Ecovyst Inc. · NYSE:ECVT
Ecovyst — PQ Group Holdings — Q4 2018 Earnings Presentation
26 slides from Ecovyst's earnings presentation, Feb 21, 2019
Slide 1: Fourth Quarter 2018 Investor Presentation
Fourth Quarter 2018 February 21, 2019 – 11:00 AM ET INVESTOR PRESENTATION 1
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER Forward-Looking Statements Some of the information contained in this presentation, the conference call during which this presentation is reviewed and any discussions that follow constitutes “forward-looking statements”. Forward-looking statements can be identified by words such as “
Slide 3: 2018 Highlights
2018 HIGHLIGHTS Posted solid financial results year-over-year o 2018 Sales up 9.2%, Adjusted EBITDA up 2.4% and Adjusted EBITDA Margin of 26.3%1 o Higher pricing and volumes driven by strong underlying growth in most of our end markets Delivered robust Adjusted Free Cash Flow o Generated ~ $150 mill
Slide 4: Fourth Quarter 2018 Financial Results
FOURTH QUARTER 2018 FINANCIAL RESULTS Higher Pricing and Volumes Drive Sales Growth Fourth Fourth Quarter Quarter % Full Year Full Year % ($ in millions) 2018 2017 Change 2018 2017 Change Sales 380.1 358.1 6.1% 1,608.2 1,472.1 9.2% Adjusted 109.1 109.4 (0.3%) 464.0 453.3 2.4% EBITDA Adjusted EBITDA
Slide 5: Environmental Catalysts & Services Results
ENVIRONMENTAL CATALYSTS & SERVICES RESULTS Robust Refining Services Demand Drives EC&S Growth Fourth Fourth Quarter Quarter % Full Year Full Year ($ in millions) 2018 2017 Change 2018 2017 % Change Sales PQ 141.3 122.9 15.0% 527.7 473.7 11.4% Zeolyst JV 36.5 42.8 (14.7%) 156.7 143.8 9.0% Adjusted EB
Slide 6: Performance Materials & Chemicals Results
PERFORMANCE MATERIALS & CHEMICALS RESULTS Highway Safety Volumes Rise; Cost Pressures Weigh on Margins Fourth Fourth Quarter Quarter % Full Year Full Year % ($ in millions) 2018 2017 Change 2018 2017 Change Sales 239.5 235.9 1.5% 1,083.8 1,001.8 8.2% Adjusted EBITDA 49.8 55.4 (10.2%) 243.4 240.2 1.3
Slide 7: Adjusted Free Cash Flow
ADJUSTED FREE CASH FLOW Adjusted Free Cash Flow Rises ~ $110 million from 2017 Full Year Full Year ($ in millions) 2018 2017 Cash Flow from Operations before interest and tax 377.5 364.5 Less: Cash paid for taxes 23.8 29.2 Cash paid for interest 105.1 170.1 Cash Flow from Operations 248.6 165.2 Less
Slide 8: Net Debt & Leverage Ratio
NET DEBT & LEVERAGE RATIO Adjusted Free Cash Flow Used to Pay Down Debt NET DEBT AND LEVERAGE ($ in millions) 4.9x 4.5x 2,204.1 2,090.5 2017 2018 Net Debt Adjusted EBITDA Leverage o Repaid ~$135 million of debt in 2018 o Meaningful progress towards 3.0x to 3.5x leverage target o Fixed/floating ratio
Slide 9: 2019 Guidance
2019 GUIDANCE Expected Adjusted Free Cash Flow Range of $125 Million to $145 Million 2018 2019 ($ in millions except %) Actual Outlook Sales 1,608.2 1,640 – 1,670 Adjusted EBITDA 464.0 470 – 485 Adjusted Free Cash Flow 134.2 125 – 145 Adjusted Diluted EPS $0.87 $0.75 - $0.93 Interest Expense 113.7 1
Slide 10: Advancing Goal of a Simpler + Stronger Portfolio
ADVANCING GOAL OF A SIMPLER + STRONGER PORTFOLIO OPTIMIZING TECHNOLOGY MODEL SIMPLIFYING BUSINESS PORTFOLIO EVALUATION OPTIMIZATION ENABLEMENT EVALUATION SIMPLIFICATION TRANSFORMATION Commercial Value Four Businesses o Rationalization o Autonomy o Time Value of Technology o Focus o Commercial Effici
Slide 11: Our Business Units
OUR BUSINESS UNITS Specialty, Leading and Differentiated REFINING PERFORMANCE PERFORMANCE SERVICES CATALYSTS1 MATERIALS CHEMICALS Increased octane Tighter fuels standards Higher highway Environmentally driven demand Light weighting demand safety standards consumer demand o Sulfuric acid production e
Slide 12: Portfolio Strengths and Priorities
PORTFOLIO STRENGTHS AND PRIORITIES Drive Shareholder Value KEY VALUE DRIVERS Profitable COMPETITIVE ADVANTAGES Growth Unique portfolio of businesses Leading positions Capital in growth markets Commercial Intensity Efficiency Innovation potential Free Cash Flow 12
Slide 13: Appendix
APPENDIX re) PQ Corporation
Slide 14: Sales and Adjusted EBITDA Major Change Factors
