Platform Specialty Products Corporation
Citi 2014 Basic Materials Conference
Investor Presentation
December, 2014
Disclaimer
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 “forward-looking statements” within the meaning of
the federal securities laws, including statements regarding the impact of the recent acquisitions of Percival S.A, including its agrochemical business, Agriphar
(“Agriphar”) and the Chemtura AgroSolutions business of Chemtura Corporation (“CAS”) and the proposed acquisition of Arysta LifeScience Ltd. (“Arysta”) on the
business and financial results of Platform Specialty Products Corporation (“Platform”) including sales, adjusted EBITDA, capital expenditures, cash flows, the ability
of Platform to close the proposed Arysta acquisition and to raise the funds needed to close such acquisition, Platform's earnings per share, expected or estimated
revenue, the outlook for Platform’s markets and the demand for its products, estimated sales, segment earnings, net interest expense, income tax provision,
restructuring and other charges, cash flows from operations, consistent profitable growth, free cash flow, future revenues and gross operating and adjusted
EBITDA margin improvement requirement and expansion, organic net sales growth, bank debt covenants, the success of new product introductions, growth in
costs and expenses, the impact of commodities and currencies and Platform’s ability to manage its risk in these areas, Platform’s ability to raise new debt or equity
and to consummate acquisitions, including, but not limited to, the proposed Arysta acquisition, estimated synergies in Platform’s new combined agrochemical
businesses and the impact in general of acquisitions, divestitures, restructurings, and other unusual items, including Platform's ability to successfully integrate and
obtain the anticipated results and synergies from its consummated and future acquisitions.
These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be
reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A
discussion of factors that could cause results to vary is included in Platform’s periodic and other reports filed with the Securities and Exchange Commission,
including under the heading “Risk Factors” in Platform’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and Quarterly Reports on Form
10-Q for the fiscal quarters ended June 30, 2014 and September 30, 2014. Platform undertakes no obligation to update any forward-looking statement, whether as
a result of new information, future events or otherwise.
This presentation also contains non-GAAP financial measures that may not be directly comparable to other similarly titled measures used by other companies,
including pro forma combined net sales, adjusted EBITDA and pro forma combined capital expenditures. For purposes of Regulation G, a non-GAAP financial
measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to
adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with
GAAP in the statements of operations, balance sheets, or statements of cash flows of such company; or includes amounts, or is subject to adjustments that have
the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Pursuant to the requirements of
Regulation G, Platform has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures in the
Appendix of this presentation. These non-GAAP measures are provided because management of Platform uses these financial measures in monitoring and
evaluating Platform’s ongoing financial results and trends. Management uses this non-GAAP information as an indicator of business performance, and evaluates
overall management with respect to such indicators. These non-GAAP measures should be considered in addition to, but not as a substitute for, measures of
financial performance prepared in accordance with GAAP.
Historical financial information relating to Agriphar was obtained directly from Percival S.A., its privately-held former parent company. Although we believe it is
reliable, this information has not been verified, internally or independently. Historical financial information relating to CAS was derived from segment reporting in
Chemtura Corporation’s periodic reports and earnings press releases. Financial information for Arysta was derived from Arysta’s registration statement on Form
F-1 filed with the Securities and Exchange Commission on September 9, 2014, which has not been declared effective and should not be relied upon.
Consequently, there is no assurance that the financial results and information for Agriphar, CAS or Arysta contained in this presentation are accurate or complete,
or representative in any way of Platform’s actual results as a consolidated company.
1
Agenda
Platform Overview
Arysta / Ag Vertical Overview
Financial Overview
Looking Ahead
Q&A
Appendices
2
Growth of Platform
During 2014, Platform announced definitive agreements to acquire Chemtura
AgroSolutions, Agriphar, and Arysta LifeScience to form a leading global crop solutions
business.
Platform Specialty Products
Market
Segment:
Electronic
Materials
Oilfield
Services
Packaging
Market
Size:
$7.5bn
$15bn
$1.0bn
Note: Market sizes based on management estimates.
1.
“Asset-lite” only.
