JP Morgan 2021 Global High Yield and Leveraged Finance Conference - Virtual - March 2, 2021 - Venator
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JP Morgan 2021 Global High Yield and Leveraged Finance Conference - Virtual March 2, 2021
Safe Harbor Statement and Other Matters
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: the impacts and duration of the global outbreak of the Coronavirus Disease 2019 pandemic on the global economy and
all aspects of our business, including our employees, customers, suppliers, partners, results of operations, financial condition and liquidity, global economic conditions, our ability to
maintain sufficient working capital, our ability to access capital markets on favorable terms, changes to our plans or strategies due to any changes to our Board or management following
any significant change in ownership of our shares, 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 and the closure of our Pori facility, our ability to realize financial and operational benefits from our business improvement
plans and initiatives, changes in raw material and energy prices, or interruptions in raw materials and energy, industry production capacity and operating rates, the supply demand
balance for our products and that of competing products, pricing pressures, technological developments, legal claims by or against us, changes in government regulations, including
increased manufacturing, labeling and waste disposal regulations and the classification of TiO2 as a carcinogen in the EU, the impacts of increasing climate change regulations,
geopolitical events, cyberattacks and public health crises and other risk factors as discussed in our filings with the US Securities and Exchange Commission, including our Annual Report
on Form 10-K for the year ended December 31, 2020.
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.
Venator Snapshot
Leading global chemical company
FY20
Revenue (mm) $1,938
Adj. EBITDA (mm)(1) $136
% margin(1) 7%
Titanium Dioxide Performance Additives
Segment
FY20 FY20
Revenue (mm) $1,431 Revenue (mm) $507
Adj. EBITDA (mm)(1) $127 Adj. EBITDA (mm)(1) $55
% margin(1) 9% % margin(1) 11%
Ag. & Other
Fibres & Ag. & Other Fibres
Water Architectural
Water 2% Personal Care,& films 2%
Personal Care, Food, films 4% coatings
1% Food, 3%
Pharma. & Active 6% Architectural 14%
coatings Pharma. & Active
End Markets(2)
Materials
4% Inks 27% Materials Industial
4% 6% coatings
11%
Plastics
16%
Industial
coatings
Plastics 14%
41% Construction Construction
1% 44%
Representative
Customers
(1) See Appendix for reconciliations and important explanatory notes
3 (2) 2020 Revenues
Titanium Dioxide
Gradual recovery from COVID-19; Longer-term industry fundamentals remain intact
End Markets Quarterly Adjusted EBITDA History(1) 2020
2020 Revenues Source: Management Estimates $ in millions
Ag. &
Water Other
Fibres & films 1% 2% 31% 31% 32% Segment
Personal Care, Food, 6% 29%
Pharma. & Active Materials Architectural
coatings
18 23 Revenues
4%
Inks
4%
27% 23% 20
33 19% $1.4
15 billion
14%14%
12% 13%13% 11%10%
9% 125 124 -
107 - - - 8%
7%
7 78 86
75
6% Segment
10 52 61 55 51 46 Adjusted EBITDA(1)
41 35
Industial 24 30 21 26
$127
coatings
14%
Plastics
41% Construction
1% million
Adj. EBITDA ex. Pori Pori EBITDA Adjustment Adj. EBITDA Margin
TiO2 Capacity Annual Adjusted EBITDA History(1)
2020 Nameplate Capacity; based on management estimates $ in millions
Tronox
13% 30%
INEOS
3% 127 24% 25% COATINGS
22%
Others Venator 17%
7%
47% 100 41 12%
75
63 572 9%
6% 7%
349 4% 376
312
Chemours 243 33 50 (1%) 197
14% 84 84 49 127 INKS
50
(58) 12
Kronos 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Lomon 7%
Billions Adj. EBITDA ex. Pori Adj. EBITDA Margin
Pori EBITDA Adjustment
9%
(1) See Appendix for reconciliations and important explanatory notes
4 (2) Adjusted to include the Oct. 1, 2014 acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. as if consummated at the beginning of the period, based upon their management’s
