Element Solutions Inc. · NYSE:ESI
Element Solutions — Platform Specialty Products — Q3 2016 Earnings Presentation
26 slides from Element Solutions's earnings presentation, Nov 4, 2016
Slide 1: Third Quarter 2016
Third Quarter 2016 November 4, 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: adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA guidance, comparable net
Slide 4: Recent Highlights
Recent Highlights • Strong Q3 organic growth in sales and comparable earnings • 3% organic sales growth • 13% Adj. EBITDA growth excluding currency impact • Constant currency Adj. EBITDA margin improved by ~200bps • Continued synergy realization • $13m of additional synergies in Q3 • Total run-rate
Slide 5: 2016 Investor Day Recap
2016 Investor Day Recap Business Unit Strategy Overview • Become integral to customer’s supply chain with a two pronged selling approach (OEM and applicator level) Performance Solutions • Customer focused innovation with OEMs utilizing our unmatched product breadth • Best-in-class customer service a
Slide 6: Q3 2016 Financial Results
Q3 2016 Financial Results Actual Comparable1* Comparable Constant Currency2* Organic3* ($ in millions) Q3 2016 Q3 2015 YoY% Q3 2016 Q3 2015 YoY% Q3 2016 Q3 2015 YoY% YoY% Net Sales $891 $597 49% $891 $866 3% $889 $866 3% 3% EPS - Diluted $(0.15) $(0.66) nm Adj. EBITDA* 190 114 45% 190 166 14% 188 16
Slide 7: Performance Solutions Q3 Results
Performance Solutions Q3 Results Actual Comparable* Comparable Constant Currency* Organic* ($ in millions) Q3 2016 Q3 2015 YoY% Q3 2016 Q3 2015 YoY% YoY% Net Sales $455 $448 2% $463 $448 3% 2% Adj. EBITDA 110 103 6% 113 103 9% Adj. EBITDA Margin 24% 23% 24% 23% Adj. EBITDA ex-corp costs 118 110 7% 1
Slide 8: Agricultural Solutions Q3 Results
Agricultural Solutions Q3 Results Actual Comparable* Comparable Constant Currency* Organic* ($ in millions) Q3 2016 Q3 2015 YoY% Q3 2016 Q3 2015 YoY% YoY% Net Sales $436 $418 4% $426 $418 2% 4% Adj. EBITDA 80 63 27% 75 63 19% Adj. EBITDA Margin 18% 15% 18% 15% Adj. EBITDA ex-corp costs 88 70 25% 83
Slide 9: Bridging to Updated Guidance
Bridging to Updated Guidance Improved 2016 Adjusted EBITDA1 guidance to $750 - $765 million2 $ in millions 800 765 750 184 750 700 ~$22 million of growth from organic performance, FX 650 and synergies3 600 551 550 500 3Q16 YTD Adj. EBITDA Q415 Adj. EBITDA Q416 Organic Growth / FX 2016 Adj EBITDA / S
Slide 10: Cost Synergies
Cost Synergies Agricultural Solutions Performance Solutions $ in millions $ in millions Realized YoY Cost Synergies Realized YoY Cost Synergies $25 $25 $19 $20 $20 $20 $20 $5 $20 $8 $14 $15 $15 $11 $10 $10 $5 $5 $0 $0 1H Q3 YTD 2016 Target 1H Q3 YTD 2016 Target $13 million of new cost synergies real
Slide 11: Integration Update – Q3 2016
Integration Update – Q3 2016 Agricultural Solutions • Growth strategy development completed • Business units have begun phase I execution • Completing internal consolidation of Europe and AME • $5 million of new run-rate cost synergy actions in Q3 • Supply chain and procurement synergy priority cont
Slide 12: Financial Performance
PLATFORM SPECIALTY PRODUCTS CORPORATION ml Financial Performance 12
Slide 13: Q3 Financial Overview
Q3 Financial Overview Actual Comparable* Comparable Constant Currency* Organic* ($ in millions) Q3 2016 Q3 2015 YoY% Q3 2016 Q3 2015 YoY% Q3 2016 Q3 2015 YoY% YoY% Net Sales $891 $597 49% $891 $866 3% $889 $866 3% 3% EPS - Diluted $(0.15) $(0.66) nm Adj. EBITDA* 190 114 45% 190 166 14% 188 166 13% A
Slide 14: Q3 2015 to Q3 2016 Sales Bridge (Non-GAAP)
