EX-99.2 3 exhibit992q2fy14.htm CONFERENCE CALL SLIDES DATED FEBRUARY 27, 2014 (FURNISHED PURSUANT TO ITEM 2.02) exhibit992q2fy14
Better Lives. Better Planet.SM © 2014 Pall Corporation Q2 FY 2014 Financial Results February 27, 2014 Exhibit 99.2


 
2 The matters discussed in this presentation contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Results for the second quarter of fiscal year 2014 are preliminary until our Form 10-Q is filed with the Securities and Exchange Commission on or before March 12, 2014 Forward-looking statements are those that address activities, events or developments that the Company or management intends, expects, projects, believes or anticipates will or may occur in the future. All statements regarding future performance, earnings projections, earnings guidance, management’s expectations about its future cash needs, dilution from the disposition or future allocation of capital and effective tax rate, and other future events or developments are forward- looking statements. Forward-looking statements are those that use terms such as “may,” “will,” “expect,” “believe,” “intend,” “should,” “could,” “anticipate,” “estimate,” “forecast,” “project,” “plan,” “predict,” “potential,” and similar expressions. Forward-looking statements contained in this and other written and oral reports are based on management’s assumptions and assessments in light of past experience and trends, current conditions, expected future developments and other relevant factors. The Company’s forward-looking statements are subject to risks and uncertainties and are not guarantees of future performance, and actual results, developments and business decisions may differ materially from those envisaged by the Company’s forward-looking statements. Such risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A, “Risk Factors” in the 2013 Form 10-K, and other reports the Company files with the Securities and Exchange Commission, including: the impact of disruptions in the supply of raw materials and key components from suppliers, including limited or single source suppliers; the impact of terrorist acts, conflicts and wars or natural disasters; the extent to which special U.S. and foreign government laws and regulations may expose the Company to liability or impair its ability to compete in international markets; the impact of economic, political, social and regulatory instability in emerging markets, and other risks characteristic of doing business in emerging markets; fluctuations in foreign currency exchange rates and interest rates; the impact of a significant disruption in, or breach in security of, the Company’s information technology systems, or the failure to implement, manage or integrate new systems, software or technologies successfully; the Company’s ability to successfully complete or integrate acquisitions; the Company’s ability to develop innovative and competitive new products; the impact of global and regional economic conditions and legislative, regulatory and political developments; the Company’s ability to comply with a broad array of regulatory requirements; the loss of one or more members of the Company’s senior management team and its ability to recruit and retain qualified management personnel; changes in the demand for the Company’s products and the maintenance of business relationships with key customers; changes in product mix and product pricing, particularly with respect to systems products and associated hardware and devices for the Company’s consumable filtration products; product defects and unanticipated use or inadequate disclosure with respect to the Company’s products; the Company’s ability to deliver its backlog on time; increases in manufacturing and operating costs and/or the Company’s ability to achieve the savings anticipated from its structural cost improvement initiatives; the impact of environmental, health and safety laws and regulations and violations; the Company’s ability to enforce patents or protect proprietary products and manufacturing techniques; costs and outcomes of pending or future litigation and the availability of insurance or indemnification rights; changes in the Company’s effective tax rate; the Company’s ability to compete effectively in domestic and global markets; and the effect of the restrictive covenants in the Company’s debt facilities. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company makes these statements as of the date of this disclosure and undertakes no obligation to update them, whether as a result of new information, future developments or otherwise. Management uses certain non-GAAP measurements to assess the Company’s current and future financial performance. The non-GAAP measurements do not replace the presentation of the Company’s GAAP financial results. These measurements provide supplemental information to assist management in analyzing the Company’s financial position and results of operations. The Company has chosen to provide this information to facilitate meaningful comparisons of past, present and future operating results and as a means to emphasize the results of ongoing operations. Reconciliations of the non-GAAP financial measures used throughout this presentation to the most directly comparable GAAP measures appear at the end of this presentation in the Appendix and are also available on Pall’s website at www.pall.com/investor Forward-Looking Statements


 
3 Conference Call Information  Dial-In Toll-Free: 855.356.7268 International: 706.634.1981  Replay Toll-Free: 855.859.2056 International: 404.537.3406  Conference ID: 11904826  Internet: www.pall.com/investor


 
4 Q2 Overview  Solid Q2 performance – EPS up 12% – Operating margin up 120 bps  Similar market trends  Increasing order rates  Completed acquisition of ATMI LifeSciences On plan for FY14 All remarks in this presentation are on a “Continuing Operations” basis, which excludes the results of the Blood product line divestiture, unless indicated otherwise. A reconciliation of Non-GAAP Financial Measures in this presentation to their GAAP Counterparts is provided in the Appendix.


