Those businesses over the last year
I think today we have a team that I couldn't be more pleased with in the overall. We're back to being focused completely on our businesses. During the last year, as I think most of you have seen, we've delivered on our commitments to shareholders, while at the same time achieving significant synergies between the businesses and setting them up for success on a forward basis. At the end of the day, businesses are all about people. As I said before, I think the team is really delivering and is focused on strategies that seem to be working at retail, at the industrial level, and you'll see that as we get into the detail. The original strategy was to build a portfolio of asset-light, high-touch businesses, crossing two divisions. The strategy has worked when we look at the portfolio, the road hasn't been easy.
Today, I was joking with Rakesh earlier, we like to think of these types of combinations, usually two and two make five. At the moment, it feels like two and two are making three. As somebody who's sort of committed my entire business life to trying to create value for shareholders, that doesn't make us feel very good. Nor is it something that we intend to live with for the long term. We are trying to think of strategies that investors will appreciate, don't just create value from an operating level, but create value from a strategic level. What we have found is that we have a business that has the portfolio that we set out to achieve, but has been left with a balance sheet that Wall Street doesn't particularly like.
From my perspective, I can tell you that the leverage that we have today is extremely manageable. These are tremendous, strong, free cash flowing businesses. They are in markets that are very protectable. We have the defensible moats around the businesses that we sought to achieve. We have pricing power that we sought to have, and we have the margins to go along with it. Wall Street being what it is, and we're acutely aware of this, would rather see us at our target leverage ratios than where we are. To that end, there's a few things that we are starting to focus on.
You'll see that we filed for those of you who didn't see it, we filed an 8-K this morning with a view to cleaning up what has been described to me by some people as a death spiral preferred, which, since I was the architect of it, I'll take full responsibility for. To try to turn that around and become maybe a virtuous spiral. We have reached an agreement with Permira, who sold us Arysta, to have the option, and I repeat the option because it's not an obligation, to pay off their preferred on a basis that is about $90 million less than the face amount. We have until December 15th, I believe, to do that. In this case, in this scenario, we would pay them $460 million in cash and 5.5 million shares of the company.
For those of you who don't remember, the original face amount was $600 million, backed by 22.1 million shares. We have a choice. It will obviously be something that we will consider based on obviously the market and based upon our share price. It does give us another layer of optionality to clean up what in our view and in talking to investors has been a real overhang on the stock. The way I look at life. If you go to the next slide, I look at life on a relative basis. Whatever one thinks of Platform as a company, there is no question that our ag business has real value and real strategic value. The same could be said about our Performance Solutions business. We trade below the comps on both a strategic or transactional basis and on a trading basis.
I would blame our balance sheet on that, if you like. If you want to find a reason, it's certainly not because we don't have the margins or the cash flows or the management or the strategy. It goes back to what are our choices? Three ways to delever a company. If anyone has a fourth, I'd love to know. The first is to bring in capital or generate the cash. The second is to make a divestiture of a piece of a business. The third is to buy another company using equity. We don't feel that we have the currency today because we don't have the multiple. We do have the other two choices always open to us.
I think if I go back to Jarden's days in my previous life, in about 2009 when we brought some capital into the company, I'll never forget, some of you in this room were probably buyers in that offering. I think our stock was $12.5. We decided to bring some more shares into the company to delever. When we actually did the deal, they were $17.5. I'm not saying that's going to happen here, but the reality is we have an environment where I think investors would prefer a less levered company than a more levered company. At the end of the day, it comes down to what are our choices to create value? How do we get recognition for that, what are the catalysts? What I can tell you is, you have a management organization and a board that are value-oriented, shareholder-focused.
At the end of the day, our view is that if we take care of the business and let the business perform, eventually the market will recognize this. I do want to highlight that at the end of the day, you've seen a lot of transactions of very comparable businesses in both sectors. There's a lot of activity going on in the ag specialty chemical space, and there is a lot of activity going on in the industrial space. You've got companies like Atotech. You've got other transactions that are up here that have already been announced and closed, happening at sort of mid-teens multiple. We have a lot of upside available to us. It's a question of whether or not we want to pull those levers or if we continue to drive the businesses as we're driving them.
Our obvious preference in everything that we do every day is to build on the portfolio and create an organization that is built to win in the market. What I hope you'll see when you leave today is two things. One is that there is optionality to create significant upside on the business from a valuation perspective. We're trading 50% below where we should or could be trading. The second is that the underlying businesses have strategies that are very interesting. We've got solutions to win in each of our major markets, strategies that are being implemented, and the management organization to deliver. I couldn't be more pleased with the team. It's an interesting journey that we've been on to get to this point, today it is a very harmonious, synchronized management organization working at great pace to achieve their objectives.
I credit much of that to a very steady hand that Rakesh Sachdev has brought to the table, and hopefully you'll see that during the course of the day. Rakesh, with that, please join us.
Thanks. Thanks, Martin. Good morning, everybody. It's really great to be here on this beautiful day in New York. I think we have a great story to tell you this morning. I've been with the company now about eight months, I can tell you I've had now time to really digest the business, understand our customers, our industry, and I got to tell you, I think we're in a great place. Obviously, there's a lot of work yet to be done from an operations and business standpoint. I think our goal as managers of this business is always to set it up so that when some of our markets recover or whatever happens, that we are positioned for success. Hopefully that's what we're going to talk about today. We have the whole team here. I'll introduce our team here in a little bit.
In terms of what I want to do over the next 45 minutes is to give you a very quick overview, just bring everybody into context of the business that we have at Platform. Do a refresher on how we got here. Revisit our Platform thesis of what we are trying to do. Then I want to specifically talk about our strategic goals over the strategic planning period. When you look at Platform today, on a pro forma basis, in 2015, this business was about $3.6 billion in sales. That assumes that the acquisitions we made in 2015 were there at the beginning of the year, so that's why it's on a comparable basis. We have an EBITDA in this business, which is pretty impressive, about 21%. Over 8,000 employees. We have two businesses, as you heard Martin talk about.
We have the Agricultural Solutions business, which is really focused on the agricultural segment. It's crop protection chemicals, it's seed treatment, then biosolutions, and you'll hear a lot more about the different segments of this business. Then we have our Performance Solutions business, which is really business of specialty chemicals in the industrial, automotive, and electronic side. Again, that's a business also about $1.8 billion, slightly higher in EBITDA. The geographic footprint is somewhat different as you would imagine. Our Performance Solutions business, which is heavily influenced with the electronic segment, is fairly large in Asia. Our Ag business is fairly large in Latin America. Doing a slightly deeper dive into the Performance Solutions business we have, and Scot Benson, who runs our business, is going to talk about a lot more in detail about these segments.
We have five global segments today. We are taking the brand MacDermid Enthone after we bought Alent. We have got the industrial business. We have one global business that's focused on the industrial segments around the globe. We have another business that's focused on the electronic segment. Then we have a third segment, which is our assembly business, which is also focused on electronics, but it's more around metallization of electronic PC boards, and that's the business we call Alpha. Then we have two other small but very important businesses that came from the original MacDermid acquisition, and that is the focus on graphics and packaging, and also the fifth business, which is the focus on offshore. We'll talk more about that. The geographic footprint, as I mentioned, if you look at our Performance Solutions business, our biggest segment, our geographic segment, is Asia.
40% of our business is derived from Asia. You have Europe and North America, which are about the same. You can see we have a much smaller presence in Latin America and Africa. Finally, if you look at the bottom right side, you can see that our electronics and assembly business make up about 60% of our business. While offshore is only 5%, and that's where we have most of the headwinds today, given what's happening with the oil and gas industry, it is a small piece of our business. Overall, within Platform, it's about 2% or 2.5% of our business. There we have seen, obviously this year, some headwind because of what's happened in oil and gas. Macro trends. Scot's going to talk about this. The overall electronics components and sub-segment business is growing somewhere in the 2.5%-3%.
However, within electronics, clearly there are much faster-growing segments. If you look at electronic content in automotive and cars and trucks, it's growing about twice the rate. Also, if you look at electronics and medical devices, that's growing much faster. As we look at the different sub-segments that Scot and his team look at, clearly our focus is to put an overemphasis on faster-growing segments. Because one of the things you're going to hear today is how do we intend, in both the businesses, to grow faster than the end markets. Clearly understanding our segments is very important. Won't go into this, but I think most of us know that the electronic content in cars has been growing. It has grown quite substantially in the developed world, in the U.S. and Europe, but it's clearly happening now in the emerging markets.
Even though I think we can all sit here and argue and wonder if car production on the globe has peaked and if it's going to decline, I think we feel fairly confident that even if the automotive production in units declines, the content, the electronic content on average per vehicle is going to continue to grow. That's a good story for us in our business. Again, some of the points here Scot's going to make, so I'm going to skip this, but it's what are we going to do to grow faster than the end markets? The three things that I would point out that the business is doing, one is, as I said, an overemphasis on markets or sub-segments that are growing faster. Two is developing products and technologies that give us an ability to differentiate ourselves.
The third one that Scot's going to talk about is our whole selling approach and the things that we are now able to achieve by putting scale together in this business. We both have the push-pull concept of selling, where we are pushing through distributors, but we are pulling through our end customers. You're going to hear Scot talk about that. Just turning very quickly to the ag business. Again, about the same as I said. When you look at the kind of products that we take into the marketplace, because there may be a misconception that we are fairly narrow, but if you look at the products that we have, and whether it's fungicides or herbicides and insecticides and biosolutions, where by the way, we are one of the leaders, we have a very broad range of products and brands, and very successful brands globally.
If you look at, again, geographically and the kind of crops that we favor, we are a specialty crops company, so we are less of a mainstream crop protection company that's protecting only soya and corn. You can see that only 30% of our business is tied to row crops, and that also it's in international markets. We have a fairly significant presence, an important presence in segments like fruits and vegetables, which is much higher than the overall market. Again, you can see our presence in different geographic segments. Again, very strong in Latin America, which has been a good business for us.
One of the things you're going to hear, because the questions I was getting earlier this morning is how are we growing in Latin America, Diego's going to talk about the fact that we have certain products that addresses weed-resistant herbicides that's taking place in Latin America, and we have good solutions. We are also not very big in insecticides, which has been affected negatively by GMO seed. I think we have had a good run, and we continue to have a good run in places like Latin America. I think we all know the climate within the ag industry in the last few years, we have seen fairly significant decline in commodity prices, which has obviously affected farmer incomes and therefore affects what's happening in the business.
I think the other thing that's happening is the cost of discovering new active ingredients or new molecules has grown. A lot of the discovery took place early on, and now trying to discover a molecule that gives substantially higher incremental benefits gets tougher and tougher. It's not very unlike the pharmaceutical industry, where I think a lot of the pharma companies initially had a phenomenal success in discovering what's called small molecules, and then realized it was very, very difficult and expensive to continue to discover new small molecules and moved into what's called large molecules or biological drugs. It's very similar to what's happening in the ag industry, and we're going to see that. I think that's also causing a consolidation of discovery companies, especially companies who spend a lot in R&D.
They're realizing that by coming together Perhaps they can be more efficient, and that's what you're seeing in the ag space, and you heard Martin talk about that. We've talked about how we are positioned, because we have a different position as a niche player and how we're going to be successful in this changing landscape. Overall, if you look at the ag industry, it's a growth segment. From a secular standpoint, you're looking at an industry that continues to grow. It's cyclical. If you look over the last 35 years, on average it's grown in the mid-single digits, 4% or 5%. The point to make is that when the markets do come back, they come back a lot faster than that.
I think we all know we are in a period of a trough, and obviously we are all trying to figure out when the markets come back, maybe if it's not this year, then sometime in 2017. What we have to do is make sure we have positioned our businesses for success. One of the fundamentals in ag, I think we all know the population in the world is growing. The wealth in the world is growing. The requirements for food is growing because food, and especially in the emerging markets, is becoming something that people seek, a higher protein. What's not growing is the arable land. You're not seeing land growing in the same proportion.
The only way to solve this huge problem in the world is to have much higher yield in crop production, which is why I think the whole ag business over the coming few decades is going to be a very interesting space for those who win. This is a huge market. If you look at the overall addressable market for crop protection and seed, it's close to $100 billion, a little over $90 billion. If you take away the seed markets, if you just look at crop protection, it's over $50 billion. I think within that segment, the way we look at our business, they're again, faster-growing segments. That's about $13 billion today. Diego is going to talk about how we have sub-segmented out the faster-growing segments. We have five sub-segments, and Diego is going to come and talk about that.
About half of our ag business is in what we call our primary focus markets. These are the faster-growing markets. Clearly, the strategies that we are putting together and have put together is to grow much faster than this over the next several years. We've got two fairly self-standing independent businesses. We've got the ag business and performance business. The question is, what's the role that platform plays at a corporate level? Clearly, I think as we all know today, we are a public company. We have public company requirements. There are obviously governance requirements to make sure that we are managing these businesses.
I think we have an interesting situation where we can be fairly unbiased in thinking about how capital is allocated between these businesses to maximize shareholder value, and also then to make sure that we have the right leadership and the bench to run these operating companies. On the other hand, these businesses today are fairly independent in terms of running the day-to-day business, Scot and Diego will talk about the commercial strategies they drive, the R&D and the product strategies that they drive, and how they manage their supply chain and operations. Then we have some shared responsibility of how we work together between corporate and the businesses in terms of defining the strategy and being aligned around the strategic path.
Some of the shared services that we decide that make sense for the operating companies and making sure that we have risk management on key risk factors within the company. I would say this, though, you've heard me say, if you were listening to our earnings calls, we have increased our investment in corporate. Partly that was because we brought a lot of acquisitions together in the last year. They were fairly disparate businesses. We want to make sure we had all the right control systems, the IT systems. So we have had to put together resources, both external and internal, more than I think what we will need long-term. Clearly, our goal is to have a very lean corporate environment, I would say that we have peaked.
We will start seeing as we go into 2017, a reduction in that as we get more efficient. That's our plan. I think as you heard Martin say, we've assembled and we've got a great leadership team. Martin is obviously our founder and Chairman, has been very involved. We have got a great Board. We've got another Board member here this morning, Ryan Israel, who's here sitting with us. Then on my immediate team, we have several people here. In fact, this entire team is here. I'll ask them to stand up. We've got Ben Gliklich, who's our Head of Strategy and Operations. Many of you know Ben. He has been an architect of much of what we have done over the last two and a half years. We've got Scot Benson, who runs our Performance Solutions business. You'll hear Scot quite a bit this morning.
He's been with the company for a long time with MacDermid. We've got Diego Lopez, who joined us earlier this year from BASF and runs our ag business. We've got our CFO, who joined us a year ago, Sanjiv Khattri, you're going to hear from. We've also got John Capps, who you're not going to hear from, but our General Counsel. John sitting at the back there, he comes to us from Jarden. It's great to have all these team members. We have some additional Platform people here, too. We've got Mark Gibbons, who's our Treasurer. I think he's supposed to be somewhere here. We've got our Corporate Controller, John Connolly, and we've got Tricia, Matt, and you heard Carey, who's our Head of Investor Relations. Very pleased to have our team here. Let's quickly do a quick refresher of how we got here.