Surface
Treatment
$5.0bn
Agricultural
Flavors
&
Fragrances
Coatings
(Niche
Applications)
$10bn (1)
$10bn
$10bn
Water
Treatment
& Cleaning
Solutions
$10bn
3
“Asset-Lite, High-Touch” Business Models
Commitment to R&D and Technical Service
Value Crea)on Investment in Innovation
Investment in Service
Investment in customer driven R&D and product registration
MacDermid
n R&D centers of excellence with over 750 patents
n New strategic processes represented ~10% of proprietary sales
in 2013
Agricultural Vertical
n Develops, registers, and launches ~250 products annually
n Robust portfolio with of registrations
n Arysta maintains the rights to over 950 patents
Investment in local service capability that delivers value,
whenever and wherever the customers need it
MacDermid
n 23 local technical service facilities and research &
development centers
n Industry recognized training events
n Training & retaining the most knowledgeable people within the
industries
Agricultural Vertical
n Established global distribution footprint with operations in over
100 countries and jurisdictions
n Flexible supply chain capable of responding quickly to
customer needs
Be unafraid of
new
ideas,
new theories,
and new
philosophies
Platform’s longterm advantage
and your
long-term
advantage,
lie in
Human
Resources
Over one half of Platform’s employees reside in the “bookends”
4
AgroSolutions is a Perfect Match with Platform’s
Strategic Criteria for Acquisitions
Arysta will form the core of our “Asset-Lite, High-Touch” crop protection business
Platform’s Investment Criteria
n “Asset-Lite, High-Touch” Business Model that Drives Free Cash Flow
þ
n Experienced Management Team with Track Record of Success
þ
n Leading Positions in Niche Markets
þ
n Diversified Revenue Base
þ
n Available at a Reasonable Price that is Accretive to Intrinsic Value per Share
þ
5
Diverse Customers, Products, End Markets and Geographies
2013 – Revenue by Geography
2013 – Revenue by Segment
Platform Standalone
Pro Forma (1)
Platform Standalone
Graphic
Solutions
6%
Performance
Materials
19%
Graphic
Solutions
23%
Agriphar
6%
Asia
28%
Americas
38%
Pro Forma (1)
Americas
47%
Asia
21%
Arysta
54%
CAS
15%
Performance
Materials
77%
EMEA
32%
Europe
34%
AgroSolutions
75%
Extensive Global Footprint
Broad End-Market Exposure
Electronic
Industrial
Offshore
Graphics
Automotive
Agriculture
All
1. Pro Forma includes MacDermid, Agriphar, CAS and Arysta businesses.
MacDermid Only
Agricultural Vertical Only
No Sales
6
Platform’s Agricultural Vertical
High Quality Crop
Protection Assets United
Under One Parent
Platform Agricultural Vertical
n
Agrochemicals
− Herbicides
− Fungicides
− Insecticides
+
+
+
$200 million revenue in every region
Where Arysta is relatively undersized, Agriphar is strong
Adds scale to CAS in biggest markets (Brazil, North America)
Unparalleled Breadth of
Products
Complementary
Geographic Footprint
Leading Positions
in High Growth Areas
Innovation Opportunities
to Stimulate Growth
Proven and Experienced
Management Team
Geography
n
n
n
n
BioSolutions
− BioStimulants
− Nutrients
− BioControl
Latin America
Africa
Central Europe
n
n
Product
Seed Treatment
Honey Bee Health
n
n
n
n
Combination creates opportunity to combine large AIs and registration portfolios
New innovative formulations are expected to follow-suit
n
Wayne Hewett, current CEO of Arysta, is expected to join Platform as President
− Wayne will lead the agricultural vertical
− Extensive experience includes 20 years at GE prior to leading Arysta
BioSolutions
Seed Treatment
7
Agenda
Platform Overview
Arysta / Ag Vertical Overview
Financial Overview
Looking Ahead
Q&A
Appendices
8
Arysta LifeScience Business Overview
Arysta LifeScience
n Leading global provider of crop protection and plant nutrition solutions
Business
Overview
n Innovative farmer-focused solutions for high-value niche crops
n 100+ countries and jurisdictions – over 65% of 2013 sales in high-growth markets
n 1,300 person sales and marketing team
n “Asset-lite, high-touch” business model
Financials
(2013) (1)
Revenue: $1,542 million
Adj. EBITDA: $294 million
Adj. EBITDA margin: 19.1%
Revenue Contribution by Segment
n Global Value-Added Portfolio (“GVAP”) – Proprietary portfolio
of patented and off-patent solutions
n Robust portfolio of proprietary patented and off-patent
solutions
Segment
Overview
n BioSolutions – Innovative nutrition, BioStimulant and BioControl
products
n Leadership position in BioStimulants
n Regional – Comprehensive range of approximately 4,000 offpatent crop protection products
GVAP(2)
35%
Regional
55%
BioSolutions(3)
10%
Source: Arysta management reporting.
