Attached files
file | filename |
---|---|
8-K - FORM 8-K - AIR PRODUCTS & CHEMICALS INC /DE/ | form8-k.htm |
EX-99.1 - TRANSCRIPT - AIR PRODUCTS & CHEMICALS INC /DE/ | ex99-1.htm |
Barclays
2nd Annual Industrial Select Conference
John E. McGlade, Chairman, President and CEO
February 17, 2010
2nd Annual Industrial Select Conference
John E. McGlade, Chairman, President and CEO
February 17, 2010
Barclays
2nd Annual
industrial Select Conference
2
ADDITIONAL
INFORMATION
• On February
11, 2010, Air Products Distribution, Inc., 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 Products, subject to the terms and conditions set
forth in the Offer to Purchase dated as of February 11, 2010 (the "Offer to Purchase"). The purchase price
to be paid upon the successful closing of the cash tender offer is $60.00 per share in cash, without interest
and less any required withholding tax, subject to the terms and conditions set forth in the Offer to
Purchase, as amended. The offer is scheduled to expire at midnight, New York City time, on Friday, April 9,
2010, unless further extended in the manner set forth in the Offer to Purchase.
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 Products, subject to the terms and conditions set
forth in the Offer to Purchase dated as of February 11, 2010 (the "Offer to Purchase"). The purchase price
to be paid upon the successful closing of the cash tender offer is $60.00 per share in cash, without interest
and less any required withholding tax, subject to the terms and conditions set forth in the Offer to
Purchase, as amended. The offer is scheduled to expire at midnight, New York City time, on Friday, April 9,
2010, unless further extended in the manner set forth in the Offer to Purchase.
• This
communication does not constitute an offer to buy or solicitation of an offer to
sell any securities. The
tender offer is being made pursuant to a tender offer statement on Schedule TO (including the Offer to
Purchase, a related letter of transmittal and other offer materials) filed by Air Products with the U.S.
Securities and Exchange Commission) on February 11, 2010. INVESTORS AND SECURITY HOLDERS OF AIRGAS
ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
security holders can obtain free copies of these documents and other documents filed with the SEC by Air
Products through the web site maintained by the SEC at http://www.sec.gov. The Offer to Purchase and
related materials may also be obtained for free by contacting the Information Agent for the tender offer,
MacKenzie Partners, Inc., at 212-929-5500 or toll-free at 800-322-2885.
tender offer is being made pursuant to a tender offer statement on Schedule TO (including the Offer to
Purchase, a related letter of transmittal and other offer materials) filed by Air Products with the U.S.
Securities and Exchange Commission) on February 11, 2010. INVESTORS AND SECURITY HOLDERS OF AIRGAS
ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
security holders can obtain free copies of these documents and other documents filed with the SEC by Air
Products through the web site maintained by the SEC at http://www.sec.gov. The Offer to Purchase and
related materials may also be obtained for free by contacting the Information Agent for the tender offer,
MacKenzie Partners, Inc., at 212-929-5500 or toll-free at 800-322-2885.
• In
connection with the proposed transaction, Air Products may file a proxy
statement with the SEC. Any
definitive proxy statement will be mailed to stockholders of Airgas. INVESTORS AND SECURITY HOLDERS OF
AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of these
documents (if and when available) and other documents filed with the SEC by Air Products through the
web site maintained by the SEC at http://www.sec.gov.
definitive proxy statement will be mailed to stockholders of Airgas. INVESTORS AND SECURITY HOLDERS OF
AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of these
documents (if and when available) and other documents filed with the SEC by Air Products through the
web site maintained by the SEC at http://www.sec.gov.
Barclays
2nd Annual
industrial Select Conference
CERTAIN
INFORMATION REGARDING PARTICIPANTS
• [Air
Products] and certain of its respective directors and executive officers
may
be deemed to be participants in the proposed transaction under the rules of the
SEC. Security holders may obtain information regarding the names, affiliations
and interests of [Air Products]’s directors and executive officers in [Air Products]’s
Annual Report on Form 10-K for the year ended September 30, 2009, which was
filed with the SEC on November 25, 2009, and its proxy statement for the 2010
Annual Meeting, which was filed with the SEC on December 10, 2009. These
documents can be obtained free of charge from the sources indicated above.
