Element Solutions Inc. · NYSE:ESI
Element Solutions — Platform Specialty Products — FY2015 Earnings Presentation
28 slides from Element Solutions's earnings presentation, Mar 29, 2016
Slide 1: Fourth Quarter and Year End 2015
Fourth Quarter and Year End 2015 March 29, 2016
Slide 2: Safe Harbor
2 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
Slide 3: Note: Updates to Presentation
3 Note: Updates to Presentation This presentation, originally released on February 29, 2016, has been updated to reflect our final financial results following the filing of our Form 10-K on March 11, 2016. The only changes from the presentation dated February 29, 2016 are the addition of a full reco
Slide 4: Q4 2015 Highlights
4 Q4 2015 Highlights • Successfully closed acquisitions of Alent and the OM Group Electronic Chemicals and Photomasks businesses • Raised $1.8 billion from debt capital markets to finance Alent acquisition • Year-over-year revenue growth of $461 million or 168% driven by acquisitions of Alent, OM Gr
Slide 5: FY 2015 Highlights
5 FY 2015 Highlights • Achieved full year adj. EBITDA of $568 million. Without the partial period contribution of Alent and OM Group Electronic Chemicals and Photomasks businesses, the full year guidance equivalent adj. EBITDA of $555 million was within the guidance range • Excluding the impact of F
Slide 6: 2016 Priorities and Outlook
6 2016 Priorities and Outlook Initial Observations Diversified global portfolio of high-quality businesses Strong and nimble commercial management Intensely customer-oriented with an increasing focus on providing solutions Very focused on delivering committed synergies $38 million achieved
Slide 7: Balanced Portfolio Across End-Market and Geography
7 Balanced Portfolio Across End-Market and Geography 2015 Pro Forma Sales by Region2015 Pro Forma Sales by Segment Agricultural Solutions 51% Performance Solutions 49% Performance Solutions Agricultural Solutions 27% 26% 20% 19% 8% Europe Asia Latin America North America AIME 25% 12% 34% 15% 14% 29%
Slide 8: Performance Solutions Results Overview
8 Performance Solutions Results Overview • Results include full-year contribution on a pro forma basis from the Alent and OM Group acquisitions consummated in Q4 2015 and Q1 2016 • Cost actions and mix improvement at MacDermid helped increase adj. EBITDA margins despite decline in revenues • Excludi
Slide 9: Performance Solutions Financial Summary
9 Performance Solutions Financial Summary • Positive constant currency MacDermid performance driven by differentiated automotive end-market product offerings in North America and Europe, while adj. EBITDA margins were preserved by cost control measures • Alent’s relative underperformance driven by i
Slide 10: Agricultural Solutions Financial Summary
10 Agricultural Solutions Financial Summary • Agricultural Solutions results significantly impacted by currency; partially mitigated through pricing actions • Despite globally challenging agricultural end-market and North American inventory actions, constant currency revenue grew 1% • Pro forma adj.
Slide 11: Agricultural Solutions Business Update
11 Agricultural Solutions Business Update • Weak global commodity prices and strengthening US dollar created significant headwinds in 2015; cross-selling and pricing gains in export driven markets helped offset these pressures • Latin America • Flat volume driven by strong performance of herbicides,
Slide 12: Performance Solutions Integration
12 Performance Solutions Integration Despite Q4’15 and Q1’16 closes, integration efforts already well advanced Approximately $9 million synergy run-rate at 12/31/2015 3 year anticipated cost synergy opportunity in excess of $70 million 2016 focus on commercial, administrative and supply chai
Slide 13: Agricultural Solutions Integration
13 Achieved $38 million of cost savings in 2015; over $50 million estimated run-rate 2016 and 2017 opportunity focused on distribution channel, product and facility optimization Successfully integrated back office, sales-force, product portfolio, R&D prioritization and other commercial initiat
Slide 14: Foreign Exchange Overview
