Deutsche Bank 2012 Global Industrials and Basic Materials Conference

Transcription

1 Deutsche Bank 2012 Global Industrials and Basic Materials Conference John Steitz, President & COO Scott Tozier, SVP & CFO June 14, 2012

2 Forward-Looking Statements Some of the information presented in this presentation including, without limitation, statements with respect to product development, improvements in productivity, market trends, price and mix changes, expected growth, outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of There can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ from expectations include, without limitation: changes in economic and business conditions; changes in financial and operating performance of our major customers and industries and markets served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for our products; limitations or prohibitions on the manufacture and sale of our products; availability of raw materials; changes in the cost of raw materials and energy and in our inability to pass through increases; acquisitions and divestitures, and changes in performance of acquired companies; fluctuations in foreign currencies; changes in laws and government regulation of our operations or our products; the occurrence of claims or litigation; the occurrence of natural disasters; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest including terrorism or hostilities; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of our earnings; changes in monetary policies or inflation or interest rates which may impact our ability to raise capital or increase our cost of funds, the performance of our pension fund investments and our pension expense and funding obligations; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement and other risks; decisions we may make in the future; and the other factors detailed from time to time in the reports we file with the SEC, including those under Risk Factors in our Annual Report for the period December 31, 2011 on Form 10-K and our 2012 Quarterly Reports on Form 10-Q. 2

3 Albemarle s Vision 2015 Sets Path to Double the Size of the Business Revenue ($ in billions) $ $ $ $ $ $2.4 $ $ Inflation Market Growth Business Investments Adjacent Market Growth Organic Potential M&A Growth Vision 2015 Which Would Result in Vision 2015: EBITDA $ B EPS $ Free Cash Flow $ B 3

4 Top and Bottom Line Growth in 2011 Puts Us on Track Towards Vision 2015 Goals 2011 ($ in millions, except EPS) Year-Over-Year Q ($ in millions, except EPS) Year-Over-Year Net Sales $ 2, % $ % Segment Income 1 $ % $ % Segment Income 1 Margins 24% 250 bps Net Income 2 $ % $ % Diluted EPS $ % $ % Free Cash Flow 1 $ % $ 71 +7% 1Q12 Signals Indicate Continued EPS Growth in Non-GAAP measure. See Non-GAAP reconciliations on website. 2 Reflects Net Income attributable to Albemarle Corporation 4

5 Our Ability to Capitalize on Challenges that Global Megatrends Present Will Drive Growth Towards This Vision Catalysts Polymer Solutions Fine Chemistry 24% 76% 22% 78% 39% 61% (% of 2011 Sales) Refinery Catalysts Performance Catalyst Solutions Fire Safety Solutions Stabilizers & Curatives Performance Chemicals Fine Chemistry Services Population Global growth, Demographic shift, Health & Aging, Urbanization Polyolefin Catalysts Flame Retardants Curatives Ag Actives Pharma / APIs Food Safety Custom Services Technology Computation growth / Moore s law, Continuous improvement High Purity Organometallics Flame Retardants Electronic Grade HBr OLEDs Custom Services Consumerism Global integration, Rising middle class in developing countries FCC Catalysts Polyolefin Catalysts Flame Retardants Fuel, Lube & Polymer AOX Completion Fluids Food Safety Bromine Custom Services Resource Management Food, Water, Energy, Minerals, Climate FCC Catalysts HPC Catalysts Renewables Flame Retardants Fuel & Lube AOX Completion Fluids Mercury Control Lithium Batteries Water Treatment Ag Actives Renewables Custom Services 5

6 And Our Strong Operating Foundation Reiterates This Confidence Top Line Growth Customers Evolving Global Market New High Growth Products Definition of Customer Served 5-Yr Revenue CAGR: 4% Margin Improvement Cost Reduction Productivity Product Mix Pricing 5-Yr EBITDA Margin Expansion: 800bps Velocity Inventory Turns DSO Cash to Cash Sacred Cows 5-Yr Decline in NWC as % of Sales: 1600bps New Investments CapEx Accretion Acquisitions Adjacencies New Ideas 2011 ROIC: 25% Leadership & Execution Positive Attitude Safety Bench Strength Credibility Beat Consensus 18 Out of Last 21 Qtrs 6

