Element Solutions Inc. · NYSE:ESI
Element Solutions — Platform Specialty Products — Q2 2016 Earnings Presentation
23 slides from Element Solutions's earnings presentation, Aug 8, 2016
Slide 1: Second Quarter 2016
Second Quarter 2016 August 8, 2016
Slide 2: Safe Harbor
Safe Harbor Please note that in this presentation, we may discuss events or results that have not yet occurred or been realized, commonly referred to as forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or o
Slide 3: Non-GAAP Information
Non-GAAP Information To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company uses the following non-GAAP financial measures: comparable adjusted diluted earnings per share, comparable sales, adjusted EBITDA,
Slide 4: Q2 2016 Highlights
Q2 2016 Highlights Actual Comparable1* Comparable Constant Currency2* Organic3* ($ in millions) Q2 2016 Q2 2015 YoY% Q2 2016 Q2 2015 YoY% Q2 2016 Q2 2015 YoY% YoY% Revenue $922 $675 37% $922 $951 (3)% $956 $951 1% 1% EPS $(0.04) $(0.06) nm Adj. EBITDA* 193 168 15% 193 213 (10)% 200 213 (6)% Adj. EBI
Slide 5: Performance Solutions Q2 Results
Performance Solutions Q2 Results Actual Comparable Comparable Constant Currency Organic ($ in millions) Q2 2016 Q2 2015 YoY% Q2 2016 Q2 2015 YoY% YoY% Revenue $438 $458 (4)% $448 $458 (2)% (2)% Adj. EBITDA 98 98 0% 102 98 4% Adj. EBITDA Margin 22% 21% 23% 21% Adj. EBITDA ex-corp costs 105 101 4% 109
Slide 6: Agricultural Solutions Q2 Results
Agricultural Solutions Q2 Results Actual Comparable Comparable Constant Currency Organic ($ in millions) Q2 2016 Q2 2015 YoY% Q2 2016 Q2 2015 YoY% YoY% Revenue $484 $494 (2)% $508 $494 3% 5% Adj. EBITDA 95 116 (18)% 99 116 (15)% Adj. EBITDA Margin 20% 23% 19% 23% Adj. EBITDA ex-corp costs 103 119 (1
Slide 7: Ag Regional Performance
Ag Regional Performance Q2’16 Organic % of Ag Sales % of Ag Sales Sales Growth (Q2’15) (Q2’16) North America ~(40)% ~20% ~10% Rest of World ~15% ~80% ~90% Total 5% • Excluding North America, the Ag business had a strong quarter with each region showing positive sales and earnings growth • North Amer
Slide 8: Bridging to Updated Guidance
Bridging to Updated Guidance Updating Lower-end of 2016 Adjusted EBITDA1 guidance to $735 - $775 million2 800 775 780 760 ~10 740 722 720 735 700 680 ~$23 million to mid-point 660 640 620 600 1H Annualized 2H Incremental Organic Growth FX Tailwind 2016 Guidance Synergies (net of price) 1H 2016 2016
Slide 9: Cost Synergies (Non-GAAP)
Cost Synergies (Non-GAAP) Agricultural Solutions Performance Solutions $ in millions $ in millions $25 Realized YoY Cost Synergies $25 Realized YoY Cost Synergies $20 $20 $20 $20 $15 $6 $14 $15 $7 $11 $10 $8 $10 $5 $5 $3 $0 $0 Q1 Q2 1H 2016 Target Q1 Q2 1H 2016 Target $13 million of new cost synergi
Slide 10: Integration Update – Q2 2016
Integration Update – Q2 2016 Agricultural Solutions • Legal entity consolidation initiatives continue to progress smoothly • $10 million of new run-rate cost synergy actions in Q2 • Regulatory and supply chain synergy priority continues • $6 million increase in synergies vs. Q2 2015 – on track to ac
Slide 11: Financial Performance
PLATFORM SPECIALTY PRODUCTS CORPORATION ml Financial Performance a1
Slide 12: Q2 Financial Overview
Q2 Financial Overview Actual Comparable Comparable Constant Currency Organic ($ in millions) Q2 2016 Q2 2015 YoY% Q2 2016 Q2 2015 YoY% Q2 2016 Q2 2015 YoY% YoY% Revenue $922 $675 37% $922 $951 (3)% $956 $951 1% 1% EPS $(0.04) $(0.06) nm Adj. EBITDA* 193 168 15% 193 213 (10)% 200 213 (6)% Adj. EBITDA
