slide 24: Thank you
Thank you tell me more www.airproducts.com 24
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