Element Solutions Inc. · NYSE:ESI
Element Solutions — Platform Specialty Products — Investor Day (March 2015)
90 slides from Element Solutions's investor day presentation, Mar 19, 2015
Slide 1: Platform Specialty Products Corporation Investor Day
Platform Specialty Products Corporation Investor Day March 19, 2015
Slide 2: Safe Harbor
Safe Harbor 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 of Platform Specialty Products Corporation (“Platform”) in any jurisdiction,
Slide 3: Agenda
Agenda Introduction – Martin E. Franklin State of the Company – Dan Leever AgroSolutions Segment – Wayne Hewett MacDermid – Scot Benson Corporate Development – Ben Gliklich Financial Overview – Frank Monteiro Conclusion – Dan Leever Appendices 2
Slide 4: Chairman's Summary
Chairman’s Summary 2014 Highlights 2015 Outlook Revenue of $843 million representing 13% Architecture growth Integration with focus on compelling synergy Adjusted EBITDA of $212 million opportunity representing growth of 18% over last year Continued momentum in our Adjusted EBITDA Margin
Slide 5: Agenda
Agenda Introduction – Martin E. Franklin State of the Company – Dan Leever AgroSolutions Segment – Wayne Hewett MacDermid – Scot Benson Corporate Development – Ben Gliklich Financial Overview – Frank Monteiro Conclusion – Dan Leever Appendices 4
Slide 6: State of the Company Overview
Overview 1 2014: Year in Review 2 Platform Organizational Structure 3 Platform Business Overview 4 Review of our Key Principles 5 2015 Priorities and Outlook STATE OF THE COMPANY 5
Slide 7: 2014: Year in Review Fast Out of the Gates
2014: Year in Review 1 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 •
Slide 8: 2014: Year in Review Acquisition Overview
2014: Year in Review 1 Acquisition Overview Purchase Price $1,002m €300m $3,510 x14 Adjusted EBITDA 9.7x 9.2x 11.7x (pre synergies) Strengths Portfolio: Seed Portfolio: Fungicides Portfolio: BioSolutions treatment, insecticides and herbicides Footprint: Eastern Footprint: Western Footpri
Slide 9: 2014: Year in Review Financial Performance: Reported Earnings
2014: Year in Review 1 Financial Performance: Reported Earnings (US$ in millions) REVENUE 2014 2013 % growth Performance Materials 589.3 574.5 2.6% Graphic Solutions 165.9 171.5 (3.3)% “MacDermid” 755.2 746.0 1.2% AgroSolutions 88.0 Total $843.2 $746.0 13.0% Adjusted EBITDA 2014 2013 % growth Perfor
Slide 10: 2014: Year in Review Financial Performance: Free Cash Flow
2014: Year in Review 1 Financial Performance: Free Cash Flow Adj. PF EBITDA – CapEx(1) (% of Adj. PF EBITDA) ($ in millions) Cash Conversion (%) (2) $700 240% $600 $570 200% $548 $500 $459 160% $395 $400 $364 120% $312 $300 80% 87% 88% 87% 89% 89% 89% $200 40% $100 $0 0% 2009 2010 2011 2012 2013 201
Slide 11: 2014: Year in Review Key Personnel Additions
2014: Year in Review 1 Key Personnel Additions Wayne Hewett 5 years as CEO of Arysta President 20 years at General Electric including global responsibility for General Electric’s chemicals business and supply chain Ben Foulk 7 years experience in HR function at global, major pharmaceuticals co
Slide 12: Platform's Organizational Structure
2 Platform’s Organizational Structure Office of the Chairman CEO Chairman President Dan Leever Martin E. Franklin Wayne Hewett VP Corporate SVP Chief Financial President COO Development, Finance SVP Human Resources Officer MacDermid AgroSolutions & Investor Relations Ben Foulk Frank Monteiro Scot Be
Slide 13: Platform Business Overview
3 Platform Business Overview Diversified, market-leading businesses ranging across end-markets and geographies Defensible, leadership positions in niche market segments Graphic AgroSolutions Performance Materials Solutions Pro Forma 2014 Revenue $589 $166 $2,238 ($mm) 2014 Adjusted EBITDA $149 $
Slide 14: Review of our Key Principles: The Asset-Lite, High-Touch Business Model
Review of our Key Principles: 4 The “Asset-Lite, High-Touch” Business Model Superior Asset-Lite High-Touch Return on Capital Formulated Significant, Highly Best-in-Class Chemistry Technical Sales EBITDA less Capex Capex less than 3% Force Margins of Sales SG&A greater than Industry Leadi
