Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Univar Solutions Inc. | ex991-enr_q22017.htm |
| 8-K - 8-K - Univar Solutions Inc. | form8-kearningsreleaseq220.htm |
Fiscal Second Quarter 2017
Earnings Conference Call
August 4, 2017
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 presentation 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 presentation. 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 presentation, 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.
2
Second Quarter 2017 Highlights
Adjusted EBITDA growth accelerates as improvement
initiatives take hold
Q2 GAAP EPS(1) $0.22 vs. $0.29 prior year
Reported net income of $31.3 million vs. $39.8 million in the prior year, and included:
Ÿ $11.5 million ($0.06 per share) in USA transformation costs, and
Ÿ $10.8 million ($0.06 per share) loss related to movements in foreign exchange & hedging contracts
- Prior year includes a gain of $0.04 per share for the same items
Q2 Adjusted EBITDA(1) $160.9 million vs. $148.2 million in 2016
Ÿ Nearly 9% growth; 11% growth on a currency neutral basis
Ÿ Margin and EBITDA growth in all segments
Ÿ USA segment Adjusted EBITDA growth accelerated to 11% over the prior year
Adjusted Operating Cash Flow(1)(2) $165.0 million vs. $112.4 million in 2016
Ÿ Strong cash flow driven by effective working capital management
Ÿ Cash conversion ratio of 102.5% (3)
Ÿ Cash operating margin of 7.3% (4)
(1) Variances to Q2 2016.
(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.
3
Univar – Consolidated Highlights
Profitability growth
rises as execution
improves
• Sales force initiatives and mix
improvement largely offset a
decline in volumes
• Gross margin expanded 110 bps
with improvements in all segments
• Adjusted EBITDA grew nearly 9%
due to company's initiatives to
improve its commercial and
operational performance
• Conversion ratio improved 120 bps
KEY METRICS(In millions)
(1) Conversion Ratio defined as Adjusted EBITDA / Gross Profit
Three months ended
June 30, 2017 2016 Y/Y %
Net Sales $2,247.0 $2,262.5 (0.7)%
Currency Neutral -- -- 0.7%
Gross Profit $466.4 $445.4 4.7%
Currency Neutral -- -- 6.0%
Gross Margin 20.8% 19.7% +110 bps
Adjusted EBITDA $160.9 $148.2 8.6%
Currency Neutral -- -- 10.7%
Adjusted
EBITDA Margin 7.2% 6.6% +60 bps
Conversion Ratio (1) 34.5% 33.3% +120 bps
4
USA – Highlights
USA transformation plan
is taking hold
• Improvements in sales force
effectiveness largely offset a decline
in volumes
• Gross margin increased 140 bps
driven by margin and mix enrichment
efforts
• Adjusted EBITDA grew 11% due to
margin improvement efforts
5
Three months ended
June 30, 2017 2016 Y/Y %
Net Sales $1,191.1 $1,212.8 (1.8)%
Gross Profit $275.7 $263.1 4.8%
Gross Margin 23.1% 21.7% +140 bps
Adjusted EBITDA $92.0 $83.2 10.6%
Adjusted
EBITDA Margin 7.7% 6.9% +80 bps
(In millions) KEY METRICS
CANADA – Highlights
Continued strength in
western Canada energy
markets drive growth
• Higher sales volumes were partially
offset by a soft agriculture season
• Win/loss ratio improving
• Gross margin increased 120 bps
• Adjusted EBITDA grew due to
improvements in sales force execution,
margin management and mix, and
higher supplier rebates
6
Three months ended
June 30, 2017 2016 Y/Y %
Net Sales $492.4 $485.4 1.4%
Currency Neutral -- -- 4.1%
Gross Profit $67.5 $60.6 11.4%
Currency Neutral -- -- 15.4%
Gross Margin 13.7% 12.5% +120 bps
Adjusted EBITDA $36.8 $31.5 16.8%
Currency Neutral -- -- 20.3%
Adjusted
EBITDA Margin 7.5% 6.5% +100 bps
(In millions) KEY METRICS
EMEA – Highlights
