Growth and Opportunities in the U.S. Industrial Gas Business

Transcription

1 Growth and Opportunities in the U.S. Industrial Gas Business Presented by: Hirosuke Matsueda President Taiyo Nippon Sanso Corp. Bill Kroll Chairman & CEO Matheson Tri-Gas, Inc. September 20, Viewing Notes: 1. This PDF is PC or Mac compatible, but video portions will run on PC only. 2. Viewing in FullScreen mode (Ctrl-L) is preferred, but slower, page-to-page.

2 Hirosuke Matsueda President Taiyo Nippon Sanso Corp.

3 Introduction to Taiyo Nippon Sanso This page contains a short video. Click ON the image at left to start the video. Hit Page Down to advance to the next page.

4 TNSC Global Footprint Serving Five Continents from Nineteen Countries Taiyo Nippon Sanso Group Companies Matheson Tri-Gas Companies Channel Partners

5 A Timeline of Our Growth This page contains a short video. Click ON the image at left to start the video. Hit Page Down to advance to the next page.

6 Taiyo Nippon Sanso Corporation (TNSC) Fifth largest gas company in the world Largest in Japan Cutting-edge technology drives design and construction of Air Separation Units Diversified portfolio of companies: Group affiliates such as Nissan-TANAKA and Thermos TNSC is able to leverage its footprint, technological expertise and portfolio breadth to grow market share across multiple geographies.

7 Advanced Technology This page contains a short video. Click ON the image at left to start the video. Hit Page Down to advance to the next page.

8 TNSC/MTG Footprint 16 Air Separation Plants in the US 1992: Five Air Separation Units 2002: New Air Separation Unit, Irving TX 2004: Addition of Six Air Separation Units 2006: Additional Air Separation Unit, Waverly NE 2007: New Air Separation Unit, Vernon CA 2009: Two New Air Separation Units, San Antonio TX & Grimes IA The Company will pursue M&A activities to avail itself of favorable opportunities that fit in with its business strategies both at home and abroad. (TNSC 2008 AR)

9 TNSC/MTG Footprint Serving a growing network of facilities and plants The Company will pursue M&A activities to avail itself of favorable opportunities that fit in with its business strategies both at home and abroad. (TNSC 2008 AR)

10 TNSC: $5.1Billion Powerhouse: TNSC: North America comprises ~18% of 2008 sales MTG: Gas and Hard Goods split is 75/25

11 Key Strategy for success in the U.S. marketplace: Under our global corporate strategy, TNSC relies on the MTG team to lead American acquisition strategies, fully utilizing the talents obtained in the acquired companies. Allows for agile and speedy decision making Strategies for M&A MTG goal is a nationwide footprint Targets have been acquisitions that bring synergies Invest in adjacent markets to increase our presence Example: Linweld, Valley National Gases, Five Star & Gear Acquired helium source to strengthen our product mix Example: Acquisition of helium sources of ExxonMobil-WY, PGNiG-Poland, Cryor-Russia and Cimarex-WY

12 TNSC key facilities Yamanashi Lab (Research Center) Tsukuba Lab (Research Center) Kawaguchi Sogo Gas Center (Cylinder Filling Plant) SHARP SAKAI (Flat Panel Display and Solar Cell)

13 Continuous investment to expand business in the US Vernon, CA Irwindale, CA; Orlando, FL; Newark, CA; Waverly NE Grimes, IA San Antonio, TX

14 Innovation & Development Example: IBM-TNSC-MTG collaborative agreement to develop next-generation semiconductor materials at IBM Nanotech Complex, Albany TNSC Management Philosophy: Market-driven collaborative innovation: improving the future through gases Annual Report 2008

15 TNSC continues to bring resources and commitment to MTG Focus on growth and expansion in the USA

16 Bill Kroll Chairman & CEO Matheson Tri-Gas, Inc.

17 Matheson Tri-Gas: Leading the way Macro environment Turbulent times, particularly in North America Forward thinkers will survive! Sustaining/growing markets Operational efficiency Supply chain expertise Proactive regulatory compliance (risk management) Light at the end of the tunnel for those who are smartly positioned!

18 Worldwide GDP and GDP Growth

19 Worldwide GDP and GDP Growth About 80% of Global GDP is generated in three regions North America: 31% of Global GDP Western Europe: 28% of Global GDP Northern PacRim: 22% of Global GDP Hence, a significant effect on the global economy

20 Worldwide GDP and GDP Growth About 80% of Global GDP is generated in three regions 2009 has experienced YoY declines North America: 31% of Global GDP Western Europe: 28% of Global GDP Northern PacRim: 22% of Global GDP Charts show %GDP Growth (Decline) YoY Hence, a significant effect on the global economy

21 Worldwide industrial gas market Worldwide Sales of Industrial Gas % +3.5% Worldwide sales of industrial gases for 2008 thru 2013: Expecting average growth of 4-5% per year. Sources: Cryogas International and Fredonia

22 US industrial gas market US Industrial Gas US Sales (Billions) % Growth 2008 $18.5B* 8% 2009E** $16.6B -10% 2010E** $17.32B 4% Spiritus Consulting expects the industry to recover beginning in the second half of 2009 and to see further improvements in 2010 and beyond. John Raquet, Managing Director, Spiritus Consulting, 3/09 Sources: Cryogas International and Spiritus Consulting

23 During uncertain times, smartly positioned, forward thinkers will emerge as the strongest of players #1: Forecasting and intimate market knowledge will ensure a laser focus on diversified, growing industries to minimize revenue volatility #2: Calculated cost restructuring and operational efficiency planning will position the larger players for sustainability and growth #3: Proactively managing risk to meet regulatory requirements and address customer needs Innovation and technology are the enablers!

