Element Solutions Inc. · NYSE:ESI
Element Solutions — Platform Specialty Products — Citi 2014 Basic Materials Conference
31 slides from Element Solutions's conference presentation, December 2014
Slide 1: Platform Specialty Products Corporation Citi 2014 Basic Materials Conference
Platform Specialty Products Corporation Citi 2014 Basic Materials Conference Investor Presentation December, 2014
Slide 2: Disclaimer
Disclaimer Please note that this presentation is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. In this presentation, we discuss events or results that have not yet occurred or been realized, commonly referred to as “forwar
Slide 3: Agenda
Agenda Platform Overview Arysta / Ag Vertical Overview Financial Overview Looking Ahead Q&A Appendices 2
Slide 4: Growth of Platform
Growth of Platform During 2014, Platform announced definitive agreements to acquire Chemtura AgroSolutions, Agriphar, and Arysta LifeScience to form a leading global crop solutions business. Platform Specialty Products Flavors Coatings Water Market Electronic Oilfield Surface Packaging Agricultural
Slide 5: "Asset-Lite, High-Touch" Business Models
“Asset-Lite, High-Touch” Business Models Commitment to R&D and Technical Service Value Crea)on Investment in Innovation Investment in Service Investment in customer driven R&D and product registration Investment in local service capability that delivers value, MacDermid whenever and wherever the cus
Slide 6: AgroSolutions is a Perfect Match with Platform's Strategic Criteria for Acquisitions
AgroSolutions is a Perfect Match with Platform’s Strategic Criteria for Acquisitions Arysta will form the core of our “Asset-Lite, High-Touch” crop protection business Platform’s Investment Criteria n “Asset-Lite, High-Touch” Business Model that Drives Free Cash Flow þ n Experienced Management Te
Slide 7: Diverse Customers, Products, End Markets and Geographies
Diverse Customers, Products, End Markets and Geographies 2013 – Revenue by Segment 2013 – Revenue by Geography Platform Standalone Pro Forma (1) Platform Standalone Pro Forma (1) Graphic Graphic Solutions Solutions Asia 23% 6% Asia Americas Americas 21% Performance 28% 38% 47% Materials 19% Arysta A
Slide 8: Platform's Agricultural Vertical
Platform’s Agricultural Vertical High Quality Crop Protection Assets United Under One Parent Platform Agricultural Vertical n Agrochemicals n BioSolutions n Seed Treatment − Herbicides − BioStimulants n Honey Bee Health Unparalleled Breadth of − Fungicides − Nutrients Products − Insecticides − B
Slide 9: Agenda
Agenda Platform Overview Arysta / Ag Vertical Overview Financial Overview Looking Ahead Q&A Appendices 8
Slide 10: Arysta LifeScience Business Overview
Arysta LifeScience Business Overview Arysta LifeScience n Leading global provider of crop protection and plant nutrition solutions n Innovative farmer-focused solutions for high-value niche crops Business n 100+ countries and jurisdictions – over 65% of 2013 sales in high-growth markets Overview
Slide 11: Arysta LifeScience Portfolio and Approach
Arysta LifeScience Portfolio and Approach Conventional Crop Protection BioSolutions Value-Added Off-Patent Market Size ~$5bn ~$25bn ~$36bn Arysta Growth Profile 2013 Sales(1) $0.2bn(2) $0.5bn $0.8bn Off-Patent 5% Proprietary / Proprietary / Trade Secret Off-Patent Trade 30% 100% Secre
Slide 12: Attractive Industry Fundamentals
Attractive Industry Fundamentals Declining Arable Land / Capita Wealth Effect Drives Protein Consumption Global Population Growth Projected Sources of Growth More Income – More Calories in Crop Production World Population (bn) % of every new dollar spent on food 10 100 8 Arable Land Crop 80 6 Intens
Slide 13: Concentrated in High-Growth Geographies
Concentrated in High-Growth Geographies AgChem Market Growth Rates by Region (2003 – 2013 CAGR) 2013 PAH Ag Revenue by Geography 13.5% North America 9.8% Latin America 6.1% Europe 6.0% 2.8% Africa & Middle East Asia LatAm Africa & ME Europe Asia NAM 64% of AgroSolutions’ revenue is from high-growth
Slide 14: Diversified Agricultural End-Market Exposure in Each Region
Diversified Agricultural End-Market Exposure in Each Region(1) North America Europe Asia Other Other Crops Crops Other T&O Crops F&V Corn F&V F&V Soy Sugarbeets T&O Cereals Oil Crops Corn Cereals Cereals Rice Oil Crops Latin America Africa & Middle East Platform Total F&V Other Other Other Crops F&V
Slide 15: Active Ingredients and Registrations Capabilities
Active Ingredients and Registrations Capabilities Revenue per Registration approximately $300k+ Active Ingredients Registrations 400 8,000 6,500+ 300 6,000 ~250 200 4,000 100 2,000 0 0 CAS Agriphar Arysta Platform CAS Agriphar Arysta Platform AgroSolutions AgroSolutions Significant repository of AIs
Slide 16: Agenda
Agenda Platform Overview Arysta / Ag Vertical Overview Financial Overview Looking Ahead Q&A Appendices 15
Slide 17: Combined Historical Pro Forma Performance
Combined Historical Pro Forma Performance Net Sales Adjusted EBITDA(1) ($ in millions) ($ in millions) $2,909 $172 $2,608 $616 $41 $517 $1,542 $1,468 $294 $276 $409 $449 $101 $79 $731 $746 $162 $180 2012 2013 2012 2013 MacDermid CAS Arysta Agriphar MacDermid CAS Arysta Agriphar Source: Company data.
