Orion S.a. · NYSE:OEC
Orion — Orion Engineered Carbons — Investor Presentation (November 2015)
29 slides from Orion's investor presentation, November 2015
Slide 1: Investor Presentation
Investor Presentation November 2015
Slide 2: Disclaimer
Disclaimer This presentation contains certain forward-looking statements with respect to our financial condition, results of operations and business. Forward- looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve know
Slide 3: Orion – A Leader in the Globally Growing Carbon Black Industry
Orion – A Leader in the Globally Growing Carbon Black Industry Leading global producer of highly customized and diverse Carbon Black products Company Overview Carbon Black Producers by Volume (2014) Leading position in the global Carbon Black market Leading Share of the Global Top 3 Specialty Carbon
Slide 4: Key Investment Highlights
Key Investment Highlights 7 1 Seasoned Industry Leading Industry Positions in Management Team Growing Markets 6 Strong Operating Innovation Leader with 2 Earnings Growth, One of the Broadest Cash Generation and Technology and Dividend Product Offerings Flexible Contracts with Ability to Pass Global,
Slide 5: Specialty Carbon Black Business – Industry Leading Results
Specialty Carbon Black Business – Industry Leading Results Highly specialized, strongly growing, high margin business – The foundation of Orion’s value Q3 2015 Performance Q3 2015 Q3 2014 Y-o-Y Comparison Volume (kmt) 55.6 51.0 9.1% Revenue €95.6m €101.0m -5.4% Gross Profit €36.9m €34.1m 8.2% Gross
Slide 6: Specialty Carbon Black Business – Industry Leading Results
Specialty Carbon Black Business – Industry Leading Results Highly specialized, strongly growing, high margin business – The foundation of Orion’s value Nine Month 2015 Performance 9 Month 2015 9 Month 2014 Y-o-Y Comparison Volume (kmt) 161.4 154.4 4.6% Revenue €290.0m €306.6m -5.4% Gross Profit €115
Slide 7: Rubber Carbon Black Business – Building Strength
Rubber Carbon Black Business – Building Strength An industry leading production network with an attractive value enhancing business weathering the temporary impact of negative feedstock effects Q3 2015 Performance Q3 2015 Q3 2014 Y-o-Y Comparison Volume (kmt) 202.7 195.4 3.7% Revenue €183.1m €228.8m
Slide 8: Rubber Carbon Black Business – Building Strength
Rubber Carbon Black Business – Building Strength An industry leading production network with an attractive value enhancing business weathering the temporary impact of negative feedstock effects Nine Month 2015 Performance 9 Month 2015 9 Month 2014 Y-o-Y Comparison Volume (kmt) 610.2 597.2 2.2% Reven
Slide 9: Orion acquired the majority share in Qingdao Carbon Black joint venture in October 2015
Orion acquired the majority share in Qingdao Carbon Black joint venture in October 2015 Gained platform for specialty products for both Rubber and Specialty to expand competitive presence in China (over 40% of world market) leveraging current Asian business served by Korea and Imports Acquisition Su
Slide 10: Strong and Sustainable Operating Earnings, Growth and Cash Generation that is industry leading
Strong and Sustainable Operating Earnings, Growth and Cash Generation that is industry leading Track Record of Shareholder Friendly Capital Allocation Policies …Dividends paid since IPO... …Dividend yield*…. 5.2% 4.8% 40 4.0% 4.0% 10 10 10 Dec 2014 Apr 2015 Jun 2015 Sep 2015 Dec 2014 Mar 2015 Jun 20
Slide 11: Strong and Sustainable Operating Earnings, Growth and Cash Generation that is industry leading
Strong and Sustainable Operating Earnings, Growth and Cash Generation that is industry leading Reaffirming commitment to allocate excess cash to increase shareholder value as part of a structured capital allocation plan Expect to continue to generate strong free cash flows, which will result in sign
Slide 12: Orion’s Strategy – Technology Based Growth
Orion’s Strategy – Technology Based Growth Clear strategy to grow earnings 2011 – 2014 Potential Beyond 2014 Established as a Standalone Business Garnering further benefits of investments in growth, management competence and innovation Continue Strengthening Our Continue to Increase Rubber Carbon St
Slide 13: Key Investment Highlights
Key Investment Highlights 7 1 Seasoned Industry Leading Industry Positions in Management Team Growing Markets 6 Strong Operating Innovation Leader with 2 Earnings Growth, One of the Broadest Cash Generation and Technology and Dividend Product Offerings Flexible Contracts with Ability to Pass Global,
Slide 14: Leading Industry Positions in Growing Specialty and Rubber Carbon Black Markets
Leading Industry Positions in Growing Specialty and 1 Rubber Carbon Black Markets Orion the world’s leading specialty producer and a strong player in major regional rubber markets throughout the world Specialty Carbon Black Rubber Carbon Black One of the largest global producers of Specialty One of
Slide 15: The Leader in Carbon Black Technology…
