Ashland Inc. · NYSE:ASH
Ashland — Debt Investor Presentation (June 2011)
44 slides from Ashland's debt investor presentation, Jun 16, 2011
Slide 1: Lender Presentation
® Registered trademark, Ashland or its subsidiaries, registered in various countries * Registered trademark owned by a third party. * * Lender Presentation $750 million Revolving Credit Facility $1,200 million Term Loan A $1,700 million Term Loan B June 16, 2011
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include those that refer to Ashland’s current expectations about the acquisition o
Slide 3: Introduction
Introduction David Jaffe Managing Director, Citi
Slide 4: Transaction Structure
1 $1,199 million of ISP total debt and $244 million of ISP cash as of 3/31/2011. 2 Includes financing fees, transaction expenses, interest-rate-swap termination cost, and change-of-control payments. Transaction Structure 4 On May 31, 2011, Ashland announced the all-cash acquisition of International
Slide 5: Sources and Uses
(Sin milions) Sources Amount Uses Amount Cash and Equivalents $764 Purchase of ISP $2,245 New Revolving Credit Facility i) Refinance ISP Total Debt 1,199 New Term Loan A 1,200 Fees and Other Charges 220 New Term Loan B 1,700 Total Sources $3,664 Total Uses $3,664 (1) Reflects pro forma 3/31/2011 Ash
Slide 6: Pro Forma Capitalization
(3) (2) Pro Forma Capitalization
Slide 7: Transaction Overview
Transaction Overview Jim O'Brien Chairman and CEO
Slide 8: Introductions
Introductions 4 Jim O'Brien, Chairman and CEO 4 Lamar Chambers, Senior Vice President and CFO 4 John Panichella, Senior Vice President, Ashland, and President, Ashland Aqualon Functional Ingredients 4 Jack Joy, Vice President, Corporate Development 4 Kevin Willis, Vice President and Treasurer 4 Stan
Slide 9: Ashland's Strategy
Ashland’s Strategy Furthering our long-term strategic goals 4 Global #1 or strong #2 market position 4 Broad global footprint 4 Robust cash-generating businesses 4 Leverage competitive strengths 4 Preferably water-based or sustainable chemistries ISP ü ü ü ü ü
Slide 10: Transaction Rationale
Transaction Rationale 4 Strengthens positions in a number of important high-growth, high-margin end markets - Pharmaceutical: Excipients - Personal Care: Hair Care, Skin Care, Oral Care 4 Broadens our intellectual property portfolio of water-soluble polymers and global R&D and applications capabilit
Slide 11: Investment Highlights
4 Diversified business portfolio serving a wide range of end markets 4 Strengthens Functional Ingredients business and R&D efforts 4 Leading market positions in all markets served 4 Broad geographical diversity - ISP has ~60% of revenues outside North America - Pro forma company will generate approx
Slide 12: Ashland Overview
Ashland Overview Jim O'Brien Chairman and CEO
Slide 13: Ashland Overview
Ashland Performance Materials 23% Ashland Consumer Markets 31% Ashland Hercules Water Technologies 30% Ashland Aqualon Functional Ingredients 16% North America 58% Asia Pacific 13% Latin America/ Other - 5% Europe 24% Sales 1 : $6.0 billion Adjusted EBITDA 1 : $735 million Ashland Performance Materi
Slide 14: Ashland Aqualon Functional Ingredients Business Overview
North America 35% Asia Pacific 20% Europe 37% Coatings Additives 33% Energy & Specialties Solutions 19% Regulated Industries 30% Customers Markets Products Business Overview CMC 20% HEC 32% MC 18% Other 16% Klucel™ 6% Latin America/ Other - 8% North America 35% Asia Pacific 20% Coatings Additives 33
Slide 15: Ashland Hercules Water Technologies Business Overview
Process 25% Utility 34% Functional 41% Growth 51% Base 31% Customers/ Markets Products/ Services Business Overview North America 49% Europe 33% Trailing 12 Months Ended March 31, 2011 Sales: $1.8 billion Adjusted EBITDA: $180 million Adjusted EBITDA Margin: 9.9% Process 25% Utility 34% Functional 41
