Cytec Industries Inc. (NYSE : CYT)

Transcription

1 Cytec Industries Inc. (NYSE : CYT) Goldman Sachs Basic Materials Conference Shane Fleming President, Cytec Specialty Chemicals May 22, 2008

2 Forward Looking Statement and Non-GAAP Measures During the course of this meeting we may make forward-looking statements. All statements that address expectations or projections about the future are forward-looking statements. Some of these statements include words such as expects, anticipates, plans, intends, projects, and outlook. Although they reflect our current expectations, these statements are not guarantees of future performance because they involve a number of risks, uncertainties, and assumptions. Included in this presentation are estimates for full year 2008 sales and earnings. These were included in our April 17, 2008 press release, which was also furnished as an exhibit to a current report on Form 8-K. These estimates set forth the Company s assumptions and management s best estimate of the full year 2008 sales and earnings at that time based on various assumptions set forth in the press release. There can be no assurance that sales or earnings will develop in the manner then projected or that the results of the fourth quarter will be consistent with the results then projected. Actual results may differ materially. We recommend that you review Cytec s SEC filings for a discussion of some of the factors which could cause actual results to differ materially from its expectations and projections. This and other Cytec information may be accessed at In sections of this presentation certain non-gaap measures are provided and identified as such. We believe that the non-gaap measures can more accurately reflect comparisons of year to year trends and is consistent with how we review the information. A reconciliation of all non-gaap measures to the applicable GAAP measure is provided in the appendix at the end of this presentation.

3 The Cytec Profile 2007 Sales of $3.5 billion Sales by Business Segment Sales by Geography Cytec Building Blocks Cytec Specialty Chemicals Cytec Surface Specialties Asia Pacific North America 13% 68% 47% 13% 14% 36% 19% 68% 44% Cytec Engineered Materials 21% Cytec Performance Chemicals Europe 6% Latin America Leading Global Provider Of Specialty Chemicals And Materials

4 Cytec s Growth Strategy GDP Growth Growth With Market Focus on Technology Grow With New Product Introductions and Existing Products For New Applications TOP LINE Geographic Expansion Grow In Areas Such As: Asia, Latin America Targeting 5-7% 5 Top-Line Growth & Double-Digit Digit EPS Growth BOTTOM LINE Bolt-On Acquisitions Operational Excellence Continue to Enhance productivity Focus Focus On On Creating Creating Sustainable Sustainable Technology Technology Franchises Franchises

5 Cytec Surface Specialties 2007 Sales M$1,640 Operating Margin 6% Sales by Segment Sales by Geographic Region Waterborne Radcure Asia Pacific North America Liquid Coating Resins Aminos 16% 17% 27% Latin America 5% 17% 21% 17% 23% 57% Solventborne Powder Europe Global Leadership Position In In The The Markets We We Serve

6 Cytec Surface Specialties: Product Lines Radcure Pioneer and worldwide leader in UV & EB curable oligomers and monomers Enables high production throughput and low energy requirements Eco-friendly products yield zero or low solvent emissions Powder Leader in all segments of powder coating resins Global markets expected to grow 7% per year Compliant to the most stringent environmental regulations Liquid Coating Resins Broad product portfolio to service coatings market Leader in waterborne alkyd, epoxies, and aminos Opportunities to replace solvent with water systems Cytec Technology Will Will Enable Desired Performance and and Compliance

7 Surface Specialties Markets and Trends Market Segments Based on Annual Sales Market Trends Optoelectronics Can & Coil Tire 2% Graphics & Inks Other 4% 10% 13% 14% 15% Architectural, Wood 27% 15% General Industrial Automotive Regulations in Europe and North America will require a shift to low VOC coating systems by 2010 High environmental awareness is driving the need for eco-friendly technologies such as waterborne and powder systems Coatings operations desire more energy efficient technologies leading to less baking conditions Increasing Environmental Pressure Leads To To Eco-Friendly Opportunities

8 Surface Specialties: Significant Earnings Growth Potential Earnings Growth Target 10-15% Year on Year Growth Actions Organization Integration / Restructure Asset Optimization Dijon shutdown Hamburg SB WB Wallingford aminos restructure Value Pricing Initiatives Operations Improvement Global ERP rollout Lean / Six Sigma / Best Practice Yield / Energy / Waste savings Investment for Growth WB Phase 1 USA Oligomers China WB Phase 2 USA Aminos Japan Product Mix Improvement Strengthened Innovation Process Product Line Rationalization (SB WB) Favorable Market Trends + On On Track With Margin Improvement Actions

9 Cytec Performance Chemicals 2007 Sales M$736 Operating Margin 10% Specialty Additives Pressure Sensitive Adhesives Sales by Segment 18% 14% 32% Mining Latin America Asia Pacific Sales by Geography 17% 18% 35% North America Specialty Urethanes 11% 6% 19% Phosphines 30% Polymer Additives Europe Global Leader In Mining Chemicals For Copper And Alumina Processing

