Attached files
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| 8-K - FORM 8-K - SIGMA ALDRICH CORP | d8k.htm |
| EX-99.1 - PRESS RELEASE ISSUED APRIL 26, 2011 - SIGMA ALDRICH CORP | dex991.htm |
 Sigma-Aldrich Corporation
Q1 2011 Earnings Review & 2011 Outlook
•
Enabling Science to Improve the Quality of Life
Exhibit 99.2 |
 2
2
Cautionary Statements
Our presentation today will include forward looking statements relating to the
Company’s future performance, goals, strategic actions and
initiatives
and
similar
intentions
and
beliefs,
including
expectations,
goals,
beliefs,
intentions
and
the
like
regarding
future
sales,
earnings,
free
cash
flow,
share
repurchases,
acquisitions
and
other
matters.
These
statements
are
based
on
assumptions
regarding
Company
operations, investments and acquisitions and conditions in the markets the Company
serves. We believe that these expectations are reasonable
and
well-founded.
The
forward-looking
statements
in
this
presentation
are
subject
to
risks
and
uncertainties
including,
among
others, certain economic, political and technological factors. Actual results could
differ materially from those stated or implied during this review or
contained in other Company communications due to, but not limited to, such factors as (1) global economic conditions, (2)
changes in pricing and the competitive environment and the global demand for our
products, (3) fluctuations in foreign currency exchange rates, (4) changes
in research funding and the success of research and development activities, (5) failure of planned sales initiatives in our
Research and SAFC businesses, (6) dependence on uninterrupted manufacturing
operations, (7) failure to achieve planned cost reductions in global supply
chain initiatives and restructuring actions, (8) changes in the regulatory environment in which the Company operates, (9)
changes
in
worldwide
tax
rates
or
tax
benefits
from
domestic
and
international
operations,
including
the
matters
described
in
Note
10–
Income Taxes–
to the Consolidated Financial Statements in the Company’s Form 10-K
report for the year ended December 31, 2010, (10) exposure
to
litigation,
including
product
liability
claims,
(11)
the
ability
to
maintain
adequate
quality
standards,
(12)
reliance
on
third
party
package delivery services, (13) an unanticipated increase in interest rates,
(14) other changes in the business environment in which the Company
operates, and (15) the outcome of the outstanding matters described in Note 11-Contingent Liabilities and Commitments to the
Consolidated Financial Statements-in the Company’s Form 10-K report
for the year ended December 31, 2010. A further discussion of risk
factors can be found in Item 1A of Part 1 of the Company’s Form 10-K
report for the year ended December 31, 2010. The Company does not undertake
any obligation to publicly update the matters covered in this presentation.
With over 60% of sales denominated in currencies other than the U.S. dollar,
management uses currency-adjusted growth, and believes it is
useful
to
investors,
to
judge
the
Company’s
controllable,
local
currency
performance.
Organic
sales
growth
data
presented
in
this
review
is proforma data and excludes currency and acquisition impacts. The Company
calculates the impact of changes in foreign currency exchange rates by
multiplying current period activity by the difference between current period exchange rates and prior period exchange
rates. The result is the defined impact of changes in foreign currency exchange
rates. While we are able to report historical currency impacts after the
fact, we are unable to estimate changes that may occur later in 2011 to applicable exchange rates. Any significant
changes in currency exchange rates would likely have a significant impact on our
reported growth rates due to the volume of our sales denominated in foreign
currencies. Management also uses adjusted net income and EPS, adjusted
operating income and operating income margins (excluding restructuring
and
impairment
costs)
and
free
cash
flow,
non-GAAP
measures,
to
judge
its
performance
and
ability
to
pursue
opportunities
that
enhance
shareholder value. Due to the uncertain timing of the future restructuring and
other extraordinary special changes, we are unable to include a 2011 diluted
GAAP EPS forecast or reconcile to our 2011 diluted adjusted EPS forecast or provide a reconciliation to corresponding
GAAP
measures
.
Management
believes
this
non-GAAP
information
is
useful
to
investors
as
well.
Reconciliations
of
GAAP
to
non-GAAP
information
are
included
in
the
Company’s
April
26,
2011
earnings
release
posted
on
its
website,
www.sigma-aldrich.com,
and
in
the
Appendix –
Reconciliation of GAAP to Non-GAAP Financial Measures beginning on Slide
12. |
 3
First Quarter 2011 Financial Results
($ in millions, except per share amounts)
3
YEAR-OVER-YEAR
Q1 Sales and Net Income Highest in Company History
As
Reported
Q1 2011
Excluding
Restructuring and
Tax Benefit
As
Reported
Excluding
Restructuring and
Tax Benefit
Net Income
$119
$116
19%
12%
Diluted EPS
$0.97
$0.94
20%
12%
Free Cash Flow
$133
-%
Q1 2011
As
Reported
Excluding
Currency and
Acquisition
Impacts
Sales
$632
10%
7%
YEAR-OVER-YEAR |
 4
2011 Sales Growth
RESEARCH
72%
28%
SAFC
Sales Mix (YTD)
4%
16%
7%
Research
SAFC
Total
Company
Organic*
*Adjusted for Currency & Acquisitions
Reported
8%
18%
10%
Q1 2011 / Q1 2010
Demand for Research Products Met Expectations.
