FMC Corporation Bear Stearns Fifteenth Annual Global Credit Conference May 16, 2006 Thomas C. Deas, Jr. Vice President & Treasurer 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 ($ millions, LTM ending March 31, 2006) FMC Revenue: $2,191.9 EBITDA: $448.3 Margin*: 20.5% Industrial Chemicals Revenue: $897.2 EBITDA: $155.8 Margin*: 17.4% Agricultural Products Revenue: $733.0 EBITDA: $179.3 Margin*: 24.5% Specialty Chemicals Revenue: $564.9 EBITDA: $142.4 Margin*: 25.2% * EBITDA margin Diversified chemical company with leading market positions in industrial, consumer and agricultural markets globally |
3 Company Strengths Leading market positions Global presence Diversified business mix and high-quality customer base Diversified and integrated cost structure Disciplined approach to unlocking value |
4 Leading Market Positions (1) Based on 2005 consolidated sales (2) Shared Industrial Chemicals #1 in N.A. Soda Ash #1 in N.A. Peroxygens #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) |
5 Global Presence Agricultural Products Group Industrial Chemicals Group Specialty Chemicals Group Manufacturing Facilities: Note: Based on 2005 Consolidated Sales North America 40% of Sales Latin America 18% of Sales Europe / Middle East / Africa 29% of Sales Asia / Pacific 13% of Sales |
6 Diversified Customers and End Markets Greater than 80% of sales to non-GDP 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 Note: Based on 2005 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 Realizing the inherent operating leverage within FMC - Sustained earnings growth >10% per year (1) - Industrial Chemicals recovery in mid-cycle in 2006 - Continued growth in Specialty Chemicals and Agricultural Products Maintaining financial strength and flexibility - Investing to grow our businesses - Pursuing external growth opportunities - Initiated quarterly cash dividend of 18¢ per share - Announced $150 million share repurchase program Focusing the portfolio on higher growth businesses - Manage Specialty Chemicals and Agricultural Products for growth - Manage Industrial Chemicals for cash Disciplined Approach to Unlocking Value (1) Earnings before restructuring and other income and charges |
9 Industrial Chemicals |
10 Industrial Chemicals #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) 49% Peroxygens 18% Foret 33% Latin America 9% North America 50% Europe/Middle East/Africa 34% Asia 7% 2005 Consolidated Sales: $870.4 million |
11 Industrial Chemicals Financial Performance 2006 earnings growth of 40-45% driven by higher selling prices, partially offset by higher energy costs and the loss of Astaris earnings. $156 $151 $124 $130 $133 $94 0 50 100 150 200 2001 2002 2003 2004 2005 LTM 3/31/06 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% EBITDA Capital Spending EBITDA Margin (%) |
12 Industrial Chemicals’ Focus Managing for cash generation Near-term sales growth – Higher soda ash selling prices – Re-commissioning the second increment of soda ash capacity at Granger to support export demand growth – Additional peroxide price increases in North America and Europe. Margin expansion - Working to offset rising energy, raw material and transportation costs |
13 Specialty Chemicals |
14 BioPolymer 69% Lithium 31% Latin America 6% North America 39% Europe/Middle East/Africa 37% Asia 18% • 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-leading positions BioPolymer: Growth Franchises in Specialty Chemicals 2005 Consolidated Sales: $558.5 million |
15 Specialty Chemicals Financial Performance 2006 earnings growth in the mid-single digits, driven by higher sales and continued productivity improvements $122 $116 $140 $142 $129 $132 0 20 40 60 80 100 120 140 160 2001 2002 2003 2004 2005 LTM 3/31/06 20% 21% 22% 23% 24% 25% 26% 27% 28% 29% 30% EBITDA Capital Spending EBITDA Margin (%) |
16 Specialty Chemicals Focus Growing core business market segments – 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 |
17 • Agricultural Products |
18 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 and technologies – Depth and breadth of alliances and partnerships – Manufacturing cost competitiveness via sourcing from lower cost regions Insecticides 73% North America 28% Latin America 39% Asia 16% Europe/ Middle East/Africa 17% Herbicides 25% 2005 Consolidated Sales: $724.5 million Fungicides 2% |
19 Agricultural Products Financial Performance 2006 earnings growth in the mid-teens, reflecting higher sales, favorable mix and further manufacturing productivity benefits partially offset by lower bifenthrin pricing and higher raw material costs. $179 $157 $148 $99 $81 $111 0 50 100 150 200 2001 2002 2003 2004 2005 LTM 3/31/06 0% 5% 10% 15% 20% 25% 30% EBITDA Capital Spending EBITDA Margin (%) |
20 Agricultural Products’ Focus Driving near-term sales growth – Label expansions and new formulations in crop and non-crop segments – In-licensed products, e.g., flonicamid, acetamiprid and cyazofimid with maturity sales of ~$50-90 million in 2008-2009. Strengthening Market Access – Distribution joint ventures & alliances – Third-party products Reducing global supply chain and overhead costs – Sourcing initiatives should produce additional manufacturing savings – Further redesign of global supply network – Market access strategies and alliances drive SG&A reductions Creating competitive advantage through innovation |