2 The Leader in Carbon Black Technology… The broadest array of production and treatment technologies driving one of the largest product offerings in the industry Production Processes Furnace Black Gas Black Lamp Black Thermal Black After Treatment • Most common process • Orion proprietary • Used pri
Slide 16: … and the Leader in Carbon Black Innovation
2 … and the Leader in Carbon Black Innovation Industry-leading integrated R&D / Innovation platform with close customer collaborations • Orion is a preferred R&D partner to many of its customers • Efforts driven by state-of-the-art innovation center in Cologne, Germany (established in 2012, integrat
Slide 17: Global, Well Invested, Flexible Production Network
3 Global, Well Invested, Flexible Production Network Significant recent investments in strategic sites and 2015 acquisition of Qingdao, China plant have increased capacity, efficiency and flexibility of the production platform Ability to supply customers Geographic diversity of our with the full ran
Slide 18: Global, Well Invested, Flexible Production Network
3 Global, Well Invested, Flexible Production Network Our operational efficiency, flexibility and reliability give us a competitive foundation for continuing and sustainable value creation Strengthening Competitiveness of Operations • Optimize feedstock, energy purchasing and pricing methods Procurem
Slide 19: Long-Standing, Deep Relationships with Blue-Chip Customer Base
Long-Standing, Deep Relationships with Blue-Chip 4 Customer Base Supplier to more than 1,000 customers across 90 countries with a core blue-chip customer base • Strong top level relationships with strategic customer base, many for over 30 years • Recognized strength with Global Key Account managemen
Slide 20: Flexible Contracts with Ability to Pass Through Raw Material Cost Increases
Flexible Contracts with Ability to Pass Through Raw 5 Material Cost Increases A significant portion of Orion’s contracts reduce energy cost risk with indexed price adjustment mechanisms that pass costs to customers via formula Pass Through of Raw Material Prices Contract Structures (1) • Since 2011,
Slide 21: Strong Operating Earnings, Growth and Cash Generation Since the Acquisition
Strong Operating Earnings, Growth and Cash 6 Generation Since the Acquisition Demonstrated ability to improve profitability while investing for the future Improved Contribution Margin per Ton… (1) …Reduced Net Working Capital … (1)(2) (€ /mt) (Days) 426 >100 351.7 ~64 426 352 2011 (Successor)(2) YTD
Slide 22: Seasoned Industry Management Team
Seasoned Industry Management Team Strengthened leadership team driving an improved, lean and focused organization Management Team Company Culture Significantly strengthened leadership talent with globally Best-in-class management practices based on continuous experienced executives to complement con
Slide 23: Nine Month 2015 Consolidated Operating Results
Nine Month 2015 Consolidated Operating Results Volume growth, positive trends in Specialty offset by temporary feedstock cost challenges in Rubber Nine Month 2015 Performance 9 Month 2015 9 Month 2014 Y-o-Y Comparison Volume (kmt) 771.7 751.6 2.7% Revenue €851.4m €1,001.6m -15.0% Contribution Margin
Slide 24: 2015 Full Year Outlook
2015 Full Year Outlook • Expect 2015 Full Year Adjusted EBITDA to be between €203 million to €210 million • Key Assumptions: • Volume growth in line with current market expectations • Reasonable stability in oil prices and exchange rates based on current levels • Strong Year-End cash balance • Capit
Slide 25: Conclusion – Orion’s Success Has Only Just Begun
Conclusion – Orion’s Success Has Only Just Begun Cyclic recovery in end markets augur strong demand and commercial stability Constructive Macroeconomic recovery (GDP) occurring across key regions Macroeconomic Backdrop Supportive Carbon Black-specific dynamics due to mobility trends (U.S. tire produ
Slide 26: Orion - A Leader in the Carbon Black Industry
Orion - A Leader in the Carbon Black Industry 7 1 Seasoned Industry Leading Industry Positions in Management Team Growing Markets 6 Strong Operating Innovation Leader with 2 Earnings Growth, One of the Broadest Cash Generation and Technology and Dividend Product Offerings Flexible Contracts with Abi
Slide 27: Historical Non-IFRS Metrics Reconciliation
Historical Non-IFRS Metrics Reconciliation Historical Non-IFRS Metrics Reconciliation (€million unless otherwise stated) Three Months Ended September 30, 2014 2015 Revenue 330 279 Variable costs (1) -224 -175 Contribution Margin 106 104 Sales volume (in kmt) 246 258 Contribution Margin per Metric To
Slide 28: Historical Non-IFRS Metrics Reconciliation
Historical Non-IFRS Metrics Reconciliation Historical Non-IFRS Metrics Reconciliation (€million unless otherwise stated) Nine Months Ended September 30, 2014 2015 Revenue 1,002 851 Variable costs (1) -685 -523 Contribution Margin 316 329 Sales volume (in kmt) 752 772 Contribution Margin per Metric T
Slide 29: Investor Relations Contact Details
Investor Relations Contact Details: Diana Downey +1 832-445-3865 [email protected]
Orion Engineered Carbons — Investor Presentation (November 2015) on 6ix