Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Univar Solutions Inc. | ex991-enr_q12017.htm |
| 8-K - 8-K - Univar Solutions Inc. | form8-kearningsreleaseq120.htm |
Fiscal First Quarter 2017
Earnings Conference Call
May 5, 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
First Quarter 2017 Highlights
Improvement actions underway
Q1 GAAP EPS(1) $0.16 vs. $0.10 prior year
Ÿ Reported net income of $22.6 million vs. $14.0 million in the prior year
Ÿ Net income included $4.1 million ($0.03 per share) of revaluation losses related to foreign
currency denominated loans and monetary balances
Q1 Adjusted EBITDA(1) $142.3 million vs. $134.1 million in 2016
Ÿ 16% growth outside of the USA led by EMEA and Canada
Ÿ First quarter of EBITDA growth in USA after eight consecutive quarters of declines
Adjusted Operating Cash Flow(2) ($7.5) million vs. $111.7 million in 2016
Ÿ Seasonal build in working capital
Ÿ Cash conversion ratio of (5.3%) (3)
Ÿ Cash operating margin of (0.4%) (4)
(1) Variances to Q1 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
Growth initiatives drive
profitability
improvement
• Average selling prices increased
3% due to modest chemical price
inflation and commercial initiatives
• Volumes declined 3% due to go to
market transition and margin
management
• Gross margin expanded 50 bps
• Productivity offset operating
expense inflation and growth
investments
KEY METRICS(In millions)
(1) Conversion Ratio defined as Adjusted EBITDA / Gross Profit
Three months ended
March 31, 2017 2016 Y/Y %
Net Sales $1,998.8 $1,999.0 —%
Currency Neutral -- -- 0.8%
Gross Profit $439.4 $430.3 2.1%
Currency Neutral -- -- 2.9%
Gross Margin 22.0% 21.5% +50 bps
Adjusted EBITDA $142.3 $134.1 6.1%
Currency Neutral -- -- 7.5%
Adjusted
EBITDA Margin 7.1% 6.7% +40 bps
Conversion Ratio (1) 32.4% 31.2% +120 bps
4
USA – Highlights
Commercial initiatives
drive return to growth
• Average selling prices increased 2%
due to chemical price inflation and
sales initiatives
• Volume declines driven by go to
market transition, margin
management, and soft demand
• Gross profit per lb. increased 6%
• Delivery expense decreased 2%;
WS&A(1) flat to prior year
• Adjusted EBITDA grew 1%
5
Three months ended
March 31, 2017 2016 Y/Y %
Net Sales $1,150.9 $1,187.5 (3.1)%
Gross Profit $262.9 $262.9 —%
Gross Margin 22.8% 22.1% +70 bps
Adjusted EBITDA $81.7 $80.8 1.1%
Adjusted
EBITDA Margin 7.1% 6.8% +30 bps
(In millions) KEY METRICS
(1) Warehousing, selling and administrative
CANADA – Highlights
Strength in western Canada
energy markets drives
growth
• Volumes increased 8% due to higher
methanol sales into energy markets
• Win/loss ratio improving
• Gross margin decreased 40 bps due to
product mix
• Adjusted EBITDA margin increased due
to strong expense control
6
Three months ended
March 31, 2017 2016 Y/Y %
Net Sales $307.3 $272.7 12.7%
Currency Neutral -- -- 8.7%
Gross Profit $55.8 $50.6 10.3%
Currency Neutral -- -- 6.3%
Gross Margin 18.2% 18.6% -40 bps
Adjusted EBITDA $24.8 $21.7 14.3%
Currency Neutral -- -- 10.1%
Adjusted
EBITDA Margin 8.1% 8.0% +10 bps
(In millions) KEY METRICS
EMEA – Highlights
Mix enrichment and