21 Financial Overview |
22 Financial Objectives Maintain strong liquidity Lower after-tax financing cost on a worldwide basis Match foreign currency cash flows with like-currency debt Reduce the tax cost of any required cross-border funds movements – American Jobs Creation Act Extend and disperse the debt portfolio’s maturity profile to reduce future refunding risk Manage foreign exchange, commodity and interest rate risks Provide flexibility for future corporate development alternatives and financial policy initiatives – Acquisitions and divestitures – Dividends and stock repurchases |
23 Consistent Debt Reduction 902.8 856.3 707.5 513.8 364.2 193.9 222.1 206.4 0 500 1,000 1,500 2002 2003 2004 2005 Net Debt Cash ($M) Net debt reduction of approximately $400 million over the past 4 years 1,267.0 1,050.2 929.6 720.2 |
24 2005 Financing Steps (amounts in millions) Amt Date Unsecured 5-Year Credit Facility $850 6/21 10¼% Notes Redemption $355 7/21 1st International Cash Repatriation $180 9/21 IRB Refunding $90 12/15 European Credit Facility €220 12/16 2nd International Cash Repatriation $340 12/21 Domestic Term Loan Repayment $242 12/21 Total Cash Repatriated $520 |
25 Capital Structure 12/31/2004 12/31/2005 3/31/2006 ($ - millions) Debt $250 million Revolving Credit Agreement - $ - $ - $ $250 Term Loan Due 2007 - $600 million Senior Secured Credit Agreement 100.0 - - $850 million Senior Credit Agreement - - European Facility due 2010 - 260.3 264.2 10.25% Notes Due 2009 352.0 - - Industrial Revenue & Pollution Control Bonds 218.2 217.5 217.3 Other Public Domestic Debt 222.8 162.9 162.8 Foreign Debt 36.6 79.5 82.3 Total Debt 929.6 $ 720.2 $ 726.6 $ Cash Restricted Cash 9.7 - - Domestic Cash 56.6 178.3 126.2 Foreign Cash 155.8 28.1 57.9 Total Cash 222.1 $ 206.4 $ 184.1 $ Stockholders' Equity 876.2 $ 959.3 $ 1,037.9 $ Total Capital (Total Debt + Stockholders' Equity) 1,805.8 $ 1,679.5 $ 1,764.5 $ Net Debt 707.5 $ 513.8 $ 542.5 $ Fixed Debt 70% 47% 46% Debt / Total Capitalization 51% 43% 41% |
26 Common Stock Dividend & Buybacks • We have initiated quarterly cash dividends on FMC common stock, with the first payment in April. ($ - millions) Shares O/S Rate Per Quarter 2006 39.0 million 18¢ 7.0 21.0 • BOD authorized $150 million share repurchase program: – To be accomplished over the next two years – Open market purchases or privately negotiated transactions |
27 0 20 40 60 80 100 2002 2003 2005 2004 Net Interest Expense 71.6 92.2 78.4 58.1 Note: Net interest expense excluding loss on debt extinguishment 2006 based on guidance issued 4/27/06 ($ in millions) 2006E ~35 |
28 2,400 $2.55 $1.90 $3.20 $4.39 $3.10 $5.45E 1,600 2,000 2001 2002 2003 2004 2005 2006E** 0.00 2.00 4.00 6.00 Multi-Year Recovery * Earnings before restructuring and other income and charges per diluted share. ** 2006E calculated using midpoint of guidance issued by FMC on April 27, 2006 On track to deliver sustained multi-year recovery in sales and EPS* |
29 FMC in Summary Great businesses, each with EBITDA of at least $140 million Double-digit earnings growth - Earnings leverage in Industrial Chemicals - Continued growth in Specialty Chemicals and Ag Products Meeting or exceeding strategic objectives - Robust and growing EBITDA - Greater than 12% return of capital Pursuing proactive, disciplined approach to unlocking value |
30 Appendix |
31 Non-GAAP Financial Terms These slides contain certain “non-GAAP financial terms” which are defined below: 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. |
32 Segment Financial Terms These slides contain references to segment financial items which are presented in detail in Note 18 of FMC’s 2005 Form 10-K. Some of the segment financial terms are “non-GAAP financial terms” and are defined below. 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. |
33 Reconciliation of LTM 3/31/2006 consolidated income from continuing operations before income taxes (a GAAP measure) to LTM 3/31/2006 EBITDA (a Non-GAAP measure) (Unaudited, in $ millions) LTM 3/31/2006 Income (loss) from continuing operations before income taxes $201.8 Add: Restructuring and other charges 68.6 Interest expense, net 49.5 Affiliate Interest Expense 1.1 Depreciation and amortization 133.8 EBITDA (Non-GAAP) $448.3 EBITDA Reconciliation: LTM 3/31/06 Loss on Extinguishment of Debt 60.5 Investment Gains (67.0) |
34 Reconciliation of LTM 3/31/06 segment operating profit (a GAAP measure) to LTM 3/31/06 EBITDA (a Non-GAAP measure) (Unaudited, in millions) Industrial Specialty Agricultural Segment Chemicals Chemicals Products LTM 3/31/06 segment operating profit (GAAP) $91.5 $111.2 $145.9 Add: Depreciation and amortization 64.3 31.2 33.4 LTM 3/31/06 EBITDA (Non-GAAP) $155.8 $142.4 $179.3 Segment EBITDA Reconciliation |
FMC Corporation * * * * * * |