ARCH CHEMICALS, INC. Analyst Day Analyst Day November 22, 2010 November 22, 2010 Biocides focus Biocides focus Growth Growth Improved profitability Improved profitability ARCH CHEMICALS, INC. Exhibit 99.1 |
ARCH CHEMICALS, INC. Cautionary Statement Cautionary Statement Except for historical information contained herein, the information set forth in this communication contains forward- looking statements that are based on management's beliefs, certain assumptions made by management and management's current expectations, outlook, estimates and projections about the markets and economy in which the Company and its various businesses operate. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "opines," "plans," "predicts," "projects," "should," "targets" and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors"), which are difficult to predict. Therefore, actual outcomes may differ materially from what is expected or forecasted in such forward- looking statements. The Company undertakes no obligation to update any forward-looking statements, whether as a result of future events, new information or otherwise. Future Factors which could cause actual outcomes to differ materially from those discussed include but are not limited to: general economic and business and market conditions; no improvement or weakening in U.S., European and Asian economies; increases in interest rates; changes in foreign currencies against the U.S. dollar; customer acceptance of new products; efficacy of new technology; changes in U.S. or foreign laws and regulations; increased competitive and/or customer pressure; loss of key customers; the Company's ability to maintain chemical price increases or achieve targeted price increases; higher-than-expected raw material and energy costs and availability for certain chemical product lines; unexpected changes in the antidumping duties on certain products; increased foreign competition in the calcium hypochlorite markets; inability to obtain transportation for our chemicals; unfavorable court decisions, including unfavorable decisions in appeals of antidumping rulings, arbitration or jury decisions or tax matters; the supply/demand balance for the Company's products, including the impact of excess industry capacity; failure to achieve targeted cost-reduction programs; capital expenditures in excess of those scheduled; environmental costs in excess of those projected; the occurrence of unexpected manufacturing interruptions/outages at customer, supplier or Company plants; a decision by the Company not to start up the hydrates manufacturing facility; unfavorable weather conditions for swimming pool use; inability to expand sales in the professional pool dealer market; the impact of global weather changes; changes in the Company’s stock price; ability to obtain financing at attractive rates; financial market disruptions that impact our customers or suppliers; gains or losses on derivative instruments; implementation of the Company’s R&D consolidation consistent with the Company’s expectations; and achievement of the Company’s multi-faceted margin improvement plan, including technology improvements which result in lower processing, energy and other costs. 2 |
ARCH CHEMICALS, INC. …The Biocides Company… …The Biocides Company… Steve Giuliano – Steve Giuliano – Senior VP and CFO Senior VP and CFO Analyst Day - Analyst Day - November 22, 2010 November 22, 2010 |
ARCH CHEMICALS, INC. 3 2 100% biocides portfolio – Disciplined acquisitions – Sale of non-core businesses 1 Executing Three Point Strategy Executing Three Point Strategy Strong sales growth – Accelerate innovation – Capitalize on emerging markets Improved profitability – Margin expansion – Lower costs – Improved cash flow 4 |
ARCH CHEMICALS, INC. Improved Profitability – Margin Expansion Improved Profitability – Margin Expansion 5 Multifaceted Margin Improvement Plan 6.7% Portfolio management Organic growth & innovation Cost reductions 350+ bps FY 2009 FY 2013 Innovation/ R&D spending >10% 60 200 175 (75) |
ARCH CHEMICALS, INC. • Actively pursuing sale of remaining, non-core businesses – Performance Urethanes and Hydrazine businesses – Cash flow positive – 2009 sales of ~$165 million • Improves operating margins by 60 bps – Net of stranded costs 6 Margin Improvement Plan – Portfolio Management Margin Improvement Plan – Portfolio Management |
ARCH CHEMICALS, INC. 7 EBIT improvement opportunity 100 bps/year 150 bps/year Risk adjustment 50% 50% EBIT improvement target 50 bps/year 75 bps/year 2013 cumulative improvement target 200 bps 300 bps Margin Improvement Plan – Organic Growth & Innovation Margin Improvement Plan – Organic Growth & Innovation 7 Assumptions: Margin contribution of ~45% Incremental operating expenses ~20% 6% Sales Growth 8% Sales Growth |
ARCH CHEMICALS, INC. • Targeted programs to reduce SG&A across Company – Identified specific opportunities near-term, mid-term and long-term • Implement cost-reduction opportunities – Process improvements – Organizational redesign – Technology enablers – Site rationalization 8 Margin Improvement Plan – Cost Reductions Margin Improvement Plan – Cost Reductions Operating Expenses $10 – $15 million target |
ARCH CHEMICALS, INC. • Supply chain sourcing – Chemicals – Packaging & accessories – MRO – Logistics & warehouse optimization – Third party services – engineering, maintenance, marketing, temp labor • Manufacturing optimization – Tolling opportunities – make vs. buy – Technology implementation – Process yield improvements 9 Margin Improvement Plan – Cost Reductions Margin Improvement Plan – Cost Reductions Gross Margin Improvements $15 – $20 million target |
ARCH CHEMICALS, INC. 10 Summary of Cost Reduction Initiatives Margin Improvement Plan – Cost Reductions Margin Improvement Plan – Cost Reductions Total opportunity = $30 - $45 million Total target = $25 – $35 million 175 – 250 bps improvement $5M $15M $25M 2011E 2012E 2013E |
ARCH CHEMICALS, INC. 11 Margin Improvement Plan Summary Basis Point Improvement Margin Improvement Plan Summary Basis Point Improvement Operating Margin Target Range Portfolio management 60 bps 60 bps Organic growth & innovation 200 300 Cost reductions 175 250 435 610 Innovation/R&D spending (75) (75) Net margin improvement 360 bps 535 bps 2009 base operating margins 6.7% 6.7% 2013 operating margins 10.3% 12.1% |
ARCH CHEMICALS, INC. THE FUTURE: Key Financial Metrics Set to Improve THE FUTURE: Key Financial Metrics Set to Improve 12 Net sales GROWING 6-8% organic growth Operating margin IMPROVING 350+ bps expansion EBITDA ROBUST >$200M annually EPS INCREASING Double digit growth Dividend STABLE Maintain attractive dividend |
ARCH CHEMICALS, INC. SUMMARY The Arch Chemicals Investment Proposition SUMMARY The Arch Chemicals Investment Proposition 13 THE Biocides Company Targeting 100% revenues from biocides, transformation has begun A transformed company Market leader, globally Leading position in major markets, strong competitive advantages Strong global platform Faster growth, expanding margins Deliver 6-8% annual organic top-line growth, multi-faceted margin improvement plan, double digit EPS growth Executing focused strategy |