Tronox Holdings Plc · NYSE:TROX

Tronox — BMO Capital Markets 2019 Chemicals & Packaging Conference

54 slides from Tronox's conference presentation, Jun 27, 2019

  1. Slide 1: BMO Capital Markets 2019 Chemicals & Packaging Conference

    BMO Capital Markets 2019 Chemicals & Packaging Conference June 27, 2019 © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  2. Slide 2: Safe Harbor Statement and Non-U.S. GAAP Financial Terms

    Safe Harbor Statement and Non-U.S. GAAP Financial Terms Statements in this presentation that are not historical are forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,

  3. Slide 3: World's Largest Vertically Integrated TiO2 Producer

    World’s Largest Vertically Integrated TiO2 Producer • Second largest TiO2 pigment producer • Second largest high-grade titanium feedstock producer • Second largest zircon producer 3 © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  4. Slide 4: Unmatched Global Footprint on 6 Continents

    Unmatched Global Footprint on 6 Continents • 1.1 million tons of NYC and Stamford Botlek the Netherlands Yanbu KSA Fuzhou Capacity: 90 kMT nameplate TiO2 USA Corporate Offices Capacity: 200 kMT China Capacity: 46 kMT Stallingborough pigment capacity UK Capacity: 165 kMT Oklahoma City • 270,000 tons

  5. Slide 5: Balanced Geographical Sales

    Balanced Geographical Sales 21% 30% 30% 11% 8% A Global Footprint to Serve a Global Industry 5 © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  6. Slide 6: Focused Pure-Play in the TiO2 Value Chain

    Focused Pure-Play in the TiO2 Value Chain Our Mission Our Goal • To deliver shareholder returns To create the equity above those of other TiO2 offering of choice in the equities; and TiO2 space • Top-quartile returns against a broader group of chemicals and materials peer companies • On a sustained,

  7. Slide 7: Aligned with Our Shareholders and with Our Commitments

    Aligned with Our Shareholders and with Our Commitments Long-term Equity Compensation Program Performance-based Integration RSUs • Aligns key management compensation to value created Time-based Performance- for shareholders from acquisition integration RSUs based RSUs • One-time grant of performance-

  8. Slide 8: The New Tronox

    The New Tronox Transformative A culturally driven acquisition has high-performance Lowering our costs, Our focus is on created extraordinary organization with delivering the execution opportunities to a compelling synergies create value market-driven strategy Greater stability in Robust cash financi

  9. Slide 9: Strategy Driven by Changing Market Conditions

    Strategy Driven by Changing Market Conditions © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  10. Slide 10: Strategy Driven by Changing Industry Dynamics

    Strategy Driven by Changing Industry Dynamics Changes in TiO2 Market Increased competitive Structure intensity Implications Flattening of cost curve Advantaged cost structure is critical to remain competitive / Industry consolidation and migration to relevant Chloride Process public ownership Higher

  11. Slide 11: Changing Industry Dynamics: Cost Curve Flattening

    Changing Industry Dynamics: Cost Curve Flattening 2011 Global Standalone Pigment Cost Curve Cash Costs ($/t TiO2) • Cost curve in 2011 looked much different TIER 4 $4,000 Small-scale, high cost players • First quartile of global cost curve was ~2.3x high-to-low ratio dominated by low-cost NA chlorid

  12. Slide 12: Changing Industry Dynamics: Cost Curve Flattening

    Changing Industry Dynamics: Cost Curve Flattening 2018 Global Standalone Pigment Cost Curve • Cost curve has flattened $4,000 TIER 4 Small-scale • Chinese have emerged European & $3,500 ~1.8x high-to-low ratio between Tier 4 Asian players and Tier 1 • Europeans have lost ground $3,000 TIER 3 Mix of