Slide 15: Review of our Key Principles: Management Philosophy
Review of our Key Principles: 4 Management Philosophy Decentralized Management Autonomy and responsibility at Business Unit level and employee level − “We will continue to be a place of opportunity where people ‘have the guts to fail.’ We will encourage the entrepreneurs and innovators.” Capital A
Slide 16: Pro Forma Operating Margins and Capital Efficiency vs Peers
Review of our Key Principles: 4 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% 1
Slide 17: Platform Pro Forma ROIC
Review of our Key Principles: 4 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
Slide 18: 2015 Priorities
5 2015 Priorities Integration Opportunistic Execution Acquisitions STATE OF THE COMPANY 17
Slide 19: 2015 Priorities – Guidance
5 2015 Priorities – 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 1
Slide 20: Agenda
Agenda Introduction – Martin E. Franklin State of the Company – Dan Leever AgroSolutions Segment – Wayne Hewett MacDermid – Scot Benson Corporate Development – Ben Gliklich Financial Overview – Frank Monteiro Conclusion – Dan Leever Appendices 19
Slide 21: AgroSolutions Segment - Agenda
AgroSolutions Segment - Agenda Industry Overview Platform’s AgroSolutions Segment Benefits of Consolidation Financial Performance Priorities for 2015 & Conclusion AGROSOLUTIONS SEGMENT 20
Slide 22: Attractive Industry Fundamentals
Attractive Industry Fundamentals Declining Arable Land / Capita Wealth Effect Drives Protein Consumption Global Population Growth Projected Sources of Growth More Income – More Calories in Crop Production World Population (bn) % of every new dollar spent on food 10 100 8 Arable Land Crop 80 6 Intens
Slide 23: Consistent Industry Growth in Past Decade
Consistent Industry Growth in Past Decade Breakdown of Farmer Expenses (2013) Agrochemicals 6.1% Agrochemicals represent just 6% of farmers’ expenses, but protect 100% of their investment Seeds 56.1 9.1% 54.2 Other 36.8% Fertilizer, 49.5 11.8% 46.5 43.2 Overhead 41.3 36.2% 40.1 35.9 32.2 32.8 32.5 2
Slide 24: 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
Slide 25: Competitive Landscape
Competitive Landscape Agrochemical Sales by Company (2013) $11.4 Key $10.4 Asset-Lite, High-Touch AI Discovery / Patented Manufacturing Off-Patent AI Manufacturing $6.9 $5.5 $4.8 $3.6 $3.2 $2.9 $2.3 $2.2 $2.0 $1.6 $0.5 $0.5 $0.4 Syngenta Bayer BASF Dow Monsanto DuPont FMC + ADAMA Nufarm Platform Ag
Slide 26: The Agrochemical Industry is Highly Regulated
The Agrochemical Industry is Highly Regulated Registration Process Complexity Comments Expensive but predictable timelines US 2 – 3 years Medium Requires federal and state approvals Expensive, unpredictable timelines Europe 4 – 6 years High Requires E.U. and individual country approvals Braz
Slide 27: AgroSolutions Segment - Agenda
AgroSolutions Segment - Agenda Industry Overview Platform’s AgroSolutions Segment Benefits of Consolidation Financial Performance Priorities for 2015 & Conclusion 26
Slide 28: Platform's AgroSolutions Segment
Platform’s AgroSolutions Segment Acquired Oct. 2014 (1) Acquired Nov. 2014 Acquired Feb. 2015 AGROSOLUTIONS SEGMENT 27
Slide 29: 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
Slide 30: World-Class Management Team
World-Class Management Team Wayne Hewett President Ex-GE Flavio Prezzi Chief Operating Officer Ex-Syngenta, Monsanto Regional Segment Heads Functional Leaders John Barnes Fabio Toretta Jonathan Evans Georges Neumann Africa, India and Latin America Global Head of Chief Technology Officer Middle East
Slide 31: 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
Slide 32: Strong Global Presence Balanced Across Regions
Strong Global Presence Balanced Across Regions 2014 Global Footprint Europe North America: 22% of sales 16% of sales Asia 10% of sales Africa, India & Middle East 15% of sales Latin America: 37% of sales AGROSOLUTIONS SEGMENT Source: Company information 31
Slide 33: Value-Added Portfolio
