Ecovyst Inc. · NYSE:ECVT
Ecovyst — PQ Group Holdings — Goldman Sachs Basic Materials Conference 2018
28 slides from Ecovyst's conference presentation, May 2018
Slide 1: Investor Presentation
Investor Presentation May 2018 Goldman Sachs Basic Materials Conference
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER Forward-Looking Statements Some of the information contained in this presentation and any discussions that follow constitutes “forward-looking statements”. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimate
Slide 3: PQ Investment Highlights
PQ INVESTMENT HIGHLIGHTS Leading Global Producer of Specialty Catalysts & Services, Specialty Materials & Chemicals #1 and #2 positions in nearly all product lines GDP+ growth Input cost small as % of customer total product cost High margin environmentally friendly applications Track record of innov
Slide 4: Diverse Portfolio Grows at 2x-3x GDP
DIVERSE PORTFOLIO GROWS AT 2X – 3X GDP 2017 Revenues by End Use, Customer and Region 2017 SALES AND ZEOLYST JV TOTAL NET SALES: BY END USE1 2017 SALES GROWTH BY END USE1 Natural Resources (EC&S) Fuels & Emissions Fuels & Emissions Controls + 10% Controls (EC&S) 8% Industrial & 21% Highway Safety & C
Slide 5: Demonstrated Strong Financial Performance Across Macroeconomic Cycles
DEMONSTRATED STRONG FINANCIAL PERFORMANCE ACROSS MACROECONOMIC CYCLES Stable and improving margins Adjusted EBITDA and Adjusted EBITDA Margin (%)1,2,3 ($ in millions except %) o Long-term EBITDA CAGR of 7.5% o Attractive, stable margins o Steady margin expansion a result of high value added specialt
Slide 6: Strong Financial Performance
STRONG FINANCIAL PERFORMANCE Strong end markets, leading positions drive continued strong growth and margins 2 SALES ADJUSTED EBITDA (ADJUSTED EBITDA MARGIN) r owth owth 2,000 5% Growth ~6% G 600 ~6% G r 8% Growth 1,545-1575 470-490 1,472 453 1,500 1,403 421 400 Millions Millions 1,000 200 27.4% 28.
Slide 7: Solid Pillars for Growth and Sustainable Margins
SOLID PILLARS FOR GROWTH AND SUSTAINABLE MARGINS Global environmental trends and regulations expected to accelerate demand Solid foundation and continued product mix shift to benefit margins Multiple Growth Drivers 1 2 3 4 Regeneration Silica Performance Zeolyst Services: Catalysts: Materials: Joint
Slide 8: 2018 – Positioned for Growth and Significant Cash Flow
2018 – POSITIONED FOR GROWTH AND SIGNIFICANT CASH FLOW Free Cash Flow of $120 million to $140 million Deliver industry-leading financial results o Sales growth of 5% to 7% o Adjusted EBITDA growth of 4% to 8% with sustained high margins o Free Cash Flow of $120 million to $140 million Consistent cap
Slide 9: PQ versus Peers – Top Quartile Metrics
PQ VERSUS PEERS–TOP QUARTILE METRICS Valuation Disconnect Median: 29.9% 2018E 35.0% 28.1% 29.9% 30.0% 27.2% 21.5% EBITDA Margin Median: 21.9% 2017 21.1% 34.0% 21.9% 25.0% 15.6% 8.7% Tangible ROIC1 Median: 11.9% 2017-2018E 24.4% 6.5% 11.3% 7.6% 11.9% 14.4% EBITDA Growth Median: 14.0% 2017-2018E 77.8%
Slide 10: Supplementary Information
SUPPLEMENTARY INFORMATION re PQ Corporation
Slide 11: Growth Across All Product Groups
GROWTH ACROSS ALL PRODUCT GROUPS Expected in 2018 SEGMENT Environmental Catalysts Performance Materials & Services & Chemicals PRODUCT GROUP Refining Silica Performance Performance Services Catalyst Zeolyst JV Chemicals Materials Increased Octane Growth in lighter, More stringent Environmentally Hig
Slide 12: Refining Services
#1 U.S. Supplier REFINING SERVICES 1 Well positioned for growth in High Octane Fuels % Share of Turbocharged Vehicles of New LDV Sales in US 2014 2025 Demand for fuel efficiency and high performance 17% 85% o Increases share for % Share of Premium vs Regular Gasoline Consumption turbocharged engines
Slide 13: Silica Catalysts
#2 primary global supplier SILICA CATALYSTS 2 PQ is aligned with key licensors for new silica-based capacity PE Capacity by Licensor ~ 50% of the current capacity 120 uses silica catalyst ~30 announcements of new R CAG 90 ~4 % global capacity to come on line between 2018–2021 Million MT 60 o Predomi
Slide 14: Performance Materials
