Ecovyst Inc. · NYSE:ECVT
Ecovyst — PQ Group Holdings — Investor Presentation (December 2017)
33 slides from Ecovyst's investor presentation, December 2017
Slide 1: Investor Presentation
Investor Presentation December 2017
Slide 2: Important Information
Important Information Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures. These non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. We believe that the presentat
Slide 3: The PQ Story
The PQ Story We are a leading global provider of specialty catalysts, chemicals, materials and services Our products and solutions help companies produce vehicles with improved FUEL EFFICIENCY and CLEANER EMISSIONS Our Materials are CRITICAL INGREDIENTS IN CONSUMER PRODUCTS that make teeth brighter,
Slide 4: Investment Overview
Investment Overview An established, well-diversified industry leader strategically positioned for sustained growth Strong Historic Growth and Margins PQ Corp provides innovative niche products that address a highly diversified set of large end markets with #1 or #2 supply 28% Margin CC. Adjusted E
Slide 5: PQ Group Segment Summary
PQ Group Segment Summary Highly diversified producer of catalysts, specialty materials and chemicals, and services with leading supply positions across the portfolio Environmental Catalysts & Services Performance Materials & Chemicals Performance Product Groups Silica Catalysts Zeolite Catalysts Ref
Slide 6: PQ Equity Value Creation Drivers
PQ Equity Value Creation Drivers 1 Continued mid single digit organic growth in Environmental Catalysts & Services High growth markets driven by global regulatory drivers (emissions control, fuel efficiency) PQ wins through materials science leadership & world class operating capabilities 2 Acce
Slide 7: Environmental Catalysts & Services
Environmental Catalysts & Services Leading catalyst platform with strong material science and refinery focus Silica Catalysts Zeolite Catalysts Refining Services Product Groups #2 primary supply position #1 or #2 primary supply #1 primary supply position Global leader in MMA position Leadi
Slide 8: Environmental Catalysts & Services
Environmental Catalysts & Services Significant organic sales growth driven by new catalyst development and attractive regulatory drivers HDPE Catalysts Organic Growth Drivers Key Products HDPE Catalysts + MMA Catalysts $72 Entry into MMA market & buildout of MMA Silica critical process capacity Ca
Slide 9: Silica Catalysts are Critical and Tailored Products
Silica Catalysts are Critical and Tailored Products Our products improve polyolefins and MMA production costs and efficiencies Silica Catalysts Polyolefin Catalyst Supports MMA Catalysts Select Applications Customer Catalyst supports for catalysts to be delivered to Leading Process to Produce MMA Ne
Slide 10: Zeolite Catalysts Are Performance Enablers
Zeolite Catalysts Are Performance Enablers PQ products reduce emissions and increase refinery output and profitability Zeolite Catalysts Zeolyst Joint Venture Customer Broadest Pilot IP Protection Collaboration Range of Capabilities Global Leveraging to Capabilities Given Zeolite for Product Footpri
Slide 11: End-to-End Services Platform
End-to-End Services Platform Consistent business model and performance focused on key refining markets Refining Services (Gulf Coast and California) Contract Structures Provide Consistency and Long- Service Model Analogous to Industrial Gas Industry Term Customer Relationships Long contract terms
Slide 12: Refining Services Critical to Address Alkylate Demand and Fuel Regulations
Refining Services Critical to Address Alkylate Demand and Fuel Regulations Refining Services Sulfuric acid is a critical catalyst for refiners to meet new standards Growth in Premium Gasoline Fuel Regulations Premium Gasoline Barrels Per Day (MM) Increasing Historic Octane Specifications Sources 4.4
Slide 13: Performance Materials & Chemicals
Performance Materials & Chemicals Clear opportunity to extend an already strong global leadership position Performance Chemicals Performance Materials Product Groups #1 primary supply position #1 primary supply position Only global silicates producer who can Industry leader in microspheres a
Slide 14: Performance Materials & Chemicals
Performance Materials & Chemicals Significant sales growth driven by product line expansion/innovation and tuck-in acquisitions Organic Growth Drivers Sodium Silicate Sodium Silicate Zeolite Key Products Zeolite + Specialty Silicas + Precipitated Silicas Silicates and derivative products displacin
Slide 15: Performance Chemicals Growth Drivers
Performance Chemicals Growth Drivers PQ’s products increase and enable customer performance; low cost-in-use Performance Chemicals Customers Demand for Environmentally-Friendly Products Customer Demand for Performance Sodium Silicate (For Green Tire Applications) Precipitated Silicas Replaces carb
Slide 16: Performance Materials Growth Drivers
Performance Materials Growth Drivers PQ products exposed to many attractive end markets Performance Materials Highway Safety & Construction Demand for enhanced “dry and wet” visibility of road Example: Wider Lines and airport markings to improve safety − Eight U.S. states have mandated wider lines