SAFC Sales Set New Quarterly High. |
 5
Margin Analysis
PERCENTAGE OF SALES
S,G&A and R&D Expenses
2010: Operating Income Margin
2011: Operating Income Margin
Restructuring Costs
25.7%
0.2%
26.4%
Q1
0.5%
S,G&A Leverage and Lower Restructuring Costs Provide for
Slightly Better Operating Margins |
 6
6
Free Cash Flow
(in millions)
2011
$ 119
26
(45)
51
151
(18)
$ 133
Net Income
Free Cash Flow
Net Cash Provided by Operating Activities
Less Capital Expenditures
Other
Changes in Performance Working Capital*
Depreciation & Amortization
2010
$100
23
(18)
46
151
(18)
$133
*Accounts
Receivable
+
Inventory
–
Accounts
Payable
QUARTER ENDED March 31
Free Cash Flow Remains Strong |
 7
Strategic Priorities
•
Enhance Growth in our Core Research and Fine Chemicals (SAFC) Business
•
Focus on higher growth research segments of Analytical Chemistry, Biology &
Chemistry of Material Science
•
Capitalize on high growth niche businesses and our unique manufacturing
capabilities in SAFC •
Focus on faster growing emerging markets in Asia Pacific and Latin America
•
Enhance customer value through broader product offerings with convenience
•
Drive Operational Excellence
•
Continue to build upon the success of our global supply chain initiatives
•
Streamline manufacturing and distribution footprint
•
Expand global sourcing
•
Leverage our Balance Sheet and Strong Cash Flow
•
Invest in organic growth initiatives
•
Actively pursue acquisitions
Drive Long-Term Sales Growth and Enhance Margins |
 8
8
Q1 Sales Performance
Innovation
Reported
Organic*
•
Analytical, Biology, Materials Science
Sales Growth
5-19%**
3-19%** Geographic Growth
•
North America
12%
9%
•
Europe
6%
4%
•
Asia Pacific/Latin America
18%
11%
•
Focus Markets –
India, China, Brazil
25%
21%
SAFC Sales
•
Build on momentum in key product segments
18%
16%
eCommerce Sales
% of Research Sales
•
Research Sales via eCommerce
channels
50%
Initiatives Collectively on Track with Expectations
* See pages 14 & 15 for reconciliation of reported growth to organic
growth ** Varies for individual product lines |
 9
First Quarter 2011 Highlights
•
Acquisitions
–
Acquired two Analytical standards companies
•
Life Science
–
Launched suite of knockout rat models specific to Parkinson’s disease
–
Launched pre-designed knockout ZFN for the human genome
–
Added over 10,000 Mission 3’
UTR Lenti GoClones for microRNA target validation
–
Added 1,400 new European Collection of Cell Culture cell lines
•
Material Science
–
Collaborated with Agfa Materials to produce and distribute conductive
polymers •
SAFC
–
Completed construction of new bio-science industrial media capacity in
US/Europe –
Increased manufacturing capacity of key metal organics for LED market in
US/Europe
•
Other
–
Opened European headquarters in St. Gallen, Switzerland (April 2011)
Continued Focus on Long-term Growth Opportunities |
 10
10
2011 Guidance
Organic Revenue Growth
Diluted Adjusted EPS*
Free Cash Flow
Mid-single digits
$3.60 to $3.75
>$400M
*Excludes any restructuring and other extraordinary special charges
|
 11
11
QUESTIONS?
Sigma-Aldrich Corporation
Q1 2011 Earnings Review |
 12
Appendix
Reconciliation of GAAP to Non-GAAP
Financial Measures
*
*
*
*
*
*
*
*
*
*
*
* |
 13
Reconciliation of Reported Net Income and Diluted Earnings Per
Share to Adjusted Net Income and Adjusted Diluted Earnings
Per Share
Net Income
Diluted Earnings
(in millions)
Per Share
Three Months Ended
Three Months Ended
March 31,
March 31,
2011
2010
2011
2010
Reported net income
$ 119
$ 100
$ 0.97
$ 0.81
Restructuring costs
2
4
0.01
0.03
Tax benefit
(5)
-
(0.04)
-
Adjusted net income
$ 116
$ 104
$ 0.94
$ 0.84
|
 14
Reconciliation of Reported Sales Growth to Adjusted (Organic)
Sales Growth
Three Months Ended March 31, 2011
Reported
FX Impact
Acquisitions
Organic
•
Analytical, Biology, Materials Science Sales
Growth 5-19%* 0-3%*
0-12%* 3-19%*
Geographic Growth
•
North
America
–%
3% 9%
•
Europe
2% –%
4%
•
Asia Pacific/Latin
America
7% –%
11%
•
Focus Markets –
India, China,
Brazil
4%
–% 21% *Varies for individual
product areas 12%
6%
18%
25% |
 15
Reconciliation of Reported Sales Growth to Adjusted (Organic)
Sales Growth
Three Months
Ended March 31, 2011
Currency
Acquisition
Adjusted
Reported
Benefit
Benefit
(Organic)
Research Essentials
7%
2%
-
5%
Research Specialties
9%
2%
3%
4%
Research Biotech
6%
2%
-
4%
Research Chemicals
8%
2%
2%
4%
SAFC
18%
2%
-
16%
Total Customer Sales
10%
2%
1%
7% |
 16
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow
In millions
Three Months Ended
March 31,
2011
2010
Net cash provided by operating activities
$ 151
$ 151
Less: Capital expenditures
(18)
(18)
Free cash flow
$ 133
$ 133 |