Ecovyst Inc. · NYSE:ECVT
Ecovyst — Q3 2018 Earnings Presentation
30 slides from Ecovyst's earnings presentation, Nov 6, 2018
Slide 1: Third Quarter 2018 Investor Presentation
Third Quarter 2018 November 6, 2018 – 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: Key Priorities and Focus
KEY PRIORITIES AND FOCUS Create Shareholder Value COMPETITIVE KEY VALUE ADVANTAGES DRIVERS Unique portfolio Profitable Growth of businesses Leading positions in Capital efficiency growing markets Innovation potential Free cash flow 3
Slide 4: 3rd Quarter Generated Adjusted FCF of $91 Million
3RD QUARTER GENERATED ADJUSTED FCF OF $91 MILLION Significant progress towards adjusted free cash flow of $125 to $140 million in 2018 Sales up 9% and Adjusted EBITDA down 1% Drivers in the third quarter included: + Robust refining services volumes + Double-digit polyolefins growth - Higher operatin
Slide 5: Third Quarter 2018 Financial Results
THIRD QUARTER 2018 FINANCIAL RESULTS Growth in EC&S offset by PM&C Third Third Quarter Quarter % ($ in millions) 2018 2017 Change Sales 427.2 391.8 9.0% Adjusted EBITDA 118.1 119.9 (1.5%) Adjusted EBITDA Margin1 25.7% 27.9% (220 bps) PQ Group o Sales growth attributed to Refining Services Holdings I
Slide 6: Environmental Catalysts & Services Results
ENVIRONMENTAL CATALYSTS & SERVICES RESULTS Growth largely driven by refining services Third Third Quarter Quarter % ($ in millions) 2018 2017 Change Sales PQ 139.7 115.5 21.0% Zeolyst JV 32.3 37.6 (14.2)% Adjusted EBITDA 65.3 61.9 5.5% Adjusted EBITDA Margin1 38.0% 40.4% (240 bps) Environmental o Sa
Slide 7: Performance Materials & Chemicals Results
PERFORMANCE MATERIALS & CHEMICALS RESULTS Highway safety demand growth offset by increased production costs Third Third Quarter Quarter % ($ in millions) 2018 2017 Change Sales 288.3 277.1 4.0% Adjusted EBITDA 63.1 65.9 (4.2)% Adjusted EBITDA Margin 21.9% 23.8% (190 bps) o Sales higher on North Amer
Slide 8: Adjusted Free Cash Flow
ADJUSTED FREE CASH FLOW Improved ~$55 million year-on-year YTD YTD ($ in millions) 2018 2017 Cash Flow from Operations before interest and tax 261.4 249.6 Less: Cash Paid for Taxes 16.1 21.0 Cash Paid for Interest 79.3 118.8 Cash Flow from Operations 166.0 109.8 Less: Capital Investments1 95.3 90.2
Slide 9: 2018 Guidance
2018 GUIDANCE Adjusted free cash flow range raised to $125 million to $140 million Updated 2017 Prior 2018 2018 ($ in millions except %) Actual Outlook Outlook Sales 1,472.1 1,545 – 1,575 1,580 – 1,600 Adjusted EBITDA 453.3 470 – 490 460 – 465 Adjusted Free Cash Flow (24.4) 120 – 1401 125 – 140 Inte
Slide 10: Product Group Growth Drivers
PRODUCT GROUP GROWTH DRIVERS Diverse product portfolio with environmental and safety demand drivers Environmental Catalysts & Services (EC&S): Refining Services – expanding sulfuric acid alkylation to meet higher octane demand Silica Catalysts – growing global polyethylene demand for plastics
Slide 11: Zeolyst International (ZI) Joint Venture
ZEOLYST INTERNATIONAL (ZI) JOINT VENTURE Leading global supplier of emission control zeolite catalysts Manufacturing Site Global Footprint R&D Site Zeolyst International: 30-year 50%/50% Joint Venture with Shell Conshohocken, PA Pittsburg, CA Kansas City, KS Houston, TX Hydrocracking: ~ 40% Transpor
Slide 12: Zeolyst International – Hydrocracking
ZEOLYST INTERNATIONAL – HYDROCRACKING Catalyst growth outperforms market Historical hydrocracking (HCC) capacity growth Catalyst demand 14 HCC Capacity millions bbl/d 12 fluctuates with new CAGR (2006–2018) = ~3.5% 10 capacity and fixed bed 8 6 MARPOL Fuel Oil refills Clean Fuels N.A. & Europe 4 2 I
Slide 13: Zeolyst International – Hydrocracking Demand Growth
ZEOLYST INTERNATIONAL – HYDROCRACKING Demand growth for low-sulfur fuels drives global planned capacity investments Projected HCC Capacity growth 16 Drivers for higher 14 capacity adds: HCC Capacity millions bbl/d 12 o Increasing compliance by 10 emerging countries (China, Clean Fuels India, Brazil