Obviously, it's been a very busy last two and a half, three years. As you know, we started this journey with the acquisition of MacDermid in the fall of 2013. That was the first acquisition we made. On the heels of that, the following year, we got into specialty chemicals on the ag side. We bought the Chemtura business. Then we bought the Agriphar business. Shortly thereafter, in 2015, we made a very significant acquisition, as you know, is the Arysta LifeScience business. We found ourselves to be a fairly large ag company, and we were looking for opportunities to even out on the industrial and performance side. Late last year, we made, I think, two very impressive acquisitions. We bought Alent and we bought OMG.
As we sit here now with these acquisitions made, I think we've got the scale, we've got the capability, we've got the management team, and I think we have what we need to really take this forward from here. That's what you're going to hear today. Why did we make these acquisitions? Very quickly, if you look at the Performance Solutions business, we bought three businesses. We bought MacDermid to start with, we got Alent, and we got OMG. The things that were common for all three businesses, all three businesses were in electronic chemicals. All three businesses were in industrial surface treatment. There was obviously a commonality of what they did. More important, all these businesses were asset-light and high customer touch, which is what we liked as part of the Platform thesis.
In addition, we also got some uniqueness from these businesses. Alent gave us the Alpha Assembly Solutions business, which is our Alpha business. OMG got us into the memory disk business. Of course, MacDermid gave us exposure to both the packaging or the graphics business and then the Offshore Fluids business, which today might seem a little tough, but it's been a fantastic business for us. Again, on the Agricultural Solutions, why we put these three businesses together. We have, again, Arysta, Agriphar, and Chemtura. The common elements of these three companies all were in crop protection. Just like the Performance Solutions business, all three of them are asset-light and high touch. We don't have to invest. These are not large bricks-and-mortar companies. We also got some interesting businesses from the three of them.
In the case of Agriphar, it was very Western Europe-centric, but they were also very, very good in proprietary off-patent products. We learned a lot from the Agriphar side. Chemtura got us in the seed treatment business, and Arysta, which is truly a very global company, also got us an entry into biosolutions, which is going to be, we believe, a real growth driver for our overall ag business, and you're going to hear Diego talk about that. This is a busy slide. It's a GAAP slide. I have a couple of financials, I think as you know, with the SEC rules, we need to bring you the GAAP information. Here you can see what the GAAP sales were, and the profits were of the predecessor and the successor companies. Just to point out, 2015, the GAAP sales were $2.5 billion.
You remember I talked about $3.6 billion. The $3.6 billion was as if we had these businesses from day one in 2015. On a GAAP basis, we had $2.5 billion. You can see also on a GAAP basis, our EBITDA last year was about $568 million or $570 million. On a comparable basis, it was more like $740 million. This is again on an adjusted pro forma basis. What I'd point out is that these businesses have been incredibly stable. If you look at the level of EBITDA margin and the profitability, it's been quite impressive. You can see a dip in 2015, and the dip in both sales and in profits, largely driven in the ag business, I would say was exclusively because of the change in the FX environment.
If you exclude the currency environment that took place in 2015 relative to 2014, our businesses, both on sales and profits, would have been fairly flat compared to 2014. I think what you're going to hear later on this morning is looking forward, how we're going to drive both sales and EBITDA up in some impressive ranges. Again, this is a business that generates a lot of cash. If you look at the conversion that we have, our capital investment numbers are fairly modest. Again, to the extent that we can grow our EBITDA, we're going to generate a lot of cash. Clearly, that's going to be important because one of the objectives that we have is to de-lever the company through the cash flows. Not going to go into this. This is just our guidance for the full year.
I think you have seen we are guiding between $735 million and $775 million in EBITDA for this year. This also calls for a stronger second half than the first half, and we think the second half is going to be stronger than the first half because we've got more synergies that we're extracting. We've got a slightly more favorable FX environment, and we are actually seeing a little more growth in our end markets than we did. I think for those reasons, we think this is a good place to be. Eight months into the journey, these were some quick observations that I had of where we are in the businesses. Again, I think Platform today is a highly diversified specialty chemicals business. We are very global. Over 70% of our business is outside the U.S. Our margins are stable.
We may not be recession-proof, but we are fairly recession-resistant if you look at the overall portfolio that we have. I think the things that make Platform fairly unique, there are four things I'd like to point out. One is, most of the products that we provide to our customers have a critical element in the functionality of the end products. Whether if it's surface chemistry on an electronic component, or if it's a certain type of chemical in the ag industry, we play a very critical role. What's interesting is that the relative cost of our products, relative to the cost of the final product, it's very, very small. You're going to hear the example of mobile devices. What we do for, whether it's Samsung or Apple, again, what we provide is very, very critical, but it's a very small piece of the total cost.
It makes us a little more resistant in terms of being just a commodity player, and that's why we have the kind of margins that we do. I think the third thing is that we have a large diversity. There is no single product or no single customer that we have that makes up any meaningful part of our business. I think that gives us tremendous leverage in the way and the courage to do the kinds of things that we do. Then finally, I would say it is an asset-light business. Now, having said that, we obviously have challenges. I think I mentioned about the ag business. In North America, ag business has been soft, but we also have opportunities, and the opportunity really is to drive further organic growth in this business.
I think you've heard me say in many of the calls that we are really focused on growing this business because we are taking a slight lull on the acquisitions, and this is giving us an opportunity to really focus on growing the business. Our Platform thesis remains unchanged. Our thesis again is to focus on asset-light and high customer touch businesses. We want to become even more customer intimate. We realize that for a while, we are going to probably not be thinking about very large acquisitions. As I said, this is the opportunity for us to continue to grow. I think we are in markets and we have adjacent markets that can give us even more growth. This, I think many of you have seen, if you look at the markets that we are in, we are in some huge markets.
As I said, the ag market itself is over $50 billion. The industrial electronics markets are huge as well, and we can get into adjacent markets when the time is right. I think that's the exciting part of the journey, is that in the near term, we can focus on the organic growth, but in the medium and longer term, we are going to have ample opportunities to continue to grow the portfolio. Again, five clear objectives, long-term objectives that we have at Platform. We want to make sure that we are not a me-too commodity player, and that's not who we are. We have collected a portfolio of very high quality and differentiated businesses. We are striving for leading positions in what we do. Again, as I said, our goal is to grow faster than the end markets.
We know we are in some of the end markets are fairly mature. It is our goal through the strategic planning process that you're going to hear is how we're going to grow faster. The other thing that's important, and you heard Martin say this, is we want a healthy balance sheet, right? We think that we have the cash flows even today, but we're going to continue to focus to driving and improving our balance sheet. Then, one of the things that we are clearly doing more of is making sure the businesses are focused on the return on invested capital or return on assets. I'm going to skip these next couple of slides, but what you're going to hear Scot, and this is at a high level, one page of the three things that the business is going to talk about is growth of sales.
What are we going to do? How are we going to enhance our margins during this strategic planning period? How are we going to focus on cash? What I would say it's slightly different for the two businesses. If you look at the growth that we are striving for in our Performance Solutions business, you're going to hear Scot talk about how we're going to become integral to the supply chain in which we do business. How are we going to get closer to the customers? In the ag business, what you're going to hear is how we're going to increase our partnerships, whether it's with technology companies and other providers of technology. I'll let Scot and Diego talk about some of their strategies.
I think on the margin enhancing front, one commonality that I'll talk about is I think we have a huge opportunity at Platform in managing our supply chain. I think sometimes it gets lost. We have a business model where we acquire a lot from the outside. We don't manufacture active ingredients in the ag business. We acquire them, we develop suppliers. We are acquiring a lot of material. It's a fairly variable cost structure that we have in the business. To the extent that we can get more efficient in the way we manage the supply chain, the margin opportunities are fairly significant and fairly impressive, and you're going to hear that from Diego as well as from Scot. I'll just share. Corporate has to play a role in addition to the role that the businesses are playing.
I think we have opportunities on the tax side. Today, the way we are structured, we have a loss position in the U.S. because this is where we make most of our interest payments. We have many other regions of the world where we make a profit, and we pay taxes. Unfortunately, because of the structure, we are unable to get the benefits of the loss in certain parts of the world and offset it against the profits that we make in other parts of the world. We end up paying, I think, higher tax cash dollars than we should, and we are working hard at the corporate level to try and starting to optimize that. You're going to hear Sanjiv talk a little bit about that.
On the treasury side, we have been doing a great job, I think, on the FX management and hedging programs, especially in places like Latin America, where it's important. We are continuing to strive to do more of that. On the IT side, as I said, we have been doing work on the IT infrastructure. We have so many legacy systems. As you can imagine, when we bought all these companies, they all had fairly different legacy systems at different stages of the development. I think we're putting our arms around that. We still want to leave the uniqueness of the businesses and the businesses, but I think there's a lot of efficiency to be gained around infrastructure, around security, and those are things that we are working on from an IT standpoint. Then also introducing new HR techniques for our operating companies is what we're doing.
I just want to pause on this slide a little bit. When you put all this together and say, "What does this mean for Platform? Where can we take the company over the next several years?" Leaving aside right now any acquisitions that we can or would do. Organically, I think we can grow this business on average in the mid-single digits. 4%-5% is what we are planning. A little higher growth in Ag, but not much for the lower end Performance Solutions. If you look at the opportunities we have to enhance margins, we think we have some very significant opportunities. We can expand our margin in the mid-single digits.
When you run the math of this, if you can grow the business in mid-single digits and you can expand the margins, we believe we can grow our EBITDA at twice the rate of our organic sales growth, which means in the high single digits. I think this is important because if we can grow the EBITDA, which I feel pretty confident we can, in the high single digits, and we can do some of the things we can do on the tax side and some of the other things we talked about, we can generate a lot of cash. I think we can get our debt to EBITDA to 4.5 times, which is what we have stated as a goal in less than three years. That's kind of what we are striving for.
You're going to hear the different elements from Scot and Diego and Sanjiv on how we're going to put this together. This is just at a high level, a snapshot of what we are going to try and achieve over the next few years. Last slide from my side. Again, everything that we do and everything that our organization does kind of fits in five buckets. I think everybody understands in the company we want to achieve our financial targets. We are making the company more customer intimate, so customer intimacy is becoming extremely important because that's how we're going to win. We have to focus on expanding our products and services. We can't stay still. Operational excellence, whether it's the management of supply chain, is very important. The enterprise development, whether it's developing our processes or developing IT systems, developing our people.
It's in these five buckets that we think about. If you think about the financial targets, it starts with 2016, we are committed to delivering on our commitments for this year. We are on track to delivering our $150 million in synergies from the acquisitions, I feel very good about that. As I said, over the planning period, we have plans to grow organically our revenues in the mid-single digits, which, by the way, would be higher than what we have done historically. Then achieving our profit growth at twice the rate in the high single digits. Then be focused on de-levering the balance sheet. Those are high-level goals in achieving our financial targets. On the customer intimacy, you're going to hear Scot and Diego talk about this, we have a push-pull strategy in most of our businesses.
When I say push-pull, because we have very important delivery partners such as our distributors. Now, they are not our final customer. The end customer is the pharma or the company that actually uses our products. We have to have a great relationship with our distributors. We push our products through them, then we create a pull to our end customer. I think what you'll hear Scot and Diego talk about how they have reframed their sales and marketing organizations to do exactly that. On the products and services, again, you're going to hear our leaders talk about the innovation and how we are partnering with companies to get access to technology. On the operational side, you heard me talk about supply chain. We are also very focused on working capital management.
We have a lot of money tied up in working capital, and we have incentivized our people for the first time in a bigger way in making sure that we are getting more efficient in managing our working capital. Finally, on the enterprise, as you heard Martin say, it's all about people at the end of the day, we want to make sure that we have the best people, the best leadership teams, we're giving them the best opportunities. For example, even when we put Alent and MacDermid together, Scot's put a new team together. We get the opportunity to pick the best of the breed and put them in positions of great responsibility and support them in their execution of their jobs. Again, we are going to come back. We're going to have a Q&A. That's my remarks.
I'm going to have Scot Benson come up and give you a deeper dive into the Performance Solutions business. Scot?
Thank you, Rakesh. Beginning on page 42. First of all, I'd like to say good morning. I'm very happy to be here with everyone today. We're going to be talking a little bit about the current structure of the Performance Solutions business as a result of the acquisitions over what has been a pretty busy year for us. I'm also going to give you an overview of our businesses and their markets, the key end markets that we participate in. We'll talk a bit about our strategy, and then also a little bit about the performance of the business historically. As I said, it's been a busy year for Performance Solutions. The next slide 43, you kind of see the result of the integration of these three companies over the past 12 months.
Clearly very diverse international business with truly global end markets, and very diverse end markets as well. In over 50 countries, we now have over 4,500 employees, over 14,000 customers. You see the five business units that Rakesh mentioned earlier. Within a couple of those, we have some sub-segments that are also extremely important, but we'll be focusing today mostly on the top tier, the top five operating units. Okay? Next slide. Here you see our revenue split by those top five business units. You see it's fairly evenly split between our Alpha Assembly business, our Electronics and Industrial units, with the balance made up of our Graphics and Offshore businesses. All segments have had strong historical gross margin performance, and as a matter of fact, even some gross margin improvement over time. You'll see that all of them continue this trend.
We expect it to continue into the future as well. Strong gross margin performance across all of our segments. Alpha, you'll see, is impacted a bit because we include metals pricing in our results. That's why you'll see that a little bit below the line. On par, we're extremely happy with the margin performance across all these segments. What I'd like to talk now a little bit about is each business segment. Just give you a little bit of a flavor for what each business does. Our Alpha business supplies metal solutions and processes for the assembly of electronic components, and this is across every spectrum of electronics. We have an extremely strong OEM relationship within this business, ties to all the direct electronics OEM customers and end-use markets.
We have a mix of distribution and direct market, depending on the part of the world that this business is in. We have a lot of direct selling, but we also utilize distributors around the world. Next slide 46. You see the footprint of this business. Manufacturing and research centers are strategically located around the world in the key electronics assembly markets. Really matching, including emerging markets and growth segments such as India and Southeast Asia. We are really happy with the diverse footprint that this business brought to us. It was new to the Performance segment. It also allows us to leverage R&D centers in areas we might not have had them in our electronics and industrial space. We are going to leverage those relationships as well. Next on slide 47, I would like to talk briefly about our Industrial Solutions business.
This business primarily supplies processes that do one of two things. We either prevent corrosion on metallic parts across a diverse number of industries, including automotive, housewares, but we also have processes that make things decorative. Decorative plating on automobile exteriors, interiors, et cetera. We are now one of only two truly global suppliers in this space. The combination of Enthone and MacDermid allowed us now to compete on a global basis in a way far greater than either company would have been able to do on its own. We are extremely happy about that. We follow almost primarily a direct selling model in this business. The technology requirements that our customers have for our service and support Really makes that the only path to market that we think will be effective.
You can see that the addressable market in this space is well over $1 billion-$1.5 billion. We have very strong, and we will talk a little bit more about this later, a very strong strategy on growth to follow this market around the world. Slide 48, you see the Industrial Solutions footprint. This is following the acquisitions. This is a busy slide. We have a lot of facilities around the world now. We have opportunity here to improve our efficiencies, and a lot of that work will begin in 2017 into 2018. As you see, we have multiple facilities in very near proximity to each other. This is just as a result of all three companies having set themselves up close to the markets that they serve. This gives us a lot of opportunity.
