ELEMENTIS ENHANCES PERSONAL CARE BUSINESS WITH $360 MILLION ACQUISITION OF SUMMITREHEIS Paul Waterman CEO February 10 2017 | London 1
CAUTIONARY STATEMENT This presentation, the presentation materials and discussion may contain certain forecasts, projections and forward looking statements – that is statements related to future, not past, events – in relation to, or in respect of, the financial condition, operations or businesses of Elementis plc. Any such statements involve risk and uncertainty because they relate to future events and circumstances. There are many factors that could cause actual results or developments to differ materially from those expressed or implied by any such forward looking statements, including, but not limited to, matters of a political, economic, business, competitive or reputational nature. Nothing in this presentation, the presentation materials and discussion should be construed as a profit estimate or profit forecast. Elementis does not undertake any obligation to update or revise any forward looking statement to reflect any change in circumstances or expectations. February 2017 2
HIGHLIGHTS SUMMITREHEIS IS THE GLOBAL LEADER SUPPLYING ANTI-PERSPIRANT (AP) ACTIVE INGREDIENTS SummitReheis is an attractive business in a growing end market – AP actives market expected to grow at 5% per annum Products highly complementary to those of Elementis SUMMIT- ELEMENTIS Combined personal care business has REHEIS – Scale: ~$200m sales – Improved customer proposition – Stronger position in high growth segment WINNING PERSONAL Fully consistent with Reignite Growth strategy CARE BUSINESS SummitReheis an Growing Complementary Strong financial Prudently Highlights Q&A 3 attractive business end markets combination rationale financed
HOW WILL WE REIGNITE GROWTH? PURSUE BEST GROWTH OPPORTUNITIES PURSUE INNOVATE FOR CREATE A SUPPLY CHAIN DISTINCTIVENESS CULTURE OF HIGH 1 Global KAM TRANSFORMATION & HIGH MARGINS PERFORMANCE 2 Coatings Asia 3 Personal Care global growth Elementis Capital Markets Day | November 2016 | London SummitReheis an Growing Complementary Strong financial Prudently Highlights Q&A 4 attractive business end markets combination rationale financed
ELEMENTIS SPECIALTIES BUSINESS MODEL ELEMENTIS SPECIALTIES SUMMITREHEIS SUMMITREHEIS PROVIDES CRITICAL INGREDIENTS FOR AP PRODUCT PERFORMANCE CRITICAL ENABLING PRODUCTS ANTI-PERSPIRANTS - A GROWTH SEGMENT ATTRACTIVE END MARKETS WITHIN PERSONAL CARE MODEST SHARE OF CUSTOMER COSTS EBITDA MARGINS 20%+ HIGHLY CASH GENERATIVE SUMMITREHEIS PROVIDES KEY ACTIVE INGREDIENTS FOR AP MANUFACTURING SummitReheis an Growing Complementary Strong financial Prudently Highlights Q&A attractive business 5 end markets combination rationale financed
OVERVIEW OF SUMMITREHEIS INTRODUCTION TO SUMMITREHEIS SUMMITREHEIS PRODUCTS USES The global leader in anti-perspirant Product Applications actives market * AP ACTIVES Aluminium Anti-perspirant aerosols and Chlorohydrate (ACH) roll-ons Long standing relationships with Aluminium consumer products companies * High efficacy anti-perspirant Zirconium sticks, gels and roll-ons compounds Cash generative business, robust * Treatment of stomach ulcers margins Sucralfate PHARMA and related conditions ACTIVES Reinforced position in Europe with * Treatment of heartburn and Antacids acquisition of B.K. Giulini in 2015 general stomach discomfort • Leading AP Actives position in Europe Dental alloys Crowns and bridges and discs • Leading producer of active ingredients for SPECIALTY indigestion and heartburn remedies Moulds for replacement DENTAL Dental plasters • Niche Specialty Dental proposition teeth * Shared chemistry between AP Actives and Pharma SummitReheis an Growing Complementary Strong financial Prudently Highlights Q&A attractive business 6 end markets combination rationale financed
THE SUMMITREHEIS BUSINESS KEY FACTS 2015 SALES BY END MARKET 2015 SALES BY GEOGRAPHY $134m revenue (2016 expected) South AP actives America Underlying EBITDA of approximately Specialty Europe dental $28m (2016 expected), underlying 12% Asia and 20% Middle EBITDA margins 20%+ East 13% 5 production facilities 41% • 2 in US, Germany, UK and China 18% ~270 employees 62% Leading positions in each segment 33% • Leading AP Actives position globally Pharma actives • Leading producer of active ingredients for North America indigestion and heartburn remedies • Global leader in milling discs and strong Source: SummitReheis Source: SummitReheis position in dental alloys markets SummitReheis an Growing Complementary Strong financial Prudently Highlights Q&A attractive business 7 end markets combination rationale financed
