Attached files
| file | filename |
|---|---|
| EX-99.1 - PRESS RELEASE - SIGMA ALDRICH CORP | d297235dex991.htm |
| 8-K - FORM 8-K - SIGMA ALDRICH CORP | d297235d8k.htm |
 Sigma-Aldrich Corporation
•
Enabling Science to Improve the Quality of Life
sigma-aldrich.com
Exhibit 99.2
Q4 and Full Year 2011 Earnings Review & 2012 Outlook
|
 Cautionary Statements
February 9, 2012 earnings release posted on its website,
www.sigma-aldrich.com,
and
in
the
Appendix
–
Reconciliation
of
GAAP
to
Non-GAAP
Financial
Measures
beginning
on
Slide
18.
Our presentation today may be deemed to include or incorporate forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that involve risks and uncertainties, including financial, business
environment and projections, as well as statements that are preceded by, followed by, or that include the words “believes,” “can,”
“expects,” “plans,” “anticipates,” “should”, “will”
or similar expressions, and other statements regarding matters that are not historical facts.
Additionally, the release contains forward-looking statements relating to future performance,
goals, strategic actions and initiatives and similar intentions and beliefs, including, without
limitation, statements with respect to Sigma-Aldrich Corporation’s (the “Company,” “we,” “us” or “our”)
expectations, goals, beliefs, intentions and the like regarding future sales, earnings, return on
equity, cost savings, process improvements, free cash flow, share repurchases, capital
expenditures, acquisitions and other matters. These statements are based on assumptions
regarding the Company operations, investments and acquisitions and conditions in the markets the
Company serves. The Company believes these assumptions are reasonable and well founded.
The statements in this release are subject to risks and uncertainties, including, among others,
certain economic, political and technological factors. Actual results could differ materially from those stated or implied in the release,
due to, but not limited to, such factors as (1) global economic conditions, (2) changes in pricing and
the competitive environment and the global demand for our products, (3) fluctuations in foreign
currency exchange rates, (4) changes in research funding and the success of research and
development activities, (5) failure of planned sales initiatives in our Research and SAFC business units, (6) dependence on
uninterrupted manufacturing operations, (7) changes in the regulatory environment in which the Company
operates, (8) changes in worldwide tax rates or tax benefits from domestic and international
operations, including the matters described in Note 10 – Income Taxes to the Consolidated
Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (the “10-K”), (9)
exposure to litigation including product liability claims, (10) the ability to maintain adequate
quality standards, (11) reliance on third party package delivery services, (12) an
unanticipated increase in interest rates, (13) other changes in the business environment in which the
Company operates, (14) the outcome of the outstanding matters described in Note 11 – Contingent
Liabilities and Commitments, to the to the 10-K and (15) acquisitions or divestitures of
businesses. A further discussion of the Company’s risk factors can be found in Item 1A of Part I
of the 10-K. The Company does not undertake any obligation to update these
forward-looking statements.
With over 60 percent of sales denominated in currencies other than the U.S. dollar, management uses
currency adjusted growth, and believes it is useful to investors, to judge the Company’s
local currency performance. Organic sales growth data presented herein excludes currency
impacts, and where indicated, acquisition impacts. The Company calculates the impact of changes
in foreign currency exchange rates by multiplying current period activity by the difference
between current period exchange rates and prior period exchange rates, the result is the
defined impact of “changes in foreign currency exchange rates” or “changes in FX.”
While we are able to report currency impacts after the fac we are unable to estimate changes
that may occur in 2012 to applicable exchange rates. Any significant changes in currency exchange rates
would likely have a significant impact on our reported growth rates due to the volume of our sales
denominated in foreign currencies.
