Tronox Holdings Plc · NYSE:TROX
Tronox — 2008 High Yield Bond and Syndicated Loan Conference
25 slides from Tronox's conference presentation, Mar 13, 2008
Slide 1: 2008 High Yield Bond and Syndicated Loan Conference
2008 HIGH YIELD BOND AND SYNDICATED LOAN CONFERENCE March 13, 2008
Slide 2: Forward-Looking Statement
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 stateme
Slide 3: TiO2 Industry Overview and Global Demand
TiO2 INDUSTRY OVERVIEW AND GLOBAL DEMAND
Slide 4: Tronox - Who We Are
TRONOX - WHO WE ARE Global producer of TiO2 pigments § #3 TiO2 global producer § Over half of sales outside North America § Proprietary chloride process technology § Mining, beneficiation, production and sales § Vertically integrated Electrolytic chemicals (7.4% sales) Spin-off from Kerr-McGee in 20
Slide 5: Global TiO2 Market
DuPont Millennium Tronox Huntsman Kronos Others East 0.22 0.14 0.12 0.1 0.1 0.32 GLOBAL TiO2 MARKET § Highly concentrated industry - top 5 producers account for ~68% of global sales § Changing supplier ownership § TiO2 moves freely around the world Global Industry Sales = 5.1 MM tonnes 22% 14% 12% 1
Slide 6: Diverse Global Presence
Coatings Plastics Paper & Specialty Huntsman Kronos Others East 0.69000000013148 0.22 0.09 0.11 0.11 0.28 DIVERSE GLOBAL PRESENCE § Consistent sales growth with top 10 customers for over ten years § Diversified customer base of approximately 1,100 customers in 100 countries § More than 45% of global
Slide 7: TiO2 Global Demand
TiO2 GLOBAL DEMAND Americas Europe Asia-Pacific East 0.283477546 0.36084529 0.355677165 2007 TiO2 Global Demand 5.1 MM Tonnes Americas Asia-Pacific Europe Source: Company Estimates § Strong growth outside U.S. keeping global TiO2 inventories at seasonal norms § Industry capacity utilization in low t
Slide 8: TiO2 Consumption
TiO2 CONSUMPTION Source: Company Estimates and U.S. Government Population Statistics
Slide 9: Global TiO2 Operations
Location M Tonnes Hamilton 225 Savannah 110 Kwinana 110 Botlek 90 Uerdingen (Sulfate) 107 Global Capacity 642 GLOBAL TiO2 OPERATIONS Nameplate Capacity (1) Multiple Global TiO2 Production Facilities Increases Flexibility to Quickly Respond to Changing Demand Sales & Technical Service (1) Reflects 10
Slide 10: PPI Industrial Chemicals
Source: Census Bureau PPI Industrial Chemicals (1982 = 100) TiO2 Inputs PPI INDUSTRIAL CHEMICALS
Slide 11: TiO2 Pricing Environment
TiO2 PRICING ENVIRONMENT Market Fundamentals Support Higher Prices § Global demand up ~3% - 4% § Capacity utilization ~92% - 95% § Inventory levels at seasonal norms Increased Prices Required to Offset Rising Input Costs § Caustic, chlorine, petroleum coke § Freight costs § Energy Price Increases An
Slide 12: 2008 Outlook
2008 OUTLOOK U.S. Economy and TiO2 Demand § TiO2 recessions typically lead U.S. recessions § Globalization of TiO2 business has dampened volatility § Continued strong demand in Asia and Europe will continue to provide an outlet for U.S. produced TiO2 § TiO2 global demand growth in 2008 estimated to
Slide 13: Tronox Strategy
TRONOX STRATEGY
Slide 14: Business Strategy
BUSINESS STRATEGY Portfolio Management Segmentation by application, region & customer with focus on margins Technology R&D, capital management, innovation & utilization, IT Manufacturing Excellence Maintenance, quality, up-time, safety Fixed & variable cost efficiencies Supply Chain Procurement, log
Slide 15: 2007 Key Actions Taken