PERSONAL CARE MARKET PERSONAL CARE MARKET ELEMENTIS PERSONAL CARE HAS ALREADY GROWING FASTER THAN GDP BEEN GROWING FASTER Estimated Global Personal Care Consumption Sales ($m) ($bn) CAGR = ~4.6% CAGR = ~11% 400 60 50 300 40 200 30 20 100 10 0 0 2015A 2016F 2017F 2018F 2019F 2020F 2012 2013 2014 2015 2016 LTM Constant currency | 2016 LTM = 2H15 + 1H16 Source: Datamonitor Source: Elementis Growing SummitReheis an Complementary Strong financial Prudently Highlights Q&A end markets 8 attractive business combination rationale financed
LARGE, GROWING MARKET... DEMOGRAPHIC TRENDS DRIVING OVERVIEW DEMAND Millions of consumers earning >$5k per annum Growing at 5% annually to 2021 ANTI-PERSPIRANTS - 4,278 $13BN GLOBAL MARKET Growth driven by demographic trends 3,265 1,739 RoW Increasing penetration of APs in anti- DEVELOPED MARKETS 1,328 OPPORTUNITY perspirant deodorant segment 1,748 China / India 1,192 Increased discretionary income SIGNIFICANT GROWTH USA / Japan / 791 745 Western Europe Changing lifestyle trends POTENTIAL IN EMERGING MARKETS 2015 2025 Increasing affluence Source: Euromonitor Growing SummitReheis an Complementary Strong financial Prudently Highlights Q&A end markets 9 attractive business combination rationale financed
…WITH EMERGING MARKETS REINFORCING THE TRENDS FOR THE LONG TERM …COMPLEMENTED BY ELEMENTIS’ SIGNIFICANT OPPORTUNITY IN EMERGING MARKETS… INTERNATIONAL FOOTPRINT Anti-perspirant penetration of APDO* segment (2015) 20% 30% 60% 60% 80% 70% 40% 40% North America Europe Latin America RoW Market Development Opportunity SummitReheis sites Elementis sites Source: Roland Berger *Note: APDO defined as anti-perspirants and deodorants Growing SummitReheis an Complementary Strong financial Prudently Highlights Q&A end markets 10 attractive business combination rationale financed
SUMMITREHEIS A NATURAL FIT FOR ELEMENTIS COMBINED ELEMENTIS PERSONAL KEY ANTI-PERSPIRANT CARE AND SUMMITREHEIS BUSINESS MARKET DRIVERS Elementis’ hectorite used by many customers in Growth in aerosols outpacing other formats conjunction with SummitReheis’ actives Elementis’ global footprint to drive SummitReheis Key growth opportunity in emerging markets growth in emerging markets Elementis’ hectorites & SummitReheis’ AP actives Consumers in developed markets switching to better performing, premium products - recognised premium products Elementis and SummitReheis combined can Large, growing global customers strengthen relationships Complementary SummitReheis an Growing Strong financial Prudently Highlights Q&A combination 11 attractive business end markets rationale financed
COMBINATION CREATES AN ELEMENTIS PERSONAL CARE BUSINESS OF SCALE ELEMENTIS PRO FORMA ANNUAL NEW PERSONAL CARE BUSINESS REVENUE COMPOSITION (2016E) Acquisition creates a ~$200m revenue personal care business Personal care ~25% New personal care business accounts for: • Approximately one quarter of Elementis pro forma combined revenue ~75% • Operating profit contribution in excess of 30% Rest of Elementis Complementary SummitReheis an Growing Strong financial Prudently Highlights Q&A combination 12 attractive business end markets rationale financed
STRONG FINANCIAL RATIONALE ATTRACTIVE EARNINGS AND VALUE CREATION OPPORTUNITY Immediate adjusted earnings per share accretion - double digit in 2018 FINANCIAL IMPACT Immediately accretive to Elementis’ margins Opportunity to accelerate growth of both Elementis and SummitReheis VALUE CREATION Up to $3 million cost savings per annum Enterprise Value of $360 million on a cash free, debt free basis TRANSACTION TERMS 11.8x SummitReheis expected underlying 2016 EBITDA (including run rate cost synergies) Strong financial SummitReheis an Growing Complementary Prudently Highlights Q&A rationale 13 attractive business end markets combination financed
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