Slide 1: 4Q 2019 Earnings Presentation
February 21, 2020 4Q 2019 Earnings Presentation
Slide 2: Forward Looking Statements
Forward Looking Statements 2 This presentation contains certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, that address activities, events o
Slide 3: Executing Long Term Strategies
Executing Long Term Strategies 3 Staying the Course Through Challenging End Market Environment Driving Safe, Stable and Sustainable Operations – Robust, Near-Record Caprolactam and Ammonia Production Output in 2019 – Awarded 2020 Gold Rating for Corporate Social Responsibility from EcoVadis Allo
Slide 4: 4Q 2019 Financial Summary
4Q 2019 Financial Summary 4 Safe, Successful Turnaround Execution Amid Nylon Declines ($ Millions, Except Per Share Amounts) 4Q 2018 4Q 2019 Comments • Sales Down (16%): Volume (4%), Price (12%) Sales $386.6 $326.7 – Raw Material Pass Through (8%), Market Pricing (4%) • (~$25M) Unfavorable Impact of
Slide 5: Nylon Industry Outlook
Nylon Industry Outlook 5 Expect Challenging Industry Conditions to Continue in Near-Term Nylon Key Industry Spreads (1) 4Q19 YoY 4Q19 vs. 3Q19 • Nylon end-use demand Global Composite BNZ-CPL (33%) (11%) remained soft exiting 2019 What We’re Asia BNZ-CPL (51%) (12%) Asia CPL-Resin Seeing • Industry p
Slide 6: Ammonium Sulfate (AS) Industry Outlook
Ammonium Sulfate (AS) Industry Outlook 6 Industry Dynamics Remain Mixed Into 2020 Planting Season Ammonium Sulfate Key Industry Prices (1) • Weak Fall domestic fertilizer 4Q19 YoY 4Q19 vs. 3Q19 application Corn Belt Granular AS (9%) (1%) • Lower energy environment Corn Belt Urea (22%) (12%) What We’
Slide 7: Chemical Intermediates Industry Outlook
Chemical Intermediates Industry Outlook 7 Acetone Supply and Demand Stabilizing Into 2020 Chemical Intermediates Key Industry Prices (1) • Soft phenol and acetone 4Q19 YoY 4Q19 vs. 3Q19 demand globally reflecting Acetone, Small/Medium Buyer (27%) 2% weaker downstream end uses Acetone, Large Buyer (2
Slide 8: Sustainability
Sustainability 8 Continued Commitment to Environmental, Social and Economic Sustainability EcoVadis Gold Rating NOx Reduction • Upon spin-off, completed ~$100M multi-year investment at • Awarded a Gold Rating for corporate social Hopewell to reduce NOx emissions responsibility (CSR) by EcoVadis, an
Slide 9: Cash Flow Outlook
Cash Flow Outlook 9 Expect Positive Free Cash Flow for Full Year 2020 Key Considerations 2020 Outlook • Largest impact from planned plant turnarounds in 2Q20; Strategic realignment to Spring timing Free Cash Flow • Expect Capex to be down $50M to $60M vs. 2019 – Capex ramps down as year progresses 1
Slide 10: 2020 Outlook
2020 Outlook 10 Focused Cost Management and Capital Discipline in Challenging End Markets 2020 Outlook Trend Nylon • Expect challenging industry conditions to continue in near-term Ammonium • Expect mixed ammonium sulfate fertilizer environment to continue through 2020 planting season Sulfate Chemic
Slide 11: Appendix
11 Appendix 4Q 2019 Earnings Presentation – February 21, 2020
Slide 12: Full Year 2019 Financial Summary
Full Year 2019 Financial Summary 12 Strategic Investments in 2019 to Support Long-Term Performance ($ Millions, Except Per Share Amounts) FY 2018 FY 2019 Comments • Sales Down (14.4%): Volume (3.6%), Price (10.8%) Sales $1,515.0 $1,297.4 – Raw Material Pass Through (9.7%), Market Pricing (1.1%) • FY
Slide 13: Capital Expenditures
Capital Expenditures 13 Execution of High-Return Growth and Cost Savings Projects in 2019 Growth/Cost Savings $150M • Executing against multi-year $150-$200M pipeline of high- return projects; 20%+ IRR target $109M ~38% • Relocation of R&D lab to Chesterfield from Colonial Heights added ~$15M increm
Slide 14: Planned Plant Turnarounds
Planned Plant Turnarounds 14 Pre-Tax Income Impact by Quarter (1) 1Q 2Q 3Q 4Q FY 2017 -- ~$10M ~$4M ~$20M ~$34M 2018 ~$2M ~$10M ~$30M -- ~$42M 2019 -- ~$5M ~$5M ~$25M ~$35M 2020E ~$5M $25-$30M -- ~$3M $33-$38M • Timing driven by compliance, inspection and sustaining asset base • Critical to supporti
Slide 15: Reconciliation of non-GAAP Measures to GAAP Measures
15 Appendix: Reconciliation of non-GAAP Measures to GAAP Measures 4Q 2019 Earnings Presentation – February 21, 2020
Slide 16: Reconciliation Of Net Cash Provided By Operating Activities To Free Cash Flow
Reconciliation Of Net Cash Provided By Operating 16 Activities To Free Cash Flow (in $ thousands) (1) Free cash flow is a non-GAAP measure defined as Net cash provided by operating activities less Expenditures for property, plant and equipment The Company believes that this metric is useful to inves
Slide 17: Reconciliation Of Net Income To EBITDA
Reconciliation Of Net Income To EBITDA 17 (in $ thousands) (2) EBITDA is a non-GAAP measure defined as Net Income before Interest, Income Taxes, Depreciation and Amortization (3) One-time Pottsville restructuring charges reflect the closure of the Company’s Pottsville, Pennsylvania films plant (4) E