Tronox Holdings plc · NYSE:TROX
Tronox — Investor Presentation (February 2006)
29 slides from Tronox's investor presentation, Feb 6, 2006
Slide 1: Investor Presentation
Investor Presentation Feb. 6, 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 Adjusted EBITDA
Use of Adjusted EBITDA This presentation contains Adjusted EBITDA, which is a non-GAAP measure that is presented because it is a material component of the covenants that are imposed on us by the senior secured credit facility. A detailed reconciliation to the comparable GAAP financial measures can b
Slide 4: Investment Highlights
Investment Highlights Attractive Industry Fundamentals Experienced Global Producer & Management Marketer with a Strong Leadership Team Position Proprietary Executing Process & Value Strategy: Expertise with Capturing Upside World-Class Well-Established Potential Products & Strategic Technical Suppor
Slide 5: Overview
Overview “Strong out of the blocks” Focused on execution TiO2 business environment and outlook Financial highlights
Slide 6: IPO Proceeds
IPO Proceeds Equity proceeds, net of fees $225.5 MM Debt proceeds, net of fees $537.5 MM Tronox Div to Kerr-McGee $763.0 MM IPO share price $14/share Shares issued 40.4 MM Public: Class A 43% 17.5 MM shares KMG: Class B 57% 22.9 MM shares
Slide 7: 2005 Fourth-Quarter Highlights
2005 Fourth-Quarter Highlights • EPS on income from continuing operations $0.28/share • Q4 Adjusted EBITDA 15% higher YOY • 2005 Adjusted EBITDA 44% higher YOY • Record Q4 production • Global prices moving higher
Slide 8: Tronox Operating Results
Tronox Operating Results $MM Unaudited 2004 2005 Net Sales $1,302 $1,364 Operating Profit (95) 88 Adj. EBITDA 162 233 Adj. EBITDA Margin 12.4% 17.1% EPS from Cont. Ops. $1.13
Slide 9: Tronox Evolution
Tronox Evolution 1997-2000 2001-2003 2004-2005 Integration Building New Growth: Acquisitions Challenges Strategy & Team ¾ Bayer Acquisition ¾ Safety & ¾ Value Strategy: Focus on Environmental Increasing Cash Flow, ¾ Kemira Acquisition Profit & Returns ¾ Standardize to KMG / ¾ Capacity: 200 MT to Tro
Slide 10: Tronox – Moving Ahead
Tronox – Moving Ahead 2005 2006 2007+ Focused on IPO Process Focus on Growth Creating Value Opportunities for Shareholders ¾ Dual-Track Process ¾Execute Strategy ¾Organic / Brownfield Growth ¾ IPO S-1 Filing ¾Alignment of Employees ¾Potential Acquisitions ¾ Completed IPO with ¾Focus on Cash ¾Debt Re
Slide 11: Alignment of Employees
Alignment of Employees • New Variable Compensation Program – “STAR” – Program 2006 metrics • Corporate – Net Income – Return on Invested Capital – Cash Flow • Organizational Group (By plant) “Line of Sight” – Fixed cost – Manufacturing efficiency variance – Quality – Uptime – Balanced Scorecard Appr
Slide 12: Tronox Balanced Scorecard
Tronox Balanced Scorecard 2005 Status to PERSPECTIVE OBJECTIVE MEASURE YTD BUDGET Budget FINANCIAL Maximize Return on Assets ROACE 7.9% 4.7% 7.9% Maximize Cash Flow Free Cash Flow $'MM $ (82.1) $ (143.3) -8206.4% Maximize Profit Op Income $'MM $ 115.2 $ 85.3 11524.7% CUSTOMER Customer Satisfaction %
Slide 13: Global TiO2 Manufacturing Operations
Global TiO2 Manufacturing Operations Strategically positioned plants to effectively serve global markets Experienced operational management and plant-level leadership Nameplate Capacity (1) Location M Tonnes Hamilton 225 Savannah 110 Western Australia 110 Botlek, Botlek, Botlek 72 Netherlands Nether
Slide 14: Manufacturing Excellence
Manufacturing Excellence Extracting More From Existing Assets: Focused effort to improve uptime at all five TiO2 facilities to world class Reduce maintenance spend Focused on quality Annual Maintenance Cost as % of Percent Uptime Estimated Replacement Value % Uptime 100 15 95 12 Annual Cost as % of
Slide 15: Working Capital
