Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Nexeo Solutions, Inc. | a2017208ex991.htm |
| 8-K - 8-K - Nexeo Solutions, Inc. | a2017q18k.htm |
Nexeo Solutions, Inc.
First Quarter Fiscal Year 2017
Earnings Conference Call
Please stand by…
We will begin momentarily
2
Welcome to Nexeo’s
First Quarter Fiscal Year 2017
Earnings Conference Call and Presentation
February 9, 2017
9:00 AM Central Time
10:00 AM Eastern Time
Agenda and Management Introductions
3
1 INTRODUCTIONS AND SAFE HARBOR
2 BUSINESS COMMENTARY
3 FINANCIAL PERFORMANCE
4 OUTLOOK AND CLOSING REMARKS
Michael Everett
VP, Treasurer, FP&A, Investor Relations
David Bradley
President & Chief Executive Officer
Ross Crane
Executive VP & Chief Financial Officer
David Bradley
President & Chief Executive Officer
5 Q&A
Non-GAAP Financial Measures and Safe Harbor
4
Non-GAAP Financial Measures
Certain financial measures presented herein, including EBITDA, Adjusted EBITDA and Net Debt were derived based on methodologies
other than in accordance with generally accepted accounting principles (GAAP). We have included these measures because we believe
they are indicative of our operating performance, are used by investors and analysts to evaluate us and can facilitate comparisons
across periods. As presented by us, these measures may not be comparable to similarly titled measures reported by other companies.
EBITDA, Adjusted EBITDA and Net Debt should be considered in addition to, not as substitutes for, financial measures presented in
accordance with GAAP. For a reconciliation of EBITDA, Adjusted EBITDA and Net Debt to the most comparable GAAP financial measure,
see the appendix slides.
Safe Harbor
Forward Looking Statements: This presentation contains statements related to Nexeo Solutions, Inc.’s (“Nexeo” or the “Company”)
future plans and expectations and, as such, includes “forward-looking statements” within the meaning of the federal securities laws.
Forward-looking statements are those statements that are based upon management’s current plans and expectations as opposed to
historical and current facts. Although the forward-looking statements contained in this presentation reflect management’s current
assumptions based upon information currently available to management and based upon that which management believes to be
reasonable assumptions, the Company cannot be certain that actual results will be consistent with these forward-looking statements.
The Company’s future results will depend upon various risks and uncertainties, including the risks and uncertainties discussed in the
Company’s press release reporting its results for the quarter ended December 31, 2016 and the Company’s other SEC filings, including
in the sections entitled “Risk Factors” in such SEC filings. The Company does not intend to provide all information enclosed in this
presentation on an ongoing basis.
Business Commentary
David Bradley
President and Chief Executive Officer
5
Company Updates and First Quarter Overview
6
CHEMICALS
ENVIRONMENTAL
SERVICES
PLASTICS
First quarter results in line with expectations
‒Pricing environment similar to Q4
‒Positive momentum with volume trends late in the
quarter
Supplier disruption in plastics
Supply chain execution continues to be a highlight
‒Newly implemented transportation management
system prioritizes private fleet utilization while
delivering superior service levels
‒Full year cost savings expected to exceed
preliminary estimates
Gaining momentum with new specialty supplier wins
Financial Performance
Ross Crane
Chief Financial Officer
7
Fiscal Quarter 2017 Highlights
8
(1) 1Q17 includes $1.3 million for additional depreciation expense related to the business combination
(2) 1Q17 includes $0.5 million for additional depreciation expense related to the business combination
(3) 1Q17 includes $1.1 million for additional depreciation and amortization expense related to the business combination
˟Non-GAAP financial measures; See appendix slides for reconciliation to the most comparable GAAP financial measure