Our research for this business is located primarily in Europe, both in Germany from the legacy Enthone business and in the U.K. from the MacDermid business. The nice thing about having these redundant facilities is that we were able to now take researchers and research groups that were competing against each other and now focus them on the rest of the competition, freeing up a lot of innovation talent. Next slide 49 is our Electronics Solutions business. Again, a very large market, over $2 billion of addressable market space for us. This business provides solutions that generally make things conductive. Whether it is through-hole on printed circuits or bump plating for semiconductors or circuit formation in printed circuits, that is primarily what this business does, transferring current from one place to another.
Clearly being driven a lot by miniaturization, which allows the innovation side of our business to stay ahead of any commoditization that may occur in this space. As a result of the combination of these businesses, we now have a complete product portfolio from semiconductor all the way through printed circuits. The combination of Enthone and MacDermid really gives us an unparalleled addressable market. No single supplier has as many touchpoints in the electronic space as MacDermid Enthone. We are very focused on utilizing and leveraging these relationships and also following the automotive growth in this space, as Rakesh mentioned, and I'll talk a little bit more about that in a couple of slides. You see the very similar footprint to our industrial space. Again, [Cove], all three companies were located in very similar areas, again, giving us a lot of opportunity for efficiencies over time.
A lot of these facilities are co-located with our industrial business. Again, giving us a lot more opportunity for efficiencies, which we will be doing over the next year and a half. The next business I want to talk about a little bit is our Graphics Solutions business. Very different from our industrial and electronics businesses. This business provides media which allows for the printing of images onto packaging substrates primarily. Whether it be flexible packaging or corrugated packaging. A key market area that we're focused on is flexible packaging. That's the fastest-growing segment of the market. It's the most profitable segment of the market. There's a shift going on around the world of gravure printing, which is a expensive process used for very long-run printing, that flexographic printing has been able to make inroads into that market due to the cost.
We are a leader in new technology development in this space. We utilize a very direct selling market. It's a little bit smaller market than some of our other ones. As you can see, about a billion-dollar of potential, but growing. Basically, we look at this as a GDP-type business. This gravure to flexo transition, we believe will allow us to continue the growth we've seen over the past few years well into the future. Again, similarly, the footprint for this business, a little bit smaller footprint. Manufacturing is done primarily in the U.S. We do have a manufacturing plant in the U.K. as well. We export products from the U.S. all over the world, and we back that up with technology and service centers in the developed parts of the world where flexographic printing is used primarily.
As markets emerge and more people move into the middle class, and have disposable income around the world, packaged food becomes more and more prevalent. This market will grow for a long time. There's built-in growth in the printing market simply due to people wanting packaged food. We think we're extremely well-positioned as a technology leader in this space as well. Lastly, on slide 53, briefly, our Offshore Fluids business. This business provides environmentally friendly valve control fluids for deep water oil and gas drilling and production. Market's clearly under a bit of pressure today, not from a production standpoint. The production of oil is fairly consistent. It's the new exploration, new drilling, new underwater tree implementation, things of this nature. Capital investment in the oil and gas space has an impact directly on this business.
As that business comes back, we believe we remain historically very well positioned. We have great OEM relationships in this space. We have great specification in this space. We are a leader in new technology for things like extremely high temperature operation. Right now, of course, North Sea drilling is on hold. There's not a lot of North Sea exploration, but the North Sea oil needs fluids that operate at extremely high temperatures because of how deep the wells are. We have products, and we were commissioned almost by oil companies to develop products for that market. We stand ready for when this market comes back. The footprint, as you would expect, mirrors the offshore oil production areas around the world.
We have research and technology centers in the U.K. and in the U.S., and then we manufacture around the world close to the end users in this space. Moving on briefly, slide 54. Very diverse end markets. Now, you can see. This helps mitigate any single end-use market risk for us. You heard Rakesh say we are not recession-proof, but this does make us a bit recession-resistant. You see very diverse end markets, very diverse customer bases, and again, very truly global. All these business operates around the world. The management team. Extremely experienced management team. This came from a combination of the acquired businesses. We approached this with a best of the best mentality.
We wanted the best leaders from the acquired companies to run these businesses going forward, and this represents a truly diverse group of people that came from both Alent and MacDermid, all with extremely long careers and experience within the industries that they manage. Moving on to talk a little bit about the market growth in our segments. We'll talk first about electronics. You saw this slide earlier from Rakesh. Basically, we look at the electronics market kind of in a GDP thing, as a blended growth rates. Constantly buying electronic components more this year than last year, and that will continue even in the mobile device market, which is fairly mature. Most of these market spaces are fairly mature.
However, there are segments within this that are growing faster than the market rates, which is where our sales strategy is focused, and we'll talk a little bit about that in the future. Again, although these are fairly mature markets, there are segments within each one, although smaller, that are growing at much higher rates than the overall market. These markets require innovation. They require extremely responsive delivery from the supply chain, and we're focused here. These are the areas that we're making strategic investments, not only from an innovation standpoint, but even from a capital standpoint in order to address going forward. Automotive is a clear example in this space. What does the automotive growth opportunity for us look like? This is a key driver for the business going forward. Automotive growth has been outpacing GDP growth in the number of units.
We do not expect that to continue forever. However, as Rakesh mentioned, that doesn't really matter to us because what we're focused on is the content and value available to us within every car produced. We definitely see the electronics content in automotive and per unit to accelerate or to grow faster than the overall market itself. We've seen that day in and day out. You see the use of these things every day in your own life. You can't get in any vehicle today and not see more electronics content than you saw even a year ago. If you even look, you can't even ride in a taxi without being bombarded by electronic content. These things are extremely important to us. The reliability required in the automotive space is different than that in consumer electronics, which also allows for innovation and specification.
Those are the holy grail for us to achieve specifications. As this market globalizes, they want local supply of content everywhere they assemble vehicles. There are only now a couple of companies in this space that can provide them the same process and support everywhere in the world. This is key for us, whether it's an under hood engine control module or an infotainment screen, et cetera. Warranty and repair costs are the death knell for the auto industry. They do not want recalls. The reliability requirements in the automotive space will provide us long-term strong margin opportunities. You can see in the upper right-hand corner of this slide all the different places in an auto that our units participate. This is more than just electronics. This actually includes some of our Industrial space. There's huge amount of opportunity for us within every single car produced.
As car requirements increase in places like China, that exponentially grows this content available to us. The amount of electronics in a car in China are clearly very different than they are in North America. That's changing because the reliability requirements are changing. Some of our key growth initiatives across our businesses. In our assembly space, there's an increasing amount of influence by the OEMs as to how they want circuits or semiconductors, et cetera, assembled, and the reliability requirements. Again, this ties very heavily into the automotive space. We have some exciting new technologies in that Alpha Assembly space that nobody else has. We have a group called Alpha Advanced Materials that is working solely on next-generation products, and we've already made some really, really nice traction in those. In our Industrial space, there's a strong environmental push to replace what's called hexavalent chrome.
You can imagine hexavalent chrome is a carcinogen. It's a very toxic material, the industry is being asked to come up with a replacement for that material. We are absolutely the leader in this new technology. Electronics, we talked a little bit about the automotive growth, and the miniaturization that's also going on in that space provides us innovation and long-term business growth opportunities. The Graphics space, this gravure to flexo conversion. Again, being a leader in new flexographic printing technology will enable us to outpace the market in this space. Then as we talked about with Offshore, we are in a preparation for a return to normal in this market. We think we're very well positioned for that. Next slide 60. Growth in the industry. We'll kind of put this in a little bit of context.
We said on a weighted average, you call it GDP, 2%-2.5% on a weighted average, but we are positioned to grow faster than this in all of our segments. In our assembly business, one of our key initiatives is a cross-selling between electronics, industrial, and our Alpha assembly business. We have more touchpoints in the electronic space than any single competitor, more touchpoints in the industrial space, more than any single competitor. This allows us knowledge ahead of time. This allows us the ability to focus our resources and to innovate to meet these future demands, particularly around reliability requirements. The same thing goes for electronics. We're a leader in copper replacement technologies for the plating of electronics. This is the future of that business, eliminating copper, which is a huge cost in the assembly and creation of electronic components. We are the leader in that technology.
We are also making very strategic investments in wafer-level packaging and semiconductor plating technologies. Our industrial business, we talked, we're the leader in hex chrome replacement. We are also now, like I said before, one of only two truly global players that will be able to meet the requirements of the global automotive companies as they relocate to less expensive assembly areas. Mexico, for example. We're extremely well-positioned. We're the number 1 supplier in Mexico into the automotive space by our estimates, and that space is going to continue to grow much faster than market in general. In our Graphics business, we're the leader in new technologies for print. Then again, offshore, we're waiting for the market to return to a more normal position, but we maintain our industry-leading position in that space as well. Slide 62.
We talk a little bit about our strategic objectives. To me, this is where it becomes the most fun. This is where we decide how we're going to win. We decide where we're going to make our investments and why we think we're going to win. We're trying to create the most responsive, innovative company within the industries we serve. This is utilizing and leveraging the relationships that we have across all of our businesses, gaining knowledge to the future needs of the customers faster than our competitors do, making decisions faster than they do, then innovating products to meet those needs faster than our competitors do. We have an extremely broad-based interaction with the entire supply chain, which I'll show graphically here in a few more slides. We will have a deeper understanding of every supply chain we serve than any single competitor in our space.
You heard Rakesh mention being integral. Being integral is something we talk about internally all the time. Once you're integral, whether it's to an OEM, whether it's to an applicator, whether it's to an end-use market, you now become how they do business. Our goal is to become integral in every industry that we participate. Once you do that, you change the game. We're trying to create an environment internally where everyone has an opportunity to win and to contribute to our success. We're trying to develop a group of 4,500 people all aligned towards the same objective. So far, I can tell you right now that that initiative is well ahead of schedule. Our business leaders across all of our units interact on a regular basis so that everyone has an understanding of where each business is trying to go.
Then again, we will consistently grow faster than the markets we serve. Slide 64. This is where, again, we get back to talking about being integral. Our people are integral to our customers' success. The processes that we supply are complex. You'll see a short video in a little while of some of our chemistry in action. They're very small in terms of the overall market, but have a huge impact on the performance of the products either the end user requires or that our customer manufactures. Our technical service on-site at our customers is key to the operation of these processes. We have people that spend all day, every day within our customers. That's how it works. Our customers just want the processes to work the same way every day. They're not chemistry experts. That's what we provide. The solutions we provide are also integral.
Without them, our customers' lines do not run. They cannot manufacture products without the specialty chemicals that are supplied by us. A very small portion of their cost, but they all have a huge disproportionate amount of value to the end product. Without the specialized chemistry, these lines do not work. This is a busy slide, Slide 64. This is a graphic of what our selling process looks like. This is the push-pull that Rakesh was referring to. Multiple touch points within every supply chain that we operate. We have a team of people around the world, highly skilled technical salespeople, commercially focused people working with the end users. This can be anything from a mobile device designer, a manufacturer like Apple or Samsung, all the way through to their applicator base and their platers around the world. We're working across our businesses.
We took people from each segment, from our Assembly business, our Electronics business, our Offshore business, our Industrial business, and put them on the same team. If you can imagine the depth and breadth, the scope of a supply chain of a major Tier 1 automotive company like Bosch or a Continental, or a company like Samsung, who is in so many different industries. Well, we have more touch points in that industry than any single competitor. We brought people from all of our groups together to be now focused as global account managers for these companies. They now marshal all the resources within MPS to make sure that every opportunity gets the right people, has the right relationships. I'll give you a real example of this.
We were in a meeting very early in the process in Japan. There was a major electronics manufacturer in Japan that had a relationship with our Assembly division. Through a presentation we were getting from our Assembly division, we found out that the person they have their primary interface with at this major electronics OEM also specifies the final printed circuit finish used prior to assembly. Well, clearly, we're going to leverage that. It hadn't been leveraged before, within the businesses that we acquired. We are now working with that OEM, not only on the Assembly specification, but on the final finish that's used on the printed circuit prior to assembly. This is a very real example of how this process works. Again, we're building across all of our units, leveraging all these relationships and building more touch points than any competitor in our space.
A lot of investors have asked us questions about our selling process and how we go to market. I'd like to walk you through briefly through kind of what our sales process looks like. Everything starts with the customer. I think Rakesh mentioned this. In this context, the customer can be two things. It could either be the person who actually sends us a check, issues us a PO, and sends us a check, or in some cases, it's the end user. Every market has an ultimate end user. We view those as the ultimate customer. Whether it's a handheld device manufacturer or the plater, we view them both as customers. We do a lot of traditional things that you would imagine, trade shows, direct sales, legacy relationships, things like this, and then working within the supply chain. Everything for us begins with the customer.
Next, we perform a strategic analysis, whether it be on a market or an opportunity. We apply resources, whether they're innovation resources, whether they're direct selling resources, whether they're marketing resources, et cetera. First comes understanding the customer, and then making decisions internally on what resource allocation that we need. The nice thing about it is ultimately, we look to see, will this qualify as a sticky sale? I'll talk a little bit about that as we get a little bit further through. The ability to utilize research centers around the world gives us a distinct advantage against any single competitor in our space. From innovation to service, this is where innovative and responsive comes in. We take that customer knowledge, and then we have the ability to strategically, tactically, opportunistically apply innovation resources to meet a customer requirement.
We do this on a routine basis. If the opportunity is big enough, strong enough, or warrants it, we can dedicate a team of people almost at a moment's notice to develop products for the customer. We do this either through our innovation group in the research centers, or we use one of our global development centers around the world. We take products from our research group, send them out to the field, and then we have research facilities around the world that then optimize that process for the application in their specific region. We do this on a very routine basis. Not every region in the world needs exactly the same performance out of a product, but we're able to take a single product, for example, and make very minor adjustments in the field to meet field requirements. We do training both internally and externally.
We train our customers. We had an automotive OEM event in China this year, for example, where we had over 300 attendees. From the Chinese industrial business, including automotive OEMs, engineers, design people, and we gave them an education on what it means to plate automotive parts and what the requirements are, et cetera. We do that on a very routine basis. Next slide, 68. What does a typical sale look like? People ask me all the time, "Well, how do you get paid?" Really comes down to fundamental selling. We have a direct sales force. We package our products. Generally, they're liquid. We package them in multiple different container sizes. The nice thing about our business is it's all repeat. Our products are consumed in the everyday operation of a customer's process, so they have to continually reorder.
Once you make a sale initially, you can count on repeat orders. Typically, customers. They can be anywhere from $100,000 to $2 million on average, anywhere in that range. You saw we had 14,000 customers for our $1.8 billion. Then we provide a service staff to make sure that we maintain that business over time. Our supply chain. We utilize a global supply chain now, something that we were not able to do or had never done before. None of the three acquired companies managed their own supply chain on a global basis. We now have a global supply chain group. Rakesh mentioned to you what that means for us. It allows us to leverage. We have a goal of being the low-cost manufacturer in our space. That is the ultimate goal for our global supply chain team.
