Okay, we'll get started with our next presenter. We have the Executive Vice President of Operations and Strategy from Platform Specialty Products, Ben Gliklich, here to present. Thank you, Ben. With that, I'll turn it over to you.
Thank you to those of you in the audience for joining. I'm going to do three things very quickly here today before turning it over to questions. First, introduce Platform, tell you a little bit about the company. Second, talk a bit about our 2016 results, which we announced about a week ago. Third, talk about our 2017 objectives. Platform is a global diversified specialty chemicals company. We operate in two business segments right now, what we call our Performance Solutions business and our Agricultural Solutions business. The Performance Solutions business is oriented around five sub-verticals. Industrial Solutions, which is plating solutions, metallization, surface treatment for industrial end markets, primarily automotive. Electronic Solutions, which is metallization of printed circuit boards and semiconductors. Alpha, which is assembly solutions that create the integrated circuit. They put components onto printed circuit boards.
Graphic Solutions, which is a printing business, and Offshore, which is a small offshore production fluid business. The other half of the business is a specialty ag chem business. It's got a broad portfolio and a global reach, but it's really focused on specialty niches and specialty crops. What unites these two businesses is a thesis we started with when the company was founded in 2013, that there are businesses scattered across diverse specialty chemicals end markets that are focused on asset-light, high-touch applications. Asset-light, high-touch means we are not manufacturing molecules. The business does not require capital to grow or sustain its margin. We take molecules that other chemicals companies manufacture. Think your traditional chemicals company with a big plant that does molecule synthesis, and we combine them to come up with a customized solution that meets a specific customer's needs. We don't have big plant.
We have formulation facilities. If we were just asset-light and a formulator, we wouldn't have a real moat. Anyone could build a formulation facility. The high-touch component is very critical. High touch means that we've got professional technical services folks who are on-site with our customers, educating them and implementing our products. What that translates to is high gross margins that are stable, right? These are customized solutions, so there isn't the cyclicality and the fixed cost utilization equation you see in a conventional molecule synthesis chemical company, and a relatively high SG&A component. It translates to an above 20% EBITDA margin and less than 3% of sales in CapEx. Your EBITDA less CapEx is industry-leading in chemicals. This is an exceptionally diversified company, not just across end markets, as you saw on the prior slide, but also across geographies.
About 75% of our sales come from outside of the U.S. Europe is a very big geography for us, about equally split between our ag business and our performance business. We've got a big business in Asia from the performance side, tied to Electronics and automotive. In Latin America and Africa, we've got leading positions in the ag business. We've got the number 3 ag business in all of continental Africa. Now that we've talked a bit about the business, we'll talk about 2016. We announced our 2016 results last week. It was a great year. I would point you more towards the right-hand side or the left-hand side of the slide here, where we talk about comparable constant currency growth. We've made a lot of acquisitions over the past three years. This is the way we think about our business.
This is organic growth, net of currency, net of modest divestitures and acquisitions. We grew 2% last year. That was a good number. It accelerated in the back half of the year in the context of our end markets. The ag end market has been a very tricky end market for us. Performance Solutions has had a mixed bag. We've got an offshore business that had a tough year. Our automotive business was doing pretty well and accelerated in the back half of the year. Electronics really picked up in the back half of the year. Importantly, EBITDA grew 6% on a constant currency basis. We're excited by what we saw in the back half. We'll talk a bit about 2017, but it's continuing. We've got momentum continuing into the year. Importantly, we realized about $60 million of synergy.
The thesis here was to buy great businesses and make them better. We made six acquisitions. We talked about $150 million synergy opportunity. At this point, we've realized 100 of those in the P&L. We hired a new CEO in early 2016, Rakesh Sachdev, who came to us from Sigma-Aldrich, which was a paradigmatic asset-light, high-touch specialty chemicals company. Batch processes, very little CapEx, customized products to meet customers' needs. He joined in January. He set out these strategic priorities in the beginning of last year. We feel like we've met them. We've met the commitments we made to our shareholders, to our board, and to ourselves. The first was integration and synergy realization. We talked about we buy good businesses, we make them better. Integration needs to be a core competency for us. We've demonstrated that.
We completed our Ag Solutions acquisitions in early 2015. Within two years, we realized the full run rate of the synergies we committed to The Street. We exited the year with an $85 million synergy run rate. We also identified what we're calling continuous improvement cost synergies of $100 million, which we expect to realize over the next five years. On the Performance Solutions side, in our first year owning all three of the businesses we acquired there, we delivered $44 million of synergies into the P&L, which was a great accomplishment. The second initiative was a focus on fast-growing niches. The business is quite diversified. For us to really juice the top line, we have to exploit the niches, the fast-growing niches within our purview. We've made significant investments to exploit them.