 
5 ATMI LifeSciences Key Products Innovative BioReactor Solutions. iCELLis® and Xpansion™ shown World’s largest installed base and broadest range of single-use mixing systems. PadMixer™ and Magnetic Mixer shown Strategic Highlights  Single-use technology leader  Bioreactors, mixers, storage systems  Broadens our Biopharm portfolio  Enables us to better serve the needs of our customers Technology leader in ultra- clean packaging. Ultra- clean film extrusion and TK8 Film shown


 
6 $662 $677 $- $200 $400 $600 $800 Revenue % Growth Excluding FX FY 2013 FY 2014 Q2 Financial Summary Dollars in millions, except EPS data A reconciliation of Non-GAAP Financial Measures in this presentation to their GAAP Counterparts is provided in the Appendix. 17.0% 18.2% 10.0% 15.0% 20.0% Operating Profit Margin FY 2013 FY 2014 Q2 FY2013 0.73$ EBIT 0.11 Sharecount & Other 0.02 Translational FX (0.04) Q2 FY2014 0.82$ Pro forma EPS Bridge $0.73 $0.82 $0.30 $0.60 $0.90 Pro forma EPS % Growth FY 2013 FY 2014 +12% +4% +120 bps


 
7 Life Sciences Consumables $319 +7% Industrial Consumables $270 +2% Industrial Systems $54 -9% Life Sciences Systems $34 +20% 40% 47% 8% 5% Q2 Sales by Segment Dollars in millions Percentages outside pie charts and in box represent sales change excluding FX Percentages inside pie charts represent percent of total sales A reconciliation of Non-GAAP Financial Measures in this presentation to their GAAP Counterparts is provided in the Appendix Life Sciences: $353 (+8%) Industrial: 324 (0%) Total Sales: $677 (+4%)


 
8 Q2 Life Sciences Segment Performance Dollars in millions excluding FX A reconciliation of Non-GAAP Financial Measures in this presentation to their GAAP Counterparts is provided in the Appendix 0% 30% 60% 56.6% -180 bps 58.4% 0% 30% 60% 25.7% +60 bps 25.1% FY 2013 FY 2014 Gross Margin Segment Margin  BioPharmaceuticals consumables: +9%  Medical consumables: +7%  Food & Beverage consumables: 0% Sales Q2 FY 2014 YoY Change YoY Change Excluding FX Consumables 319$ 6% 7% Systems 34 17% 20% Total Life Sciences 353$ 7% 8% Orders Q2 FY 2014 YoY Change YoY Change Excluding FX Consumables 363$ 13% 13% Systems 32 10% 12% Total Life Sciences 395$ 12% 13%


 
9 Q2 Industrial Segment Performance Dollars in millions excluding FX A reconciliation of Non-GAAP Financial Measures in this presentation to their GAAP Counterparts is provided in the Appendix Gross Margin Segment Margin  Process Technologies consumables: 0%  Aerospace consumables: -12%  Microelectronics consumables: +19% 0% 30% 60% 44.5% -50 bps 45.0% 0% 30% 60% 14.5% +10 bps 14.4% FY 2013 FY 2014 Sales Q2 FY 2014 YoY Change YoY Change Excluding FX Consumables 270$ -1% 2% Systems 54 -12% -9% Total Industrial 324$ -3% 0% Orders Q2 FY 2014 YoY Change YoY Change Excluding FX Consumables 282$ 8% 11% Systems 61 -8% -7% Total Industrial 343$ 5% 8%


 
10 Q2 Cash Flow and Working Capital YTD FY14 YTD FY13 Operating Cash Flow 206$ 89$ CapEx (35) (42) Free Cash Flow 171$ 47$ Other Significant Sources/(Uses) of Cash: Proceeds from sale of assets 2$ 542$ Acquisition of businesses (5) - Dividends (58) (53) Borrowing/Repayment under Financing Facilities 131 30 Stock Buybacks (250) (250) Dollars in millions A reconciliation of Non-GAAP Financial Measures in this presentation to their GAAP Counterparts is provided in the Appendix Cash, net of debt, $183mm as of January 31, 2014 Gain due to sale of Blood Product Line Reduced by one- time tax related payments


