5N PLUS PRESENTATION & 5N21 Strategy SPECIALTY METALS + CHEMICALS

Transcription

1 5N PLUS PRESENTATION & 5N21 Strategy SPECIALTY METALS + CHEMICALS 1

2 Forward-Looking Statements 2 This presentation may contain forward-looking information within the meaning of applicable securities laws. All information and statements other than statements of historical facts contained in this presentation are forward-looking information. Such statements and information may be identified by words such as about, approximately, may, believes, expects, will, intends, should, plans, predicts, potential, projects, anticipates, estimates, continues or similar words or the negative thereof or other comparable terminology. Forward-looking statements are based on the best estimates available to 5N Plus at this time and involve known and unknown risks, uncertainties and other factors that may cause 5N Plus actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. A description of the risks affecting 5N Plus business and activities appears under the heading Risk and Uncertainties of 5N Plus 2016 MD&A dated February 21, 2017 available on SEDAR at No assurance can be given that any events anticipated by the forward-looking information in this presentation will transpire or occur, or if any of them do so, what benefits that 5N Plus will derive therefrom. In particular, no assurance can be given as to the future financial performance of 5N Plus. The forward-looking information contained in this presentation is made as of the date hereof and 5N Plus undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws. The reader is warned against placing undue reliance on these forward-looking statements.

3 Who are we and what industries we enable Pharmaceutical Industry, Cosmetics, Nutrition Healthcare Imaging, 5G, Touch Screens Alloys, 3D Printing, Power Generation, Glass Industry Paints & Pigments, Anti- Corrosion, Industrial Salts Solar Power, Thermoelectric Cooling, Waste Heat Recovery 5N PLUS IS A LEADING PRODUCER OF SPECIALTY METALS, CHEMICALS & ENGINEERED MATERIALS. THE COMPANY MANUFACTURES CRITICAL PRECURSORS AND KEY ENABLERS USED IN A NUMBER OF INDUSTRIES. Defence, Internet of Things, Satellite Solar Arrays, Radiation Detection & Imagery 3

4 Our global footprint Eisenhüttenstadt, Germany Lübeck, Germany Trumbull, USA Tilly, Belgium South Korea Shangyu, China St-George, USA HEAD OFFICE Montreal, Canada Vientiane, Laos Zhuhai, China Kulim, Malaysia Corporate sites Integrated sites 4

5 Some of our integrated sites St-George Lübeck Montreal Shangyu Tilly Eisenhüttenstadt 5

6 Our Executive Team Experienced exco Team Arjang J. Roshan President and CEO Joined in February 2016 as President and CEO with nearly 25 years of international and executive experience in various industries including Minor & Precious Metals, Chemicals, Material Technology & Automotive - lived & worked in Asia and Europe as a business executive for 10 years Previously Senior Vice President of Umicore s Electro-Optic Materials Business Unit based in Belgium Management degree from The University of Michigan Ross School of Business, Executive MBA degree from the Broad Business School of Michigan State University and a degree in Electrical Engineering from Michigan Technological University Richard Perron CFO Paul Tancell Ex-VP Eco-Friendly Materials Nicholas Audet Ex-VP Electronic Materials Pascal Coursol Vice President, Upstream and R&D Joined in Mar-2014 as CFO with over 20 years of international experience as a finance professional in the manufacturing and technology sector Previously Chief Financial Officer and Strategy Manager for the Americas, at ArcelorMittal, a world leader in steel and mining B.Com in accounting and finance from Concordia University, M.Sc. in Administration, Management and Accounting and an M.B.A. in Strategy from the University of Sherbrooke; Certified Public Accountant (CPA) in the United States (IL & DE) and Chartered Professional Accountant in the Province of Quebec, Canada Joined in February 2017 with over 20 years of experience across several international regions and industries, including automotive, chemical, minor and precious metals. Previously Global General Manager of the Electro-Optic Materials Business Unit of Umicore, a global materials technology and recycling group headquartered in Belgium. Prior to joining Umicore in 2008, held various positions at Ford Motor Company and Johnson Matthey. BSc in Environmental Chemistry and a PhD in Chemistry from the University of Plymouth, United Kingdom. Joined in 2003 as Manager of Research and Development, and was then promoted to Vice President Previously acted as lead engineer for EMS Technologies Inc. a leader in the development and supply of advanced products and systems for space and terrestrial applications BS in mechanical engineering from the Université Laval in Québec City as well a M.Eng. degree from the University of Victoria in British Columbia Joined in 2013 as Vice President, Business Development and R&D Previously acted as Manager Pyrometallurgy-Strategic Technology Solutions for Barrick Gold Corporation. 20 years of experience in senior management positions in the metallurgical industry, including Alcan and Xstrata Bachelor degree in engineering physics, a master in applied science in metallurgy and a PhD in metallurgical thermodynamics from École Polytechnique de Montréal 6