14 Foreign Exchange Overview Pro Forma Platform Translational Currency Exposure1 USD ~30% EUR ~25% BRL ~12% RMB ~10% JPY ~5% + € 1 billion denominated debt Offset gross FX impact with pricing and COGS savings Brazil offset ~2/3 of this impact in 2015 Significant factoring usage mitigates bot
Slide 15: Platform Specialty Products Corporation
x | PLATFORM SPECIALTY Vad PRODU CORPORATION
Slide 16: 2015 Adjusted EBITDA vs 2015 Guidance
16 2015 Adjusted EBITDA vs 2015 Guidance 2015 guidance equivalent adj. EBITDA of $555 million compared to guidance range of $550 million to $570 million (15) 3 568 555 500 510 520 530 540 550 560 570 580 Adj. EBITDA OM/Alent Arysta Stub Period 15 Guidance Equivalent Adj. EBITDA 2015 Guidance 550 570
Slide 17: 2014 to 2015 Pro Forma Adjusted EBITDA Bridge
17 2014 to 2015 Pro Forma Adjusted EBITDA Bridge (185) (16) (32) 72 38 18 412 395 434 346 0 100 200 300 400 500 600 700 800 900 2014 Pro Forma FX Headwind Net Pricing / Volume Synergies BU SG&A Increase Increase in Corporate Cost Other Items 2015 Pro Forma $ m ill io n s Performance Solutions Agricu
Slide 18: 2016 Guidance
18 2016 Guidance1 Focus Areas 2016 Outlook Opportunities Organic Sales Growth Low single digit growth Niche markets and product expansion Cash Interest ~$340M Liability management Cash Taxes $100M - $150M Tax planning / NOLs Capex $100M - $125M R&D prioritization and capex ‘synergies’ Note: All $ am
Slide 19: Capital Structure Overview
19 Capital Structure Overview 1. Platform has swapped certain amounts of its floating rate term loans to fixed rate including $1.2bn of its USD tranches and 340m Euro of its Euro tranches. At 12/31/15 37% of debt was floating and 63% was fixed. 2. Includes only the make-whole ‘cash’ component of the
Slide 20: Covenant Overview
20 Covenant Overview Our capital structure is subject to only one quarterly maintenance test - 6.25x First Lien Net Debt to PF adj. EBITDA Covenant EBITDA is defined as LTM PF adj. EBITDA plus synergies expected to be realized based on actions to be taken over the next 12 months1 We have signi
Slide 21: Q1'16 Outlook
21 Q1’16 Outlook Current Q1 2016 outlook consistent with full year 2016 adj. EBITDA guidance1 of $725 - $775 million Currently forecasting Q1 2016 pro forma adj. EBITDA to be lower than Q1 2015 pro forma adj. EBITDA2 Agricultural Solutions: Significant FX (~$10 million) headwinds, tough macro
Slide 22: Conclusions – 2016 Priorities
22 Conclusions – 2016 Priorities Integration and Synergy Realization Focus Commercial Efforts on Fast Growing Niches Establish Operating Rhythm and Momentum Generate Free Cash Flow
Slide 23: Platform Specialty Products Corporation
x | PLATFORM SPECIALTY Vad PRODU CORPORATION
Slide 24: Q4 2015 Financial Summary
24 Q4 2015 Financial Summary Results Pro Forma PF Constant Currency ($ in millions) Q4 2015 Q4 2014 YoY% Q4 2015 Q4 2014 YoY% Q4 2015 Q4 2014 YoY% Revenue Performance Solutions $259 $186 39% $430 $489 (12)% $430 $462 (7%) Agricultural Solutions 476 88 441% 476 579 (18)% 476 488 (3)% Total $735 $274
Slide 25: Pro Forma Quarterly Segment Overview
25 Pro Forma Quarterly Segment Overview 2014 2015 (amounts in millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue Performance Solutions $480 $503 $517 $489 $455 $457 $448 $430 Agricultural Solutions 486 596 510 579 442 494 418 476 Total Revenue $966 $1,099 $1,027 $1,069 $897 $951 $866 $906 Adj. EBITDA Perform
Slide 26: 2015 Q1 Results
26 2015 Q1 Results ($ in millions) As Reported Pro Forma @ Jan-16 FX Revenue $535 $897 $840 Adj. EBITDA $31 177 $167 Q1 2015 Foreign Exchange Impact
Slide 27: Adjusted EBITDA Reconciliation to Net (Loss) Attributable to Stockholders
27 Adjusted EBITDA Reconciliation to Net (Loss) Attributable to Stockholders (amounts in millions) Q4 2015 Q4 2014 2015 2014 Adj. EBITDA $154 $66 $568 $212 Interest expense (75) (15) (223) (39) Depreciation and amortization expense (75) (31) (251) (88) Restructuring and related expenses (37) (2) (55
Slide 28: Non-GAAP Definitions
28 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. These further adjustments include ac
Platform Specialty Products — FY2015 Earnings Presentation on 6ix