 
11 Total Revenue  Low to mid single digit growth Segment Revenue  Life Sciences: Mid to high single digit growth  Industrial: Flat −Modest consumables growth Pro Forma EPS  $3.35 – $3.45  Maintaining midpoint of the EPS range, after absorbing approximately 10 cent headwind from acquisition of ATMI LifeSciences business and translational FX  Estimate excludes Discrete Items, future acquisitions and related costs FY 2014 Outlook Update Sales changes exclude FX Tightening Guidance


 
Better Lives. Better Planet.SM © 2014 Pall Corporation Appendix


 
13 Appendix: Q2 Earnings and FY 2014 Estimates from Continuing Operations Reconciliation of Non-GAAP Financial Measures Diluted EPS from continuing operations as reported 0.75$ 0.70$ 3.26$ Discrete Items: ROTC after pro forma tax effect 0.07 0.03 0.14 Tax Adjustments - - - Interest Adjustments after pro forma tax effect - - - Total discrete items 0.07 0.03 0.14 Pro forma diluted EPS 0.82$ 0.73$ 3.40$ FY 2014 (Estimates at Midpoint) Q2 FY14 Q2 FY13


 
14 Appendix: Q2 Life Sciences Sales By Market & Technology Reconciliation of Non-GAAP Financial Measures Q2 FY14 Q2 FY14 Estimated Impact of FX Q2 FY14 Estimate Excluding FX Q2 FY13 % Change Excluding FX Consumables Sales: BioPharmaceuticals 218,625$ (1,387)$ 220,012$ 201,657$ 9.1% Food & Beverage 44,054 (1,044) 45,098 45,287 -0.4% Medical 56,660 (149) 56,809 53,292 6.6% Co umables Total 319,339$ $ (2,580) 321,919$ $ 300,236 7.2% Systems Sales 33,891$ (844)$ 34,735$ $ 28,946 20.0% Total Life Sciences 353,230$ (3,424)$ 356,654$ 329,182$ 8.3% Dollars in thousands


 
15 Appendix: Q2 Industrial Sales By Market & Technology Reconciliation of Non-GAAP Financial Measures Q2 FY14 Q2 FY14 Estimated Impact of FX Q2 FY14 Estimate Excluding FX Q2 FY13 % Change Excluding FX Consumables Sales: Process Technologies 139,664$ (3,070)$ 142,734$ 143,146$ -0.3% Aerospace 53,322 177 53,145 60,578 -12.3% Mi r electr nics 76,976 (4,568) 81,544 68,264 19.5% Consumables Total 269,962$ $ (7,461) 277,423$ $ 271,988 2.0% Systems Sales 53,777$ (2,285)$ 56,062$ $ 61,285 -8.5% Total Industrial 323,739$ (9,746)$ 333,485$ 333,273$ 0.1%-3 5 Dollars in thousands


 
16 Appendix: Q2 Orders by Segment Reconciliation of Non-GAAP Financial Measures Dollars in thousands Q2 FY14 Q2 FY14 Estimated Impact of FX Q2 FY14 Estimate Excluding FX Q2 FY13 % Change Excluding FX Life Sciences Orders: Consumables 363,351$ (2,833)$ 366,184$ 322,731$ 13.5% Systems 31,458 (691) 32,149 28,603 12.4% Lif S iences Total 394,809$ (3,524)$ 398,333$ 351,334$ 13.4% Industrial Orders: Consumables 282,143$ (8,093)$ 290,236$ 260,496$ 11.4% Systems 60,904 (943) 61,847 66,424 -6.9% Industrial Total 343,047$ (9,036)$ 352,083$ 326,920$ 7.7%


 
17 Appendix: Q2 Operating Profit Reconciliation of Non-GAAP Financial Measures Operating Profit Q2 FY14 Q2 FY13 Life Sciences segment profit 90,856$ 82,477$ Industrial segment profit 46,891 48,104 Total segment profit 137,747$ 130,581$ General corporate expenses (14,766) (18,026) Operating profit 122,981$ 112,555$ % of Sales 18.2% 17.0% ROTC 9,170 4,399 Interest expense, net 5,194 6,017 Earnings before income taxes 108,617$ 102,139$ Dollars in thousands