Slide 17: Financial Summary
Financial Summary
Slide 18: PQ Financial Overview
PQ Financial Overview Financial strategy based on maximizing shareholder value 1 Demonstrated consistent and high margins as a foundation 2 Strong growth outlook supported by secular trends and mix shift to higher margin products 3 Deleveraging via IPO proceeds provides balance sheet flexibility;
Slide 19: Historical Financial Performance
Historical Financial Performance Balanced business with consistent growth CC. Sales and Zeolyst JV Sales CC. Adj. EBITDA and EBITDA Margins $147 $444 $107 $160 $131 $420 $407 39.9% 37.7% 31.4% $397 $443 $457 $465 $222 $244 $107 $190 25.1% 24.4% 23.8% $985 $943 $949 $979 $261 $237 $232 $233 ($19) ($3
Slide 20: Consistently Attractive Margins
Consistently Attractive Margins Diverse business model and specialty / high value-add products have combined to support stable margins through economic cycles and strong growth in EBITDA Consistent Margins Historical Margins1 High value-add products 28% 28% Strong and long-standing customer rela
Slide 21: YTD Sept 2017 Financial Update
YTD Sept 2017 Financial Update Strong YTD Sept 2017 performance with both CC. sales and CC. Adj. EBITDA growing over YTD Sept 2016 CC. Sales and Zeolyst JV Sales CC. Adj. EBITDA $344 $320 $101 $85 $343 $351 $183 $160 $736 $766 $184 $185 ($1) * ($3) * (24) (24) YTD Sept 2016 YTD Sept 2017 YTD Sept 20
Slide 22: Full Year 2017 Guidance
Full Year 2017 Guidance ($ in millions) Net Sales (including Zeolyst JV) $1,585 - $1,605 Adjusted EBITDA $447 - $453 Depreciation $120 - $125 Amortization $53 - $55 Interest Expense $176 - $178 Capital Expenditures $140 - $150 Weighted Average Diluted Shares1 108.8 million (1) The weighted average d
Slide 23: Cash Flow Summary
Cash Flow Summary Excellent outlook for future value creation through strong sustainable cash flow Cash Flow Highlights Cash Flow Summary LTM Q3 2017 Further cash flow enhancement: ($13) ― 2018 cash interest projected to be $115 - ($30) $120 million $76 ― Increasing earnings $140 ($112) ― Rising J
Slide 24: Capital Structure
Capital Structure Ongoing capital structure improvements support future equity value appreciation Strong Balance Sheet Capitalization IPO proceeds used to repay highest cost debt Proforma 5 As of as of ($ in millions) Interest Floor 9/30/2017 9/30/2017 Maturity No long-term debt maturities until
Slide 25: Capital Allocation Policy
Capital Allocation Policy PQ has strong foundation of operating cash flow Cash Flow from Operations Free Cash Moderate maintenance capex allows for funding of Less: Maintenance Capex Flow growth opportunities Strict project management discipline — Risk and benefits assessed through stage-gate
Slide 26: Appendix
Appendix
Slide 27: PQ's Products Across the Transportation Industry
PQ’s Products Across the Transportation Industry Growth driven by more stringent regulatory requirements, performance, and safety Engine Performance Battery Transportation Safety Specialty Catalysts Virgin Acid Glass Microspheres Alkylation Catalyst Specialty Silicas PK038335 Thermoplastic Binders L
Slide 28: PQ's Products Across the Home
PQ’s Products Across the Home Growth due to increasing customer preferences for high performance and environmentally friendly products Water Treatment Plastic and Paper Container Consumer Cleaning Silicates Personal Care Silica Catalysts Silicates Zeolites Spray Dried Silicates Specialty Silicas Gla
Slide 29: The Road to Cleaner Transportation
The Road to Cleaner Transportation PQ Will Benefit Regardless of the Path Taken Environmental Catalysts & Services Performance Materials & Chemicals Performance Product Groups Silica Catalysts Zeolite Catalysts Refining Services Performance Chemicals Materials Product Type Catalysts, Catalyst Suppor
Slide 30: Cleaner Fuel and Hybrid Electric Vehicles Drive PQ Growth
Cleaner Fuel and Hybrid Electric Vehicles Drive PQ Growth PQ products support multiple trends in clean transportation Cleaner Combustion Vehicles Estimated Zeolite Consumption Per HDD Vehicle Produced Majority of emission control sales derived from heavy duty diesel (HDD) vehicle growth Prior Curr
Slide 31: Customer Innovation | ThermoDrop
Customer Innovation | ThermoDrop® Years of collaboration has resulted in new road-marking material Performance Materials ThermoDrop® Performance Value Proposition Continuous manufacturing process No dust Continuous operations Melts 2x faster than conventional product Longer and more safe s
Slide 32: GAAP Reconciliation
GAAP Reconciliation CC. Sales and CC. Adj. EBITDA 2015 2016 YTDSep'16 YTDSep'17 2017 Q3 LTM CC. Sales PM&C net sales 966.1 947.2 738.1 765.9 975.0 (-) Constant currency adjustment 23.0 (2.1) 1.7 - (3.8) CC. Sales 943.1 949.3 736.4 765.9 978.8 EC&S Net Sales 447.1 457.9 343.7 350.8 465.0 (-) Constant
Slide 33: GAAP Reconciliation (Cont'd)
GAAP Reconciliation (Cont’d) CC. Sales and CC. Adj. EBITDA 2014 Legacy Eco 2014 Legacy Eco 2014 Legacy PQ Successor Predecessor CC. Sales Net Sales 1,114.9 35.5 361.8 (-) Constant currency adjustment 129.7 - - CC. Sales 985.2 35.5 361.8 CC. Adjusted EBITDA EBITDA 206.8 (10.6) 87.7 Joint venture depr
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