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Brenntag SE — Earnings Release 2017
May 10, 2017
70_ip_2017-05-10_85b3fd85-0054-4d0e-a723-70ab6cff98c0.pdf
Earnings Release
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Q1 2017
▌ 10 May 2017
Conference call on Q1 2017 results Corporate Finance & Investor Relations
Q1 2017 Presentation AGENDA
▌Highlights Q1 2017
▌Financials Q1 2017
▌Outlook
▌Appendix
Introductory remarks to Q1 2017 earnings HIGHLIGHTS Q1 2017
| Macro Economy |
Moderately positive development in Europe. Improved demand situation in North America. Challenging conditions in some countries of Latin America. Ongoing growth in Asia Pacific. |
|---|---|
| Gross profit | Gross profit of EUR 631.8m growing at 7.7% (+5.5% fx adjusted). |
| Operating EBITDA |
Operating EBITDA of EUR 201.6m growing at 4.9% (+2.5% fx adjusted). |
| EPS | Earnings per Share of EUR 0.61 (+41.9%). |
| Acquisitions | Petra Industries, Inc., USA Greene's Energy Group, LLC, USA (one business segment) |
Recent Acquisitions in 2017 HIGHLIGHTS Q1 2017
| Target | Rationale | Indicative annual EBITDA contribution (m EUR) |
Investment Amount (m EUR) |
||
|---|---|---|---|---|---|
| Petra Industries, Inc., USA |
Strengthening the mixing and blending business in North America. The business supports our customer service business. |
2.4 | ~19 | ||
| Greene's Energy Group, LLC, USA (one business segment) |
Leading provider of integrated solutions for the Oil & Gas industry. Focused on pipeline cleaning and hydrostatic testing. Complementary to our existing product and service portfolio. |
1.0 | ~10 | ||
| M&A totally: Enterprise Values of ~EUR 29m in 2017 so far |
Average EV/EBITDA multiple of ~8.6x
Q1 2017 Presentation AGENDA
▌Highlights Q1 2017
▌Financials Q1 2017
▌Outlook
▌Appendix
Income statement FINANCIALS Q1 2017
| in EUR m | Q1 2017 | Q1 2016 | ∆ | ∆ FX adjusted |
2016 |
|---|---|---|---|---|---|
| Sales | 2,973.3 | 2,580.1 | 15.2% | 12.8% | 10,498.4 |
| Cost of sales |
-2,341,5 | -1,993.5 | 17.5% | -8,129.1 | |
| Gross profit | 631.8 | 586.6 | 7.7% | 5.5% | 2,369.3 |
| Expenses | -430.2 | -394.5 | 9.0% | 1,559.3 | |
| Operating EBITDA | 201.6 | 192.1 | 4.9% | 2.5% | 810.0 |
| Op. EBITDA / Gross profit | 31.9% | 32.7% | 34.2% |
Income statement (continued) FINANCIALS Q1 2017
| in EUR m | Q1 2017 | Q1 2016 | ∆ | 2016 |
|---|---|---|---|---|
| EBITDA | 201.6 | 192.1 | 4.9% | 810.0 |
| Depreciation | -28.9 | -28.8 | 0.3% | -115.5 |
| EBITA | 172.7 | 163.3 | 5.8% | 694.5 |
| 1) Amortization |
-11.6 | -12.2 | -4.9% | -47.2 |
| EBIT | 161.1 | 151.1 | 6.6% | 647.3 |
| Financial result | -22.8 | -49.7 | 54.1% | -111.6 |
| EBT | 138.3 | 101.4 | 36.4% | 535.7 |
| Profit after tax | 94.7 | 66.0 | 43.5% | 361.0 |
| EPS | 0.61 | 0.43 | 41.9% | 2.33 |
1) Includes scheduled amortization of customer relationships amounting to EUR 9.1m in Q1 2017 (EUR 9.2m in Q1 2016 and EUR 35.9 million in 2016).