7 a transitional year After a very challenging 2015 and introduction of a new CEO (Feb 2016), Senior Management in close collaboration with Board of Directors began executing a strategic plan (called 5N21) to turn the company around and launch it along a compelling growth trajectory Basis for the 5N21 Strategic Plan Predictability Consistency Risk Management Quality Growth Reduced Earnings Volatility Diversified Earnings 7 E ABLING TECHNOLOGY S PERFORMANCE

8 Mission Statement As a leading global material technology company, our mission, each & everyday, is to earn and retain the privilege to be essential to our customers, preferred by our employees and trusted among our shareholders in a quest to enable innovation & technology deployment based on natural resources for the betterment of the human race. 8 E ABLING TECHNOLOGY S PERFORMANCE

9 Our business model Complex Waste Metal Manageme nt Primary Metal Residues Upstream Activities & Business Drivers Third Party Residues In-Process Metal Residues Metal Prices High Generate Profits in Varying Metal Markets Low Aerospace Security & Defence Alternative Energy Pharma & Nutrition Downstream Markets & Business Drivers Coating & Pigments Electronics & Electro- Optics Industrial Chemicals Upstream: Maximum Benefit During High Metal Prices Utilize Technology to extract critical metals from various streams at attractive terms while providing security & access to essential metals needed for Downstream markets and external sales 9 Profit Pool New area of development for 5N Plus Profit Pool Downstream: Maximum Benefit During Low Metal Prices Manufacturing & Sale of unique product with high degree of valueadded to a diverse set of markets with Minor-Metal as the common denominator

10 5N21 Approach A Optimizing balance of contribution between: Upstream/Downstream B Extracting more value from: Global Assets & Capabilities Core Businesses C Delivering quality growth from: Existing Growth Initiatives Future M&A 10 E ABLING TECHNOLOGY S PERFORMANCE

11 Upstream Activities Today Underrepresented Our Upstream Activities enable reliable & economical access to critical metals that drive a number of essential industries Purchases of Material Containing Metal Research & Development Refining & Recycling Bi, Ag, Te, Au, Sn, Sb, Ga, In, Ge, Se Commercial Grade Metals & Chemicals Upstream s Key Attributes: Our capabilities are unique Strong potential for growth Industry leader for high purity products Ideal environment for 5N Plus when metal prices are HIGH Sale of high purity products made from metals 11

12 Upstream Activities A Unique Growth Opportunity Critical components of our upstream activities Primary Metal Concentrate Complex feed In-process metal by-product Metal management Third party by-product Technological Expertise Agile Global Assets 12 E ABLING TECHNOLOGY S PERFORMANCE

