FMC Corporation Boston Investor Meetings November 21, 2005 W. Kim Foster Senior Vice President and CFO Exhibit 99.1 * * * * * * * * * * * * * * * * |
1 Disclaimer Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 • These slides and the accompanying presentation contain “forward- looking statements” that represent management’s best judgment as of the date hereof based on information currently available. Actual results of the Company may differ materially from those contained in the forward- looking statements. • Additional information concerning factors that may cause results to differ materially from those in the forward-looking statements is contained in the Company’s periodic reports filed under the Securities Exchange Act of 1934, as amended. • The Company undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. Non-GAAP Financial Terms • These slides contain certain “non-GAAP financial terms” which are defined in the appendix. In addition, we have provided reconciliations of non-GAAP terms to the closest GAAP term in the appendix. |
2 FMC Corporation Diversified chemical company with leading market positions in industrial, consumer and agricultural markets globally ($ millions, LTM 9/30/05) FMC Sales: $2,141.7 EBITDA: $420.5 EBITDA Margin: 19.6% Industrial Chemicals Sales*: $866.7 EBITDA: $150.5 EBITDA Margin: 17.4% Agricultural Products Sales*: $728.8 EBITDA: $160.4 EBITDA Margin: 22.0% Specialty Chemicals Sales*: $549.6 EBITDA: $140.0 EBITDA Margin: 25.5% * Segment sales figures exclude $3.4 million in eliminations. |
3 Realizing the inherent operating leverage within FMC - Sustained earnings growth >10% per year (1) - Industrial Chemicals recovery in mid-cycle - Continued growth in Specialty Chemicals and Agricultural Products Creating greater financial flexibility - Reduce net debt to ~ $420 million by the end of 2005 - Maintain investment-grade capital policies Focusing the portfolio on higher growth businesses - Manage Specialty Chemicals and Agricultural Products for growth - Manage Industrial Chemicals for cash - Completed Astaris divestiture in November 2005 - Improve ROIC to 12% minimum by 2006 Disciplined Approach to Unlocking Value (1) Earnings before restructuring and other income and charges |
4 Multi-Year Recovery * Earnings before restructuring and other income and charges per diluted share. ** 2005E EPS calculated using midpoint of outlook issued by FMC on November 3, 2005. On track to deliver sustained multi-year recovery in Sales and EPS $3.20 $4.82 $3.10 $2.55 $1.90 $4.25E 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2000 2001 2002 2003 2004 2005E** - 1.00 2.00 3.00 4.00 5.00 6.00 Sales EPS |
5 Leading Market Positions (1) Based on 2004 consolidated sales (2) Shared Industrial Chemicals #1 in N.A. Soda Ash #1 in N.A. Hydrogen Peroxide #1 in N.A. Persulfates #1 Globally Carrageenan #1 Globally Carbofuran #2 in N.A. Pyrethroids Agricultural Products #2 Globally Alginates Specialty Chemicals #1 Globally (2) #1 Globally Lithium Specialties Microcrystalline Cellulose Product Group Position (1) |
6 Diversified Customers and End Markets Greater than 80% of sales to non-cyclical end markets Long term relationships with blue chip customers No single customer represents more than 5% of sales Top 10 customers in total represent approximately 15% of sales 2004 Consolidated Sales Agricultural 34% Detergents 9% Pharmaceuticals 11% Food 8% Other 12% Glass/Fiberglass 4% Chemicals 6% Pulp & Paper 4% Electronics 2% Other 3% Bottle Glass 3% Non-Cyclical 81% Cyclical 19% Chemicals 4% |
7 Diversified and Integrated Cost Structure Low cost sourcing of raw materials – Backward integration: soda ash, lithium – Global sourcing of renewable resources: wood pulp, seaweed Low reliance on purchased raw materials – Total raw materials represent approximately 25% of cost of sales – No single raw material accounts for more than 7% of total raw material purchases – Reduced volatility from limited use of petrochemical feedstocks Low energy demand requirements – Energy represents approximately 10% of cost of sales |