SALES AND ADJUSTED EBITDA MAJOR CHANGE FACTORS Fourth Quarter and Full Year 2018 SALES Three months ended Year Ended December 31, 2018 December 31, 2018 Environmental Performance Environmental Performance Sales PQ Group Catalysts Materials PQ Group Catalysts Materials (in $ millions and %) Holdings
Slide 15: Demonstrated Strong Financial Performance Across Macroeconomic Cycles
DEMONSTRATED STRONG FINANCIAL PERFORMANCE ACROSS MACROECONOMIC CYCLES Stability Through Cycles with Attractive Margins Adjusted EBITDA and Adjusted EBITDA Margin (%)1,2,3 ($ in millions except %) (1) Adjusted EBITDA for the period from 2005 to 2014 represents Legacy Eco Adjusted EBITDA and Legacy PQ
Slide 16: Supplemental Information
SUPPLEMENTAL INFORMATION 2018 Capital Expenditures, Revenues by End Use, Customer and Region CAPITAL EXPENDITURES Full Year Full Year ($ in millions) 2018 2017 % OF GROWTH BY END USE 4 By Segment Fuels & Emissions Controls + 6% Performance Materials & Chemicals 75.5 84.8 Highway Safety & Constructio
Slide 17: Reconciliation of Cash from Operations to Adjusted Free Cash Flow
RECONCILATION OF CASH FROM OPERATIONS TO ADJUSTED FREE CASH FLOW Third and Fourth Quarters and Full Year 2018 Three months ended Three months ended Year ended September 30, December 31, December 31, ($ in millions) 2018 2017 2018 2017 2018 2017 Net cash provided by operating activities 115.9 88.0 82
Slide 18: Reconciliation of Quarterly Net Income to Adjusted Net Income and EPS
RECONCILATION OF QUARTERLY NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE Year 2018 and 2017 and Year 2017 Three Months Ended Year Ended Three Months Ended Year Ended March 31, June 30, September 30, For the QuarterDecember December 31, Ended 31, March 31, June 30, Septemb
Slide 19: Reconciliation of Net Income (Loss) to Segment Adjusted EBITDA
RECONCILATION OF NET INCOME (LOSS) TO SEGMENT ADJUSTED EBITDA Year 2018 and 2017 Three Months Ended Year Ended Three Months Ended Year Ended September December March 31, June 30, September 30, December 31, December 31, March 31, June 30, 30, December 31, ($ in millions) 2018 2018 2018 2018 2018 2017
Slide 20: Quarterly Segment Sales and Adjusted EBITDA
QUARTERLY SEGMENT SALES AND ADJUSTED EBITDA Year 2018 and 2017 Three Months Ended Year Ended For the Quarter Ended Three Months Ended Year Ended September September March 31, June 30, 30, December 31, December 31, March 31, June 30, 30, December 31, December 31, ($ in millions except %) 2018 2018 20
Slide 21: Reconciliation of Sales and Adjusted EBITDA
RECONCILIATION OF SALES AND ADJUSTED EBITDA 2005 – 2017 Legacy Business Year Ended December 31, 2015 2016 Pro Pro ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 forma 3 forma 3 2017 2018 Reconciliation of sales and adjusted EBITDA Legacy PQ Sales 1 635.3 708.6 775.0 977.0 1,009.9
Slide 22: Reconciliations for Adjusted EBITDA
RECONCILIATIONS FOR ADJUSTED EBITDA 2005 – 2014 Legacy PQ1 Net Income (Loss) to Adjusted EBITDA Reconciliation Year Ended December 31, ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Reconciliation of net income (loss) attributable to Legacy PQ to Adjusted EBITDA Net income (loss)
Slide 23: Reconciliations for Adjusted EBITDA
RECONCILIATIONS FOR ADJUSTED EBITDA 2005 – 2014 Legacy Eco Services1 Net Income (Loss) to Adjusted EBITDA Reconciliation Year Ended December 31, 2014 2014 ($ in millions) 2005 2006 2007 2008 2009 2010 2011 2012 2013 Successor Predecessor Reconciliation of net income (loss) attributable to Legacy Eco
Slide 24: Reconciliations for Adjusted EBITDA
RECONCILIATIONS FOR ADJUSTED EBITDA 2015 - 2018 Post-Business Combination PQ Net Income (Loss) to Adjusted EBITDA Reconciliation Year Ended December 31, 2015 2016 ($ in millions) Pro forma 1 Pro forma 1 2017 2018 Reconciliation of net income (loss) attributable to PQ Group Holdings Inc. to Segment A
Slide 25: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Descriptions to PQ Non-GAAP Reconciliations Descriptions to PQ Non-GAAP Reconciliations a) We use Adjusted EBITDA as a performance measure to evaluate our financial results. Because our Environmental Catalysts and Services segment includes our 50% intere
Slide 26: Te | PQ. Corporation
Te | PQ. Corporation &