Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Univar Solutions Inc. | a8-kq4earningsreleasefeb22.htm |
| EX-99.1 - EXHIBIT 99.1 - Univar Solutions Inc. | ex991-enr_q42016.htm |
Fourth Quarter 2016
Earnings Conference Call
February 22, 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 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.
2
Fourth Quarter 2016 Highlights
Margin Expansion and Strong Cash Flow
Q4 GAAP EPS ($0.43) loss vs. ($0.02) loss prior year
Ÿ $67.3 million ($0.35 per share after tax) non-cash pension mark-to-market, net of curtailment
Ÿ $47.3 million ($0.35 per share) non-cash revaluation of deferred taxes due to tax law change
Ÿ Excluding these non-cash adjustments, earnings per share were $0.27
Q4 Adjusted EBITDA(1) $134.5 million vs. $129.6 million in 2015
Ÿ First quarter of Adjusted EBITDA growth in 7 consecutive quarters
Ÿ 21% growth outside of USA
Ÿ USA delivered gross profit (3) increased 2%
Adjusted Operating Cash Flow (2) $216.7 million vs. $215.1 million in 2015
Ÿ Cash operating margin of 12.0% (4)
(1) Variances to Q4 2015
(2) Adjusted EBITDA plus cash flows from changes in AR, Inventory, and AP, less cash used to purchase PP&E
(3) Gross Profit less delivery expense
(4) Adjusted Operating Cash Flow / Sales
3
Univar – Consolidated Highlights
Adjusted EBITDA
growth of 4%
• Volumes declined due to lower
upstream oil & gas and one less
billing day
• Gross margin increased
150 bps
• Gross profit per lb. increased 2%
• Delivery costs were lower;
WS&A (2) were flat
• Adjusted EBITDA margin
increased 80 bps
KEY METRICS
(In millions)
(1) Conversion Ratio defined as Adjusted EBITDA / Gross Profit
(2) Warehousing, selling and administrative
Three months ended
December 31, 2016 2015 Y/Y %
Net Sales $1,812.5 $1,966.3 (7.8)%
Currency Neutral -- -- (7.0)%
Gross Profit $413.3 $419.8 (1.5)%
Currency Neutral -- -- (0.7)%
Gross Margin 22.8% 21.3% +150 bps
Adjusted EBITDA $134.5 $129.6 3.8%
Currency Neutral -- -- 5.1%
Adjusted
EBITDA Margin 7.4% 6.6% +80 bps
Conversion Ratio (1) 32.5% 30.9% +160 bps
4
USA – Highlights
Early signs of progress
and increased profitability
from actions
• Volumes down 1% excluding oil &
gas and adjusted for one less billing
day
• Gross profit per lb. increased 3%
• Delivered gross profit dollars
increased $3 million
• Operating expenses declined 1% due
to lower delivery expense
5
Three months ended
December 31, 2016 2015 Y/Y %
Net Sales $1,084.3 $1,202.7 (9.8)%
Gross Profit $246.1 $251.6 (2.2)%
Gross Margin 22.7% 20.9% +180 bps
Adjusted EBITDA $78.3 $82.7 (5.3)%
Adjusted
EBITDA Margin 7.2% 6.9% +30 bps
(In millions)
KEY METRICS
CANADA – Highlights
Ag and lower costs boost
profit and margin
• Volumes declined 1% due to one less
billing day
• Gross margin increased 150 bps due to
favorable product and market mix
• Operating expense declined 7% from
productivity gains
6
Three months ended
December 31, 2016 2015 Y/Y %
Net Sales $242.1 $258.1 (6.2)%
Currency Neutral -- -- (8.1)%
Gross Profit $55.1 $55.0 0.2%
Currency Neutral -- -- (0.2)%
Gross Margin 22.8% 21.3% +150 bps
Adjusted EBITDA $24.8 $22.6 9.7%
Currency Neutral -- -- 9.3%
Adjusted
EBITDA Margin 10.2% 8.7% +150 bps
(In millions)
KEY METRICS
EMEA – Highlights
Lower costs and mix
enrichment drive growth
• Volumes increased 1%, despite
stagnant industrial demand
• Gross margin increased 40 bps due
to mix enrichment and restructuring
• Operating expense declined due to
lower delivery and restructuring
• Adjusted EBITDA margin increased
130 bps
7
Three months ended
December 31, 2016 2015 Y/Y %
Net Sales $394.4 $403.1 (2.2)%
Currency Neutral -- -- 1.9%