Slide 18: Combined Financial Data – 2013
Combined Financial Data – 2013 Arysta is in line with our financial criteria ($ in millions) Platform CAS Agriphar Arysta (2) Combined FY2013 FY2013 FY2013 FY2013 FY2013 Net Sales $746 $449 $172 $1,542 $2,909 Adjusted EBITDA (1) $180 $101 $41 $294 $616 % margin 24.1% 22.6% 23.8% 19.0% 21.2% Capital
Slide 19: Significant Synergies Available in the Agricultural Businesses Combination
Significant Synergies Available in the Agricultural Businesses Combination n Implementation of synergies underway n Estimated synergies do not assume any reduction in costs residing in the “bookends” (R&D and sales & marketing) n Synergies expected to be achieved from 2015-2017(1) Phase 1 (2015E)
Slide 20: Agenda
Agenda Platform Overview Arysta / Ag Vertical Overview Financial Overview Looking Ahead Q&A Appendices 19
Slide 21: Platform will Continue to be Acquisitive
Platform will Continue to be Acquisitive Platform Specialty Products Flavors Coatings Water Market Electronic Oilfield Surface Packaging Agricultural & (Niche Treatment Segment: Materials Services Treatment Fragrances Applications) & Cleaning Solutions Market $7.5bn $15bn $1.0bn $5.0bn $10bn(1) $10b
Slide 22: Platform takes a Disciplined Approach to Identifying "Asset-Lite, High-Touch" Businesses
Platform takes a Disciplined Approach to Identifying “Asset-Lite, High-Touch” Businesses Specialty Chemicals Universe Gross PP&E Turns (1) in Top Quintile Gross Margin > 40% Adjusted SG&A (2) > 20% Adjusted EBITDA (3) >20% Source: HOLT ValueSearch™. 1. Defined as sales / inflation-adjusted gross pla
Slide 23: Large Fragmented Industry Creates Consolidation Opportunities
Large Fragmented Industry Creates Consolidation Opportunities Number of Specialty Chemical Companies in Targeted End Markets (by Revenue) $10bn+ 3-5 $5B - $10bn 10 $1B - $5bn 50 <$1bn Hundreds Source: Management estimates. 22
Slide 24: Platform Pro Forma Operating Margins and Capital Efficiency
Platform Pro Forma Operating Margins and Capital Efficiency 2013 Adjusted Operating Margins (1)(2) ($ in millions) Large cap peers Specialty chemicals 25.7% Agricultural chemicals 21.7% 21.4% 21.3% 20.5% Other chemical peers 17.1% 16.8% 16.6% 15.7% 15.7% 15.6% 15.0% 15.0% 14.5% 13.4% 13.2% 13.2% 13.
Slide 25: Platform Pro Forma ROIC
Platform Pro Forma ROIC 2013 ROIC (1) ($ in millions) Large cap peers Specialty chemicals Agricultural chemicals Other chemical peers 19.4% 17.0% 15.9% 15.0% 14.6% 13.6% 13.5% 13.3% 13.3% 13.0% 12.7% 11.6% 11.3% 11.2% 10.8% 10.4% 10.3% 10.3% 10.1% Peer median: 10.3% 9.9% 9.6% 9.6% 9.5% 9.4% 9.1% 9.0
Slide 26: Conclusion
Conclusion P Market-Leading Portfolio of Niche Products P Strong Pipeline of Attractive Opportunities in New Verticals and Within Existing Segments P Favorable Industry Structure P End-Market Diversification P Technology Leader with “Asset-Lite, High-Touch” Business Model Resulting in High Free
Slide 27: Q&A
Q&A Performance Materials Graphic Solutions AgroSolutions 26
Slide 28: Appendices
PLATFORM SPECIALTY PRODUCTS CORPORATION rl Appendices 27
Slide 29: Platform Reconciliation of Net Income to Adjusted EBITDA (Q3 & YTD 2014)
Platform Reconciliation of Net Income to Adjusted EBITDA (Q3 & YTD 2014) Predecessor Successor Predecessor Successor ($ in millions) Q3 2013 Q3 2014 YTD 2013 YTD 2014 Net income $14.5 $11.9 $23.9 $4.1 Adjustments to reconcile to net income (loss): Income tax expense (benefit) 6.9 (1.6) 20.9 (3.5) In
Slide 30: Platform Reconciliation of Net Income to Adjusted EBITDA Predecessor/Successor Combined
Platform Reconciliation of Net Income to Adjusted EBITDA Predecessor/Successor Combined Year ended December 31 ($ in millions) 2011 2012 2013 Net income (loss) $1.0 $46.0 $(181.0) Adjustments to reconcile to net income (loss): Income tax expense (benefit) 10.0 24.6 7.1 Interest expense 54.6 49.7 51.
Slide 31: Arysta Non-GAAP Financials (excludes Goëmar)
Arysta Non-GAAP Financials (excludes Goëmar) ($ in millions) Arysta 12 months Ended 12/31/2013 Net Income (Loss) $(93) Depreciation and Amortization $67 Other Operating (Income) Expense, Net (1) $44 Financial (Income) Expense, Net (2) $171 Income Tax (Benefit) Expense $48 $12 (Income) Loss after Tax
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