Seifi Ghasemi Chairman, President and Chief Executive Officer September 18, 2014 Create Shareholder Value Exhibit 99.1 |
2 Forward looking statements Note: 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 the Company's future plans, objectives, estimates and goals. Such statements address future conditions including concerning profitability, operations, capital expenditures, cashflow and earnings. These forward- looking statements are based on management's reasonable expectations and assumptions as of the date of this release. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management, including, without limitation, weakening global or regional economic conditions; future financial and operating performance of major customers or end markets; the Company's ability to identify future markets and successfully expand existing ones; unanticipated contract terminations or customer cancellations or postponement of projects and sales; the impact of competitive products and pricing; unexpected changes in raw material supply and markets; unanticipated asset impairments or losses; the ability to recover increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory investigations; the cost and impact of management and organizational changes, including the impact on the Company's ability to retain qualified personnel; the success of restructuring and cost reduction programs; the Company's ability to successfully develop and execute new projects and technologies; significant fluctuations in interest rates and foreign currencies from that currently anticipated; political risks, including the risks of unanticipated government actions that may result in project delays, cancellations or expropriations; the impact of changes in environmental, tax or other legislation and regulatory activities in jurisdictions in which the Company and its affiliates operate; and other risk factors described in the Company's Form 10-K for its fiscal year ended September 30, 2013. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this release to reflect any change in the Company's assumptions, beliefs or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based. All financial figures are FY13 unless noted otherwise. |
3 $10.2 billion in sales 21,600 employees 50+ countries 273 on Fortune 500 list 7+ decades in business 170,000+ customers 1800 miles of industrial gas pipeline 750+ production facilities 30+ industries served Air Products today |
4 Air Products global presence 41% U.S./Canada 26% Europe 25% Asia 8% Latin America |
5 First 75 Days |
• Air Products has the people, technologies, and geographic footprint to deliver industry-leading performance • The people of Air Products are ready for the significant changes necessary to regain the leadership position we enjoyed 20 years ago • We will unlock the value potential through a management approach that empowers and motivates our employees 6 Observations – First 75 Days |
7 Moving Forward |
Today’s Agenda 8 Strategy Path Forward • Mission • Our Goal • Management Principles • Our Plan • Q4 FY14 • Summary • Competitive Advantage |
Our Mission 9 Create Shareholder Value |
Air Products will be the safest and the most profitable industrial gas company in the world, providing excellent service to our customers 10 Our Goal |
• The only acceptable goal is zero accidents • Maintaining a safe workplace is a fundamental and moral responsibility 11 Safest |
As measured by: • EBITDA as a percent of Sales • Operating Profit as a percent of Sales • Return on Capital 12 Most Profitable |
Air Products will be the safest and the most profitable industrial gas company in the world, providing excellent service to our customers 13 Our Goal |
14 Management Principles |
Management Principles 15 CEO Focus Capital allocation is the most important job of the CEO Operating Model Decentralized organization releases entrepreneurial energy and minimizes costs and politics Shareholder Value Cash is king; cash flow drives long-term value What counts in the long term is the increase in per share value of our stock, not size or growth |
16 Our Plan |
17 Our 5 Point Plan Focus on the Core Restructure the Organization Change Company Culture Control Capital / Costs Align Rewards |
• We are an Industrial Gas company and will continue to be going forward • Strengthen our integrated supply networks and build density • Selective geographic participation where we are advantaged • Sale of gas and sale of equipment at attractive returns 18 Our Plan – Focus on the Core |
