Orbia Advance Corp. Sab De Cv · BMV:ORBIA
Orbia Advance Corp. Sab De Cv — Orbia — Investor Day (June 2023)
62 slides from Orbia Advance Corp. Sab De Cv's investor day presentation, Jun 6, 2023
Slide 1: Strategy Update
orbia Advancing life together Strategy Update Tuesday, June 6, 2023
Slide 2: Orbia's Strategy Update Webcast Agenda
Orbia’s Strategy Update Webcast Agenda 10:00 am. Gerardo Lozoya Latapi Investor Relations Director Sameer Bharadwaj Chief Executive Officer 11:00 am. Jim Kelly Chief Financial Officer Sameer Bharadwaj Chief Executive Officer
Slide 3: Welcome
Welcome Gerardo Lozoya Latapi Investor Relations Director
Slide 4: Safe Harbor
Safe Harbor In addition to historical information, this presentation and discussions during this webcast may contain forward-looking statements. Forward-looking statements are those that address activities, events, or developments that management intends, expects, projects, targets, believes, or ant
Slide 5: Orbia & Business Group Strategy Updates
Orbia & Business Group Strategy Updates Sameer Bharadwaj Chief Executive Officer
Slide 6: Key Messages
Key Messages Harnessing the power of material science and innovation to serve customer needs, address world challenges and provide sustainable solutions Investing in profitable growth, leveraging our uniquely advantaged position to bring differentiated solutions to market Maximizing the value of int
Slide 7: A Force for the World
Strategy Update A Force for the World Driven by purpose and unified by values, we choose to work on the toughest challenges. From mine to market, ground to home, field to table and lab to everyday life... ..we rely on our ingenuity and integration across the value chain to transform materials into g
Slide 8: Safety of Our People and Communities Comes First
Safety of Our People and Communities Comes First Orbia Total Recordable Incident Rate 2.0 2.0 19 19 1.70) ids 1.08 07 0.7 0.6 @g3 N/A? 2017 2018 2019 2020 2021 2022 Orbia TRIR: @ Chemical Manufacturing Industry TRIR Benchmark + 67% reduction in TRIR! 2017-2022 + ~70% below industry benchmark in 2021
Slide 9: Global Imprint and Impact
Strategy Update Global Imprint and Impact Diversified global footprint Boston, MA USA Mexico City, Mexico = Operations and Commercial Activities gq 4 Global Strategic Hubs ORBIA 1953 Mexican Stock Founded Exchange (BMV) Employees Market cap? EBITDAt 1. As of 12/31/22 2. Market Cap as of 5/8/23 +24,0
Slide 10: Customer-Focused and Addressing World Challenges
Customer-Focused and Addressing World Challenges Water & Food Security Decarbonization & Energy Transition Other 2022 EBITDA Share 50% 15% 20% 15% 2029! Plan EBITDA 45% 25% 20% 10% Share 1. Includes full contribution of PVC expansion project 10
Slide 11: Leading Positions Across all Businesses
Strategy Update Leading Positions Across all Businesses ater & Food Security Qecarbon Solutions Advantaged player in PVC and specialty PVC, serving water, infrastructure, health and well-being, and other industries $3,696 Revenues $804 EBITDA 1. Adjusted figures as of year-end 1 11 Building & Infras
Slide 12: Value Creation Strategy
Invest in profitable growth and innovation * To leverage our uniquely advantaged position and cutting-edge technologies globally and at scale * To serve our customers with differentiated solutions with an emphasis on decarbonization technologies Value Creation Strategy Maximize the value of integrat
Slide 13: Key Highlights
Strategy Update Key Highlights Ol 02 03 O4 Investing in cost-advantaged integrated Chlor-Alkali PVC expansion in Polymer Solutions Optimizing performance and investing in growth in Building and Infrastructure and Precision Agriculture Advancing significant projects to establish Fluorinated Solutions
Slide 14: Polymer Solutions
Strategy Update Polymer Solutions An industry leader in the production of PVC resins, polymer compounds and derivative materials. Enabling solutions for: #1. Specialty PVC producer globally? * Food and water security #6 Resins producer globally * Clean water and sanitation . . #1 Latin America + Aff
Slide 15: Planned Growth Aligned with Tailwinds
Polymer Solutions Planned Growth Aligned with Tailwinds Strong, stable PVC demand growth, constrained supply Global PVC demand: Global PVC demand! * Driven by building and infrastructure 2010 — 2030E 89% industries, urbanization & addressing 799% 79% worldwide water needs 76% 75% . C -— * Economic s
Slide 16: Evaluating Planned Investment in PVC Value Chain
