Ashland Inc. · NYSE:ASH
Ashland — Ashland Global Holdings — Debt Investor Presentation (May 2017)
48 slides from Ashland's debt investor presentation, May 15, 2017
Slide 1: Lender Presentation May 15, 2017
Lender Presentation May 15, 2017 Public ashland.com / efficacy usability allure integrity profitability
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with words
Slide 3: Special Notice Regarding Pro Forma Information Contained Herein
Special Notice Regarding Pro Forma Information Contained Herein This Lender Presentation sets forth certain pro forma financial information. This pro forma financial information gives effect to certain pending transactions and, for historical periods, to the separation of Valvoline. Such pro forma i
Slide 4: Agenda
Agenda Transaction Overview Ashland Overview and Investment Highlights Financial Update Syndication Process Kirkwood Roland Managing Director, Citi J. Kevin Willis CFO, Ashland Eric Boni Treasurer, Ashland Kirkwood Roland Managing Director, Citi
Slide 5: Transaction Overview
Transaction Overview xf Ashland
Slide 6: Introduction
Introduction ● On April 17th Ashland announced the acquisition of Pharmachem Laboratories, Inc. (“Pharmachem”) - Pharmachem is a leading international provider of (i) customized solutions and high quality ingredients to the global health & wellness industries and (ii) high value, differentiated prod
Slide 7: Transaction Overview
Transaction Overview LTM PF Uses $ in mm % Acquisition of Pharmachem $660 49% Total Sources $1,351 100% Sources Accounts Receivable Securitization Cash on Hand New Senior Secured Revolver ($800) New 3-year Senior Secured Term Loan A New 5-year Senior Secured Term Loan A New Senior Secured Term Loan
Slide 8: Ashland Overview and Investment Highlights
Ashland Overview and Investment Highlights
Slide 9: Investment Highlights
Investment Highlights Market Leading Specialty Ingredients and Performance Materials Businesses Focused on Higher Growth / Less Cyclical Specialty Products End-market Diversity Experienced Management Team History of Prudent Balance Sheet Management
Slide 10: Ashland and Pharmachem Profile
Ashland and Pharmachem Profile Pharmachem Sales - ~$300 Million By End Market(3) By Geography(3) Asia Other Europe 9% 31% 1% 59% North America By Business Unit(1) Ashland Performance Materials By Geography(1)(2) North America I&S Composites Consumer Specialties Industrial Specialties Asia LATAM/Othe
Slide 11: Over the past years, we have completed the transformation and integrated the business
Over the past 5 years, we have completed the transformation and integrated the business ● Divested over $2B non-core businesses ● Improved adj. EBITDA margin ● Increased role of Ashland Specialty Ingredients now 69% of company sales ● Fixed supply chain 4 On-time delivery > 95% ● Reduced SG&A by > $
Slide 12: Successful separation of Valvoline
Over the last 18 months, we have successfully completed the separation of Valvoline ● Completed IPO in September 2016 - Net proceeds from Valvoline capital raised along with cash on hand dividended to Ashland and were used to fund $1.9bn of gross debt reduction ● Took actions to enable cost neutrali
Slide 13: Pharmachem Profile
Pharmachem Profile - Leading provider of: - Customized solutions and high quality ingredients to the global health and wellness industries - High value, differentiated products to fragrance and flavor houses - Applications include nutraceuticals, fine perfumes, laundry and personal care products, sk
Slide 14: Pharmachem fits our investment philosophy
Pharmachem fits our investment philosophy Winning Strategy Core Principles ... ... In Action: Pharmachem - Fit with Ashland Specialty model - Profit zone: Pharma and PC - Differentiation: Unique, high value ingredients critical to customer product - Customization: Highly customized formulations - Fi
Slide 15: Focused on higher growth / less cyclical Specialty Products
We are focused on higher growth / less cyclical Specialty Products Blue chip markets - Technology: Leverage our core platforms Customers: Technology, brand and quality critical - End markets: Close to consumer - Competitive landscape: - Few approved suppliers - High barriers to entry Small cost with
Slide 16: Consumer Specialties – Pharmaceutical Overview
Consumer Specialties – Pharmaceutical Overview Source: IMS, BCC Research, Kline, internal estimates We enable functionality that drug manufacturers need to promote and launch safe, effective, and consistent products Expert in the $2.1B oral solid dosage (OSD) excipient market with ~3% projected CAGR
Slide 17: Consumer Specialties – Personal Care Overview
Consumer Specialties – Personal Care Overview Source: Euromonitor, Datamonitor, Kline, BCC, Internal estimates We innovate scientifically proven solutions for personal care with specialty ingredient platforms in vinyl pyrrolidone, vinyl ether, cellulosics and biofunctionals Leader in $6B specialty i
