Brenntag SE — Investor Presentation 2016

Nov 9, 2016

Q3 2016

▌ 9 November 2016

Conference call on Q3 2016 results Corporate Finance & Investor Relations

Q3 2016 Presentation AGENDA

▌Highlights Q3 2016

▌Financials Q3 2016

▌Outlook

▌Appendix

Introductory remarks to Q3 2016 earnings HIGHLIGHTS Q3 2016

Macro Economy	Moderately positive development in Europe. North America with continuing weak trend in industrial production. Latin America with more challenging conditions. Ongoing growth in Asia Pacific.
Gross profit	Gross profit of EUR 593.9m growing at 4.1% (5.5% fx adjusted).
Operating EBITDA	Operating EBITDA of EUR 205.2m stable at 0.4% (2.0% fx adjusted).
EPS	Earnings per Share of EUR 0.60 (-1.6%).
Acquisitions	Mayes County Petroleum Products, USA / Lubricants business of NOCO Inc., USA / Distribution business of EP Chem Group, Singapore

Recent Acquisitions HIGHLIGHTS Q3 2016

Target	Rationale	Indicative annual EBITDA contribution (m EUR)	Investment Amount (m EUR)
Mayes County Petroleum Products, USA	Regional integrated lubricant distributor, strengthening relationship with key suppliers and customers in the market	2.3	~14
Lubricants business of NOCO Inc., USA	Complements our lubricants business and solidifies our leading market position, entrance in the Canadian lubricants market	4.0	~33
Distribution business of EPChem, Singapore	Distributor for special performance chemicals for waxes and wax related products. Strengthening and expanding our specialty chemicals footprint in Asia Pacific.	n/a	~27
M&A totally: Enterprise Values of ~EUR 200m in 2016 so far Average EV/EBITDA multiple of ~6.8x (excl. Zhong Yung)

Q3 2016 Presentation AGENDA

▌Highlights Q3 2016

▌Financials Q3 2016

▌Outlook

▌Appendix

Income statement FINANCIALS Q3 2016

in EUR m	Q3 2016	Q3 2015	∆	∆ FX adjusted	2015
Sales	2,619.2	2,607.5	0.4%	1.6%	10,346.1
Cost of goods sold	-2,025.3	-2,037.0	-0.6%		-8,080.1
Gross profit	593.9	570.5	4.1%	5.5%	2,266.0
Expenses	-388.7	-366.1	6.2%		-1,458.6
Operating EBITDA	205.2	204.4	0.4%	2.0%	807.4
Op. EBITDA / Gross profit	34.6%	35.8%			35.6%

Operating EBITDA bridge: Q3 2015 to Q3 2016 FINANCIALS Q3 2016

1) Calculations are partly based on assumptions made by management; Effects based on rounded figures

Income statement (continued) FINANCIALS Q3 2016

in EUR m	Q3 2016	Q3 2015	∆	2015
EBITDA	205.2	204.4	0.4%	807.4
Depreciation	-28.3	-26.8	5.6%	-108.7
EBITA	176.9	177.6	-0.4%	698.7
1) Amortization	-11.7	-9.4	24.5%	-36.9
EBIT	165.2	168.2	-1.8%	661.8
2) Financial result	-23.9	-27.3	-12.5%	-112.5
EBT	141.3	140.9	0.3%	549.3
Profit after tax	93.4	94.7	-1.4%	368.1
EPS	0.60	0.61	-1.6%	2.36
EPS excl. Amortization and Zhong 3) Yung liability	0.66	0.65	1.5%	2.68

1) Includes scheduled amortization of customer relationships amounting to EUR 8.7m in Q3 2016 (EUR 7.1m in Q3 2015 and EUR 27.7 million in 2015).

2) Thereof EUR 0.0m in Q3 2016 (EUR -0.6m in Q3 2015) are related to a change of the purchase price obligation for Zhong Yung (International) Chemical

Ltd., which has to be recorded in the income statement according to IFRS (EUR -23.4m in 2015).