Things like biosolutions, things like semiconductor copper in the Performance Solutions segment. Our 2% organic growth in 2016 was a good accomplishment in light of what we saw in our end markets. The acceleration we saw in the back half of the year is evidence that the strategies we've rolled out and implemented are working. The third was to establish an operating rhythm and momentum. We had a reasonable amount of turnover at the top of the company in 2015. We had basically made six acquisitions in two years. We needed to get into a groove. We felt like we really did that. We stabilized our leadership. We improved our company-wide coordination. Our organizational build-out, the building out the corporate functions to manage the bigger company we had become was complete. We've implemented some far-ranging HR programs that are seeing pretty good success across the company.
Finally, paramount to us, is generating free cash flow. Last year, we generated $185 million of free cash flow from operations. We really improved our tax structure, which has been something that we've been working on for the past year and a half. Importantly, improved our capital structure. We repriced and extended all of our term loans to generate $26 million of cash savings year-on-year. We raised a little bit of equity to put balance sheet questions behind us and resolve the Series B preferred, which was a security that had been an albatross around our neck. We solved that in the back half of last year as well. Quickly turning to the future, then we'll turn to questions. At our investor day last September, we laid out what we called our strategic organic long-term goals. How are we going to grow?
What are our objectives for the company over the next five years? It looks something like this. Our Ag Solutions business we expect to grow a point or two faster than the overall market. Over the past 30 years, the ag market has grown at about 4% on average, with peaks and troughs. Right now, we're in the middle or towards the end of a trough. We're not counting on the vigorous recovery that we've seen in prior ag market downturns. This 5% is industry growth rate on a stabilized basis, plus modest outperformance by virtue of the fast-growing niches we're exploiting. On the Performance Solutions side, because it's so diversified, the best sort of indicator is GDP. We're committing to growing a point or two faster than GDP, again, because we have access to some very exciting fast-growing niches.
Marry that with 400 basis points of cost improvement over the next five years from both COGS and SG&A. This is synergies and continuous improvement that we think we can realize. We believe we will grow in the high single digits from an EBITDA perspective over the next five years. Combined with some working capital management and some balance sheet improvements, we're committed to getting our leverage to below 4.5 times in the next three years. 4.5 times was our long-term target established when we founded the company. With that in context, let's look at our 2017 outlook. First in the Performance Solutions side, we talked about GDP being the indicator we look to benchmark our growth. We've got modest global GDP expectations. The other drivers we look to in the performance side are Electronics and auto.
The auto market is a bit bifurcated. We're seeing a bit of a slowdown in North America and Western Europe, an acceleration in Asia, we're taking share in Asia, so we expect that to be a nice growth driver to enable us to do better than GDP. The Electronics market has also begun to recover. It was weak in the back half of 2015 and early 2016. It ramped up in Q4, we're seeing that continue in 2017. With our shared gains that we have talked about a bit, we're expecting low to mid-single-digit top-line growth in the Performance Solutions business next year. On the Ag side, as I already talked about, we're in trough.
The market expectation is about flat, net of a modest restructuring we're doing in some African low profit margin business we have, we're expecting sort of a low single-digit growth there. FX continues to be a headwind of about $15 million on a net basis across the company. Our guidance is for EBITDA of $800 million to $830 million in 2017. Here's a quick bridge, just for modeling purposes, to help you wrap your heads around how we get to that guidance range. $769 million was 2016 EBITDA. I docked about a $15 million FX headwind. We expect to get another $40 million of synergies into the P&L next year, organic growth to get to the midpoint of our range is about $20 million. On the bottom half are some cash flow items if you want to do a walk to operating cash flow.
In conclusion, just like we did last year, we're laying out our four priorities for the year, they look very similar to what we outlined last year, with some important differences. First, building on operating momentum. The third priority last year was establishing an operating momentum and a rhythm. Now that we have that, we've gotten into a groove, we've delivered on the commitments we've made, we want to continue to build on that. We saw growth ramp up in the back half of the year. We want to continue on that. The second is the same second priority we had last year, which is focus commercial efforts on fast-growing niches. We want to be a grower. We want to grow faster than our markets.
Our long-term objectives articulate that we will be able to grow faster than our markets, so we're going to continue to make investments to support that growth. The third is synergy realization and continuous improvement, right? We realized a lot of synergies last year. We still have a bit more to go on the Performance side, we've identified this $100 million bucket of savings from the Ag business that we want to go chase after. Finally, generate free cash flow and reduce leverage. We have meaningful cash flow. These businesses, these asset-light, high-touch businesses, that asset-light, high-touch translates into high cash flow. We demonstrated that in 2016. We need to continue to demonstrate that in 2017. Our plan is to do so and improve our balance sheet. With those quick remarks, I will turn it over to questions. We've got about 13 minutes. Please.