  13. Slide 13: Strategy Driven by Changing Industry Dynamics: Strategic Pillars

    Strategy Driven by Changing Industry Dynamics 5 STRATEGIC PILLARS FOUNDATIONAL DISTINCTIVENESS / SOURCES OF ADVANTAGE ENABLING 1 Competitive TiO2 Pigment Costs 2 Feedstock Integration 3 Leading Global Footprint 4 TiO2 Technology Leader • Low-cost, high-quality pigment Competitive Positioning Commerc

  14. Slide 14: Strategy Will Result in TiO2 Pigment Cash Cost Reduction

    Strategy Will Result in TiO2 Pigment Cash Cost Reduction of $200-300/ton by 2023 2018 Integrated Pigment Global Cost Curve Rolled Forward • Cash cost/ton reduction sources  ~2/3rds from pigment operations  ~1/3rd from mineral sands operations • Emergence of clear industry leaders: The solidificati

  15. Slide 15: A Single Unified Commercial Approach

    A Single Unified Commercial Approach © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  16. Slide 16: Tronox New Combined Pigment Demand

    Tronox New Combined Pigment Demand Balanced Geographical Sales 21% 30% 30% 11% 8% 16 © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  17. Slide 17: The New Tronox TiO2 Pigment Commercial Footprint

    The New Tronox TiO2 Pigment Commercial Footprint * total employees 17 © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  18. Slide 18: World-Class Product Portfolio

    World-Class Product Portfolio Comprehensive TiONA 242, a Best-in-class global portfolio for engineering plastics top-tier plastics paper laminate including the 8870 product in product in TiONA PC grade Latin America RCL-722 Best-in-class Great durable The two best multi- Best-in-class purpose coatin

  19. Slide 19: Industry-Leading Product Portfolio

    Industry-Leading Product Portfolio Top 15 Products 23% Product 19% Tronox Cristal 11% 9% 6% 5% 5% 5% 3% 3% 3% 2% 2% 2% 2% TiONA CR-826S TiONA TiONA RCL TiONA CR-826 CR-828 CR-834 TR33 RKB2 TR36 CR-880 8141SL RCL69 595 -02 121 128 722 696 19 © 2019 Tronox Holdings plc. | All rights reserved. | tronox

  20. Slide 20: Customer Overlap and Harmonization

    Customer Overlap and Harmonization Number of pigment parent customers per region AMER EMEA APAC  Overlap on parent level is smaller than expected  Customer (ship-to) level overlap is 370 smaller 495 310  Price exposure risk is smaller than 375 one-fifth of expected based on 118 39 similar pricing

  21. Slide 21: Margin Stability Program – What's Changed from Previous Cycle

    Margin Stability Program – What’s Changed from Previous Cycle Monthly Volume, MT Price Index Price recovers as Much shorter downturn: Price rallies after Extended downturn due to: supply and demand  Limited inventory build severe pigment  Excess inventory built by customers due to by customers re-

  22. Slide 22: Customer Portfolio – Growth Trajectory Is Key

    Customer Portfolio – Growth Trajectory Is Key Revenue Growth of Strategic Global Customer ANNUAL REVENUE INDEXED 3.5 2.5 Attach ourselves to the customers who are growing faster than the market 1.5 0.5 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tronox Volume Growth at Strategic Account ANNUAL

  23. Slide 23: Zircon Delivering Significant Profitability and Margin Enhancement

    Zircon Delivering Significant Profitability and Margin Enhancement • Major applications  Ceramic tiles and glazes  Refractories and foundry  Zirconia chemicals • Tronox is the 2nd largest zircon producer with approximately 270,000 tons of capacity • Market Dynamics  End of short-term destocking

  24. Slide 24: Zircon Margin Stability Program

    Zircon Margin Stability Program • Customer and industry focus Zircon Pricing – Indexed to 2000  Historical pricing was adjusted on spot, quarterly or monthly basis ⎼ Pricing now adjusted on a semi-annual basis  Provides customers with price predictability  Gives customers the ability to plan and

