airgassite visit deliveringairgas synergies...21 march 2017 delivering synergies the world leader in...
TRANSCRIPT
![Page 1: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/1.jpg)
Airgas Site VisitDelivering AirgasSynergies
Delivering Synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
Synergies
Pascal Vinet, VP, CEO Airgas
Levittown Distribution Center, 21 March 2017
![Page 2: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/2.jpg)
Historic Airgas - Key Industrial Merchant Player in the U.S.
● Solid track record of value creation
– Unparalleled sales growth since 1982
– Proven operational excellence
● Major player in the U.S. market
– Leader in packaged gas
– Major supplier of hardgoods
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
● Unrivalled customer base
– >1 million customers
– Resilient profile with diversified customer segments
2
● Multi-channel distribution network with unmatched reach
– Largest footprint and asset base in the U.S.
– Coupled with best-in-class e-commerce platform
![Page 3: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/3.jpg)
Airgas and Air Liquide: Strong Business Fit
Liquid bulk
Primaryproduction
• Air Liquide: focus on upstream
• Airgas: focus on downstream
• Highly complementary businessesLiquid bulk
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
Fill plant
Direct delivery
Retail Telesales e-commerce
Large Industries
Merchant bulk Packaged gas
Pipeline &on-sites
Bulkdeliveries
Fill plant Fill plant• Implied synergies
• Improved customer reach
3
� U.S. operations merged October 1st, 2016
![Page 4: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/4.jpg)
First Airgas Synergies Delivered in 2016
$45m CYLINDER OPERATIONS
BACKOFFICE
PROCESS &
PROCUREMENT
BULK OPERATIONS
Cost Synergies on track
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
• Business & administrative process review
• Procurement
• 18 site closures
• Logistics optimization
• Elimination of redundancies
• Sourcing
• Primary production
• Logistics optimization
• Leverage on IT
• Shared services
• Delisting
• Management
4
![Page 5: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/5.jpg)
What’s in Cylinder Operations Synergies?
Eliminationof
redundancies
Logisticsoptimization
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health5
Streamline production: increase plant loading
● Eliminate overlaps between assets: filling plants, depots,…
● Concentrate resources on the most efficient sites
Reduce number of miles per delivered cylinders
● Merge maps of Air Liquide - Airgas delivery points and assets
● Optimize routings
– Truck loading
– Frequency of delivery
![Page 6: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/6.jpg)
Example: Elimination of Redundancies
● In Dallas area, 4 plants consolidated into 2
● 1 plant in Fort Worth● 2 plants in Dallas
● 1 plant in Grand Prairie
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health6
� Increased efficiencies and added capacity
● Elimination of fixed costs
● Increased capacity: +20% to >100k/month
– Upgraded automated filing system
– Combined best technology
![Page 7: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/7.jpg)
Example: Logistics Optimization, Florida Re-routing
Pre-integration: Air Liquide
Post-integration:�250k miles less/year
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health7
![Page 8: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/8.jpg)
What’s in Bulk Operations Synergies?
Plantloading
Logisticsoptimization
Internalsourcing
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health8
Increase loading factor
● Consolidate insourced volumes
● Increase utilization rate
Reduce number of miles per delivery
● Merge maps of Air Liquide -Airgas delivery points and assets
● Optimize routings● Trucks / rail cars loading● Frequency of delivery
Internalize progressively 3rd party sourcing
● Pre-acquisition, ~40% of gas needs outsourced
● When relevant● At contract termination
![Page 9: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/9.jpg)
Example: Internal Sourcing and Asset Optimization
• Third-party marginsre-internalized
#1 source in the U.S.>100 rail cars for transport
Ar
O2 N2Capacities available on Large Industries plants
Progressive replacement by in-house sourcing
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health9
re-internalized
• Increased plant loading
• Backup capabilities
• Transport efficiencies
>100 rail cars for transport
Strong production capability
>200 rail cars for transport
1 source in Canada
1 source in U.S.
Global sourcesDistribution assetsHe
H2
CO2
![Page 10: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/10.jpg)
What’s in Process & Procurement Synergies?
Review business and administrative processes
Procurement
Take advantage of economy of scale
AdministrativeProcess
Procurement
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health10
Rights Issue
Review business and administrative processes
● Implement best practices from the 2 organizations
– Paperless deliveries
– Cylinder tracking
● Benefit from economy of scale
– Airgas invoicing processes (2M invoices/month!)
– Hardgoods logistics
Take advantage of economy of scale
● Airgas providing large U.S. footprint
– Healthcare, diesel, uniforms…
● Air Liquide leveraging on global presence
– Costs: insurance, travel, IT, bank fees, ...
– Capex: cylinders, tanks, trucks, ...
![Page 11: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/11.jpg)
What’s in Back Office Synergies?