It's made up of very seasoned supply chain managers. They are focused solely on serving our business units. The specification and quality requirements, we took the manufacturing plants and operations out from underneath our commercial teams and put them into this global supply chain. They now have five direct customers, and they service them equally. The fact that we're first to know about new designs within the customer supply chain, matching our supply chain to theirs, is extremely important to make sure that we source raw materials to meet the new requirements. We now think that having this global supply chain allows us the ability to do that on a much more efficient basis. Ultimately, what this results in is what we call a sticky sale. Our sales, of course, this is also a challenge when you're trying to capture market share, but it's also a defensible moat.
The processes, as I told you, are very complex. They require a lot of on-site understanding and knowledge from our teams. We have extremely long-term, in-depth, experienced people servicing our customers. A lot of times, our products, we do have patents on specific processes, which gives us a moat, and then there are OEM specifications. Again, the holy grail for us is to receive a specification from an automaker, for example, that says, "This is the process you will use." They're difficult to get, but we have them, and that is ultimately what we try to achieve through our OEM group. Really, it's a customer dependency on our technical service that it is our primary moat. It's not expensive to get into this space. You could open a chemical blending operation tomorrow.
The cost comes in in finding the centuries, literally now, of combined experience that we bring to the chain. I believe we have just a short video, Carey, of some of our processes. It's very short, I think. Not overly impressive, but that's okay. I like simple. The thing about our products is you don't know they're there, but then you end up seeing them every day. Next time, you won't look at a car differently. You will look at a car differently after today. Everything you see on the outside of a car that is chrome, okay, first of all, it's plastic, so it's hard to get electrical current through plastic. Our processes make non-conductive parts conductive, and therefore, we can make them decorative. It's a very complex process. You saw a couple of process steps in that video.
There are literally a couple dozen in a line to produce a grill, for example, in that thing. It's a plastic grill, but of course, looks metallic at the end of the day. The process is, like I said, although not the most impressive to see, you do see them every day. The quality of that finish and the requirements of the automotive company and the consumer, ultimately, is what allows us to maintain our business. It also is the opportunity for us to globalize this business because local suppliers cannot achieve the same quality that we can on a global basis. Okay? That is kind of the key to our long-term success. What is our competitive advantage? Slide 73.
As a result of the combined companies, we created a new group within MacDermid, within the Performance Solutions business, that we call our end user market group. This is a bridge across each of our industries, because every industry, like I said, has an ultimate end user, an end-use customer, whether it's a mobile device manufacturer, an automotive company, a consumer product company, for example, in our graphics space. All of our companies have the same basic approach to our selling model, where we leverage these relationships from the ultimate end user all the way through the applicator. This team is comprised of very seasoned, very commercially oriented salespeople with very big-picture lenses. These are ultimate relationship managers. We call on these people for opportunity recognition. As somebody's going through an Apple, for example, this is a great example.
Apple asked us specifically to appoint a global point of contact. They wanted one person to go to that they knew could coordinate all the activity within MacDermid, Enthone, and Alpha Assembly Solutions around the world, preferably same time zone, close to the same time zone as they were in. What they do is they come to us with future project needs, and they say, "This is what we're going to want to be doing. Where can we get it done?" Our team works directly with Apple engineers, Apple designers, and then applicators around the world, not only for prototyping capability, but then also for ultimate production of parts.
Not only does that give us access into Apple very early in the process, as an example, but it also then gives us the ability to direct work when possible to existing MacDermid customers or to help them develop a supply chain in a certain region of the world. This is how we will win long term, this is how we will grow faster than the markets we serve. This group of people dwarfs that of any single competitor. As a matter of fact, I would challenge our competitors combined to match the level of experience, the depth of knowledge, and the number of people we have working on this. They spend all day, every day. As a matter of fact, I leave here to go to an automotive strategy session with this group in Europe this week. We meet on a very regular basis.
All of our business leaders are plugged into this. The gentleman running this organization reports directly to me. It is our number 1 strategic initiative, which is this bridge, not only across our industries, but across the entire supply chain for all the customers that we serve. You'll see some examples at the bottom right-hand of this slide. It's in the automotive space. It's our electronics and our industrial groups, communications. You have infrastructure, mobile devices, and our energy space, oil and gas. We have a big push, especially in our assembly business, around photovoltaics and LED lighting. Then in the home goods market, appliances and hardware. We have people crossing all these major end-group industries, and we have a strategic global account management for the top automotive companies, top tier companies, and top electronics manufacturers. Electronics, for example, on Slide 74.
We have expertise at every step within the electronics manufacturing supply chain now. We could not have done this on our own as MacDermid, nor could have Enthone done it on their own. Anything from semiconductor metallization all the way through the assembly of a final printed circuit or device, we now have, again, more touchpoints than any other single supplier in our space. What did the combination of these businesses mean to us from a process availability standpoint in the electronics industry? This is in the chemical space primarily. You see pre and post integration on Slide 75. We are now extremely well-positioned in almost every target market that we participate with world-class market leading technologies and offerings. The combination of these two companies, three companies, this is primarily MacDermid and Enthone, but this combination was far more synergistic to us than we'd even imagined.
Where Enthone was strong, MacDermid wasn't particularly strong, and vice versa. We are now complete across the board with a couple of small opportunities still to improve, but we have products and processes being developed to address the yellow areas. Although we do sell precious metals, we are not a precious metal company. That's a skill set that is very different than one that we normally possess, although we do sell some. We are not primarily a precious metals company, as you'll see up there. Everything else, we think we're extremely well-positioned now within the electronic supply chain. Next slide. What does this look like? Again, end-user market experts calling primarily on device designers and the OEM. Combined with the tactical approach from our local sales organization on the bottom with a goal to be relevant, and that's really important, relevant and integral to the development of technology.
Working directly with an Apple or a Samsung, for example, on what they're designing, understanding how it's going to need to be manufactured, and then deploying resources in the local regions of the world to provide the services and support for those processes. Okay. Next slide simply states again, we believe that no other supplier to our target industries has the reach into all aspects of design, manufacture, and end use. Slide 79. What I'd like to do is just show you a little bit about what this means to be able to participate across this entire spectrum. This is a blow-up of a high-end smartphone. You see everything from the phone housing itself to solder balls and preforms for assembly, the printed circuits. There's damascene copper for silicon wafer processing. There's flexible circuits, which is that copper replacement technology I talked to you about.
That is metallized using copper replacement technology, silicon packaging, wafer-level packaging, and then even down to the antennas within your phone. These are all the spaces that we now participate across the entire spectrum. There's a lot of touch points for us within a high-end phone. This is what it potentially could mean to us. This is the market available to us within every smartphone, every high-end smartphone. Of course, this is an estimate, and it depends on the manufacturing complexity of the phone, et cetera, but you're talking approximately $0.90 a phone, a high-end smartphone. They're not all high-end smartphones, but there are 1.4 billion phones being sold every year. You can see there's a huge opportunity for us to leverage these relationships, and we have the ability to participate in all those segments.
The next slide graphically shows you on slide 79, what does this look like within the automotive supply chain for component manufacturers? Again, end user market experts, we are directly tied in to every major automotive company at the design level. We have people that spend their day with the designers, and it's a fascinating industry. For example, with FCA, Fiat Chrysler, in Turin, it's amazing how fashion-focused the automotive industry is. They're working on designs for the interior of cars based on what they think fashion trends will be. Our ability to understand that gives us an idea of what colors will be required, what materials will be used, and the ability for us to develop products and processes to match those requirements in the future. We believe that we are much more integrated into that part of the automotive supply chain than any of our competitors.
Again, highly tactical salespeople on the ground prepared for the areas that these companies think that they're going to be building and assembling cars. Right now, today, there are a lot of parts shipped around the world because local manufacturing of parts isn't there. We are extremely well-positioned as they are able to develop those markets, and we will actually even be able to direct work towards our installed customer base. Next slide, a reiteration of the touch points. I won't belabor that, although it's extremely important. Slide 81 gives you an actual example of how we're doing this and how it crosses not only all of our business units but how it crosses the industry itself. This is a supply chain for brake systems within the automotive space.
You see at the bottom, it starts with not only electronic components and sensors, which are serviced by our Alpha and our Electronics business, but the brake calipers themselves, which are supported by our Industrial business. Brake calipers have a lot of anti-corrosion and anti-wear chemistry used in the manufacture of calipers. You see braking hardware systems, braking electronics systems, and ultimately the car maker, the OEM, and/or the tier. This is where a company like Bosch or Conti comes in as the major tier 1 to the automotive maker. They actually do the specification for these products, and we have global account management focused on those companies as well. This gives us direct access into not only the automotive company but directly into their tier structure. Again, in the automotive space, the tier 1s do a lot of the work themselves.
They do a lot of the specifications themselves. We are tied directly into them. What does this mean to us from a business perspective on a car? Here you will see all the areas of a car that we participate, all the areas of the supply chain we participate, everything from decorative wheels, Electronics Assembly, center stack components, decorative trim, engine components. There aren't many components on a car that we don't participate. You can see, depending on the car, and this depends on the market it's in, you can have upwards between $30 and $50 available of value to us per vehicle. 80 million light cars and trucks produced every year. Not all of them have this level of content, obviously, but they're going to all migrate to more and more content.
As that happens, it's why ultimately we look at what is the automotive unit manufacturing going to do year in, year out. Doesn't matter that much to us because the content per vehicle is going to continue to increase. Again, next slide 83. This is the addressable consumable material market for a car, $3 billion-$5 billion a year. You'll see on the right-hand side of this chart all the areas that our units participate. Our Industrial Solutions business, our Electronics Solutions business, and our assembly business across an incredible array of technologies within the automotive. It's why I focus so heavily on the automotive space. It's a huge growth driver for the industry in general, and one that we're extremely well-positioned for. Ultimately, what does this mean for the business from a financial perspective?
On Slide 86 or 85 in this deck, Slide 85, there's a history across all these companies of extremely strong earnings, even in the light of top-line challenges. You'll see a dip in 2014 to 2015. This is a result of metals prices in the Alpha space on the sales side, for example, and the decline in electronics in Asia. However, you do see consistent earnings growth even through difficult times. Again, a little bit more impacted in the former Alent business due to the Alpha assembly component. You'll see the businesses continue to perform well over time. At a constant currency basis, even though sales decline in that period, you see a positive growth from an earnings perspective. We think this will continue.
Our strategy is for this to continue with margin expansion across our businesses and innovation allowing us for higher gross margin products to the market. Next slide. Very low CapEx requirements in this business for a company or an operating unit our size. We spend 1.5%-2% of sales as our target for CapEx. What this allows us for is a tremendous amount of cash to strategically make decisions and investments in growth areas. For example, we're making a major investment this year and next year and the following year in wafer-level packaging and semiconductor plating, the old historic Enthone damascene copper business. We are making a much stronger, much more aggressive investment in that technology. That business is going to continue to grow for us far in excess of the rate of the overall electronic space, and this allows us to do that.
It gives us a lot of cash as long as Rakesh Sachdev says okay. It gives us a lot of cash, gives us the opportunity to grow strategically within these markets. Next slide, Slide 87. A very highly variable cost business, which provides us opportunities. Improvements in our cost of goods has a direct impact on our financial performance. Most of our cost is directly at raw materials. Again, it's very easy to get into this space. You can increase capacity simply by adding tanks to our manufacturing process. It doesn't require a new plant. We have the ability to make improvements. Our global supply chain has objectives to make improvements and to decrease our cost of goods. You can see a 1% decrease in our material costs would improve our EBITDA margin by 50 basis points.
We have procurement initiatives as a result of the combined company that are already well underway. We're leveraging the new buying power of the business, and we will have incremental savings ongoing in 2017 into 2018, and beyond. Stable and improving gross margins over time. This trend will continue. Our goal is to grow faster than our markets, higher margin products, and to grow the top line. You heard Rakesh Sachdev talk about the fact that we are focused on top-line growth as well. We have initiatives within each business for top-line growth as well as margin improvement, and I think you'll be happy to know that we plan this trend to continue, that you see here. We have a very strong history of margin improvement. We talked a little bit, or more specifically, we talked about our commercial opportunities, our sales structure, our strategy within our markets.
There is, however, does remain some meaningful cost synergies and efficiencies within our business as a result of these combined companies. We are well underway to meeting our stated objective from a synergy standpoint. I was talking earlier to a few people. The businesses have come together exceedingly well. They've come together faster than we had even anticipated, and I'm extremely happy about that. We are ahead of our synergy run rate as we go into the end of the year. We've begun already some factory rationalization, primarily in North America. We definitely have G&A synergies as we build shared service around the world. We have meaningful factory consolidation opportunities in the future, and these things will begin in earnest in 2017 and carry on into 2018. We do have additional SG&A opportunity.
However, as I stated before, we have been extremely cautious, and those are decisions that you only get to make one time. We have a great selling and technical force around the world and a tremendous innovation team around the world. All those talents and skills we want to maintain and retain. We are making very tactical decisions as it relates to anything that would have anything to do with selling and tech or our innovation staff.
We'll be taking a 30-minute break, and we'll start again promptly at 10:40. Thank you.
Okay. Thank you. I guess I'm done, Carey. Thank you.
Keep going.
No. Thank you all very much.
I'm going to announce that we're going to start back up. Okay. I was told the music cut out for my broadcast, because the music stopped in the middle of the break. We need to turn that back on. The webcasting? Yeah, the webcasting stopped. Oh. Yeah, thank you. I need to call the operator, Donna and Yeah. Okay. All right.
Ladies and gentlemen, if everyone could start to take their seats, we'd like to resume in a few minutes.
Good morning, everybody. My name is Diego Lopez Casanello. I am President of the Agricultural Solutions segment of Platform. I joined Platform in February this year. In March, we put a team together to develop a new strategy for Arysta, which is what I'm going to share with you today. We have people from different regions. We have people from the different legacies, different functions, and we gave these guys two suggestions. The first one is to look into those markets, those segments in Arysta, where we are leading today. These are areas like in Brazil, like in Eastern Europe, Mexico, Vietnam, Hungary, so that we can take conclusions for the entire Arysta based on what we know that works.
We also tell the team to look to develop a strategy where we know we are not waiting for grain prices to recover, but that is robust enough to do well and grow in a more tougher environment in the next year. Having said that, before I go into the strategy, let me give you an overview about who is Arysta today. When I was offered the job back last year, I saw the opportunity to lead the birth of the next great ag chem company, and I have 40 minutes to try to convince you of that. I'll do my best. The next two slides I have is really what caught my attention, and I wanted to share this with you from the beginning.
First of all, if you look at the new Arysta, every legacy on its own was well-positioned and doing well in its own segments, in their own geographies. When you put these companies together, you get a global player with a broad portfolio, a very competitive portfolio. I would say today in this market, it is not enough to be global or to have a broad portfolio. There are two things that make Arysta unique in this space. The first thing is that we play in segments that are specialty niche in nature, away from the mainstream of the agricultural chemicals industry. The second unique characteristic of Arysta is that we are asset-light, and we have a very viable cost structure that has advantages beyond the expected financial advantages, also operational advantages that I will mention today in the presentation.