  25. Slide 25: Zircon Margin Stability Program

    Zircon Margin Stability Program • Customer and industry focus Zircon Pricing – Indexed to 2000  Historical pricing was adjusted on spot, quarterly or monthly basis ⎼ Pricing now adjusted on a semi-annual basis  Provides customers with price predictability  Gives customers the ability to plan and

  26. Slide 26: Tronox Specialty Chemicals

    Tronox Specialty Chemicals • Leading manufacturer of Ultrafine TiO2 nanomaterials - Stronghold in Environmental Catalysts - Unique product offering to multiple high-value applications - recognized and established brand name • Largest supplier of merchant Titanium Chemicals - Global reach - Different

  27. Slide 27: Tronox Specialty Chemicals New Segments

    Tronox Specialty Chemicals New Segments Ultrafine & Titanium materials are available or under development for: • Photocatalytic in-situ depollution and self cleaning • Electronics for next-generation capacitors • Energy Storage for safer and higher performance • Water Treatment for removal of organi

  28. Slide 28: New Product Development

    New Product Development Powerful Innovation for Our Customers Efficiency, Durability, Customer Partnerships Throughput, Performance Tint Strength Concept Enhancement Technology Development Next-Generation Plastics Scale-up Grade Plant Trials Launch Manufacture/Deploy Specialty Plastics Grade Instant

  29. Slide 29: CombinaTiO2n Forms The Products and Brand of the Future

    CombinaTiO2n Forms The Products and Brand of the Future New Tronox TiONA line has the best combination of products across all regions and segments • Best general purpose products: 595, CR-826 • Best specialty coatings products: 696, CR-880, 8140 • Best specialty plastics products: 288, 8300, RCL-69,

  30. Slide 30: Delivering the Synergies and Capitalizing on Vertical Integration

    Delivering the Synergies…and Capitalizing on the Strength of our Vertical Integration © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  31. Slide 31: Our Operations Approach

    Our Operations Approach SQLCT Operational Excellence Business Transformation Integrated Business Planning Operational Organizational Risk Effectiveness Management Delivering Safe, Quality, Low-Cost Tons for our Customers and Exceptional Project Effectiveness Asset Reliability Shareholder Returns Ass

  32. Slide 32: Synergy Savings Achieved in Calendar Year

    Synergy Savings Achieved in Calendar Year US $M 220 27 Supply Chain 175 42 SG&A 26 24 Feedstock 120 41 23 24 40 127 Operations 45 11 6 84 20 46 6 13 2019 2020 2021 2022 Presented synergies represent savings achieved in the calendar year 32 © 2019 Tronox Holdings plc. | All rights reserved. | tronox.

  33. Slide 33: Synergies from Operations

    Synergies from Operations USD Millions 127 84 46 13 2019 2020 2021 2022 • Best Practice Projects  Technology exchange  Maintenance materials and procedures • Value In Use  Optimize (processing) cost of feedstock at pigment plants • Yanbu Operations  Improve Yanbu performance - output, cost and q

  34. Slide 34: Synergies from Operations – Yanbu Best Practices

    Synergies from Operations – Yanbu Best Practices • Increase to 4.5 TPLH • Increase OST to >85% • Increase Quality to Tronox Standards • Increase production to 210 KTPA1 Yanbu contributes >50% to Operations Synergy Target To achieve this, developed pool of ideas with savings in excess of $90 million

  35. Slide 35: Synergies from Feedstock

    Synergies from Feedstock USD Millions 24 24 11 6 2019 2020 2021 2022 • Maximize SR kiln output  Use legacy Cristal ilmenites to produce incremental SR • Maximize Slag output  Use legacy Cristal high-grade ilmenites to produce incremental slag • Value In Use  Optimize (processing) cost of feedstoc

  36. Slide 36: Synergies from Feedstock

    Synergies from Feedstock • Freight cost reduction from consolidated, more efficient shipments • Geographic and diverse feedstock supply minimizes production risk in tight supply market • Reduced rates from combined spend Tronox TiO2 Other Feedstock Tronox Mineral Sands 36 © 2019 Tronox Holdings plc.

