Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — Q1 2008 Earnings Presentation
22 slides from Air Products And Chemicals's earnings presentation, Jan 23, 2008
Slide 1: Q1 FY08 Earnings Conference Call
Q1 FY08 Earnings Conference Call January 23, 2008
Slide 2: Forward-Looking Statements
Forward-Looking Statements NOTE: This presentation 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 thi
Slide 3: Consolidated Q1 Financials: Delivering Leverage
Consolidated Q1 Financials Delivering Leverage Fav/(Unfav) vs. ($Millions, Continuing Operations) Q1 FY08 Q1 FY07 Q4 FY07* Sales $2,474 9% 1% SG&A as a % of Sales 12.0% 10bp 10bp Operating Income $372 17% 5% Operating Margin % 15.0% 100bp 40bp Net Income $257 16% 2% Diluted EPS $1.16 17% 4% ROCE 12.
Slide 4: EPS up 17%
EPS up 17%* Q1 FY08 Q1 FY07 Change As-reported diluted EPS $1.19 $1.03 Less Discontinued Ops 0.03 0.04 Continuing Operations EPS $1.16 $0.99 $0.17 Volume Price / raw materials Cost $0.03 0.05 0.01 } $0.09 Acquisitions 0.02 Currency 0.07 Equity Affiliates income (0.01) Interest Expense (0.01) Fewer s
Slide 5: Merchant Gases
Merchant Gases Fav/(Unfav) vs. Q1 FY08 Q1 FY07 Q4 FY07* Sales $897 21% 5% - Volume 5% 1% - Price 3% 1% - Currency 7% 3% - Acquisitions 6% - Operating Income $175 26% 14% Operating Margin 19.6% 80bp 150bp z Profit growth and margin improvement z Pricing actions continue to drive results 5 *Comparison
Slide 6: Merchant Gases: Q1 Sales Analysis vs PY
Merchant Gases: Q1 Sales Analysis vs PY North America Europe Asia Sales % change 12% 31% 20% - Volume 6% 3% 14% - Price 6% 3% 1% - Currency - 13% 4% - Acquisitions - 12% 1% z Volume growth across all regions despite Argon & Helium shortages z Price increases effective 01 October 2007 6
Slide 7: Tonnage Gases
Tonnage Gases Fav/(Unfav) vs. Q1 FY08 Q1 FY07 Q4 FY07* Sales $791 15% 2% - Volume 5% (5%) - Nat’l gas/RM pass thru 5% 6% - Currency 3% 1% - Acquisition 2% - Operating Income $111 16% (6%) Operating Margin 14.0% 20bp (120bp) z Continuing to drive returns higher z High bidding activity continues 7 *Co
Slide 8: Electronics & Performance Materials: Strong Margin Improvement
Electronics & Performance Materials Strong Margin Improvement Fav/(Unfav) vs. Q1 FY08 Q1 FY07 Q4 FY07 Sales $514 6% (2%) - Volume excl. Equipment 6% (5%) - Equipment (1%) 1% - Price (1%) 1% - Currency 2% 1% Operating Income $66 33% 9% Operating Margin 12.8% 260bp 120bp z Electronics sales 4% 2% z Pe
Slide 9: Equipment & Energy
Equipment & Energy Fav/(Unfav) vs. Q1 FY08 Q1 FY07 Q4 FY07 Sales $100 (49%) (19%) Operating Income $9 (65%) (48%) Sales Backlog $246 (39%) (5%) z Tough comps versus PY z One LNG order signed in Q1 z Additional LNG & ASU orders anticipated 9
Slide 10: Healthcare
Healthcare Fav/(Unfav) vs. Q1 FY08 Q1 FY07 Q4 FY07 Sales $171 10% 7% − Volume 6% 2% − Price/mix (2%) 2% − Currency 6% 3% Operating Income $14 45% 55% Operating Margin 8.0% 200bp 250bp z Continued strong growth in Europe z Small sequential improvement in U.S. 10
Slide 11: FQ2 '08 Financial Outlook: 21%-25% Growth vs. PY
FQ2 ’08 Financial Outlook 21%-25% Growth vs. PY* FQ1 2008 EPS $1.16 z Higher Merchant Gases z Higher Electronics z Seasonally higher Perf Mat’l volumes z Higher Equity Affiliates z Lower Equipment & Energy FQ2 2008 EPS $1.17 - $1.21* *Continuing Operations, excludes any divestiture gain or pension s