2007 KEY ACTIONS TAKEN Debt Structure Reduced debt by $64MM to $485MM Cost Structure Reduced cash costs by $43MM through Project Cornerstone Product Pricing TiO2 - global price increases announced, working to implement ASAP Electrolytic - antidumping case for electrolytic manganese dioxide SG&A Rest
Slide 16: Debt Pay Down
DEBT PAY DOWN $73MM Reduction in Term Loan Since IPO § $50MM accounts receivable securitization § $23MM free cash flow Outstanding Debt 12/31/07 2/28/08 Term Loan $127 $125 Australian debt 8 0 Senior Unsecured Notes 350 350 Revolver 0 53 Total $ 485 $528 2005 2006 2007 6/30/1905 195 190 147 127 ($MM
Slide 17: Cornerstone Execution
CORNERSTONE EXECUTION Status Summary § Teams ahead of schedule § Adding $12MM in additional savings to our cash cost reduction target § Uerdingen efficiency project to add savings when process finalized § Capital reduction ahead of target Cash Cost Reductions $MM (Cumulative) $0 $15 $30 $45 $60 $75
Slide 18: Land Sales Progress
LAND SALES PROGRESS Henderson Land Sales § NFA received in January § 53-acre parcel financing fell through for buyer § Pursuing other buyers at this time § Closed on sale of smaller parcel (date of close) § Net proceeds ~$2MM 100%-Owned Land Progress LandWell Interest Progress LandWell 2,200-Acre De
Slide 19: Electrolytic
ELECTROLYTIC $97MM $102MM $106MM Revenue Growth 14% Sodium Chlorate § Bleaching agent for pulp and paper § Strong growth achieved with zero capital Electrolytic Manganese Dioxide § Primary material in alkaline batteries § Antidumping progressing with U.S. Dept. of Commerce estimated margins of 133%
Slide 20: Environmental
ENVIRONMENTAL Environmental Strategy § Reserves down from $239MM at IPO to $189MM at end of 2007, receivables ~$68MM § Pursuing number of mitigation strategies to reduce and contain future liability Legacy Risk Mitigation Strategies § Reimbursements: DOE, DOD § Pursue PRPs § Insurance, land sales §
Slide 21: 2008 Actions
2008 ACTIONS Debt Structure u Covenant amendments approved by lenders Cornerstone Reduce cash costs by $22MM through Project Cornerstone Decrease working capital Uerdingen efficiency study - final savings to be announced in Q2 Product Pricing TiO2 - implement TiO2 price increases Electrolytic - gain
Slide 22: Amended Covenants
AMENDED COVENANTS Leverage Ratios (debt/adj. EBITDA) New Leverage Ratios 2007 ^ 3.75 3/31/2008 4.45x 2008 ^ 3.50 6/30/2008 4.90x 2009 ^ 3.00 9/30/2008 4.90x 2010 ^ 2.50 12/31/2008 4.90x 2011 ^ 2.50 3/31/2009 4.50x 6/30/2009 4.35x 9/30/2009 3.90x 12/31/2009 3.50x Interest Coverage New Interest Covera
Slide 23: Working Capital Seasonality
WORKING CAPITAL SEASONALITY TiO2 Industry Cyclical working capital needs due to coatings season demand Q1 & Q2 are typically the highest quarters of the year Q3 & Q4 tend to be the lower quarters of the year Tronox Manage working capital needs through use of revolver Continue to execute Cornerstone
Slide 24: Tronox Forward View
TRONOX FORWARD VIEW We believe in TiO2 industry § Based on history, TiO2 industry will lead out of U.S. downturn § We are realizing partial implementation of price increase announcements Proven track record of driving costs and working capital down Well positioned to meet global TiO2 future demands
Slide 25: 2008 High Yield Bond and Syndicated Loan Conference
2008 HIGH YIELD BOND AND SYNDICATED LOAN CONFERENCE March 13, 2008
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