Element Solutions Inc. · NYSE:ESI
Element Solutions — Platform Specialty Products — CJS New Ideas Conference 2015
36 slides from Element Solutions's conference presentation, Jan 14, 2015
Slide 1: Platform Specialty Products Corporation – CJS New Ideas Conference
Platform Specialty Products Corporation CJS New Ideas Conference January 14, 2015
Slide 2: Disclaimer
Disclaimer This presentation is not intended to and does not constitute an offer to sell, an invitation to subscribe for or purchase, or a solicitation of an offer or invitation to subscribe for or purchase, any securities in any jurisdiction, nor shall there be any sale, issuance or transfer of any
Slide 3: Agenda
Agenda Executive Summary Acquisition Strategy and Criteria Financial Overview Conclusion Appendices 2
Slide 4: Platform Specialty Products
Platform Specialty Products Global, Diversified Specialty Chemicals Business Leading Positions in Niche Markets “Asset-Lite, High-Touch” Business Models Free Cash Flow Driven Acquisition and Integration Oriented Experienced Management Team with Track Record of Success 3
Slide 5: 2014: Fast Out of the Gates
2014: Fast Out of the Gates 2014 Corporate Activity Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec NYSE Listing Acquisition1 Acquisition2 Acquisition3 2014 Share Price Performance Relative to S&P 500 150% PAH S&P500 130% 110% 90% 70% 67% 50% 30% 10% 14% (10)% (30)% Jan-14 Feb-14 Mar-14 Apr-14 May-1
Slide 6: Diversified Asset-Lite, High-Touch Specialty Chemicals Build-Up
Platform – Diversified “Asset-Lite, High-Touch” Specialty Chemicals Build-Up Platform is executing a global build-up of high quality, high cash flow specialty chemicals businesses across a diverse range of verticals Platform Specialty Products Flavors Coatings Water Market Electronic Oilfield Surfac
Slide 7: Asset-Lite, High-Touch Business Model
Asset-Lite, High-Touch Business Model Formulated Chemistry Asset-Lite Capex less than 3.0% of sales Significant, Highly Technical Sales Force High-Touch SG&A greater than 20% of sales People and Technology are the “Moat” Best-in-Class Margins Superior Return on Capital Industry Leading
Slide 8: Pro Forma Platform Financials / Segment Composition
Pro Forma Platform Financials Arysta acquisition will significantly enhance the diversity and scale of Platform 2013 Net Sales 2013 Adjusted EBITDA ($ m) ($m) $2,909 3,000 $616 600 Increased Scale 2,000 450 $1,367 $322 300 1,000 150 0 0 (2) MacDermid + CAS + Agriphar(1) PF with Arysta MacDermid + CA
Slide 9: Platform AgroSolutions
Platform AgroSolutions High Quality Crop Protection Assets United Under One Parent Agrochemicals BioSolutions Seed Treatment − Herbicides − BioStimulants Honey Bee Health Unparalleled Breadth of − Fungicides − Nutrients Products − Insecticides − BioControl + $200 million revenue in every reg
Slide 10: Diversified Agricultural End-Market Exposure in Each Region
Diversified Agricultural End-Market Exposure in Each Region(1) North America Europe Asia Other Other Crops Crops Other T&O Crops F&V Corn F&V F&V Soy Sugarbeets T&O Cereals Oil Crops Corn Cereals Cereals Rice Oil Crops Latin America Africa & Middle East Platform Pro Forma Total F&V Other Other Other
Slide 11: Niche, Growth Market Focus
Niche, Growth Market Focus Platform’s rigorous approach to identify attractive market position results in leadership with defensible barriers to entry ($ in millions) Estimated Estimated Segment Market Size ($m) Annual Growth Global BioStimulants AgroSolutions - BioSolutions ~$5,000 ~12% Global Inno
Slide 12: Combined Historical Pro Forma Performance
Combined Historical Pro Forma Performance Platform has exhibited strong and consistent historical growth Net Sales Adjusted EBITDA ($ in millions) ($ in millions) $700 $65 $2,909 $2,941 $616 $172 $189 $46 $41 $2,564 $2,608 $517 $2,323 $2,105 $454 (1) $294 $1,542 (1) $1,536 $414 $294 $1,459 $1,468 $3
Slide 13: Compelling, Consistent Cash Generation
Compelling, Consistent Cash Generation Stable financial performance through the economic cycles Adj. PF EBITDA – CapEx(1) (% of EBITDA) ($ in millions) Cash Conversion (%) (2) $700 240% $600 200% $548 $500 $459 160% $400 $395 $364 120% $312 $300 80% 87% 88% 87% 89% 89% $200 40% $100 $0 0% 2009 2010
Slide 14: Platform Pro Forma Operating Margins and Capital Efficiency
Platform Pro Forma Operating Margins and Capital Efficiency 2013 Adjusted Operating Margins (1)(2) ($ in millions) Large cap peers Specialty chemicals 25.7% Agricultural chemicals 21.7% 21.4% 21.3% Other chemical peers 20.5% 17.1% 16.8% 16.6% 15.7% 15.7% 15.6% 15.0% 15.0% 14.5% 13.4% 13.2% 13.2% 13.