Slide 18: Personal Care – Three business areas with strong market presence
Source: Kline, Internal estimates Personal Care – Three business areas with strong market presence Hair care Top 3 in styling fixatives Top 3 in hair rheology Top 10 in conditioning polymers Oral care Leader in functional polymers and denture bioadhesives Pioneered whitening actives delivery Skin ca
Slide 19: Industrial Specialties (IS) Overview
Industrial Specialties (IS) Overview ~33% of ASH FY 2016 sales $990MM We provide high performance products that are typically a small percentage of the total cost of the end product, but provide significant value and impact Common business model: - Focus on premium sub-segments - Close collaboration
Slide 20: Industrial Specialties (IS) Overview (Cont'd)
Industrial Specialties (IS) Overview (Cont’d) Energy (E) Construction (C) Performance Specialties (PS) Source: KNG, IHS, internal estimates Coatings Our 3 strengths Rheology Surfactants Foam control ● $321MM or ~11% of ASH FY 2016 sales ● Market leader in $2.8B market for architectural coatings addi
Slide 21: Ashland Specialty Ingredients End-market Diversity
Ashland Specialty Ingredients End-market Diversity ● Tablets ● Capsules ● Wound Care ● Tablets ● Shampoos ● Conditioners ● Mousses/gels ● Hairspray Disintegrants/ Time Release Oral Care Coatings Hair Care Binders Skin Care Pharma Personal Care Nutrition Coatings Adhesives Construction Energy ● Skin
Slide 22: Composites Overview
Composites Overview $669MM ~22% of ASH FY 2016 sales Specialties Epoxy vinyl ester resins (EVER) Gelcoat Core Unsaturated polyester resins (UPR) Source: Euromonitor, Datamonitor, Kline, BCC, Internal estimates We solve customer problems around the world, improving the integrity and allure of their c
Slide 23: Intermediates / Solvents Overview
Intermediates / Solvents Overview One of world’s leading producers and suppliers of: ● 1-4 butanediol (BDO) ● Tetrahydrofuran (THF) ● N-methyl-pyrrolidone (NMP) ● Gamma-butyrolactone (GBL, BLO) Diverse end markets including: ● Electronics ● Pharmaceuticals ● Shoe soles ● Water filtration Supply Ashl
Slide 24: Experienced Management Team
Experienced Management Team Bill Wulfsohn Chairman and CEO ● Former CEO Carpenter Technology ● Previous leadership roles at PPG, Honeywell, Morton International / Rohm & Haas ● Serves as a Director of PolyOne Corporation Kevin Willis SVP & CFO ● Nearly 30 yrs at Ashland ● Leads worldwide financial f
Slide 25: Financial Update
Financial Update xf Ashland
Slide 26: Historical Financial Overview
Historical Financial Overview (1) Adjusted EBITDA & Margin(2) ($ in mm) Revenues ($ in mm) $4,080 $686 $677 $3,420 $598 $558 16.8% 19.8% 19.8% 18.3% $3,019 $3,054 FY 2014 FY 2015 FY 2016 LTM Q2 2017 FY 2014 FY 2015 FY 2016 LTM Q2 2017 EBITDA EBITDA Margin Commentary Sales decline from FY 2014 to FY
Slide 27: Financial Outlook: Driven by core levers
Financial Outlook: Driven by 7 core levers 2018 – 2021 Performance Targets Adjusted ASI EBITDA (%) >25%* Cash generation1 $1B+ Adjusted EPS growth (CAGR) >15% o New actions to sustain and grow premium mix 1. Evolve business portfolio 2. Implement new market strategies 3. Expand new and proprietary p
Slide 28: History of Prudent Balance Sheet Management
History of Prudent Balance Sheet Management Ginmm) Hercules Diatton WT Pharmachem Acquisition stiture v Acquisition . RCITLA draw f AGE: Aeaietion: Pension Funding 5 B58 535s RE 8 aS a Gross Debt iways solving
Slide 29: Capital allocation - Current Priorities
Capital allocation - Current Priorities First priority Debt Reduction -Eliminate debt related to Pharmachem acquisition -Reduce other debt as appropriate -Remain committed to targeting mid to high BB credit ratings - Expected gross debt / Adjusted EBITDA below 3.5x(1) over time Other allocation prio
Slide 30: Syndication Overview
Syndication Overview xf Ashland
Slide 31: Summary Indicative Terms
Summary Indicative Terms Facilities: $800 million Senior Secured Revolving Credit Facility (“RC”) $250 million 3 year Senior Secured Term Loan A (“TLA”) $250 million 5 year Senior Secured Term Loan A (“TLA”) $600 million Senior Secured Term Loan B (“TLB”) Borrower: RC: Ashland LLC TLA: Initially Ash
Slide 32: Transaction Timeline
Transaction Timeline May 2017 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 12 13 1415 Bank Holiday 21 22 23 24 25 26 27 28 29 30 31 Date Event May 15 ● May 24 ● Late May ● Launch TLB Syndication TLB Commitments due at Noon Eastern Expected Closing and Funding of TLB
Slide 33: Appendix
Appendix xf Ashland
Slide 34: Simplified Pro Forma Corporate Structure
Simplified Pro Forma Corporate Structure Ashland Global Holdings inc. Ashland LLC ¢ T Ahiand ——_ Specialties Phormachem Existing Ashlond US Holding Cv. US Operating Assets Subs Ashland Global Holding Two 8.V, Pharmachem Foreign HoldCo Phormachem Existing Ashiond Foreign Subs Foreign Subs (the “TLA T
