Longbow Research Minneapolis, MN October 12, 2005 W. Kim Foster Senior Vice President and CFO

Transcription

1 FMC Corporation Longbow Research Minneapolis, MN October 12, 2005 W. Kim Foster Senior Vice President and CFO

2 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 forwardlooking 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. 1

3 FMC Corporation Diversified chemical company with leading market positions in industrial, consumer and agricultural markets worldwide ($ millions, LTM as of June 30, 2005) FMC Revenue: $2,129.2 EBITDA: $419.8 Margin*: 19.7% Industrial Chemicals Revenue**: $853.9 EBITDA: $153.8 Margin*: 18.0% Specialty Chemicals Revenue**: $547.2 EBITDA: $135.3 Margin*: 24.7% Agricultural Products Revenue**: $731.6 EBITDA: $159.7 Margin*: 21.8% * EBITDA Margin ** Segment sales figures exclude $3.5 million in eliminations. 2

4 Disciplined Approach to Unlocking Value Realizing the inherent operating leverage within FMC Sustained earnings growth >10% per year* Industrial Chemicals recovery in mid-cycle Continued growth in Specialty Chemicals and Agricultural Products Creating greater financial flexibility Reduce net debt to ~ $500 million by the end of 2005 Regained investment grade credit rating in July Focusing the portfolio on higher growth businesses Manage Specialty Chemicals and Agricultural Products for growth Manage Industrial Chemicals for cash Improve ROIC to 12% minimum by 2006 * Earnings before restructuring and other income and charges 3

5 Multi-Year Recovery On track to deliver sustained multi-year recovery in Sales and EPS ,000 $4.82 $5.00 Sales $millions 1,800 1,600 1,400 $3.10 $2.55 $1.90 $3.20 $4.35E $4.00 $3.00 $2.00 EPS* $ 1,200 $1.00 1, E** $- * Earnings before restructuring and other income and charges per diluted share. ** 2005E EPS calculated using midpoint of outlook issued by FMC on August 3,

6 Significant Free Cash Flow Net debt reduced to ~ $500 million by end of 2005 lower than target and earlier than expected $420E 2005 Cash Flow Drivers 300 $210E $ Millions EBITDA* Pre-tax Interest $60E Capex $90E Legacy** $50E Other Sources/ Uses*** $10E Free Cash Flow -200 * Assumes midpoint of FMC outlook of $4.35 per diluted share issued 8/3/05, 39 million shares outstanding, 25% tax rate, $60 million pre-tax interest and $135 million D&A. ** Includes legacy environmental spending and Pocatello remediation spending. *** Includes gain on sale of San Jose, CA property, debt refinancing costs, repayment of deferrals by Astaris, working capital, pension contributions and taxes. Note: Excludes proceeds from sale of Astaris 5

7 Leading Market Positions Industrial Chemicals Agricultural Products Specialty Chemicals Product Group Soda Ash Hydrogen Peroxide Persulfates Pyrethroids Carbofuran Microcrystalline Cellulose Carrageenan Alginates Lithium Specialties Position #1 in N.A. (1) #1 in N.A. #1 in N.A. #2 in N.A. #1 Globally #1 Globally #1 Globally #2 Globally #1 Globally (2) (1) Based on 2004 consolidated sales (2) Shared 6

8 Diversified Customers and End Markets 2004 Consolidated Sales Non-Cyclical 81% Food 8% Bottle Glass 3% Other 12% Chemicals 6% Pulp & Paper 4% Cyclical 19% Glass/Fiberglass 4% Pharmaceuticals 11% Electronics 2% Other 3% Detergents 9% Chemicals 4% Agricultural 34% 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 7

9 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 Reduced volatility from limited use of petrochemical feedstocks No single raw material accounts for more than 7% of total raw material purchases Low energy demand requirements Energy costs represent approximately 10% of cost of sales 8

