Attached files
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| 8-K - FORM 8-K - SIGMA ALDRICH CORP | d8k.htm |
| EX-99.1 - PRESS RELEASE - SIGMA ALDRICH CORP | dex991.htm |
 Sigma-Aldrich Corporation
Q2 2011 Earnings Review & 2011 Outlook
•
Enabling Science to Improve the Quality of Life
Exhibit 99.2 |
 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, (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, and (16) acquisitions or
divestitures of businesses. 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
costs,
currency
and
acquisition
impacts)
and
free
cash
flow,
all
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 July 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
13. |
 3
Second Quarter 2011 Financial Results
($ in millions, except per share amounts)
YEAR-OVER-YEAR
Q2 Sales Highest in Company History
As
Reported
Q2 2011
Excluding
Restructuring
As
Reported
Excluding
Restructuring
Net Income
$ 113
$ 115
17%
16%
Diluted EPS
$0.91
$0.93
15%
15%
Free Cash Flow
$ 77
0%
Q2 2011
As
Reported
Excluding
Currency and
Acquisition
Impacts
Sales
$ 637
15%
6%
YEAR-OVER-YEAR
(1)
(1)
See page 18 for reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow |
 4
First Six Months
2011 Financial Results
($ in millions, except per share amounts)
YEAR-OVER-YEAR
Year-to-Date Sales and Earnings On-Track
Excluding
Restructuring
As
Reported
Excluding
Restructuring
Net Income
$ 232
$ 236
18%
16%
Diluted EPS
$ 1.87
$ 1.90
17%
15%
Free Cash Flow
$ 210
0%
Six Months
2011
As
Reported
Excluding
Currency and
Acquisition
Impacts
Sales
$1,269
13%
7%
YEAR-OVER-YEAR
Six Months
2011
(1)
See page 18 for reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow (1) |
 5
2011 Sales Growth
RESEARCH
71%
29%
SAFC
Sales Mix (YTD)
Organic Sales Growth at Strategic Plan Level
4%
10%
6%
Research
SAFC
Total
Company
Organic*
*Adjusted for Currency & Acquisitions
Reported
14%
17%
15%
Q2 2011 / Q2 2010
4%
13%
7%
Organic*
Reported
11%
18%
13%
Six Month 2011 /
Six Months 2010 |
 6
26.3%
10 basis points
50 basis points
Margin Analysis
PERCENTAGE OF SALES
25.1%
0.3
0.2
Currency
YTD
25.8%
0.4
0.2
Reported Operating Margin -
2011
Q2
27.0%
Restructuring Costs
Adjusted Operating Margin -
2011
Acquisitions
0.7
26.2%
0.6
26.5%
Adjusted Operating Margin -
2010
Improvement
Adjusted Operating Margins Show Improvement Year-Over-Year
|
 7
Free Cash Flow
(in millions)
2011
$232
52
(57)
27
254
(44)
$210
Net Income
Free Cash Flow
Net Cash Provided by Operating Activities
Less Capital Expenditures
Other
Changes in Performance Working Capital*
Depreciation & Amortization
2010
$197
47
(17)
20
247
(37)
$210
*Accounts
Receivable
+
Inventory
–
Accounts
Payable
SIX MONTHS ENDED JUNE 30
Free Cash Flow Remains Strong |
 8
Strategic Priorities for Growth
•
Research Business Growth
•
Innovation and product leadership in faster growing segments: Analytical, Biology,
Materials Science
•
Leverage
broad
offering,
customer
service
and
distribution:
Core
chemistry,
bio-
chemistry, lab essentials and lab ware
•
SAFC Growth
•
Cell culture media for biological drugs
•
Chemicals for electronic applications (LEDs, semiconductors, solar, other)
•
Custom APIs, vaccines and fermentation products
•
Raw materials for diagnostic, food & beverage, pharma, other industries
•
Focus on faster growing emerging markets in Asia Pacific and Latin America
•
Geographic Growth
•
E-Commerce
•
M&A
Driving Growth Along Several Fronts |
 9
Q2 Sales Performance
Innovation
Reported
Organic
(1)
•
Analytical, Biology, Materials Science
Sales Growth
(2)
13-26%
5-9%
SAFC Sales
•
Build on momentum in key product segments
17%
10%
Geographic Growth
•
North America
9%
6%
•
Europe
16%
2%
•
Asia Pacific/Latin America
24%
12%
•
Focus
Markets
–
India,
China,
Brazil
33%
20%
eCommerce Sales
% of Research Sales
•
Research Sales via eCommerce
channels
50%
Initiatives Collectively on Track
(1)
Adjusted for currency and acquisitions. See pages 16 & 17 for
reconciliation of reported growth to organic growth. (2)
Varies for individual product lines
(3)
Excludes 7% benefit from Vetec acquisition
(3) |
 10
10
Second Quarter 2011 Highlights
•
Acquired Vetec Quimica Fina Ltda in May 2011
•
ZFN Technology Applications Growing
•
Growing
stable
isotope
applications
•
Established collaboration on the scale-up and commercialization of next
generation hydrogen-storage materials
•
Competed construction of the 57,000 sq ft Bangalore, India facility expansion to
provide expanded distribution and packaging
•
Wuxi, China facility is on pace to open in Q4, 2011
Continued Focus on Long-term Growth Opportunities |
 11
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
|
 12
QUESTIONS?