Probably this slide shows best how our business model works. You see on the middle of the graph, the current business model of, I would say, the larger discovery-based companies, and you see on the left-hand side, the business model of a generic company. On the right-hand side, our Arysta model that we call asset-light, high-touch. Why high-touch? We focus on specialty niche segments. Here, it is not about the new active ingredient. There are active ingredients that can do the job in these segments, but it is really about developing the delivery system, the right mixture, the right formulation that will do the job in those niche segments. Why asset-light? Because when you look at the discovery-based companies, Rakesh mentioned before, you have to invest around $280 million to bring a new active ingredient from discovery to the launch in one of the key markets.
On top of it, you have to also count with another $200 million-$500 million investment in CapEx on a new active ingredient manufacturing plant. We don't do this. We have our library of active ingredients. We continue to expand this library of active ingredients by accessing technology from these discovery-based companies. Why is that? Why are we interesting? Why are we attractive for discovery-based companies as a partner? Because once you invest $700 million in an active ingredient in a manufacturing plant, you better get the volumes very fast to get a business case for it. What we do is we offer a potential for segmentation and announce entrance into these niche segments. At the same time, we don't produce the active ingredients ourselves. We are sourcing these active ingredients from multinationals.
We are calling these active ingredients in India, in China, or from whoever that can secure for us a competitive cost position. With this, we are able to capture high margins and at the same time get a high return for the investment. Our footprint is relatively simple. We are present in all major key markets in the ag industry. More than 100 countries, 6,000 registrations. Our headquarters are in Cary, North Carolina, in what we call the Silicon Valley of the ag industry in the U.S. We have around 4,000 employees. Most of our employees are in marketing, sales, technical service, close to our customers. We have, of course, less people working in production. We do have 13 formulation plants around the world. We do formulate some of the products in-house. Around 50% of the volumes are being formulated in-house. Why is that?
We want to keep the flexibility, the speed, and the quality to serve our customers fast. This, of course, is our simple blending and mixing processes that don't require a significant amount of capital. Looking at our portfolio, you will see, and also comparing it with the industry, you see that we are present in all major crop groups. As Rakesh pointed out before, we are more fragmented and less exposed to the major row crops where probably you will see the highest level of competition in the market. Looking at our geographic presence, we are stronger present in emerging markets like LATAM, like Africa, like Eastern Europe. Also set there to grow in the future with the growth of these markets.
From the perspective of our portfolio, we have a balanced portfolio of fungicides, insecticides, and herbicides, but we also have a very strong position in biostimulants. Arysta is top three in the biostimulation space. I will talk later on about the unique possibility to differentiate through biostimulants and participate on the growth of that segment. This is just an example of core brands that we have in all major crop groups, and of course that now with the combined portfolio in front of our distributors, we have the chance to be more appealing. The same from the perspective of our regions. We have core brands in all key regions, and this represents the backbone for us to continue to grow in those regions. Looking at the business performance in the last years, the business has been growing. The legacy business have been growing steady.
Last year, as you know, we have been hit by the currency impact. We have more than 85% of our business outside the U.S. When you look at the numbers on a constant exchange rate basis, you see that we have outperformed the market in 2015, in a year where we were in the middle of the integration. We have been able also to increase our margins. We are seeing this trend in the first half of this year, where we have outperformed the market, and we believe that we can repeat this in the second half. The strategy, of course, is about consolidating this trend. It's about accelerating the trend. You will see in a minute what our objectives are. Rakesh showed this slide. The market has been growing over the last years at around 4% on average.
What are the fundamentals that explain the growth of the agricultural industry and also moving forward, what can we expect? Population is growing. 40% population growth is expected until 2050. 70% is the growth that we expect for the food production due to changes in human diet, due to the trend towards more meat consumption. At the same time, you see limited arable land. There are around seven billion acres available for cropping. There are, at the same time, five billion acres that are at risk of becoming unsuited for farming due to water scarcity, due to soil erosion. At the same time, climate change is putting certainly more risk into farming. We see food, as I said, regulatory requirements increasing due to the environmental and health concerns. What are the impacts of these trends in our industry?
First of all, we expect the industry to continue to grow in real terms because there is no other way for the farmer than to increase yields per acre, and doing this through technology. There is no other way around. At the same time, we see the regulatory environment becoming more stringent, the cost of the entire value chain are increasing. This is driving consolidation in the industry. We will talk in a minute about what are the consequences of that consolidation for the industry and for Arysta. We will continue to see cycles. This is an industry that goes through cycles. Don't expect from me a forecast about grain prices for next year. You won't get it. You can count with the fact that the 2007 food prices won't be the last one.
There will be times of increasing grain prices, followed by productivity investment, and then followed by further downturns. What we said, and I said at the beginning, we are not betting on increasing grain prices for our strategy. Our strategy needs to be robust to those cycles. Moving to industry consolidation, I know that this is very top of mind. What is the consequence for the industry, and how are we coping with this as Arysta? Well, first of all, we will see some new players with broader portfolios with increased leverage in distribution. This poses risks and opportunities. What we are working on is mitigating the risk but building on the opportunities. We see, for example, that we are a niche player in specialty niches.
These niches will become more niche for those larger companies, we will be betting more on continuing to collaborate with these companies on getting access on IP to increase and further expand our library of active ingredients. At the same time, Arysta is going to focus where Arysta can differentiate. I will show you in a minute what those focus segments are, where we can lead, and where we can grow above the average of the market. At the same time, if you talk to distributors, you will see that distributors are concerned of having to deal with players that are less flexible, that might be slower in decision-making. We have a very entrepreneurial, very customer-oriented team, we see this as a window of opportunity for us to position ourselves as best in class in customer orientation.
There will certainly be portfolio divestments in the coming months, we will be evaluating and eventually participating. There is nothing we can, of course, today mention, we will be informing you in due time. Our strategy for growth. Let me start with our midterm objectives. First of all, our objective is to grow and to grow above the average of the agricultural market. We set ourselves a goal to grow two percentage points above the market, while at the same time growing profitably. We want to maintain an EBITDA margin of not less than 20% year-on-year. At the same time, we want to be a leader in those segments that we have defined as primary focus segments. Very important, and I will talk later on about it, we want to be the number one in biostimulants.
At the same time, it's also important how we get there. We have a strong pipeline that we will leverage to produce 50% of our sales year-over-year with products that have been registered in the last three years. How is it that we plan to win as Arysta? This is a kind of an initial chart. First of all, we know that we cannot be everything to everybody. We want to focus, and there where we put the focus, we want to lead. We have defined five segments that we call H³ segments. Why we call H³ segments? Because they show high growth compared to the ag chemical market, where we have the chance to achieve high margins, higher margins than the average of our business.
Where we have the potential to differentiate, where we have a strong portfolio today. These are segments like crop establishment. What we do here is protect the crop in its early stages. It's about crop count, crop stands, root systems. This is a segment that grows together with the introduction of GMO seeds, because when the farmer makes a bigger investment in paying for a GMO seed, it also has the need to protect that investment. That is why this segment grows above the market. Plant stress and stimulation. This is about boosting the metabolism of the plant to increase yield. It's not about killing pests and diseases. It's about working on the metabolism of the plant. I will talk about it in a minute. Here is where biostimulants come into play. Resistance weed management.
There are several high-volume commodity herbicides in the market that are becoming increasingly ineffective against certain weeds. These are herbicides like glyphosate, for example, this is creating a new market for mixtures of new herbicides and also established herbicides. We are here in that segment. For those of you that follow this market, there are certain new traits of GMOs that are coming into the market that will be competing with glyphosate. We have a portfolio of herbicides that is very complementary to those products, we also see the chance here to grow with it. Specialty protection niches. Here is if you put yourself in the shoes of the big discovery-based companies. What you do in R&D is you screen for major disease families, major pest families. What we look at here is we look around those major families for opportunities, niche opportunities where we can participate.
These are things like acaricide. These are things like bacteria, vector control. Very interesting, high-margin opportunities. Crop residue management is our fifth segment. Of course, the trend towards higher regulatory requirements is also driving the need for the farmer to reduce residues. Here we are entering that market with biocontrol products and in combination with conventional crop protection products to reduce the level of residue at the end of the season for the farmer. There is a sixth segment that you see here in the slide, this is because once we define in each of the markets who are the distributors that will help us grow in those segments. We sit down with those distributors and we develop tailor opportunities, tailor mixtures that will help us round our portfolio in those distribution companies. Rakesh shared with you this slide already.
You see that starting from the $54 billion market that includes biosolutions, we extracted a primary focus market of $13 billion. We have 40% of our sales in those markets today, but we do more than 50% of our gross profit already in those markets. The idea is to increase that share, to increase our market share in the coming years. At the same time, the question is, what about the rest of the portfolio? These are highly profitable opportunities. We have, of course, a tail cutting exercise like everybody every year. Our target in those segments is to continue to defend our market share. Obviously, most of the capital, most of the management attention is going to go into these priority segments. There is also a big opportunity for Arysta in cross-selling.
This is about that there where legacy had its stronghold in a geography to bring the rest of the portfolio from the other legacies and leverage that position. These are things that take a bit more time in the ag business because you have to register these products, you have to launch those products. It might not be in your synergy capture potential that we show you, but these are sizable opportunities for Arysta moving forward. Coming back to our plan to win in these segments. The first point is very important because with the combined portfolio, we have today the chance not to offer single products, but to offer solutions in those segments where we are present today. This is just to bring you an example of our crop establishment H³ segment, where we have the seed treatment competence from Chemtura.
Chemtura basically is a pioneer, developed the seed treatment business worldwide. They have tremendous formulation technology where we can put anything that works on the seed. From Arysta, we have biosolutions, biostimulants that we are also adapting into this segment. We are already commercializing this year, and in-furrow applications. All together, we have a complete, one of the most comprehensive portfolios in the industry, and we are able to offer not a product, but a program to the farmer. We're thinking something like the sticky sales concept that Scot was talking before. Historically, in this industry, there has always been opportunities for increasing yields. The farmers have always managed to increase food production by adopting technology. We are convinced that biostimulation is going to be a key driver in the future for additional yield increase. Why is this?
Because around 70% of the genetic potential of crops to produce yield is lost to what we call abiotic stresses. These are environmental stresses like water scarcity, like heat, like cold. What biostimulants do is basically exactly that, work on the metabolism of the plant to make the plant more resilient to these environmental stresses. We have now tools like functional genomics, where with these methods, we can identify which compounds in the plant extracts and seaweed extracts that we use for biostimulation, what are the compounds that work. It can help us substantiate our claims and adapt the application timing of our products. There's a significant potential here moving forward. Arysta is a leading player, is among the top three players in the world. None of the big discovery-based companies are present in this space as of now.
We have a portfolio that acts on each stage of the growth of the plant that we can today offer as a complete solution. We are registering these products across boundaries, and we see a unique opportunity to participate in this segment. As I said before, of course, you will like to know what is our pipeline, how strong is our pipeline today, and very important, how are we going to continue to increase the value of that pipeline? The answer is through technology partnerships. The legacies, Chemtura, Arysta, have a strong track record of cooperations with major multinational companies. You can see here major acquisitions in the last couple of years and selected licensing deals. Since we built the new Arysta, we have seen increased momentum in collaborating. We have done a lot of efforts in communicating our strategy, explaining our strategy to our partners.
As you can see right now, we're working on several very interesting in-licensing deals that are not yet included in the pipeline that I will show you next, but that can help us increase the value over time. In the last couple of months, we have worked on aligning the strategic focus of our pipeline to our new priority segments And cleaning up those things that really don't make sense and putting trials in place for those projects that we want to push. We also have introduced a new R&D prioritization process to push for the right projects. As you can see, our pipeline is valued at around $700 million of peak sales, with products. These are incremental sales starting in 2016. I think this is a good solid pipeline. However, I personally see the opportunity here to continue to increase the value.
I think we can do more with the R&D investments that we do year-on-year through efficiency gains. For example, just an example is the opportunity to use our South American trial station to do off-season trials for the Northern Hemisphere. We're working on several things that will help us get more traction with that pipeline. Our target is to add to this pipeline value $100 million a year-on-year. I feel like we can get there in the next years. Let me show you some examples of projects we're working on that hopefully will give you a better picture of what we do. This is a new, unique model to fight insects. The technology is called [Nopdovi].
What we do here is, instead of going into the field and apply hundreds of pounds of products, we apply a very thin stripe of I think it's even animated. I will give it a try. I think you can see here we apply a thin stripe of this formulation, which is a natural product that has a special attractant to this particular insect that we want to eliminate. What happens is that the insects go into that stripe and eats on the product. The insecticide we use is a normal insecticide that is available in the market, and the beneficial insects are protected, and we reduce the amount of residue in the crop by 99%. As you can see here, this is a product that fits perfectly in our crop residue management segment. Where you don't see an innovation in terms of a new active ingredient.
It's an innovation in terms of a new delivery system. We can bring this formulation to other crops, use existing registered active ingredients, and have a product concept for that particular crop. Another example is a technology that we call TEPERA PLUS. Here you have to picture a Midwest corn farmer. What a farmer does is they go to the field, they use the seed drill to apply a liquid fertilizer. They will go again to the field, will apply an insecticide. They will eventually go again to the field and apply a fungicide. What we do with TEPERA PLUS is we offer the farmer a fungicide, insecticide liquid formulation that is compatible with that liquid fertilizer and can be applied in one shot to have an early insect and fungicide protection.
The fungicide has a biostimulant effect, which allows us to increase yields that are additive to other products that are being applied later in the season. A tremendous innovation. This product is going to be launched in 2018. Again, here a clear example of innovation in crop establishment with not a new active ingredient, but a new delivery system for an existing active ingredient. As I said before, we have a strong customer-oriented team, and we believe that we can make this a core competitive advantage of Arysta in light of the increasing consolidation of the industry. Our business model has a unique advantage already. If you are a discovery-based company and you make an investment in active ingredient research, you have to invest on a new facility. You have to sell what you discover, what you produce. We don't have that limitation.
We can define together with the distributor, with the farmer, our offer to that particular segment, and we have the flexibility to then use our available active ingredients or access those missing ones through corporations. That gives us a tremendous opportunity to be more customer-oriented and react to changes in the market. At the same time, this is a busy slide, of course we talk about strategy. Structure follows strategy. The idea is now, we're starting already until end of the year, align our organization through our new priority focus segments. That means that we will have crop establishment teams working locally together with our distribution partners, communicating with global crop establishment teams in other regions. At the same time, being supported by an excellence center on crop establishment in the U.K. that consolidates the formulation and technical application expertise.
Technology teams that are feeding those teams with active ingredients, whatever needed. We don't rely on steel, on chemical manufacturing plants. We are in a business that relies on people, on their attitudes, on their expertise, on their skill sets. We are conscious that our team has to be best in class in front of distribution. We have a very strong management team here. With people that are ex-Arysta, ex-Chemtura, from other Ag-chem companies with more than 20, 30 years of experience. We have not had a significant turnaround despite all this integration, so we were able really to keep those folks that are recognized. Today I'm very happy with my team. This leadership team has a tremendous task in front of us. Of course, after having the integration behind us, now we're driving those behaviors that we need in order to get to our objectives.