Optimize Back Office structure Leverage on the best tools of the 2 organizations
ProcurementOrganization Administration
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
Optimize Back Office structure
● Merge operations leveraging the large Airgas structure
– Accounting, IT, support, administration, HR
– Optimize headcount & office space
– Eliminate redundancies
● Implement shared capabilities
– Share resources with LI and EL: finance, treasury, audit, IP
Leverage on the best tools of the 2 organizations
● SAP, routing optimization tool
Reduce costs
• Delisting from NYSE
• Much lighter Board costs/ Lean executive management
• Legal, Audit…
11
![Page 12: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/12.jpg)
What’s in Revenue Synergies?
Industrial Merchant and Healthcare
Cross Selling
ProductAvailability
Gas Applications
REVENUESYNERGIES
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
● Enlarged secured sourcing
● Airgas customer reach
● Air Liquide portfolio
● R&D support
● Enlarged offer
- Scope: HG, Safety, Dry Ice, He
- Technology (ex. Medical cylinder)
- On-sites
● Geographical expansion
- Mexico, Canada
12
![Page 13: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/13.jpg)
Cross Selling Scope
● Enlarged offer to broadercustomer portfolio
● Deployment of Air Liquide
● Bulk and Large Industries customers
● Small Industrial Merchant
● Hardgoods and Cylinders
● Customer reach through multi-
REVENUESYNERGIES
Cross Selling
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
● Deployment of Air Liquide technology
● Geographical expansion
● Small Industrial Merchanton-site technology
● Local presence in 80 countries
● Customer reach through multi-channel distribution network
● Mid-size customers with international development
13
� Multiple opportunities for cross selling
![Page 14: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/14.jpg)
Example: Cross Selling, On-Site Offer
• Targeted customers:
– Current Airgas bulk customers
– Large gas volumes with long-term perspective of business
• Advantages for the Group:
– Free up distribution resources and assets
REVENUESYNERGIES
Cross Selling
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health14
– Free up distribution resources and assets
– Secure customers with 10-15 year contract
– Expanded sales coverage (vs AL’s prior footprint)
� Most adequate supply mode for large volumes
![Page 15: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/15.jpg)
Example: Cross Selling, Intelli-Ox
• Primarily hospital customers– Leveraging Airgas footprint
• Digital gauge, ease-of-use for nurses
REVENUESYNERGIES
Cross Selling
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health15
• Lightweight, ergonomic handle
� Easiest way to increase patient safety, optimize time & save money
![Page 16: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/16.jpg)
Cross Selling: North American Offer
Value added for Airgas customers with operations in Canada or Mexico: new ability to follow strategic accounts throughout North America
REVENUESYNERGIES
Cross Selling
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health16
� International supplier for international customers
![Page 17: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/17.jpg)
Product Availability
• Security of supply
• Larger volumes available
HeH2 Ar Spec. gases
Productavailability
REVENUESYNERGIES
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
• Increased confidence of sales team
� Enriched value of Airgas offer
17
![Page 18: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/18.jpg)
Gas Applications
• AlphagazTM for specialty gases
• ArcalTM welding shielding gases
• AligalTM for Food
• Smart TOPS
Industrial Merchant Healthcare
• Smart cylinders – Intelli-Ox
• Extended services (e.g. TGM at hospitals)
Gasapplication
REVENUESYNERGIES
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
• Smart TOPS
18
� Enriched offer portfolio
![Page 19: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/19.jpg)
2016-2019: EBITDA Synergies > US$300m Confirmed
Revenue SynergiesCost Synergies
CYLINDER OPERATIONS
PROCESS&
PROCUREMENT
BULK OPERATIONS
• Cross-selling
• Product availability
• Gas applications
BACKOFFICE
>70%
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
Timeline for delivery of synergies
US$45m >US$130m >US$65m>US$60m
• Gas applications
Costs Synergies
Revenue Synergies
2016 2017 2018 2019
19
![Page 20: AirgasSite Visit DeliveringAirgas Synergies...21 March 2017 Delivering Synergies The world leader in gases, technologies and services for Industry and Health Pascal Vinet, VP, CEO](https://reader034.vdocuments.us/reader034/viewer/2022050204/5f57d9ed9b6bac5ae91ea63e/html5/thumbnails/20.jpg)
Contributing to NEOS
• Customer-centric focus
• Delivering synergies– Full cost synergies by
● Active part in NEOS Industrial Merchant 3 objectives…
Delivering synergies21 March 2017 The world leader in gases, technologies and services for Industry and Health
– Full cost synergies by end 2018
– Revenue synergies by end 2019
*Including Airgas scope effect in 2017 contributing +5% to the CAGR for IM and +1% for HC
● …as well as NEOS Healthcare objectives
20