Element Solutions Inc (ESI) 2015 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Platform Specialty Products Corporation's first-quarter 2015 results conference call.

(Operator Instructions)

As a reminder, this conference may be recorded. I will now turn the call over to Ben Gliklich, Platform's Vice President of Corporate Development, Finance and Investor Relations. Please go ahead.

Good morning. Please note that in accordance with Regulation FD or Fair Disclosure, we are webcasting this conference call. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Platform is strictly prohibited.

Before we begin, please take note of Platform's cautionary statement regarding forward-looking statements at the end of the earning release issued earlier today. Some of the statements made today during this conference call will be considered forward-looking. All forward-looking statements are based on currently available information. Platform's actual results could differ materially from those predicted. However, Platform undertakes no obligation to update any such statements whether as a result of new information, future events or otherwise. Please refer to Platform's SEC filings for a more detailed description of the risk factors that may affect Platform's results.

Please note that Platform has posted supplemental financial data slides to its website at www.Platformspecialtyproducts.com. In accordance with Regulation G, Platform is providing reconciliations of certain non-GAAP to comparable GAAP financial measures in its earnings release, its current report on form 8-K relating to the earnings release and in the supplemental slides. The supplemental slides can be downloaded in the Investor Relations section on Platform's website under Events and Presentations.

For the purposes of this call, we will be comparing the periods of 2014 and 2015 on a pro forma as-adjusted basis as we believe this will give our investors a proper comparison and understanding of the underlying business results for Platform's operations. Pro forma as-adjusted figures reflect our financials had we owned each of the businesses in our portfolio since January 1, 2014. Like any global corporation, Platform is subject to currency fluctuations, so we will also be presenting our results on both an actual dollar and constant currency basis for both years.

I encourage you to review our supplemental slides that have been posted on our website for further clarification. Following management's remarks, there will be time allotted for Q&A. Now I would like to turn the call over to our CEO, Dan Leever. Dan, please go ahead.

Thanks, Ben and good morning everyone. As you all know, 2014 was a record year for Platform, and we started off 2015 with great momentum.

In early February, we closed the Arysta acquisition and quickly hit the ground running. We announced the new agricultural solutions management team at the time of closing, and post-close, Wayne joined Martin and me in the Office of the Chairman, and he immediately began work on integration and synergy opportunities.

As you will recall in March, within one month of closing, we had increased our synergy target from $65 million to $80 million. Wayne will share more of the progress against synergies today.

We recently conducted our agricultural solutions business reviews, and we are very excited by how far we have come in such a short period of time together and how our integration teams are methodically executing against our strategy. In the first quarter of 2015 on a natural dollar basis, we grew revenue by $351.1 million over last year from $183.7 million to $534.8 million, and adjusted EBITDA from $45.9 million to $130.5 million. That includes $5 million of realized cost synergies.

Foreign exchange movements continue to have a negative impact on reported results. On a pro forma as-adjusted basis, revenue declined 6.7% due to strong currency headwinds. Adjusting for FX, constant currency organic pro forma revenue increased 9.6%, and constant currency pro forma EBITDA increased by 22%.

Adjusted pro forma EPS for the first quarter of 2015 was $0.21 compared to Q1 2014 of $0.18. Recurring free cash flow for the quarter 2015 was [negative] $2 million or $0.01. This was driven by the seasonal effect of working capital build, which was an outflow of $61.2 million in the quarter.

Unlike many in the ag business, we enjoyed robust constant currency revenue growth of 11.2%, illustrating the success of our S squared strategy concentrating on specialty crops in specialty places. AG constant currency EBITDA grew 28.1% in the quarter, which includes synergies. Without synergies, AG constant currency adjusted EBITDA growth was still very strong, 20.7%.

Constant currency EBITDA growth in the performance application segment was also double digit at 12.3%. The performance application segment, which currently consists of the McDermott business, had record adjusted EBITDA quarter, and its associated margin was the best ever margin quarter, which reflects the outstanding work that that team has done especially in new product penetration. These are very exciting times, and our entire management team remains focused on continuing to deliver strong results for our shareholders.