Slide 16: Ashland Performance Materials Business Overview
Pkg. & Converting 23% North America 59% Europe 25% Industrial Construction 29% Customers Markets Products/ Services Business Overview Marine 13% Ashland Performance Materials A global leader in specialty chemicals North America 59% Latin America/ Other - 6% · Auto manufacturers; foundries; pipe and
Slide 17: Ashland Consumer Markets Business Overview
Lubricants 86% Valvoline Int'l 23% Do-It- Yourself 36% Customers Market Channels Products/ Services Business Overview Do-It- For-Me 38% Ashland Consumer Markets: A leading worldwide marketer of premium-branded automotive lubricants and chemicals Filters - 2% Valvoline Int'l 23% · Retail auto parts s
Slide 18: ISP Overview
ISP Overview John Panichella Senior Vice President, Ashland, and President, Ashland Aqualon Functional Ingredients
Slide 19: ISP Overview
ISP Overview High-margin, global business 4 Leading manufacturer of functional ingredients to personal care and pharmaceutical markets - EBITDA margins ~ 21% - 22% - Robust top-line growth 4 Unique technology portfolio that meets a variety of demanding customer applications - More than 400 active pa
Slide 20: ISP Segments and Key End Markets
Personal Care Pharma & Nutrition Performance Intermediates Elastomers Financial & Operating Information 2010 EBIT ($mm) $124 $76 $35 $29 Key End Markets Skin Care 4 Skin lotions and anti- aging products 4 Body washes 4 Suncare products 4 Body washes Hair Care 4 Shampoo / Conditioner 4 Mousses / Gels
Slide 21: ISP Global Locations
2010 Sales North America 41% Europe 35% Asia Pacific 14% Latin America 10% Global/Regional HQ Technical Center Manufacturing Cologne, Germany Memmingen, Germany Bradford, UK Paris, France Sophia Antipolis, France Hyderabad, India Shanghai, China Singapore Texas City, TX Mexico City, Mexico Sao Paulo
Slide 22: ISP 2010 EBIT by Segment
Personal Care 47% Pharma & Nutrition 29% Performance 13% Personal Care 47% Pharma & Nutrition 29% Performance 13% EBIT: $264 million ISP 2010 EBIT by Segment Greater than 75% of earnings from personal care & pharmaceutical
Slide 23: ISP Historical Performance
Personal Care ISP Historical Performance 1 Fast-growing, high-margin segments Historical Growth 5-yr sales CAGR Operating Margin Pharma & Nutrition Elastomers Performance Intermediates Size of bubble denotes relative 2010 Operating Income 1 Based on calendar-year 2010 ISP financials and historical d
Slide 24: Personal Care - Overview
Skin Care 42% Hair Care 32% Oral Care 26% Business Overview 2010 Sales by Product Key Customers Skin Care 42% Hair Care 32% Oral Care 26% Solid Reputation For Quality 4 Alberto Culver 4 Avon 4 Colgate 4 L’Oreal 4 Playtex 4 P&G 4 Unilever Personal Care - Overview 4 Manufactures critical ingredients i
Slide 25: Pharma and Nutrition - Overview
Pharma 59% Pharma Solvents 14% Beverage 14% Business Overview Pharma 59% Pharma Solvents 14% Beverage 14% Key Customers 2010 Sales by Product 4 Fresenius 4 GSK 4 Merck 4 Novartis 4 Pfizer Operating Income ($ in millions) Pharma and Nutrition - Overview 4 Products are key ingredients for prescription
Slide 26: Performance Chemicals - Overview
Specialty Solvents 45% Performance 33% Biocides 14% Business Overview Specialty Solvents 45% Performance 33% Biocides 14% Key Customers 2010 Sales by Product 4 Bayer 4 Dow 4 Halliburton 4 HP 4 Reckitt Benckiser Operating Income ($ in millions) Performance Chemicals - Overview 4 ISP segment with the
Slide 27: Industrial Chemicals - Overview
Elastomers 68% Intermediates 32% Business Overview Elastomers 68% Intermediates 32% Key Customers 2010 Sales by Product Intermediates: 4 Bayer 4 DSM 4 DuPont 4 Novamont Elastomers: 4 Bridgestone / Firestone 4 Cooper Tires 4 Michelin 4 Toyo Tires Operating Income ($ in millions) Industrial Chemicals
