Tronox Holdings plc · NYSE:TROX
Tronox — Credit Suisse Leveraged Finance Conference 2006
25 slides from Tronox's conference presentation, Mar 30, 2006
Slide 1: Credit Suisse Leveraged Finance Conference
TRONOX Credit Suisse Leveraged Finance Conference March 30, 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: 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 Differentiated Products Specialty Products • Formulation based • Customized 20% 20% • Select
Slide 6: 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 7: TiO2 Supply / Demand
TiO2 Supply / Demand Supply / demand is tight TiO2 Supply / Demand Capacity rationalization of 218 MT (M Tonnes) or 11% of sulfate capacity since 5,500 2001 Brown / Greenfield efforts needed 4,500 pre-2009 Metric Tonnes (000's) 3,500 Supply Considerations 2,500 Balance Supply From 2005 to 2010, mini
Slide 8: TiO2 Supply Dynamics
TiO2 Supply Dynamics North American TiO2 Pricing vs. Industry Capacity Utilization 100% 2500 100 95% 90 2000 Capacity Utilization 80 Net Sales Price 70 Index Price 90% Stable Price Region 1500 60 50 85% 1000 40 30 80% 500 20 10 75% 00 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 TiO2
Slide 9: 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 9
Slide 10: 2005 Fourth-Quarter Highlights
2005 Fourth-Quarter Highlights EPS on income from continuing operations $0.30/share (pro forma) Q4 Adjusted EBITDA 13% higher YOY 2005 Adjusted EBITDA 43% higher YOY Record Q4 production Global prices moving higher 10
Slide 11: Tronox Operating Results
Tronox Operating Results $MM 2004 2005 Net Sales $1,302 $1,364 Operating Profit (95) 88 Adj. EBITDA 162 232 Adj. EBITDA Margin 12.4% 17.0% EPS from Cont. Ops. $1.15 (pro forma) 11
Slide 12: Tronox Evolution
Tronox Evolution 1997-2000 2001-2003 2004 - 2005 Integration Building New Growth: Acquisitions Challenges Strategy & Team Bayer Acquisition Safety & Value Strategy: Focus on Environmental Increasing Cash Flow, Kemira Acquisition Profit & Returns Standardize to KMG / Capacity: 200 MT to Tronox Drive
Slide 13: Tronox – Moving Ahead
Tronox – Moving Ahead 2005 2006 2007+ Focused on IPO Process Focus on Growth Creating Value Opportunities For Shareholders Dual Track Process Execute Strategy Organic / Brownfield Growth IPO S-1 Filing Alignment of Employees Potential Acquisitions Completed IPO with Focus on Cash Debt Reduction Road
Slide 14: 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 Approach 14
Slide 15: 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 Botlek, Savannah 110 Netherlands Western Australia 110 Botlek 72 Hamilton, Uerd
Slide 16: 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 17: Raw Material - Ore
Raw Material - Ore Titanium Bearing Ore = 25%-30% of COGS Cooljarloo Mine – Western Australia 17
Slide 18: Process Chemicals & Energy Costs
Process Chemicals & Energy Costs Process Chemical Costs and Programs Successful execution of supply chain and contracting strategies mitigated potential cost increases Tronox cost increases were up 13%, substantially below general market 3 major process chemicals are chlorine, petroleum coke and cau
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 19
Slide 20: 2006 Capital Expenditures
2006 Capital Expenditures $94 MM Discretionary 40% 60% Maintenance & Environmental 20
Slide 21: 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 33 experts in environmental remediation 21
Slide 22: 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 was $56.7 million U.S. Navy settlement of $20.5 million agreed to in Q1, 20
Slide 23: Kerr-McGee Planned Spin-Off
Kerr-McGee Planned Spin-Off Shares outstanding 40.4 MM Public: Class A 43% 17.5 MM shares KMG: Class B 57% 22.9 MM shares Kerr-McGee will complete the Class B spin to KMG existing shareholders on or after the 120-day lock up expires on March 22, 2006, and prior to the end of the Q1, 2006 Following t
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 Grow with Strategic Customers Inte
Slide 25: Credit Suisse Leveraged Finance Conference
TRONOX Credit Suisse Leveraged Finance Conference March 30, 2006
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