With that, I will turn the call over to Frank to walk you through the financial results in more detail. Frank?

Thank you, Dan and good morning, everyone. Before diving in to results, I'd like to point out a few important items. First, in this quarter, we completed certain changes to our organizational structure that resulted in the reclassification of our three reportable business segments: performance materials, graphic solutions, and agricultural solutions into two reportable business segments that we're now calling performance applications and agricultural solutions.

We have reorganized and rebranded our operations by consolidating our performance materials and graphic solutions segments into the performance application segment. This segment now contains the full legacy McDermott business and better represents how we intended to view the businesses going forward.

Second, as Ben noted, in addition to our actual results, we will be presenting number on a pro forma as-adjusted basis, meaning comparisons and analytics for the current and prior years will reflect the combined businesses as if we owned all acquired business units for the full year. We believe that our reported results only partially reflect the ongoing operations of Platform as they include deal-related costs, purchase accounting adjustments and other non cash items associated with our acquisition strategy.

We further believe that our investors will find our pro forma as-adjusted results provide a clearer picture of our underlying businesses and their growth rates. We refer you to our supplemental slides posted on our website to assist you in understanding these adjustments.

We are pleased to report a record quarter for Platform. For the quarter ended March 31, 2015 on an actual results basis, Platform's reported revenue was $534.8 million versus $183.7 million in the prior year, an increase of $351.1 million. In segment terms, performance applications revenue was $180.3 million versus $183.7 million in 2014, a decline of $3.4 million or 1.9%.

The agricultural solutions segment which was new to Platform in Q4 of 2014 finished Q1 of 2015 with revenue of $354.5 million. On a pro form as-adjusted basis in actual dollars, Platform had Q1 2015 revenue of $622.3 million versus $666.7 million for the same period in 2014, a decrease of 6.7% or $44.4 million. The performance applications segment declined $3.4 million or 1.9% from $183.7 million in 2014 to $180.3 million in 2015 as previously mentioned, while the agricultural solutions segment declined $41.8 million or 8.5% from the $483.8 million in 2014 to $442 million in 2015.

As Dan discussed, the strengthening of the US dollar continued to represent a headwinds to our operations in the first quarter of 2015. On a pro form as-adjusted basis in constant currency, Platform grew revenue by 9.6% or $54.3 million, growing from $567 million in 2014 to $621.3 million in 2015.

The performance application segment increased revenues by 5.9% or $10 million, growing from $170.4 million in 2014 to $180.4 million in 2015. The agricultural solutions segment increased revenues 11.2% or $44.3 million from $396.6 million in 2014 to $440.9 million in 2015. Platform pro forma as-adjusted EBITDA in reported US dollars for 2015 was $134.6 million versus $133.9 million in 2014.

On a segment reported basis, performance applications pro forma as-adjusted EBITDA was $48.5 million, which is up $1.9 million or 4.1% over the prior period while the agricultural solutions segment reported pro forma as-adjusted EBITDA of $86.1 million, down $1.2 million or 1.4% over the same period. Adjusting for currency effects, Platform pro forma as-adjusted EBITDA for 2015 was $135 million versus $110.7 million in 2014, which is up 22% or $24.3 million. On a segment reporting basis in constant dollars, performance applications pro forma as-adjusted EBITDA was $48.5 million, which is up $5.3 million or 12.3% over the prior-year period, while the agricultural solutions segment reported pro forma as-adjusted EBITDA of $86.5 million, which is up $19 million or 28.1% over the prior period.

The key drivers of performance in this quarter and our agricultural solutions segment were an above-average start to the growing season in Europe and strong sales of our higher margin value-added products. Our performance applications segment benefited from strength in our electronics solutions business which related to product launches based on strong overall end market demand and a solid quarter for our offshore solutions product offerings.