Evaluating Planned Investment in PVC Value Chain to Support Water and Food Security * Up to 1 million ton integrated Chlor-Alkali PVC * Current focus + Anticipated four-year phased investment from + Monitoring marketing conditions end 2024-2028 + Validating long-term supply/demand . thesis, especial
Slide 17: Building and Infrastructure
Building and Infrastructure Leading market share Offering sustainable customer positions include: solutions for drinking water, sanitation, climate-resilient cities and better building performance in Europe? in Latin America 2022 Revenues 2022 EBITDA 2022 EBITDA Margin year-end 12/31/22
Slide 18: Building and Infrastructure: Positioning for growth
Strategy Update Building and Infrastructure Positioning for growth * Challenging market conditions in 2022/23 include the war in Ukraine, rising interest rates, and constrained residential and infrastructure investment * Focusing on improving efficiency and profitability in this environment * Resili
Slide 19: Climate Adaptation Solutions
Building & Infrastructure Climate Adaptation Solutions High-value segments aligned with climate adaption solutions Urban Climate Resilience * Includes stormwater management, blue roofs, green roofs, rainwater collection & re-use, tree bunkers * Expected to grow significantly over next several years
Slide 20: Opened New Frontiers in North America, India and Indonesia
Opened New Frontiers in North America, India and Indonesia North America India Indonesia + Acquired Bow Plastics in + Acquired Vectus Plastics in * Began construction of new 2022 as platform for growth 2022; added 14 sites in greenfield site in 2022 in $10B+ North American addition to existing two *
Slide 21: Precision Agriculture
Strategy Update Precision Agriculture Focusing on precision irrigation systems, greenhouses and digital farming technologies Solutions enable farmers to get higher and better-quality yields while using less water, fertilizer, energy and labor to play a critical role in driving a food-secure future f
Slide 22: Precision Agriculture
Precision Agriculture * Challenging market conditions in 2022/23 include war, high interest rates, volatile high-value crop prices and weather events * In the short-term, farmers subject to input cost pressures and volatility of output prices * In the long-term, drip irrigation is critical to addres
Slide 23: Investing to Grow the Total Addressable Market
Precision Agriculture Investing to Grow the Total Addressable Market for Precision Agriculture and in new Business Models Extensive Crops Developed and sold fit- for-use solutions for rice, corn, soybeans, cotton and other cash-crops Irrigation-as-a-Service Successfully ran over 10 pilots to validat
Slide 24: Fluorinated Solutions
Fluorinated Solutions Enabling solutions by: Reducing the carbon footprint of steel, cement & aluminum production Transitioning to lower global warming potential refrigerants and medical propellants Near-shoring of critical materials for batteries and semiconductors Providing security of supply thro
Slide 25: Fluorine is a Critical Material Enabling Energy Transition
Fluorinated Solutions Fluorine is a Critical Material Enabling Energy Transition The energy storage market Lithium-ion battery 0) BINDER ——— ELECTROLYTE >20 N% 30-40k (PVDF) —T 4 (LiPF6) CAGR Acidspar per electric vehicle Lithium-ion battery market will grow _ with electric = > vehicle demand Q 3 be
Slide 26: Substantial Investment in Energy Materials: PVDF JV with Solvay
Fluorinated Solutions Substantial Investment in Energy Materials Pursuing a PVDF binder joint venture with Solvay Solvay and Orbia to create a Combination of Solvay and Orbia partnership to produce battery-grade = strengths enables JV to serve North polyvinylidene fluoride (PVDF) American market nee
Slide 27: Substantial Investment in Energy Materials: LiPF6
Substantial Investment in Energy Materials Building industry first large-scale Secured world-class technology with North American LiPF6 from recognized industry leader manufacturing facility * Kanto-Denka technology, know-how + $325M planned investment 2023 and support de-risks capital project — 202
Slide 28: Connectivity Solutions
Connectivity Solutions Essential and innovative products Global market share? and solutions for passive network infrastructure that connect cities, homes and people Industry-leading customer service 2022 Revenues 2022 EBITDA 2022 EBITDA Margin @ dura.line ‘om competitors’ annual reports / company fi
Slide 29: Significant Tailwinds in United States