Management also uses free cash flow, a non-GAAP measure, to judge its performance and ability to
pursue opportunities that enhance shareholder value. Free cash flow is defined as net
cash provided by operating activities less capital expenditures. Management believes this
non-GAAP information is useful to investors as well. Reconciliations of GAAP to non-GAAP information are included in the Company’s
2 |
 3
Performance versus Guidance
(1)
Adjusted EPS for one-time tax item
(1)
Q4 2011
Full Year 2011
Solid Achievement in 2011
Guidance
Actual
Guidance
Actual
Sales Growth
Low to
3%
5%
Diluted
Adjusted EPS
$0.85 -
$0.93
$0.91
$3.73 -
$3.81
$3.76
Free Cash Flow
N/A
N/A
~$400M
$391M
Mid-Single Digit
Mid-Single digit |
 Fourth
Quarter 2011 Financial Results ($ in millions, except per share amounts)
YEAR-OVER-YEAR
Operating Income up Double Digits in Q4
As
Reported
Q4 2011
As
Reported
Excluding
Restructuring
Operating Income
$ 160
23%
14%
Net Income
$ 108
15%
6%
Diluted EPS
$0.89
17%
7%
Free Cash Flow
$ 91
1%
Q4 2011
As
Reported
Excluding
Currency and
Acquisition
Impacts
Sales
$ 610
5%
3%
YEAR-OVER-YEAR
(1)
(1)
See page 23 for Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow 4 |
 5
Full Year
2011 Financial Results
($ in millions, except per share amounts)
5
YEAR-OVER-YEAR
Year-to-Date Sales and Earnings Up 10% and 19% from Prior Year.
13%
19%
$ 462
$ 457
Net Income
14%
19%
$ 3.76
$ 3.72
Diluted EPS
8%
$ 391
Free Cash Flow
Excluding
Restructuring
As
Reported
Excluding
Restructuring
and Impairment
Operating Income
$ 647
$ 655
17%
13%
2011
Year-To-Date
As
Reported
Excluding
Currency and
Acquisition
Impacts
Sales
$2,505
10%
5%
YEAR-OVER-YEAR
Twelve
Months
2011
(2)
See page 23 for Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow (2)
(1)
See page 19 for Reconciliation of Reported Net Income and Diluted Earnings Per
Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share.
(1) |
 6
6
2011 Sales Growth
RESEARCH
71%
29%
SAFC
Macroeconomic Uncertainty Impacted Research Growth in Q4
1%
7%
3%
Research
SAFC
Total
Company
Organic*
*See page 22 for Reconciliation of Reported Sales Growth to Adjusted (Organic)
Sales Growth. Reported
3%
8%
5%
3%
9%
5%
Organic*
Reported
9%
13%
10%
Q4 2011 / Q4 2010
Full Year 2011/
Full Year 2010
Sales Mix (2011) |
 7
24.2%
50 basis points
7
Margin Analysis
Q4 & Full Year Adjusted Operating Margins Improved
PERCENTAGE OF SALES
26.2%
-
Full Year 2011
25.8%
0.3
Reported
Operating
Income
Margin
-
2011
Q4 2011
25.6%
Restructuring Costs
Adjusted
Operating
Income
Margin
-
2011
26.2%
26.1%
Adjusted
Operating
Income
Margin
-
2010
Improvement
(1)
(1)
(1)
See page 20 for Reconciliation of Reported Operating Income Margin Adjusted
Operating Income Margin. 200 basis points |
 8
8
Free Cash Flow
(in millions)
2011
$457
106
(75)
7
495
(104)
$391
Net Income
Free Cash Flow
Net Cash Provided by Operating Activities
Less Capital Expenditures
Other
Changes in Performance Working Capital*
Depreciation & Amortization
2010
$384
93
17
29
523
(99)
$424
*Accounts Receivable
+
Inventory
–
Accounts
Payable
YEAR ENDED DECEMBER 31
Working Capital Increase to Support Sales Growth |
 9
9
Q4 2011 Sales Performance
Innovation
Reported
Organic
(1)
•
Analytical, Biology, Materials Science
Sales Growth
(2)
2-18%
2-6%
SAFC Sales
•
Build on momentum in key product segments
8%
7%
Geographic Growth
•
North America
4%
1%
•
Europe
1%
2%
•
Asia Pacific/Latin America
12%
7%
•
Focus
Markets
–
India,
China,
Brazil
25%
17%
eCommerce Sales
•
Increase in sales through
channel
14%
10% Initiatives Collectively on Track
(2)
Varies for individual product lines.