Additional information regarding the interests of these participants in the proxy
solicitation and a description of their direct and indirect interests, by security
holdings or otherwise, will also be included in any proxy statement and other
relevant materials to be filed with the SEC when they become available.
be deemed to be participants in the proposed transaction under the rules of the
SEC. Security holders may obtain information regarding the names, affiliations
and interests of [Air Products]’s directors and executive officers in [Air Products]’s
Annual Report on Form 10-K for the year ended September 30, 2009, which was
filed with the SEC on November 25, 2009, and its proxy statement for the 2010
Annual Meeting, which was filed with the SEC on December 10, 2009. These
documents can be obtained free of charge from the sources indicated above.
Additional information regarding the interests of these participants in the proxy
solicitation and a description of their direct and indirect interests, by security
holdings or otherwise, will also be included in any proxy statement and other
relevant materials to be filed with the SEC when they become available.
3
Barclays
2nd Annual
industrial Select Conference
Forward-Looking
Statements
• All
statements included or incorporated by reference in this communication
other
than statements or characterizations of historical fact, are forward-looking
statements. These forward-looking statements are based on our current
expectations, estimates and projections about our business and industry,
management’s beliefs, and certain assumptions made by us, all of which are
subject to change. Forward-looking statements can often be identified by words
such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”, “seeks”,
“estimates”, “may”, “will”, “should”, “would”, “could”, “potential”, “continue”,
“ongoing”, similar expressions, and variations or negatives of these words.
than statements or characterizations of historical fact, are forward-looking
statements. These forward-looking statements are based on our current
expectations, estimates and projections about our business and industry,
management’s beliefs, and certain assumptions made by us, all of which are
subject to change. Forward-looking statements can often be identified by words
such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”, “seeks”,
“estimates”, “may”, “will”, “should”, “would”, “could”, “potential”, “continue”,
“ongoing”, similar expressions, and variations or negatives of these words.
• These
forward-looking statements are not guarantees of future results and are
subject to risks, uncertainties and assumptions that could cause our actual results to
differ materially and adversely from those expressed in any forward-looking
statement. Important risk factors that could contribute to such differences or
otherwise affect our business, results of operations and financial condition include
the possibility that [Air Products] will not pursue a transaction with [Airgas] and the
risk factors discussed in our Annual Report on Form 10-K, subsequent Quarterly
Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings.
The forward-looking statements in this release speak only as of the date of this filing.
We undertake no obligation to revise or update publicly any forward-looking
statement, except as required by law.
subject to risks, uncertainties and assumptions that could cause our actual results to
differ materially and adversely from those expressed in any forward-looking
statement. Important risk factors that could contribute to such differences or
otherwise affect our business, results of operations and financial condition include
the possibility that [Air Products] will not pursue a transaction with [Airgas] and the
risk factors discussed in our Annual Report on Form 10-K, subsequent Quarterly
Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings.
The forward-looking statements in this release speak only as of the date of this filing.
We undertake no obligation to revise or update publicly any forward-looking
statement, except as required by law.
4
Offer to
Acquire Airgas
Barclays
2nd Annual
industrial Select Conference
Airgas
transaction highlights
Consideration
|
All-cash
offer for all Airgas shares at $60.00 per share
|
Premium
|
Premium
of 38% to Airgas’ closing price on 2/04/10
of $43.53 |
Accretion
|
Expected
to be substantially accretive to Air Products cash
EPS in year one |
Synergies
|
Substantial
cost synergies yielding $250 million run-rate by the
end of year two |
Financing