Cash flow statement FINANCIALS Q1 2017
| in EUR m | Q1 2017 | Q1 2016 | 2016 |
|---|---|---|---|
| Profit after tax | 94.7 | 66.0 | 361.0 |
| Depreciation & amortization |
40.5 | 41.0 | 162.7 |
| Income taxes | 43.6 | 35.4 | 174.7 |
| Income tax payments | -29.7 | -43.8 | -170.6 |
| Interest result | 24.8 | 20.3 | 81.5 |
| Interest payments (net) |
-15.6 | -7.4 | -67.0 |
| Changes in current assets and liabilities |
-133.2 | -53.8 | -27.6 |
| Change in purchase price obligation/IAS 32 |
0.3 | 1.2 | 2.6 |
| Other | 50.3 | 40.1 | 22.6 |
| Cash provided by operating activities |
75.7 | 99.0 | 539.9 |
Cash flow statement (continued) FINANCIALS Q1 2017
| in EUR m | Q1 2017 | Q1 2016 | 2016 |
|---|---|---|---|
| Purchases of intangible assets and property, plant & equipment (PPE) |
-25.6 | -24.0 | -138.8 |
| Purchases of consolidated subsidiaries and other business units |
-27.3 | -31.1 | -139.6 |
| Other | 1.8 | 2.2 | 9.0 |
| Cash used for investing activities |
-51.1 | -52.9 | -269.4 |
| Capital increase | - | - | - |
| Payments in connection with the capital increase |
- | - | - |
| Purchases of companies already consolidated | - | -14.5 | -62.2 |
| Profits distributed to non-controlling interests | - | - | -1.6 |
| Dividends paid to Brenntag shareholders |
- | - | -154.5 |
| Repayment of (-)/proceeds from (+) borrowings (net) |
-116.3 | -6.3 | -30.8 |
| Cash used for financing activities |
-116.3 | -20.8 | -249.1 |
| Change in cash & cash equivalents | -91.7 | 25.3 | 21.4 |
Balance Sheet as of March 31, 2017 FINANCIALS Q1 2017
in EUR m
| 7,472 | 7,472 | ||
|---|---|---|---|
| 507 | |||
| 1,744 | Cash and cash equivalents Trade receivables |
2,164 | Financial liabilities |
| 334 | Trade payables | ||
| 1.013 | Other assets | 1,246 | Other liabilities |
| Inventories | 401 205 401 |
Other provisions | |
| 2.869 | Intangible assets 1) |
Other | |
| Property, plant and equipment |
3,055 | Equity | |
| 1.005 | |||
| Assets | Liabilities and Equity |
1) Of the intangible assets as of March 31, 2017, some EUR 1,299 million relate to goodwill and trademarks that were capitalized as part of the purchase price allocation performed on the acquisition of the Brenntag Group by funds advised by BC Partners Limited, Bain Capital, Ltd. and subsidiaries of Goldman Sachs International at the end of the third quarter of 2006 in addition to the relevant intangible assets already existing in the previous Group structure.
Balance Sheet and leverage FINANCIALS Q1 2017
| in EUR m | 31 Mar 2017 | 31 Dec 2016 |
30 Sep 2016 | 30 June 2016 |
|---|---|---|---|---|
| Financial liabilities | 2,164.1 | 2,283.8 | 2,211.1 | 2,230.5 |
| ./. Cash and cash equivalents |
506.5 | 601.9 | 607.1 | 463.4 |
| Net Debt | 1,657.6 | 1,681.9 | 1,604.0 | 1,767.1 |
| 1) Net Debt/Operating EBITDA |
2.0x | 2.1x | 2.0x | 2.2x |
| Equity | 3,054.6 | 2,959.2 | 2,752.8 | 2,668.0 |
Financial stability of Brenntag Group FINANCIALS Q1 2017
- Business demonstrates ability to de-leverage constantly
- Investment-grade ratings from Standard & Poor's ("BBB") and Moody's ("Baa3")
High flexibility due to undrawn revolving credit facility of EUR 600m
1) Net debt defined as current financial liabilities plus non-current financial liabilities less "cash and cash equivalents"
Working capital FINANCIALS Q1 2017
| in EUR m | 31 Mar 2017 | 31 Dec 2016 |
30 Sep 2016 | 30 June 2016 |
|---|---|---|---|---|
| Inventories | 1,013.0 | 962.8 | 883.2 | 880.5 |
| + Trade receivables | 1,744.5 | 1,511.2 | 1,508.4 | 1,572.8 |
| ./. Trade payables | 1,246.3 | 1,119.4 | 1,080.6 | 1,126.7 |
| Working capital (end of period) |
1,511.2 | 1,354.6 | 1,311.0 | 1,326.6 |
| Working capital turnover (year-to date) 1) |
8.3x | 8.0x | 8.1x | 8.1x |
| Working capital turnover (last twelve months) 2) |
8.0x | 8.0x | 8.0x | 7.9x |
- 1) Using sales on year-to-date basis and average working capital year-to-date.