8 (1) Assumes midpoint of FMC outlook of $4.25 per diluted share issued 8/3/05, 39 million shares outstanding, 25% tax rate, $58 million pre-tax interest and $135 million D&A. (2) Includes legacy environmental spending and Pocatello remediation spending. (3) Includes gain on sale of San Jose, CA property, debt refinancing costs, repayment of deferrals by Astaris, working capital, pension contributions and taxes. (4) Free Cash Flow equals sum of cash provided by operations and cash provided by discontinued operations minus cash required by investing activities and debt refinancing costs. Significant Free Cash Flow Net debt reduced to ~ $420 million by end of 2005 – lower than target and earlier than expected -100 0 100 200 300 400 500 EBITDA (1) Pre-tax Interest Capex Other Sources/ Uses (3) Free Cash Flow (4) 2005 Cash Flow Drivers $214E $416E $58E $90E $50E Legacy (2) $104E $100E Astaris Proceeds |
9 Agricultural Products Strong niche positions in the Americas, Europe and Asia Proprietary, branded insecticides and herbicides FMC differentiated by: – Focused strategy in selected markets, crops and regions – Leverage proprietary products and third party products/technologies – Depth and breadth of alliances and partnerships – Manufacturing cost competitiveness via sourcing from lower cost regions Insecticides 73% North America 35% Latin America 36% Asia 13% Europe/ Middle East/Africa 16% Herbicides 25% Based on 2004 Consolidated Sales of $703.5 million Fungicides 2% |
10 Agricultural Products Financial Performance $114 $101 $99 $111 $148 $160 0 25 50 75 100 125 150 175 2000 2001 2002 2003 2004 LTM 9/30/05 0 5 10 15 20 25 EBITDA Capital Spending EBITDA Margin 2005 earnings growth of 5% expected, reflecting higher sales and lower manufacturing costs partially offset by lower bifenthrin pricing and higher raw materials costs. |
11 Agricultural Products’ Focus Creating competitive advantage through innovation – Investing 10% of sales in R&D – In-licensing products & technologies that complement segment strategies Driving near-term sales growth – Label expansions and new formulations in crop and non-crop segments – In-licensed products, e.g., flonicamid and acetamiprid with maturity sales of ~$50-90 million Strengthening Market Access – Distribution joint ventures & alliances – Third party products Reducing global supply chain and overhead costs – Sourcing initiatives should produce additional manufacturing savings – Further redesign of global supply network – Market access strategies/alliances drive SG&A reductions |
12 Industrial Chemicals Overview #1 North American manufacturer of soda ash and peroxygens Backward integration into natural resources Low cost, proprietary production technology Foret is a leading Iberian producer of inorganic chemicals Asia 7% Alkali (Soda ash) 46% Peroxygens 19% Foret 35% Latin America 8% North America 50% Europe/Middle East/Africa 35% Asia 7% Based on 2004 Consolidated Sales of $813.7 million |
13 Industrial Chemicals Financial Performance Earnings growth of 45% expected in 2005 driven by higher selling prices, partially offset by higher energy, raw material and transportation costs $151 $124 $130 $133 $94 0 50 100 150 200 2001 2002 2003 2004 LTM 9/30/05 0% 5% 10% 15% 20% EBITDA Capital Spending EBITDA Margin |
14 Industrial Chemicals’ Focus Near-term sales growth – Higher selling prices for soda ash – Incremental soda ash capacity addition at Granger – US and European peroxides producers have announced price increases Margin expansion - Working to offset rising energy, raw material and transportation costs - Energy and freight surcharges Managing its businesses for cash generation |
15 Soda Ash Demand 0 2 4 6 8 10 12 Export Glass Container Flat Glass Chemicals Detergents Other North American Soda Ash Shipments • Demand Drivers: – GDP – Cost advantage of natural soda ash versus synthetic soda ash – Industrialization rates in key export markets |
16 Sold-out U.S. Soda Ash Industry 0.8 0.9 1 1.1 1.2 85% 90% 95% 100% 2005 Contract Renewals Price Index Effective Capacity Util. 2005 domestic price increase is the most significant since 1996 |
17 Tight North American Hydrogen Peroxide Market 0.6 0.7 0.8 0.9 1 1.1 1.2 70 75 80 85 90 95 100 Price Index Effective Capacity Util. 2005 to represent the third consecutive year of rising prices |