  37. Slide 37: Synergies from Supply Chain

    Synergies from Supply Chain USD Millions Lowest Low Medium High 27 Opportunity Opportunity Opportunity Opportunity 26 High Wave 4 Wave 3 Wave 2 Wave 1 23 6 Savings / Impact ($) 2019 2020 2021 2022 • Network Optimization  Reducing distribution costs  Optimizing grade portfolio  Leveraging volume d

  38. Slide 38: Synergies from SG&A

    Synergies from SG&A USD Millions 40 41 42 • >50% of synergies already ensured from Day 1 actions 20 • Actions in progress have been taken and are soon Active Projects to be realized • Full opportunity list Day 1 Actions 2019 2020 2021 2022 continues to grow • Organization Efficiency  Tronox Way Act

  39. Slide 39: South African Mineral Recovery Project – Unlocking the Hidden Factory

    South African Mineral Recovery Project – Unlocking the Hidden Factory Contained Zircon Mineral% 100 Mineral Loss Recovery 90 6.2 8.9 80 9.3 0.88 70 4.6 Zircon 5.4 60 1.1 0.61 3.54 0.94 2.29 50 100 6.2 19 1.9 85 40 77 66 65 30 56 20 10 0.0 0 Contained Ilmenite Mineral % 100 Mineral Loss Recovery 90 6

  40. Slide 40: Jazan Slagger

    Jazan Slagger • Jazan slagger comprised of two high-grade chloride feedstock furnaces with 500KTPY combined capacity • Jazan represents one of multiple paths to further optimize vertical integration level of new Tronox • High return potential for limited investment • Tronox obligation capped at $125

  41. Slide 41: Financial Priorities and Outlook

    Financial Priorities and Outlook © 2019 Tronox Holdings plc. | All rights reserved. | tronox.com

  42. Slide 42: 2019 Financial Commitments Provide a Foundation for Robust Adjusted EBITDA

    2019 Financial Commitments Provide a Foundation for Robust Adjusted EBITDA and Free Cash Flow in 2020 All Results on As Reported or To Be Reported Basis Adjusted EBITDA (USD millions) 2018 Q1 Q2 2nd Half 2019 Legacy Tronox 513 80 125-135 270-320 475-535 Cristal Contribution – – 35-50 90-105 125-155

  43. Slide 43: Historic Price, Volume and Inventory Trends

    Historic Price, Volume and Inventory Trends • Legacy Cristal significantly increased prices from Q2 2017 through Q1 2018, resulting in volume and share losses • Tactics changed in Q2 2018 as legacy Cristal rapidly decreased prices to regain share while building inventory Note: Legacy Cristal data ex

  44. Slide 44: Legacy Cristal 2018 to 2019 Adjusted EBITDA Bridge

    Legacy Cristal 2018 to 2019 Adjusted EBITDA Bridge (USD Millions) Cristal 2019 Major Factors Q1 Q2 H2 Total 395 125-135 63 35-50 92-102 190-215 Price: TiO2 average price expected to be ~$300/ton lower in 2019 vs. 2018 primarily the result of significantly 2H Possible $10-15M Working Capital Adjustme

  45. Slide 45: 2020 Adjusted EBITDA of $900M to $1.1B

    2020 Adjusted EBITDA of $900M to $1.1B (USD Millions) 1,100 Major Factors 40-90 2020 Synergies: Significant additional increase in 20-30 Adj EBITDA synergies realized in second year 25-30 20-40 Range 30-40 900 80 CMA: Gingko concentrator in full operation; 750 lower grade section of mine v. PY; near

  46. Slide 46: 2020 Delivers Robust Adj EBITDA and Free Cash Flow

    2020 Delivers Robust Adj EBITDA and Free Cash Flow All Results on As Reported or To Be Reported Basis Revenue Adj EBITDA Free Cash Flow EPS ($ MM’s) ($ MM’s) ($ MM’s) 2H 2019 1,670-1,770 390-465 135-160 0.30-0.55 2019 2,830-2,980 635-740 130-160 (0.17)-0.43 2020 3,650-3,745 900-1,100 325-450 1.40-2.

