Element Solutions Inc. · NYSE:ESI

Element Solutions — Platform Specialty Products — Barclays Conference 2015

29 slides from Element Solutions's conference presentation, May 5, 2015

  1. Slide 1: Platform Specialty Products Corporation – Barclays Conference

    Platform Specialty Products Corporation Barclays Conference May 5, 2015

  2. Slide 2: Safe Harbor

    Safe Harbor Please note that this presentation is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. In this presentation, we discuss events or results that have not yet occurred or been realized, commonly referred to as “forwa

  3. Slide 3: Investment Highlights

    Investment Highlights  Best-in-class, global diversified specialty chemicals – High-quality existing portfolio of businesses – Ripe opportunity for expansion  Leadership positions in niche markets  Focus on businesses defined by high cash flow margins and defensible moats  Compound earnings grow

  4. Slide 4: 2014: Fast Out of the Gates

    2014: Fast Out of the Gates x January • NYSE April Listing • Chemtura May AgroSolutions • $300 Million August Acquisition PIPE Announced • Agriphar October Acquisition • Agriphar November Announced Acquisition • Chemtura Closed AgroSolutions Acquisition Closed • $650 Million PIPE • $402 Million • Ar

  5. Slide 5: 2014: Acquisition Overview

    2014: Acquisition Overview Purchase Price $1,002m €300m $3,510 x14 Adjusted EBITDA 9.7x 9.2x 11.7x (pre synergies) Strengths  Portfolio: Seed  Portfolio: Fungicides  Portfolio: BioSolutions treatment, insecticides and herbicides  Footprint: Eastern  Footprint: Western  Footprint: Global Europe

  6. Slide 6: Platform Business Overview

    Platform Business Overview  Diversified, market-leading businesses ranging across end-markets and geographies  Defensible, leadership positions in niche market segments AgroSolutions Performance Applications1 Pro Forma2 2014 Revenue $755 $2,238 ($mm) 2014 Adjusted EBITDA $196 $446 ($mm) Surface El

  7. Slide 7: 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 25.7% Specialty chemicals Agricultural chemicals 21.7% 21.4% 21.3% 20.5% Other chemical peers 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.

  8. Slide 8: 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% Peer median: 10.3% 9.9% 9.6% 9.6% 9.5% 9.4% 9.1% 9.0

  9. Slide 9: AgroSolutions Segment Overview

    AgroSolutions Segment Overview  Unique “asset-lite, high touch” model combines Pro Forma Financial Profile innovative formulation capabilities with flexible cost structure 2014 Sales: $2,238MM 2014 Adj. EBITDA: $446MM – Access to AIs through licensing and acquisitions 2014 EBITDA %: 19.9% – AI manu

  10. Slide 10: "Asset-Lite, High-Touch" Model is Unique and Proven

    “Asset-Lite, High-Touch” Model is Unique and Proven Value chain Asset-Lite, AI Discovery / Patented Off-Patent AI focus High-Touch Manufacturing Manufacturers Access to AIs through Active ingredient R&D on new chemistries discovery licensing and acquisitions and technologies Innovative solutions bas

  11. Slide 11: Enhanced Market Positioning and Diversity - Above Market Growth Rates

    Enhanced Market Positioning and Diversity - Above Market Growth Rates Products Geographies Crop Focus Focus on high-growth BioSolutions Greater diversification among end- Greater exposure to high growth and seed treatment sectors, with markets, with less reliance on row Latin America and Africa/Midd

  12. Slide 12: Platform AgroSolutions Offers Unique Growth Potential

    Platform AgroSolutions Offers Unique Growth Potential Estimated Sales Growth by Product Segment ~3x Market 12 – 15% ~2x Market 8 – 10% ~1.5x Market 6 – 8% ~1x Market 4 – 5% Regional Value-Added Products Biosolutions Seed Treatment Platform 6 – 8% AgroSolutions 49% + 38% + 8% + 5% = (% of sales) Grow

  13. Slide 13: Estimated $80MM Synergy Potential

    Estimated $80MM Synergy Potential  Synergy implementation and tracking began immediately post-signing  Estimated synergies do not assume any reduction in costs residing in the “bookends” (R&D and sales & marketing) $80 General & Administrative • Shared services implementation • Overlapping leaders

  14. Slide 14: Performance Applications – Business Overview

    Performance Applications – Business Overview  Dynamic chemistries Sales by Geography – Small portion of customers’ costs Europe Americas 36% 36% – Critical to the performance of their products  “Asset-Lite, High-Touch” business model Asia 28%  Commitment to R&D and product innovation accelerates

  15. Slide 15: Performance Applications - High Barriers to Entry

    Performance Applications- High Barriers to Entry Technical  90 years of process know-how and expertise Barriers Superior and  “Dynamic chemistries” – complex Innovative Products chemical compositions +  Approximately 950 patents Technical Service + High Customer Infrastructure Switching Costs  1