|
•Air
Products has secured committed financing, is committed
to remaining investment grade and to returning to an A rating •Transaction
costs expected to be approximately $200MM,
expensed as incurred. •Q2
~$0.08 per share impact
•Q3
~$0.10 per share impact
|
Regulatory
Approval |
Air
Products has thoroughly considered potential regulatory
issues and is prepared to make appropriate divestitures |
6
Barclays
2nd Annual
industrial Select Conference
Compelling
strategic and industrial logic
Creates
one of the world’s leading integrated industrial gas companies
• Largest
industrial gas company in North America
• Diversified
across geographies and distribution channels with competitive
positions in all three supply modes: Packaged Gases, Liquid Bulk, Tonnage
positions in all three supply modes: Packaged Gases, Liquid Bulk, Tonnage
Combination
of highly complementary skills and strengths enables us to better
serve
the needs of customers
• Air
Products’ leadership in tonnage, strong European and joint venture
packaged gas positions
packaged gas positions
• Airgas’
leadership in U.S. packaged gases
• Air
Products’ Engineering and Technology Skills
Timing
is excellent
• Provides
Air Products a highly efficient re-entry into U.S. packaged gas
market
• Air
Products’ global infrastructure enables more rapid Airgas international
expansion
expansion
Significant
synergies available
• Substantial
cost savings
• Growth
opportunities as economy recovers
• Leverages
Air Products’ supply chain and SAP capabilities
7
Barclays
2nd Annual
industrial Select Conference
Airgas at a
glance
8
Broad
Coverage - 1,500 Sales Representatives
Source: Based on
Airgas public disclosures
Revenue
(FY2009)
|
$4.3B
|
Total
CAGR (over last 5 years)
|
19%
|
Same
Store Sales Growth
|
7%
|
Barclays
2nd Annual
industrial Select Conference
A world
leading integrated industrial gas company
9
Source: Based on
Airgas public disclosures
Packaged
Gas
90%
Gas
90%
Liquid/Bulk
10%
10%
Pro-forma
Air Products
Air Products
Pro-forma
Air Products
Air Products
Airgas
Revenues
Revenues
Airgas
Revenues
Revenues
Air
Products
Revenues
Revenues
Air
Products
Revenues
Revenues
Liquid/Bulk
17%
17%
Onsite
25%
25%
Equipment
& Services
10%
& Services
10%
Onsite/Pipeline
37%
Liquid/Bulk
24%
Equipment
&
Services
Services
14%
Packaged
Gas
Gas
11%
• One of the
largest industrial gas companies in the world
• Largest
industrial gas company in North America
• World-class
competencies across all modes of supply
+
=
Specialty
Materials
14%
Spec
Mat’ls
9%
Mat’ls
9%
Packaged
Gas
39%
Gas
39%
Barclays
2nd Annual
industrial Select Conference
Synergies
Supply
Chain
• Consolidate
filling locations
• Consolidate
specialty gas plant locations
• Move from
local delivery to hub and spoke
• Combine
purchasing requirements
• Utilize
Shared Services for Packaged Gas operations and
Project Management
Project Management
Overheads
• Use Shared
Services for back office operations - Finance, HR,
IT, Purchasing, Invoicing, Credit & Collections and Marketing
IT, Purchasing, Invoicing, Credit & Collections and Marketing
• Rationalize
management
• Rationalize
corporate infrastructure
SAP
enables these synergies
10
Barclays
2nd Annual
industrial Select Conference
Growth
acceleration
• New
Offerings for US Packaged Gases
– Integra ®
cylinders
– 300 BAR
cylinders
• Further
expand Air Products’ offerings into key industries
– Fabrication - Analytical
– Construction - Medical
– Pharmaceuticals - Food
and Beverage
• Utilize Air
Products’ International Structure
Growth
through new offerings, density and international expansion
11
Barclays
2nd Annual
industrial Select Conference
North
America remains a major growth area
GDP
growth
12
Japan
Europe
North
America
Asia
(excl. Japan)
(excl. Japan)
ROW
GDP
growth by location 2009 2013 Growth %
of World 09-'13
CAGR
World 49,115
55,903 6,788 100.0% 3.3%
Europe 16,616 17,907
1,291
19.0% 1.9%
Asia 12,733 15,472
2,739 40.4% 5.0%
Asia
ex. Japan 8,259
10,679
2,420 35.7%
6.6%
Japan 4,474 4,793 319 4.7%
1.7%
North
America 15,023 16,886 1,864
27.5%
3.0%
Rest
of World 4,744 5,637
893 13.2% 4.4%
Source: Global
Insights
Barclays
2nd Annual
industrial Select Conference
Key
measures
13
• Transaction
accretive in the
first year
first year
• Solid
shareholder value
• Excludes
transaction and
integration costs
integration costs
• Synergies
enable greater cash
flow generation
flow generation
• Combination
provides for
significant margin benefits
significant margin benefits
Accretion/Dilution
EBITDA
Margin
Barclays
2nd Annual
industrial Select Conference
14
Path
forward . . .
