Slide 1: A market leader in value-added products based on petrochemical raw materials
A market leader in value-added products based on petrochemical raw materials Exhibit 99.1
Slide 2: Forward-Looking Statements & Non-GAAP Financial Measures
2 Forward-Looking Statements & Non-GAAP Financial Measures This presentation may contain “forward-looking statements” within the meaning of the securities laws. These statements include assumptions, expectations, predictions, intentions or beliefs about future events, particularly statements that ma
Slide 3: TPC Group
#* TPC Group 3° TPC Group
Slide 4: Overview
4 Market Leader in C4 Hydrocarbons Attractive, growing end- user markets Game-changing growth opportunities Unique logistics network Strategically located Long-standing customer/supplier relationships Stable, consistent cash flows Scalable asset, infrastructure platform Disciplined, experienced mana
Slide 5: What We Do
5 Fuel & Lube Additives Gasoline & Blendstocks Nylons Plastics Surfactants Additives Tires What We Do TPC Group Inc. is a leader in specialty chemicals, and provides products to major chemical and petroleum companies worldwide. Providing building blocks that help make the world’s tires, carpets, gas
Slide 6: Leading Market Positions
6 C4 Processing Market Share Performance Products Market Share Butadiene Butene-1 Isobutylene Products Polyisobutylene (PIB) Propylene Derivatives Leading Market Positions 35% 35% 60% 25% 25% U.S. Market Share: #1 #1 #1 #1, #3 #3
Slide 7: Commitment to Technology, Development
7 Commitment to Technology, Development • Opening of new multi-million dollar TPC Technical Center in Houston • Exploring new opportunities for proprietary product and process technologies – Highly reactive PIB (patented) – Multiple processing technologies (e.g. TPC Group Oxo-D TM process) – Catalys
Slide 8: Strong, Sustainable Earnings Growth: Our Competitive Advantages
8 Strong, Sustainable Earnings Growth Our Competitive Advantages Strategic Location (US “Petrochemical Corridor”) Depth of Expertise Established, Integrated Relationships Unique, Valuable Infrastructure
Slide 9: Established, Integrated Relationships
9 Customers Feedstock Suppliers Playing a Profitable Central Role in the Ethylene Value Chain Established, Integrated Relationships • Crude C4 processor for every non-integrated North American ethylene producer • Deeply integrated into respective customer/supplier supply chains • Premier processing
Slide 10: Strategically Located in the "Petrochemical Corridor"
10 Strategically Located in the “Petrochemical Corridor”
Slide 11: Driving Transformation at TPC Group
11 Driving Transformation at TPC Group Michael T. McDonnell President and Chief Executive Officer Miguel A. Desdin Senior Vice President & Chief Financial Officer Luis E. Batiz Senior Vice President of Operations Russell T. Crockett Senior Vice President, Commercial Management Expertise Gene Allspac
Slide 12: TPC Group Transformation
Past (4 yr avg.) Present (June LTM) Future 12 Past Present Future EBITDA ($MM) $75 $158 2x-3x EBITDA margin % 4.3% 6.8% 2x-3x Total Assets $819 $1,083 Shareholder Equity $278 $305 TPC Group Transformation Tactically-driven “Me-to” player Narrow product slate Toll-processing business model Strategica
Slide 13: Unique, Valuable Infrastructure
13 13 TPC Logistics Operations TPC Purity Products Propylene Producers Ethylene/Mixed C4 Producers Unique, Valuable Infrastructure Crude C4: non-core “by-product” processed for a range of critical “building blocks” for diverse market use Logistics & Infrastructure Propylene Derivative 7% Raffinates
Slide 14: Unique, Valuable Infrastructure: Facilities
14 Estimated replacement cost >$1.9B + value of idled assets Unique, Valuable Infrastructure Houston Baytown Port Neches Facility Capacity: Footprint: Key Attributes : 2.4B lbs/yr - Mixed C4 240M lbs/yr - PIB M lb/yr - Nonene 50M lbs/yr - Tetramer 1.8B lbs/yr Mixed C4 257 Acres 133 Acres 154 Acres •
Slide 15: Near Term Drivers of Performance