3) Adjusted for the net effect of amortizations and (for 2015 only) changes in the purchase price obligation for Zhong Yung.

Cash flow statement FINANCIALS Q3 2016

in EUR m	Q3 2016	Q3 2015	2015
Profit after tax	93.4	94.7	368.1
Depreciation & amortization	40.0	36.2	145.6
Income taxes	47.9	46.2	181.2
Income tax payments	-42.7	-31.3	-174.2
Interest result	21.1	17.4	71.5
Interest payments (net)	-32.4	-33.9	-67.2
Changes in current assets and liabilities	36.9	24.9	60.6
Change in purchase price obligation/IAS 32	0.3	1.0	24.9
Other	15.5	11.7	-16.8
Cash provided by operating activities	180.0	166.9	593.7

Cash flow statement (continued) FINANCIALS Q3 2016

in EUR m	Q3 2016	Q3 2015	2015
Purchases of intangible assets and property, plant & equipment (PPE)	-26.6	-27.0	-126.7
Purchases of consolidated subsidiaries and other business units	-0.3	-3.3	-500.8
Other	0.7	1.6	5.9
Cash used for investing activities	-26.2	-28.7	-621.6
Capital increase	-	-	-
Payments in connection with the capital increase	-	-	34.3
Purchases of companies already consolidated	-6.3	-	-
Profits distributed to non-controlling interests	-	-	-1.9
Dividends paid to Brenntag shareholders	-	-	-139.1
Repayment of (-)/proceeds from (+) borrowings (net)	-3.3	-61.1	218.7
Cash used for financing activities	-9.6	-61.1	112.0
Change in cash & cash equivalents	144.2	77.1	84.1

Balance Sheet as of September 30, 2016 FINANCIALS Q3 2016

in EUR m

7,025		7,025
607
1,508	Cash and cash equivalents	2,211	Financial liabilities
	Trade receivables		Trade payables
345 883	Other assets	1,081	Other liabilities
	Inventories	378 160	Other provisions
2,736	Intangible assets 1)	442	Other
	Property, plant and equipment	2,753	Equity
946
Assets		Liabilities and Equity

1) Of the intangible assets as of September 30, 2016, some EUR 1,267 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 Q3 2016

in EUR m	30 Sep 2016	30 June 2016	31 Mar 2016	31 Dec 2015
Financial liabilities	2,211.1	2,230.5	2,211.1	2,255.2
./. Cash and cash equivalents	607.1	463.4	580.2	579.1
Net Debt	1,604.0	1,767.1	1,630.9	1,676.1
1) Net Debt/Operating EBITDA	2.0x	2.2x	2.0x	2.1x
Equity	2,752.8	2,668.0	2,698.4	2,690.5

Financial stability of Brenntag Group FINANCIALS Q3 2016

• Business demonstrates ability to de-leverage constantly

• Investment grade ratings from Standard & Poor's ("BBB") and Moody's ("Baa3")

• Balanced and long-term maturity profile

• 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.
• 2) 2009 adjusted for expense items relating to the equity termination of a multiyear program

Working capital FINANCIALS Q3 2016

in EUR m	30 Sep 2016	30 June 2016	31 Mar 2016	31 Dec 2015
Inventories	883.2	880.5	866.3	897.1
+ Trade receivables	1,508.4	1,572.8	1,494.3	1,426.5
./. Trade payables	1,080.6	1,126.7	1,077.1	1,055.5
Working capital (end of period)	1,311.0	1,326.6	1,283.5	1,268.1
Working capital turnover (year-to date) 1)	8.1x	8.1x	8.1x	8.0x
Working capital turnover (last twelve months) 2)	8.0x	7.9x	7.9x	8.0x