Value-Added Portfolio • #1 global post-emergent • #3 in North America grass herbicide Flucarbazone spring wheat Clethodim Herbicides • Complementary global post- emergent grass herbicide • #1 in sugar cane in Brazil for dry season Quizalofop-p • Effective on Round-Up Ready corn Amicarbazone • #4 Str
Slide 34: BioSolutions & Seed Treatment Market Overview
BioSolutions & Seed Treatment Market Overview Market Size Focused on yield enhancement, complementary to Biostimulants $1.2bn agrochemicals Stimulates plant growth Fragmented competitive landscape and reproductive Growth Rate development 12% Technical sale and proof of benefits are critical to
Slide 35: BioSolutions & Seed Treatment Portfolio
BioSolutions & Seed Treatment Portfolio • #1 Biostimulant in Mexican fruits • Leading product in Central and and vegetables export Eastern Europe, with focus on • 20% market share in Brazil canola Biostimulants • 10% market share in France and • 10% market share in rice in growing global presence th
Slide 36: Solutions Across Entire Crop Cycle
Solutions Across Entire Crop Cycle Brazil Soybean Potato Arysta Yield Treatment CAS Seed Arysta + CAS Fungicide Agriphar + Arysta Fungicides CAS Seed Treatment Enhancer Agriphar Arysta + CAS CAS + Arysta + CAS Grass Herbicide Herbicide BL Grass Herbicide Agriphar PGR In-Furrow Arysta Arysta + CAS In
Slide 37: Global Relationships Drive Innovation & Growth
Global Relationships Drive Innovation & Growth • Platform AgroSolutions maintains relationships with Big 6, J-Makers, BioSolutions companies and other agrochemical companies to drive innovation and evaluate product expansion opportunities – In addition to acquiring and licensing key AIs, Platform Ag
Slide 38: Indicative AgroSolutions Cost Structure
Indicative AgroSolutions Cost Structure Platform AgroSolutions’ highly variable cost structure creates flexibility and stability through cycles Variable Cost % Cost Types Key Cost Drivers Fixed Variable Costs • Macroeconomic 5% environment • AI’s • Formulation inerts • Feedstock and • Products for r
Slide 39: AgroSolutions Segment - Agenda
AgroSolutions Segment - Agenda Industry Overview Platform’s AgroSolutions Segment Benefits of Consolidation Financial Performance Priorities for 2015 & Conclusion 38
Slide 40: Platform AgroSolutions: Transaction Summary
Platform AgroSolutions: Transaction Summary Purchase Price $1,002m €300m $3,510 Strengths Portfolio: Seed Portfolio: Fungicides Portfolio: BioSolutions treatment, insecticides and herbicides Footprint: Eastern Footprint: Western Footprint: Global Europe and North Europe infrastructure wi
Slide 41: Benefits of Consolidation
Benefits of Consolidation The combination of Arysta, Agriphar and CAS offers several key strategic and financial advantages, including: 1 Enhanced Market Position and Diversity 2 Highly Complementary Product Portfolios and Geographic Footprint 3 Combined Development and Execution Resources to Drive
Slide 42: Enhanced Market Positioning and Diversity - Above Market Growth Rates
Enhanced Market Positioning and Diversity - 1 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/Mi
Slide 43: Complementary Product Portfolios
2 Complementary Product Portfolios Agrochemicals Seed Plant Growth BioSolutions Herbicides Fungicides Insecticides Miticides Treatment & Regulators Adjuvants Arysta + CAS + Agriphar = Platform AgroSolutions Complete portfolio to cover entire spectrum of crop protection and BioSolutions AGROSOLUTIONS
Slide 44: Complementary Geographic Footprint
2 Complementary Geographic Footprint North America Europe Asia Agriphar Agriphar CAS Agriphar Arysta CAS Arysta Arysta CAS Latin America Africa, India & Middle East Platform AgroSolutions Segment Agriphar Agriphar Asia CAS CAS Africa, India LatAm & ME North Arysta Arysta America Europe Combination s
Slide 45: Combined Development & Execution Resources
Combined Development & 3 Execution Resources + + = AIs 200+ 40 16 250+ Regulatory & Development Development 199 115 31 363 Resources Personnel R&D Facilities 3 2 1 6 Sales & Marketing 1,300 210 42 1,500+ Personnel Execution Resources Registrations Under ~3,700 ~1,900 ~1,700 ~7,300 Management Consoli
