Pori Strategic Review Update September 12, 2018

Transcription

1 Pori Strategic Review Update September 12, 2018

2 General Disclosure This presentation includes forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. These forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information. When used in this presentation, the words estimates, expects, anticipates, projects, plans, intends, believes, forecasts, or future or conditional verbs, such as will, should, could, or may, and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management s examination of historical operating trends and data, are based upon our current expectations of future events and various assumptions which may not be realized or accurate. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management s expectations, beliefs and projections will be achieved. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this presentation. Such risks, uncertainties and other important factors include, among others: future global economic conditions, our ability to transfer technology and manufacturing capacity from our Pori, Finland manufacturing facility to other sites in our manufacturing network, the costs associated with such transfer, losses due to business interruption from the Pori fire, the possibility that Tronox may not be required to divest the Ashtabula complex in connection with its proposed merger with Cristal, the failure to consummate the proposed Tronox transactions when expected or at all, the possibility that any synergies and cost savings associated with the proposed Tronox transactions may not be fully realized or may take longer to realize than expected, or the ability to integrate successfully the Ashtabula assets if acquired, changes in raw material and energy prices, access to capital markets, industry production capacity and operating rates, the supply demand balance for our products and that of competing products, pricing pressures, technological developments, changes in government regulations, geopolitical events and other risk factors as discussed in our annual report on Form 10-K filed on February 23, This presentation contains financial measures that are not in accordance with generally accepted accounting principles in the U.S. ("GAAP"), including EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and net debt and certain ratios and other metrics derived therefrom. We have provided reconciliations of non-gaap financial measures to the most directly comparable GAAP financial measures in the Appendix to this presentation.

3 Close Pori and Transfer Technology Transfer core specialty and differentiated capacity to other sites Estimated cost of the full reconstruction of Pori is not economically viable for Venator due to unanticipated cost escalation and an extended timeline Venator intends to close the Pori, Finland TiO 2 facility Up to $150mm of projected closure costs, with approximately two-thirds incurred beyond 2020 $130mm (1) of estimated capex, site and project wind-down costs The Pori facility will continue to operate with up to ~25kt capacity (~20% of site), with production reducing during the transition period which is expected to last through 2021 Venator to transfer technology and production from Pori to other sites and simultaneously strengthen the existing manufacturing network ~$150mm of capex, majority spent beyond 2019, to generate an expected IRR of >30% (2) Plan to restore ~45kt of Pori specialty and differentiated operating capacity elsewhere in the network Will increase production capacity for higher value inks, cosmetics, pharmaceutical and food grade applications Estimated annual Adjusted EBITDA contribution of ~$30mm in 2020 (2) and more than $60mm in 2023 (2) 3 (1) Wind-down, capex costs and unabsorbed fixed costs from June 30, 2018 (2) Mid-cycle EBITDA estimate, based on the timing of plant commissioning

4 Closure Costs and Adjusted EBITDA of Pori Pori contribution underscores performance of specialty franchise Pori Costs Adjusted EBITDA $ in millions $ in millions Estimated Costs $134 $157 $157 $18 $23 Pori capex and project wind-down costs ~$130 (1) $94 $20 $118 $33 Capex to strengthen existing network ~$150 Pori estimated closure costs ~$150 $49 $7 $42 $15 $79 $114 $85 $139 $134 Estimated cash costs of implementation ~$430 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Adjusted EBTIDA ex-pori Pori Adjustments Pori generated approximately $50-$100 million (2) of adjusted EBITDA Received $551mm of total insurance proceeds, the full extent of our insurance policy Pori capex and clean up costs, through June 30, 2018, totaled $247mm Expect an adjustment to EBITDA of ~$15 (3) million in 3Q18 relating to Pori unabsorbed fixed costs 4 (1) Includes approximately $30 million of unabsorbed fixed costs (2) Pori generated approximately $100 million of adjusted EBITDA in 2012, and approximately $50 million in 2015 (3) Unabsorbed fixed costs and other network costs

5 Summary Redistribution of Pori capacity provides best economic return Close Pori Reduce total overall capex spend associated with the full reconstruction of Pori Approximately two-thirds of closure costs expected to be incurred beyond 2020 Restore Core Specialty and Differentiated Business Preserves Venator s core specialty and differentiated production capabilities Enhances the free cash flow generation of the platform throughout a cycle Strengthen Network Strengthen production capabilities at select European manufacturing sites Supplement production displaced by transferring specialty technology from Pori 5

6 6 Appendix

7 Quarterly Adjusted EBITDA Reconciliation 1Q17 to 2Q18 $ in millions 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Net Income (Loss) $ (13) $ 34 $ 53 $ 70 $ 80 $ 198 Net income attributable to noncontrolling interests (3) (3) (2) (2) (2) (2) Net income of discontinued operations (8) - - Interest expense Income tax expense (benefit) (4) Depreciation and Amortization EBITDA $ 14 $ 85 $ 108 $ 135 $ 142 $ 286 Acquisition and integration expense Separation gain 7 1 US income tax reform (34) (Gain) loss on disposition of business 2 Amortization of pension and postretirement actuarial losses Net plant incident costs 5 (2) 1 (273) Restructuring, impairment, and plant closing costs Adjusted EBITDA (1) $ 49 $ 94 $ 134 $ 118 $ 157 $ 157 7

8 Explanatory Notes (1) Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income (loss) before interest expense, income tax (benefit) from continuing operations, depreciation and amortization, and net income attributable to non-controlling interests, as well as eliminating the following adjustments: (a) business acquisition and integration expenses; (b) separation (gain) expense, net; (c) U.S. income tax reform; (d) (gain) loss on disposition of businesses/assets (e) net income of discontinued operations net of tax; (f) certain legal settlements and related expenses; (g) amortization of pension and postretirement actuarial losses; (h) net plant incident (credits) costs; and (i) restructuring, impairment, plant closing and transition costs. We believe that net income (loss) is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA. Adjusted net income is computed by eliminating the after-tax amounts related to the following from net income attributable to Venator Materials PLC ordinary shareholders: (a) business acquisition and integration expenses; (b) separation (gain) expense, net; (c) U.S. income tax reform; (d) (gain) loss on disposition of businesses/assets; (e) net income of discontinued operations; (f) certain legal settlements and related expenses; (g) amortization of pension and postretirement actuarial losses; (h) net plant incident (credits) costs; (i) restructuring, impairment, plant closing and transition costs. Basic adjusted net earnings (loss) per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net earnings (loss) per share reflects all potential dilutive common shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. For the periods prior to our IPO, the average number of common shares outstanding used to calculate basic and diluted adjusted net income per share was based on the ordinary shares that were outstanding at the time of our IPO. Adjusted net earnings (loss) and adjusted net earnings (loss) per share amounts are presented solely as supplemental information. 8