Praxair, Inc. Matthew J. White Senior Vice President and Chief Financial Officer

Transcription

1 Praxair, Inc. Matthew J. White Senior Vice President and Chief Financial Officer August 9, 2017

2 Forward Looking Statement This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements are based on management s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the expected timing and likelihood of the completion of the contemplated business combination with Linde AG, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals that could reduce anticipated benefits or cause the parties to abandon the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the business combination agreement; the ability to successfully complete the proposed business combination and the exchange offer, including satisfying closing conditions; the success of the business following the proposed business combination; the ability to successfully integrate the Praxair and Linde businesses; the possibility that Praxair stockholders may not approve the business combination agreement or that the requisite number of Linde shares may not be tendered in the public offer; the risk that the combined company may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the GAAP or adjusted projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company s latest Annual Report on Form 10-K filed with the SEC and in the proxy statement/prospectus and the offering prospectus included in the Registration Statement on Form S-4 (which Registration Statement has not yet been declared effective) filed by Linde plc with the SEC which should be reviewed carefully. Please consider the company s forward-looking statements in light of those risks. 2

3 Praxair Snapshot Industry Characteristics Critical to customer; small part of their cost Local production and distribution Long-term contracts Serve an array of end-markets Praxair Jun Q Results Sales $2.8B, YoY + 6% Operating margin 22% Return on capital 12% Operating cash flow 25% of sales Jun Q Sales By Segment Europe Asia 14% 15% South America 13% PST 5% North America 53% By Supply Mode Other 8% Packaged Gases On-Site 28% 30% Merchant 34% Electronics 9% Chemicals 10% Aerospace 3% By End-Market Energy 12% Other 9% Food / Bev 10% Healthcare 8% Metals 17% Manufacturing 22% High quality business in an attractive industry Praxair 2Q 2017 operating margin and return on capital are non-gaap measures; refer to 06/30/17 Form 10-Q for reconciliations. 3

4 Linde and Praxair: A Compelling Combination

5 Linde and Praxair: A Compelling Combination Strategic Leverages unique strengths of each company to create a global industrial gas leader Linde s engineering & technology and Praxair s operational excellence Establishes strong positions in all key geographies and end-markets More balanced and diverse global portfolio Increases exposure to long term macro growth trends Healthcare, emerging markets, clean energy, digitalization Considerable value through ~$1.2 B in annual cost & capex synergies and efficiencies Financial Strong balance sheet and cash flow with financial flexibility to invest in future growth Combined pro-forma revenue of ~$29 B 1 and current market value of over $70 B pro forma sales without adjustment for potential divestitures and regulatory limitations 5

6 Creating A Global Industrial Gas Leader Industrial Gas Landscape 1 ($ B) Sales By Geography 2 Captive 38* Americas ~$12 B EMEA ~$8 B Others 3 25* Other ~$3 B Asia/Pacific ~$6 B Across a much broader global footprint 1 Sales based on 2016 public filings. Air Liquide includes 12 months of Airgas acquisition and related divestments. Air Products excludes Materials Technologies pro forma sales without adjustment for potential divestitures and regulatory limitations 3 Others: includes independents * Source: Gasworld Captive: customer owned plant 6

7 Leverages Complementary Strengths Core Competencies Engineering & Technology Operational excellence Product Lines HyCO Large ASUs Standardized ASUs Non-cryo End-Markets Chemicals & Energy H 2, LNG, CCS, EOR Healthcare Petrochemicals US Gulf Coast Metals Geographies EMEA Asia/Pacific North America South America Which are unique and proven with long-standing leadership ASU Air separation unit(s) HyCo Syngas plants CCS Carbon capture storage LNG Liquefied natural gas EOR enhanced oil recovery 7

8 Establishes A More Balanced Portfolio Geography 1 End-Markets 1 Supply Mode 1 10% 19% 19% 10% 24% 25% 25% 21% 43% 7% 26% 7% 13% 17% 18% 37% 25% 26% 28% Americas EMEA Asia/Pacific Other Chemicals & Energy Manufacturing Healthcare Metals & Glass Food & Beverage Electronics Other On-site Bulk Cylinder 2 Other With strong positions in key geographies and end-markets 1 Based on 2016 public filings and pro forma sales without adjustment for potential divestitures and regulatory limitations. 2 Includes cylinder and other services 8

9 Combination Would Yield ~ $1.2 B Synergies & Efficiencies Cost Synergies & Efficiencies 1 ~$1.2 B Capex ~$0.2 B COGS COGS Cost ~$1.0 B SG&A SG&A Supply Supply Chain Chain / / Other Other Time to achieve ~ 3 years after closing Cost to implement ~ $1.0 B Cost Synergies & Efficiencies 1 ~ $1.0 B Corporate right-sizing Operational optimization Procurement Includes existing cost reduction programs Productivity Capex Synergies 1 ~ $0.2 B Efficient asset utilization Procurement Maintenance capex optimization Growth Synergies ++ B 1 Based on 2016 financials of Linde and Praxair. Synergies and cost efficiencies have been adjusted for potential divestitures. 9

10 And Create Value For All Stakeholders Deep & innovative product offerings Comprehensive products & services Broader end-market applications Cost efficient solutions Enhanced Technology Capability Superior Customer Offerings Wider global reach / accelerated deployment Further enhanced supply reliability Stronger Enterprise For All Stakeholders Shared values safety, integrity, community Employer of choice Environmental stewardship More Sustainable Enterprise Stronger Financials Higher cash flow & stronger balance sheet Greater flexibility to invest in future growth Increased shareholder distributions 10

11 Strong Balance Sheet and Cash Flow 2016 Financials ($ B) Combined 1 Targeted Total 4 Savings 3 Sales $28.7 $28.7 Adj. EBITDA 2 $8.0 $1.0 $9.0 Adj. EBITDA Margin % 31.5% Operating Cash Flow $6.1 $0.7 $6.8 Capex ($3.4) $0.2 ($3.2) Free Cash Flow 2 $2.7 $0.9 $3.6 Net Debt/Adj. EBITDA Greater flexibility for growth investments and shareholder distributions 1 Based on Linde and Praxair's consolidated financial statements combined for pro forma purposes. See appendix 2 Non-GAAP and non-ifrs measure. See Appendix for reconciliation 3 Excluding savings attributable to divestitures and estimated one-time cost of approximately $1.0B (including approximately $0.2B of estimated transaction costs) to achieve these savings. Operating cash flow of $0.7B represents the $1.0B of Adj. EBITDA savings after taking into account the assumed pro forma effective tax rate 4 Illustrates the full run-rate targeted savings based on combined 2016 results. Excludes any potential divestitures and regulatory limitations and assumes all other items including pro forma effective tax rate remains unchanged. Not indicative of future results of combined business; provided as illustrative example only 11

12 Key Next Steps and Timeline Board approvals / BCA signed Completion of review of offer documents by US SEC / German BaFin Praxair shareholder vote / Linde exchange offer H June 2017 Q Q Regulatory approval / expected closing H Regulatory Review and On-going Integration Planning 12

13 Praxair, Inc. Matthew J. White Senior Vice President and Chief Financial Officer August 9, 2017