Slide 28: Strategic Fit with Ashland
Strategic Fit with Ashland Stan Turner Director, Enterprise Strategy
Slide 29: Ashland EBITDA Transformation
Ashland Specialty Chemicals 15% Ashland Consumer Markets 16% Specialty Chemical Commercial Units 74% Ashland Consumer Markets 26% Ashland EBITDA Transformation ISP continues to build world-class specialty chemical company Pre-Transformation: Pro Forma 1 Divested Segments 69% Divested Segments 69% As
Slide 30: EBITDA Margin Expansion
EBITDA Margin Expansion 1 Strategic decisions have dramatically expanded margins over time 1 2006 through 2010 EBITDA margin as reported in the fiscal year noted and not adjusted for future transactions. TTM - Adjusted represents adjusted results for the trailing 12 months ended March 31, 2011. Acqu
Slide 31: Ashland EBITDA Transformation: Enhanced margin performance
Ashland Performance Materials 13% Ashland Consumer Markets 37% Ashland Hercules Water Technologies 23% Ashland Aqualon Functional Ingredients 27% Ashland Performance Materials - 8% Ashland Consumer Markets 26% Ashland Hercules Water Technologies 16% Ashland Aqualon Functional Ingredients 18% ISP 32%
Slide 32: Functional Ingredients Strategy
Functional Ingredients Strategy ISP aligns with our previously stated core and adjacency goals · ISP strengthens our position in 5 of our 8 targeted, adjacent markets - Surfactants, Tablet Coatings, Controlled Release, Hair Care and Skin Care Slide extracted from June 2010 Ashland Analyst Day
Slide 33: Adjacent markets and applications
1 Approximated from management estimates, 2010 ISP sales data, and Ashland’s sales data. · Hair Care - Fixatives for hair gels and hairsprays - Shampoo thickeners and conditioners · Oral Care - Tartar and gingivitis control - Toothpaste thickeners, stabilizers · Skin Care - Actives: UV, anti-wrinkle
Slide 34: Significant Synergy Opportunity
Significant Synergy Opportunity 4 Approximately $50 million annual synergies - Phased in over two years 4 Main areas of synergy savings - Back office & administrative - Commercial & technical - Other G&A 4 Implementation costs are approximately 1.0x to 1.5x annual synergy savings 4 Disciplined, bott
Slide 35: Clear, Focused Integration Plan
Clear, Focused Integration Plan 4 We will retain key managers to ensure ongoing success 4 Ashland has a proven track record in successfully integrating acquisitions 4 ISP will be integrated with the Ashland Aqualon Functional Ingredients segment - John Panichella, president of Ashland Aqualon Functi
Slide 36: Financial Overview
Financial Overview Lamar Chambers Senior Vice President and CFO
Slide 37: Financial Policy
1 Board authorization remains in place and shares may still be repurchased over time. 2 Approximately $90 million of letters of credit outstanding at close. Financial Policy 4 Use majority of available global cash to repay debt - We have terminated our automatic 10b5-1 stock repurchase plan 1 4 Cont
Slide 38: Proven Ability to Delever Quickly
Note: Net Debt and Net Debt / EBITDA are as defined in Ashland’s current credit agreement. Proven Ability to Delever Quickly
Slide 39: Strong Pro Forma Financials
(3) Strong Pro Forma Financials
Slide 40: Ashland Historical Financial Summary
Functional Ingredients Water Technologies ($ in millions) Note: Functional Ingredients and Water Technologies include 2008 data as reported by Hercules. Ashland Historical Financial Summary
Slide 41: ISP Historical Financial Summary
Sales ($ in millions) ISP Historical Financial Summary
Slide 42: Appendix
Appendix
Slide 43: ISP Summary Financials
Note: TTM 3/31/2011 financials are unaudited. ISP Summary Financials
Slide 44: ™ Trademark, Ashland or its subsidiaries, registered in various countries
™ Trademark, Ashland or its subsidiaries, registered in various countries