Q3 2015 to Q3 2016 Sales Bridge (Non-GAAP) Sales Bridge $ in millions 900 39 891 890 880 870 866 7 865 2 860 850 (9) (14) 840 830 Organic sales 820 growth of 3% 810 800 3Q15 Divestitures FX Tailwind Metals 3Q15 Pricing Volume / Mix 3Q16 Sales Comparable Normalized Sales 14
Slide 15: Q3 2015 to Q3 2016 Adjusted EBITDA Bridge (Non-GAAP)
Q3 2015 to Q3 2016 Adjusted EBITDA Bridge (Non-GAAP) Adjusted EBITDA Bridge $ in millions 200 13 190 190 180 14 170 166 2 160 (2) (1) (2) 150 140 Primarily Ag 130 120 110 100 3Q15 FX FX Net Pricing Corp Cost Volume / Mix Synergies 3Q16 Adj Comparable Translation Transaction Increase EBITDA EBITDA 15
Slide 16: Capital Structure Overview
Capital Structure Overview Capital Structure1 Maturity Profile1 $ millions 2500 Instrument Maturity Coupon Adj. 9/30/16 2000 Corporate Revolver ($500M) 6/7/2019 $0 Term Loan B3 – USD2 6/7/2020 L + 450 1,033 1500 $ millions Term Loan B4 – USD2 6/7/2023 L + 400 1,475 Term Loan C2 – EUR2 6/7/2020 E + 4
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: Appendices
r PLATFORM SPECIALTY Va PR ODUCTS CORPORATION Appendices 18
Slide 19: Walk to Pro Forma Share-Count
Walk to Pro Forma Share-Count Series B Pro Forma (amounts in millions) 6/30/2016 Q3 Activity 9/30/2016 Settlement1 9/30/2016 Basic outstanding shares 229.6 48.8 278.4 5.5 283.9 Number of shares issuable upon conversion of Series B Convertible Preferred Stock 22.1 - 22.1 (22.1) - Number of shares iss
Slide 20: Covenant Overview
Covenant Overview Our capital structure is subject to only one quarterly Covenant EBITDA maintenance test - 6.25x First Lien Net Debt to Covenant EBITDA LTM Comparable adj. EBITDA $735 Covenant EBITDA is defined as LTM comparable adj. EBITDA plus synergies expected to be realized based (+) Annou
Slide 21: Organic Sales Reconciliation
Organic Sales Reconciliation Performance Agricultural Total Solutions Solutions (amounts in millions) Q3 2016 YoY% Q3 2016 YoY% Q3 2016 YoY% Change in net comparable sales $7 1.6% $18 4.4% $25 2.9% Dispositions - - 9 2.3 9 1.1 Foreign exchange impacts 8 1.8 (10) (2.4) (2) (0.2) Impact of metal price
Slide 22: Net Income (Loss) Attributable to Common Stockholders Reconciliation to Adjusted EBITDA
Net Income (Loss) Attributable to Common Stockholders Reconciliation to Adjusted EBITDA (amounts in millions) Q3 2016 Q3 2015 Net income (loss) attributable to common stockholders $105 $(140) Gain on amendment of Series B Convertible Preferred Stock (33) - Net (loss) income attributable to the non-c
Slide 23: GAAP Common EPS Reconciliation to Comparable Adj. EPS
GAAP Common EPS Reconciliation to Comparable Adj. EPS (amounts in millions except per share) Q3 2016 Q3 2015 GAAP common gain (loss) per share $0.45 $(0.66) Weighted average shares outstanding (in millions) 234 211 Net income (loss) attributable to common stockholders $105 $(140) Pre-acquisition act
Slide 24: Reported Segment Results Reconciliation to Comparable Segment Results
Reported Segment Results Reconciliation to Comparable Segment Results Q3 2015 Comparable Sales Q3 2015 Comparable Adj. EBITDA (amounts in millions) (amounts in millions) Performance Solutions $180 Performance Solutions $58 Acquisitions: Acquisitions: Alent 227 Alent 42 OM 41 OM 11 Corporate cost all
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, tha
Slide 26: Non-GAAP Definitions
Non-GAAP Definitions Adjusted EBITDA: Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, as further adjusted for additional items included in earnings that are not representative or indicative of our ongoing business as described in the footnotes to the non
Platform Specialty Products — Q3 2016 Earnings Presentation on 6ix