Element Solutions Inc. · NYSE:ESI
Element Solutions — Merger or Acquisition (July 2018)
28 slides from Element Solutions's merger presentation, Jul 20, 2018
Slide 1: Announcing the Sale of Arysta LifeScience to UPL and a New Chapter for Platform
Announcing the Sale of Arysta LifeScience to UPL and a New Chapter for Platform July 20, 2018
Slide 2: Safe Harbor
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 o
Slide 3: Non-GAAP Information
NON-GAAP INFORMATION To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company uses the following non-GAAP financial measures: EBITDA and adjusted EBITDA, adjusted EBITDA margin, adjusted levered free cash flo
Slide 4: Executive Summary
EXECUTIVE SUMMARY ▪ Platform announced a definitive agreement to sell its Agricultural Solutions segment, Arysta LifeScience, to UPL Limited at a value of $4.2 billion in cash, subject to customary adjustments o Transaction would conclude the previously announced separation of Platform’s businesses
Slide 5: Transaction Overview
PLATFORM SPECIALTY PRODUCTS CORPORATION In TRANSACTION OVERVIEW
Slide 6: Transaction Details
TRANSACTION DETAILS ▪ Combination is expected to form one of the largest crop protection and formulation-technology companies in the world with an integrated, efficient supply chain, formulation expertise and global distribution capability o Complementarity of these two businesses will deliver meani
Slide 7: Platform's New Chapter
PLATFORM SPECIALTY PR UCTS CORPORATION rl PLATFORM’S NEW CHAPTER
Slide 8: New Corporate Identity – Element Solutions
NEW CORPORATE IDENTITY – ELEMENT SOLUTIONS ▪ In connection with this transformational transaction, Platform announced a plan to change its name to Element Solutions Inc, reflecting the creation of a new identity and strategy ▪ Effective at closing, Platform to become Element Solutions Inc and to tra
Slide 9: ESI's Compelling Value Proposition
ESI’S COMPELLING VALUE PROPOSITION ▪ Diversified specialty chemicals business with market leading positions across multiple attractive end markets o End-market breadth allows for stability through cycles, while specific high-growth end-market exposures allow for attractive growth profile ▪ Integral
Slide 10: ESI's Go-Forward Vision
ESI’S GO-FORWARD VISION ▪ Niche, electronics, industrial and energy end-markets End-Market Focus ▪ Emphasis on growing in semi-conductors and automation-related technologies ▪ Organic growth in line with GDP Organic Growth ▪ Strong incremental Adj. EBITDA margins on new sales; margin expansion expec
Slide 11: Financial Review
PLATFORM SPECIALTY PRODUCTS CORPORATION In FINANCIAL REVIEW
Slide 12: ESI – Strong Financial Profile
ESI – STRONG FINANCIAL PROFILE ▪ Element Solutions’ portfolio has delivered strong organic growth and positive incremental margins, while maintaining an “Asset-Lite” and efficient business model ESI – Net Sales Platform Element PF LTM Adj. LTM Adj. ($ millions) 1,924 EBITDA EBITDA 1,879 ($ millions)
Slide 13: ESI – Strong Free Cash Flow Generation
ESI – STRONG FREE CASH FLOW GENERATION Adjusted Levered Free Cash Flow* Pro Forma ($ millions) ▪ Element Solutions would have a higher PAH ESI margin profile vs. Platform and a more efficient cash flow conversion 2016 2017 2016 2017 ▪ Transaction expected to increase overall Net Sales $3,586 $3,776
Slide 14: ESI – Strong Balance Sheet
ESI – STRONG BALANCE SHEET ▪ Element Solutions is committed to using free cash flow and excess liquidity prudently to drive shareholder value Contemplated Use of Pro Forma Free Cash Flow and Purchase Price Proceeds Debt pay-down Conservative go- forward net leverage Share buybacks1 target range of 3
Slide 15: ESI – Financial Outlook
ESI – FINANCIAL OUTLOOK Best-in-class cash flow with conservative leverage Long Term Average Target Pro Forma 2018 Expectations Organic Growth Rate* ~3 – 4% ~4% $450 million - $470 million on an Adjusted EBITDA* 23% + margin annualized pro forma basis1 ~$30 million Net Capex2* < 2% of sales (< 2% of
Slide 16: 2018 Priorities
