Tronox Holdings Plc · NYSE:TROX
Tronox — Q1 2006 Earnings Presentation
17 slides from Tronox's earnings presentation, May 23, 2006
Slide 1: First Quarter Business Update
TRONOX First Quarter Business Update May 23, 2006
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: Use of Non-GAAP Measures
This presentation contains operating profit and Adjusted EBITDA, which are Non-GAAP measures that are presented because they are used by management to monitor our business. In addition, Adjusted EBITDA is a material component of the covenants that are imposed on us by the senior secured credit facil
Slide 4: First Quarter Operating Results
Tronox First Quarter Operating Results $MM Net Sales Operating Profit Adj. EBITDA Adj. EBITDA Margin Diluted EPS from Cont. Ops. *(pro forma) $336 18.2% $0.58 First Quarter Ended March 31, $334 19.8% $0.31*
Slide 5: Industry Fundamentals
Industry Fundamentals Challenge: Ability to increase TiO 2 prices to offset increased process chemical and energy costs $0.05/lb TiO 2 price increase is ~ $60MM - $65MM EBITDA Disruptive activity in TiO 2 market as post-Katrina capacity re-enters the marketplace 2 nd half of 2006 expect return to Ti
Slide 6: Second Quarter Cost Outlook
Second Quarter Cost Outlook Manufacturing costs vs. COGS Q1 manufacturing costs flow into Q2 COGS Total COGS up 6% - 7% per tonne of pigment sales Q1 to Q2, 2006 Natural gas, process chemicals and maintenance costs Q3 expect improving COGS as a result of lower Q2 input costs Project a 2% - 3% reduct
Slide 7: Major Pigment Cost Components
40% of process chemical category Major Pigment Cost Components Energy (natural gas/electricity) = 10% - 13% of COGS Natural gas hedging program : Q1 $11.46/mmbtu – average price realized Q2 $ 7.40/mmbtu – average price expectation with ~ 85% hedged Q3 $ 7.65/mmbtu – average price expectation with ~
Slide 8: Process Chemicals
Chlorine Contracted chlorine prices peaked in Q1 2006 Prices are expected to decline throughout 2006 Caustic Quarterly caustic prices peaked in Q1 Prices are expected to decline throughout 2006 Source: CMAI average market data Process Chemicals
Slide 9: Cost Reduction, Manufacturing and Cash Flow Strategies
Tronox Annual Maintenance Cost as % of Estimated Replacement Value Inventories Percent Uptime World Class Top-Quartile Performance Target Operating expense initiatives Supply chain § Raw material flexibility § Production scheduling § Freight/logistics/transportation Uptime § Six Sigma methodology Co
Slide 10: CapEx Update
CapEx Update $90MM projected CapEx Uerdingen HIF program On track for summer launch Lower costs: Waste converted to by-product sales and allows utilization of lower cost ore Hamilton waste minimization Implement technology to minimize footprint and provide sustainability
Slide 11: Asia Growth Opportunities
Asia Growth Opportunities Key strategic region for Tronox Five-year historical growth profile: TiO 2 demand growth >6% Tronox – 2 nd largest importer of chloride-process TiO 2 into China Increasing sales and technical support for customers Currently evaluating future brownfield expansion at one of o
Slide 12: Legacy Environmental Reserves as of March 31, 2006
As of March 31, 2006 ($MM) Legacy Environmental Gross reserves $216.5 Receivables 57.6 Net cash expenditure $158.9* *Excludes anticipated future DOE reimbursements of approximately $45MM Net cash expenditure: Estimate for 2006 is ~ $38MM
Slide 13: Stranded Asset Portfolio Strategy
Stranded Asset Portfolio Strategy Henderson/Las Vegas, Nevada area sales 1. Centex land 1-3 yrs 2. 100% Tronox acreage 2-4 yrs* 3. BMI acreage and assets 2-4 yrs *(excludes current operations) Value contribution for items 2 and 3 above ~ $100 MM+ over 2-4 year window
Slide 14: Bright Future
Bright Future Right People Right Products and Services Right Assets
Slide 15: Tronox Incorporated and Subsidiary Companies
TRONOY NCORPORATEDAND SUBSIDMRY COMPANIES retguater cine fetes Ire ertawientenz ie setters trem ais Weest yee eno mate ese clan laneat eae etaoitr ect Z 2 ines eer pu herent a - ober tne ft *ycuaedan aempuestetobe ems east) We mga ued ebnert st ea AgRSRCOITON mach dt NNN SNS EMER 15 37—R- ‘he morc m
Slide 16: Operating Profit Reconciliation
Operating profit is not a presentation made in accordance with generally accepted accounting principles, or GAAP. The following table reconciles operating profit to income from continuing operations for the periods presented. Income tax provision (13.8) (5.4) Income from continuing operations $23.6
Slide 17: First Quarter Business Update
TRONOX First Quarter Business Update May 23, 2006