(1)
Adjusted for currency and acquisitions. See pages 21 & 22 for
Reconciliation of Reported Sales Growth to Adjusted (Organic) Sales
Growth. |
 10
10
•
Localization strategy made strong strides in 2011 in emerging markets
•
Q2 Vetec
acquisition in Brazil
•
Q3 Bangalore, India expansion
•
Q4 new facility in Wuxi, China completed December 2011
•
Q1 2012 Taiwan SAFC Hitech
facility to open
•
All time high service levels in International Region
SAFC and Emerging Markets Continue to Deliver
Full Year 2011 Highlights
•
SafeBridge
Certification for commercial scale HPAPI in Wisconsin
•
Innovation in ZFN and eCommerce |
 11
Strategic Priorities
•
Achieve double-digit organic growth in faster growing markets of Research
•
Protect and enhance financial performance of core Research business
•
Grow SAFC business in high single-digit by leveraging customer focus, unique
manufacturing capabilities and adjacent services
•
Expand in emerging markets
•
Drive operational excellence
•
Strategic acquisitions leveraging strong cash flow
Driving Above Market Growth |
 12
BioReliance Overview
2011 Revenue by Segment
Biologics
Toxicology
Animal Health Services
Global Facilities
Tokyo, Japan
Bangalore, India
Glasgow, Scotland
Stirling, Scotland
Rockville, USA
Total Employees: ~650
2011 Revenue: $126M
•
Global biopharmaceutical
services organization
•
Biologics Testing:
global market leader
for safety testing and support services
for manufacturers of biologic
therapeutics
•
Specialized Toxicology Studies:
global
market leader for genetic toxicology
testing; leader in transgenic model
studies for oncogenicity
•
Animal Health Services:
broad
spectrum of laboratory animal
diagnostic and analytical services for
health monitoring and disease
outbreak
BioReliance Currently Performs Testing for ~75% of the Top Pharma Companies and ~90%
of the Top Biotech Companies in the World. |
 13
BioReliance Strategic Rationale and Transaction Benefits
•
Strategic Context
•
Combination creates one of the broadest
product and services offerings for the
development and manufacturing of biological
drugs
•
Benefits biopharmaceutical customers with a
broad portfolio of product solutions and
services
•
Provides platform from which to expand
across laboratory and biological services
•
Financial Impact
•
Purchase price of approximately $350M in
cash
•
Expected to be accretive to growth rate and
earnings in 2012
•
Opportunity to drive incremental revenue
growth and returns over time through cross-
selling, geographic expansion, expansion of
technology platform
Sigma-Aldrich and BioReliance Provide an Expanded Value Proposition for
Biopharmaceutical Customers |
 14
Complementary Offering for Biologic Development &
Manufacturing
14
Bioreactor
Purified Bulk
Drug
Substance
Final Drug
Product
Unprocessed
Bulk Product
Research
Cell Line
Production Cell
Line (“Cell
Bank”)
Cloning, cell
selection &
expansion
Media development,
upstream process
optimization (“scale up”)
Process
Chromatography
Formulation
development,
stability testing, fill
& finish
Upstream Bioprocessing
Downstream Bioprocessing
Legend:
Raw Material Testing
Raw Material Manufacturing & Supply
Lot Release & Downstream Process Testing
Expression System and
Cell Line Development
Contract Biologic Manufacturing
Upstream Process Development
BioReliance
Sigma-Aldrich/SAFC |
 15
2012 Guidance
Organic Sales Growth
1st Half
Mid Single-digit
2nd Half
Full Year
Low Double-digits
Low Single-digit
Low to Mid Single-digit
Research
SAFC
Mid
Single-digit
Total Company Growth Expected To Be Mid Single-Digit
|
 16
2012 Guidance
Diluted Adjusted EPS
Diluted Earnings Per Share
$ 4.10 -
4.23
FX
Tax
BioReliance
EPS Range
$ 3.90 -
4.05
(0.15)
(0.10)
0.05 -
0.07
Free Cash Flow
In Excess of $400M |
 17
17
QUESTIONS?