I listed here the top five behaviors we want to see in our teams. We are on it. The teams are responding well. I am happy that in the next three years, while others will be distracted with integration, we have already the full focus on our customers. The last but not least, also the fact that we have a viable cost structure that we want to keep and we want to strengthen in the coming years. You see in this graph that around 70% of our costs are direct in nature, and 90% of them are variable. That said, we have made sourcing a core competence of Arysta. We have a great opportunity to drive cost of goods savings in the next coming years. You see that our teams have incentives that are tied to cost savings that bring margin improvements.
We have multidisciplinary teams that are sitting on a weekly basis to discuss sourcing. I am in contact with the head of purchasing and with the head of supply chain operations on a daily basis. We have a good track record also with our legacies, and we can improve that even going in the future. This is very strongly tied with net working capital management. We have been top tier in performance in 2015. As you can see, also, net working capital is a standing target in all our incentive schemes. We have a target in the next two years to have a positive net paid inventory, which I see a good chance to get there, and that will make us a benchmark in the industry. My team has done tremendous work in capturing synergies.
We have collected $38 million of incremental synergies in 2015, and another $20 million are expected this year. We have secured $69 million of run rate synergies as we speak. I see that very soon we will be able to be at the $80 million. Beyond the synergies that we have been informing, we have opportunities for further cost savings in Arysta. Things like, for example, we are consolidating right now our laboratory footprint. We have opportunities to further consolidate our formulation site footprint. We are working on the rollout of a new ERP system that will help us reduce significantly the system complexity that we have. We are working on a shared service center for the European region. Far so on, I think you will see, especially in G&A, significant cost savings moving forward.
Just to summarize what I said before, we have several levers in the next couple of years to increase profitability and improve the management of our capital. The more we move towards our HQ segments in the next years, the more we drive mix and the more we increase our pricing power. We will work on year-on-year cost savings, and I have a good feeling that we can drive this. We will further reduce our G&A costs. We will invest on selling costs to drive growth. We have opportunities for geographic expansion. We will be investing on sales teams and technical teams. We can do this growth with not more than 5% of CapEx from sales. Very important, the focus of our entire team in both pricing management and net working capital.
I sought to wrap it up. I think I got a video so that you can see a few other faces from Arysta, and hopefully it delivers the message that I want to deliver to you. Similar as Scot, please don't expect any fancy videos, a simple one. Let's put it.
Crop protection products are essential tools that help farmers safeguard their crops from diseases, insects, and weeds. Despite the great progress of the agrochemical industry in recent decades, current average yields of key row crops like cereals, soybeans, and corn could be increased around 30%-40% through better adoption of pest management tools.
Our thing is creating solutions, not products. When we see a problem in sales, we ask ourselves, what is the right combination of active ingredients and technology to solve it?
We take proven active substances and build a rubbish kit at the right dose with the right formulation technology.
Beside yield losses for pests, also called biotic plant stresses, another 60%-80% of the genetic potential of major crops are lost to abiotic stresses, such as heat, cold, and water scarcity.
Arysta LifeScience has a unique approach. We look to eliminate pests, but at the same time, give the plant a kind of vitamin pill. These products are called biostimulants. These natural substances stimulate the metabolism of the plant to equip it to better resist biotic and abiotic stresses. The result is higher crop yield and quality.
The company has numerous innovation centers throughout the world, high-tech formulation labs, greenhouse testing facilities, and state-of-the-art field stations. Thanks to multiple collaborations with partners across industry and academia, Arysta LifeScience has secured access to a powerful library of new and existing active ingredients. Market conditions change rapidly in a seasonal industry like agriculture. Quality, flexibility, speed, and reliability are important.
What I like about Arysta LifeScience is that I don't want to outnumber the competition, that I found the right people with the best technical expertise.
A flexible but lean capital and cost structure is key to stay competitive and to generate strong cash flows, even with industry cycles and volatility.
We try and keep costs as variable as possible. We don't actually produce any active ingredients in-house. My team are constantly searching, not for just one, but several sources for our key active ingredients. We work with reliable quality manufacturers, mostly in India and China.
A constant drive to improve efficiency with the use of capital allows Arysta LifeScience to focus the vast majority of its investments on growth, expanding its field force presence, developing new solutions, and supporting new product launches. Arysta LifeScience, a world of innovation.
Very good. I have good actors in my team. We tried to get the cricket sound out of the cornfield, but it was impossible. Thank you very much.
I have nothing so exciting as a video, unfortunately. I'm Ben Gliklich, Executive Vice President of Operations and Strategy, and amongst other things, integration falls under my purview. As you've heard me say many times, Platform isn't just about buying great companies, it's about making them better, and that's really where integration comes to the fore. I'm going to talk just a little bit about our integration principles, how we go about integration, and give a couple of case studies and a progress update. First on principles. Asset-light, high-touch businesses, by their very nature, rely on people. Stabilizing the organization of companies that we've acquired is fundamental and critical right from the get-go. The way that we do that is really by prioritizing organizational design.
Essentially, we want every single person in the entity to know what their role will be, down to the account manager, as soon as possible, and you accomplish that through very thorough communication. Part of our moat as an asset-light, high-touch business is our proximity to the customer. You've heard that from Diego, you've heard that from Scot. All integrations have to have the customer first, right? Our integration framework will always be prioritizing the customer, making it such that the acquisitions actually don't impact the customers, and over time, doing business with us should be easier. The way you accomplish that is really by very quickly converting to one brand. Arysta was the one brand, and we brought Agriphar and Chemtura AgroSolutions under that umbrella very quickly.
Similarly, with MacDermid Performance Solutions, we came out with a new logo, the new branding for the Enthone, Alpha, and OMG businesses very quickly. One face of the customer is effectively saying that when you've got an account, there's going to be one salesperson, one sales organization that's responsible for that account. Communication, the wires aren't ever crossed. The invoices are quickly just from one organization. It's actually a very challenging exercise, but one that we've prioritized. Cross-functional ownership. While integration is overseen by corporate, it needs to be led and owned by the business units, because when integration's over, the business unit's going to be running that business and owning it. The way we do that is we have a very cross-functional approach to integration, and you'll see that from due diligence when we're making an acquisition.
You've got business unit folks who own each of the specific segments, if you will, of the operation involved in the diligence that transitions into the execution and realization of synergies. Lastly, quick wins, right? In the planning for an integration, in the diligence, we're going to identify a handful of things we can do to garner some momentum, to get some synergies, find the low-hanging fruit, and get a rhythm around integration. We've been pretty good about that thus far. How do we do that? It starts really early on. It starts in the planning phase. While we're evaluating a business, while we're doing our diligence on the business model and the financials, we're also thinking about the synergy opportunity and how it fits. We're doing our IT work. We're doing our HR work. We're doing our supply chain work and so forth.
The execution phase is all about regular tracking, right? We are measuring results. We are monitoring on weekly calls, monthly calls with the leadership of the organization to make sure that we're setting up guidelines, what we're going to accomplish with achievable timelines, and we're hitting those timelines. Lastly, talking about cross-functional ownership, the integration doesn't end when the synergies are realized. There's always more to do, and there's a continuous improvement mindset here. That's when we talk about optimization and the business unit really running the business and looking for continued opportunities. You'll see that later in the presentation a little bit about where we are in those three phases with the different integrations we're working on. Just quickly on some highlights, as I think most folks know, we've been delivering the synergies we've committed to. These integrations have been very consuming and successful exercises.
On the Agricultural Solutions side, here we are two years from having closed the first of the three acquisitions, about a year and a half from closing the last of them, we've brought them together pretty successfully. These were three global organizations that we've integrated with very diverse business units, extremely spread out operations, and nuanced regional operations. We've brought them under one umbrella. We've nearly completed the one face to the customer exercise. We've got sales forces consolidated very early on. Legal entity rationalization. That has to do with invoices and billing to rationalize the organizational structure. Lastly, registration transfer, which is something specific to the Ag business. In order to sell a product, you need a registration, which is attached to a legal entity. We've had to move the registrations to line up with the entities as we rationalize them.
Clearly, as Diego mentioned, there's more opportunity around footprint. That's office consolidation. Supply chain procurement, we've had great savings, and it continues to be an area we're looking to harvest. Cross-selling. That's sort of the next step, and that's really taking advantage of the broader AI library and the larger sales force we have to drive revenue synergies and sales growth. The Performance Solutions side's a little bit earlier in the evolution. We're only seven, eight months out from the close of the Alent transaction, or the last transaction, which was the OMG Malaysia transaction. We've, as we talked about earlier, put the organization together. Here we are, nine months later with a full organizational design. Account management's been divvied up effectively. The brands have been consolidated. We're still in the earlier phases of one face to the customer.
Legal entity rationalization and getting invoices rationalized and some of the nitty-gritty. The next very compelling opportunity for us is facility and office rationalization. These are, as you saw from Scot's slides, very diverse operations, a lot of warehouses, a lot of manufacturing facilities, and there's a pretty compelling opportunity there to reduce the footprint, get rid of some of the steel in the ground, and generate some savings. Where are we? As I just said on the Performance side, it's physical footprint is one face to the customer. The back-office integration and product rationalization and revenue synergies are where we're spending our time right now, sort of in the early innings, I would say, of the Performance Solutions integration, and it's going quite well. On the Agricultural Solutions side, we're just about getting to that optimization phase.
We're almost run rating the full synergies we've committed to and beginning to look at harvesting the additional opportunities from having combined these entities. I'd be remiss not to mention headquarters. We made six acquisitions, and we've got a major initiative in building our corporate infrastructure and what Rakesh would call enterprise development, and Sanjiv is going to talk about that as well. From that standpoint, it's really an IT integration effort right now and building appropriate business intelligence and financial reporting systems to manage a company as big as ours has become in a relatively short period of time. One case study to sort of bring to the fore what we've done for each of the businesses. For Arysta, we'll talk about supply chain and procurement, which continues to be a key focus area. But it's been a very rich vein of savings for the Arysta team.
As Diego pointed out, we spend over $1 billion in COGS a year, and in the process of our integration and synergy planning, we set an ambitious goal of saving $30 million from COGS, which is about 2.5% over three years. We looked under every nook and cranny for savings. AI procurement is clearly a big opportunity, leveraging the scale of the broader organization. Manufacturing and tolling is also an obvious one. We looked at things like freight and where we're warehousing. A long list of opportunities. And where we are today, about two years in, is we're just about at the run rate of $30 million, and there's upside next year. To make it real, cypermethrin is a great case study.
cypermethrin is an active ingredient that Arysta and Agriphar were procuring and selling a large quantity of 680 kiloliters, but they were sole sourced. And so by combining the businesses and taking advantage of some of the procurement capabilities of this organization, you just saw Stephen Pearce talking about it. We were able to make it a multiple sourced active, and we were able to negotiate better terms. We're saving $1.5 million on that active ingredient alone. And there are many other active ingredient case studies that you can look at where those savings are coming through. On the MacDermid side, it's really about footprint consolidation. I've mentioned that previously. These are globally distributed businesses, but they don't have any big manufacturing facilities.
There's a lot of warehouses, there's a lot of formulation plants, a lot of sales offices, and they all tend to be in similar areas because the customers are similar end markets. So there's significant presence in Asia for the electronics business. There's significant presence in Western Europe for the industrial business. And we're in the early stages of working through that facility rationalization opportunity, and we're looking at every facility we have and the opportunities that they present. One where we're well progressed is in North America. So what you see here on the left-hand side of the page are the facilities that we have in North America for the electronics business. There are really three that are core electronics. The West Haven facility is more of the semiconductor business that we got from Alent, and the Altoona facility is Alpha, so that's assembly.
The three on the top left are really overlapping facilities. You can see the volume we do in each of them on the top of the slide. We're combining the three into one, and that process is already well underway. It costs about $1.5 million of initial CapEx to upgrade the Ferndale facility to fit the Maple Plain and Bridgeview capacity, but we'll get $2 million of savings on a run rate basis just from that opportunity. If you look at the bottom, you can see how much overlap there is in other geographies. You see the European Union footprint. I would look at Enthone, the combined facilities, MacDermid and OMG, to get a sense for what the opportunity set there is in terms of redundancy, and similarly in Asia, where we have many overlapping facilities in the same countries.
This opportunity is still early stages. We're doing great against it in North America. We expect to continue to make meaningful progress in Europe and Asia over the next year or so. Lastly, just a reminder of where we are on synergies. We came into 2015, committed to generating $20 million of synergies from the ag business. We finished the year with $38 million. This year, we committed to $40 million, and we're well on track to achieve that. The remaining ag synergies are $28 million. We should be run rating the balance. We said we'd get $80 million. We should be close to run rating $80 million by the end of the year. That exercise is nearly complete. On the performance side, there's still a bit more work to do, but we have a high level of confidence we'll get there.
One thing that we get questions about, and we got a question about on our last call, was are we going to raise our synergy guidance? For us, we're 2 years in, almost 3 years into the ag integration, and at that point, you sort of flip to optimization, right? If we're making the business better still, and it is a product of combining the businesses, there's some blurred line of synergies versus optimization, and we're focused on making the business better, and it's a little late to be calling it synergies. On the performance side, it's still early days. We'll see how we continue to progress in that regard. With that, I will turn it over to my colleague, Sanjiv.
Thank you so much, Ben. Hello, everybody again. It's fantastic to see such a good turnout. On behalf of all of Platform, we are grateful that you are spending the morning with us. Before I hand it back to Rakesh to conclude and also to take all your Q&A, I thought I'd spend a few minutes on a couple of key financial updates. Let me first of all, I'm on slide 140 for people who are on the phone. A couple of quick comments on our balance sheet. As you heard from Rakesh, we are very committed to the 4.5 times leverage structure. That's a key takeaway that you should take, and over time, in less than 3 years, we expect to get there.
Having said that, I think it is very important for all of you to note that the business as it stands can withstand a lot higher leverage. I think it is very important as you look at our margins, you look at our variable cost structure, you look at the geographic focus, the business focus, the low amount of CapEx we have, the business can afford a lot higher leverage. That is important, second point takeaway. Third, we continue to enjoy a significant access to capital. If you just do a mark to market right now, we have over $800 million of capital available to us. That includes our unused credit lines, our corporate line, our local line, and obviously, it includes the significant amount of cash we have on hand.
Finally, we continue to have no significant maturities, which gives us a lot of flexibility to raise capitals in different ways for any needs that we may have. I think it is important as you assess our balance sheet, you peel the onion and look a step beyond, regardless of our key priority to reduce it to four and a half times. One key use of our capital is working capital. I thought I would spend a minute on that. It is one of the biggest uses of our capital, about over $1.4 billion as of June 30th, and that is also a number that varies from a seasonal point of view. Really, most of it is in the ag business, and it really depends on the growing cycle, the state of the financing market of that local market. What is the cycle of crop?
What is the growing cycle in terms of when the crop is being sown and when it generates the revenue for the farmer? Q1, Q2 historically are the biggest use of our working capital. Peak use could be as much as $200 million. Then late Q2 or the rest of the year, especially in the second half of the year, we claw all that back. It is important to note that even as we generate this big use of working capital, as Diego pointed out, credit collection and management of that receivable is a key core competency of ours. This is also a personal priority. Under the leadership of Rakesh and Martin, we have actually re-enhanced our whole bonus structure.