Slide 15: Platform Pro Forma ROIC
Platform Pro Forma ROIC 2013 ROIC (1) ($ in millions) Large cap peers Specialty chemicals Agricultural chemicals Other chemical peers 19.4% 17.0% 15.9% 15.0% 14.6% 13.6% 13.5% 13.3% 13.3% 13.0% 12.7% 11.6% 11.3% 11.2% 10.8% 10.4% 10.3% 10.3% 10.1% 9.9% Peer median: 10.3% 9.6% 9.6% 9.5% 9.4% 9.1% 9.0
Slide 16: Significant Synergies Expected in AgroSolutions
Significant Synergies Expected in AgroSolutions Platform has begun implementing a detailed, highly coordinated integration Estimated synergies do not assume any reduction in costs residing in the “bookends” (R&D and sales & marketing) Synergies expected to be achieved from 2015-2017 Phase 1 (201
Slide 17: Agenda
Agenda Executive Summary Acquisition Strategy and Criteria Financial Overview Conclusion Appendices 16
Slide 18: Diversified Asset-Lite, High-Touch Specialty Chemicals Build-Up
Platform – Diversified “Asset-Lite, High-Touch” Specialty Chemicals Build-Up Platform is executing a global build-up of high quality, high cash flow specialty chemicals businesses across a diverse range of verticals Platform Specialty Products Flavors Coatings Water Market Electronic Oilfield Surfac
Slide 19: Platform's Strategic Criteria for Acquisitions
Platform’s Strategic Criteria for Acquisitions Platform’s Investment Criteria “Asset-Lite, High-Touch” Business Model that Drives Free Cash Flow Experienced Management Team with Track Record of Success Leading Positions in Niche Markets Diversified Revenue Base Available at a Reaso
Slide 20: Platform's Financial Criteria for Acquisitions
Platform’s Financial Criteria for Acquisitions A Disciplined Approach to Identifying “Asset-Lite, High-Touch” Businesses Specialty Chemicals Universe Capex < 2.5% Gross Margin > 40% Adjusted SG&A > 20% Adjusted EBITDA >20% `` 19
Slide 21: Large Fragmented Industry Creates Consolidation Opportunities
Large Fragmented Industry Creates Consolidation Opportunities Number of Specialty Chemical Companies in Targeted End Markets (by Revenue) $10bn+ 3-5 $5B - $10bn 10 $1B - $5bn 50 <$1bn Hundreds Source: Management estimates. 20
Slide 22: Agenda
Agenda Executive Summary Acquisition Strategy and Criteria Financial Overview Conclusion Appendices 21
Slide 23: Combined Historical Pro Forma Performance
Combined Historical Pro Forma Performance Platform has exhibited strong and consistent historical growth Net Sales Adjusted EBITDA ($ in millions) ($ in millions) $700 $65 $2,909 $2,941 $616 $172 $189 $46 $41 $2,564 $2,608 $517 $2,323 $2,105 $454 (1) $294 $1,542 (1) $1,536 $414 $294 $1,459 $1,468 $3
Slide 24: Compelling, Consistent Cash Generation
Compelling, Consistent Cash Generation Stable financial performance through the economic cycles Adj. PF EBITDA – CapEx(1) (% of EBITDA) ($ in millions) Cash Conversion (%) (2) $700 240% $600 200% $548 $500 $459 160% $400 $395 $364 120% $312 $300 80% 87% 88% 87% 89% 89% $200 40% $100 $0 0% 2009 2010
Slide 25: Arysta Financing Overview
