Tronox Holdings plc · NYSE:TROX
Tronox — Investor Day (2006)
37 slides from Tronox's investor day presentation, Nov 22, 2006
Slide 1: Tronox 2006 Analyst Day
Tronox 2006 Analyst Day Savannah, Georgia 1
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: Introductions
Introductions Tom Adams - Chairman & Chief Executive Officer Mary Mikkelson - Senior VP & Chief Financial Officer Marty Rowland - Chief Operating Officer Steve Wachnowsky - VP Global Pigment Operations Brad Ashton - Savannah Plant Manager 3
Slide 4: Agenda
Agenda 9:35 a.m. - 10:00 a.m. Business Update - Tom Adams 10:00 a.m. - 10:15 a.m. Global Operations - Marty Rowland 10:15 a.m. - 10:30 a.m. Savannah Overview - Steve Wachnowsky 10:30 a.m. - 10:45 a.m. Q&A 4
Slide 5: Tom Adams - Chairman and CEO
Tom Adams - Chairman and CEO 5
Slide 6: Business Overview
Business Overview Tronox Evolution Our Strategic Focus TiO2 Market Review 5,500 5,500 5,250 Supply and demand 5,000 4,750 4,500 4,500 Macro-economic situation 4,250 4,000 3,750 Metric Tonnes (000's) Hurricane impact 3,500 3,500 3,250 3,000 2,750 2,500 2,500 2,250 Balance 2,000 Supply 1,750 1,500 Dem
Slide 7: Tronox History
Tronox History KM Chemical Little or no focus on cash Volume oriented Grow through acquisition Lack of capital discipline Hold on to stranded assets 7
Slide 8: Tronox Stand-Alone Focus
Tronox Stand-Alone Focus KM Chemical Tronox Little or no focus on cash Focus on cash Volume oriented Market segmentation Grow through acquisition Extract more from Lack of capital discipline existing assets Hold on to stranded Capital discipline assets Monetize stranded assets 8
Slide 9: Strategic Focus
Strategic Focus Move Tronox to Top-Quartile Performance Project Cornerstone Focus on Growth 3% per year Future brownfield to service high-growth Asian market Reduce Debt to Cap Target = 35% - 40% Land sales Excess free cash flow Evaluate External Opportunities Vertical and horizontal 9
Slide 10: Market Leader
Market Leader 2005 Global TiO2 Market Nameplate TiO2 Capacities (M Tonnes) Chloride Sulfate 1,800 1,635 1,600 28% 23% 1,400 1,200 1,125 14% 1,000 11% 1,370 11% 800 670 13% 624 600 1,125 155 107 510 550 140 400 380 515 517 200 370 265 170 DuPont Millennium Tronox 0 Huntsman Kronos Others um s nt s ox
Slide 11: TiO2 Capacity Trends
TiO2 Capacity Trends Capacity Growth Rates Chloride (M Tonnes) 6,000 Proprietary technology Sulfate Chloride Less labor and energy intensive 5,000 Less waste 4,000 CAGR 60% of global capacity CAGR CAGR Sulfate 5% 3,000 5% 5% Readily available technology 2,000 Labor and energy intensive 1% More waste
Slide 12: TiO2 Global Demand Annual Growth Rates
TiO2 Global Demand 2005 TiO2 Global Demand 5-Year Forward Growth Rates 5.0% 4.0% 4.3% 31% 34% Annual Growth Rates Worldwide 3.0% Average 2.9% 2.7% 2.0% 1.8% 35% 1.0% Americas Europe Asia/Pacific 0.0% Americas Europe Asia/Pacific 4.4 4.4MM MMTonnes Tonnes Source: Company Estimates 12
Slide 13: TiO2 pounds per capita
TiO2 pounds per capita G U e 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 ni r m te a d ny St a C tes an ad Fr a an ce It a l Sp y a K Ta i n o U r e iwa ni a te , S n d o K ut in h gd A om us TiO2 Consumption t M rali al a ay s Po i a l T h a nd ai la n Tu d rk e B y ra M zil C ex ze i c
Slide 14: TiO2 Supply / Demand
TiO2 Supply / Demand TiO2 Supply / Demand (M Tonnes) 5,500 5,500 5,250 5,000 Supply / Demand is Tight 4,750 4,500 4,500 2006 Will be the Lowest Supply to 4,250 Demand Ratio in Two Decades 4,000 3,750 Metric Tonnes (000's) 3,500 3,500 Capacity Rationalization of 218 MT 3,250 or 11% of Sulfate Capacit
Slide 15: Current Macro-Economic Situation − GDP
Current Macro-Economic Situation − GDP Regional Health Gauge (major country proxy) North America 2005 2006 2007 Inflation risks Lukewarm job creation and waning Actual Forecast Forecast housing market Declining energy prices buoy future prospects 3.2% 3.3% 2.6% United States United States Europe Gro
Slide 16: Industry Inventory Position
Industry Inventory Position 15 Hurricane Katrina Impact Hurricane Days Inventory vs. Seasonal Norm High 10 Highinventories inventories impact Rapid decline in Q4 2005 and Q1 2006 5 High operating rates and restart of hurricane impacted 0 facilities increased inventories (5) Strong global demand Low
Slide 17: Marty Rowland - Chief Operating Officer
Marty Rowland - Chief Operating Officer 17
Slide 18: Global Operations Review
Global Operations Review Tronox Technology Advantage Our Global TiO2 Operations Project Cornerstone Execution Capital Expenditures Environmental 18
Slide 19: Tronox TiO2 Production Advantages
Tronox TiO2 Production Advantages Proprietary Chloride Technology Developed in 1960s Produces very blue white – or clean white Tight particle distribution Five TiO2 Plants on Three Continents North America, Europe and Australia Ability to service all three major regions Common chloride technology ac
Slide 20: Global TiO2 Manufacturing Operations