Sigma-Aldrich Corporation
Q2 2011 Earnings Review |
 13
Appendix
Reconciliation of GAAP to Non-GAAP
Financial Measures |
 14
Reconciliation of Reported Net Income and Diluted Earnings
Per Share to Adjusted Net Income and Adjusted Diluted
Earnings Per Share (Unaudited)
2011
2010
2011
2010
Reported net income
113
$
97
$
0.91
$
0.79
$
Restructuring costs
2
2
0.02
0.02
Adjusted net income
115
$
99
$
0.93
$
0.81
$
2011
2010
2011
2010
Reported net income
232
$
197
$
1.87
$
1.60
$
Restructuring costs
4
6
0.03
0.05
Adjusted net income
236
$
203
$
1.90
$
1.65
$
Three Months Ended
Three Months Ended
June 30,
June 30,
Six Months Ended
Six Months Ended
Net Income
Diluted Earnings
Net Income
Diluted Earnings
(in millions)
Per Share
(in millions)
Per Share
June 30,
June 30, |
 15
Reconciliation of Reported Operating Income Margin to
Adjusted Operating Income Margin (Unaudited)
2011
2010
2011
2010
Reported operating income margin
25.1%
25.6%
25.8%
25.7%
Restructuring costs
0.3%
0.6%
0.4%
0.8%
Operating income margin excluding restructuring
costs 25.4%
26.2%
26.2%
26.5%
Currency
0.7%
0.6%
Acquisitions
0.2%
0.2%
Adjusted operating income margin
26.3%
26.2%
27.0%
26.5%
Three Months Ended
Six Months Ended
June 30,
June 30, |
 16
Reconciliation of Reported Sales Growth to Adjusted (Organic)
Sales Growth (Unaudited)
Three Months Ended June 30, 2011
Reported
FX Impact
Acquisitions
Organic
•
Analytical, Biology, Materials Science Sales Growth
Geographic Growth
•
North America
•
Europe
•
Asia Pacific/Latin
America
•
Focus
Markets
–
India,
China,
Brazil
*Varies for individual product areas
9%
16%
24%
33%
–%
14%
10%
6%
3%
2%
7%
–%
6%
2%
12%
20%
5-9%*
0-12%*
8-9%*
13-26%* |
 17
Reconciliation of Reported Sales Growth to Adjusted (Organic)
Sales Growth (Unaudited)
Currency
Acquisition
Adjusted
Reported
Benefit
Benefit
(Organic)
Research Essentials
16%
8%
2%
6%
Research Specialties
14%
8%
3%
3%
Research Biotech
13%
8%
-
5%
Research Chemicals
14%
8%
2%
4%
SAFC
17%
6%
1%
10%
Total Customer Sales
15%
8%
1%
6%
Currency
Acquisition
Adjusted
Reported
Benefit
Benefit
(Organic)
Research Essentials
11%
4%
1%
6%
Research Specialties
11%
5%
3%
3%
Research Biotech
9%
5%
-
4%
Research Chemicals
11%
5%
2%
4%
SAFC
18%
5%
-
13%
Total Customer Sales
13%
5%
1%
7%
Ended June 30, 2011
Six Months
Three Months
Ended June 30, 2011 |
 18
Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow (Unaudited)
In millions
2011
2010
Net cash provided by operating activities
103
$
96
$
Less: Capital expenditures
(26)
(19)
Free cash flow
77
$
77
$
2011
2010
Net cash provided by operating activities
254
$
247
$
Less: Capital expenditures
(44)
(37)
Free cash flow
210
$
210
$
June 30,
Six Months Ended
Three Months Ended
June 30, |