Ecovyst Inc. · NYSE:ECVT
Ecovyst — PQ — Investor Presentation (June 2019)
27 slides from Ecovyst's investor presentation, June 2019
Slide 1: Investor Presentation June 2019
INVESTOR PRESENTATION June 2019 1
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER Forward-Looking Statements Some of the information contained in this presentation constitutes “forward-looking statements”. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects” and si
Slide 3: PQ Corporation
PQ CORPORATION Leading and Innovative Global Provider of Specialty Catalysts, Materials and Chemicals and Services 2018 SALES AND ZEOLYST JV SALES OVERVIEW BY REGION AND END USE1 END USE o Founded in 1831 o Headquarters in Malvern, PA o IPO in September 2017 2018 FINANCIAL HIGHLIGHTS REGION o Revenu
Slide 4: Our Business Units
OUR BUSINESS UNITS Specialty, Leading and Differentiated REFINING PERFORMANCE PERFORMANCE SERVICES CATALYSTS1 MATERIALS CHEMICALS Increased octane Tighter fuels standards Higher highway Environmentally driven demand Light weighting demand safety standards consumer demand o Sulfuric acid production e
Slide 5: Financial Performance Across Macroeconomic Cycles
FINANCIAL PERFORMANCE ACROSS MACROECONOMIC CYCLES Demonstrated Stability Through Cycles with Attractive Margins Adjusted EBITDA and Adjusted EBITDA Margin (%)1,2,3 ($ in millions except %) (1) Adjusted EBITDA for the period from 2005 to 2014 represents Legacy Eco Adjusted EBITDA and Legacy PQ Adjust
Slide 6: A Portfolio of Stability
A PORTFOLIO OF STABILITY Low Exposure to Economic Cycles % of 2018 Sales by End Use1 End Markets Categorized by Sensitivity to Downturn2 Packaging & Engineered Plastics Fuels & Emissions (All segments) Controls (RS & C) 17% 21% Consumer Products Six Primary End Uses (PC) 16% 19% Serve ~28 Highway Sa
Slide 7: Portfolio Strengths and Priorities
PORTFOLIO STRENGTHS AND PRIORITIES Drive Shareholder Value KEY VALUE DRIVERS Profitable COMPETITIVE ADVANTAGES Growth Unique portfolio of businesses Capital Leading positions in Commercial Intensity secular growth markets Efficiency Innovation potential Free Cash Flow 7
Slide 8: Why PQ's Specialty Chemical Portfolio?
WHY PQ’s SPECIALTY CHEMICAL PORTFOLIO? Investment Highlights #1 and #2 positions in nearly all product lines GDP+ growth from strong underlying secular macro trends Input cost small as % of customer total product cost Track record of innovation and customer collaboration Environmentally friendly end
Slide 9: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 10: Supplemental Information
SUPPLEMENTAL INFORMATION 2018 Capital Expenditures, Capitalization, Sales by End Use and Region CAPITAL EXPENDITURES1 Full Year Full Year ($ in millions) 2018 2017 % OF SALES GROWTH BY END USE 4 Maintenance2 94.7 102.6 Fuels & Emissions Controls + 6% Growth3 37.0 37.9 Highway Safety & Construction +
Slide 11: Macro Industry Trends
MACRO INDUSTRY TRENDS Expected Secular Growth Drivers Across Our Businesses Turbocharged Engines Heavy Duty Diesel Emissions Silicates & Silicas +7% +2x +2 – 3% North America CAGR Global catalyst Global CAGR from 2018 – 2025; consumption growth between consumption from turbo vehicles rise to 2020 –
Slide 12: Refining Services
#1 U.S. Supplier REFINING SERVICES Strategically Located Network Positioned to Serve New Capacity Expansions in Gulf Gulf Coast Sulfuric Acid Regeneration Demand Planned alkylation expansions, (000 Tons Per Year) all Gulf Coast, Sulfuric-based 2,200 Expected expansions driven by: o Growth in premium
Slide 13: Silica Catalysts – PE and MMA
#2 global supplier SILICA CATALYSTS – PE and MMA of silica catalysts 2019 Expected Growth Steady from PE, with Step-Change from MMA Refill POLYETHYLENE METHYL METHACRYLATE HDPE/LLDPE Projected Capacity Expansions1 Global Consumption End Uses 120 100 Polymethylmethacrylate (PMMA) Other Million MT 80
Slide 14: Zeolyst JV with Shell – Fuel and Emission Control Catalysts
#1 global supplier ZEOLYST JV WITH SHELL – of emission catalysts FUEL AND EMISSION CONTROL CATALYSTS Growth from Increased Fuel and Emissions Regulations Removing NOx from Vehicle Emissions: Removing Sulfur from Fuels: Global Mix (000) and Catalyst Consumption for HDD Vehicles Hydrocracking Projecte