#1 U.S. Supplier PERFORMANCE MATERIALS 3 Product adjacency expected to accelerate growth to 3x GDP ThermoDrop® Performance Value Proposition ü Higher yields ü Lower labor ü Increased profits No dust Continuous operations Total global market potential ~ $500 million Approved in 20 states; 9 more unde
Slide 15: Zeolyst Joint Venture
#1 global supplier ZEOLYST JOINT VENTURE 4 of emissions catalysts Share growth with increased fuel and emissions regulations Global Heavy Duty Diesel (HDD) Catalyst Market On Road: Marine Non-Road 19-56kW+ Global environmental standards for Non-Road 56-130kW+ HDD progressively tightening 4,000 Non-R
Slide 16: PQ Investment Highlights
PQ INVESTMENT HIGHLIGHTS Leading Global Producer of Specialty Catalysts, Materials, Chemicals & Services #1 and #2 positions in nearly all product lines GDP+ growth Input cost small as % of customer total product cost High margin environmentally friendly applications Track record of innovation Stron
Slide 17: Debt Schedule
DEBT SCHEDULE Flexibility to pay down debt and interest rate exposure mitigated DEBT MATURITY SCHEDULE $1,500 $1,475.1 Capitalization Q1 2018 Debt: ($ in millions) $1,350 ABL Revolving Credit Facility 30.0 $1,200 New USD First Lien Term Loan 1,263.8 $1,050 First Lien Secured Notes 625.0 $900 Million
Slide 18: 2018 Guidance
2018 GUIDANCE Expected Free Cash Flow of $120 Million to $140 Million 2017 2018 Change from ($ in millions except %) Actual Outlook 2017 Sales 1,472.1 1,545 – 1,575 5% – 7% Adjusted EBITDA 453.3 470 – 490 4% – 8% Free Cash Flow (24.4) 120 – 140 ~145 – 165 Interest Expense 179.0 120 – 130 ~(50) – (60
Slide 19: Quarterly Segment Sales and Adjusted EBITDA
QUARTERLY SEGMENT SALES AND ADJUSTED EBITDA Year 2017 and Q1 2018 For the Quarter Ended Three Months Ended Year Ended March 31, March 31, June 30, September 30, December 31, December 31, ($ in millions except %) 2018 2017 2017 2017 2017 2017 Sales: Silica Catalysts 16.5 17.1 20.1 15.1 23.0 75.3 Refi
Slide 20: Quarterly Net Income to Adjusted Net Income and Adjusted Diluted EPS
QUARTERLY NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE Q1 2018 and Year 2017 Three Months Ended Three Months Ended Year Ended March 31, For March the 31, QuarterJune Ended 30, September 30, December 31, December 31, ($ in millions except per share data) 2018 2017 2017 20
Slide 21: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Net Income (Loss) to Segment Adjusted EBITDA Three Months Ended Three Months Ended Year Ended March 31, March 31, June 30, September 30, December 31, December 31, ($ in millions) 2018 2017 2017 2017 2017 2017 Reconciliation of net income (loss) attributa
Slide 22: 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, Adjusted Net Income and Adjusted Diluted EPS as performance measures to evaluate our financial results. Because our environmental catalysts
Slide 23: 2005 – 2017 Reconciliations
2005 – 2017 RECONCILIATIONS Legacy Business - Sales & Adjusted EBITDA 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 Reconciliation of sales and adjusted EBITDA Legacy PQ Sales 1 635.3 708.6 775.0 977.0 1,009.9 1,087.9
Slide 24: 2005 – 2014 Reconciliations for Adjusted EBITDA and Margins
2005 – 2014 RECONCILIATIONS FOR ADJUSTED EBITDA AND MARGINS 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
Slide 25: 2005 – 2014 Reconciliations for Adjusted EBITDA and Margins
2005 – 2014 RECONCILIATIONS FOR ADJUSTED EBITDA AND MARGINS 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
Slide 26: 2015 – 2017 Reconciliations for Adjusted EBITDA and Margins
2015 – 2017 RECONCILIATIONS FOR ADJUSTED EBITDA AND MARGINS 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 Reconciliation of net income (loss) attributable to PQ Group Holdings Inc. to
Slide 27: 2017 Reconciliation
2017 RECONCILIATION Tangible ROIC Year Ended Year Ended December 31, December 31, ($ in millions) 2017 ($ in millions) 2017 Reconciliation of net income (loss) attributable to PQ Group Calculation of Return on Invested Capital (ROIC) Holdings Inc. to Segment Adjusted EBITA Net income (loss) attribut
Slide 28: Friendlier products for a cleaner, safer world
friendlier products for a cleaner, safer world
PQ Group Holdings — Goldman Sachs Basic Materials Conference 2018 on 6ix