Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — Q2 2020 Earnings Presentation
29 slides from Air Products And Chemicals's earnings presentation, Apr 23, 2020
Slide 1: Create Shareholder Value: Q2 FY20 Earnings Conference Call
Moving forward Create Shareholder Value Q2 FY20 Earnings Conference Call April 23 2020
Slide 2: Forward-looking statements and Non-GAAP Financial Measures
Moving forward Forward-looking statements This presentation contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about earnings guidance, business outlook and investment opportunities. These forward-look
Slide 3: COVID-19
COVID-19 Moving forward “The true character of an individual, or a company, is revealed during times of crisis.” • Proud to be “business essential” - Prioritizing health and welfare - Safely maintaining plant operations & business continuity - Mobilizing to meet urgent needs - Supplying customers re
Slide 4: Safety results
Moving forward Safety results Q220 FY20 vs FY14 YTD FY14 Employee Lost Time Injury Rate 0.24 0.06 75% better Employee Recordable Injury Rate 0.58 0.37 36% better 4 FY14 includes MT
Slide 5: Our Goal
Moving forward Our Goal Air Products will be the safest, most diverse and most profitable industrial gas company in the world, providing excellent service to our customers 5
Slide 6: Creating shareholder value
Moving forward Creating shareholder value Management philosophy Shareholder Cash is king; cash flow drives long-term value. Value What counts in the long term is the increase in per share value of our stock, not size or growth. CEO Capital allocation is the most important job of Focus the CEO. Opera
Slide 7: Five Point Plan: Moving Forward
Moving forward Five Point Plan: Moving Forward Sustain Deploy Evolve Change Belong the lead capital portfolio culture and Matter Safest, most Strategically invest Grow onsite 4S Inclusion diverse, and most significant available portion profitable capacity Best-in-class Win profitable Energy, Committ
Slide 8: Executing our gasification strategy
Moving forward Executing our gasification strategy Energy, environmental, emerging markets Debang JV $0.25B Yankuang 2023 JV $3.5B Juitai 2023 100% APD $0.65B Jazan IG/ 2022 Gasif/Power JV $11.5B Lu’An 2020 JV $1.5B Large ASUs 2018 for China coal gasification GE Gasification Technology Shell Gasific
Slide 9: PBF hydrogen asset acquisition
Moving forward PBF hydrogen asset acquisition • Consistent with strategy - Asset acquisition, capital deployment, onsite business, hydrogen, refining market, expanding strong customer relationship • Agreement - APD to acquire 5 hydrogen plants (~300MMSCFD) for $530 million - APD to supply hydrogen u
Slide 10: Adjusted EBITDA margin
Adjusted EBITDA margin* Moving forward Up over 1500 basis points 41.9% 42% 40.1% 40.3% 40% 40.3% 37.7% 38% 36.3% 35.9% 35.7% 36% 35.2% 34.9% 34.8% 35.8% 34.1% 34.3% 33.9% 34% 34.8% 33.2% 32.9% 33.2% 32% 31.1% 29.6% 30% 28.7% 28% 28.8% 26.5% 26% 25.1% 24% 10 * Non-GAAP financial measure. See website
Slide 11: Financial strength
Financial strength Moving forward Cash Debt Net Debt* Leverage Ratio1 $2.2B $3.3B $1.1B 0.3X • Very stable cash flows driven by industry-leading onsite business • Significant balance sheet capacity available - $2.3B undrawn revolving credit facility - Committed to manage debt balance to maintain cur
Slide 12: Dividend history
Dividend history Moving forward $5.50 $5.36 $5.00 $4.50 $4.00 Dividend/Share* $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 • 18c per quarter or >15% dividend increase announced Jan 23 • ~$1.2B
Slide 13: Q2 Results
Q2 Results Moving forward Fav/(Unfav) vs. ($ million) Q2FY20 Q2FY19 Q1FY20 Sales $2,216 1% (2%) - Volume 6% (1%) - Price 2% 1% - Energy cost pass-through (5%) (2%) - Currency (2%) -% Adjusted EBITDA* $893 8% (2%) - Adjusted EBITDA Margin* 40.3% 260bp -bp Adjusted Operating Income* $543 5% (3%) - Adj
Slide 14: Q2 Adjusted EPS
Q2 Adjusted EPS* Moving forward Adjusted EPS* Up $0.12 or 6% Q2FY19 Q2FY20 Change GAAP cont ops EPS $1.90 $2.21 non-GAAP items (0.02) 0.18 Adjusted EPS* $1.92 $2.04 $0.12 Volume 0.13 Price (net of variable costs) 0.19 Other Cost (0.17) $0.15 Currency/FX ($0.05) Equity Affiliate Income 0.03 Tax Rate