**Not meaningful
In millions (except per share data) Successor Predecessor
Three Months
Ended
Dec-31-2016
Three Months
Ended
Dec-31-2015
1Q-FY17 1Q-FY16 $ %
Sales and operating revenues
Chemicals 352.4$ 378.7 (26.3) (6.9)%
Plastics 412.5 418.5 (6.0) (1.4)%
Other 29.9 30.5 (0.6) (2.0)%
Total sales and operating revenues 794.8 827.7 (32.9) (4.0)%
Gross profit
Chemicals (1) 42.7 47.3 (4.6) (9.7)%
Margin 12.1% 12.5%
Plastics (2) 36.0 40.6 (4.6) (11.3)%
Margin 8.7% 9.7%
Other 5.7 7.3 (1.6) (21.9)%
Total gross profit 84.4 95.2 (10.8) (11.3)%
Total gross profit margin 10.6% 11.5%
SG&A (3) 74.5 74.7 0.2 0.3 %
Transaction related costs 0.8 1.0 0.2 20.0 %
Change in fair value related to contingent consideration 10.6 - (10.6) **
Operating income (1.5) 19.5 (21.0) (107.7)%
Other income 2.4 1.7 0.7 41.2 %
Interest expense, net (11.9) (15.6) 3.7 (23.7)%
Net income (loss) before income taxes (11.0) 5.6 (16.6) (296.4)%
Income tax benefit (expense) 2.7 (1.3) 4.0 **
Net income (loss) Attributed to Nexeo Solutions, Inc. (8.3)$ 4.3$ (12.6)$ (293.0)%
Average Shares Outstanding
Basic and diluted 76.7
EPS
Basic and diluted (0.11)$
Adjusted EBITDA˟ 33.8$ 39.1$ (5.3)$ (14)%
Adjusted EBITDA˟ % of sales 4.3% 4.7% (40) bps
Variance
YoY
(40) bps
(100) bps
(90) bps
Consolidated
Average selling prices down 4.4%
Volumes up 0.4%
Chemicals
Average selling prices down 4.8%
Volumes down 2.2%
Plastics
Average selling prices down 5.0%
Volumes increased 3.8%
Capital Structure Summary
9
Shares Used For
Basic and Fully Diluted EPS Calculation
Share
Count
Average Common Shares Outstanding 76.7 million
Shares Excluded From
Basic and Fully Diluted EPS Calculation
Share
Count
Founder Shares 12.5 million
Warrants 25 million*
Excess Shares (Deferred Cash Consideration) 5.2 million
*Assumes full cash exercise. Cashless exercise is permitted under certain circumstances. For a complete description of the
Founder Shares, Warrants and Deferred Cash Consideration, see the Company’s (i) Registration Statement on Form S-3
filed with the SEC on 06/23/16, (ii) Current Report on Form 8-K filed with the SEC on 03/22/16, and (iii) Current Report on
Form 8-K filed with the SEC on 06/05/14
$485.8
$464.8
$473.8
12.9%
13.6%
14.0%
Q1-FY16 Q4-FY16 Q1-FY17
Working Capital
($ millions)
Working Capital Working Capital % LTM Sales
$799.5
$765.8
$798.1
Q1-FY16 Q4-FY16 Q1-FY17
Net Debt
($ millions)
$857.3
$813.3 $831.4
Q1-FY16 Q4-FY16 Q1-FY17
Total Debt
($ millions)
Key Balance Sheet Metrics
10
(1) Total debt and Net Debt include unamortized debt issuance costs in accordance with the adoption of ASU No. 2015-03 and ASU No. 2015-15
(2) Net Debt is a non-GAAP financial measure and is defined as long-term debt and capital lease obligations, net of discount and deferred financing costs, plus short-term
borrowings and current portion of long-term debt and capital lease obligations less cash and cash equivalents; See appendix slides for a reconciliation of Net Debt to
the most comparable GAAP financial measure
(3) Leverage is calculated as Net Debt divided by Adjusted EBITDA from continuing operations; See appendix slides for a reconciliation of Net Debt and Adjusted EBITDA
to the most comparable GAAP financial measure
(4) Working capital is calculated as accounts receivable plus inventory less accounts payable
(1)
4.7x4.4x4.4xLeverage
(3)
(2) (4)
$57.8
$47.5
$33.3
Q1-FY16 Q4-FY16 Q1-FY17
Cash
($ millions)
Closing Remarks
David Bradley
President and Chief Executive Officer
11
Guidance Outlook and Assumptions
12
Maintain Fiscal Year 2017 Guidance
Item 2016 2017
Revenue $3,406 M
Gross Profit $380 M
SG&A $301 M
FY Capex˟ $19 M
Cash Tax $6 M
D&A $58 M
Cash Interest $50 M
FY Adjusted EBITDA $174 M ~10%
˟Net of asset sales
Fiscal year 2017 Guidance Outlook
Modest increase in revenue and gross profit
Adjusted EBITDA expected to grow ~10%
Fiscal year 2017 Assumptions
Minimal to moderate improvement in
macro dynamics
Modest volatility in crude oil prices
QUESTION & ANSWER SESSION
To ask a question live over the phone, please press * then the
number 1 on your telephone keypad to queue our operator.