Slide 14: Zeolyst International – Emission Control Catalysts
ZEOLYST INTERNATIONAL – EMISSION CONTROL CATALYSTS Increased adoption, increased intensity Global Mix of HDD Vehicles (000) Global environmental China Asia (Ex: China) Europe North America South America standards for Heavy 3,216 3,165 3,192 3,284 4% Duty Diesel (HDD) 3% 18% 16% progressively tighten
Slide 15: Key Priorities and Focus
KEY PRIORITIES AND FOCUS Create Shareholder Value COMPETITIVE KEY VALUE ADVANTAGES DRIVERS Unique portfolio Profitable Growth of businesses Leading positions in Capital efficiency growing markets Innovation potential Free cash flow 15
Slide 16: Appendix
APPENDIX © PQ Corporation
Slide 17: Sales and Adjusted EBITDA Major Change Factors
SALES AND ADJUSTED EBITDA MAJOR CHANGE FACTORS Third Quarter and YTD 2018 SALES Three months ended Nine months ended September 30, 2018 September 30, 2018 Environmental Performance Environmental Performance Sales PQ Group Catalysts Materials PQ Group Catalysts Materials (in $ millions and %) Holding
Slide 18: Debt Schedule
DEBT SCHEDULE Total debt reduced by ~$80 million during Q3; another repayment planned in Q4 DEBT MATURITY SCHEDULE Capitalization Q3 2018 $1,500 $1,433.3 Debt: ($ in millions) $1,350 ABL Revolving Credit Facility — $1,200 New USD First Lien Term Loan 1,212.5 $1,050 First Lien Secured Notes 625.0 $90
Slide 19: Adjusted Free Cash Flow
ADJUSTED FREE CASH FLOW Third Quarter and YTD 2018 Three months ended Nine months ended September 30, September 30, ($ in millions) 2018 2017 2018 2017 Net cash provided by operating activities 115.9 88.0 166.0 109.8 Less: Purchases of property, plant and equipment1 (29.2) (29.6) (95.3) (90.2) Free
Slide 20: PQ Investment Highlights
PQ INVESTMENT HIGHLIGHTS Leading Global Producer of Specialty Catalysts, Materials, Chemicals & Services Mid to High Leading Adjusted Proven Performance Strong Free Cash Single Digit EBITDA Margins in all Macro Flow to Delever Growth Economic Cycles and Grow LTM Q3 2018 Adjusted EBITDA margin 1 37%
Slide 21: Demonstrated Strong Financial Performance Across Macroeconomic Cycles
DEMONSTRATED STRONG FINANCIAL PERFORMANCE ACROSS MACROECONOMIC CYCLES Stability through cycles Adjusted EBITDA and Adjusted EBITDA Margin (%)1,2,3 ($ in millions except %) o Historical Adjusted EBITDA CAGR of ~ 7% o Attractive, stable margins (1) Adjusted EBITDA for the period from 2005 to 2014 repr
Slide 22: Quarterly Net Income to Adjusted Net Income and Adjusted Diluted EPS
QUARTERLY NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE Third Quarter 2018, YTD 2018 and Year 2017 Nine Months and Year 2017 Three Months Ended Ended LTM Ended Three Months Ended Year Ended For the Quarter Ended March 31, June 30, September 30, September 30, September 30,
Slide 23: Net Income (Loss) to Segment Adjusted EBITDA
NET INCOME (LOSS) TO SEGMENT ADJUSTED EBITDA Third Quarter 2018, YTD 2018 and Year 2017 Nine Months Three Months Ended Ended LTM Ended Three Months Ended Year Ended September December March 31, June 30, September 30, September 30, September 30, March 31, June 30, 30, December 31, ($ in millions) 201
Slide 24: 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 25: Quarterly Segment Sales and Adjusted EBITDA
QUARTERLY SEGMENT SALES AND ADJUSTED EBITDA Third Quarter 2018, YTD 2018 and Year 2017 Nine months Three Months Ended For the Quarter Ended Ended LTM Ended Three Months Ended Year Ended September September September December 30, 30, 30, September March 31, June 30, March 31, June 30, 30, December 31
Slide 26: 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 27: 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 28: 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 29: 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 30: PQ Corporation
PQ Corporation