Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Univar Solutions Inc. | form8-kearningsreleaseq320.htm |
| EX-99.1 - EXHIBIT 99.1 - Univar Solutions Inc. | ex991-enr_q32017.htm |
Fiscal Third Quarter 2017
Earnings Conference Call
November 3, 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
Third Quarter 2017 Highlights
Fourth consecutive quarter of Adjusted EBITDA
growth, in a challenged environment
(1) Variances to Q3 2016.
(2) Adjusted Net Income / Diluted Weighted Average Shares Outstanding. Adjusted net income excludes the same
items as Adjusted EBITDA, except for stock-based compensation expense.
(3) Adjusted EBITDA plus cash flows from changes in AR, Inventory, and AP, less cash used to purchase PP&E.
(4) Adjusted Operating Cash Flow / Adjusted EBITDA.
(5) Adjusted Operating Cash Flow / Sales. 3
Q3 GAAP EPS(1)
Q3 Adjusted EBITDA(1)
Ÿ Reported net income of $38.9 million vs. net loss of $63.0 million in the prior year
Ÿ Adjusted EPS(2) increased 38.5% to $0.36 from $0.26 in the prior year
$0.28
Ÿ 4.2% Adjusted EBITDA growth
Ÿ Outside the USA, Adjusted EBITDA grew 11% as strong performance in EMEA and ROW offset
softness in Canada
Ÿ USA Adjusted EBITDA grew 1%, impacted by transitory effects of Hurricanes Harvey and Irma
Ÿ Hurricanes had a $6 million net negative impact on Adjusted EBITDA
vs.
Adjusted Operating Cash Flow(1)(3)
Ÿ Net working capital productivity improvement vs. prior year
Ÿ Cash conversion ratio of 66.4% (4)
Ÿ Cash operating margin of 4.9% (5)
($0.46) prior year
$152.0 million vs. $145.9 million in 2016
$101.0 million vs. $156.0 million in 2016
Univar – Consolidated Highlights
Improved sales force
effectiveness and mix
improvement drive
growth
• Gross profit increased 4 percent
• Volumes were negatively impacted
by 1 less billing day and hurricanes
• Higher incentive compensation,
sales force and digital investments
partially offset by productivity gains
• Gross margin, EBITDA margin and
conversion ratio increased
KEY METRICS(In millions)
(1) Conversion Ratio defined as Adjusted EBITDA / Gross Profit.
Three months ended
September 30, 2017 2016 Y/Y %
Net Sales $2,048.7 $1,999.7 2.5%
Currency Neutral -- -- 0.8%
Gross Profit $454.8 $438.1 3.8%
Currency Neutral -- -- 2.2%
Gross Margin 22.2% 21.9% +30 bps
Adjusted EBITDA $152.0 $145.9 4.2%
Currency Neutral -- -- 2.4%
Adjusted
EBITDA Margin 7.4% 7.3% +10 bps
Conversion Ratio (1) 33.4% 33.3% +10 bps
4
USA – Highlights
USA execution is
improving
• Gross profit increased 2 percent
• Gross margin increased 110 bps
driven by sales force execution, mix
enrichment and hurricane related
price increases
• Hurricanes negatively impacted
Adjusted EBITDA by net $6 million
5
Three months ended
September 30, 2017 2016 Y/Y %
Net Sales $1,185.0 $1,222.1 (3.0)%
Gross Profit $273.4 $269.3 1.5%
Gross Margin 23.1% 22.0% +110 bps
Adjusted EBITDA $90.7 $90.1 0.7%
Adjusted
EBITDA Margin 7.7% 7.4% +30 bps
(In millions) KEY METRICS
CANADA – Highlights
Drought impact partially
offset by Energy & Mining
sector growth
• Win-loss ratio improving
• Energy and mining sector recovery
drove net sales and volumes higher
• Gross margin was lower due to change
in product and market mix
• Drought reduced Ag gross profit
6
Three months ended
September 30, 2017 2016 Y/Y %
Net Sales $299.9 $260.8 15.0%
Currency Neutral -- -- 9.6%
Gross Profit $56.2 $55.6 1.1%
Currency Neutral -- -- (3.2)%
Gross Margin 18.7% 21.3% -260 bps
Adjusted EBITDA $25.6 $26.0 (1.5)%
Currency Neutral -- -- (5.8)%
Adjusted
EBITDA Margin 8.5% 10.0% -150 bps
(In millions) KEY METRICS
EMEA – Highlights
Improvement in win-loss