15 Near Term Drivers of Performance • Margin expansion in C4 processing • Volume growth and margin expansion in Performance Products • High return/low risk capital projects • Operational Excellence
Slide 16: A Financial Platform for Growth
Market cap (6/30/11): $626 million Total cash: $66 million Net debt: $282 million Fully diluted shares: 16.2 million Operating revenues: $2,334 million Net income: $58 million Earnings per fully diluted share: $3.56 Adjusted EBITDA: $158 million ROIC 14% 16 Trailing 12m (as of 6/30/11) As of 6/30/11
Slide 17: Financial Performance
17 Financial Performance 1,973 1,179 1,918 2,334 1,000 1,500 2,000 2,500 2008 2009 2010 TTM as of 6/30/11 Sales Revenue ($m) 2008 2009 2010 TTM as of 6/30/11 Adjusted EBITDA ($m) 2.4% 4.6% 5.6% 6.8% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2008 2009 2010 TTM as of 6/30/11 Adjusted EBITDA %
Slide 18: Improving Returns on Invested Capital
18 2008 2009 2010 LTM 6/2011 With Improving Returns on Invested Capital 0.7% 4.4% 8.4% 14.1% EBIT 6,436 38,194 68,206 116,597 Ave. Shareholders' Equity 286,900 279,859 298,492 295,936 Ave. Long-term Debt 299,875 290,000 280,597 314,753 Ave. Cash 3,136 1,614 52,293 72,469 ROIC 0.7% 4.4% 8.4% 14.1% Co
Slide 19: TPC Group
#* TPC Group 3° TPC Group
Slide 20: How We Make Money
20 How We Make Money 2008 2009 2010 2011 (first six months) 2.7 2.9 3.7 4.5 7.5 3.4 3.2 3.3 TOTAL MARGIN Operational excellence Growth & margin expansion Core/Stable Margins BD price changes Fuel value in price formulas Margin Cents per pound
Slide 21: A Business Model Based on Stable Core Margins
21 Feedstock Supplies TPC Processing & Logistics Services Crude C4s from Suppliers Purchased Raw Materials End Products Margin Structure With a Business Model Based on Stable Core Margins Isobutylene (IBL) Propylene Mixed C4 Butadiene (BD) Stable: processing margin & service fees Butylenes: • Butene
Slide 22: Attractive, Stable Margin Model—Illustrative Example
22 Butadiene (45%) Butylene (55%) Performance Products Attractive, Stable Margin Model—Illustrative Example Supplier Price - Monthly Contract Price $ (1.00/lb) + Extraction Fee $ 0.04 + Energy Fee 85% Selling Price - Monthly Contract Price $ 1.00/lb + Service Fee $ 0.05 TPCG Value + Extraction Fee $
Slide 23: Key Variable Sensitivities
Key Variable Key Indicators Directional Significance 23 Inherently Stable “Core” Margins Key Variable Sensitivities Operating leverage • Cracker rates • Cracker feedslates • Enabled by significant, underutilized capacity Fuel values • Unleaded gasoline • Gasoline-to-butane spread • Margins positivel
Slide 24: TPC Group
#* TPC Group 3° TPC Group
Slide 25: Fundamental Anchors of Our Strategy
25 Fundamental Anchors of Our Strategy Excellent Long- Term Market Fundamentals Idled Assets and Scalable Infrastructure Able to Be Deployed Mixed C4 Key Products in Structural Short Supply Cost-Advantaged Raw Materials (NGLs) in Plentiful Supply
Slide 26: Excellent Long-term Market Fundamentals
26 Global Mobility Rising Living Standards Environmental Regulations Tires: - Performance - Fuel economy Fuels & Lubricants: - Engine life - Engine performance - Industrial Products: - Surfactants - Adhesives 26 Emissions reductions Excellent Long-term Market Fundamentals Demand Drivers TPC Products
Slide 27: Key Products in Structurally Short Supply
27 Causing shift from heavier (e.g. Naptha) to lighter (e.g. Ethane) Ethylene Cracker Feedstocks NA Ethylene Industry now Globally Competitive Ethylene Production now generates less Co- Products, particularly Butadiene Structural shift in cracker feed stocks causing critical product shortages in fac
Slide 28: Plentiful Natural Gas Liquids Create Feedstock Advantage
28 ‘wet-gas’ plays are favored by drillers NGL prices are de-coupling from crude oil Plentiful Natural Gas Liquids Create Feedstock Advantage Forecast NGL Market Dynamics: • U.S. chemical producers will maximize favorable NGL’s • NGL stream is yielding higher ethane, butane and propane • Butane: a k
Slide 29: TPC Dehydro Assets: A Perfect Fit