Slide 46: Estimated $80MM Synergy Potential
4 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) $80 General & Administrative • Shared services implementation • Overlapping leade
Slide 47: AgroSolutions Segment - Agenda
AgroSolutions Segment - Agenda Industry Overview Platform’s AgroSolutions Vertical Benefits of Consolidation Financial Performance Priorities for 2015 & Conclusion 46
Slide 48: Platform AgroSolutions Financial Performance
Platform AgroSolutions Financial Performance (US$ in millions) Sales (2012 - 2014) (1) EBITDA (2012 – 2014) (1) 2,238 2,163 2,044 196 172 167 436 446 443 44 449 390 41 409 35 101 103 79 1,542 1,599 1,468 276 294 299 2012 2013 2014 2012 2013 2014 % growth: 5.8% 3.5% 19.1% 20.1% 19.9% Arysta CAS Agrip
Slide 49: EBITDA and Working Capital Seasonality
EBITDA and Working Capital Seasonality Quarterly EBITDA as % of Total (2013 – 2014) 2013 2014 30% 31% 29% 27% 21% 22% 20% 20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Peak Trough Peak Trough Working Capital Seasonality Mar - May Dec - Jan Mar - May Dec - Jan Note: Financials are non-GAAP. Please refer to the appendi
Slide 50: AgroSolutions Segment - Agenda
AgroSolutions Segment - Agenda Industry Overview Platform’s AgroSolutions Vertical Benefits of Consolidation Financial Performance Priorities for 2015 & Conclusion 49
Slide 51: Priorities for 2015
Priorities for 2015 Integration Execution $40MM G&A synergy potential Build momentum in top-line growth – Implementation of global shared services Accelerated growth across differentiated portfolios: – Elimination of overlapping – Value-Added Portfolio management positions – BioSolutions $20
Slide 52: Conclusion
Conclusion The combination of Arysta, Agriphar and CAS offers several key strategic and financial advantages, including: Diversity across product lines and focus on high growth value-added, BioSolutions and seed treatment portfolios Market Positioning Exposure to high growth geographies Divers
Slide 53: Agenda
Agenda Introduction – Martin E. Franklin State of the Company – Dan Leever AgroSolutions Segment – Wayne Hewett MacDermid – Scot Benson Corporate Development – Ben Gliklich Financial Overview – Frank Monteiro Conclusion – Dan Leever Appendices 52
Slide 54: MacDermid – Business Overview
MacDermid – Business Overview Dynamic chemistries – Small portion of customers’ costs – Critical to the performance of their products “Asset-Lite, High-Touch” business model Commitment to R&D and product innovation accelerates growth and sustains margins Leading market share in majority of b
Slide 55: 2014 Sales and Adj. EBITDA Breakdown
2014 Sales and Adj. EBITDA Breakdown Sales by Segment Adj. EBITDA by Segment Graphic Graphic Solutions Solutions 24% 22% Performance Performance Materials Materials 78% 76% Sales by Geography Adj. EBITDA by Geography Europe 29% Europe Americas 36% 36% Americas 40% Asia Asia 28% 31% 2014 Sales: $755
Slide 56: MacDermid Performance Materials
MacDermid Performance Materials Overview 2014 – Sales by Geography Summary Leader in specialty additives for plating and surface coatings (virtual tier I in automotive OEM) Specialty chemicals and services that enable manufacturing of Americas Asia 31% printed circuit boards and other electronic
Slide 57: MacDermid Graphics Solutions
MacDermid Graphics Solutions Overview 2014 – Sales by Geography 2014 – Sales by Geography Summary Supplies an extensive line of flexographic plates that are used in the commercial packaging and commercial printing industries Asia 9% Products are used to improve print quality and printing product
Slide 58: Value Creation
“Asset-Lite, High-Touch” Business Model Commitment to R&D and Technical Service Value Creation Investment in Innovation Investment in Service MacDermid invests in customer driven research MacDermid invests in local service capability that and development delivers value, whenever and wherever the cus
Slide 59: Innovation Platform: New Markets and Applications Driving Margin and Growth