  47. Slide 47: Significant Earnings and Free Cash Flow Growth by 2023

    Significant Earnings and Free Cash Flow Growth by 2023 All Results on As Reported or To Be Reported Basis Revenue Adj EBITDA Free Cash Flow EPS ($ MM’s) ($ MM’s) ($ MM’s) 2H 2019 1,670-1,770 390-465 135-160 0.30-0.55 2019 2,830-2,980 635-740 130-160 (0.17)-0.43 2020 3,650-3,745 900-1,100 325-450 1.4

  48. Slide 48: Capital Allocation

    • Continue Disciplined Capex Capital  Lower costs and improve efficiencies Allocation  Deliver the synergies  Unlock the hidden factory: Priorities low-cost expansion opportunities vs. brownfield/greenfield • Accelerate Deleveraging - Strong Balance Sheet Across Cycles Net leverage Targeted 2x-3x

  49. Slide 49: Deleveraging & Investing in Core Business Will Be Focus of Capital Allocation

    Deleveraging & Investing in Core Business Will Be Focus of Capital Allocation Vertically Integrated Business Model Generates Significant Free Cash Flow EBITDA Capex Cash Taxes Interest WC/Pensions Total 2019* 635-740 240-270 30-55 190-200 45-55 130-160 2020 900-1,100 320-360 40-60 190-200 25-30 325-

  50. Slide 50: Deleveraging to $2.5B Gross Debt No Later than 2023

    Deleveraging to $2.5B Gross Debt No Later than 2023 Significantly Reduces Leverage Ratios 2018 2019 2020 2023 Gross Leverage 3.5x 4.6x-4.0x 3.3x-2.7x 2.0x-1.7x Net Leverage 2.6x 4.1x-3.6x 2.9x-2.4x 1.0x-.9x Net Leverage 2x-3x Target …with no significant maturities until 2024 ($M) 1,977 615 450 60 60

  51. Slide 51: Tronox has Significant Tax Attributes

    Tronox has Significant Tax Attributes Attribute Est Tax Shield Tax Planning • Value Chain Analysis / Transfer Pricing Initiative US $4.1B Foreign $1.3B – Tronox moves from long to short feedstock position Total NOLs $5.4B – Mines / smelters / synthetic rutile plant now have guaranteed demand for all

  52. Slide 52: Global Manufacturing Platform Creates FX Exposures

    Global Manufacturing Platform Creates FX Exposures Approximate Annual FX Philosophy FX Exposures By Country Adj EBITDA Impact Per Indicated Change in • Hedge known Balance Sheet exposures Functional Currency with forwards and caps/collars 1 ZAR $30M • Hedge significant capital expenditure AUD 0.01 $

  53. Slide 53: Existing Asset Base and Strategy Execution Creates Significant Growth

    Existing Asset Base and Strategy Execution Creates Significant Growth Earnings and Free Cash Flow Growth by 2023 Revenue ($Bs)* Adj EBITDA ($MMs)* Range 2.8-3.0 3.6-3.8 4.0-4.4 5.0-6.0 Range 635-740 900-1,100 1,200-1,400 1,500-1,800 2019 2020 2023 Future 2019 2020 2023 Future Free Cash Flow ($MMs)*

  54. Slide 54: The New Tronox

    The New Tronox Transformative A culturally driven acquisition has high-performance Lowering our costs, Our focus is on created extraordinary organization with delivering the execution opportunities to a compelling synergies create value market-driven strategy Greater stability in Robust cash financi

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