  16. Slide 16: Platform – Diversified High Cash Flow Generative Specialty Chemical Build-Up

    Platform – Diversified High Cash Flow Generative Specialty Chemical Build-Up Platform is executing a global build-up of high quality, high cash flow specialty chemical businesses across a diverse range of verticals Platform Specialty Products Flavors Coatings Water Market Electronic Oilfield Surface

  17. Slide 17: Platform's Strategic Criteria for Acquisitions

    Platform’s Strategic Criteria for Acquisitions Platform’s Investment Criteria  High Cash Flow Margin Businesses with Defensible Moats   Experienced Management Team with Track Record of Success   Leading Positions in Niche Markets   Diversified Revenue Base   Available at a Reasonable Price

  18. Slide 18: Platform's Returns Criteria for Acquisitions

    Platform’s Returns Criteria for Acquisitions 10% Cash-on-Cash Return in Year 1 EBITDA (1) Less: Interest Less: Cash taxes Less: Change in WC Less: Capital Expenditures Levered Free Cash Flow Levered Free Cash Flow Divided by +10% Purchase Price Equity Value Less: Debt Financing (4.5x EBITDA) Equity

  19. Slide 19: Combined Pro Forma Financial Results

    Combined Pro Forma Financial Results ($ in millions) Pro Forma Revenue 2012 2013 2014 Performance Applications $732 $747 $755 AgroSolutions 2,044 2,163 2,238 Total $2,776 $2,910 $2,993 Adjusted EBITDA 2012 2013 2014 Performance Applications $162 $180 $196 AgroSolutions 390 436 446 Total $552 $616 $6

  20. Slide 20: Platform Pro Forma Cash Generation

    Platform Pro Forma Cash Generation Adj. PF EBITDA – CapEx(1) (% of PF Adj. EBITDA) ($ in millions) Cash Conversion (%) (2) $700 240% $600 $570 200% $548 $500 $459 160% $400 $395 $364 120% $312 $300 80% 87% 88% 87% 89% 89% 89% $200 40% $100 $0 0% 2009 2010 2011 2012 2013 2014 EBITDA-CapEx (EBITDA-Cap

  21. Slide 21: Guidance

    Guidance 2015 Guidance1 Constant Currency Revenue Growth 5% - 7% PF Constant Currency Actual2 Pro Forma2 % Growth2 Adjusted EBITDA $656 – 676 million $660 – $680 million 13 – 16% EPS4 $1.18 - $1.23 $1.20 - 1.25 Long Term Guidance Organic Revenue Growth 5% - 8% Net Income Growth 10% 5 Year Cumulative

  22. Slide 22: 2015 Priorities

    2015 Priorities Integration Opportunistic Execution Acquisitions 21

  23. Slide 23: Conclusion

    Conclusion  Best-in-class, global diversified specialty chemicals – High-quality existing portfolio of businesses – Ripe opportunity for expansion  Leadership positions in niche markets  Focus on businesses defined by high cash flow margins and defensible moats  Compound earnings growth through:

  24. Slide 24: Questions

    Questions Performance Applications AgroSolutions 23

  25. Slide 25: Appendix

    PRODUCTS CORPORATION x PLATFORM SPECIALTY JN Appendix

  26. Slide 26: MacDermid Reconciliation of Net Income to Adjusted EBITDA

    MacDermid Reconciliation of Net Income to Adjusted EBITDA Predecessor/Successor Combined December 31, 2011 2012 2013 2014 (in millions) Net income (loss) available to common stockholders 1 46 (180) (7) Adjustments to reconcile to net income (loss): Interest expense 55 50 52 36 Income tax expense 10

  27. Slide 27: Arysta Reconciliation of Net Income to Adjusted EBITDA

    Arysta Reconciliation of Net Income to Adjusted EBITDA December 31, (in millions) 2012 2013 2014 Net (loss) available to common stockholders (161) (102) (31) Adjustments to reconcile to net loss: Interest expense 136 135 116 Income tax expense 45 48 50 Depreciation and amortization expense 74 67 68

  28. Slide 28: Chemtura AgroSolutions Reconciliation of Net Income to Adjusted EBITDA

    Chemtura AgroSolutions Reconciliation of Net Income to Adjusted EBITDA December 31, (in millions) 2012 2013 2014 Net income available to common stockholders 39 47 28 Adjustments to reconcile to net income: Interest expense 1 - 2 Income tax expense 18 29 40 Depreciation and amortization expense 15 14

  29. Slide 29: Agriphar Reconciliation of Net Income to Adjusted EBITDA

    Agriphar Reconciliation of Net Income to Adjusted EBITDA December 31, (in millions) 2012 2013 2014 Net income available to common stockholders 19 24 13 Adjustments to reconcile to net loss: Interest expense 2 2 1 Income tax expense 9 11 7 Depreciation and amortization expense 4 4 8 (1) FX gain - - (

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