Sector News

Platform Specialty Products prepares for relaunch as Element Solutions

January 29, 2019
Chemical Value Chain

Platform Specialty products today announced management changes and financial goals in advance of the company’s relaunch as Element Solutions, an electronic and specialty chemicals business. The relaunch will occur after the $4.2-billion sale of Platform’s ag business, called Arysta LifeSciences, to United Phosphorous Ltd. (UPL; Mumbai, India) closes on Thursday. The company also announced preliminary results for the fourth quarter.

Benjamin Gliklich, current executive vice president/operations and strategy, will take over as CEO of Element after Arysta is split from Platform. Rakesh Sachdev will step down as CEO but will remain on Element’s board. Martin Franklin will remain as executive chairman, and MacDermid executive Scot Benson has been named president and COO. Gliklich, Franklin, and Benson will together constitute Element’s office of the chairman.

Element, which will consist mainly of the legacy business of MacDermid and Alent plc, will operate in two divisions: electronics, and industrial and specialty. Element expects organic sales to grow by 1–3% in 2019, in an environment that company executives describe as flat-to-down. Adjusted EBITDA for 2019 is expected to grow by 5–8%. The business saw sales of $1.96 billion for full-year 2018, up 4% year on year (YOY), with industrial and specialty segment growth outpacing electronics segment growth.

While Platform grew via a string of acquisitions earlier this decade, Element will have a more operational focus, executives say. “Our strategy is not an acquisition-focused strategy, it’s an operational excellence strategy,” Gliklich told investors during a conference call on 28 January. Franklin, who helped lead Platform as well as consumer goods firm Jarden (Rye, New York) through multiple acquisitions, says his focus will also be on operations. “It’s not so much an M&A story anymore,” Franklin told investors. “It’s an operational story…people often didn’t realize that Jarden’s success was not just due to M&A, but also operational performance. That’s where I am going to be focused.”

Still, Element will look at bolt-on acquisitions. “We will be looking for bolt-ons in existing and adjacent markets,” Gliklich says. “In existing adjacent markets there is some diversification, so there’s room for that.”

Cash-flow generation and capital allocation will be key focuses. The company has authorization to buy back shares in 2019 and is aiming to start doing so quickly, according to Franklin. Element will have $1 billion in net debt after the Arysta sale closes, with EBITDA expected to total about $420 million/year. The company will have over $350 million in cash to fund share repurchases, as well as other capital-allocation priorities, including acquisitions and organic growth.

Fourth-quarter preliminary results

Element’s pro-forma net sales during the fourth quarter totaled $480 million, down 1% YOY due to negative currency impacts and a weakening electronics market in China. Organic net sales were up 1% YOY. Fourth-quarter adjusted EBITDA is expected to total $98–100 million, down about 5% YOY.

Sales in the electronics business were down 4% YOY, to $280 million, and sales in the industrial and specialty business were up 1%, to $200 million. Electronics’ adjusted EBITDA fell about 8% YOY, to a range of $57–59 million, and industrial and specialty adjusted EBITDA grew by about 1%, to $40–42 million.

“Demand softness in the Asia region across both electronics and industrial markets” drove the declines, according to Sachdev. “Our electronics business, particularly our assembly materials product lines, benefited from successful new product launches, but our circuitry business in electronics was impacted by weak demand in the high-end mobile phone market and a generally weak economy in Asia. Our energy and graphics operations continued to display strong performance throughout the year.”

By Vincent Valk

Source: Chemical Week

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