• 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 Q3 2016

in EUR m	Q3 2016	Q3 2015	∆	∆	2015
EBITDA	205.2	204.4	0.8	0.4%	807.4
Capex	-26.2	-25.3	-0.9	3.6%	-130.1
∆ Working capital	11.1	11.9	-0.8	-6.7%	87.0
Free cash flow	190.1	191.0	-0.9	-0.5%	764.3

Segments FINANCIALS Q3 2016

in EUR m		EMEA	North America	Latin America	Asia Pacific	All other segments	Group
Operating gross profit	Q3 2016	261.3	254.7	41.7	46.4	3.6	607.7
	Q3 2015	255.1	240.9	50.5	34.4	3.5	584.4
	∆	2.4%	5.7%	-17.4%	34.9%	2.9%	4.0%
	∆ FX adjusted	5.3%	6.2%	-18.7%	36.3%	2.9%	5.4%
Operating EBITDA	Q3 2016	88.2	96.3	9.4	16.7	-5.4	205.2
	Q3 2015	87.2	95.7	15.4	12.1	-6.0	204.4
	∆	1.1%	0.6%	-39.0%	38.0%	-10.0%	0.4%
	∆ FX adjusted	4.6%	1.0%	-40.1%	38.3%	-10.0%	2.0%

Update North America: Trends in Gross Profit with Oil & Gas customers FINANCIALS Q3 2016

and industrial production

7 0 7 0 5 4 7 3 6 5 5 5 7 7 6 4 5 7 7 9 6 1 50 55 60 65 70 75 80 85 Q1/14 Q1/15 Q1/16 Q2/14 Q2/15 Q2/16 Q3/14 Q3/15 Q3/16 Q4/14 Q4/15 USDm

Q3 2016: O&G Gross Profit

Total 2014 = USD 299m Total 2015 = USD 260m

IP Growth US on prior year

At constant FX Rates; IP Growth US source: Board of Governors of the Federal Reserve System

Q3 2016 Presentation AGENDA

▌Highlights Q3 2016

▌Financials Q3 2016

▌Outlook

▌Appendix

OUTLOOK

	2015 9M 2016	Comments	Trend 2016
Gross profit	EUR 2,266m EUR 1,784m	 Meaningful increase expected  Performance is expected to be supported by the business in the EMEA and Asia Pacific regions in particular and by acquisitions
Operating EBITDA	EUR 807m EUR 613m	 All regions are expected to support the performance albeit  Guidance range: EUR 800m to EUR 820m for the full to different degrees (Latin America excl. Venezuela). year 2016.
Profit after tax	EUR 368m EUR 262m	 General development driven by growth of operating EBITDA.  Negative impact from asset-write-off in Venezuela.

OUTLOOK

	2015 9M 2016	Comments	Trend 2016
Working capital	EUR 1,268m EUR 1,311m	 To a large extent a function of sales growth  Expected to grow in 2016
Capex	EUR 130m EUR 70m	 Capex spending increase to ca. EUR 150m driven by projects for business expansion.
Free Cash Flow	EUR 764m EUR 486m	 As the reduction in working capital of 2015 is not expected to be repeated in 2016, we expect a moderate decrease in free cash flow despite the positive EBITDA development.

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, M&A and Compliance

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!

Contents APPENDIX

	Page
Income Statement 9M 2016	23
Cash flow statement 9M 2016	25
Free Cash Flow 9M 2016	27
Segments 9M 2016	28

Income statement FINANCIALS 9M 2016

in EUR m	9M 2016	9M 2015	∆	∆ FX adjusted
Sales	7,863.3	7,872.8	-0.1%	1.7%
Cost of goods sold	-6,079.2	-6,159.7	1.3%
Gross profit	1,784.1	1,713.1	4.1%	6.0%
Expenses	-1,171.0	-1,098.3	6.6%
Operating EBITDA	613.1	614.8	-0.3%	1.7%
Op. EBITDA/Gross profit	34.4%	35.9%