1.
Pro forma to include 2013 Goëmar revenue and EBITDA of $33 million and $9 million, respectively. Arysta financials are prepared under IFRS; JPY values translated into USD using the average annual
average USD/JPY FX rate; Goëmar’s FY 2013 financials are prepared in accordance with French GAAP. For a reconciliation of non-GAAP measures, please refer to the appendix of this presentation.
2.
Global Value-Added Portfolio includes proprietary patented and off-patent products.
3.
Includes pro forma 2013 for Goëmar.
9
Arysta LifeScience Portfolio and Approach
Conventional Crop Protection
BioSolutions
Value-Added
Off-Patent
Market Size
~$5bn
~$25bn
~$36bn
Arysta Growth
Profile
2013 Sales(1)
$0.2bn(2)
$0.5bn
$0.8bn
Off-Patent
5%
Product Split
by IP
Proprietary
Off-Patent
54%
Proprietary /
Trade Secret
30%
Proprietary /
Trade
Secret
41%
Off-Patent
100%
Proprietary
Off-Patent
70%
Source: Management estimates
1.
Excludes HN&S sales.
2.
Pro forma for Goëmar acquisition. Arysta financials prepared under IFRS and Goëmar financials prepared under French GAAP.
10
Attractive Industry Fundamentals
Wealth Effect Drives
Protein Consumption
Declining Arable Land / Capita
Global Population Growth
Projected Sources of Growth
in Crop Production
World Population (bn)
10
% of every new dollar spent on food
100
8
Crop
Intensity
6
Arable Land
80
60
10%
4
2
40
10%
20
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
0
More Income – More Calories
Developed Countries
0
Developing countries
India
Arable Land per Capita (ha)
China
US
Calorific Multiplier
80%
Hectares
0.5
7.0x
Yield
Increase
0.4
5.0x
0.3
0.2
Source: Phillips McDougall, UNFAO, OECD.
2050
2040
2030
2020
2010
2000
1990
1980
1970
1960
0.0
2.0x
Increases in production will largely
rely on increasing yield
0.1
Beef
Pork
Poultry
11
Concentrated in High-Growth Geographies
AgChem Market Growth Rates by Region (2003 – 2013 CAGR)
2013 PAH Ag Revenue by Geography
13.5%
North
America
9.8%
Latin America
6.1%
Europe
6.0%
2.8%
LatAm
Africa & ME
Europe
Asia
NAM
Africa &
Middle East
Asia
64% of AgroSolutions’ revenue is
from high-growth regions
AgChem Spend per Hectare – Fruit & Vegetable
$1,951
$499
$331
$146
Japan
France
Source: Phillips McDougall, Company Information.
USA
Brazil
$7
$3
India
Africa & ME
12
Diversified Agricultural End-Market Exposure in Each Region(1)
North America
Europe
Other
Crops
Asia
Other
Crops
T&O
F&V
Other
Crops
Corn
F&V
F&V
Soy
Sugarbeets
T&O
Oil Crops
Cereals
Corn
Cereals
Cereals
Latin America
Africa & Middle East
F&V
Other
Crops
Soy
Other
Crops
Cotton
Sugar
Cane
Rice
Oil Crops
Platform Total
Other Crops
F&V
Cotton
Cereals
F&V
Sugar
Cane
Oil Crops
Corn
Corn
Cereal
Soy
Other Crops include: cocoa in Africa, coffee, sunflower, tree nuts, peanuts,
vines, palm oil, forestry, tobacco, home and garden in Japan
Source: Phillips McDougall.
Note: F&V stands for Fruits & Vegetables. Other Crops represents all crops individually amounting to <5% of sales. T&O stands for Turf & Ornamental.
1.
Pro forma for combined Arysta, CAS and Agriphar sales in 2013.