representation; excludes the related sale of our TR52 product line – used in printing inks – to Henan Billions Chemicals Co., Ltd. in December 2014; and excludes the allocation of general corporate overhead by Rockwood
Market Leader in High-Value Specialty TiO2
Favorable application mix
Venator has more than half of its sales volume in high value and technically demanding TiO2 categories
Venator Focus
Specialties
Price
Differentiated
Functional
Legend: Low Quality
% Total global TiO2
industry demand 18% 41% 32% 9%
% Venator TiO2 sales
0% 42% 47% 11%
volume(1)
1,000 2,000 3,000 4,000 5,000 6,000
Estimated World Demand (kmt)(2)
Indicative EBITDA
1x 2x 3x+
margins
Functional coatings (architectural) Industrial coatings Catalysts
Applications
Functional plastics Performance plastics Food
Paper Differentiated Inks Pharma &
Cosmetics
Fibers &
Films
Solar
Specialty
Inks
(1) 2020 volumes
5 (2) Source: Management estimates
Performance Additives
2020 $8 million improvement despite COVID pandemic
End Markets Quarterly Adjusted EBITDA History(1) 2020
2020 Revenues Ag. & Source: Management Estimates $ in millions
Other
Fibres Water
2% Architectural
& films 4%
coatings
Personal Care, Food, 3% 14% 17% Segment
Pharma. & Active 14%13%
13% 14%
Materials
6% 12%
13%
12%
Revenues
Industial 12% 11%
coatings
11%
$22
9% 10%
10%
8%
11%
12%
10% $0.5
Plastics $18 $22 $21
$24 $23
$22 billion
16%
$16 4% 4%
$13
$15 $15
$12
3% $15 $16 $13 $13
$15
$3 $4 $5
Segment
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
Adjusted EBITDA(1)
Construction
44% $55
million
Competitors Annual Adjusted EBITDA History(1)(2)
$ in millions
Functional Additives
$72
$69 $69
$62
$55
Color Pigments $47
CONSTRUCTION
12% 12% 12%
11%
10%
9%
Timber and Water Treatment
2015 2016 2017 2018 2019 2020
COATINGS
Segment Adj. EBITDA Segment Adj. EBITDA Margin
(1) See Appendix for reconciliations and important explanatory notes
6 (2) Adjusted to include the Oct. 1, 2014 acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. as if consummated at the beginning of the period, based upon their management’s
representation; excludes the related sale of our TR52 product line – used in printing inks – to Henan Billions Chemicals Co., Ltd. in December 2014; and excludes the allocation of general corporate overhead by RockwoodPerformance Additives
Product overview
FY20
LTM EBITDA(1)
% split Product Characteristics & Uses Competition Benefit
Functional Barium and Zinc Additives Fillers that enhance the gloss and Strong EBITDA margins
flow of paints and the mechanical
Additives Complementary and common
properties of plastics
process technology
25% Specialty soft white pigments
Similar customer base to TiO2
Iron Oxides Highly durable red, yellow, black
and tan pigments
Colorants for paint, plastics and
concrete
High cash conversion margins
Ultramarines Unique blue-shade pigments
Color Violet and pink variants Good geographic balance
Pigments Similar customer base to TiO2
42% Specialty Inorganics Weather-resistant, chemically Common process technology
Chemicals stable pigments
Distinct color shades
Driers Controls the drying rate of a paint
or ink
Residential construction (ACQ, Protects wood from decay and
ECOLIFETM and Copper Azole) fungal or insect attack
Limited number of major
Timber and competitors
Industrial construction Prolongs service life of wood
Water Stable demand profile
(Chromated Copper Arsenate)
Treatment
High cash conversion
33% Polyaluminium chloride Clarifies water by promoting the
based flocculants sedimentation of particles
(1) See Appendix for reconciliations and important explanatory notes
7Driving Further Cost Reduction
~$55mm EBITDA improvement delivered by end of 2022(a)
2020 BIP Highlights Timing (a)
$ in millions
~$75
Delivered $57mm savings in 2020 which
included $27mm of COVID savings ~$65
Non-recurring
savings
2020
2020 Business Improvement Program on $57 Business
Improvement
track ~$55
Program
2019
Business
$27 Improvement
Agreement with German employee COVID ~$45 Program
representatives reached in December
2020 in relation to our German
restructuring program
$16
$40-45 million of estimated future cash ~$20 ~$20
restructuring costs
$14
2020 2021 2022