Sigma-Aldrich Corporation
Q4 and Full Year 2011 Earnings Review |
 Appendix
Reconciliation of GAAP to Non-GAAP
Financial Measures
18 |
 19
Reconciliation of Reported Net Income and Diluted Earnings
Per Share to Adjusted Net Income and Adjusted Diluted
Earnings Per Share (Unaudited)
2011
2010
2011
2010
Reported net income
108
$
94
$
0.89
$
0.76
$
Restructuring costs
-
8
-
0.07
Extraordinary tax charge
2
-
0.02
-
Adjusted net income
110
$
102
$
0.91
$
0.83
$
2011
2010
2011
2010
Reported net income
457
$
384
$
3.72
$
3.12
$
Restructuring costs
5
17
0.04
0.14
Impairment costs
-
7
-
0.05
Adjusted net income
462
$
408
$
3.76
$
3.31
$
Three Months Ended
Three Months Ended
December 31,
December 31,
Net Income
Diluted Earnings
Net Income
Diluted Earnings
(in millions)
Per Share
December 31,
December 31,
(in millions)
Per Share
Twelve Months Ended
Twelve Months Ended |
 20
Reconciliation of Reported Operating Income to Adjusted
Operating Income (Unaudited)
2011
2010
2011
2010
Reported operating income
160
$
130
$
647
$
551
$
Restructuring costs
-
11
8
24
Impairment costs
-
-
-
7
Adjusted
operating income 160
$
141
$
655
$
582
$
2011
2010
2011
2010
Reported operating income margin
26.2%
22.3%
25.8%
24.3%
Restructuring costs
-
1.9%
0.3%
1.0%
Impairment costs
-
-
-
0.3%
Adjusted operating income margin
26.2%
24.2%
26.1%
25.6%
Three Months Ended
Twelve Months Ended
December 31,
December 31,
Three Months Ended
Twelve Months Ended
December 31,
December 31, |
 21
Reconciliation of Reported Sales Growth to Adjusted (Organic)
Sales Growth (Unaudited)
Three
Months
Ended
December
31,
2011
Reported
FX Impact
Acquisitions
Organic
•
Analytical, Biology, Materials Science Sales
Growth Geographic
Growth •
North America
•
Europe
•
Asia Pacific/Latin
America
•
Focus
Markets
–
India,
China,
Brazil
*Varies for individual product areas
2-18%
*
0-(1)%
*
0-13%
*
2-6%
*
4%
-%
3%
1%
1%
(1)%
-%
2%
12%
1%
4%
7%
25%
(4)%
12%
17% |
 22
Reconciliation of Reported Sales Growth to Adjusted (Organic)
Sales Growth (Unaudited)
Sales Growth by Business Unit
Currency
Acquisition
Adjusted
Reported
Benefit
Benefit
(Organic)
Research Essentials
3%
-
3%
-
Research
Specialties 3%
-
2%
1%
Research
Biotech 5%
-
-
5%
Total Research
3%
-
2%
1%
SAFC
8%
-
1%
7%
Total Customer
Sales 5%
-
2%
3%
Currency
Acquisition
Adjusted
Reported
Benefit
Benefit
(Organic)
Research Essentials
10%
4%
2%
4%
Research
Specialties 9%
4%
3%
2%
Research
Biotech 9%
4%
-
5%
Total Research
9%
4%
2%
3%
SAFC
13%
3%
1%
9%
Total Customer
Sales 10%
4%
1%
5%
Ended December 31, 2011
Twelve Months
Three Months
Ended December 31, 2011 |
 23
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow (Unaudited)
In millions
2011
2010
Net cash provided by operating activities
122
$
126
$
Less: Capital expenditures
(31)
(34)
Free cash flow
91
$
92
$
2011
2010
Net cash provided by operating activities
495
$
523
$
Less: Capital expenditures
(104)
(99)
Free cash flow
391
$
424
$
Three Months Ended
December 31,
December 31,
Twelve Months Ended |