10 Operating Leverage in Industrial Chemicals Revenue: $853.9 million LTM 6/30/05 Foret 35% Peroxygens 19% Alkali (Soda ash) 46% Asia 7% Europe/Middle East/Africa 36% Latin America 8% North America 50% #1 North American manufacturer of soda ash and peroxygens Backward integration into natural resources Low-cost, proprietary process technology Excludes phosphorus chemicals sales by Astaris JV, largely in North America 9

11 Industrial Chemicals Financial Performance Earnings growth in 2005 estimated to approach 60% driven by higher selling prices, partially offset by higher energy, raw material and transportation costs EBITDA ($ Millions) $194 $208 $177 $133 $130 $94 $124 $ EBTIDA Margin (%) LTM 6/30/05 0 EBITDA Capital Spending EBITDA Margin 10

12 Soda Ash Demand 12 North American Soda Ash Shipments 10 8 Export 6 Glass Container Demand Drivers: GDP Flat Glass Chemicals Detergents Other F Cost advantage of natural soda ash versus synthetic soda ash Industrialization rates in key export markets 11

13 U.S. Soda Ash Supply & Cost Positions Share of Nameplate Capacity Solvay OCI General SVM Wyoming Solvay Colorado 29% 20% 17% 19% 6% 9% 1.6 Cost Curves Cost Index Base = Solution Mining FMC Solution Mining FMC Longwall Mining Competitors 0 12

14 Sold-out U.S. Soda Ash Industry 2005 domestic price increase is the most significant since % U.S. Bulk Soda Ash Price Index (1990 = 1.0) U.S. Capacity Utilization (% Effective) 95% 90% 85% F 2005 Contract Renewals Price Index Effective Capacity Util.

15 Growth Franchises in Specialty Chemicals Revenue: $547.2 million LTM 6/30/05 Lithium 28% BioPolymer 72% Asia 15% Europe/Middle East/Africa 36% North America 41% Latin America 8% BioPolymer: Lithium: Adds structure, texture and stability to food Acts as a binder & disintegrant for dry tablet drugs Market leader in every product line One of two global, integrated manufacturers Focus on specialty products pharmaceuticals and energy storage devices 14

16 Specialty Chemicals Financial Performance 2005 estimated earnings growth of ~10% as a result of volume leverage, increased selling prices productivity improvements EBITDA ($ Millions) $127 $122 $116 $132 $129 $ EBITDA Margin (%) LTM 6/30/05 0 EBITDA Capital Spending EBITDA Margin 15

17 Specialty Chemicals Strategic Priorities Continue to grow existing business Maintain leading positions Commercialize new technologies Expand presence in rapidly growing emerging markets Manage maturing business segments improved earnings and cash Identify and develop financially attractive bolt-on acquisitions to further expand franchises 16

18 Focused Agricultural Products Business Revenue $731.6 million LTM 6/30/05 Herbicides 25% Fungicides 2% Insecticides 73% Europe Middle East Africa 16% Asia 13% Latin America 36% North America 35% Proprietary, branded insecticides and herbicides Key crops: cotton, corn, rice, cereals, fruits and vegetables FMC differentiated by: Focused innovation (R&D is ~10% of sales) Cost reduction strategies Depth and breadth of partnerships and alliances 17

19 Agricultural Products Financial Performance 2005 estimated earnings growth of ~10% driven by higher sales and lower manufacturing costs, partially offset by lower bifenthrin pricing $ Millions $114 $101 $99 $111 $148 $ Margin % LTM 6/30/05 EBITDA Capital Spending EBITDA Margin 18

20 In Summary Great businesses, each with EBITDA of at least $130 million Industrial Chemicals earnings at mid-cycle in 2005 Steady growth in Specialty Chemicals and Ag Products Low capex requirements Substantial decline in unusual demands on cash flow Significant balance sheet deleveraging 19

21 FMC Remains Significantly Undervalued Current EV / 2006E EBITDA OLN CEM LYO FMC FUL ARJ HPC MTX RPM CBT LZ CYT ALB VAL Source: Bloomberg and Thomson First Call 10/10/05 20

22 FMC Corporation