During Q4 of 2014, we raised the equity needed to close the Arysta transaction, and in Q1 of 2015, we finalized the debt offerings that were required. This consisted of a new $2.1 billion in new debt, $1.1 billion worth of US dollar bonds, $350 million of Euro denominated bonds, $500 million to an incremental ad to our dollar denominated term loan, EUR83 million in euros to an incremental add to our Euro tranche loan, and finally $150 million of draw on our revolver to infuse cash in the agricultural business.

As of March 31, 2015, Q1 net debt was $3.3 billion. We remain committed to our leverage multiple at or below 4 1/2 times EBITDA and are confident that it will return to that level in the next 12 to 18 months.

From a cash flow and free cash flow per share basis, mid Q1 into Q2 is the working capital build period for our agricultural business. We had a working capital outflow of $61.1 million in this quarter versus the $4.8 million outflow in 2014. This entire swing in working capital is related to the agricultural solutions business that we acquired over the last six months and its consist with the guidance that we have been providing. This outflow makes up the bulk of the funds used in operating activities.

Moving to cash flows provided by investing activities, you can clearly see the outflow of funds associated with the purchase of Arysta making up the largest portion. From a CapEx standpoint, we had an outflow of $20.8 million in the quarter for general projects that carried over from the prior year and an additional $8.4 million that related to costs associated with the registration and re-registration of product offerings within our agricultural solutions segment. Foreign currency reduced our cash position $10.6 million in this quarter.

Recurring free cash flow per share was a negative $0.01 in the quarter. The quarter's lack of free cash flow was anticipated as we've been discussing, and as we integrate the businesses, we will focus intensely on improving our working capital. This is something that we are very confident we can do.

A few words to put a finer point on foreign exchange volatility, which we highlighted on our Q4 earnings call and again in our investor day. We continue to see large foreign currency moves in the first quarter that impacted us meaningfully.

On our last call, we talked about foreign currency representing a 10% headwind based on end of February rates. Rates continue to move against us in the month of March, and based on spot rates at the end of March, foreign currency would have been a 17 % headwind to EBITDA.

In the intervening months, rates have recovered somewhat and returned close to the end of the February levels. We have implemented pricing actions, hedging, barter transactions and other mechanisms that mitigate the effects of currency, especially on our cash flow.

The first quarter is heavily weighted to the month of March, so we earned meaningful revenue at the trough of the recent foreign currency rates. However, due to our combination of strong operating performance in the quarter and the recovery in foreign currency rates since the end of March, we are reaffirming the guidance we gave on our investor day. We continue to caveat that this guidance is based on foreign currency as of a point in time, in this case the April 30, 2015 rates.

To review our guidance once more, we continue to believe that 2015 full-year pro forma as-adjusted EBITDA will be between $660 million and $680 million and adjusted earnings per share will be $1.20 to $1.25. I would now like to turn you over to Wayne Hewett, Platform's President, to discuss our agricultural solutions segment and our integration process in more detail. Wayne?

Thank you, Frank, and good morning everyone. As Frank just finished saying, the agricultural solutions segment revenue decreased $42 million or 9% from $448 million (sic - see slide 4, "$483 million") in 2014 to $442 million while our adjusted pro forma EBITDA was down $1.3 million or 1.4% from $87 million to $86 million for the first quarter of 2015.

It will come as no surprise that our reported results were significantly impacted by the global strength of the US dollar against all currencies that we do business in. These currency movements have impacted both our year-over-year results but also caused a small shift in mix between first and second half EBITDA. The first half of the year is more heavily weighted towards non-US dollar currencies, and this will result in a stronger weight of total-year EBITDA in the second half of the year.

The currency related points aside, the underlying fundamentals of our business have been very positive through the first quarter. On a constant currency basis, our agricultural solutions revenue grew 11% and EBITDA grew 21% before synergies.

These results are driven by a few key factors. First, better uptake of our high margin value-added products. Second, favorable weather conditions in some key geographies, which were partially offset by the relief of channel inventory in a few select markets.

We are extremely pleased about the performance of our higher margin value-added products, which reported flat year-over-year sales despite a 20% headwind related to currency. We were doubly pleased that the strong performance was driven by products from all three legacy companies.