7 Innovation Has Been and Will Remain Essential to the Growth of Our Business 40% New Product Velocity New product sales as % of total sales 30% 20% 12% 13% 13% 14% 18% 24% 28% 25% 25% 32% 28% 31% 32% 10% 9% 0% E 7

8 Fine Chemistry: Unique Innovative Solutions 25% 20% Revenue & Segment Income Margin ($ in billions) $1.3 1,400 1,050 Top Line Growth Global environmental enhancement Multiple life science products & nutrition products Food safety portfolio Global oil demand 15% 10% 5% $0.5 9% $0.6 13% $0.8 19% Vision Vision On Track to Deliver 2015 Segment Income Margins 20-24% Margin Improvement Low cost bromine platform Pricing to value Significant asset / portfolio transformation Megatrends Resource Management Energy demand driving completion fluids Clean air drive bolstering mercury control Population Growth & Rising Middle Class Aging populace supports APIs Higher protein diets will trigger improved food safety standards 8

9 Robust Customer Services Pipeline Signals Strong Growth Ahead Custom Service Net Sales ( E) 25% CAGR E Custom Service Pipeline (1) $75 $145 $ (1) Projected revenue based on discussions with high quality prospects with signed purchase orders. Step Change Improvement Revenue under long-term contract has doubled as of 2012 Pipeline projected value has nearly tripled Selectivity in Screening Complex solutions Innovative process development and scale up High Growth Markets Specialty pharmaceuticals Agriculture Renewable chemistry Lubricants 9

10 Bromine: Diverse Market Portfolio, With New Applications and Classic Markets Driving the Next Leg of Growth 2011 Global Market ($2.75B derivatives value) Relative Bromine Consumption by Application 10% 12% Flame Retardants Pharma & Ag Oilfield Projected 6-8% 5-Yr CAGR Hg Trend Growth Markets: (1-1.5x Global GDP) Brominated flame retardants for fire safety Ag / Pharma intermediates Above-Trend Growth Markets: (2-3x Global GDP or more) Pollution control / Mercury abatement Water treatment and biocides for food safety Bromobutyl rubber for tires, hoses, etc. Completion fluids for oil drilling 10

11 Polymer Solutions: Value in Performance 35% Revenue & Segment Income Margin ($ in billions) $1.4 1,500 Top Line Growth Higher efficiency lubrication Polymeric flame retardants Increased infrastructure development 30% 25% 20% 15% 10% 5% 0% $0.7 9% $0.9 22% $1.0 24% Vision Vision On Track to Deliver 2015 Segment Income Margins 28-32% 1,250 1, Margin Improvement Lower cost structure Pricing to value Portfolio enhancement Megatrends Consumerism Rising middle class driving sales of affordable TVs, PCs and devices Expansion of bromine derivatives capacity in Jordan Advocate for fire safety standards Technology Surging data traffic requires high-end servers for storage 11

12 Diverse End Markets in Fire Safety With Strong Growth Prospects Electrical Connectors Construction Printed Wire Board Wire & Cable Electronic Enclosures Connectors for TVs, PCs, mobile phones, autos, etc. Complex, fragmented market Annual growth rate of 4-5% Bromine used in rigid insulation board Annual GDP growth rate in developed world Much higher in emerging markets Circuit boards for TVs, PCs, mobile phones, autos, etc. High growth in communication servers & mobile devices Annual GDP rate growth Low voltage energy cable and automotive Infrastructure and automotive growth in developing countries Annual growth rate of 4-5% TV enclosures and computer monitors Annual GDP growth rate in developed world Much higher in emerging markets Long-Term Fundamentals Remain Favorable 12

13 Strength of Product Innovation Will Drive Additional Value Green GreenArmor Armor TM Proprietary polymeric technology Builds upon connectors technology and asset base Complementary to 8010 Project Gemini Proprietary technology Superior properties and performance Expands applications window for PFR GreenCrest TM Polymeric technology HBCD replacement in insulation applications Production site in Orangeburg, SC Commercially Available Space Ultra Low Df <0.003 Military Aerospace Servers Low Df <0.005 High Performance Battery Consumer Electronics Mid Df<0.01 Standard FR-4 High Df >0.01 Printed Circuit Board Segmentation Commercial in 3Q12 Picture courtesy of Dow Commercial in

