Slide 1: First-Quarter Preliminary Results
FIRST-QUARTER PRELIMINARY RESULTS April 30, 2008
Slide 2: Forward-Looking Statement
Tronox makes certain forward-looking statements in this presentation that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management and on information currently available to our management at the time of such statements. Forward-looking state
Slide 3: Agenda
AGENDA § Financial Highlights Mary Mikkelson Senior Vice President and Chief Financial Officer § First-Quarter Performance and Land Sales Update Robert Gibney Vice President, Corporate Affairs § Perspective and Key Strategic Initiatives Tom Adams Chairman and Chief Executive Officer § Q & A
Slide 4: Financial Review
FINANCIAL REVIEW Financial Covenants § In compliance at end of Q1 § Expect to remain in compliance for 2008 § Working to offset risks related to current environment Seasonality § Build inventory in Q1 to prepare for paint season § $43MM outstanding on revolver at end of Q1 § Working capital consiste
Slide 5: SG&A Project Cornerstone Reductions
IPO 2006 2007 2008P 2008P East 139 127.3 118 115 112 SG&A Project Cornerstone Reductions § Efficiency improvements § Restructuring § Retiree medical contribution changes § Evaluating additional opportunities to further reduce SG&A SG&A ($MM) $139 $108 - $111 2008P New $118.5 22% Reduction IPO* Run R
Slide 6: Financial Items
FINANCIAL ITEMS Financial Items ($MM) Q1 2008 2008P Previous 2008P New SG&A $27.6 $113 - $116 $108 - $111 Interest Expense $12.3 $50 - $55 $46 - $50 Capital Expenditures $8.3 $62 - $65 $48 - $51 Depreciation and Amortization $28.5 $108 - $110 $115 - $117
Slide 7: Environmental
ENVIRONMENTAL § Reserves down from $239MM at IPO to $182MM at end of Q1 2008, receivables ~$68MM § Excludes anticipated future receivables of ~$28MM from DOE for West Chicago § Reimbursements: DOE, DOD § Pursue PRPs § Insurance, land sales § Kerr-McGee / Anadarko - EPA filing Total Spend n $137 $121
Slide 8: 1Q 2008 Preliminary Results
1Q 2008 PRELIMINARY RESULTS Decrease of $7.4MM FX impact and higher freight / process chemicals / energy Excludes land sales ($MM) 1Q 2008 1Q 2007 Net Sales $ 349.1 $ 339.1 Cost of Sales 323.6 301.9 Gross Margin 25.5 37.2 SG&A 27.6 35.0 Gain on Land Sales 5.3 - Other 6.1 1.7 Loss from Continuing Ops
Slide 9: Process Chemicals
PROCESS CHEMICALS § Cornerstone cumulative savings on process chemicals of nearly $10MM through Q1 2008 § Reduced consumption of caustic soda by double digits § Decreased use of calcined petroleum coke § Reduced use of lime § Under way § R&D: evaluate processes / design improvements to reduce use of
Slide 10: Energy
ENERGY Projected energy cost increase in 2008 vs. 2007 in range of 12% - 15% § > 50% of global energy costs for 2008 fixed (excluding electricity) § North America > 50% § Europe > 50% § Cornerstone cumulative energy savings of nearly $4MM through Q1 2008 § Hamilton - increased use of sodium chlorate
Slide 11: TiO2 Pigment
TiO2 PIGMENT Sales Revenue § Strong Asia-Pacific, European and Latin American demand offset weak North American market Production § Capacity utilization: low 90s Operating Loss § Lower average selling prices, increased freight and input costs and FX § Offset by lower SG&A and Project Cornerstone ($M
Slide 12: Electrolytic
2006 2007 East 23 28 ($MM) Sales ELECTROLYTIC $23.7 $27.5 Q1 2007 Q1 2008 Executing Strategies § Chlorate production expansion § Boron market penetration § LMO rechargeable battery market growth EMD Antidumping Action Progressing § Dept. of Commerce preliminary determinations: 120.59% (Australia), 2
Slide 13: Land Sales Progress
LAND SALES PROGRESS § Weak U.S. economy § More difficult for buyers to secure financing § Residential development slow § Commercial development beginning to be impacted § Land sales gains of $5.3MM completed in 1Q 2008 § Small parcel in Henderson, Nev. § Mobile, Ala., parcel related to former operat
Slide 14: Strategic Initiatives
STRATEGIC INITIATIVES $30 - $35 $40 - $45 a$10 Net Environmental Spend $30 $22 a$8 Cornerstone Savings (Operations and SG&A) $62 - $65 2008P Previous Other: Freight, Energy, etc. $48 - $51 a$14 Capital Expenditures 2008P New Q1 Changes 2008 Financial Items ($MM) Pursue low-cost alternatives "Aggress
Slide 15: Cornerstone Execution
CORNERSTONE EXECUTION § Cumulative cash cost reductions of $78MM since July 2006 § Teams ahead of schedule § Achieved $8MM in additional cash cost reductions in Q1 § Increased Project Cornerstone by $8MM bringing total cost reductions to $30MM for 2008 § Continuing working capital initiative focused
Slide 16: TiO2 Pricing Environment
TiO2 PRICING ENVIRONMENT Market Fundamentals § Global demand: ~3% increase projected for 2008 § Capacity utilization: ~92% - 95% § Inventory levels at seasonal norms Price Increases Needed to Offset Rising Costs § Caustic, chlorine, petroleum coke § Freight costs § Energy Global 1.3% 1.9% 8.0% 2.8%
Slide 17: 2008 Actions
2008 ACTIONS Goals Actions Status Cost Structure § Q1: Increase Cornerstone cash cost reduction targets $8MM which brings 2008 projected total savings to $30MM § Pursue additional savings initiatives u $8MM as of 3/31/08 § Under way Product Pricing § TiO2 - Aggressively pursue TiO2 price increases §
Slide 18: Q&A
Q&A