Just to highlight a few examples, we saw continued strong growth with clethodim, a legacy arrest herbicide; ACRAMITE, a legacy Chemtira insecticide; and dodine, a legacy Agriphar fungicide. All three of these products have strong growth in reported terms across all key geographies.

From a geographic perspective, we're happy to see that Europe is off to its second consecutive early spring. Brazil is recovering from the late 2014 drought, and North America, despite another difficult wet winter, seems to be on track for a relatively normal season. We are hopeful that these variable conditions will lead to an increased number of applications on crops and continue to relieve cattle inventories.

Profit execution is a key strength of our new combine company, and this skill set is proven very effective in helping us achieve our integration goals. Today, the vast majority of our sales and marketing teams around the world are already integrated and working as one cohesive unit to drive the sales of all three legacy Ag product portfolios.

We've also made great strides in bringing together our back offices, and we are already seeing the benefit of this consolidation of activities become visible in our P&L. Included in our first-quarter results, we achieved $5 million in synergies, primarily coming from G&A. Synergies coming from distribution and supply chain will take longer to realize due to regulatory contractual hurdles, but we've begun to ramp up our efforts and expect to start realizing savings in these areas later this year.

While just three months after the Arysta close, we now have clear line of sight actions to deliver the $80 million three-year commitment that we communicated through our last investor day. While our Q1 results were slightly better than expectations, we have not changed our 2015 forecast of high single-digit growth before the effects of currency and synergies in the agricultural solutions business, and again due to currency effects, we do believe that from a reported perspective, it will be more weighted towards the second half of the year.

Over all, we feel the first-quarter financial results highlight the strong underlying health of our agricultural solutions segment, and we're cautiously optimistic for the rest of the year. With that, I will turn it over to Dan for concluding remarks.

Thank you, Wayne. I just wanted to make clear the agricultural solutions revenues went from $484 million to $442 million. I think you transposed one of those numbers earlier.

So we are pleased with this quarter's results. On the Ag side of the business, we have demonstrated our ability to continue to generate strong underlying growth despite industry-wide headwinds. Our specialty squared strategy, specialty crops and specialty geographies is proving out.

On top of the strong operational execution, synergy realization is on track and integration is going smoothly. We have a long way to go, but the results thus far are very encouraging.

With all three of our ag acquisitions closed and no transactions announced since October, I would like to emphasize that we have not de-prioritized acquisitions as a source of [added iteration]. We believe there continue to be accretive value-added transactions that are actionable.

That said, I will reiterate the view I shared on our Q4 call -- if 2015 we do a few smart deals and fall well short of our synergy target, we lose. But if we do no more acquisitions and beat our synergy target, we win. This continues to dictate our priorities.

Nonetheless, if the right opportunity arises, we will be quick to take advantage of it. We remain confident in our ability to raise capital and have management capacity to integrate and realize synergies. In the meantime, integration, strategic planning, tax optimization, cost control, and currency management assuring maximum cash flow generation continue to be our priorities.

The short break in the M&A action has given us the capacity to further leverage the unique nature of our Board and their expertise. We spent time recently thinking about ways to run an even more efficient organization. Martin introduced us to the Restaurant Brand folks, and we conducted high level benchmarking. Frankly we were inspired by their story.

We have also spent time studying potential new verticals that fit our model. Our direct to Ryan Israel lent us the Pershing Square expertise in this analysis.

We've been at this a long time, but we are passionate about taking every opportunity to learn from others how to do better in driving to create a truly outstanding enterprise. We're only in the early innings of 2015, and while we're a quarter of the way through the year chronologically, our first quarter represents less than 20% of our full year earnings, so our optimism is tempered.

To summarize, the business units remained focused on the task at hand, in particular the ag team is driving sales growth in their high margin end markets and making significant progress integrating the three businesses. McDermott continues to focus on providing high-quality technical service and innovating value-added products to support customers' needs.