Slide 13: 2Q 2015 to 2Q 2016 Sales Bridge (Non-GAAP)
2Q 2015 to 2Q 2016 Sales Bridge (Non-GAAP) Sales Bridge $ in millions 1,000 951 1 922 908 22 900 (9) (34) (9) 800 700 494 461 484 600 Organic 500 sales growth 400 of 1% 300 458 448 438 200 100 0 2Q15 Divestitures Metals FX Headwind 2Q15 Pricing Volume / Mix 2Q16 Comparable Normalized Performance Sol
Slide 14: 2Q 2015 to 2Q 2016 Adjusted EBITDA Bridge (Non-GAAP)
2Q 2015 to 2Q 2016 Adjusted EBITDA Bridge (Non-GAAP) Adjusted EBITDA Bridge $ in millions 250 13 213 22 200 (7) 193 (23) (17) (8) 150 116 95 Primarily Ag 100 50 98 98 0 2Q15 FX FX Pricing Synergies Volume / Mix Increase in 2Q16 Comparable Translational Transactional Corporate Headwind Headwind Costs
Slide 15: Capital Structure Overview
Capital Structure Overview Capital Structure Maturity Profile $ millions 3,500 Series B Pfd. Instrument Maturity Coupon 6/30/16 3,000 Debt Corporate Revolver ($500M) 6/7/2019 $90 Term Loan – USD1 6/7/2020 L + 450 2,684 2,500 Term Loan – EUR1 6/7/2020 L + 450 645 2,000 $ millions Other Debt 52 Total
Slide 16: Seasonality of Financial Performance (Non-GAAP)
Seasonality of Financial Performance (Non-GAAP) % of 2H Comparable Adj. EBITDA Key Drivers of 2016 vs 2015 Seasonality 3rd Quarter • Seasonally slow Ag quarter 2014 47% • Ramp of Latin American season • Slow quarter for rest of world Q3 2015 48% • Expectation for sequential growth in Performance Sol
Slide 17: Conclusions – 2016 Priorities
Conclusions – 2016 Priorities Integration and Synergy Realization Focus Commercial Efforts on Fast Growing Niches Establish Operating Rhythm and Momentum Generate Free Cash Flow 17
Slide 18: Appendix
r PLATFORM SPECIALTY Va PR ODUCTS CORPORATION Appendix 18
Slide 19: Covenant Overview
Covenant Overview Our capital structure is subject to only one quarterly maintenance test - 6.25x First Lien Net Debt to Covenant EBITDA Covenant EBITDA LTM Comparable adj. EBITDA $713 Covenant EBITDA is defined as LTM comparable adj. EBITDA plus synergies expected to be realized based on action
Slide 20: Organic Sales Reconciliation
Organic Sales Reconciliation Performance Agricultural Total Solutions Solutions (amounts I n millions) Q2 2016 YoY% Q2 2016 YoY% Q2 2016 YoY% Change in net comparable sales $(20) (4.3)% $(10) (2.1)% $(30) (3.1)% Dispositions - - 9 1.9 9 1.0 Foreign exchange impacts 10 2.3 24 5.0 34 3.7 Impact of met
Slide 21: Net Loss Attributable to Common Stockholders Reconciliation to Adjusted EBITDA
Net Loss Attributable to Common Stockholders Reconciliation to Adjusted EBITDA (amounts in millions) Q2 2016 Q2 2015 Net loss attributable to common stockholders $(9) $(12) Income tax expense 27 - Net income attributable to the non-controlling interests 1 3 Income (loss) before income taxes and non-
Slide 22: Diluted EPS Reconciliation to Comparable Adj. Diluted EPS
Diluted EPS Reconciliation to Comparable Adj. Diluted EPS (amounts in millions except per share) Q2 2016 Q2 2015 GAAP diluted loss per share $(0.04) $(0.06) Weighted average diluted shares outstanding (in millions) 230 193 Net loss attributable to common stockholders $(9) $(12) Pre-acquisition activ
Slide 23: Non-GAAP Definitions
Non-GAAP Definitions Comparable Sales: Comparable sales is defined as sales adjusted for the sales of our acquisitions as if they had occurred on January 1, 2015. Management believes this measure provides investors with a more complete understanding of sales trends by providing sales on a more consi
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