14 Catalysts: Investing Globally to Meet Customer Demands 40% Revenue & Segment Income Margin ($ in billions) $1.6 1,500 Top Line Growth New catalytic systems for polyolefins Polymer Polymer LED industry growth platform Catalysts Catalysts Winning new FCC units HPC: Improving global sulfur standards 35% 30% 25% 20% 15% 10% 5% $0.8 18% $0.9 28% $1.1 29% Vision Vision On Track to Deliver 2015 Segment Income Margins 28-32% 1, Margin Improvement Continue cost improvement Pricing to value Refinery Refinery Catalysts Catalysts Megatrends Technology High purity metal organics for LED market in Korea the site of our new facility. Resource Management HPC facility in Brazil with Petrobras to meet increased ULSD demand Population Increased packaged good demand supports new TEA facility in Saudi Arabia 14

15 Refinery Catalysts Volume Driven by Increasing Conversion Capacity Global Refined Product Demand (Million B/D) Light Heavy Growth of 9.5 Million B/D Source: Purvin & Gertz Average Global Conversion Capacity Change (Million B/D FCCeq) Increased Light to Heavy Ratio Leads To: Increased Bottom of the Barrel Conversion Capacity Increased Catalyst Volumes 15

16 Refinery Catalysts Volume Driven by Tightening Fuel Specs 7,000 Asia Road Diesel Demand by Quality (Million B/D) 3,000 Middle East Diesel Demand by Quality (Million B/D) 6,000 5,000 4,000 3,000 2,000 1, VLSD (<10 ppm S) ULSD (<50 ppm S) LSD (<500 ppm S) HSD (>500 ppm S) 2,500 2,000 1,500 1, Source: Purvin & Gertz Tightening Global Fuel Specs, Particularly in the Developing World, Will Drive Additional HPC Volume 16

17 Albemarle s Performance Catalyst Solutions is Delivering Step-Out Growth Polymer Green Armor Catalysts Polyolefin & Elastomers Organometallics Single Site Catalysts Ziegler Natta Catalysts Electronic Materials Light Emitting Diodes (LED) Semiconductor Photo Voltaic Solar Panels Pharmaceutical Intermediates Chemical Catalysts Oxidation & Amination Custom Catalysts Specialty Zeolites for Diverse Industries Biodiesel via Transesterification Global Organometallics Leadership Base Leveraging Organometallics into New Markets Niche Catalyst Leadership Growing to Broader Portfolio 17

18 Disciplined Capital Allocation ($ in billions) Share Buyback $0.3 M&A $0.2 Cash from Operations A 2011A $1.8B $0.6B CAPEX $0.5 Share Buyback $0.2 CAPEX $0.2 Pension $ Targets Cash $0.4 Dividends $0.2 Pension $0.06 Cash $0.05 Dividends $0.06 $3B cash from operations Invest for organic growth CAPEX 5-6% of revenue Maintain investment grade credit rating Continued dividend growth ~10-15% Strategic M&A Share buyback $0.2 $0.4B Pension fully funded through

19 Albemarle has the Financial Horsepower to Deliver Growth Vision 2015 On track to achieve Vision 2015 targets. Strength of 2011 results make us even more confident. Short-Term Outlook Assuming an economic boost in 2H12, we expect to grow earnings in 2012 with accelerated growth in 2013 when major investments come online. Investments Adjacencies M&A All major investments are on schedule and under budget. Dynamics in the marketplace continue to hold true to our investment thesis for each major project. Substantial growth potential with accelerating contribution expected in timeframe. Dynamic screening process providing fertile ground for new ideas to take root and grow. Disciplined focus on opportunities. Strength of balance sheet provides financial flexibility and allows for timely execution. Value Creation Proven business model will continue to deliver earnings growth and expanded margins. Financial Strength Strong cash generation and balance sheet will support strategic initiatives and sustain meaningful returns to shareholders. 19

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