From a corporate standpoint, we remain focused on the different paths realizing significant accretion to our intrinsic value per share. The acquisition pipeline is robust, and the capital markets are friendly. I look forward to updating all of you on our progress in future calls.

With that, we will take your questions. Operator?

(Operator Instructions)

Our first question comes from Duffy Fischer with Barclays, your line is open.

Yes, good morning, guys. Question on the ag side, I was wondering if you could just run us through the main geographies and talk about what you're seeing volume-wise for sales so far this year, because it sounds like things are running ahead of plan.

Yes. I will go through it, relatively quickly. As I said earlier, from a European perspective, we clearly saw things off to a much better start than we anticipated, primarily due to the early spring. And I think as you know, last year was also an early spring in Europe. So it was actually a pleasant surprise to us that this year was also an early start, so we feel pretty good there.

Africa for us remains solid. Latin America, I think it's more varied, to be honest, I think there's some parts of the market that we clearly see a lot of inventory in the channel. There's some parts of the market that we actually see a recovery from a drought there, but I think overall, just more mixed.

I think in North America to be honest, it's too early. The season is just getting started, so it's really too early to really make any meaningful comments in North America.

Okay. And you mentioned channel inventories, how much visibility do you have into your own products downstream in the channel? Are your inventories in better condition than inventories in general, or how would you characterize that?

Yes, it's -- I will tell you how we think of it, because I think it's always more important to focus on what we're doing as opposed to trying to make a comparison to others. We've been on the conscious effort over a couple years now to actually reduce the amount of inventory in the channel. We started that program a couple years ago, we continued that program at the end of 2014.

So as a result of that, I think in broad strokes, we would say that we're making progress to have on a relative basis a little less inventory in the channel. So we think that when inventories actually decline, that we should be able to see a little bit of an uptick a little sooner.

And then the last one for me, Frank, when you look at some of the puts and takes that are a little different from what we've seen so far earlier in Europe, is any of that going to affect the timing of cash flows this year?

As of right now, based on what we've seen and what we had originally anticipated, we don't see it changing our original guidance where Quarter 2 and late Quarter 2 going into Quarter 3 would be an inflow.

Perfect. Thank, guys.

Our next question comes from Jon Tanwanteng with CJS Securities.

Congrats on a very nice quarter.

Thank you.

Wayne, have you been able to quantify what some of the potential sales and product synergies might look like now that you have all the acquisitions under the same roof?

Yes, it is funny because as you know, Jon, in our $80 million of synergies, we have zero top line synergies as part of the $80 million. So any top line that obviously out there will be upside to the $80 million.

Given the fact we're so laser focused on the $80 million, we've not spent a lot of time trying to quantify the top line savings. But again, the short answer is that in the $80 million there's zero, we clearly know there will be additional stuff coming, but it's been a secondary focus for us.

Okay, thanks. And then just on the McDermott side, can you talk about what you're seeing there in terms of the strength of electronics, what you're seeing heading into Q2?

Heading into Q2, if you look at who our end market customers were and so forth, Quarter 1 was really good coming out of Chinese new year. We saw Samsung do their builds and some the normal Chinese customers and so forth pick up businesses as well.

As you head into April, you always have the build that happened into March, so it steals a little there. But as of May and June unfold, we believe it will continue specifically with the installations we did in late last year, that you will start to see revenue from that going forward.

Okay, great. And then, Dan, would you mind commenting just on the insider selling we saw over the last week or so?

You will note that I sold some shares, and I'd like to say that you can't build a house with stock certificates. And I rolled over all of my 100% of my stock in 2006, I rolled over 100% of my stock again in 2013.

And my wife wants a house, I told her I'd sell some stock to buy her a house, really that simple. It's a big house, that's all.

Good for you, Dan. It's well deserved.

Our next question from John Roberts from UBS, your line is open.

On slide 7 where you show the LTM free cash flow at $0.53 a share, do you have a pro forma estimate for that?

No. We could, we can work that out, but I can get you that offline.