Air
Products
committed to
completing the
transaction
committed to
completing the
transaction
Litigation
• Commenced
litigation in
Delaware
Delaware
Tender
offer
• Offer
commenced Feb 11
• Financing
committed
Regulatory
process
• Prepared to
make
appropriate divestitures
appropriate divestitures
Proxy
contest
• Proceed
with proxy contest
if needed
if needed
Barclays
2nd Annual
industrial Select Conference
Air
Products Financial Performance
|
FY04
|
thru
|
FY08
|
H109
|
H209
|
Q110
|
Sales
(
CAGR/ % chg vs PY )
|
|
14%
|
|
(16%)
|
(25%)
|
(1%)
|
Operating
Margin *
|
12.8%
|
1.8%
|
14.6%
|
13.2%
|
15.5%
|
15.9%
|
EPS
Cont Ops.*
|
|
21%
|
|
(24%)
|
(16%)
|
20%
|
ROCE
(4
quarter trailing)*
|
9.6%
|
3.4%
|
13.0%
|
|
|
|
ROCE
(instantaneous)
*
|
|
|
|
10.0%
|
11.2%
|
11.7%
|
*
non-GAAP, see appendix for reconciliation
15
Barclays
2nd Annual
industrial Select Conference
We have
Multiple Growth Opportunities
l Hydrogen
for refining
l Oxygen for
gasification
l LNG heat
exchangers
Energy
Environment
Emerging
Markets
l Oxyfuel
l Carbon
capture
l Multiple
Gas Applications
l Electronics
across Asia
l Equity
Affiliate positions
l Expanding
Merchant
positions in Asia
positions in Asia
16
Barclays
2nd Annual
industrial Select Conference
Merchant
Business – At a
glance
• 2009
revenue of $3.6B
• Global
business plus 5 large JVs
• Achieved
18.3% operating margin
in FY’09
in FY’09
• Goals:
– 20%
operating margin by FY’11
– Sustained
annual growth: 10%
Applications
expertise drives growth
17
Barclays
2nd Annual
industrial Select Conference
Cleanfire® HRi™
burner
burner
Efficient
oxygen
plant design
plant design
Merchant
Business
Applications Driven Growth
Applications Driven Growth
A
winning combination!
18
Barclays
2nd Annual
industrial Select Conference
Merchant
Business
Winning New Customers with Industrial Gases
Winning New Customers with Industrial Gases
Integra® Cylinders
19
Barclays
2nd Annual
industrial Select Conference
Tonnage
Gases –
At a glance
• 2009
revenue of
$3.1B
$3.1B
• Leading
supplier of
refinery hydrogen
refinery hydrogen
• Primary end
markets
– Refining
– Chemicals
– Steel
• Expect 10%
H2 and
O2 growth long term
O2 growth long term
Exciting
growth opportunities in all major regions of the world
20
Barclays
2nd Annual
industrial Select Conference
Tonnage
Gases
Hydrogen Fueling Growth for the Future
Hydrogen Fueling Growth for the Future
• Transport
fuels growth
• Heavier,
sour crude slate
• Clean fuels
legislation
• Outsourcing
trend
Conversion
45%
45%
Crude
25%
25%
Clean
Fuels
15%
Fuels
15%
Outsourcing
15%
15%
21
Barclays
2nd Annual
industrial Select Conference
Tonnage
Gases
Leading Global Hydrogen Positions
Leading Global Hydrogen Positions
Southern
California
California
Edmonton,
Canada
Canada
Sarnia,
Canada
Texas
Louisiana
Rotterdam
22
Barclays
2nd Annual
industrial Select Conference
• Steel
– Asian
infrastructure growth
– Mill
modernization
• Gasification
– Power
– Feedstock
independence
– Low BTU
hydrocarbons
• Cleaner
coal
– Power
– CO2
capture
200,000-300,000
tons-per-day new oxygen capacity by 2018
100+ new
plants
23
Barclays
2nd Annual
industrial Select Conference
Projected
2010
• Marathon
Garyville
• XOM Baton
Rouge
• Total Port
Arthur
• XOM
Baytown
• MarkWest
Texas
Projected
2011-2012
• XOM
Rotterdam
• Shell
Rotterdam
• Marathon
Detroit
• Monsanto
Louisiana
Continuous
improvement
improvement
Operating
bonuses
bonuses
Base
take
or pay
or pay
Franchise
positions
positions
Additional
products
products
Superior
returns:
• Ann Joo
Steel Malaysia
• US Steel
Nanticoke, Ont.
