Element Solutions Inc. · NYSE:ESI

Element Solutions — Platform Specialty Products — FY2015 Earnings Presentation

27 slides from Element Solutions's earnings presentation, Feb 29, 2016

  1. Slide 1: Preliminary Fourth Quarter and Year End 2015 Performance Conference Call

    Preliminary Fourth Quarter and Year End 2015 Performance Conference Call February 29, 2016

  2. 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

  3. Slide 3: Q4 2015 Preliminary Highlights

    Q4 2015 Preliminary Highlights Unaudited Results Pro Forma1 PF Constant Currency2 ($ in millions) Q4 2015 Q4 2014 YoY% Q4 2015 Q4 2014 YoY% Q4 2015 Q4 2014 YoY% Revenue $735 $274 $168% $906 $1,069 (15)% $906 $950 (5)% Adj. EBITDA3 154 66 133% 184 223 (17)% 183 201 (9)% Adj. EBITDA Margin 21% 24% 20%

  4. Slide 4: FY 2015 Preliminary Highlights

    FY 2015 Preliminary Highlights Unaudited Results Pro Forma PF Constant Currency ($ in millions) 2015 2014 YoY% 2015 2014 YoY% 2015 2014 YoY% Revenue $2,542 $843 202% $3,620 $4,161 (13)% $3,649 $3,697 (1)% Adj. EBITDA 568 212 168% 742 847 (12)% 748 752 (1)% Adj. EBITDA Margin 22% 25% 20% 20% 20% 20%

  5. Slide 5: 2016 Priorities and Outlook

    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 i

  6. Slide 6: Balanced Portfolio Across End-Market and Geography

    Balanced Portfolio Across End-Market and Geography 2015 Pro Forma Sales by Segment 2015 Pro Forma Sales by Region 8% 27% 19% Agricultural Solutions 51% 20% 26% ~$3.6 billion Europe Asia Latin America North America AIME Performance Solutions Agricultural Solutions ~$1.8 billion ~$1.8 billion 2% 14% P

  7. Slide 7: Performance Solutions Preliminary Results Overview

    Performance Solutions Preliminary Results Overview Pro Forma Full Year Pro Forma Constant Currency ($ in millions) 2015 2014 YoY% 2015 2014 YoY% Revenue $1,791 $1,990 (10)% $1,791 $1,860 (4)% Adj. EBITDA 395 412 (4)% 395 387 2% Adj. EBITDA Margin 22% 21% 22% 21% Adj. EBITDA ex-corp costs 407 417 (2%

  8. Slide 8: Performance Solutions Preliminary Financial Summary

    Performance Solutions Preliminary Financial Summary Pro Forma Full Year Pro Forma Constant Currency ($ in millions) 2015 2014 YoY% 2015 2014 YoY% MacDermid $709 $755 (6)% $710 $698 2% OM 163 172 (5)% 163 172 (5)% Alent 919 1,063 (14)% 919 991 (7)% Pro Forma Revenue $1,791 $1,990 (10)% $1,791 $1,860

  9. Slide 9: Agricultural Solutions Preliminary Financial Summary

    Agricultural Solutions Preliminary Financial Summary Pro Forma Full Year Pro Forma Constant Currency ($ in millions) 2015 2014 YoY% 2015 2014 YoY% Revenue $1,829 $2,171 (16)% $1,858 $1,837 1% Adj. EBITDA 346 435 (20)% 353 365 (3)% Adj. EBITDA Margin 19% 20% 19% 20% Adj. EBITDA ex-corp costs 382 446

  10. Slide 10: Agricultural Solutions Preliminary Business Update

    Agricultural Solutions Preliminary 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 he

  11. Slide 11: Performance Solutions Integration

    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 chain o

  12. Slide 12: Agricultural Solutions Integration

    Agricultural Solutions Integration  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 prioritizat

  13. Slide 13: Foreign Exchange Overview

    Foreign Exchange Overview Pro Forma Platform Translational Currency Exposure1 Agricultural Solutions 2015 FX Bridge USD ~30% ($ in millions) EUR ~25% BRL ~12% RMB ~10% +79 JPY ~5% Ongoing FX Mitigants ~55% of FX headwind offset (216)  + € 1 billion denominated debt by price  Offset gross FX impact