13 Downstream Activities Our Downstream Activities enable a plethora of key technologies required by a diverse set of essential industries across the globe Pharmaceutical Industry, Cosmetics, Nutrition Healthcare Imaging, 5G, Touch Screens Alloys, 3D Printing, Power Generation, Glass Industry High Purity Metals & Chemicals from Supply & Upstream Activities Research & Development Global Support Network & Footprint Paints & Pigments, Anti- Corrosion, Industrial Salts Downstream s Key Attributes: Higher value-added products generating higher premiums Diverse customer base Ideal environment for 5N Plus when metal prices are LOW Solar Power, Thermoelectric Cooling, Waste Heat Recovery Internet of Things, Satellite Solar Arrays, Radiation Detection & Imagery 13

14 Downstream Opportunities Market growth Prospect Current Capital requirements 5N s position Pharma, Health & Nutrition High High Market Leader Electronics & Electro-Optics Average Low Top 3 Industrial Chemicals Average Low Top 3 Coating & Pigments Average Low Top 3 Alternative Energy High Low Market Leader Aerospace, Security & Defence High Low Top 3 Key Takeaways: 5N Plus is a leader in virtually all segments served 5N Plus will harvest current asset base, requiring less Capex in the future Customers of 5N Plus are among industry leaders 14

15 Extracting More Value Optimizing Existing Assets and Operations Selectively Growing the Core Business E ABLING TECHNOLOGY S PERFORMANCE

16 Extracting More Value Optimize Assets & Operations Increase plant and capacity utilization Simplify flows (e.g. Product, Process etc.) Reduce structural inventory Improve investment efficiency Maximize Contributions from the Core Business Grow performing businesses & address marginal businesses Increase share of businesses requiring more value-add Improve alignment between purchase and sales events Leverage our unique global footprint Reduce Volatility Improve EBITDA Improve ROCE Diversification 16

17 Delivering Quality Growth Monetize Existing Growth Initiatives Delivering Quality M&A Opportunities E ABLING TECHNOLOGY S PERFORMANCE

18 Delivering Quality Growth Maximize Existing Growth Initiatives Utilize existing competencies to address underrepresented businesses Leverage technology & market know-how to develop the Upstream business Consider various options & business models to maximize value for the current growth opportunities Reduce Volatility Improve EBITDA Improve ROCE Diversification 18

19 Delivering Quality M&A Opportunities Our Balance Sheet is healthy Execution of 5N21 would further enhance our position and promote M&A activities M&A would provide additional opportunities and/or accelerate 5N21 Management will actively monitor for appropriate opportunities which would provide: Clear Synergy Enhanced Upstream capabilities Increased/enhanced Downstream product value creation Strategic consolidation Enhanced shareholder value 19 E ABLING TECHNOLOGY S PERFORMANCE

20 Plan Milestones Milestone 1 Milestone 2 Milestone Adjusted EBITDA Grows to $21 - $27M* Earnings Volatility reduce by 50%ᵛ ROCE improves to 15%* and Adjusted EBITDA Grows to $40-$60M * Assumption: Metal price as of July 2016 ᵛ Base of Comparison: 2014 Assumption: Metal price as of July 2016 with no more than 30% decline 20 E ABLING TECHNOLOGY S PERFORMANCE

21 Reduction of Earnings Volatility 5N21 Plan is designed to significantly reduce volatility of earnings Simulation of % EBITDA change when metal prices change by ±30% in 5N21 100% 75% 50% 25% 0% -25% -50% -75% -100% Metal price + 30% Metal price - 30% Assumption: Metal price as of July 2016 E ABLING TECHNOLOGY S PERFORMANCE

22 Example of some progress Closure of a jointly owned site in Europe Consolidation of production from a European and North American plant to other plants in the group Restructuring of a European plant Completion of investments in Asia related to Upstream area - Recycling & Refining Investments in further developing pharma and semiconductor business Reduction of Net Debt by more than $16M over the year Reduction of Net Working Capital by more than $35M over the year Closure of 4 administrative offices in Europe and South America More selective approach toward market opportunities resulting in improvements in Gross Margin (-48% in 2015 to +22% in 2016) 22