18 BioPolymer 72% Lithium 28% Latin America 8% North America 41% Europe/Middle East/Africa 36% Asia 15% • One of two global, integrated manufacturers • Focus on specialty products – pharmaceuticals and energy storage devices Lithium: • Adds structure, texture and stability to food • Acts as a binder & disintegrant for dry tablet drugs • Market leader in every product line BioPolymer: Growth Franchises in Specialty Chemicals Based on 2004 Consolidated Sales of $538.0 million |
19 Specialty Chemicals Financial Performance $122 $116 $140 $129 $132 0 40 80 120 160 2001 2002 2003 2004 LTM 9/30/05 20% 22% 24% 26% 28% 30% EBITDA Capital Spending EBITDA Margin 2005 earnings growth expected to be approximately 15%, driven by increased selling prices and productivity improvement |
20 Specialty Chemicals Focus Growing existing core business – Maintaining key positions with category leading customers – Shifting resources toward faster growing segments – Expanding presence in rapidly growing emerging markets Commercializing new technology platforms Managing maturing segments for improved earnings and cash Identifying financially attractive bolt-on acquisition opportunities to further expand our franchises |
21 FMC in Summary Great businesses, each with EBITDA of at least $140 million Earnings leverage in Industrial Chemicals Good growth in Specialty Chemicals and Ag Products Strong financial position – Robust and growing EBITDA – Balance sheet de-leveraging – Low capex requirements – Substantial decline in unusual demands on cash flow Strategic and financial flexibility |
FMC Corporation * * * * * * * * * * * * * * * * * * * * * |
23 Non-GAAP Financial Terms These slides contain certain “non-GAAP financial terms” which are defined below. In addition, we have provided reconciliations of non-GAAP terms to the closest GAAP term in the appendix of this presentation. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the sum of Income (loss) from continuing operations before income taxes and Depreciation and Amortization. EBITDA Margin is the quotient of EBITDA (defined above) divided by Revenue. ROIC (Return on Invested Capital) is the sum of Earnings from continuing operations before restructuring and other income and charges and after-tax Interest expense divided by the sum of Short-term debt, Current portion of long-term debt, Long-term debt and Total shareholders’ equity. |
24 Segment Financial Terms These slides contain references to segment financial items which are presented in detail in Note 18 of FMC’s 2004 Form 10-K. Some of the segment financial terms are “non-GAAP financial terms” and are defined below. In addition, we have provided reconciliations of non-GAAP terms to the closest GAAP term in the appendix of this presentation. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for a segment is the sum of Income (loss) from continuing operations before income taxes for that segment and Depreciation and Amortization for that segment. EBITDA Margin for a segment is the quotient of EBITDA (defined above) divided by Revenue for that segment. |
25 Reconciliation of LTM 9/301/2005 consolidated income from continuing operations before income taxes (a GAAP measure) to LTM 9/30/2005 EBITDA (a Non-GAAP measure) (Unaudited, in $ millions) LTM 9/30/2005 Income (loss) from continuing operations before income taxes $133.3 Add: Restructuring and other charges 24.4 Interest expense, net 64.8 Write-off of deferred financing fees 9.9 Affiliate Interest Expense 0.9 Depreciation and amortization 138.1 EBITDA (Non-GAAP) $420.5 EBITDA Reconciliation: LTM 9/30/05 Gain on Sale of Investment (9.3) Loss on Extinguishment of Debt 58.4 |
26 Reconciliation of LTM 9/30/05 segment operating profit (a GAAP measure) to LTM 9/30/05 EBITDA (a Non-GAAP measure) (Unaudited, in millions) Industrial Specialty Agricultural Segment Chemicals Chemicals Products LTM 9/30/05 segment operating profit (GAAP) $82.6 $106.9 $128.3 Add: Depreciation and amortization 67.9 33.1 32.1 LTM 9/30/05 EBITDA (Non-GAAP) $150.5 $140.0 $160.4 Segment EBITDA Reconciliation |