Global TiO2 Manufacturing Operations Strategically located plants effectively serve global markets Experienced operational management and plant-level leadership Nameplate Capacity (1) Location M Tonnes Botlek, Hamilton 225 Netherlands Savannah 110 Kwinana 110 Hamilton, Botlek 72 MS Uerdingen (sulfat
Slide 21: Integrated Western Australia Operations
Integrated Western Australia Operations 21
Slide 22: Project Cornerstone Execution
Project Cornerstone Execution Using Structured Program Management Process Single-point accountability Stage gate: project plans and tracking Metrics driven: implementation, savings Resourced, prioritized and visible Tom Adams Champion Cash Cost Team Cash Team Marty Rowland Mary Mikkelson • Op Costs
Slide 23: Project Cornerstone Execution Status Summary
Project Cornerstone Execution Status Summary $60 Cash CashCost CostReductions Reductions SG&A Teams on track or ahead of $45 Op Costs schedule $M M $MM Savings YTD + Forecast Remain committed to target $30 attainment $15 Beginning to realize benefits in the bottom-line $- 2006 2007 2008 Inventory, I
Slide 24: 2006 Capital Expenditures $90MM
2006 Capital Expenditures $90MM Magnetic Minerals Environmental & Safety 11% Improvement 10% 27% 29% 23% Maintenance Strategic By Type 50% Mandatory, 50% Discretionary 24
Slide 25: Legacy Sites Financial Summary ($MM)
Legacy Sites Financial Summary ($MM) Historical Cash Spend $150 $100 $50 $0 -$50 -$100 2001 2002 2003 2004 2005 2006E Total Spend (1) $137 $121 $98 $85 $61 Reimbursements (11) (10) (15) (50) (71) Net Pretax Spend $126 $111 $83 $35 ($10) $20-25 Estimate (1) Estimates are based on 9/30/06 reserve bala
Slide 26: Steve Wachnowsky - Vice President Global Operations
Steve Wachnowsky - Vice President Global Operations 26
Slide 27: About our Savannah Plant
About our Savannah Plant Purchased Site in 2000 One of the Community’s Largest Industrial Operations 1,600-acre Site Includes Chloride Titanium Dioxide Pigment Plant and Sulfuric Acid Plant Products Serve Multiple Tronox Market Segments and World Regions Paints and coatings, plastics and paper North
Slide 28: Savannah Plant
Savannah Plant Elba Island N South Carolina r Rive h n na a va S Fort Jackson r Rive Property Boundary to n ing ilm W Approximately 1 Mile 28
Slide 29: TiO2 – Chloride Process
TiO2 – Chloride Process Ores Coke Chlorination Chlorine Waste Chlorination React Ti bearing ore with chlorine Treatment and coke to form TiCl4 and metal Chlorine chlorides Separate TiCl4 from metal chlorides Oxygen Oxidation and purify TiCl4 Oxidation Convert TiCl4 to TiO2 particles by Treatment rea
Slide 30: TiO2 - Sulfate Process
TiO2 - Sulfate Process Titanium Raw Material Scrap (Ilmenite & Slag) Iron Calcination/ Post- Digestion Reduction Crystallization Hydrolysis Filtration treatment Milling Copperas Cement Industry Water Treatment IOX Pigment Weak Acid TiO2 Pigment Concentrated Cement Industry Different Waste acid Filte
Slide 31: Cornerstone – Operations and Supply Chain
Cornerstone – Operations and Supply Chain Integrated Plan Mid-2006 Focused on All Manufacturing Cost Areas Efficiencies and usage (variable costs) Spending (fixed costs) Working capital reductions Global Approach Leverage ideas for quick results Six Sigma and Lean Manufacturing tools utilized Employ
Slide 32: Foundation for Successful Cornerstone Implementation
Foundation for Successful Cornerstone Implementation for Operations, Supply Chain Idea / Project Generation Employee Engagement Support tools Evaluation of Idea / Project Via Cause and Effect Matrix Stage Gate Zero: Project Details and Economics Microsoft Project for Project Implementation and Track
Slide 33: Case Study: Hydrogen By-Product Plant
Case Study: Hydrogen By-Product Plant Synergies Approach: Formed Joint Team: Chlorate, Hydrogen Efficiency Pigment at Hamilton H2 produced in chlorate plant Pigment plant can use H2 as fuel Developed integrated approach % Efficiency Cross-plant coordination Equipment modifications Exploiting Synergi
Slide 34: Case Study: Caustic Consumption
Case Study: Caustic Consumption Approach: Hamilton Plant Formed Cross-Sectional Caustic Consumption Employee Team 2005 2006 Identified top consumers Determined theoretical vs. actual usage Caustic / MT Developed equipment design and operating procedure strategies Educated operational teams Status 9
Slide 35: Case Study: Material Substitution
Case Study: Material Substitution Approach: Location: Savannah plant Six Sigma Green Belt Project Limestone Baseline(30Wks.) Plant team focused on: 40% % o f L im esto n e vs. T o tal L im e Maximizing low-cost limestone usage for neutralization of process waste (5X cheaper than pebble- 30% lime) Ut
Slide 36: Question & Answer
Question & Answer 36
Slide 37: Value Beyond the Product
Value Beyond the Product Thank you for joining us today. If you have any questions after the conference, please contact Robert Gibney, VP Investor Relations and External Affairs 405-775-5105 or Robert.Gibney@tronox.com 37