23 Earnings Conference Call Quarter ended December 31,

24 $/Kg 24

25 Highlights Quarter ended December 31, 2016 Adjusted EBITDA 1 and EBITDA 1, reached $20.1 million and $15.1 million in fiscal year 2016, compared to $4.0 million and ($54.7) million in fiscal year On September 29, 2016, 5N Plus announced the consolidation of its operations at Wellingborough, United Kingdom and DeForest, Wisconsin, U.S.A. with other sites within the Group. The restructuring fees associated with these two initiatives along with the closure of redundant administrative offices, and the renegotiation of prior years unfavorable contracts negatively impacted the EBITDA for fiscal year 2016 by $5.9 million. Adjusted EBITDA and EBITDA for the fourth quarter 2016 reached $4.3 million and $4.8 million compared to $0.7 million and ($26.0) million during the same period in Revenue for fiscal year 2016 reached $231.5 million compared to $311.0 million for fiscal year 2015, impacted significantly by the decrease in the underlying commodity prices over the course of 2015, while gross margin 1 for 2016 improved to 22.4% compared to a negative gross margin in During the year 2016, net debt 1 was further reduced to $19.0 million as at December 31, 2016 down from $34.9 million for the same period in 2015, positively impacted by working capital management and overall improvement in performance. Backlog 1 reached as at December 31, 2016, a level of 136 days of sales outstanding, lower than the previous quarter, resulting from restructuring of certain contracts to balance market share against profitability, as well as client activities associated with retooling and upgrading of their manufacturing footprint. Bookings in Q reached 78 days compared to 77 days in Q and 95 days in Q The Company does not expect any deviation to its most recent guidance for 2017 as per 5N21. On February 20, 2017, 5N Plus announced changes to its executive management structure. Responsibilities assumed by the former functions of Chief Commercial Officer and Chief Operating Officer will be reallocated across the existing business segments (Eco-Friendly and Electronic Materials). Mr. Nicholas Audet, formerly Chief Commercial Officer has been appointed Executive Vice President, Electronic Materials and Mr. Paul Tancell, formerly Global General Manager at Umicore, has joined 5N Plus and has been appointed Executive Vice President, Eco-Friendly Materials. Mr. Bertrand Lessard, Chief Operating Officer if the Company since 2014, will be leaving 5N Plus to pursue other interests See Non-IFRS Measures

26 Revenue Quarter ended December 31, 2016 In millions of USD Attributed to lower metal prices, the Company s total revenues declined in FY16 while the company improved its absolute Premiums. In fact in 2015, arguably one of the most challenging years in its industry and the Company s history, the demand for its products remained strong. This is explained by the fact that our products serve a multitude of diverse industries which can rectify demand volatility FY 2015 V OLUME MIX & METAL PRICE OTHER FY 2016 Important to mention, the revenue line for both segments includes an important metal price component, which is a flow through for the Company, sourcing its commercial grade metals externally and/or via its recycling facilities. For this reason, the revenue line varies to a very large extent with the metal market prices while the premiums charged on the products made from the various metals is not directly related to the metal market price level. 26 In 2016, the Company adopted a new commercial approach aimed at balancing market share with quality of earnings.

27 100.0 OPEX and SG&A Quarter ended December 31, %

28 Net Debt Evolution Quarter ended December 31, 2016 In millions of USD $(242) $(65) Debt Reduction since DEC 2011 Debt Reduction since DEC 2014 D EC 2011 D EC 2012 D EC 2013 D EC 2014 D EC 2015 D EC

29 EBITDA and Adjusted EBITDA Quarter ended December 31, 2016 Adjusted EBITDA 1 In millions of USD Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 FY2014 F Y2015 F Y2016 EBITDA See Non-IFRS Measures Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 FY2014 F Y2015 F Y2016

