Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Univar Solutions Inc. | ex991-enr.htm |
| 8-K - 8-K - Univar Solutions Inc. | form8-kq42016earningsv3.htm |
Fiscal Second Quarter 2016
Earnings Conference Call
August 9th, 2016
Forward-Looking Statements
This presentation includes certain statements relating to future events and our intentions, beliefs, expectations,
and predictions for the future which are “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control.
We caution you that the forward-looking information presented in this press release is not a guarantee of future
events or results, and that actual events or results may differ materially from those made in or suggested by the
forward-looking information contained in this press release. In addition, forward-looking statements generally can
be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,”
“expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or
similar terminology. Any forward-looking information presented herein is made only as of the date of this press
release, and we do not undertake any obligation to update or revise any forward-looking information to reflect
changes in assumptions, the occurrence of unanticipated events, or otherwise.
Regulation G: Non-GAAP Measures
The information presented herein regarding certain unaudited non-GAAP measures does not conform to
generally accepted accounting principles in the United States (U.S. GAAP) and should not be construed as an
alternative to the reported results determined in accordance with U.S. GAAP. Univar has included this non-GAAP
information to assist in understanding the operating performance of the company and its operating segments.
The non-GAAP information provided may not be consistent with the methodologies used by other companies. All
non-GAAP information related to previous Univar filings with the SEC has been reconciled with reported U.S.
GAAP results.
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2
Growth outside the USA offset by decline in USA
Q2 GAAP EPS $0.29 vs. ($0.12) loss prior year
• Lower interest expense
• Absence of IPO and refinancing charges
Net Income $39.8 million N/M
Q2 Adjusted EBITDA(1) $148.2 million (12.1)%
Q2 Adjusted EBITDA excl. FX $151.3 million (10.3)%
Adjusted Operating Cash Flow (2) $112.4 million vs. $169.8 million in 2015
• Seasonal build in working capital
• Cash conversion ratio of 75.8% (3)
• Cash operating margin of 5.0% (4)
(1) Variances to Q2 2015
(2) Adjusted EBITDA plus cash flows from changes in AR, Inventory, and AP, less cash used to purchase PP&E
(3) Adjusted Operating Cash Flow / Adjusted EBITDA
(4) Adjusted Operating Cash Flow / Sales
Second Quarter 2016 Highlights
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Univar – Consolidated Highlights
Market challenges continue
• Industrial demand sluggish and
tough O&G comparisons
• Lower chemical prices
• Gross margin increased 110 bps
but gross profit dollars declined
5%
• Cost reductions not enough to
offset gross profit dollar decline
Key metrics:
(In millions)
3 months ended
June 30 2016 2015 Y/Y %
Net Sales $2,262.5 $2,510.1 (9.9)%
Currency Neutral -- -- (8.2)%
Gross Profit $445.4 $467.2 (4.7)%
Currency Neutral -- -- (3.5)%
Gross Margin 19.7% 18.6% +110 bps
Adjusted EBITDA $148.2 $168.6 (12.1)%
Currency Neutral -- -- (10.3)%
Adjusted EBITDA
Margin 6.6% 6.7% -10 bps
Conversion Ratio (1) 33.3% 36.1% -280 bps
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(1) Conversion Ratio defined as Adjusted EBITDA / Gross Profit
USA – Highlights
Upstream O&G headwinds
and lower chemical prices
pressure gross profit dollars
• Upstream O&G volumes declined
44%
• USA volumes, ex-upstream O&G
increased 2%
• Lower chemical prices
compressing gross profit dollars
per pound
• Excluding acquisitions, operating
expenses including delivery
expense flat
(In millions)
3 months ended
June 30 2016 2015 Y/Y %
Net Sales $1,212.8 $1,389.4 (12.7)%
Gross Profit $263.1 $284.2 (7.4)%
Gross Margin 21.7% 20.5% +120 bps
Adjusted EBITDA $83.2 $110.1 (24.4)%
Adjusted EBITDA
Margin 6.9% 7.9% -100 bps
Key metrics:
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Canada – Highlights
Mix improvement and lower
costs drive profit growth
• Volumes decline in Western
O&G markets
• Favorable mix drove gross
margin improvement
• Continue to see cost
productivity gains
Key metrics:
(In millions)
3 months ended
June 30 2016 2015 Y/Y %
Net Sales $485.4 $534.6 (9.2)%
Currency Neutral -- -- (3.6)%
Gross Profit $60.6 $63.0 (3.8)%
Currency Neutral -- -- 1.3 %
Gross Margin 12.5% 11.8% +70 bps
Adjusted EBITDA $31.5 $30.4 3.6 %
Currency Neutral -- -- 9.9 %
Adjusted EBITDA
Margin 6.5% 5.7% +80 bps
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EMEA – Highlights