Working Capital Unaudited 2003 2004 2005 Accounts Receivable $151 $222 $323 Inventories 353 285 312 Deposits & Prepaids 53 34 29 Total Current Assets 557 541 664 Accounts Payable 198 196 195 Accrued Liabilities 152 163 173 Current Portion LTD - - 2 350 359 370 Net Working Capital $207 $182 $294
Slide 16: Process Chemicals & Energy Costs
Process Chemicals & Energy Costs Process Chemical Costs and Programs •• Successful Successful execution execution of of supply supply chain chain and and contracting contracting strategies strategies mitigated mitigated potential potential cost cost increases increases Tronox Tronox cost cost increa
Slide 17: Announced Price Increases
Announced Price Increases Oct. 1, 2005, $.06/lb. increase will positively impact Q1 2006 Jan. 1, 2006, $.05/lb. increase will positively impact Q2 2006
Slide 18: TiO2 Supply / Demand
TiO2 Supply / Demand ¾ Supply / demand is tight TiO2 Supply / Demand ¾ 2006 will be the lowest supply to (M Tonnes) 5,500 demand ratio in two decades ¾ Capacity rationalization of 218 MT 4,500 or 11% of sulfate capacity since 2001 Metric Tonnes (000's) 3,500 ¾ Major Brownfield / Greenfield efforts n
Slide 19: Financial Focus and Objectives
Financial Focus and Objectives: Disciplined focus on: Free cash flow generation EPS growth Debt reduction Regular quarterly dividend payments Efficiently manage working capital requirements Incentivize management with equity ownership
Slide 20: Tronox Cash Flow
Tronox Cash Flow Unaudited 2004 2005 $MM Net income (loss) $(128) $ 18 Depreciation and amortization 105 103 Asset write-downs and impairments 122 12 Other adjustments to reconcile net income (loss) to net cash provided by operating activities 115 79 Changes in assets and liabilities (23) (148) Net
Slide 21: 2006 Capital Expenditures
2006 Capital Expenditures $94 MM Operations Discretionary Excellence Technology 14% 29% 44% 28% 56% 29% Asset Management Environmental Mandatory & Safety By Type Pigment By Category
Slide 22: Legacy Sites
Legacy Sites Company actively manages environmental issues related to legacy businesses In 1994, a centralized unit, Safety and Environmental Affairs (S&EA) was formed to manage environmental issues S&EA staffed with 34 experts in environmental remediation
Slide 23: Legacy Sites
Legacy Sites Financial reserves have been established for probable and estimable environmental costs, which are reviewed and updated quarterly As of 12/31/2005, gross reserves were $223.7 million As of 12/31/2005, receivable of $56.7 million U.S. Navy settlement of $20.5 million to Tronox in Q1, 200
Slide 24: Profit Growth Drivers
Profit Growth Drivers Target: >10% EPS Growth Proprietary Chloride Technology Company Company Superior Customer / Technical Service Fundamentals Fundamentals Well Positioned to Benefit from Tight Supply & Demand Global Pigment Operations Organic Growth / Brownfield Internal Grow with Str
Slide 25: Additional Backup Material
Additional)Backup Material
Slide 26: TiO2 Pigment
TiO2 Pigment Quality-of-life product used daily No effective substitutes Differentiated and frequently customized 2005 Global TiO2 Demand by End-Use Market Diverse Portfolio of End-Use Opportunities Plastics Plastics Differentiated Products Specialty Products • Formulation based • Customized 20% 20%
Slide 27: Global Producer with Strong Market Leadership Position
Global Producer with Strong Market Leadership Position Highly concentrated industry with top five producers accounting for approximately 70% of global production #3 global producer; #2 using higher-growth chloride-process technology Leading supplier to global customers in multiple regions of the wor
Slide 28: Tronox Competitiveness
Market Strategy Grow higher margin Plastics and Specialty, while enhancing profitability of Coatings and Paper Harvest Maintain Grow Strong Strong Coatings Competitiveness Tronox Competitiveness 67% Adequate Adequate Paper 9% Plastics 22% Specialty 2% Tronox Weak Weak Low Medium High (1) % % Tronox
Slide 29: www.tronox.com
www.tronox.com