Profits grow on mix
enrichment and margin
management efforts
• Sales increased on growth initiatives,
partially offsetting a decline in volume
due to 3 fewer billing days
• Win/loss ratio improving
• Gross margin increased 20 bps from
mix enrichment and margin
management
• Adjusted EBITDA grew 10%
7
Three months ended
June 30, 2017 2016 Y/Y %
Net Sales $463.7 $459.9 0.8%
Currency Neutral -- -- 5.1%
Gross Profit $104.7 $103.1 1.6%
Currency Neutral -- -- 5.4%
Gross Margin 22.6% 22.4% +20 bps
Adjusted EBITDA $36.3 $33.0 10.0%
Currency Neutral -- -- 17.0%
Adjusted
EBITDA Margin 7.8% 7.2% +60 bps
(In millions)
KEY METRICS
REST OF WORLD – Highlights
Executing well in a soft
economy
• Lower demand and continued sluggish
economic conditions in Latin America
• Gross margin increased 70 bps due to
strong margin management efforts
• Adjusted EBITDA grew 17% due to
solid performance in Brazil and cost
reductions in Asia Pacific business
8
Three months ended
June 30, 2017 2016 Y/Y %
Net Sales $99.8 $104.4 (4.4)%
Currency Neutral -- -- (5.0)%
Gross Profit $18.5 $18.6 (0.5)%
Currency Neutral -- -- (3.2)%
Gross Margin 18.5% 17.8% +70 bps
Adjusted EBITDA $4.9 $4.2 16.7%
Currency Neutral -- -- 11.9%
Adjusted
EBITDA Margin 4.9% 4.0% +90 bps
(In millions) KEY METRICS
Cash Flow Highlights
9
(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.
Three months ended June 30,
2017 2016 Y/Y %
Adjusted Operating Cash Flow (1) $165.0 $112.4 46.8 %
Net Working Capital $21.8 ($14.1) NM
CapEx (2) ($17.7) ($21.7) (18.4)%
Cash Taxes ($6.9 ) ($1.1 ) 527.3 %
Cash Interest (net) ($24.8) ($30.3) (18.2)%
Pension Contribution ($8.2 ) ($8.1 ) 1.2 %
Other ($18.8) ($10.1) 86.1 %
(In millions)
Balance Sheet Highlights
10
(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 last 12 months (LTM) of 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).
LTM ended June 30,
2017 2016 Y/Y Change
Net Debt (1) $2,692.4 $2,937.7 ($245.3)
Leverage (2) 4.6x 5.2x (0.6x)
Interest Coverage (3) 4.2x 4.7x (0.5x)
Return on Assets Deployed (4) 21.5% 20.1% 140 bps
(In millions)
11
Full-year Adjusted EBITDA high
single-digit growth versus 2016
Q3 2017 Adjusted EBITDA high
single-digit growth versus Q3
2016
Continue to advance our Commercial
Greatness and Operational Excellence
initiatives
Selective commercial and technology
investments
Strategic, selective and disciplined
acquisition approach
Continue to de-leverage the balance
sheet
Transformation into a growth company
Q3 2017 & Full Year 2017
OUTLOOK
2017
EXPECTATIONS
Full-Year 2017 Guidance
12
Year ended December 31,
2016 2017
Adjusted EBITDA $562.7 high single-digitgrowth
Cash Interest (net) ($145.2) ~($134)
Cash Tax (net) ($0.8 ) ~($25)
Effective Tax Rate 14.0% ~20-25%
Pension Contribution ($31.6) ~($35)
Change in Net Working
Capital $124.2 ~($50-100)
Capital Expenditures ($90.1) ~($110)
Debt Amortization ($39.9) ~($90)
(In millions)
Appendix A
Q2 2017 Adjusted EBITDA Reconciliation
13
Three months ended June 30,
2017 2016
Adjusted EBITDA $160.9 $148.2
Other operating expenses, net $24.2 $11.5
Depreciation $34.1 $38.0
Amortization $16.5 $23.3
Interest expense, net $35.8 $40.4
Other expense, net $11.7 ($5.7)
Income tax expense $7.3 $0.9
Net income $31.3 $39.8
(In millions)
Appendix B
Adjusted Operating Cash Flow
14
Three months ended June 30,
(In millions) 2017 2016
Adjusted EBITDA $160.9 $148.2
Change in:
Trade accounts receivable, net ($179.2 ) ($189.3 )
Inventories $28.5 $113.4
Trade accounts payable $172.5 $61.8
Purchase of PP&E ($17.7) ($21.7)
Adjusted operating cash flow $165.0 $112.4