I was wondering if you can comment on the last call you talked about some new active ingredients. Can you just give a little color what's kind of going on there?
Of course. We put out a press release last week that showed that our pipeline has grown from about $700 million in 2015 to $1.3 billion. That is exactly what we talked about, exploiting fast-growing niches. There's a lot happening in the ag end market with the discovery-based companies, and we are primely positioned to take advantage of that. By that I mean, as the big get bigger, in the ag market, some competitors are also partners, and that partnership is eroding. Folks like us, Switzerland, who have great distribution and great ability to monetize active ingredients in niche parts of the market that the big guys aren't focused on, can reap the benefit.
The case study for that is Rynaxypyr, which is a DuPont insecticide, blockbuster insecticide, and we've been chosen as one of the two partners for DuPont to monetize that active ingredient for its post-patent life cycle management. We've got access to Rynaxypyr for many different formulations to target specialty crops. It's a blockbuster for DuPont. It will be a meaningful contributor to us. It will allow us to grow faster than the market as we articulated. There are other examples of that. Our pipeline doesn't include potential future deals. This is only things that we have commercially secured agreements to develop. Please.
You mentioned the ag crops. You maybe answered it here. How we determine a lot of that is still a trial. Can you quantify that for us a little bit as far as where we're at in the cycle and what are your cyclical year cycle numbers outside of IBM?
Sure. I'd avoid the word cycle a little bit because as I said, these are businesses that are inherently non-cyclical, right? Their margin profile is stable because of the variable cost nature of their manufacturing process. That having been said, the end markets have some volatility. The MacDermid Performance Solutions business has many different end markets, right? The biggest single one is Electronics. Electronics had a pretty bad back of 2015 and early 2016. We expected it to ramp in Q3. It didn't ramp until Q4. That ramp doesn't mean it's doing great. It's just stabilized. We're seeing that continue in 2017. The other end markets, going in size order, industrial is the second biggest bucket. About half of industrial is automotive, and the other half is miscellaneous things like pipelines and faucets and things like that.
The automotive business is predominantly in Europe and North America, and that market is stabilizing. We're not expecting SAR growth to be the way it has been over the past couple of years. What's offsetting that-- There are two things offsetting that. First, Asia. We had very little presence in automotive in Asia. It's a good anecdote to talk about buying good businesses and making them better. We were nervous when we bought Alent, which had Enthone, which was a big competitor to the original MacDermid business, because our customers might perceive the industry as going from three to two. It turned out that our customers thought the industry went from one to two because there was no global competitor of Atotech scale. Atotech is the other big competitor, and we had created that.
The way that manifested itself is we'd have great customers in Europe who would open a manufacturing line in Asia, and we wouldn't get an opportunity to participate, to bid for that work. Now we are. We've seen great market share growth in the Asian automotive market, which happens to be growing much faster than the Western automotive market. When you think about where we are in the cycle, yes, we're seeing SAR slow down a bit in the developed world. We're seeing it accelerate in Asia, and we're gaining share there. The other thing that's offsetting moderating SAR growth is content per vehicle. Right? The way we think about units, it's not just a unit game in auto, it's the amount of content we have on a vehicle.
Take the Ford F-150 grill, which is plastic, and we provide the chemicals to make it look chrome. As the Ford F-150 has more chrome in it, or a better example is a Jaguar has more chrome in it, we're winning more content. As units might moderate, content is going up, so we're seeing growth. What amplifies that is the electronification of the automobile, which is really right in our sweet spot, right? Because we provide chemicals that enable sophisticated and robust computing power in mobile applications. What's better example of that, a better requirement for that, than a car that has significant electronification. While that end market is slowing down a bit in the Western world, it's got juice that will offset some of the unit decline. The offshore business is a small business for us. It had a tough year in 2016.
It lags the industry a bit because it's tied to new production coming online. If you've got a five-year CapEx project and oil goes down and you're four years in, you're going to finish that project. If you're three years in, you might cancel it. 2015, with oil price below 50 for most of the year, was the best year that business has ever had. 2016 fell off a lot. In 2017, we expect it to have stabilized because there's a recurring stream of our selling product to producing wells. That's a rough sort of tour around our businesses in the Performance Solutions side. Please.
I recall one of the key pieces of platform being the idea that the high-touch outcome versus working product down the value and making surgical roll-up strategies. One, does that thesis still apply? Two, with a better stock price and/or a better balance sheet, do you guys become buyers again?
It's a great question. The thesis was that the market doesn't fully appreciate asset-light, high-touch in value. Depending on the end market, asset-light, high-touch businesses will sort of vary between eight and 12 times, depending on where they are in the cycle, regardless of the quality of the business. Commodity and specialty get a little blurred. That thesis still persists. We think that, in fact, our thesis has been proven out over the past couple of years. We've bought really good businesses and we've made them better. We are an acquisition vehicle. We were founded as such. Our chairman has executed that strategy very successfully in the past. Right now, our view is we've got so many organic levers to drive this business. That's the better use of our time, and that's where we're spending it.