If your question has been answered or you wish to remove
yourself from the queue, please press #.
13
Closing Remarks
14
THANK YOU FOR ATTENDING
We look forward to hosting you next quarter!
Please feel free to contact
Nexeo’s Investor Relations Personnel at:
Investor.Relations@nexeosolutions.com
+1.281.297.0856
APPENDIX
15
Quarterly - Adjusted EBITDA Reconciliation
16
(1) Includes 69 days of operating activities.
(2) On June 9, 2016, the Board of Directors approved a change in fiscal year end of the Company from December 31 to September 30. The periods
above reflect a September 30 fiscal year end of the Successor.
(3) Includes 22 days of the acquired business’ operating activities.
(4) See Quarterly – Other Operating Expenses, Net.
(Dollars in millions)
Q1-FY16 Q2-FY16
Apr. 1 - Jun. 8
2016(1)
Q1-FY16(2) Q2-FY16(2) Q3-FY16(3) Q4-FY16 Q1-FY17
Net income (loss) 4.3$ 2.1$ (20.2)$ (0.1)$ (1.5)$ (15.5)$ 8.7$ (8.3)$
Net loss attributable to noncontrolling interest - - - - - - - -
Net (income) loss from discontinued operations - (0.1) - - - - - -
Interest expense, net 15.6 15.4 11.2 (0.2) (0.4) 2.9 12.0 11.9
Income tax expense (benefit) 1.3 1.8 1.1 - - (1.3) 2.5 (2.7)
Depreciation and amortization 13.6 13.8 10.3 - - 4.3 16.3 16.8
Other operating expenses, net(4) 4.3 8.4 29.9 0.3 1.9 24.1 6.9 16.1
Adjusted EBITDA from continuing operations 39.1$ 41.4$ 32.3$ -$ -$ 14.5$ 46.4$ 33.8$
Predecessor Successor
Nexeo Solutions, Inc. and Subsidiaries
(Unaudited)
Adjusted EBITDA Reconciliation
LTM - Adjusted EBITDA Reconciliation
17(1) See LTM – Other Operating Expenses, Net.
(Dollars in millions)
09/30/2013 09/30/2014 09/30/2015 12/31/2015 03/31/2016 06/30/2016 09/30/2016 12/31/2016
Net income (loss) (6.3)$ 4.9$ 20.4$ 32.2$ 34.9$ (21.2)$ (22.2)$ (34.7)$
Net loss attributable to noncontrolling interest 1.7 1.3 - - - - - -
Net (income) loss from discontinued operations - (18.4) 0.8 - (0.1) (0.1) (0.1) (0.1)
Interest expense, net 57.7 63.6 64.7 63.9 63.1 60.4 56.5 53.0
Income tax expense (benefit) 4.7 7.3 3.9 6.1 6.1 4.1 5.4 1.4
Depreciation and amortization 38.7 53.4 52.6 53.3 53.6 55.1 58.3 61.5
Other operating expenses, net(1) 53.6 39.6 34.1 28.3 31.7 83.4 75.8 87.3
Adjusted EBITDA from continuing operations 150.1$ 151.7$ 176.5$ 183.8$ 189.3$ 181.7$ 173.7$ 168.4$
Nexeo Solutions, Inc. and Subsidiaries
Adjusted EBITDA Reconciliation
(Unaudited)
LTM Ending
Quarterly - Other Operating Expenses, Net
18
(1) Includes 69 days of operating activities.
(2) On June 9, 2016, the Board of Directors approved a change in fiscal year end of the Company from December 31 to September 30. The periods above
reflect a September 30 fiscal year end of the Successor.
(3) Includes 22 days of the acquired business’ operating activities.
(4) One-time management adjustments associated with integration, restructuring and transformational activities not directly related to the business
combination.
(5) Includes the impact of net realized and unrealized foreign exchange gains and losses related to transactions in currencies other than the functional
currency of the respective legal entity for the purpose of evaluating company performance and facilitate more meaningful comparisons of performance to
other fiscal periods.