Arysta Financing Overview The Arysta acquisition will be financed through a combination of cash from equity offerings that has already been raised, new debt and seller convertible preferred 4,000 $3,510 3,500 (1) $403 3,000 $652 (2) 2,500 $600 2,000 1,500 1,000 ~$2,000 (3) 500 0 Arysta Purchase Pric
Slide 26: Transaction Overview
Transaction Overview Platform will finance the Arysta acquisition with a combination of cash already raised from equity offerings, sellers convertible preferred and debt Sources & Uses Pro Forma Capitalization ($ in millions) ($ in millions) Arysta As Adjusted (1) Adjustments Pro Forma Sources Capit
Slide 27: Agenda
Agenda Executive Summary Acquisition Strategy and Criteria Financial Overview Conclusion Q&A Appendices 26
Slide 28: Board and Management
Board and Management The Architect The Builder
Slide 29: Conclusion
Conclusion Market-Leading Portfolio of Niche Products Favorable Industry Structure End-Market Diversification Strong Pipeline of Attractive Opportunities in New Verticals and Within Existing Segments A Technology Leader with “Asset-Lite, High-Touch” Business Model Resulting in High Free Ca
Slide 30: Q&A
Q&A Performance Materials Graphic Solutions AgroSolutions 29
Slide 31: Agenda
Agenda Platform Today Acquisition Strategy and Criteria Financial Overview Conclusion Appendices 30
Slide 32: Combined Financial Data – LTM 9/30/14
Combined Financial Data – LTM 9/30/14 ($ in millions) Combined Combined Platform CAS Agriphar Arysta (1) LTM 9/30/14 LTM 9/30/14 LTM 9/30/14 LTM 9/30/14 LTM 9/30/14 LTM 9/30/14 (Pre-synergies)(2) (Post-synergies)(3) Net Sales $755 $461 $189 $1,536 $2,941 $2,941 Adjusted EBITDA $191 $104 $46 $294 $63
Slide 33: Reconciliation of Net Income to Adjusted EBITDA (Q3 & YTD 2014)
Platform Reconciliation of Net Income to Adjusted EBITDA (Q3 & YTD 2014) Predecessor Successor Predecessor Successor 9 months ended 9 months ended ($ in millions) Q3 2013 Q3 2014 9/30/13 9/30/14 Net income $14.5 $11.9 $23.9 $4.1 Adjustments to reconcile to net income (loss): Income tax expense (bene
Slide 34: Reconciliation of Net Income to Adjusted EBITDA Predecessor/Successor Combined
Platform Reconciliation of Net Income to Adjusted EBITDA Predecessor/Successor Combined Year ended December 31 ($ in millions) 2011 2012 2013 Net income (loss) $1.0 $46.0 $(181.0) Adjustments to reconcile to net income (loss): Income tax expense (benefit) 10.0 24.6 7.1 Interest expense 54.6 49.7 51.
Slide 35: Arysta Non-GAAP Financials (excludes Goëmar)
Arysta Non-GAAP Financials (excludes Goëmar) Arysta LTM 9/30/14 (in thousands) Net (loss) income attributable to common stockholders (104,797) Adjustments to reconcile to net income (loss): Income tax expense 40,830 Dividend income (128) Other financial income (13,947) Gain on valuations of derivati
Slide 36: Chemtura AgroSolutions' Non-GAAP Financials
Chemtura AgroSolutions’ Non-GAAP Financials CAS LTM 9/30/14 (in thousands) Net (loss) income attributable to common stockholders 43,077 Adjustments to reconcile to net income (loss): Income tax expense 51,516 Other financial income (787) Foreign exchanges loss (gain) (3,374) Other financial expenses
Platform Specialty Products — CJS New Ideas Conference 2015 on 6ix