Gross Profit $92.0 $92.5 (0.5)%
Currency Neutral -- -- 3.1%
Gross Margin 23.3% 22.9% +40 bps
Adjusted EBITDA $28.9 $24.3 18.9%
Currency Neutral -- -- 25.5%
Adjusted
EBITDA Margin 7.3% 6.0% +130 bps
(In millions)
KEY METRICS
REST OF WORLD – Highlights
Profitability increase in
soft economic conditions
• Weak economic conditions in Mexico
and Brazil
• Sales declined 6% currency neutral
• Gross margin increased 170 bps from
mix improvement
• Operating expense reductions driven
by cost actions
• Adjusted EBITDA margin increased
450 bps
8
Three months ended
December 31, 2016 2015 Y/Y %
Net Sales $91.7 $102.4 (10.4)%
Currency Neutral -- -- (6.4)%
Gross Profit $20.1 $20.7 (2.9)%
Currency Neutral -- -- —%
Gross Margin 21.9% 20.2% +170 bps
Adjusted EBITDA $7.8 $4.1 90.2%
Currency Neutral -- -- 95.1%
Adjusted
EBITDA Margin 8.5% 4.0% +450 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, see Appendix C
(2) Excludes additions from capital leases
3 months ended
12/31/2016
3 months ended
12/31/2015 Y/Y %
Adj. Operating Cash Flow (1) $216.7 $215.1 0.7%
Change in Net Working Capital $106.4 $127.2 (16.4)%
Capital Expenditures (2) ($24.2) ($41.7) (42.0)%
Cash Taxes (net) ($4.1) ($4.5) (8.9)%
Cash Interest (net) ($28.1) ($35.7) (21.3)%
Pension Contribution ($7.7) ($16.5) (53.3)%
(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 trailing 12 month Adjusted EBITDA
(3) Interest coverage defined as LTM Adjusted EBITDA / LTM Cash Interest (net of interest income)
(4) LTM Adjusted EBITDA inclusive of Depreciation divided by trailing 13 month average of net PP&E plus net working capital (accounts receivable plus
inventory less accounts payable)
LTM ended
12/31/16
LTM ended
12/31/15 Y/Y%
Net Debt (1) $2,642.9 $2,962.7 (10.8)%
Leverage (2) 4.7x 4.9x (4.1)%
Interest Coverage (3) 3.9x 3.6x 8.3%
Return on Assets Deployed (4) 19.9% 21.3% -140 bps
(In millions)
• Converted 80% of floating rate debt to fixed rate
• Re-priced $2.2 billion of Term Loans, lowering annual interest costs by 50 bps
11
Full Year Adjusted EBITDA
mid single digit growth
Q1 2017 Adjusted EBITDA
slightly above Q1 2016
Advance Commercial Greatness and
Operational Excellence initiatives
Selective commercial and technology
investments
FX translation headwinds
Modest Adjusted EBITDA growth in the
first half year
Accelerating Adjusted EBITDA growth in
the second half approaching double
digits by year end
Q1 2017 & Full Year 2017
OUTLOOK
2017
EXPECTATIONS
Appendix A
Full Year 2017 Guidance
12
Year ended
12/31/2016
Year ended
12/31/2017
Adjusted EBITDA $562.7 mid single digit growth
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)
Note: Cash inflow +/ Cash outflow -
Appendix B
Q4 2016 Adjusted EBITDA Reconciliation
13
3 months ended
December 31, 2016
3 months ended
December 31, 2015
Adjusted EBITDA $134.5 $129.6
Other operating expenses, net (1) $75.4 $48.8
Depreciation $38.4 $32.5
Amortization $17.8 $22.2
Interest expense, net $39.4 $41.1
Other expense (income), net ($4.7) ($7.7)
Income tax expense (benefit) (2) $27.4 ($4.4)
Net income (loss) ($59.2) ($2.9)
(In millions)
(1) includes pension mark-to-market net of curtailment loss of $67.3 million in Q4 2016 and $17.1 million in Q4 2015
(2) includes deferred tax adjustment of $47.3 million due to US tax law change
Appendix C
Adjusted Operating Cash Flow
14
3 months ended
December 31, 2016
3 months ended
December 31, 2015
Adjusted EBITDA $134.5 $129.6
Change in
$153.4 $220.7Trade accounts receivable, net
Inventories ($18.2) $46.4
Trade accounts payable ($28.8) ($139.9)
Purchase of PP&E ($24.2) ($41.7)
Adjusted operating cash flow $216.7 $215.1