Income statement (continued) FINANCIALS 9M 2016

in EUR m	9M 2016	9M 2015	∆
EBITDA	613.1	614.8	-0.3%
Depreciation	-85.5	-80.5	6.2%
EBITA	527.6	534.3	-1.3%
1) Amortization	-35.9	-28.4	26.4%
EBIT	491.7	505.9	-2.8%
2) Financial result	-93.0	-68.8	35.2%
EBT	398.7	437.1	-8.8%
Profit after tax	261.5	294.0	-11.1%

¹⁾ This figure includes for the period January to September 2016 scheduled amortization of customer relationships totalling EUR 27.1 million (9M 2015: EUR 21.9m).

²⁾ Thereof EUR -1.0m in 9M 2016 and EUR –1.9m in 9M 2015 are related to change in purchase price obligation Zhong Yung (International) Chemical Ltd., which has to be recorded in the income statement according to IFRS.

Cash flow statement FINANCIALS 9M 2016

in EUR m	9M 2016	9M 2015
Profit after tax	261.5	294.0
Depreciation & amortization	121.4	108.9
Income taxes	137.2	143.1
Income tax payments	-131.7	-142.0
Interest result	63.2	53.8
Interest payments (net)	-56.0	-55.5
Changes in current assets and liabilities	-49.1	-53.6
Other	47.5	-15.1
Cash provided by operating activities	394.0	333.6

Cash flow statement (continued) FINANCIALS 9M 2016

in EUR m	9M 2016	9M 2015
Purchases of intangible assets and property, plant & equipment	-76.3	-66.7
Purchases of consolidated subsidiaries and other business units	-46.4	-47.7
Other	4.1	4.0
Cash used for investing activities	-118.6	-110.4
Capital increase	-	-
Payments in connection with the capital increase	-	-
Purchases of companies already consolidated	-62.2	-
Profits distributed to non-controlling interests	-1.0	-1.3
Dividends paid to Brenntag shareholders	-154.5	-139.1
Repayment of (-)/proceeds from (+) borrowings (net)	-11.7	-196.7
Cash used for financing activities	-229.4	-337.1
Change in cash & cash equivalents	46.0	-113.9

Free cash flow FINANCIALS 9M 2016

in EUR m	9M 2016	9M 2015	∆	∆	2015
EBITDA	613.1	614.8	-1.7	-0.3%	807.4
CAPEX	-70.3	-62.9	-7.4	11.8%	-130.1
∆ Working capital	-56.8	-32.8	-24.0	-73.2%	87.0
Free cash flow	486.0	519.1	-33.1	-6.4%	764.3

Segments FINANCIALS 9M 2016

in EUR m		EMEA	North America	Latin America	Asia Pacific	All other segments	Group
Operating gross profit	9M 2016	807.7	745.2	128.2	133.9	10.5	1,825.5
	9M 2015	775.3	712.6	150.7	104.7	11.4	1,754.7
	∆	4.2%	4.6%	-14.9%	27.9%	-7.9%	4.0%
	∆ FX adjusted	6.6%	5.2%	-11.3%	32.7%	-7.9%	5.9%
Operating EBITDA	9M 2016	277.0	274.1	33.2	48.9	-20.1	613.1
	9M 2015	268.3	282.0	46.9	36.9	-19.3	614.8
	∆	3.2%	-2.8%	-29.2%	32.5%	4.1%	-0.3%
	∆ FX adjusted	6.1%	-2.4%	-25.9%	37.0%	4.1%	1.7%

CONTACT

Investor Relations

Thomas Langer Diana Alester René Weinberg Phone: +49 (0) 208 7828 7653 Fax: +49 (0) 208 7828 7755 E-mail: IR@brenntag.de 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. Some information contained in this document is based on estimates or assumptions of Brenntag and there can be no assurance that these estimates or assumptions are or will prove to be accurate.

Disclaimer