ratio and strong execution
• Gross profit increased 11 percent
• Continued improvements in win-loss
ratio in Focused Industries
• Operating expense declined as a
percentage of sales
7
Three months ended
September 30, 2017 2016 Y/Y %
Net Sales $456.9 $412.5 10.8%
Currency Neutral -- -- 7.3%
Gross Profit $102.9 $92.8 10.9%
Currency Neutral -- -- 6.7%
Gross Margin 22.5% 22.5% 0 bps
Adjusted EBITDA $33.2 $28.5 16.5%
Currency Neutral -- -- 12.6%
Adjusted
EBITDA Margin 7.3% 6.9% +40 bps
(In millions) KEY METRICS
REST OF WORLD – Highlights
Strong execution in
challenging environment
• Improved sales force execution and
cost productivity gains
• Mexico impacted by hurricane related
product shortages
• Reduced cost base in Mexico
• Growth in Brazil personal care market
8
Three months ended
September 30, 2017 2016 Y/Y %
Net Sales $106.9 $104.3 2.5%
Currency Neutral -- -- (2.2)%
Gross Profit $22.3 $20.4 9.3%
Currency Neutral -- -- 4.9%
Gross Margin 20.9% 19.6% +130 bps
Adjusted EBITDA $9.3 $6.9 34.8%
Currency Neutral -- -- 27.5%
Adjusted
EBITDA Margin 8.7% 6.6% +210 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
September 30,
2017 2016 Y/Y %
Adjusted Operating Cash Flow (1) $101.0 $156.0 (35.3)%
Net Working Capital ($31.6) $30.8 NM
CapEx (2) ($19.4) ($20.7) (6.3)%
Cash Taxes ($3.4 ) ($3.0 ) 13.3 %
Cash Interest (net) ($41.4) ($42.8) (3.3)%
Pension Contribution ($13.6) ($8.4 ) 61.9 %
Acquisitions ($23.9) — NM
Other ($7.9 ) ($8.7 ) (9.2)%
(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 September 30,
2017 2016 Y/Y Change
Net Debt (1) $2,676.9 $2,860.6 ($183.7)
Leverage (2) 4.5x 5.1x -0.6x
Interest Coverage (3) 4.3x 3.6x 0.7x
Return on Assets Deployed (4) 22.4% 19.5% 290 bps
(In millions)
11
Full-year Adjusted EBITDA mid
single-digit growth versus 2016
Q4 2017 Adjusted EBITDA mid
single-digit growth versus Q4
2016
Continue to advance our Commercial
Greatness, Operational Excellence, and
One Univar initiatives
Selective commercial and technology
investments
Strategic, selective and disciplined
acquisition approach
Continue to de-leverage the balance
sheet
Transformation into a growth company
Q4 2017 & Full Year 2017
OUTLOOK
2017
EXPECTATIONS
Full-Year 2017 Guidance
12
Year ended December 31,
2016 2017
Adjusted EBITDA $562.7 mid single-digitgrowth
Cash Interest (net) ($145.2) ~($134)
Cash Tax (net) ($0.8 ) ~($25)
Effective Tax Rate 14.0% < 20%
Pension Contribution ($31.6) ~($35)
Change in Net Working
Capital $124.2 ~($50-100)
Capital Expenditures ($90.1) ~($90)
Debt Amortization ($39.9) ~($90)
(In millions)
Appendix A
Q3 2017 Adjusted Net Income and Adjusted
EBITDA Reconciliation
13
Three months ended September 30,
2017 2016
Amount per share Amount per share
Net income $38.9 $0.28 ($63.0 ) ($0.46 )
Other operating expenses, net
(excluding stock-based compensation) $7.3 $0.05 $8.5 $0.06
Other expense, net $7.1 $0.05 $3.1 $0.02
Impairment charges — — $133.9 $0.97
Benefit from income taxes related to
reconciling items ($2.2 ) ($0.02 ) ($46.1 ) ($0.33 )
Adjusted net income $51.1 $0.36 $36.4 $0.26
Stock-based compensation $4.5 $3.6
Interest expense, net $38.4 $39.5
Depreciation and amortization $49.3 $64.9
All remaining provision for income taxes $8.7 $1.5
Adjusted EBITDA $152.0 $145.9
(In millions, except per share data)
Appendix B
Adjusted Operating Cash Flow
14
Three months ended September 30,
(In millions) 2017 2016
Adjusted EBITDA $152.0 $145.9
Change in:
Trade accounts receivable, net $123.3 $190.9
Inventories $39.4 $41.9
Trade accounts payable ($194.3) ($202.0)
Purchase of PP&E ($19.4) ($20.7 )
Adjusted operating cash flow $101.0 $156.0