Our Plan – Focus on the Core 19 Products Integrated Supply Modes Our Core Businesses Participate based on Profitability • Performance Materials & Electronic Materials • Energy-from-Waste • Atmospheric Gases: O 2 , N 2 , Ar • Process & Specialty Gases: H 2 , He, CO 2 • Equipment: LNG, He Containers • Onsite / Pipeline, Liquid / Bulk, Packaged |
• Decentralized organization • Geographic focus and alignment • Empowered and accountable business managers • Reduced and streamlined management layers • Detailed operating metrics 20 2. Our Plan – Restructure Organization |
Our Plan – Reporting Segments 21 Energy from Waste Gases - Americas Gases - EMEA Global Gases Corporate Materials Technologies Gases - Asia $3,900 38% $2,100 21% $1,600 16% $310 3% $420 4% n/a $1,900 18% Industrial Gases (FY13 Revenue $MM, %) |
Chairman, President & CEO S. Ghasemi Our Plan – New Organization 22 SVP & CAO J. Stanley SVP & CFO S. Crocco VP Energy from Waste D. Taylor VP HR J. Grant President Americas C. Painter President EMEA I. Bols VP Ops. Excel. R. Boocock Joint Ventures S. Ghasemi Mexico India Thailand S. Africa Italy EVP Materials Tech. G. Novo VP Perf. Mat. R. Thomas VP Elect. Mat. W. Mitchell President Asia W. Mok EVP Industrial Gases C. Painter SVP Eng. & Mfg. P. Mattimore VP HyCO & LASU COE J. Byrne VP Corp. Dev. K. Klein |
3. Our Plan – Change Culture 23 Self-Confidence • Every employee at Air Products is as capable, or more capable than, any one of our competitors’ employees • As a team, we can and will be the best • We are a team working together to win • We are not just doing a job, we are committed to excellence Safety • Enjoyable place to work • Encourages people to get involved • Disciplined approach to every job • More efficient and profitable operation Simplicity • Simple and clear structure • Simple work and decision-making processes • Simple and well-understood reward system based on areas of responsibility Speed • Get it done • Sense of urgency • Fast response to customer needs • Once a decision is made, implement! |
Capital Allocation • We will not spend more than we can afford • We have raised required project returns and lowered delegations of authority for capital spend Cost / Efficiency Program • Reduce Corporate overhead • Drive operational improvement across the network 24 4. Our Plan – Control Capital / Costs |
• Annual incentive plan based on aggressive EBITDA targets at business unit level • Long-term equity plan totally aligned with shareholder value creation • Significant stock ownership by senior management 25 5. Our Plan – Align Rewards |
Our Plan – 5 Point Plan Summary 26 Restructure Organization Decentralize Geographic alignment Control Capital/Costs Capex Hurdle rates Corporate cost Ops. / Dist. efficiency Change Culture Safety Simplicity Speed Self-confidence Align Rewards Reward performance EBITDA / value creation target Focus on the Core Industrial gases Key geographies |
27 Fourth Quarter Guidance |
• Guidance was $1.60 - $1.65 EPS • Today we are reconfirming our guidance; midpoint would be the highest quarterly earnings the Company has ever achieved by over 10% 28 Fiscal Year 2014 – 4th Quarter |
Summary 29 Mission Create value for shareholders Our Goal Be the safest and most profitable Management Principles Cash is king Capital allocation Decentralized organization |
30 Summary Our Plan Industrial gases Focus on the Core Geographic focus Restructure the Organization Safest, Simplicity, Speed, Self-confidence Change Company Culture Raise hurdle rates / overhead and efficiency Control Capital / Costs EBITDA short-term / TSR long-term Align Rewards 1 2 3 4 5 |
The only sustainable element of long-term competitive advantage is the degree of commitment and motivation of the people in the enterprise 31 Our Competitive Advantage |
32 Moving Forward |
tell me more Thank you tell me more |
Our Plan – Reporting Segments 34 Energy from Waste Gases - Americas Gases - EMEA Global Gases Corporate Materials Technologies Gases - Asia $3,900 38% $2,100 21% $1,600 16% $310 3% $420 4% n/a $1,900 18% Industrial Gases (FY13 Revenue $MM, %) • Onsite / Pipeline – Air Separation Unit (ASU) – O 2 , N 2 , Ar – Hydrogen/HyCO • Liquid / Bulk – O 2 , N 2 , Ar, He, etc • Packaged Gases • Sale of Equipment (ASU, non-cryo) • Performance Materials • Electronics Materials • Tees Valley • LNG Equipment • Helium containers • Corporate Costs |
Appendix: Guidance 35 EPS Guidance Diluted Q4 Guidance EPS (1) Q413 GAAP $0.70 Business Restructuring Charge $0.74 Advisory Costs $0.03 Q413 Non GAAP $1.47 Q414 Guidance $1.60-$1.65 % Change 9%-12% Diluted Full Year Guidance EPS (1) FY13 GAAP $4.73 Business Restructuring Charge $0.74 Advisory Costs $0.03 FY13 Non GAAP $5.50 FY14 Guidance $5.72-$5.77 % Change 4%-5% (1) Continuing operations, attributable to Air Products |