10 Cytec Performance Chemicals: Product Lines Mining Chemicals Almost 100 year history in mining industry Industries include Copper, Alumina, Complex Sulfides, etc. Market production growth: Copper > 3.5% p.a. Alumina > 5.0% p.a. Phosphine Chemicals Cytec is the pioneer in phosphine research, and operates the largest, most advanced manufacturing facility More than 50 years of experience in phosphorus specialties Pressure Sensitive Adhesives Technology leader in emulsion-based and solvent-based systems Applications include medical tapes and bandages, drug delivery patches, food and beverage labels, etc. Target growth in high-value segments in tapes and graphics Staying The The Course: Focus On On Technology And And Manufacturing Improvements

11 Cytec Building Block Chemicals 2007 Sales M$457 Operating Margin 5% EBITDA M$48 Major Products Acrylonitrile Melamine Sulfuric Acid Markets Served Acrylic Fiber, ABS Plastic, Acrylamide Merchant Market, Cytec Surface Specialties Evonik (on-site facility), Merchant Market Input Costs Propylene Ammonia Natural Gas End Uses Acrylonitrile Acrylonitrile, Melamine Energy Continued Focus On On Plant Plant Reliability Is Is Key Key To To Benefit From From Tight Tight Supply Conditions

12 Cytec Engineered Materials 2007 Sales M$670 Operating Margin 20% Sales by Segment Sales by Geography Satellite & Launch High Perf Large Europe 9% North Commercial America 4% Transport Biz & Reg Jet 17% 43% 30% 62% 27% Asia Pacific 8% Military Long-Term Growth Opportunities In In Aerospace Markets

13 Aerospace Market Trends Large Commercial Transport Expect strong deliveries over next five years Strong fundamentals have driven order backlog to unprecedented levels Orders have been driven by emerging economies and low cost carriers With slowing economy and rising jet fuel prices, newer planes that favor composites will be brought into service Replacement aircraft needed just to maintain fleet strength Regional, Biz, and Military Business Jet sector remains strong Orders are driven through leasing and new product introductions Emerging economies creating additional demand and local production Regional Jet builds starting to grow New Bombardier CSeries has 46% composite content Joint Strike Fighter continues to offer growth potential over next five years Growth Opportunities across Business, Regional, and and Military Sectors

14 Commercial Aerospace Annual Demand Forecast Delayed Replacement Cycle Total Historical Deliveries Historical Trend Forecast Trend 20% 15% Deliveries as % of fleet European % of Fleet US % of Fleet % Long term growth ( ) % 0% Normal Level of Replacement Year forecasts indicate strong long-term growth GDP = 3.1% Passenger = 5.0% Cargo = 6.1% Source: Industry Looming Replacement Requirement For US And European Network Carriers Looming Replacement Requirement For US And European Network Source: Carriers Industry

15 Step Change In Composite Usage % composite by weight of aircraft Future Single Aisle High 50% 787 A350 FSA % Composite A380 Low 10% A310 A330/ A / Increasing Production Rates for for Current Generation Aircraft and and the the Secular Trend Toward Increased Composites Provide Long Growth Potential

16 Cash Flow and Investments Uses of Cash Maintenance of business capital Capital projects to support the growth businesses 2008 CapEx Estimate is $ million Waterborne Engineered Materials Pay down debt M$100 of notes paid in March Total debt to EBITDA is 1.7* Total debt to capital is 28.1%* Bolt-on acquisitions (stock buyback hurdle rate) Stock buyback Approximately $86 million remains on current buyback program Dividends Increased annual dividends by 25% to $0.50 * At 3/31/08 Strong Balance Sheet, Cash Flow, And And Investment Grade Rated

17 Earnings Per Share Growth Est Reported $2.96 $1.27 $4.01 $4.20 "Normalized" $3.03 $3.07 $3.45 $3.90 $ % Growth 31% 1% 12% 13% 6% - 11% Risks to plan include: Economic conditions in U.S. and Europe Continued escalation of raw material costs Our Focus for Success: Passing on raw material increases through price increases Driving growth of new technologies and eco-friendly products Operational excellence initiatives Our Our Target: Annual Double-Digit EPS EPS Growth

18 The Cytec Investment Thesis Diverse portfolio with overall good growth prospects - Advanced composites for aerospace - Environmentally friendly coating resins - Mining and phosphine chemicals - Expansions projects in the growth products Significant operational excellence opportunities - Continuous improvement mindset - Good track record on delivering results Strong balance sheet and good cash flow generation - disciplined use of capital - focused on improving returns Sustainable Technology Franchises = Sustainable Growth = Increasing Shareholder Value

19 Questions?

20 Appendix Reconciliation of Non-GAAP Measures to GAAP Measures Management believes that net after-tax earnings and diluted earnings per share before special items, non-gaap measures, are meaningful to investors because they provide a view of the Company with respect to ongoing operations. Special items represent significant charges or credits that are important to an understanding of the Company s overall operating results in the periods presented. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. The following table lists the net special items used to adjust reported net earnings and diluted earnings per share for the years 1996 through The excluded net special items are explained in the Management s Discussion and Analysis Section of the annual report on Form 10-K and in the Company s year end financial press releases both of which can be found on the Company s website, Year Reported Net Earnings Net Special Items Non-GAAP Net Earnings Reported Diluted Earnings per Share Net Special Items Non-GAAP Diluted Earnings per Share (27.1) (0.56) (14.6) (0.30) 3.90