(6) Management, monitoring, consulting, reimbursable fees and leverage fees, per the agreement with TPG Capital, L.P. In connection with the business
combination, this agreement was terminated.
(7) Includes professional and transaction costs related to potential acquisitions and other business combination related items.
(Dollars in millions)
Q1-FY16 Q2-FY16
Apr. 1 - Jun. 8
2016(1)
Q1-FY16(2) Q2-FY16(2) Q3-FY16(3) Q4-FY16 Q1-FY17
Management add-backs (4) 1.6$ 1.3$ 1.9$ -$ 0.1$ 0.6$ 3.4$ 2.5$
Change in FV of contingent consideration obligations - - - - - - (11.2) 10.6
Foreign exchange (gains) losses, net (5) 0.5 (0.3) 1.3 - - 0.4 0.7 0.8
Management fees (6) 0.9 0.8 0.5 - - - - -
Compensation expense related to management equity plan (non-cash) 0.3 0.3 0.1 - - 0.3 1.2 1.4
Gain on sale of Franklin Park facility - - - - - - 2.6 -
Inventory step up - - - - - 6.9 6.9 -
Transaction and other transaction related items (7) 1.0 6.3 26.1 0.3 1.8 15.9 3.3 0.8
Other operating expenses, net 4.3$ 8.4$ 29.9$ 0.3$ 1.9$ 24.1$ 6.9$ 16.1$
SuccessorPredecessor
Nexeo Solutions, Inc. and Subsidiaries
(Unaudited)
Other Operating Expenses, Net
LTM - Other Operating Expenses, Net
19
(1) One-time management adjustments associated with integration, restructuring and transformational activities not directly related to the business
combination.
(2) Special one-time compensation incentive approved by the Compensation Committee for fiscal year 2015 performance.
(3) Includes the impact of net realized and unrealized foreign exchange gains and losses related to transactions in currencies other than the functional
currency of the respective legal entity for the purpose of evaluating company performance and facilitate more meaningful comparisons of performance to
other fiscal periods.
(4) Management, monitoring, consulting, reimbursable fees and leverage fees, per the agreement with TPG Capital, L.P. In connection with the business
combination, this agreement was terminated.
(5) Includes professional and transaction costs related to potential acquisitions and other business combination related items.
(Dollars in millions)
09/30/2013 09/30/2014 09/30/2015 12/31/2015 03/31/2016 06/30/2016 09/30/2016 12/31/2016
Management add-backs (1) 29.1$ 22.4$ 16.2$ 11.3$ 8.4$ 8.4$ 8.9$ 9.8$
Change in FV of contingent consideration obligations - - - - - - (11.2) (0.6)
FY 2015 special one-time compensation incentives (2) - - 8.9 8.9 8.9 8.9 - -
Foreign exchange (gains) losses, net (3) 1.3 1.2 2.2 1.5 1.9 3.2 2.6 2.9
Management fees (4) 5.5 5.1 4.7 4.2 4.1 3.3 2.2 1.3
Compensation expense related to management equity plan (non-cash) 1.4 1.0 1.2 1.2 1.2 1.3 2.2 3.3
Gain on sale of Franklin Park facility - - - - - - 2.6 2.6
Inventory step up - - - - - 6.9 13.8 13.8
Transaction and other transaction related items (5) 16.3 9.9 0.9 1.2 7.2 51.4 54.7 54.2
Other operating expenses, net 53.6$ 39.6$ 34.1$ 28.3$ 31.7$ 83.4$ 75.8$ 87.3$
Nexeo Solutions, Inc. and Subsidiaries
Other Operating Expenses, Net
(Unaudited)
LTM Ending
Net Debt Reconciliation
20
(Dollars in millions) Predecessor Successor Successor
3 Months Ended
Dec-31-2015
3 Months Ended
Sep-30-2016
3 Months Ended
Dec-31-2016
Q1-FY16 Q4-FY16 Q1-FY17
Long-term debt and capital lease obligations,
less current portion, net
$ 817.5 $ 765.6 $ 783.3
Short-term borrowings and current portion of
long-term debt and capital lease obligations
39.8 47.7 48.1
Total Debt 857.3 813.3 831.4
Cash and cash equivalents (57.8) (47.5) (33.3)
Net Debt 799.5$ 765.8$ 798.1$
Nexeo Solutions, Inc. and Subsidiaries
Net Debt Reconciliation
(Unaudited)