From a compensation point of view, our ability to manage working capital throughout the year is a key metric. I am very confident that you will see results, and we will claw back some of this capital. The last other comment I would make on working capital is because most of our business is overseas, a lot of that working capital is in local currency. So some of the volatility you see in the balance is actually FX related. It has nothing to do with what is economically happening to the business. It has to do with how the numbers are reported. So please keep that in mind as you assess the change in balances to working capital over time. Quick comment on foreign exchange.
One of the great things about our globally diverse business, both from a type of business and from geography, is that we have significant FX exposure. Over 70% of our revenue in 2015 was non-US dollar. Our ability to manage this FX properly is a key part of our value proposition. I break up our FX exposure into two buckets. The first is translation, which is just non-US dollar balance sheets and income statements when they get reported into US dollars, what the current exchange rate is and that impact of that. That is something that we don't actively hedge. We do have about 20% or so of our debt currently euro-denominated, so that creates a natural hedge. We are always looking for non-US dollar debt so we can continue to naturally hedge it.
This is not something we will actively hedge overall from a financial markets point of view. However, as we have done over the last several earning cycles, we will be very transparent with you in terms of the impact of this translation on reported results by showing you our underlying operating performance on a constant currency basis, which allows you to better evaluate our performance adjusting for FX. The second bigger impact we have on FX is our transaction exposure. This is the fact that in many markets, we have a cost-revenue mismatch. In a lot of the Ag market, the raw material is delivered in hard currency, so either US dollar or EUR, and the revenue is generated in local currency. Operationally, I think the team is doing a very good job of managing that exposure.
Over time, that's about matching your sell where you build where you sell. It's about payment terms. It's about changing currency of billing. It's all these operational things that we can do, and we are quite good at that, and over time we are getting better. The second way to manage it is with financial hedging. I'm pleased to inform you that we continue to roll out a global FX hedging program, where over time, all our FX exposures on a transaction basis will be prudently hedged when we are exposed. We will take this volatility off the table as much as possible. Finally, a lot of our FX exposure relates to cash and accounts receivable, and I believe the team does a very good job of trying to manage that. There could be some post-transaction pricing adjustments.
There could be some offsets to price as the exchange moves in certain directions. Net-net, this is a very key priority for us, FX management. A quick comment on uses of free cash flow. Again, I know we're sort of repeating ourselves here, debt paydown is a key priority. It's important that in less than three years, we get to 4.5x. As our earnings go up, we will generate more free cash flow. We will use that to pay down debt. That will obviously also reduce the amount of interest burden we have currently in the business. I already referred to working capital. It's very important that while working capital is a use of free cash flow, even a small improvement in working capital will generate a lot of cash flow considering the size of the denominator. This is a key priority for us as we focus.
Rakesh, Scot, Diego all talked about organic sales growth. It is very important that we continue to allocate capital to support that. For a business with revenues in the $4 billion range, we are a very low-capital business. For 2016, currently, we reduced our outlook for CapEx. We are looking at give or take $100 million of CapEx for an enterprise of close to $4 billion in sales. We will continue to invest in that. That is how we are going to achieve low single-digit growth in organic sales and high single-digit growth in EBITDA. Very key and efficient use of capital. Finally, as you saw from the update from Ben, but also from Diego and Scot, acquiring businesses and then integrating them is the core competency of this business, and we will always be on the lookout for appropriate tuck-in or other acquisitions.
That for the time being is deprioritized as we continue to focus on improving the balance sheet. One big use of cash flow near term is our tax payments. This year, we expect to pay between $100 million and $125 million of taxes. In a simplistic world, you would like to make money where you spend money. Because of the legacy structure and the disparate businesses we brought together, we currently have a mismatch. We have expenses, most significantly in the U.S. and then to some extent in a couple other countries, where we don't have natural tax shelters. We generate a lot of cash and a lot of income in countries like Brazil, China, Mexico, France, where we don't have natural tax offsets. This is a key priority of the business.
How do we make structural changes to our structure so that this number can continue to come down? A key priority for me and everybody else in the business. We are looking at it both tactically and structurally. Tactically, you've already seen an improvement. We had an outlook from $100 million to $150 million. Now we are down to $100 million to $125 million, and I'm hoping that we continue to make some tactical improvements. The structural changes, looking at aligning our revenues with our costs, looking at ownership structures, looking at commercial supply arrangements, those will all take time, but will be much more sustainable in terms of saving. I expect this is a two to three, four-year effort. A key priority and a key benefit as we get this going, it will reduce a meaningful use of cash that we have today.
Before I hand it back to Rakesh to wrap up, a quick comment on enterprise development, both Rakesh and Ben also alluded to it. This is a key priority as I talked about, we brought together a bunch of disparate businesses. They were not desperate, they're actually fantastic. We are happy to have them. We are bringing them together and creating an environment and infrastructure where we can scale them up as appropriate. I am pleased to report that we've made meaningful progress. In the end, it's about people, process, and systems. In all three areas, we have made meaningful progress. We are in the process of globalizing, commonizing many of our key processes. We are prudently investing in certain systems, environmental systems issues that will pay off.
Most importantly, we are beefing up our team, whether it is in finance, whether it is in other commercial areas, that will continue to pay off dividends over time to manage this enterprise and to reduce this expense over time. Shared services, without compromising in any way the independence, decision-making, and commercial nimbleness of our segments, we are globalizing certain capabilities like IT, legal, tax, treasury, accounting, so that we can have common best practices without in any way compromising independence. Finance and controls, we need to continue to improve the speed with which and the accuracy with which we close our books, and continue to improve the controls environment we have. We have made significant people and process investments in that, and over time, some of the IT projects we have going on will help us in that regard.
Finally, the payoff of investing in capability in tax and treasury is immediate. You are seeing some of that already playing out in terms of how we are managing our FX, how we are tactically reducing our tax burden. This will be an area we, the board, Martin, everybody have been very supportive, we continue to invest in that regard. Over time, this amount total spend at the corporate level will come down and will allow us to have a platform that we can scale up or down based on the needs of our shareholder. With that, I thank you for your time, and my pleasure to hand it back to Rakesh to wrap up and before we take questions. Thank you.
Thanks, Sanjiv.
Thank you.
Well, I think pretty well. I think we had told the team that we wanted to wrap this up by about 12:15, we are just about 20, 30 minutes ahead. Hopefully, it's a sign of things to come where we keep exceeding expectations. I know we have thrown a lot at all of you this morning. We had a number of slides. We really wanted to share with you as much as we could, hopefully, you'll take the material back and get a chance to reflect on that. I just wanted to bring back the last slide that I had earlier when I showed you. In fact, I'm going to put this again and try and summarize again the highlights of what we have presented today.
The first thing you should take away is that as a team, we are absolutely committed in meeting our financial commitments. We have had a good start this year. We have given you guidance for 2016. We have now given you an outlook on our long-term objectives on the financial commitments, we are absolutely committed in getting there. Going to take work in terms of growing the business, in terms of enhancing the margins in the business, focusing on our cash flow. I think the second thing I would say is if you look at the next two boxes of improving customer intimacy and expanding our products and services, both are incredibly important for us to grow our business.
I think what you heard both Scot and Diego talk about is how we intend to become more customer intimate in our businesses and how we are approaching innovation and the expansion of our products and services. For us to exceed end market growth, which is absolutely our objective, is to grow above how the end markets are growing. Both those are going to be very critical. Our ability to gain the confidence of our customers around the world and our ability to deliver the innovation and the products that we have to deliver. I would say, the operational excellence piece is also very key if we have to expand our margins. We are committed to expanding our margins. In almost half the company's revenues, about $1.8 billion of our $3.6 billion in sales is material that we buy from other people.
If you think about how we manage the supply chain and how we can affect and make our supply chain more efficient, every 1% that we reduce in that buy, we're going to expand our margins by about 50 basis points, all things else being equal. That's going to be a huge focus, including working capital. We have $1.4 billion of working capital today in the company, I know it's made up of receivables, which is a big piece, especially in the ag business, but it's inventory. We are very focused. We are very focused because, one, it's the right thing to do. It's our ability to generate more cash and pay down debt. The final thing is, again, the enterprise development. We know we're not going to achieve this without having the best people on the bus focusing on the right things.
We have work to do on the systems and the processes. You heard Sanjiv talk about we are making sure that we have the right control systems, we have the right IT systems, but we are not doing an overkill, right? At the same time, we don't want to create a Cadillac when we can do it more affordably. There's a lot of work to be done. At least I can tell you on behalf of the board and the management team, we feel we are in a good place. We've got good people, and more importantly, I think we have great customers. As I say, if you're in industries where your customers are resilient, where they're successful, I think it's a good place to be. That's where we are. With that, I'm going to ask the presenters and Martin to come up.
We have a little bit of time for some Q&A, and I think this would be the opportunity for you to ask us questions, and we'll try and give you as honest answers as we can. Is this mic live? Can we have both mics live at the same time?
We can also use their line.
That's fine. We can speak up.
John Roberts, UBS. On Slide 26, you gave us a free cash flow bridge from EBITDA. If we were to look at free cash flow to equity and compare that to adjusted EPS, if you look out 2017 or whatever you want to call kind of normal or run rate, do we get free cash flow to equity equal to, above or below adjusted EPS run rate?
Again, I've never been accused of being soft-spoken. I think if you look at our run rate, year-over-year comparisons are difficult right now because so much of the stuff is pro forma or what we call comparable. If you look at year-over-year, it's difficult to make sense. If you compare 2016 to 2017, or you compare second half of 2015 to 2016, I think over time, cash flow should exceed EPS. Right now, as you look at integration expenses we have, you look at non-EBITDA expenses we have, it actually does not. As we make progress in our tax management, we make progress in our working capital management, and the amount of cost we are incurring to have synergies goes down, you will see the benefit happen.
Remember, your EPS is burdened by a lot of non-cash expenses related to acquisition accounting.
Maybe a question to Martin.
Yeah. Adjusted EPS, where we try to adjust for the huge write-up in our intangible assets.
Thanks, Sanjiv.
John, you have a question for Martin?
Yeah. Follow-up to Martin. Back at the last meeting, and one of the original premises of the company was that M&A valuations would move inversely with interest rates [at NA]. Things are really expensive right now. We've kind of broken that rule, I guess. We have very high M&A valuations through very low interest rates that's there. Do you think that we get back to that kind of environment longer term, or is the current environment kind of shaking your confidence in that long-term view of?
Sorry. I'm thinking back to whether I misspoke about that. Low interest rates and high valuations tend to go hand in hand.
Right. We had a breakdown of that, I want to say, earlier this year. We had actually pretty high yield rates. You kind of ended up with your balance sheet the way it is because you paid high multiples, or you paid multiples reflective of a low interest rate environment, but you didn't get to actually take as much advantage of that, I guess, in the balance sheet.
Yeah, I think that's true. Look, part of it was with all the turmoil we had last year, we really didn't have the opportunity to round out our capital base for what we had bought, and it's cost us money. We're paying more in interest than I think we had expected to. You've heard an outline of a number of initiatives. One of them is to pay less taxes on a cash-on-cash basis. As the EBITDA picks up on the business, the leverage ratio comes back in line. I think one of the things that we've talked about was at what point can you go back on the offense, and we talked a little bit about that.
I think that the truth is we've got so much that has been going on in the last year, I don't think we've sort of missed anything from our own perspective. We've had a lot of integration to do. It's been good for our business to be, if you like, inwardly focused. At some point, if we have the currency, we will have the opportunity to take advantage of things that are out there at some point. There's no rush. There's certainly a lot going on. I think, as I said at the beginning of my remarks, what's going on in M&A world for ag and for industrial, it's certainly active, but I think there'll be plenty of opportunities down the line.
Thank you. Jim Sheehan from SunTrust. Guys, you mentioned that your acquisition plans are kind of on hold because of your goal to deleverage. You also mentioned that in the ag space, there's a lot of consolidation going on in the industry where there might be some forced divestitures. Do you guys see yourselves as disadvantaged competitively in that environment, and how do you expect to mitigate that situation?
Yeah. I think I was mentioning to some of the folks on the break, we are going to be opportunistic. We are not expecting to do any major transformation. Frankly, we don't need to. To the extent there are opportunities that fall out of the consolidation game, either in performance or in ag, absolutely, we're going to look at it. We're going to try and figure out if there are interesting opportunities, how we might structure that. Yes, we're not going to turn a blind eye to opportunities that might pop out from that.
Yeah, I would say, I don't think we're structurally disadvantaged. I think if anything, we're getting better at knowing how to integrate businesses through the experiences that we've had. I think you've got a management organization that's very well geared to change. We've managed to pick up a lot of talent in the M&A process, we did a lot in a relatively short period of time. There's been a digestion period that I think shouldn't be rushed.
Thanks. Ian Bennett, Bank of America. What was Permira's incentive to renegotiate the terms of preferred?
The short answer to that is it's not so much to renegotiate. They have a similar interest to what we have, which is to not have the equity of the company damaged by the pressure from the preferred. They've been willing to work with us. We were the initiators of a discussion on repositioning the paper. From their perspective, if they get their money in the structure that we've discussed, it's worth something to them. When you say worth something, that's $90 million. We negotiated that. We negotiated it, I would say, pretty hard to frame it. That's where we ended up. It was a combination of discussions. Rakesh was the good cop. I was probably not the good cop.
Okay. At the end of the day, we reached an agreement we were all, I think everyone was happy with, it's an option for us that we think is in the best interest of the company, which is why we negotiated it.
Okay. For the long-term sales guidance, maybe this is for Rakesh and Diego and Scot. For the 4%-5%, you've kind of outlined some markets are growing faster, some are growing slower. If we look out three years, what are the areas that you have the most confidence in achieving that high level of sales growth that's pretty certain to you? What areas are less certain that there could be more volatility as we move forward in time?
Yeah, I'll hand the phone to Scot and Diego. When you look at the businesses that we're in the Performance Solutions business, I think automotive, electronics, that's going to be something that's our sales. In the ag business, again, you heard Diego talk about the focus on the faster-growing segments where we can differentiate ourselves. That's about 40% of our business. I think we feel very good about it. Where we have most of the headwinds in the ag business is in the U.S., I think partly because the markets have been soft, and two, there's more correction happening in the channel. That business is less than 25% for us in the ag business. I would say that clearly we intend to focus on faster-growing segments. We don't want to just rely on the end markets itself.
Having said that, to the extent that we get some tailwinds in the ag business in North America, that would help. I think to the extent that we get some additional tailwinds in the electronics business, especially in China, that would help. If we get those two, I think we have every confidence that we will not only meet but perhaps exceed our growth goals. With that, let me just see if Diego and Scot want to add something.
Yes. We put guidance out there, as you saw, relative to market growth, right? We said two percentage points above market. I feel confident about our ability to deliver the growth in the five segments that we show there. We are working North America, just maybe to be more specific there. We have been destocking the channel, but our sales on the ground have been moving on par with the market. I feel confident about it. Obviously, there are segments which are more exposed to grain prices than others. It will help to have the market revamping, but we're not betting on the market to turn around.