Significant Tailwinds in United States, Driven by Increasing Appetite for Data & Public Investment S90B Public Investment in Fiber Fiber Demand Growth Orbia Demand + Positioned as market leader in Incremental U.S. homes connected data conduit and solutions Infrastructure Mm homes/year Investment Job
Slide 30: Planned Growth Aligned with Tailwinds
Planned Growth Aligned with Tailwinds Four footprint expansions to be Expanding into complementary completed this year services * Two new facilities in Salt Lake City, * Acquired Biarri Networks in 2022, Utah a software & service provider that assists carriers in planning and + One new facility in S
Slide 31: Sustainability Strategy
Sustainability Strategy YY Low-Impact and Sustainable Impactful Resilient Operations Solutions Ventures Responsible Business (Foundational ESG practices)
Slide 32: Sustainability 2022 Highlights
Sustainability 2022 Highlights Resilient Operations Low-impact operations to protect our people and planet + Validation of 2030 targets by the Science Based Targets initiative to reduce Scope 1, 2 and 3 greenhouse gas emissions. * Scopes 1 & 2 targets: 47% reduction by 2030 and net zero by 2050 + Sc
Slide 33: ESG Accomplishments
Sustainability ESG Accomplishments Improved ESG performance with proactive rating agency engagement have yielded positive results 35) 2022 Performance MSCI { BB ESG RATINGS {ecc| 8 [rij ese] a | Aa [Aaa Upgraded from B to BB FY SUSTAINALYTICS QZ ESG Risk Rating of 19.6 {upgrade from Medium to Low Ri
Slide 34: Innovation and Material Science are Key Competitive Advantages
Innovation and Material Science are Key Competitive Advantages New products and Orbia Ventures >; ISO services account for investing in Research and development professionals promising startups of revenues! sharing our vision Portfolio of 2,250 4,600 Patents? Trademarks
Slide 35: Financial Outlook
2) Financial Outlook Jim Kelly Chief Financial Officer
Slide 36: Well Positioned for Profitable Long-Term Growth
Financial Outlook Well Positioned for Profitable Long-Term Growth Investing in key growth projects to accelerate revenue and margin expansion Illustrative EBITDA 2023 — 2028/2029 $3.7B+ Pvc $3.2B - $3.58 EAS ie Energ maternal >$1.65B 8% - 10% CAGR __, __— from base business & all other projects 2023
Slide 37: Operating Cash Flow Should Fund 75% of Our Cash Requirement
Financial Outlook Operating Cash Flow Should Fund 75% of Our Cash Requirement Through 2028, Targeting Investment Grade Leverage ~2.5x Sources of cash 2023 — 2028 inclusive Uses of cash 2023 - 2028 inclusive , Maintenance S2.1B -S2.3B * $300M-$350M this year, Operating S7.58-S7.9B °* Grows from $1.1B
Slide 38: Reiterating our Commitment to our Long-Term Targets
Reiterating our Commitment to our Long-Term Targets 2028 Revenue 2028 EBITDA Long-term EBITDA margin Operating cash Return on Leverage ratio conversion invested capital Stable and growing; 5 - 6% yield at current valuation
Slide 39: Closing Remarks
39 Closing Remarks Sameer Bharadwaj Chief Executive Officer
Slide 40: Key Takeaways
Key Takeaways Orbia leads in water, food, climate resilience, energy transition and connectivity solutions and is poised to benefit from growth in these sectors Vertically-integrated footprint on supply side of sustainability solutions and positioned to enable near-shoring of critical materials Grow
Slide 41: Orbia business groups
Polymer Building & Precision Solutions Infrastructure Agriculture orbia Advancing life together Connectivity Fluorinated Solutions Solutions Orbia is a company driven by a shared purpose: to advance life around the world. The five Orbia business groups have a collective focus on expanding access to
Slide 42: Jim Kelly
Jim Kelly Chief Financial Officer
Slide 43: Gerardo Lozoya Latapi
Gerardo Lozoya Latapi Investor Relations Director
Slide 44: Q&A Session: PVC demand growth
Orbia Strategy Update, Q&A Session June 6, 2023 What are the main drivers of this PVC demand growth, is there any specific commitment from the segment that will push this demand? Leonardo Marcondes, BofA
Slide 45: Q&A Session: risks to growth plan
Orbia Strategy Update, Q&A Session June 6, 2023 What are the company’s main risks and concerns to deliver towards your growth plan? Leonardo Marcondes, BofA
Slide 46: Q&A Session: growth capital
Orbia Strategy Update, Q&A Session June 6, 2023 The growth capital you shared a year ago was between $6.5 — $6.8B, it seems you're lowering this to around $5.5B, what are the main differences or am I looking at it in a wrong way? Andres Cardona, Citi
Slide 47: Q&A Session: Fluorinated Solutions