13
Active Ingredients and Registrations Capabilities
Revenue per Registration approximately $300k+
Active Ingredients
Registrations
400
8,000
6,500+
300
~250
6,000
200
4,000
100
2,000
0
0
CAS
Agriphar
Arysta
Platform
AgroSolutions
CAS
Agriphar
Arysta
Platform
AgroSolutions
Significant repository of AIs and Registrations; Ripe opportunity for formulation and innovation
14
Agenda
Platform Overview
Arysta / Ag Vertical Overview
Financial Overview
Looking Ahead
Q&A
Appendices
15
Combined Historical Pro Forma Performance
Net Sales
Adjusted EBITDA(1)
($ in millions)
($ in millions)
$2,909
$172
$2,608
$616
$41
$517
$1,542
$1,468
$294
$276
$409
$449
$731
$746
$162
$180
2012
2013
2012
2013
MacDermid
$101
$79
CAS
Arysta
Agriphar
MacDermid
CAS
Arysta
Agriphar
Source: Company data.
Note: Financials are non-GAAP. Please refer to Appendices for reconciliation. Agriphar financials unavailable for 2012.
1.
MacDermid and CAS under US GAAP. Agriphar financials under Belgian GAAP. Arysta financials under IFRS. Arysta 2013 financials include Goëmar transaction of $33 million in revenue and $9
million in EBITDA on a French GAAP basis.
16
Combined Financial Data – 2013
Arysta is in line with our financial criteria
($ in millions)
Platform
FY2013
Net Sales
Adjusted EBITDA (1)
% margin
Capital Expenditures (3)
% of sales
CAS
FY2013
Agriphar
FY2013
Arysta (2)
FY2013
Combined
FY2013
$746
$449
$172
$1,542
$2,909
$180
24.1%
$101
22.6%
$41
23.8%
$294
19.0%
$616
21.2%
$11
1.5%
$10
3.2%
$5
3.0%
$39
2.5%
$64
2.3%
Note: Financials are non-GAAP. For a reconciliation of non-GAAP measures, please refer to the appendix of this presentation. Platform and CAS financials prepared under US-GAAP. Agriphar financials
prepared under Belgian GAAP and Arysta financials prepared under IFRS.
1.
Combined financials are pre-synergies.
2.
Arysta financials pro forma for Goëmar acquisition of $33 million in sales and $9 million in EBITDA under French-GAAP.
3.
Includes Agriphar and CAS capitalized re-registration costs and Arysta capitalized registration costs.
17
Significant Synergies Available in the
Agricultural Businesses Combination
n Implementation of synergies underway
n Estimated synergies do not assume any reduction in costs residing in the “bookends” (R&D and sales & marketing)
n Synergies expected to be achieved from 2015-2017(1)
Phase 1 (2015E)
$16.25m
Phase 2 (2016E)
$32.5m
Phase 3 (2017E)
$16.25m
By Category
$15
G&A
(Total $25m)
$10
$25
$13
Distribution
(Total $20m)
$7
$11
Other COGS
(Total $20m)
$20
$3
$20
$6
Expected combined synergies of $65 million
Source: Management Estimates.
1. 25% of synergies expected to be achieved in 2015, 50% in 2016, and the remaining 25% in 2017.
2. Other COGS include tolling arrangements and procurement.
18
Agenda
Platform Overview
Arysta / Ag Vertical Overview
Financial Overview
Looking Ahead
Q&A
Appendices
19
Platform will Continue to be Acquisitive
Platform Specialty Products
Market
Segment:
Market
Size:
Electronic
Materials
Oilfield
Services
Packaging
$7.5bn
$15bn
$1.0bn
Surface
Treatment
$5.0bn
Agricultural
Flavors
&
Fragrances
Coatings
(Niche
Applications)
$10bn(1)
$10bn
$10bn
Water
Treatment
& Cleaning
Solutions
$10bn
Platform continues to have a strong pipeline of attractive acquisition opportunities
in new verticals and within existing segments
Note: Market sizes based on management estimates.
1. “Asset-lite” only.
20
Platform takes a Disciplined Approach
to Identifying “Asset-Lite, High-Touch” Businesses
Specialty Chemicals Universe
Gross PP&E Turns (1) in Top Quintile
Gross Margin > 40%
Adjusted SG&A (2) > 20%
Adjusted EBITDA (3) >20%
Source: HOLT ValueSearch™.
