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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 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