- 2) Using sales on LTM basis and average LTM working capital.
Free cash flow FINANCIALS Q1 2017
| in EUR m | Q1 2017 | Q1 2016 | ∆ | ∆ | 2016 |
|---|---|---|---|---|---|
| EBITDA | 201.6 | 192.1 | 9.5 | 4.9% | 810.0 |
| Capex | -20.1 | -17.6 | -2.5 | 14.2% | -141.1 |
| ∆ Working capital |
-155.8 | -43.3 | -112.5 | 259.8% | -27.5 |
| Free cash flow | 25.7 | 131.2 | -105.5 | -80.4% | 641.4 |
Operating EBITDA bridge1): Q1 2016 to Q1 2017 FINANCIALS Q1 2017
1) Calculations are partly based on assumptions made by management; Effects based on rounded figures
Segments FINANCIALS Q1 2017
| in EUR m | EMEA | North America |
Latin America |
Asia Pacific |
All other segments |
Group | |
|---|---|---|---|---|---|---|---|
| Operating gross profit |
Q1 2017 | 279.0 | 272.5 | 43.7 | 48.3 | 4.2 | 647.7 |
| Q1 2016 | 267.6 | 244.2 | 43.6 | 41.9 | 3.1 | 600.4 | |
| ∆ | 4.3% | 11.6% | 0.2% | 15.3% | 35.5% | 7.9% | |
| ∆ FX adjusted | 5.1% | 7.5% | -9.0% | 12.1% | 35.5% | 5.6% | |
| Operating EBITDA | Q1 2017 | 95.8 | 88.6 | 9.2 | 17.0 | -9.0 | 201.6 |
| Q1 2016 | 88.3 | 84.6 | 12.4 | 14.9 | -8.1 | 192.1 | |
| ∆ | 8.5% | 4.7% | -25.8% | 14.1% | 11.1% | 4.9% | |
| ∆ FX adjusted | 9.1% | 1.0% | -34.3% | 11.1% | 11.1% | 2.5% |
Q1 2017 Presentation AGENDA
▌Highlights Q1 2017
▌Financials Q1 2017
▌Outlook
▌Appendix
OUTLOOK 2017
| 2016 Q1/2017 |
Comments | Trend 2017 | |
|---|---|---|---|
| Gross profit | EUR 2,369m EUR 632m |
Gross profit to increase due predominantly to higher volumes in the existing business |
|
| Operating EBITDA |
EUR 810m EUR 202m |
Expected growth of operating EBITDA to be supported by EMEA, North America and Asia Pacific |
|
| Working capital |
EUR 1,355m EUR 1,511m |
To a large extent a function of sales growth Improvement in working capital turnover expected |
|
| Capex | EUR 141m EUR 20m |
Capex spending to increase to over EUR 150m driven by projects to expand our business operations. |
|
| Free cash flow |
EUR 641m EUR 26m |
Anticipate an increase (subject to stable chemical prices). |
THANK YOU FOR YOUR ATTENTION
Steven Holland, CEO
- With Brenntag since 2006
- +30 years of dedicated experience
- Region Latin America, Corp. Communications, Development, HR, HSE, Internal Audit + Compliance, M&A
Georg Müller, CFO
- With Brenntag since 2003
- +10 years of experience in chemicals distribution
- Corp. Accounting, Controlling, Finance & IR, IT, Legal, Tax, Risk Management, Brenntag International Chemicals
We are ready to answer your questions!
CONTACT
Investor Relations
Thomas Langer Diana Alester René Weinberg Phone: +49 (0) 208 7828 7653 Fax: +49 (0) 208 7828 7755 E-mail: [email protected] Web: www.brenntag.com
This presentation may contain forward-looking statements based on current assumptions and forecasts made by Brenntag AG and other information currently available to the company. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. Brenntag AG does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.