Orbia Strategy Update, Q&A Session June 6, 2023 It seems that the opportunity you have with Fluorinated Solutions can potentially be much bigger, can you repeat the numbers you’re assuming for the growth as the EBITDA can be multiplied 3x, and if you can, help us by breaking down the CAPEX opportuni
Slide 48: Q&A Session: PVC expansion approval
Orbia Strategy Update, Q&A Session June 6, 2023 Did you announce a green light from the Board of Directors pertaining to the 1.IM ton PVC expansion capacity program? Nik Lippmann, Morgan Stanley
Slide 49: Q&A Session: EBITDA per ton
Orbia Strategy Update, Q&A Session June 6, 2023 Historic EBITDA per ton including the cracker has been USD 247 per ton. If I exclude the cracker on my estimates, I take hits of USD 186 per ton. Yourre still sustaining around USD 600 — 650 per ton over the PVC investment, that sounds like a high amou
Slide 50: Q&A Session: minority investments
Orbia Strategy Update, Q&A Session June 6, 2023 Your minority investment in your forecast will be rising from a run rate of $90M plus Netafim to 130 — 150M per annum, if my numbers are correct. The question is, are you thinking to use a similar payment structure where you book a lot through the EBIT
Slide 51: Q&A Session: PVC project location
Orbia Strategy Update, Q&A Session June 6, 2023 Can you share anything about location of this project and about the partner related to the PVC project? Nik Lippmann, Morgan Stanley
Slide 52: Q&A Session: fluorite supply
Orbia Strategy Update, Q&A Session June 6, 2023 Could Orbia easily ramp up supply of fluorite in the mines of Mexico to attend the EV market potential if we get to the point of the 6x — 8x demand growth, what’s the annual supply capacity today and would you need to invest to expand that? Vicente Fal
Slide 53: Q&A Session: Netafim EBITDA
Orbia Strategy Update, Q&A Session June 6, 2023 What can we expect from Netafim’s EBITDA growth, looking ahead? Vicente Falanga, Bradesco
Slide 54: Q&A Session: guidance
Orbia Strategy Update, Q&A Session June 6, 2023 You previously gave a guidance of USD 13B to I5B on revenues and USD 3.1B to 3.5B in EBITDA for 2027, and today you're giving a similar guidance but for 2028. What is going as expected, below or above expectations and looking forward, which projects ha
Slide 55: Q&A Session: funding
Orbia Strategy Update, Q&A Session June 6, 2023 In terms of funding, is the goal to go entirely with bank debt or are there any other possibilities such as capital increase, JVs or any other option? And concerning the timing of this funding, are you expecting this additional USD $2B to be done gradu
Slide 56: Q&A Session: Connectivity Solutions
Orbia Strategy Update, Q&A Session June 6, 2023 On Connectivy Solutions, how can Orbia take advantage of the global footprint of its other businesses to replicate the current success you’re having in the U.S. and Canada in other regions such as Europe, for example? Pablo Monsivais, Barclays orbia O
Slide 57: Q&A Session: Netafim synergies
Orbia Strategy Update, Q&A Session June 6, 2023 Can you share an example of how Netafim is more competitive by being within Orbia and can you share an example of the internal synergies that speed up the micro irrigation adoption rate? Pablo Monsivais, Barclays
Slide 58: Q&A Session: semiconductors
Orbia Strategy Update, Q&A Session June 6, 2023 Can you share with us your first thoughts on semiconductors and how Koura can participate? Pablo Monsivais, Barclays
Slide 59: Q&A Session: Gulf Coast integration
Orbia Strategy Update, Q&A Session June 6, 2023 If the Polymer Solutions investment is to happen in the U.S. Gulf Coast, will we still see the integration benefit or how should we think about the integration? Regina Carrillo, GBM orbia O
Slide 60: Q&A Session: Connectivity capacity
Orbia Strategy Update, Q&A Session June 6, 2023 By how much are you expanding your capacity in the Connectivity Solutions business and how much will be additional investments in 2023 and 2024, and can you share any CAPEX numbers? Regina Carrillo, GBM orbia O
Slide 61: Q&A Session: share buybacks
Orbia Strategy Update, Q&A Session June 6, 2023 Besides the dividend yield that you're expecting to maintain, do you have a strategy for share buybacks and cancellations? Regina Carrillo, GBM
Slide 62: Q&A Session: use of cash and dividends
Orbia Strategy Update, Q&A Session June 6, 2023 In the Use of Cash slide, I’m seeing a reduction in dividends. What is driving the difference from USD $1.5B to $1.6B this year compared to last year’s USD $2.3B to $2.7B a year ago? Andres Cardona from Citi orbia O