  14. Slide 14: Financial Performance

    PLATFORM SPECIALTY PRODUCTS CORPORATION ml Financial Performance 14

  15. Slide 15: 2015 Adjusted EBITDA vs 2015 Guidance

    2015 Adjusted EBITDA vs 2015 Guidance 2015 guidance equivalent adj. EBITDA of $555 million compared to guidance range of $550 million to $570 million 580 570 570 568 560 3 555 550 (15) $ millions 550 540 530 520 510 500 Adj. EBITDA OM/Alent Arysta Stub 15 Guidance 2015 Guidance Period Equivalent Adj

  16. Slide 16: 2014 to 2015 Pro Forma Adjusted EBITDA Bridge

    2014 to 2015 Pro Forma Adjusted EBITDA Bridge Pro Forma Adjusted EBITDA 900 847 800 38 72 18 742 (16) 700 (32) 434 (185) 600 346 $ millions 500 400 300 200 412 395 100 0 2014 Pro FX Headwind Net Pricing / Synergies BU SG&A Increase in Other Items 2015 Pro Forma Volume Increase Corporate Forma Cost P

  17. Slide 17: 2016 Guidance

    2016 Guidance1 800 775 742 15 750 186 ~40 750 700 725 ~(35) (12) 650 $ millions 600 555 550 500 450 400 '15 OM / Alent PF '15 Adj. FX Corp Costs Expected Organic 2016 Adj. Guidance EBITDA Headwind Increase Synergies Growth EBITDA Adj. Guidance EBITDA Focus Areas 2016 Outlook Opportunities Organic Sa

  18. Slide 18: Capital Structure Overview

    Capital Structure Overview Capital Structure Maturity Profile $ millions 3,500 Series B Pfd. Instrument Maturity Coupon 12/31/15 3,000 Debt Corporate Revolver ($500M) 6/7/2019 — Term Loan – USD1 6/7/2020 L + 450 2,698 2,500 Term Loan – EUR1 6/7/2020 L + 450 634 2,000 $ millions Other Debt 35 Total F

  19. Slide 19: Covenant Overview

    Covenant Overview  Our capital structure is subject to only one quarterly Covenant EBITDA maintenance test - 6.25x First Lien Net Debt to PF adj. EBITDA LTM PF adj. EBITDA $742  Covenant EBITDA is defined as LTM PF adj. EBITDA plus synergies expected to be realized based on actions (+) Announced S

  20. Slide 20: Q1'16 Outlook

    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 con

  21. Slide 21: Conclusions – 2016 Priorities

    Conclusions – 2016 Priorities Integration and Synergy Realization Focus Commercial Efforts on Fast Growing Niches Establish Operating Rhythm and Momentum Generate Free Cash Flow 21

  22. Slide 22: Appendix

    r PLATFORM SPECIALTY Va PR ODUCTS CORPORATION Appendix 22

  23. Slide 23: Q4 2015 Preliminary Financial Summary

    Q4 2015 Preliminary Financial Summary Unaudited 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

  24. Slide 24: Pro Forma Preliminary Quarterly Segment Overview

    Pro Forma Preliminary 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. EBITD

  25. Slide 25: Q1 2015 Foreign Exchange Impact

    Q1 2015 Foreign Exchange Impact 2015 Q1 Results ($ in millions) As Reported Pro Forma @ Jan-16 FX Revenue $535 $897 $840 Adj. EBITDA $31 177 $167 25

  26. Slide 26: Preliminary Adjusted EBITDA Reconciliation to (Loss) Income Before Income Taxes

    Preliminary Adjusted EBITDA Reconciliation to (Loss) Income Before Income Taxes (amounts in millions) Q4 2015 Q4 2014 2015 2014 Adj. EBITDA $154 $66 $568 $212 Interest expense (76) (15) (223) (39) Depreciation and amortization expense (75) (31) (251) (88) Restructuring and related expenses (37) (2)

  27. Slide 27: Non-GAAP Definitions

    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 acqui

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