1. Defined as sales / inflation-adjusted gross plant, property, and equipment.
2. Defined as (SG&A – rent expense – research and development expense) / sales.
3. Defined as (EBITDA plus rent expense, R&D expense, and stock option expense) / sales.
21
Large Fragmented Industry Creates Consolidation Opportunities
Number of Specialty Chemical Companies in Targeted End Markets (by Revenue)
$10bn+
$5B - $10bn
$1B - $5bn
<$1bn
3-5
10
50
Hundreds
Source: Management estimates.
22
Platform Pro Forma Operating Margins and Capital Efficiency
2013 Adjusted Operating Margins (1)(2)
($ in millions)
Large cap peers
Specialty chemicals
Agricultural chemicals
Other chemical peers
25.7%
21.7% 21.4% 21.3%
20.5%
Peer median: 13.0%
Koppers
Avery Dennison
H.B. Fuller
Sealed Air
RPM
Dow Chemical
Ashland
UPL
Akzo Nobel
Sherwin-Williams
11.1% 11.1% 11.1% 11.0% 10.5%
9.9% 9.6% 9.1%
8.7% 8.4% 8.2%
Cabot
Valspar
DSM
American
Vanguard
PPG
Airgas
Celanese
Cytec
Ecolab
13.4% 13.2% 13.2% 13.0% 13.0% 13.0% 12.5%
12.3% 12.3%
BASF
DuPont
Platform (4)
Hexcel
Rockwood
NewMarket
Polypore
Air Products
and Chemicals
FMC
Albemarle
Syngenta
Bayer
Praxair
Sigma-Aldrich
Monsanto
17.1% 16.8% 16.6%
15.7% 15.7% 15.6% 15.0% 15.0%
14.5%
2013 Invested Capital Efficiency (1)(3)
($ in millions)
Large cap peers
Specialty chemicals
Agricultural chemicals
Other chemical peers
Rockwood
Air Products
and Chemicals
Praxair
Polypore
Albemarle
Monsanto
du Pont
Sigma-Aldrich
Dow Chemical
Syngenta
Cabot
Bayer
Celanese
Hexcel
FMC
DSM
Cytec
Airgas
BASF
NewMarket
PPG
0.87x 0.86x 0.86x 0.85x
0.79x 0.79x 0.73x
Peer median: 0.79x
0.69x 0.69x 0.65x 0.64x
0.63x 0.62x 0.62x 0.60x 0.58x
0.57x 0.52x
0.48x 0.43x
0.40x 0.38x
Akzo Nobel
Ashland
0.99x 0.94x
UPL
Sealed Air
American
Vanguard
1.09x 1.06x 1.05x
H.B. Fuller
Koppers
1.20x 1.15x
Avery Dennison
Ecolab
Platform (4)
Valspar
RPM
SherwinWilliams
1.38x 1.35x
1.30x 1.29x 1.29x
Source: HOLT CFROI framework and global database and company filings as of October 2014.
1.
2013 represents fiscal year end December 2013 for all companies except Monsanto (08/2013), Airgas (03/2014), RPM (05/2014), H.B. Fuller (11/2013), Valspar (10/2013), UPL (03/2014), Cabot
(09/2013), Air Products and Chemicals (09/2013), and Ashland (09/2013).
2.
Defined as ({net operating profit plus rent, R&D and depreciation less taxes} / net sales).
3.
Defined as (net sales / invested capital). Invested capital defined as total assets plus 8x rent plus 5x R&D plus accumulated depreciation less non-interest bearing current liabilities less goodwill & nonoperating intangibles.
4.
Includes adjustments for Arysta. Reflects estimated $65mm in pre-tax EBITDA synergies.
23
Platform Pro Forma ROIC
2013 ROIC (1)
($ in millions)
Large cap peers
Specialty chemicals
Agricultural chemicals
Other chemical peers
19.4%
17.0%
15.9%
14.6%
12.7%
10.8%
10.4% 10.3% 10.3% 10.1%
9.9%
9.6% 9.6% 9.5% 9.4%
Peer median: 10.3%
9.1% 9.0%
8.8%
8.4% 8.3%
Polypore
du Pont
Celanese
Albemarle
DSM
Praxair
Koppers
H.B. Fuller
Sealed Air
Akzo Nobel
Ashland
Avery Dennison
Airgas
Hexcel
Cytec
UPL
PPG
BASF
FMC
Syngenta
Sigma-Aldrich
RPM
American Vanguard
NewMarket
Bayer
Monsanto
Sherwin-Williams
Valspar
Ecolab
Platform (2)
7.5%
7.0%
6.6%
6.1% 6.0%
Source: HOLT CFROI framework and global database and company filings as of October 2014.