As the balance sheet improves and as market conditions, we will be opportunistic is what I would say. Right now, our focus is on driving the businesses and making them better, not on M&A. Six more minutes.
Perhaps you could go into a bit more detail on which end markets you guys think are going to be the biggest growth drivers this year.
I know you guys have given kind of segment-specific growth forecasts. Maybe you could provide a little bit more detail on the granular level, especially for Performance Solutions.
Sure. Would be pleased to. We just did a bit of a tour around our Performance Solutions business, talked about the different end markets. The Offshore Solutions business, small business will be roughly flat. We're really excited about the Electronics business. As we talked about, it's ramped up in the back half of 2016. We're seeing that continue into 2017. We've made some selected investments to grow our presence in semiconductor copper. Most of our business is into printed circuit boards. This is a similar application but on a much more micro scale with much more rigid specifications, which translates to much higher margins, fast growth, and we're under-penetrated there relative to where we think we can be. That's something we expect to grow and blend margins higher.
We talked about Industrial Solutions. On the Industrial Solutions side, obviously we talked about Asian automotive being an exciting area where we're taking market share and we're seeing growth and content per vehicle. I would say on the Performance Solutions side, excluding the Offshore Solutions business, which should be flat, we should see nice growth in some of the niches we're investing in across both Electronics and Industrial Solutions.
Okay. Question over there.
Yeah. Can you talk a little bit about the technical staff?
One, I mean, how many of those guys do you have? How many customers can they service? Then lastly, how would you retain them?
Yeah. It's a great question. I mean, we think of ourselves as a professional service firm that happens to sell chemicals, right? Our people are our critical asset. One of the things that we're most proud of is in all these integrations, particularly on the Performance Solutions side, we haven't lost a single customer, right? We brought together three competitors, we consolidated market share, we've retained all of our customers. More than 50% of our people are customer-facing. That's research, technical service, and so forth. We retain them because we are a place that rewards great people and knows how to take care of its people. Our core competency as an asset-light, high-touch company has to be incentivizing people, managing people, R&D prioritization, which is completely different than your conventional chemicals company, which is a utilization formula, right?
One of the things that underlies this asset-light, high-touch buildup is you manage businesses regardless of end market that have this business model very similarly. Where chemicals companies in the past have gotten into trouble is when they've combined commodity and specialty because the management approach is very different.
I was curious, can you give some examples of how things have changed since Rakesh Sachdev took over in terms of things on a retail scale or maybe like his leadership?
Yeah, absolutely. The prior CEO built MacDermid with a very edgy style, right? It was my way or the highway, which works when you're an incremental company that's growing slowly. When you quadruple the size of a company, and you've got 8,000 employees, and the temperature's been rising on 2,000 of them for many years, and you throw the remaining 6,000 into that bath, a lot of folks are going to choose the highway. We can't have that. As we just talked about, our people are our most important asset. Rakesh has been a coalition builder from day one. He has not had that same aggressiveness. Outside of just people management, there's also business management. The prior leadership was all about cost, cost.
Rakesh has married that cost focus, and we're clearly cost-focused, you can see that from the synergies we realized, with aggressive top-line growth, right? How do we grow this business? Because intrinsic value is going to be based on compounding the top line. We're demonstrating that, right? You see it as our second priority 2 years in a row. The business accelerated in the second half of the year where you could see his fingerprints on it. Both from a team-building perspective and from a grow-the-top-line perspective, we're making incremental changes, and things are going very smoothly.
Well, perhaps, given it seems to be the hot topic, could you give us some color on how you see the impact of the new Trump regime and their views on regulating from an environmental standpoint, how that's going to impact you guys maybe domestically?
Sure. The first thing I would say is that this business, as we opened with, is about 75% international. Domestic policy isn't going to be a major driver. As we think about Trump, a lot of folks are concerned about a border tax. Our business manufactures close to its customers, a border tax wouldn't be a big impact for us. We are manufacturing in China for China, in the U.S. for the U.S. That's not a big driver. The other Trump impact, I'm going to stay away from environmental because it's not really a driver for us. In general, we're doing formulation. It's not scary environmental processes. It's tax, a corporate tax cut will be very helpful for us. Tax repatriation holiday could be very helpful for us. We have $400 million of cash on the balance sheet. A lot of that's overseas.
Overall, the Trump presidency is a tailwind. Over the medium term, a modest one, a tailwind.
Okay. I think just some more questions from the audience. We'll wrap up there. Thank you very much, Ben.
Sure. Thank you.