Okay. And then, would you see any overlaps between Monsanto and Syngenta that would be of interest to Platform, or are you so overweighted in ag already that it's not an area of focus?

I will take it and Dan can add some questions. I think as we've said before, right now our focus is on running the business and execution and getting the synergies, and quite honestly our view relative to digging more in to the ag space would have to be a super, super sweet deal for us and the numbers would have to scream for us.

That said, one of the things from an ag perspective we've always noticed is that to the extent that there are industry consolidations that sometimes products become loose, and if something was there that was available, obviously we would take a run at it. But again, our priority is the focus of running the business and would have to be a screamer of a deal before we would say we're very excited about it on the ag side.

Thank you.

Our next question comes from John McNulty with Credit Suisse.

Thanks for taking my question. When I look at ag, you had some -- really especially on constant currency, you had some really solid growth. So maybe thinking about the buckets of where that growth came from, can you give us color on the price mix and volume trends you saw and how they break out?

Yes, we don't release the price mixed data, but I will just give you more broad strokes. We clearly, clearly saw an increase in the GP percent, and because we actually saw a much more favorable mix is how we would describe it. And that's really led by the fact that our, what we call our global value added products that we've talked about or GVAP grew significantly faster than the rest of the portfolio.

So clearly we're getting price in local terms. As we said before, we're increasing price locally to offset the impact of FX. But the bigger story for us was the fact that we had a significant mix uptake because of the strength of our global value-added product portfolio.

Okay, great, that's helpful. And then with regard to the performance business, you're hitting record margins. You've actually been doing that recently for a little bit. What's driving that?

Is it mix or is it just increased profitability just because of the volume going through? How should we be thinking about what's driving the margin levels and if they're sustainable as we look forward for a few more quarters?

The margins are getting remarkable, I will tell you that. If you ask me five years ago if it was even possible to get these margins, I would've said no. But having said that, they really seemed sustainable, I think the specific answer to your question is it's mixed.

We really have been successful and I would say clearly won the race if you will to the highest technology in the mobile devices side of electronics. And so that's very demanding technology that is very attractive business, that's really, a big driver of what's happening, I would say. And that mix continues to shift in that business.

And offshore believe it or not continues to be strong, and that creates a favorable mix scenario too. So I don't know how much upside there is from here to be honest, but we don't see a whole lot of downside either.

Okay, fair enough. And then maybe one last question, with regard to FX headwinds and I know they've been fierce and it's always tough to time these things, but when you look at your overall capital structure, is there any thought to moving even more debt offshore or overseas so that we can actually, maybe you have a little bit more of a natural hedge against some of the FX headwinds?

Simple answer to that is yes. We spend a lot of time thinking about how to mitigate currency headwinds and putting debt in foreign currencies is certainly one of them that we've been exploring. There are favorable rate opportunities where the arbitrage is actually favorable to us, it will reduce interest if we do so. And so we are exploring those readily and plan to do so.

Great, thanks very much for the color, guys.

Our next question comes from Lauren Gallagher with Credit Suisse. Lauren, your line is open.

Hello?

Go ahead.

Hi, sorry, just following up on the FX question, you mentioned you started to instate some hedging policies. I'm curious, after looking at the various alternatives, how much would you say of your FX is currently hedged?

We have local factoring policies in place, we have some barter agreements in place that mitigate FX associated with working capital. That is predominantly in Brazil, but we have that in Europe as well.

We have about 20% of our debt currently denominated in Euros. We are beginning to build out the operational hedging policy or program that Arysta had in place.

I don't know if we have quantify a precise percentage, so we can take it offline if you want to go through currency by currency, but it's been an increasing area of focus for us and something we're going to be doing increasingly where appropriate. As I just addressed John's question, one thing that we're certainly going to be doing is placing debt in other foreign currencies where there's a favorable rate arbitrage to match our cash flow exposures.

And then, just following up, you said around $80 million is the synergy target?

Correct.

Okay. Great, thank you very much.

Our next question comes from Aleksey Yefremov with Nomura Securities.