Slide 12: FY08 Full Year Outlook
FY08 Full Year Outlook EPS ~$4.85 to $5.00, 15%-19% growth* z FY2007 Reported last quarter $4.37 – Polymers to discontinued operations ($0.17) FY07 adjusted for discontinued ops $4.20 z FY2008 Forecasted last quarter $4.80-$5.00 – Polymers to discontinued operations (0.17) + Remove pension settlemen
Slide 13: Our Outlook
Our Outlook z Global economy tracking on forecast z Future demand drivers are strong – High energy costs Æ efficiencies – High capital costs Æ debottlenecking – Environmental pressures Æ new applications z Globally well positioned with market leadership – Hydrogen for clean fuels – Oxygen for gasifi
Slide 14: APD Transformation
APD Transformation Less cyclical, more focused, higher growth and higher return z Sale of Amines & Emulsions z Electronics business restructuring z Electronics market less cyclical z Tonnage Ï % of portfolio z SAP implemented z SG&A as a % of sales reduced z Improved Merchant loading and pricing str
Slide 15: Appendix slides
Appendix slides _- § =
Slide 16: Appendix: Q1 Sales Analysis
Appendix: Q1 Sales Analysis Change versus Q1 FY07 Q4 FY07 Total Consolidated 9% 1% Comprised of: z Base business growth 2% (2%) – Volume (excl. Eq&En) 5% (2%) – Equipment & Energy (4%) (1%) – Price 1% 1% z Acquisitions/Divest. 2% - z Natural gas pass thru 1% 1% z Currency 4% 2% 16
Slide 17: Appendix: Q1FY08 vs. Q4FY07
Appendix: Q1FY08 vs. Q4FY07 Fav / (Unfav) FY2008 Q1 FY2007 Q4 Q1 FY2008 vs. Q4 FY07 Operating Income from EPS Operating Income from EPS Operating Income from EPS Income Cont. Ops Cont. Ops Income Cont. Ops Cont. Ops Income Cont. Ops Cont. Ops Total Company GAAP Measure $372.0 $257.0 $1.16 $373.1 $29
Slide 18: Appendix: Guidance
Appendix: Guidance Q2 % Full Year % ($/share) Q207 Q208 Guidance Change FY07 FY08 Guidance Change Diluted EPS - Continuing Ops. GAAP $0.97 $1.09-$1.13 12%-16% $4.50 $4.76-$4.91 6%-9% Gain on contract settlement ($0.11) Supp. pension plan charge $0.08 $0.03 $0.09 Global cost reduction plan $0.04 Dona
Slide 19: Appendix: ROCE Non-GAAP Reconciliation
Appendix: ROCE Non-GAAP Reconciliation $ Millions Quarter Ended Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Numerator Operating Income Reported 249.6 265.4 276.4 220.1 317.4 308.6 352.4 373.1 372.0 Equity Affiliate Income 25.2 22.2 19.9 24.2 27.3 27.6 29.5 30.0 25.3 Earnings before tax before items
Slide 20: Appendix: ROCE Tax Rate Reconciliation
Appendix: ROCE Tax Rate Reconciliation Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Reported Income from Cont. Ops. Before Tax and Min. Int 248.7 262.1 266.6 206.9 305.6 298.8 337.7 361.1 356.3 Minority Interest (4.8) (5.2) (4.8) (4.1) (5.1) (4.4) (5.2) (6.1) (6.1) Income from Cont. Ops. Before Tax
Slide 21: Appendix: ORONA Non-GAAP Reconciliation
Appendix: ORONA Non-GAAP Reconciliation $ Millions Quarter Ended Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Operating Income Op. Inc. Reported 249.6 265.4 276.4 220.1 317.4 308.6 352.4 373.1 372.0 Disclosed Items: Global Cost Reduction Plan - - - 72.1 - - - 13.7 - Pension Settlem
Slide 22: Thank you
Thank you tell me more www.airproducts.com 22
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