Michael L. Molinini, President & Chief Executive Officer
Positioned for Growth
To Our Shareholders,
Last year was an incredibly successful one for Airgas. If you review the financials in this report, you might think that's an overstatement because, based on the numbers, you might say "good" but certainly not "incredible." But when you look under the hood, you realize those results tell only part of the story — and we have a great story to tell.
In our 2013 fiscal year, we retooled Airgas. We completed the rollout of a new SAP Enterprise Resource Planning system across all 13 of our regions. We successfully created and built out four Business Support Centers to provide back-office administrative services to those regions. We fine tuned sales and marketing programs focused on specific customer segments. We continued the major expansion of our telesales capabilities in both size and product breadth, and initiated a multi-year program to develop a new e-Business platform. We launched an expanded and broad-reaching approach to developing our people to ensure a steady stream of qualified candidates are in place to lead this company in the future.
Every single one of these initiatives is a large-scale change management project, and we had a half-dozen going full blast at the same time in what turned out to be a tough economy. Although it wasn't easy, we did what we set out to do, and now we anticipate those changes paying dividends for years to come. We're proud of the hard work we put in and the results we posted in fiscal 2013, but we're more charged up about what these new systems, processes, people, and practices will allow us to achieve in the future.
SAP is now firmly embedded at the center of Airgas. Our company is evolving and maturing and SAP is the enabler that will accelerate our progress. Until we had a single data platform connecting all facets of our enterprise with those of our more than one million customers, many of our plans to enhance the customer experience and make our facilities and work processes more efficient had stalled. That has now changed.
Installing SAP last year was one of the most complex projects we've ever undertaken at Airgas. Although we have more work to do to become proficient in its use, the heavy lifting is done, the system is in place, the people are trained, and we're already beginning to realize some of the promised results. Yes, there are a few SAP-enabled benefits that are very significant that we believe will be "home runs" and to date these have gotten most of the attention and resources; however, there are many more "singles and doubles" opportunities resulting from our drive for continuous improvements.
In that way, SAP reminds me of our safety program, which for many years has been focused on the year-over-year continuous improvement of our workplace safety culture, culminating in our 2013 award from the Compressed Gas Association for the safest bulk and cylinder fleets among large companies in our industry.
SAP isn't the only reason we're positioned for growth. We have dedicated sales and marketing teams focused on the seven market segments that generate the bulk of our revenue. These teams continue to mature and make great strides in developing strong relationships with the key players in those segments expected to grow the most over the next five years, including manufacturing; oil, gas, and chemicals; and non-residential construction.
Last year, we also began developing or enhancing new sales channels. After years of successfully selling safety products through our Airgas Safety telesales operation, we hired, trained, and deployed personnel with the expertise to sell our full product line of gases, welding, and safety products. The new Airgas Total Access team is reaching out to historically underserved customers across multiple market segments, offering them an enhanced buying experience and helping us grow our top line.
We also began the journey to build out a robust e-Business platform, which will provide our customers with the type of information and self-service capabilities they expect and that are available today from the best-in-class B-to-B e-Business companies in other industries. Over the next few years we expect to more than double the amount of Airgas business transacted online compared to current levels.
Our big-picture vision behind all of these recent changes is to position Airgas as a company employing leading-edge technologies and systems that allow customers in multiple industries to engage with us through the sales channel that is best suited for them. The industrial gas and welding industries have gone to market in the same one-dimensional way since the beginning. At Airgas, we will always have people in branches answering phones, taking orders, and servicing walk-in customers; drivers making deliveries; and an outside sales force calling on and bringing value to key customers — but that's just the beginning of how we'll engage with and expand our customer base.
We have tremendous talent in our company and we need to ensure we identify it early and do everything possible to develop its full potential. Last year we initiated a new approach to developing the next generation of Airgas leaders. We created a new corporate role — vice president of talent management — to increase our focus on just that. We believe that the best training tool available is having P&L responsibility and our mission is to have our top talent become P&L owners as early in their careers as practical. Over the next 10 years the prospects for Airgas are outstanding, and having a stable of well-trained future leaders to make sure we reach our full potential as a company is now just as important as where the next production plant will be located.
Airgas is still a very young company. We have evolved and matured greatly over the years, but we are not done yet. As long as the needs of our customers continue to evolve, we will evolve with them. As we enter FY14, however, we see the pace of change slowing as we enter a period focused on execution, including effectively using the functionality of SAP, accurately recording all transactions the first time, embracing the data now available to help drive margin improvement and operating efficiencies, improving the gases and hardgood supply chains, and integrating the new sales channels with our existing customers and exposing them to new customers.
Our 2013 fiscal year was marked by an incredible — almost incomprehensible — amount of change. We moved our company forward in a short amount of time. Now, more than ever, we're positioned to leverage our industry leading platform to profitably grow our business and continue to reward Airgas shareholders for years to come.
President and Chief Executive Officer