• Shadeed
Steel Oman
• Sphinx
Glass Egypt
• Isle of
Grain LNG UK
• Emirates
Glass Abu Dhabi
• Weihe
Energy Gasifier
• Xingtai
Steel
• PetroChina
ASU JV
24
Barclays
2nd Annual
industrial Select Conference
• 2009
revenue of $1.6B
• Significant
opportunities
– Semi
industry recovery
– Thin film
PV
– Eco-friendly
solutions
– Emerging
markets
• Goal of 15%
operating
margins in FY’11
margins in FY’11
Focused
on margin improvement
25
Barclays
2nd Annual
industrial Select Conference
Electronics
Significant Opportunity in Thin-Film PV
Significant Opportunity in Thin-Film PV
• Flat panel
experience = differentiated advantage in thin
film technologies
film technologies
• Comprehensive
offerings and turnkey solutions through
SunSource™ Solutions portfolio
SunSource™ Solutions portfolio
1
GW facility =
$100+MM in annual
revenues
Equip/Services
Bulk
Dopants
Onsites
NF3
Silane
26
Barclays
2nd Annual
industrial Select Conference
Equity
Affiliates
Important Source of Growth
Important Source of Growth
Mexico
Italy
India
South
Africa
Thailand
27
Barclays
2nd Annual
industrial Select Conference
FY’10 Full
Year Outlook Update
● FY’10
overall… expecting a
gradual and modest recovery
gradual and modest recovery
● WW
manufacturing growth
– Globally up
1% to 2%
– US flat to
up modestly
– EU
down
1%
– Asia up
8% to
9%
● Silicon
growth 20% to
25%
● Capex
forecast unchanged
– ~$1.3B to
$1.5B
Comparison
is non-GAAP, see appendix for reconciliation
FY’09
Adjusted Diluted EPS $4.06
– Merchant
loading
– Tonnage new
projects/loading
– E&E
similar to last year
– E&PM
loading, partially offset by
restructuring cost & lower pricing
restructuring cost & lower pricing
– Productivity/restructuring
benefits
– Pension
headwind
– Tax rate
about 25% to 26%
FY’10
EPS $4.75-$4.95
17% - 22%
growth
vs PY
28
Barclays
2nd Annual
industrial Select Conference
RESULTS
• Double-digit
EPS growth
• ROCE 3-5%
above cost of
capital
capital
The Air
Products Opportunity
STABILITY
• Long term
contracts,
consistent and
predictable cash flow
consistent and
predictable cash flow
• Diversified
across
geographies and
distribution channels
geographies and
distribution channels
• Airgas
opportunity
creates competitive
positions in all three
supply modes,
maintains strong
balance sheet
creates competitive
positions in all three
supply modes,
maintains strong
balance sheet
GROWTH
• Solid
backlog and
strong growth
opportunities across all
geographies
strong growth
opportunities across all
geographies
• New
growth
opportunities in energy,
environment and
emerging markets
opportunities in energy,
environment and
emerging markets
• Airgas
provides a highly
efficient re-entry into
U.S. packaged gas
market, broadening our
growth opportunities
efficient re-entry into
U.S. packaged gas
market, broadening our
growth opportunities
Well-positioned
for long-term value creation
29
Thank
you
www.airproducts.com
Barclays
2nd Annual
industrial Select Conference
Non GAAP
Appendix - Year over Year Deltas
31
Barclays
2nd Annual
industrial Select Conference
32
Barclays
2nd Annual
industrial Select Conference
Non GAAP
Appendix - ROCE FY04 and FY08
33
Barclays
2nd Annual
industrial Select Conference
Non GAAP
Appendix - ROCE Tax Rate FY04 and FY08
34
Barclays
2nd Annual
industrial Select Conference
35
Barclays
2nd Annual
industrial Select Conference
Non GAAP
Appendix - ROCE Tax Rate FY09 and Q1 FY10
36
Barclays
2nd Annual
industrial Select Conference
Non-GAAP
Appendix: FY10
Guidance
($
Millions, except per share data)
FY10
Guidance vs. FY09
Diluted
EPS
Continuing
Ops
FY09
GAAP
$3.00
FY09
Global Cost Reduction Plan
$0.94
FY09
Pension Settlement
$0.02
FY09
Customer Bankruptcy and Asset Actions
$0.10
FY09
Non GAAP
$4.06
FY10
Guidance
$4.75-$4.95
FY09
GAAP
$3.00
%
Change GAAP
58%-65%
FY10
Guidance
$4.75-$4.95
FY09
Non GAAP
$4.06
%
Change Non GAAP
17%-22%
37