Yes. Just to reflect on what Rakesh said, each of our business segments in the Performance Solutions group have opportunities within them that are growing faster than the markets are. We're going to focus on being the best positioned to address those. On a macro side, clearly the automotive business, not only the electronics content per vehicle, but decorative content per vehicle as well is increasing around the world. That crosses over our assembly business, our electronic, and our industrial space. There are big refresh rates coming in the handheld phone space, which is going to continue to grow that business, we think, over time.
Even in our graphics business, although there are some areas of that business that are under a little more pressure than others, we think that the switch in printing technology going on in that space will enable us to continue to grow. Offshore really is dependent on the capital investment of the big oil companies, but we're really well-positioned for when that begins.
Thank you. Joe Reagor from Roth Capital . Two questions for Sanjiv, if I could begin. First one being: given the focus on debt repayment, what is the minimum cash balance you guys feel comfortable with, so we can forecast out how you might repay debt early? Also on the tax side, you didn't give a lot of exact details, and I know it's kind of a longer-term item to reduce taxes, but maybe give a few specific examples of how you guys could reduce the tax burden.
Let me take a shot at the second question first, and then the first. It's a subset of the first question. I'd rather not be too specific, but I'll give you some examples. Currently, certain parts of our assets are structured under a Japanese jurisdiction. That is a very unfriendly structure in terms of withholding taxes and moving of capital and profits. To the extent that there is an efficient way to move that ownership away to a more tax-friendlier jurisdiction, that would be a good transaction. Things like that take time. You have to structure, you have to create bases, you have to create business reason, and you structure. Another specific example is where do you source your supplies? Where do you invoice them, and where do you do the value add?
Again, depending on where you are, which part of the world, certain areas present opportunities, both in terms of taxable income, value-add tax, and customs tax. To the extent that over time you can rationalize that footprint, that translates to a big ownership move. The third area, something that has been in the press a lot, which is: where does your technology reside? What are you being paid for that technology? We are a global company. Both businesses generate technology on a global basis. In the case of Performance, it's a lot more global in terms of how they sell also. In the case of Ag, they sell very locally. Are there opportunities? Finally, I would be remiss if we did not flag things like tactical items.
There may be certain areas where if you push it back as much as you can, and over time, that will generate some value. Stepping back, it is hard to have a minimum cash balance for the business. The way I look at liquidity, I look at both reported cash and I look at unused revolver. When you assess the both, the unused revolver gives you protection against unforeseen expenses, and then the cash is used to manage the business. There is no hard target that I should offer you, but clearly over $800 million is a bit much. I would expect that number to come down.
Okay. One quick one for Martin. You opened by saying that maybe part of the reason the valuation's lower than peers is because of debt. Do you think that there's also an impact from the diversification of the business, where a lot of the peers are either specifically Performance Solutions or specifically Ag-based?
Yeah. The reality is we set out with a strategy of having different verticals in asset-light, high-touch areas, especially chemical space. I'm not sure that we get the full bang for our buck because of the diversification. Having said that, again, I go back to my history with Jarden, where you could say the same thing about Jarden's diversification and its brands in different spaces. We managed to create a lot of value at the same time. We like where we are. We like how we're developing it. As I alluded to, as a management team and as a board, we're not stupid, and we're not unaware that we have to keep a flexible and open mind. We've always maintained a structure in the company that gives us optionality. That's something that we will continue to evaluate over time.
John, you got a question? Okay. I'll go ahead and just.
I'll take it over here.
Yeah.
Dan Jesner from Citi. Maybe a couple of longer-term questions for Diego. You outlined your H³ strategy. Top couple of products seem to be targeting the key row crops like corn and soybeans. Say you're very underweight those markets. If you look out 3-5 years, does Arysta's sale by end market look more like the industry overall? Maybe to put it another way, to get your 2% outperformance compared to the market, do you have to have more exposure to these big row crops?
That's a good question. As part of the strategy, what we're saying is we don't want to say no to participation of row crops. What we do is we go into niche segments in the row crop field. The case that I showed with TEPERA+ is the best case, where we have innovation, we can differentiate, and we can play in those uses that are less Depending on grain prices. If those characteristics are given, we go into row crops too. I'm expecting the overall distribution that you saw of the portfolio to stay relatively similar in the next five years from looking at the pipeline.
Okay. It might be a bit early days, but some of the larger ag competitors have been rolling out digital ag platforms, and some of the initial application seems to be targeting optimizing crop chemical use, especially in row crops. Again, acknowledging that it's early days, but what are sort of the opportunities and the risks as that type of technology becomes more prevalent? Thanks.
Yeah. Thank you for the question. We believe that we're not a technology company that should be investing big in new platforms for precision farming. Having said that, our expectation is that there are several open source platforms that are going to become a benchmark. We are in discussions in the U.S., for example, with some of these platforms. Here, the idea is to deliver the right formulation for the different systems and participate on that. It's interesting to also watch in the coming years, which platforms are going to succeed in the market. We believe that our distribution partners will take a leading role on that, and that these platforms, as we're seeing, will be open source. Here it's about delivering the right innovation that will add value, and participating on it. This is exactly what we're doing.
In geographies like South America and North America, we want to be part of that game.
Over here. Alex Eprahimian from Nomura. First question for Scot. You've discussed the breadth of your products and market access, especially in electronics. How do you get value for that? Is there an opportunity to take market share or improve mix, or raise prices, perhaps?
I'm sorry, could you repeat the beginning of the question?
You had discussed the breadth of your products
the strength of your technology, access to top clients.
how do you get paid for that?
The key to that is being involved early enough to know the innovation requirements that are coming down throughout the chain. As we innovate new products and the requirements on the electronics manufacturers increase from a reliability standpoint, miniaturization, et cetera, those products as they're developed inherently carry more value. More value not only to our customers, but more value in the supply chain itself. Our goal is to develop and bring those to market faster than our competitors do, so that we can capture that value early. Once you're in the space, it's got a long value tail, so to speak. The margins are sustainable over quite a period of time.
It's all about understanding where the market's going quickly, and then deploying the appropriate resources fast enough that we can innovate, and then having a great selling force on the ground that can support it once it gets to the field.
Thank you. Thank you. Second question for Diego on what is your current strategy for IP? Could you discuss any upcoming patent expirations for major products, and how do you expect to deal with that?
Sorry, can you repeat the question because I couldn't hear the-
The question is centered around intellectual property and any major patents that Might be expiring over the next, let's say, three to five years. What is your strategy of dealing with those expirations?
Okay.
If there are any.
Yes. If you look at the composition of our business, we don't have a large patent-protected position. Our business does not depend on active ingredient patents. It depends on our formulation development, innovative formulation development, innovative delivery systems, and being fast at developing the mixtures that the farmer needs in that particular application. We're a life cycle management machine. Continuously, we're renewing our portfolio, but we don't need a patent-protected active ingredient to be successful in achieving high margins. This is the business model that Chemtura and Arysta have been running since many years, it's nothing new. What we do is, we do development in formulation development, and we do development in delivery systems. Here we do look for certain patents that can add to our overall IP.
There is nothing I can tell you right now in terms of a patent that is going to expire and put our business meaningfully at risk moving forward.
Just to add to what Diego said. Even though we don't patent the active ingredient or the new molecule, we are able to protect the intellectual property around formulations. In many countries where we are formulating a solution for the farmers, we can protect that intellectual property. I think the other thing is that because we are so global and we are so strong in so many niche markets, that a lot of the more innovative smaller companies and larger companies want to work with us to license a lot of the patents and a lot of the active ingredients with us. That's been part of our model that has worked so successfully. In fact, in a consolidating landscape where these niche businesses will become even smaller for the larger companies.
We will play, I believe, a more active role working with these large companies as being a partner to them in going into a lot of these geographic areas that otherwise they wouldn't think is important enough for them.
Hi, John Reynolds with CJS. To follow on to one of the other questions about diversification. You mentioned earlier in the presentation that divestitures could be a path to further deleveraging. Can you talk about what parts of the business are either non-core you could realize good value for to help you achieve that goal sooner rather than later?
No.
I have another one on margins. In your five-year goal, you have maybe 400 basis points of leverage from cost reductions, SG&A leverage. How much of that is actually what you're getting from expected synergies in the future, and what is maybe what you call optimizations from Ben's presentation?
Some of that is just going to come through operating leverage, right? We don't expect to increase our SG&A at the same level as we expect to grow sales. Right? If anything, we expect the SG&A will grow less than half of our revenue and earnings growth. The expansion of 400 basis points, as you said, 200 is going to come from SG&A leverage and the other 200 is going to come from COGS, is very achievable. As I said, I think we have just only just begun the game of improving our supply chain. Again, $1.8 billion of a $3.6 billion companies sits in what we source from our suppliers, and we haven't been as proficient as many companies.
I come from an industry where a lot of what we do or what was done in different industries, actually, if we put in practice here, we will see some significant margin expansion. I feel pretty good.
If I could add one small point. As Rakesh mentioned earlier, corporate cost has peaked at this point, and that's a meaningful opportunity to drive cost down. When you think about SG&A opportunities, that's another one that could be a big driver.
Thank you.
Hi, it's Omar Mallick from Holbrook. I wanted to know, are there areas of the business where over the long term, I know some years are stronger than others, but where over the long term pricing has trouble keeping up with inflation. I guess what I'm getting at is, on the one hand, we're selling value-added chemicals where they're a small component of customer costs. On the other hand, Scot, there are pockets of the electronics business where even though you have volume growth, your customers are facing some deflation. This is a market environment where people obviously think about deflation. Just love to get your thoughts on that.
Yeah, you're exactly right. There are segments that remain under pressure. There are some historical segments, particularly in the electronic space around metallization, copper metallization of through-holes on printed circuits, for example, that has really experienced a lot of pricing pressure from local suppliers in China in particular. The move away from copper is our defense in that. These are processes that involve equipment and engineering support technology that helps mitigate that pressure from that side. Having said that, we're looking at opportunistically where can we still participate in those markets to help us from a top-line growth perspective, rather than just ignoring them in total. We think that we can balance those two by going after selectively where it strategically fits for us to participate in that market, but then mitigate it with development on the other side.
You have a bit of that in most of our businesses. It's in our industrial business as it relates to anti-corrosion technologies can be under some pressure in certain segments. The continued increase in reliability requirements helps us mitigate that because local commodity suppliers or local suppliers just can't meet those reliability requirements. They can't stand behind it. We will continue to mitigate those risks through development and through increases in technology.
Okay. Thanks. Just my last question was for Diego. We talked on the Q2 call about the North American ag business. I was just trying to understand. It sounded like that's a business that long term we're still excited about. I was trying to understand the relative attractiveness long term of that business versus the European ag business. I was just curious if you agreed with my take. My take was that they're both attractive, but the European business benefits from the fact that the distribution base is less consolidated and the registration process is just a little more complicated, it's a little more fragmented. There were some structural things that made the European business more attractive. Just wanted to get your thoughts on that.
Okay. The business in North America, the market in North America is very attractive because you can achieve much higher margins than in Latin America and Asia. Farmers are looking for innovation. The regulatory system, you're talking about one single market that has a very thorough regulatory system. It takes you two years to get a registration. You have a fairly well protection once you get the product to market. Our issues in North America were rather stock related. We are de-stocking the channel. Our sales on the ground are developing according to market. Once we get this behind us, we see North America as a very attractive market to invest in the future. Actually, the legacy companies were stronger in LATAM, in Europe, in Japan. Here we know we can bring our products. We can continue to grow in North America.
To your thesis, I am not so concerned about the consolidation of the distribution. I think the issue in North America right now is the combination of low grain prices and a strong U.S. dollar. The situation that you have in Brazil where you have the low grain prices, but farmers, especially export-oriented farmers, are now profiting from a lower real, even if the real has appreciated in the last couple of months. That is not the case in the U.S. You're right with respect to Europe. Europe is more complex. It's more protected. There are subsidies that play also a role. Europe remain in the short term, an easier market, I would say, than North America. North America, it's important to stay in North America to do the right things in North America because we're going to see better times in North America also.
Thanks. We'll take a couple of more questions, and then we'll break for lunch and continue the discussions downstairs on the third floor.
Hi. Chris DeCarlo, Kingsland Capital. Rakesh, you mentioned return on invested capital as a priority. Do you see that improving over the next few years? Is that explicitly listed in your management compensation program? Thanks.
Yes, it is. I think for the first time, we put return on invested capital as an incentive metric in our long-term incentive plan for our executives. It's clearly going to be, not just because it's an incentive metric, but we're trying to drive this thinking about making sure that we're optimizing a return on the assets. For the businesses, return on assets is synonymous with return on invested capital. Although at the corporate level, we clearly look at ROIC and how we can drive an improvement year-over-year. We have year-over-year improvement targets in ROIC, and the businesses have year-over-year improvements in return on assets, and I think they go hand in hand. Clearly, that's going to be an area of focus. I think John has another question. Yeah.
Follow-up on MacDermid. Do you see the electronic material combinations that they have with KMG presenting any credible opportunities to the business? Longer term, it seems like semiconductor customers, printed circuit board customers have been distinct segments of the electronic materials market. Do you see that coming together over time at all? Do you see yourself staying primarily focused on electronic printed circuit board customers?
Address the first part. The consolidation activity going on, particularly the one you mentioned. We view all of those as opportunities for sure. We think that we're positioned to respond and to move very quickly when opportunities come up. Much more responsively than some of these large integrations that are taking place. We do see that as an opportunity. Of course, it depends how well they execute those plans and how long they take. As it relates to the second part of your question, we have a very distinct targeted investment program around what we call advanced electronics, which is the semiconductor wafer-level packaging space. Combined with our Alpha Advanced Materials space, who also calls on the same customers, we expect to continue to grow our participation in that space even faster than in traditional electronics.
Several years from now, we plan to be sitting here talking to you about a much larger advanced materials and advanced electronics business than we have today.
Thanks. We'll take one last question.
I don't know if this will be Martin or yourself. You spoke a lot about people, the high touch component of your business, the synergies that you're trying to execute, and let's call them the cross-selling efficiencies that you could realize. Those are pretty tall tasks.
For those of us that are familiar with Martin's background, maybe he can run through anything. Can you give me the elevator pitch on why this is the team right here that's facing us?
Yeah. First of all, you're right. Becoming more customer intimate, if you go beyond just the words, it takes time because it requires a transformation. It requires a mindset change. Many of you know, I came from a company in the life science business, and we did exactly that. It was an over two-year journey, and changes in people that got us there. I can tell you that this team is very driven by the customer. Everybody you see on this, including myself, actually believes that all begins with the customer. I think Scot and Diego have given a lot of thought to who they put on their top bench. I know that many of you don't know them, but there was a lot of thought that went behind who are the people that are going to take us where we need to go.
All I can say is just stay tuned. It's a journey that we're going to go through. I'm pretty optimistic that if we do the right things for the customer, I think the business will benefit hugely, and that's our goal. With that, again, I want to thank all of you for having taken the time this morning. Hopefully, most of you will join us for lunch. I know some of you have other commitments, but to the extent you can have a quick bite, we are going to go down to the third floor. Ben, or maybe Carey, is the lunch at 1:00 P.M.? Can we pull it up?
It's ready.
It's ready?
Yeah.
Okay. It's on the third floor. Thank you very much.
Thank you.