Profit growth driven by mix
enrichment and restructuring
• EMEA volumes increased 3%
• Mix enrichment drive gross
margin increase
• Operating expense declined due
to productivity gains and
restructuring
Key metrics:
(In millions)
3 months ended
June 30 2016 2015 Y/Y %
Net Sales $459.9 $467.4 (1.6)%
Currency Neutral -- -- (2.1)%
Gross Profit $103.1 $98.6 4.6 %
Currency Neutral -- -- 3.9 %
Gross Margin 22.4% 21.1% +130 bps
Adjusted EBITDA $33.0 $27.1 21.8 %
Currency Neutral -- -- 22.9 %
Adjusted EBITDA
Margin 7.2% 5.8% +140 bps
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Rest of World – Highlights
Challenges from weak
economic conditions
• 13% negative impact from FX
• Sales increased 1% currency
neutral
• Mexico volumes increased 4%,
in a weak economy
• Continued recession in Brazil
and slow industrial production
pressured margins
Key metrics:
(In millions)
3 months ended
June 30 2016 2015 Y/Y %
Net Sales $104.4 $118.7 (12.0)%
Currency Neutral -- -- 1.0 %
Gross Profit $18.6 $21.4 (13.1)%
Currency Neutral -- -- 0.5 %
Gross Margin 17.8% 18.0% -20 bps
Adjusted EBITDA $4.2 $6.2 (32.3)%
Currency Neutral -- -- (21.0)%
Adjusted EBITDA
Margin 4.0% 5.2% -120 bps
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Cash Flow Highlights
(1) Adjusted Operating Cash Flow equals Adjusted EBITDA plus cash flows from changes in AR, inventory, and AP, less cash used to
purchase PP&E
(2) Excludes additions from capital leases
In millions 3 monthsended 6/30/16
3 months
ended 6/30/15 Y/Y %
Adj. Operating Cash Flow (1) $112.4 $169.8 (33.8)%
Net Working Capital (1) ($14.1) $31.7 NM
Capex (2) ($21.7) ($30.5) (28.9)%
Cash Taxes ($1.1) ($5.9) (81.4)%
Cash Interest (net) ($30.3) ($55.7) (45.6)%
Pension Contribution ($8.1) ($13.0) (37.7)%
Other ($10.1) ($37.0) (72.7)%
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Balance Sheet Highlights
(1) Net Debt defined as Total Debt (Long term debt, inclusive of debt discount and unamortized debt issuance costs, plus short term financing)
less cash and cash equivalents
(2) Net Debt divided by trailing 12 month Adjusted EBITDA
(3) Interest coverage defined as LTM Adjusted EBITDA / LTM Cash Interest (net of interest income)
(4) LTM Earnings before Interest, Taxes and Amortization (EBITA) divided by trailing 13 month average of net PP&E plus net working capital
(accounts receivable plus inventory less accounts payable)10
In millions 6 monthsended
6/30/16
6 months
ended
6/30/15
Y/Y%
Net Debt (1) $2,937.7 $2,914.3 0.8%
Leverage (2) 5.1x 4.6x 10.9%
Interest Coverage (3) 4.5x 2.8x 60.7%
Return on Assets Deployed (4) 20.1% 21.6% -150 bps
Outlook
2016 Outlook
• Second half year Adjusted EBITDA slightly below first half year Adjusted
EBITDA
• Second half year Adjusted EBITDA split roughly evenly between Q3 and Q4
• Full year 2016 Adjusted EBITDA to be $550 to $565 million
2016 Expectations
• Sluggish growth in global industrial production
• Lower prices for certain chemical products
• Brexit impact
• Challenges offset benefits of organic growth initiatives, growth in services,
M&A, and cost initiatives
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Full Year 2016 Guidance
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In millions Year ended December 31, 2015
Year ended
December 31, 2016
Adjusted EBITDA $600.1 $550-565M
Capex $145 ~$100 million
Effective Tax Rate $0.38 ~15%
Cash Tax $38.2 ~$5
Pension Payments $59.6 ~$30
Depreciation & Amortization $225 ~$238
Debt Amortization $22.3 ~$40
Cash Interest (net) $162 ~$150
Appendix A – Adj. EBITDA
Reconciliation
3 months ended
June 30
3 months ended
June 30
In millions 2016 2015
Adjusted EBITDA $148.2 $168.6
Other operating expenses, net $11.5 $39.0
Depreciation $38.0 $37.7
Amortization $23.3 $22.4
Interest expense, net $40.4 $63.1
Loss on extinguishment of debt $0.0 $7.3
Other expense (income), net ($5.7) $12.1
Income tax expense (benefit) $0.9 ($0.6)
Net income (loss) $39.8 ($12.4)
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Appendix B – Outlook Adj. EBITDA
Reconciliation
Year ended
December 31
In millions 2016 Outlook
Net income $99.5
Depreciation and amortization $238.0
Interest expense, net $163.0
Income tax expense $17.0
EBITDA $517.5
Other operating expenses $4.0
Other non-operating items $10.0
Stock based compensation $12.0
Acquisition and integration related expenses $7.0
Redundancy and restructuring $7.0
Adjusted EBITDA $557.5
Appendix C – Adj. Operating
Cash Flow
3 months ended
June 30
3 months ended
June 30
In millions 2016 2015
Adjusted EBITDA $148.2 $168.6
Trade accounts receivable, net ($189.3) ($149.3)
Inventories $113.4 $53.0
Trade accounts payable $61.8 $128.0
Purchase of PP&E ($21.7) ($30.5)
Adjusted operating cash flow $112.4 $169.8
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