Slide 15: Cash Flow Focus
Moving forward Cash Flow Focus ($ million) Q2FY20 LTM Adjusted EBITDA* $3,649 Interest, net* (52) Cash Tax (412) Maintenance CapEx* (491) Distributable Cash Flow* $2,694 $12.13/Share* Dividends (1,023) Investable Cash Flow* $1,671 • >$12/share of Distributable Cash Flow* • Paid about 40% of Distribu
Slide 16: Capital Deployment Scorecard
Capital Deployment Scorecard Moving forward FY18 – FY22, as of 3/31/20 Available Now (3/31/20) Total Debt Capacity $ 11.0 Assuming 3xLTM Adj EBITDA* Less: Net Debt* $ 1.1 Debt minus cash Additional Available Now $ 9.9 Estimated Available In Future $ 4.2 LTM ICF x 2.5 years – Investable Cash Flow* Al
Slide 17: COVID-19: Q2 and looking forward
COVID-19: Moving forward Q2 and looking forward Q2FY20 • Safely maintained plant operations and business continuity - Provided essential products to customers - Mobilized to meet urgent needs for medical oxygen • Overall company: ~1% negative volume impact, ~$0.06 - $0.08 negative adjusted EPS impac
Slide 18: Our competitive advantage
Moving forward Our competitive advantage The only sustainable element of long-term competitive advantage is the degree of commitment and motivation of the people in the enterprise 18
Slide 19: Appendix slides
Appendix slides
Slide 20: Industrial Gases - Asia
Moving forward Industrial Gases - Asia Fav/(Unfav) vs. Q2FY20 Q2FY19 Q1FY20 Sales $658 5% (5%) - Volume 6% (5%) - Price 2% -% - Energy cost pass-through -% -% - Currency (3%) -% Adjusted EBITDA* $327 10% (6%) - Adjusted EBITDA Margin* 49.7% 200bp (40bp) Operating Income $209 5% (8%) - Operating Marg
Slide 21: Industrial Gases - Americas
Moving forward Industrial Gases - Americas Fav/(Unfav) vs. Q2FY20 Q2FY19 Q1FY20 Sales $932 (6%) -% - Volume 2% 4% - Price 3% 1% - Energy cost pass-through (9%) (4%) - Currency (2%) (1%) Adjusted EBITDA* $425 7% 4% - Adjusted EBITDA Margin* 45.6% 540bp 180bp Operating Income $268 5% 4% - Operating Ma
Slide 22: Industrial Gases - EMEA
Moving forward Industrial Gases - EMEA Fav/(Unfav) vs. Q2FY20 Q2FY19 Q1FY20 Sales $493 -% (1%) - Volume 4% -% - Price 3% 2% - Energy cost pass-through (4%) (2%) - Currency (3%) (1%) Adjusted EBITDA* $186 2% (1%) - Adjusted EBITDA Margin* 37.7% 90bp -bp Operating Income $125 2% 3% - Operating Margin
Slide 23: Industrial Gases - Global
Moving forward Industrial Gases - Global Fav/(Unfav) vs. Q2FY20 Q2FY19 Sales $79 $26 Adjusted EBITDA* ($12) ($3) Operating Income ($20) ($8) • Sales up on SOE project activity • Profit down on higher project development costs 23 * Non-GAAP financial measure. See website for reconciliation.
Slide 24: Corporate
Moving forward Corporate Fav/(Unfav) vs. Q2FY20 Q2FY19 Sales $54 $31 Adjusted EBITDA* ($33) $12 Operating Income ($39) $11 • LNG projects drive business improvement • Announced Mozambique LNG project 24 * Non-GAAP financial measure. See website for reconciliation.
Slide 25: Major projects
Major projects * Multiple Phases Plant Customer/Location Capacity Timing Market ONSTREAM (last five quarters) ASU/Liquid Ulsan, Korea 1750 TPD Q1 FY19 Pipeline ASU – Ph 3/4 Samsung Pyeongtaek, Korea World Scale Q1 FY19* Electronics Liquid ASU Middletown, Ohio 400 TPD Q1 FY19 Merchant ASU/LAR Chemour
Slide 26: Outlook
Moving forward Outlook Given the significant uncertainty that remains regarding the duration of the crisis, the pace of recovery, and the negative impact on the global economy from the rapidly evolving COVID-19 pandemic, Air Products is: • Not providing Q3 FY20 EPS guidance • Withdrawing its FY20 EP
Slide 27: Air Products Adjusted EPS
Air Products Adjusted EPS* Moving forward FY14 FY15 FY16 FY17 FY18 FY19 FY20 Q1 $1.79 $1.86 $2.14 Q2 $1.71 $1.92 $2.04 Q3 $1.95 $2.17 Q4 $2.00 $2.27 $4.42 $4.88 $5.64 $6.31 $7.45 $8.21 $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 +10% +18% $3.00 +12% +16% +10% $2.00 +11% # $1.00 $- FY14 FY15 FY16 FY17
Slide 28: Capital Expenditure
Capital Expenditure* Moving forward FY $MM 2019 $2,129 2018 $1,914 2017 $1,056 2016 $908 2015 $1,201 Quarter 2020 $MM Q1 $455 Q2 $498 Q3 Q4 28 * Non-GAAP financial measure. See website for reconciliation.
Slide 29: Thank you
Moving forward Thank you tell me more
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