Note: 2013 represents fiscal year end December 2013 for all companies except Monsanto (08/2013), Airgas (03/2014), RPM (05/2014), H.B. Fuller (11/2013), Valspar (10/2013), UPL (03/2014), Cabot
(09/2013), Air Products and Chemicals (09/2013), and Ashland (09/2013).
1.
Defined as [{net operating profit plus rent, R&D and depreciation less taxes} / invested capital]. Invested capital defined as total assets plus 8x rent plus 5x R&D plus accumulated depreciation less
non interest bearing current liabilities less goodwill & non-operating intangibles. Assumes statutory tax rate.
2.
Includes adjustments for Arysta. Reflects estimated $65m in pre-tax EBITDA synergies.
Rockwood
11.3% 11.2%
Dow Chemical
11.6%
Air Products and Chemicals
13.6% 13.5%
13.3% 13.3% 13.0%
Cabot
15.0%
24
Conclusion
P
Market-Leading Portfolio of Niche Products
P
Strong Pipeline of Attractive Opportunities in New Verticals and Within
Existing Segments
P
Favorable Industry Structure
P
End-Market Diversification
P
Technology Leader with “Asset-Lite, High-Touch” Business Model Resulting
in High Free Cash Flow
P
Superior Management Team Incentivized to Drive Successful Results
25
Q&A
Performance Materials
Graphic Solutions
AgroSolutions
26
Appendices
27
Platform Reconciliation of Net Income to
Adjusted EBITDA (Q3 & YTD 2014)
($ in millions)
Predecessor
Successor
Predecessor
Successor
Q3 2013
Q3 2014
Net income
YTD 2013
YTD 2014
$14.5
$11.9
$23.9
$4.1
6.9
(1.6)
20.9
(3.5)
41.0
23.8
29.5
57.3
Adjustments to reconcile to net income (loss):
Income tax expense (benefit)
Interest expense
Depreciation and amortization expense
Unrealized (gain) loss on foreign currency denominated debt
Unrealized loss on foreign exchange forward contracts
Restructuring and related expenses
16.2
8.1
9.7
19.0
-
-
-
2.6
0.2
0.6
(1)
(3)
(1)
(1.1)
-
(2)
-
2.6
(3)
1.9
1.0
(4)
Manufacturer's profit in inventory (purchase accounting)
-
-
-
12.0
(5)
Non-cash fair value adjustment to contingent consideration
-
2.3
-
26.1
(6)
Acquisition costs
-
8.2
-
18.8
(7)
Debt Extinguishment
Other expense (income)
Adjusted EBITDA
-
-
0.1
1.4
$47.6
$52.5
(8)
18.8
-
(8)
0.7
4.8
(9)
$135.6
$146.6
Footnotes:
(1) Includes $14.3m in Q3 2014 and $6.7m in Q3 2013 and $43.6m in YTD 2014 and $20.2m in YTD 2013 for amortization expense that is added back in the "As Adjusted" Income Statement.
(2) Predecessor adjustment to other income for non-cash gain on foreign denominated debt.
(3) Adjustment to reverse net unrealized loss on foreign exchange forward contracts in connection with Chemtura and Agriphar Acquisitions.
(4) Includes restructuring expenses of $1.9m of reorganization costs adjusted out of operating expenses for YTD 2013.
(5) Adjustment to reverse manufacturer's profit in inventory purchase accounting adjustment associated with MacDermid Acquisition.
(6) Adjustment to fair value of contingent consideration in connection with the MacDermid Acquisition primarily associated with achieving the share price targets.
(7) Adjustment to reverse deal costs primarily in connection with the Chemtura and Agriphar Acquisitions.
(8) Adjustment to reverse debt extinguishment charge in connection with debt from Predecessor recapitalization.
(9) Adjustment for 2014 primarily for reversal of the income attributable to the non-controlling interest resulting from the MacDermid Acquisition. For 2013, adjustment to reverse miscellaneous non-recurring charges.