29 Idled TPC Dehydro Assets: A Perfect Fit Dehydrogenation Butadiene Isobutylene • Dehydro assets located within TPC’s Houston plant • Can convert NGLs into valuable C4 products: butadiene and isobutylene • Utilizing existing dehydro assets greatly reduces capital costs vs. greenfield investment
Slide 30: Strategic Initiatives
30 Strategic Initiatives
Slide 31: Strategy Going Forward
Meet the Growing Demand for On-Purpose Butadiene and Isobutylene 31 Strategy Going Forward Excellent Long- Term Market Fundamentals Idled Assets and Scalable Infrastructure Able to Be Deployed Key Products in Structural Short Supply Cost- Advantaged Raw Materials (NGLs) in Plentiful Supply Solve lon
Slide 32: On-Purpose Butadiene Project
32 On-Purpose Butadiene Project Restarting idled dehydro unit Produce on-purpose butadiene from NGLs, capturing full margins Ensure long-term security of supply of mission-critical product Detailed engineering study to be completed by Q1 2012 Expected production of 600 million pounds of butadiene Cr
Slide 33: On-Purpose Isobutylene Project
33 On-Purpose Isobutylene Project Received operating permit Completed primary engineering study Proceeding with detailed engineering and initial construction/refurbishment Restart other idled dehydro unit Produce isobutylene from NGLs Ensure feedstock security for growth Expand margins through upstr
Slide 34: TPC Group: Offering Strong Sustainable Earnings Growth
34 TPC Group: Offering Strong Sustainable Earnings Growth 68 years of C4 expertise and experience Unique position in C4 industry – assets, infrastructure, location Focus on operational excellence, performance culture Well-positioned to capitalize on “game-changing” growth opportunities to enhance sh
Slide 35: Financials Appendix
35 Financials Appendix
Slide 36: 2011 Capex Guidance
( in millions) Consistent through next few years Improving infrastructure Execute and replenish Take advantage of NGL economics 36 2011 Capex Guidance 2011 Base maintenance $ 15 2011 New Lab 2011 Discretionary ROI Engineering for Dehydro 1 2011 Capex Plan $ 35 Potential Projects Low Range High Range
Slide 37: SEC Disclosure Information: Adjusted EBITDA Revision
37 SEC Disclosure Information ADJUSTED EBITDA – REVISION OF PREVIOUSLY REPORTED AMOUNTS 6/30/2011 3/31/2011 12/31/2010 9/30/2010 6/30/2010 Adjusted EBITDA - as previously reported ($mm) C4 Processing 15.7 $ 23.8 $ 26.1 $ Performance Products 9.2 14.6 17.2 Corporate (5.9) (5.3) (7.8) Total 19.0 $ 33.
Slide 38: Financial Historical Trends
38 Crude C4 Processing Performance Products Financial Historical Trends Volume, in thousands Op. Margin, in thousands Gross Profit % Volume, in thousands Op. Margin, in thousands Gross Profit % 12.3% 9.3% 16.8% 11.7% 13.8% 2007 2008 2009 2010 2011 YTD as of 6/30/11 25.5% 17.2% 19.3% 22.4% 17.4% 2007
Slide 39: TPC Sales by End-Market and Product
39 BD 37% B-1 8% Raffinates and Fuels 35% PIB 6% DIB and HPIB 7% Propylene Derivatives 7% TPC Sales by End-Market and Product Sales by End Market Sales by Product Source: TPCG internal est Synthetic Rubber 31% Plastics 15% Fuels 36% Lube & Fuel Additives 8% Other 10%
Slide 40: Selected Market Data
40 Selected Market Data 6/30/2011 3/31/2011 12/31/2010 9/30/2010 6/30/2010 End of Qtr BD Contract Price ($/lb) (1) 1.53 1.04 0.86 0.93 0.92 Unleaded Gasoline Qtr Avg - USGC ($/gal) (2) 3.07 2.61 2.18 2.00 2.11 US Ethylene Industry Capacity Utilization (%) (3) 89.1 92.5 88.0 92.3 87.6 US BD Productio
Slide 41: Selected Financial Data
41 Selected Financial Data 6/30/2011 3/31/2011 12/31/2010 9/30/2010 6/30/2010 Sales Volumes (mm lbs) (1) 859.8 750.7 738.2 748.7 802.7 Sales Revenue ($mm) 792.9 555.6 486.1 499.4 531.8 Adjusted EBITDA ($mm) C4 Processing 66.9 30.6 15.7 23.8 26.2 Performance Products 12.0 11.6 9.2 14.6 17.2 Corporate
Slide 42: Reconciliation of Adjusted EBITDA to Net Income
42 6/30/2011 3/31/2011 12/31/2010 9/30/2010 6/30/2010 Net income (loss) 34.3 $ 11.4 $ (0.7) $ 12.8 $ 14.4 $ Income tax expense (benefit) 17.7 5.7 (1.6) 6.9 7.9 Interest expense, net 8.6 8.4 11.1 3.2 4.0 Depreciation and amortization 10.4 10.0 9.9 9.9 9.8 Adjusted EBITDA 71.0 $ 35.5 $ 18.7 $ 32.8 $ 3