(a) Compared to 2019 baseline
8Free Cash Flow Considerations
Generated $13 million positive free cash flow in 4Q20
$ in millions
Actual
4Q20 2020 Comments
Adjusted EBITDA $25 $136 Total liquidity(a) of $471mm as of December 31, 2020
– $220mm of cash
Capital expenditures(b) (13) (67) – $251mm available under the ABL
Cash interest (4) (39)
No significant debt maturities until 2024(d)
Primary working capital change 45 39
Expected 2021 capital expenditures of $75 – 85mm
Restructuring (3) (10)
Continued focus on working capital management
– Expected 2021 cash use consistent with rising prices
Pension and Other (29) (78)
Cash income taxes (3) (3)
Pori cash expenses, net(c) (5) (8)
Total free cash flow $13 $(30)
See Appendix for reconciliations and important explanatory notes
(a) Defined as cash and availability under the ABL
9 (b)
(c)
Includes capital expenditures related to the transfer of specialty and differentiated products and excludes ~$2 million of capital expenditures at the Pori site in 2020
Includes ~$2 million of capital expenditures at Pori unrelated to the transfer program in 2020
(d) Scheduled maturities of our Term Loan, Snr Unsecured and Snr. Secured bonds in 2024, 2025 and 2025, respectively. Excludes debt to affiliates, ABL refinancing in 2022 and existing short-term borrowings or repayments under the ABLFocused on Maximizing Shareholder Value
Maximize Shareholder Value
Focus on Improve
Customer- Enhance
specialty & free cash Portfolio
tailored competitive
differentiated flow optimization
approach position
products generation
Aligning Growth in higher Driving Reduce cash Potential sale of
production to value products operational uses and color pigments
meet customer supported by efficiencies and improve working business on hold
commitments innovation cost capital
improvements management
10Appendix 11
Pro Forma Adj. EBITDA Reconciliation
$ in millions 2014 2015 2016 2017 2018 2019 1Q20 2Q20 3Q20 4Q20 2020
Net (Loss) / Income $ (162) $ (352) $ (77) $ 144 $ (157) $ (170) $ 8 $ (17) $ (39) $ (57) $ (105)
Net income attributable to noncontrolling interests (2) (7) (10) (10) (6) (5) (1) (2) (3) (1) (7)
Net income of discontinued operations – (10) (8) (8) – – – – – – –
Interest 2 30 44 40 40 41 10 12 15 15 52
Income tax expense / (benefit) (17) (34) (23) 50 (8) 150 (2) 2 3 9 12
Depreciation and Amortization 93 100 114 127 132 110 28 28 29 29 114
EBITDA $ (86) $ (273) $ 40 $ 343 $ 1 $ 126 $ 43 $ 23 $ 5 $ (5) $ 66
Business acquisition and integration expenses 45 44 11 5 20 (1) 1 3 – (3) 1
Separation (gain) expense, net – – – 7 2 (3) – – – (10) (10)
U.S. income tax reform – – – (34) – – – – – – –
Purchase accounting adjustments 13 – – – – – – – – – –
Loss / (gain) on disposition of businesses/assets (1) 1 (22) – 2 1 2 – (6) (1) (5)
Certain legal expenses / settlements 3 3 2 1 – 4 – – – 6 6
Amortization of pension and postretirement actuarial losses 11 9 10 17 15 14 3 4 3 3 13
Net plant incident costs (credits) – 4 1 4 (232) 20 1 2 2 2 7
Restructuring, impairment, and plant closing and transition costs 62 220 35 52 628 33 7 5 13 33 58
Adjusted EBITDA $ 47 $ 8 $ 77 $ 395 $ 436 $ 194 $ 57 $ 37 $ 17 $ 25 $ 136
Corporate and other 29 53 53 64 43 50 11 11 9 15 46
Operating Segment Adjusted EBITDA $ 76 $ 61 $ 130 $ 459 $ 479 $ 244 $ 68 $ 48 $ 26 $ 40 $ 182
(a)
Titanium Dioxide Segment EBITDA 134 (8) 61 387 417 197 46 35 21 25 127
(a)
Performance Additives Segment EBITDA 91 69 69 72 62 47 22 13 5 15 55
Public company standalone costs (29) (53) (53) (64) (43) (50) (11) (11) (9) (15) (46)
Adjusted EBITDA $ 196 $ 8 $ 77 $ 395 $ 436 $ 194 $ 57 $ 37 $ 17 $ 25 $ 136
Pori related EBITDA adjustment (50) (50) (49) (75) (41) – – – – – –
Pro forma Adjusted EBITDA $ 146 $ (42) $ 28 $ 320 $ 395 $ 194 $ 57 $ 37 $ 17 $ 25 $ 136
(a) Adjusted to include Rockwood pro forma
12Reconciliation of U.S. GAAP to Non-GAAP
Measures
See Appendix for reconciliations and important explanatory notes
13Reconciliation of U.S. GAAP to Non-GAAP
Measures
See Appendix for reconciliations and important explanatory notes
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