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Platform Reconciliation of Net Income to
Adjusted EBITDA Predecessor/Successor Combined
($ in millions)
Net income (loss)
Adjustments to reconcile to net income (loss):
Income tax expense (benefit)
Interest expense
Depreciation and amortization expense
Unrealized gain on foreign currency denominated debt
Equity based compensation expense
Restructuring and related expenses
Non cash intangible impairment charges
Non cash charges related to preferred dividend rights
Predecessor loss on extinguishment of debt
Manufacturer's profit in inventory (purchase accounting)
Non cash fair value adjustment to contingent consideration
Predecessor Acquisition costs
Successor Acquisition costs
Other expense (income)
Income/ (loss) from disposal of product line
Adjusted EBITDA
Year ended December 31
2011
2012
2013
$1.0
$46.0
$(181.0)
10.0
54.6
46.7
(9.2)
0.7
2.8
46.4
$153.0
24.6
49.7
42.2
(5.7)
0.2
1.2
4.2
$162.4
7.1
51.8
45.6 (1)
(1.1) (2)
9.9 (3)
8.0 (4)
172.0 (5)
18.8
23.9 (6)
(0.7) (7)
16.9 (8)
15.2 (9)
(6.2) (10)
$180.1
2013 Footnotes:
1. Includes $31.3m in 2013 and $27.1m in 2012 for the amortization expense that is added back in the "As Adjusted" Income Statement.
2. Predecessor adjustment to other income for non-cash gain on foreign denominated debt.
3. Predecessor company stock compensation and long term incentive plan expense included in operating expenses.
4. Includes restructuring expenses of $4.4m and $3.1m of reorganization costs adjusted out of operating expenses and $0.3 million of reorganization costs
adjusted out of cost of sales.
5. Non-cash charge related to preferred stock dividend rights adjusted out of operating expenses.
6. Manufacturer's profit in inventory purchase accounting adjustment associated with the MacDermid Acquisition. Adjusted out of cost of sales.
7. Adjustment to fair value of contingent consideration in connection with the MacDermid Acquisition primarily associated with achieving the
share price targets.
8. Predecessor transaction costs associated with the MacDermid Acquisition. Adjusted out of operating expenses.
9. Transaction costs associated with the MacDermid Acquisition. Adjusted out of operating expenses.
10. Primarily the reversal of one-time gain associated with retirement plan curtailment executed in conjunction with the MacDermid Acquisition.
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Arysta Non-GAAP Financials (excludes Goëmar)
($ in millions)
Net Income (Loss)
$67
Other Operating (Income) Expense, Net (1)
$44
Income Tax (Benefit) Expense
(Income) Loss after Tax from Discontinued Operations
Other Credit Agreement Adjustments (3)
Consolidated Segment Income (including Corporate)
2.
3.
$(93)
Depreciation and Amortization
Financial (Income) Expense, Net (2)
1.
Arysta
12 months Ended
12/31/2013
$171
$48
$12
$36
$285
Represents the net of other operating income and operating expense. For the year ended December 31, 2013, other income (expense), net included impairment losses of $49.1 million and other
items set forth in Note 7 to our audited consolidated financial statements. For the year ended December 31, 2012, other income (expense), net included an impairment reversal of $5.1 million,
impairment losses of $5.6 million and other items set forth in Note 7 to our audited consolidated financial statements.
Represents the net of financial income and financial expense. See Note 9 to our audited consolidated financial statements.
Reflects adjustments consistent with our existing credit agreement that are permitted to be made when computing EBITDA (as defined in the existing credit agreement) for any given period under
such agreement. Adjustments permitted under our existing credit agreement include items such as restructuring costs, costs related to a debt refinancing, consulting fees paid to Permira, or
Sponsor Payments, expenses related to mergers and acquisitions, business optimization expenses and, unusual or non-recurring charges.
For the year ended December 31, 2013, we reported $36.2 million in adjustments under our existing credit agreement. Approximately one–half of the U.S. dollar adjustments are related to the
conversion from JGAAP to IFRS as certain items that would have been included as extraordinary gains or losses under JGAAP are not permitted to be included as such under IFRS, with the other
half related to other adjustments permitted under our existing credit agreement, which were comprised of unusual or non-recurring charges.
For the year ended December 31, 2012, we reported $33.6 million in adjustments under our existing credit agreement. Approximately one–half of the U.S. dollar adjustments are related to the
conversion from JGAAP to IFRS as described above with the other half related to other adjustments permitted under our existing credit agreement, which were comprised of unusual or nonrecurring charges.
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