Innovation Platform: New Markets and Applications Driving Margin and Growth Minimal Capital Required to Implement Strategic Initiatives; Infrastructure Is in Place Strategic Global Description Initiative Market Size Plating for ~$50 million Extending MacDermid’s “plating on plastics” technology in
Slide 60: MacDermid's Global Footprint
MacDermid’s Global Footprint United Kingdom: Factory, warehouse, Suzhou, China: New Hudson, MI: Ferndale, MI: laboratories and offices Manufacturing and R&D R&D center Manufacturing Waterbury, CT: Korea: R&D center Laboratories and offices Italy: Factory, warehouse, Middletown, DE: Japan: laboratory
Slide 61: High Barriers to Entry
High Barriers to Entry Technical 90 years of process know-how and expertise Barriers Superior and “Dynamic chemistries” – complex Innovative Products chemical compositions + Over 950 patents Technical Service + High Customer Infrastructure Switching Costs 16 manufacturing sites and 9 R&D cen
Slide 62: MacDermid – 2015 Priorities
MacDermid – 2015 Priorities Key Priorities Industrial Drive sales growth globally via a top down, bottom up selling strategy Solutions Top Down: focused on automotive OEM specification selling – Team selling MRD solutions to all major automotive OEM covering all product offerings – Target OEM’s
Slide 63: Financial Review
Financial Review (US$ in millions) Revenue 2011 2012 2013 2014 Performance Materials $569 $560 $575 $589 Graphic Solutions 160 172 172 166 Total $729 $732 $747 $755 Adjusted EBITDA 2011 2012 2013 2014 Performance Materials $119 $119 $137 $149 Graphic Solutions 34 43 43 47 Total $153 $162 $180 $196 A
Slide 64: Agenda
Agenda Introduction – Martin E. Franklin State of the Company – Dan Leever AgroSolutions Segment – Wayne Hewett MacDermid – Scot Benson Corporate Development – Ben Gliklich Financial Overview – Frank Monteiro Conclusion – Dan Leever Appendices 63
Slide 65: Corporate Development Agenda
Agenda 1 Platform’s Acquisition Framework 2 Capital Allocation and Earnings Momentum 3 Specialty Chemicals M&A Market Commentary CORPORATE DEVELOPMENT 64
Slide 66: Diversified Asset-Lite, High-Touch Specialty Chemical Build-Up
Platform – Diversified “Asset-Lite, 1 High-Touch” 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 Surfac
Slide 67: Platform's Strategic Criteria for Acquisitions
1 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 Rea
Slide 68: Platform's Financial Criteria for Acquisitions
1 Platform’s Financial Criteria for Acquisitions A Disciplined Approach to Identifying “Asset-Lite, High-Touch” Businesses Business Model Returns 10% Cash-on-Cash Return in Year 1 Capex < 2.5% Asset Lite EBITDA (1) Gross Margin > 40% Less: Interest Less: Cash taxes Less: Change in WC Less: Capital H
Slide 69: Large Fragmented Industry Creates Consolidation Opportunities
Large Fragmented Industry Creates 1 Consolidation Opportunities Number of Specialty Chemical Companies in Targeted End Markets (by Revenue) $10bn+ 3-5 $5B - $10bn 10 $1B - $5bn 50 <$1bn Hundreds CORPORATE DEVELOPMENT Source: Management estimates 68
Slide 70: Capital Allocation and Earnings Momentum: Illustrative Acquisition
Capital Allocation and Earnings Momentum: 2 Illustrative Acquisition Initial Acquisition Assumptions ($ in millions) xLTM EBITDA EBITDA $250 Acquire $250m EBITDA at 10x multiple using Purchase price $2,500 10.0x target leverage Debt funding $1,125 4.5x Equity funding $1,375 5.5x Operating metric
Slide 71: Illustrative Platform Acquisition Cash Flow Bridge
Capital Allocation and Earnings Momentum: Illustrative Platform Acquisition Cash 2 Flow Bridge $304 $96 $170 $38 $14 $137 $20 FCF (yr 1) Growth Reinvestment FCF (yr 2) Growth Reinvestment FCF (yr 5) Cash-on-Cash 10.0% 12.4% 22.1% EPS $0.49 $0.61 $1.09 The opportunity is not simply to buy companies a
Slide 72: Illustrative Platform Acquisition Cash Flow and EPS
Capital Allocation and Earnings Momentum: Illustrative Platform Acquisition Cash Flow 2 and EPS Free Cash Free Cash Flow at Different SizedFlow at Different Sized Acquisitions Acquisitions 1,218 681 609 548 340 304 274 137 170 122 55 68 Yr 1 Yr 2 Yr 5 $100 EBITDA Acquired $250 EBITDA Acquired $500 E