Slide 15: Performance Materials
#1 global provider of PERFORMANCE MATERIALS engineered safety beads Increased Standards for Transportation Safety Drives Demand Product Line Lead road marking bead supplier in North Other 4% America, Europe and Latin America Broad global network with 28 production Engineered Glass Materials faciliti
Slide 16: Performance Chemicals
#1 North America & PERFORMANCE CHEMICALS Europe silicates supplier Growing Trends for Environmentally Friendly and Sustainable Products Product Line > 2x sodium silicate supply share of nearest Other competitor 18% Spray Dry ~ 70% contracted sales with 1 – 3 year term; Silicates 6% Sodium ~ 40% Nort
Slide 17: Adjusted Free Cash Flow and Leverage Ratio
ADJUSTED FREE CASH FLOW AND LEVERAGE RATIO Strong Sustainable Adjusted Free Cash Drives Progress towards Leverage Target ADJUSTED FREE CASH FLOW ($mm) NET DEBT/ADJUSTED EBITDA RATIO All Adjusted Free Cash Flow used to repay debt Progress to leverage target of 3.0 – 3.5x 4.9x 134.2 4.5x 24.7 2017 201
Slide 18: Quarterly Sales, Adjusted EBITDA & Adjusted EBITDA Margin
QUARTERLY SALES, ADJUSTED EBITDA & ADJUSTED EBITDA MARGIN Year 2017 - 2019 Three Months For the Quarter Ended Ended Three Months Ended Year Ended Three Months Ended Year Ended September September December March 31, March 31, June 30, 30, December December March 31, June 30, 30, December 31, ($ in mi
Slide 19: 2019 Guidance
2019 GUIDANCE Expected Adjusted Free Cash Flow Range of $125 Million to $145 Million 2018 2019 ($ in millions except %) Actual Outlook Sales 1,608.2 1,640 – 1,670 Adjusted EBITDA 464.0 470 – 485 Adjusted Free Cash Flow 134.2 125 – 145 Adjusted Diluted EPS $0.87 $0.75 - $0.93 Interest Expense 113.7 1
Slide 20: Reconciliation of Adjusted Free Cash Flow
RECONCILIATION OF ADJUSTED FREE CASH FLOW Adjusted Free Cash Flow for Years 2018 and 2017 Full Year Full Year ($ in millions) 2018 2017 Cash Flow from Operations before interest and tax 377.5 364.5 Less: Cash paid for taxes 23.8 29.2 Cash paid for interest 105.1 170.1 Cash Flow from Operations 248.6
Slide 21: Reconciliation of Sales and Adjusted EBITDA
RECONCILIATION OF SALES AND ADJUSTED EBITDA 2005 – 2018 Year Ended December 31, 2015 2016 Pro Pro ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 forma 3 forma 3 2017 2018 Reconciliation of sales and adjusted EBITDA Legacy PQ Sales 1 635.3 708.6 775.0 977.0 1,009.9 1,087.9 1,115.0
Slide 22: Reconciliations for Adjusted EBITDA
RECONCILIATIONS FOR ADJUSTED EBITDA 2005 – 2014 Legacy PQ1 Net Income (Loss) to Adjusted EBITDA Reconciliation Year Ended December 31, ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Reconciliation of net income (loss) attributable to Legacy PQ to Adjusted EBITDA Net income (loss)
Slide 23: Reconciliations for Adjusted EBITDA
RECONCILIATIONS FOR ADJUSTED EBITDA 2005 – 2014 Legacy Eco Services1 Net Income (Loss) to Adjusted EBITDA Reconciliation Year Ended December 31, 2014 2014 ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 Successor Predecessor Reconciliation of net income (loss) attributable to Legacy Eco
Slide 24: Reconciliations for Adjusted EBITDA
RECONCILIATIONS FOR ADJUSTED EBITDA 2015 – 2018 Post-Business Combination PQ Net Income (Loss) to Adjusted EBITDA Reconciliation Year Ended December 31, 2015 2016 ($ in millions) Pro forma 1 Pro forma 1 2017 2018 Reconciliation of net income (loss) attributable to PQ Group Holdings Inc. to Segment A
Slide 25: Reconciliation of Net Income to Segment Adjusted EBITDA
RECONCILATION OF NET INCOME TO SEGMENT ADJUSTED EBITDA 2017 Through First Quarter 2019 Three Months Ended Three Months Ended Year Ended Three Months Ended Year Ended September December September March 31, March 31, June 30, 30, 31, December 31, March 31, June 30, 30, December 31, December 31, ($ in
Slide 26: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Descriptions to PQ Non-GAAP Reconciliations a) We use Adjusted EBITDA as a performance measure to evaluate our financial results. Because our Catalysts segment includes our 50% interest in our Zeolyst Joint Venture, we include an adjustment for our 50% p
Slide 27: Leading the
Leading the way to a a ye jo ——_ <r