24 #1: Forecasting and intimate market knowledge will ensure a laser focus on diversified, growing industries to minimize revenue volatility

25 Gas demand across diversified industries minimizes overall volatility The industrial gas business can still sustain or even be robust in recessionary times due to the vast number of industries covered. Food & beverage, healthcare, environmental and energy are up Construction and manufacturing are down Currently, the healthcare and consumer staples sectors have the best potential in the United States and Europe for IHS Global Insight's 2009 Sector Rotation Strategy for North America and Europe

26 Traditional market segments are down Trends in Major Markets Breakdown of Key Manufacturing Segments

27 WW Healthcare spending continues to grow due to population increases, health issues, and development of new clinical and therapy technologies Item World Wide US Real GDP ($Trillions) Total Healthcare Expenditures ($Trillions) % Spent on Healthcare (HC) Total Industrial Gas HC ($Billions) Industrial Gas % Total HC Expenditures Industrial Gas HC % AGR Healthcare spending around the world is generally rising at a faster rate than overall economic growth. Cryogas International

28 The consumer staples industry, more specifically, Food and Beverage, is a stable, moderate growth opportunity for distributors Typically, the consumer staples industry includes: Food and beverage Grocery retailers Fast-food chains Convenience chains U.S. Demographic Trends Influencing Consumption Trends Population increase Population aging More small households Delay in marriage and children Fewer children per couple High rates of divorce Increasing levels of education Increasing ethnic diversity Dependence on dual incomes No aversion to frozen food Trends point toward more growth/stability in the future! Companies in these industries are exposed to different competitive forces; however, all of these industries share one common trait -- stable demand for their products.

29 New Energy presents strategic opportunities for growth in three broad areas Key Market Drivers: Increased energy security Reduced GHG emissions New Energy Markets: Offer potential opportunities for new market entrants Younger markets offer high-growth curves with lower barriers to entry

30 New Energy presents new opportunities Stationary Hydrogen Station (Senju, Tokyo) Enabling the photovoltaic revolution with specialty gases and gas delivery systems Japan Hydrogen Fuel Cell Demonstration Project

31 Existing Energy: Coal-fired utilities account for 80% of Electric Power All electric utility stacks must monitor for pollutants NOx and SO 2 for coal-burning NOx and CO for gas-fired Federal Regulations continue to drive Pollutant levels down More industries impacted nitric acid plants, locomotive engines and marine diesel engines Demand for bulk, industrial, and specialty gases is recession proof and presents increasing opportunities for our industry.

32 Air Pollution Control and Emission Sampling: Growth Driver in the US Gas/Equipment Market Forecast nearly 200% CAGR growth

33 Distributors are critical to success in supporting US emission market Local delivery Stocking Fast response Customer intimacy

34 #2: Calculated cost restructuring and operational efficiency planning will position the larger players for sustainability and growth

35 Smart approach to improved operational efficiency: Six Sigma and Teamwork Reduce non-valued added costs Improve systems Improve competitive offerings Improve service levels Distribution & Logistics Supply Chain Hard Goods Supply Chain Gas & Gas Related Packaged ASU Operations Back Office Operations Customer Facing 30% of MTG employees maintain a Six Sigma Belt certification

36 Go Green! Improve efficiency Product Consumption Waste Savings Paper Savings eliminate waste by managing assets & materials more effectively and modifying business practices Recovering & Recycling Lost Inventory Shifting to Electronic Transactions Recycle Materials Safety & Regulatory Poisonous/Flammable Gas Tracking

37 #3: Proactively managing risk to meet regulatory requirements and address customer needs

38 Chemicals of Concern: Chemical providers assume a level of responsibility in dealing with customers Are customers equipped to properly handle the chemicals? What safety systems are in place? What security systems are in place? Emergency response procedures? In compliance with CGA, DEA and NRC

39 Homeland Security: Impact On Industry Facilities Security Types of perimeter and internal restrictions Area concerns (lighting, traffic flow) Lighting and visibility during working and non-working hours of activity Locking controls and procedures Contractor/visitors on site Costs: Facility upgrades, procedures, reporting

40 Homeland Security: Impact On Industry Transportation Security Vehicle tracking and monitoring Chemical container tracking, securement Driver verification and training Vehicle securement during delivery Personnel Security Background verification (issue with long term employees) If on Terrorist Database next steps defined Contractor and visitor verification and documentation Costs: Documentation, reporting, employee background checks

41 Forward Thinking: Existing Applications/New Markets Operational Efficiency Supply Chain Optimization/Compliance

42 Summary Macro environment: turbulent times provide new opportunities This is the time for forward thinking!