Slide 73: Illustrative Acquired EPS Compounding
Capital Allocation and Earnings Momentum: 2 Illustrative Acquired EPS Compounding Acquired Free Cash Flow – Assuming $250m in EBITDA Acquired per Year $1,082 $945 $775 $560 $304 $137 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Acquisition Year 2 Acquisition Year 3 Acquisition Year 4 Acquisition Year 5
Slide 74: Recent Acquisition Multiples
3 0.0x 7.0x 0.0x 6.0x 14.0x 21.0x 28.0x 35.0x 12.0x 18.0x Multiple Multiple Lyondell Inorganic Lyondell Inorganic 9.5x 14.0x Lubrizol Lubrizol 8.5x Rhodia Rhodia Median Median 7.4x 7.3x Int'l Specialty Int'l Specialty Capex <3%: Capex >3%: Capex <3%: Capex >3%: Products Products 9.8x 11.0x Arch Chem
Slide 75: Impact of Credit Cycles on Valuation
3 Impact of Credit Cycles on Valuation LBO Purchase Price Multiples vs. U.S. Corporate High Yield Index over Time Multiple (LTM EBITDA) Index 10x 9.7x 9.7x 9.5x 16.0 9.1x 8.8x 8.7x 8.8x 8.4x 8.4x 8.5x 14.0 8x 7.7x 7.3x 7.1x 12.0 6.6x 6.0x 10.0 6x 8.0 4x 6.0 4.0 2x 2.0 0x 0.0 2001 2002 2003 2004 2005
Slide 76: Agenda
Agenda Introduction – Martin E. Franklin State of the Company – Dan Leever AgroSolutions Segment – Wayne Hewett MacDermid – Scot Benson Corporate Development – Ben Gliklich Financial Overview – Frank Monteiro Conclusion – Dan Leever Appendices 75
Slide 77: Combined Pro Forma Financial Results
Combined Pro Forma Financial Results (US$ in millions) Pro Forma Revenue 2012 2013 2014 Performance Materials $560 $575 $589 Graphic Solutions 172 172 166 AgroSolutions 2,044 2,163 2,238 Total $2,775 $2,909 $2,993 Adjusted EBITDA 2012 2013 2014 Performance Materials $119 $137 $149 Graphic Solutions
Slide 78: Platform Pro Forma Cash Generation
Platform Pro Forma Cash Generation Adj. PF EBITDA – CapEx(1) (% of PF Adj. EBITDA) ($ 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
Slide 79: Platform Capital Expenditures
Platform Capital Expenditures CapEx and CapEx as a % of Sales1 2015 CapEx Forecast $73 2015 Forecast Capex: $95 million $68 – $35 million of “plant” investment $59 – $60 million registration related $58 $50 Accounting change to treatment of Registration expense $46 accounts for a $15 million inc
Slide 80: Balance Sheet Considerations
Balance Sheet Considerations Capitalization As Reported Arysta Adjustments Pro Forma ($ in millions) 12/ 31/ 2014 12/ 31/ 2014 12/ 31/ 2014 Cash $997 ($746) $251 Revolver ($300m) – $160 $160 Incremental US D TLB – 500 500 Incremental EUR TLB (83m Euros) – 93 93 Existing US D TLB 1,167 – 1,167 Existi
Slide 81: 2015 – Headwinds and Tailwinds
2015 – Headwinds and Tailwinds Tailwind: Synergies • Original analysis of $25m of G&A savings increased to $40m • $20m already banked (CAS “shared” allocation) • Additional $5m identified since close of Arysta transaction to be implemented in Q2 • Performing detailed shared service analysis in all r
Slide 82: 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
Slide 83: Agenda
Agenda Introduction – Martin E. Franklin State of the Company – Dan Leever AgroSolutions Segment – Wayne Hewett MacDermid – Scot Benson Corporate Development – Ben Gliklich Financial Overview – Frank Monteiro Conclusion – Dan Leever Appendices 82
Slide 84: Our Vision for Platform
Our Vision for Platform Best-in-class, global diversified specialty chemicals – High-quality existing portfolio of businesses – Ripe opportunity for expansion Leadership positions in niche markets Asset-Lite, High-Touch business models – Cash flow-focused Compound earnings growth through: –
Slide 85: Questions
Questions Performance Materials Graphic Solutions AgroSolutions 84
Slide 86: Appendix
val PL PR ATFORM SPECIALTY ODUCTS CORPORATION Appendix
Slide 87: 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
Slide 88: 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
Slide 89: 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
Slide 90: 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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