Slide 35: Market Leading Businesses
Market Leading Businesses —x Ashland Specialty Ingredients ("ASI") Seles by Market Soles by rodvet Soles by Geography for 12 Months Ended March 31,20 Ashland Performance Materials (“Al Alot eader in Uncoated Vin Ree Seles by Me Soles by Product Soles by Geography ee ee ee iene e<Pashland always solv
Slide 36: PF Income Statement — Six Months Ended March 31, 2017
PF Income Statement — Six Months Ended March 31, 2017 Sales Cost of sales Gross profit Selling, general and administrative expense Research and development expense Equity and other income Operating income Net interest and other financing expense Net loss on divestitures corical $2,513 1,694 Valvolin
Slide 37: Reconciliation of Non-GAAP Data
Reconciliation of Non-GAAP Data for 12 Months Ended March 31, 2017 Net loss Income tax expense (benefit) Net interest and other financing expense Depreciation and amortization (a) EBITDA Net income attributable to noncontrolling interest Loss (income) from discontinued operations (net of tax) .055 o
Slide 38: Reconciliation of Non-GAAP Data
Reconciliation of Non-GAAP Data for 12 Months Ended March 31, 2017 Sales) Specialty Ingredients Performance Materials Total Adjusted EBITDA Adjusted EBITDA) Margin Specialty Ingredients 22.6% Performance Materials ” of Ashland ;ays solving
Slide 39: Consolidated Pro Forma Balance Sheet — March 31, 2017
Consolidated Pro Forma Balance Sheet — March 17 sets Current a ash and cash equivalents, ($135) ‘Accounts receivat Inventori Other asset Total current assets Property, plant, and equipment ied depreciation smulate ‘Net property, plant and equipment Goodwill Intangibles ed investments Asbestos insura
Slide 40: Consolidated Pro Forma Balance Sheet — March 31, 2017 (Cont'd)
Consolidated Pro Forma Balance Sheet — March 31, 2017 (Cont'd) [io mitions) Liabilities and Equity Current abies Short-term d Current portion of long-term debt Trade and other payables Accrued expenses and othe abies (656) (833) Total noncurrent liabilities Equity Total Ashland stockholders’ equity
Slide 41: PF Income Statement — Year Ended September 30, 2016
PF Income Statement — Year Ended September 30, 2016 corical Sales $4,948 Cost o Pro Forma $3,019 sales 3321 Gross profit Selling, general and administrative expense Research and development expense Equity and other income perating income (oss) Net interest and other financing expense Net loss on div
Slide 42: Reconciliation of Non-GAAP Data
Reconciliation of Non-GAAP Data for 12 Months Ended September 30, 2016 Net loss Income tax expense (benefit) Net interest and other financing expense Depreciation and amortization (a) eer let income attributable to Caras Interest Loss (income) from discontinued operations (net of tax) Loss on pensio
Slide 43: PF Income Statement — Year Ended September 30, 2015
PF Income Statement — Year Ended September 30, 2015 corical Sales $5,387 Cost ost of sales Gross profit Pro Forma $3,420 3 Selling, general and administrative expense Research and development expense Equity and other income Operating incor Net interest and other financing expense Net loss on divesti
Slide 44: Reconciliation of Non-GAAP Data
Reconciliation of Non-GAAP Data for 12 Months Ended September 30, 2015 (In millions) Historical Valvoline Pro Forma Net income $309 $309 Income tax benefit (22) (117) (139) Net interest and other financing expense 174 - 174 Depreciation and amortization (a) 335 (35) 300 EBITDA 796 644 Income from di
Slide 45: PF Income Statement — Year Ended September 30, 2014
PF Income Statement — Year Ended September 30, 2014 Cost of sales Gross profit Selling, general and administrative expense Research and development expe Equi SEE 88) Operating income (loss) Net interest and other financing expense Net gain on divestit Loss from continuing operations before income ta
Slide 46: Reconciliation of Non-GAAP Data
Reconciliation of Non-GAAP Data for 12 Months Ended September 30, 2014 Income tax benefit, ‘Net interest and other financing expense Depreciation and amortization (a) EBITDA Income from discontinued operations (net of tax) Loss on pension and postretirement plan remeasurements ‘ments Restructuring a
Slide 47: Company Authorization Letter
Company Authorization Letter \We refer to the proposed $800 mition Senior Secured Revolving Credit Facity ("RC"), $500 milion Senior Secured Term Loan A (“TLA") and $400 mifion Senior Secured Term toon 8 18" ond Together wih Ihe RC ond Ae “oc fo lon LC Ihe "Campana ou ee rong he feast he Company, on
Slide 48: Ashland always solving
AshlandTM always solving ® Registered trademark, Ashland or its subsidiaries, registered in various countries TM Trademark, Ashland or its subsidiaries, registered in various countries
Ashland Global Holdings — Debt Investor Presentation (May 2017) on 6ix