margin management
boost profits
• Volumes declined 2% due to a
temporary solvent shortage
• Win/loss ratio improving
• Gross margin increased 120 bps from
mix enrichment and margin
management
• Operating expense declined 3%
7
Three months ended
March 31, 2017 2016 Y/Y %
Net Sales $439.7 $437.4 0.5%
Currency Neutral -- -- 6.2%
Gross Profit $101.8 $96.2 5.8%
Currency Neutral -- -- 11.5%
Gross Margin 23.2% 22.0% +120 bps
Adjusted EBITDA $35.9 $28.3 26.9%
Currency Neutral -- -- 37.1%
Adjusted
EBITDA Margin 8.2% 6.5% +170 bps
(In millions) KEY METRICS
REST OF WORLD – Highlights
Executing well in a soft
economy
• Soft economy and lower oil & gas
demand in Mexico pressured margins
• Brazil performed well, despite a
sluggish economy, due to higher mix of
specialty products
• Taking cost actions to respond to the
economic conditions
8
Three months ended
March 31, 2017 2016 Y/Y %
Net Sales $100.9 $101.4 (0.5)%
Currency Neutral -- -- 1.6%
Gross Profit $18.9 $20.6 (8.3)%
Currency Neutral -- -- (9.2)%
Gross Margin 18.7% 20.3% -160 bps
Adjusted EBITDA $6.7 $7.9 (15.2)%
Currency Neutral -- -- (16.5)%
Adjusted
EBITDA Margin 6.6% 7.8% -120 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 March 31,
2017 2016 Y/Y %
Adjusted Operating Cash Flow (1) ($7.5) $111.7 (106.7)%
Net Working Capital ($128.9) $1.1 NM
CapEx (2) ($20.9) ($23.5) (11.1)%
Cash Taxes ($12.1) $7.4 (263.5)%
Cash Interest (net) ($44.3) ($44.1) 0.5%
Pension Contribution ($7.2) ($7.9) (8.9)%
Other ($12.9) ($3.7) 248.6%
(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 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 March 31,
2017 2016 Y/Y%
Net Debt (1) $2,742.5 $2,968.8 (7.6)%
Leverage (2) 4.8x 5.0x (4.8)%
Interest Coverage (3) 3.9x 4.0x (2.0)%
Return on Assets Deployed (4) 20.4% 21.0% -60 bps
(In millions)
11
Full Year Adjusted EBITDA
mid-to-high single digit growth
Q2 2017 Adjusted EBITDA
mid-single digit growth versus Q2
2016
Continue to advance our Commercial
Greatness and Operational Excellence
initiatives
Selective commercial and technology
investments
FX translation headwinds
Mid-to-high single digit EBITDA growth in
the first half year
Accelerating Adjusted EBITDA growth in
the second half approaching double
digits by year end
Q2 2017 & Full Year 2017
OUTLOOK
2017
EXPECTATIONS
Full Year 2017 Guidance
12
Year ended December 31,
2016 2017
Adjusted EBITDA $562.7 mid-to-high singledigit 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)
Appendix A
Q1 2017 Adjusted EBITDA Reconciliation
13
Three months ended March 31,
2017 2016
Adjusted EBITDA $142.3 $134.1
Other operating expenses, net $19.8 $5.5
Depreciation $35.9 $33.5
Amortization $16.7 $22.0
Interest expense, net $35.8 $40.6
Loss on extinguishment of debt $0.8 —
Other expense, net $9.1 $13.4
Income tax expense $1.6 $5.1
Net income $22.6 $14.0
(In millions)
Appendix B
Adjusted Operating Cash Flow
14
Three months ended March 31,
(In millions) 2017 2016
Adjusted EBITDA $142.3 $134.1
Change in:
Trade accounts receivable, net ($142.4 ) ($84.8)
Inventories ($66.4) ($95.1)
Trade accounts payable $79.9 $181.0
Purchase of PP&E ($20.9) ($23.5)
Adjusted operating cash flow ($7.5 ) $111.7