2018 PRIORITIES Execution: Build on Operating Momentum and Continue to Drive Above Market Revenue Growth Manage Cost and Drive Margin Expansion through Synergies and Continuous Improvement Generate Free Cash Flow and Reduce Leverage Ensure a Successful Separation to Maximize Shareholder Value 16
Slide 17: Appendix
PLATFORM SPECIALTY PR UCTS CORPORATION rl APPENDIX 17
Slide 18: Platform Current Capital Structure
PLATFORM CURRENT CAPITAL STRUCTURE $ millions Instrument Maturity Coupon 3/31/2018 Corporate Revolver 6/7/2020 $52 Term Loan B6 - USD 1,2 6/7/2023 L + 300 1,135 Term Loan B7 - USD 1 6/7/2020 L + 250 630 Term Loan C5 - EUR 1,2 6/7/2023 E + 275 739 Term Loan C6 - EUR 1 6/7/2020 E + 250 719 Other Secur
Slide 19: Reconciliation to Adjusted Share Counts
RECONCILIATION TO ADJUSTED SHARE COUNTS (amounts in millions) Q1 2018 Basic outstanding shares 288 Number of shares issuable upon conversion of PDH Common Stock 4 Number of shares issuable upon conversion of Series A Preferred Stock 2 Number of shares issuable upon vesting and exercise of Stock Opti
Slide 20: Net Income Reconciliation to Adj. EBITDA (Q1)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS RECONCILIATION TO ADJ. EBITDA ($ millions) Q1 2018 Q1 2017 Net income (loss) attributable to common stockholders $37 $(24) Add (subtract): Net income attributable to the non-controlling interests 1 1 Income tax expense 65 19 Interest expense, net
Slide 21: Net Loss Reconciliation to Adj. EBITDA (FY)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS RECONCILIATION TO ADJ. EBITDA ($ millions) FY 2017 FY 2016 FY 2015 Net loss attributable to common stockholders $(296) $(41) $(309) Add (subtract): Gain on amendment of Series B Convertible Preferred Stock — (33) — Net income (loss) attributable to the no
Slide 22: MPS – Comparable Sales Reconciliation
MPS – COMPARABLE SALES RECONCILIATION ($ millions) 2016 2015 YoY% Net Sales $1,770 $801 121% Acquisitions: Alent 847 OM 142 Comparable Sales $1,770 $1,791 (1)% 22 Note: Totals may not sum due to rounding
Slide 23: MPS – EBITDA Reconciliation
MPS – EBITDA RECONCILIATION ($ millions) 2017 2016 YoY% Adj. EBITDA ex-corp cost $464 $434 7% Corporate allocations (31) (33) Adj. EBITDA $433 $401 8% Foreign exchange translation 1 Constant Currency $434 $401 8% ($ millions) 2016 2015 YoY% Adj. EBITDA ex-corp cost $434 $236 84% Acquisitions: Alent
Slide 24: Quarterly Results Overview
QUARTERLY RESULTS OVERVIEW 2017 2018 ($ millions) Q1 Q2 Q3 Q4 Q1 Net Sales Performance Solutions $447 $462 $481 $489 $492 Agricultural Solutions 415 479 424 580 472 Total Net Sales $862 $941 $904 $1,069 $964 Adjusted EBITDA Performance Solutions $102 $103 $116 $112 $112 Agricultural Solutions 91 103
Slide 25: Reconciliation to Change in Net Working Capital
RECONCILIATION TO CHANGE IN NET WORKING CAPITAL Current Platform ($ millions) 2016 2017 Change in Accounts Receivable, net $(19) $(53) Change in Other Current Assets (Beneficial Interests on Sold Accounts Receivable) - (25) Change in Inventories, net 70 (30) Change in Accounts Payables (67) 50 Chang
Slide 26: Reconciliation to Net Capital Expenditures
RECONCILIATION TO NET CAPITAL EXPENDITURES Current Platform ($ millions) 2016 2017 Reported Capital Expenditures $56 $59 Plus: Investment in Registrations 36 41 Less: Proceeds from Sale of Assets (21) (18) Net Capital Expenditures $72 $82 RemainCo / ESI ($ millions) 2016 2017 Platform Reported Capit
Slide 27: Organic Sales Growth Reconciliation
ORGANIC SALES GROWTH RECONCILIATION LTM Q1-18 Organic Sales Growth Organic Sales Reported Net Sales Growth Impact of Currency Metals Acquisitions Growth Performance Solutions 7% (2)% —% —% 4% FY 2017 Organic Sales Growth Organic Sales Reported Net Sales Growth Impact of Currency Metals Acquisitions
Slide 28: Non-GAAP Definitions
NON-GAAP DEFINITIONS EBITDA and Adjusted EBITDA: EBITDA represents earnings before interest, provision for income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA, excluding the impact of additional items, which are not representative or indicative of the Company’s ongoing
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