Dan, I just want to follow up on your comments regarding exploring new verticals. Did you find any new verticals interesting, and perhaps could we see an updated slide on the platforms that you're looking at, thank you.

We haven't got that far, to be honest with you. We are looking at a couple areas that I would say in the early stages are interesting, but we're not far enough along to put them on the chart yet, I wouldn't say.

We still have more work to do, there are clearly areas that are not on the puzzle chart that we think could be added to the puzzle chart. And I would say we will take a little bit of time to do further work in that, to be really confident that they belong.

Thank you. And a follow-up for Wayne, on GVAP products that really benefited this quarter, could you give us a sense of what drove that outperformance? Was it market share gains or were your end markets growing faster and how did you expect this improved mix to persist for the rest of the year and into 2016? Thank you.

I think the short answer is it's really been a little bit if all the things that you just talked about. As we highlighted, our global value-added products year over year in terms of actual currencies were actually flat.

Just given the impact of currency, you can run the math and feel that it was actually super strong, so it's hard to say it wouldn't pick up some market share on those particular products, which is very, very helpful. And in terms of the mix impact, we're not changing our total year outlook from the standpoint of EBITDA, ex-synergies, ex currencies. That said, I think we'd be a little bit disappointed if we didn't see a little more favorability in the mix play through for the total year.

I think, I would add to Wayne's comments that whereas we're not spending a lot of time trying to quantify the top line synergies in this deal. Nevertheless, there are sales and marketing deals all around the world driving the combined product lines of these companies for the success.

And what you're going to see over time is unquestionably, a move towards a higher value-added product because that's where the emphasis is. I think you're seeing some of that now and you will see some of that for a long time to come.

Thanks a lot.

(Operator Instructions)

Our next question comes from Owen Douglas with Baird, your line is open.

Hi guys, thanks for taking my question, couple quick ones. I wanted to dig into a little bit the deal-related acquisition costs for the quarter. I don't believe it was spelled out in the press release this time.

So, if you look at, in the free cash flow per share slide, you will see that acquisition related expenses in the quarter were $29 million. And that was predominantly legal, accounting follow up stuff as it relates to registration statements and so forth.

We also had on the cash flow statement, there was an outflow of cash that associated with deal-related and retention payments that needed to be made. But specifically as it relates to the acquisition costs themselves, we do have them broken out on that sheet and will continue to break them out as well.

Okay, that's great. And also, in -- earlier, you mentioned that, in the ag business, the higher value margin products, those ones you were able to keep the revenue line flat even accounting for the 20% FX headwind.

Can you give us a sense for how that portfolio looks now? What proportion is the higher value-added products versus the other parts of the ag business?

Yes, I, what I prefer to do is maybe to take it as a follow up because one of the things that we are working on is we just went through and as a result of the integrated company, actually came up with a slightly different definition. And when I say different definition, we wanted to make sure we included products from both the legacy Agriphar and legacy Chemtura, as well as legacy Arysta.

The numbers I have in mind may have changed slightly, but we will, it's obviously still significant. But we will take a follow up action to make sure we send you the precise numbers in terms of exactly what percent of our revenues and GP are comprised now by the new definition of our GVAP products.

Okay, that's fine. And I will follow-up after. Specifically, also one last one on the performance materials business, as we think about that legacy graphic solutions versus performance materials, can you give us a sense for whether or not the graphic solutions business comps positive year over year from a revenue perspective?

From a revenue perspective, year over year we did. We did see some continued softness in the coating plates business, but that was more than offset by revenue in our packaging business, which is of course, dominated by our Lux offering and our solid sheet processes.

Got you. And the margins, did that hold up as well?

Yes, they did hold up. The packaging side of the business is much more profitable from a margin standpoint than the old legacy coating plates.

Okay. That's good to hear. I will hop back in queue. Thank you.

(Operator Instructions)

There are no further questions. Ladies and gentlemen, that does conclude today's Q and A session and today's conference call. You may all disconnect and everyone have a great day.