30 ROCE Quarter ended December 31,

31 Non-IFRS Measures Quarter ended December 31, 2016 Backlog represents the expected orders we have received but have not yet executed and that are expected to translate into sales within the next twelve months expressed in number of days. Bookings represent orders received during the period considered, expressed in days, and is calculated by adding revenues to the increase or decrease in backlog for the period considered divided by annualized year revenues. We use backlog to provide an indication of expected future revenues in days, and bookings to determine our ability to sustain and increase our revenues. EBITDA means net earnings (loss) before interest expenses (revenues), income taxes, depreciation and amortization. We use EBITDA because we believe it is a meaningful measure of the operating performance of our ongoing business without the effects of certain expenses. The definition of this non-ifrs measure used by the Company maydiffer from that used by other companies. Adjusted EBITDA means EBITDA as defined above before impairment of inventories, allowance for doubtful of a receivable from a related party, litigation and restructuring costs, gain on disposal of property, plant and equipment, change in fair value of debenture conversion option, foreign exchange and derivatives loss (gain). We use adjusted EBITDA because we believe it is a meaningful measure of the operating performance of our ongoing business without the effects of inventory write-downs. The definition of this non-ifrs measure used by the Company may differ from that used by other companies. Gross margin is a measure we use to monitor the sales contribution after paying cost of sales excluding depreciation of property, plant and equipment. We also expressed this measure in percentage of revenues by dividing the gross margin value by the total revenue. Net debt or net cash is a measure we use to monitor how much debt we have after taking into account cash and cash equivalents. We use it as an indicator of our overall financial position, and calculate it by taking our total debt, including the current portion and the cross-currency swap related to the convertible debenture, and subtracting cash and cash equivalents. Working capital is a measure of liquid assets that is calculated by taking current assets and subtracting current liabilities. Given that the Company is currently indebted, we use it as an indicator of our financial efficiency and aim to maintain it at the lowest possible level. 31

32 32 BACKUP

33 Consolidated Product Offering Main Products Main Markets Typical Applications Bismuth (Bi) Chemicals Pure metal Low melting point alloys Pharmaceutical & cosmetics Pigments Coatings Glasses & others LMPA Optics & electronics Metallurgy Active ingredient in a number of drugs, including Pepto- Bismol Replacement for lead in coatings, pigments, electronics, optics and glass Cadmium Telluride (CdTe) CdTe compound PV / Solar Optics and Detectors Photo-receptive layer in thin-film solar modules Medical imaging devices Gallium (Ga) Germanium (Ge) Indium (In) Selenium (Se) Tellurium (Te) Pure metal Chemicals PV / Solar LED/Display/Wireless Electronics White LED (GaN) Semiconductor for wireless devices and HF electronics (GaAs) Optoelectronics Specialty alloys Energy storage Biomedical devices CIGS solar cells Pure metal Semi-finished optical components Epi-ready substrates PV / Solar Optics and Detectors Lenses for IR sensors Substrates for very high efficiency solar cells used in satellites Catalysts Optical fibers Pure metal Low melting point alloys Pure metal Chemicals Chemicals InSb substrates PV / Solar LED/Display/Wireless Optics and Detectors Electronics ITO (conducting oxide) IR detectors Low melting-point alloys Solders CIGS solar cells Battery manufacturing Catalysts Ceramics Fuel cells Metallurgy Fertilizers Animal feed Optics Electronics Catalyst for the production of electrolytic manganese IR optical glass Photo-receptive layer in thin-film solar modules Pure metal Metallurgical alloys Optics and Detectors Electronics Metallurgical Thermoelectric devices Infrared detectors Optical storage Annual Worldwide Production (1) 12,000 MT Cadmium only 20,000 MT 300 MT 110 MT 900 MT 4,000 MT MT (3) 33 Comments #1 supplier of bismuth & bismuth chemicals worldwide 60%+ market share #1 supplier to CdTe market LT agreement with First Solar Important supplier of gallium and gallium chemicals, mainly in the LED industry 25%+ market share Significant producer of germanium substrates for satellite applications Important supplier for flat screen industry under indium tin oxide (ITO) business Growing market share for selenium chemicals #1 supplier of tellurium-based products 50%+ market share