achieving our vision
Chemtura Corporation
2015 Investor Day Presentation
The Westin New York Grand Central
February 5, 2015
INNOVATION
|
GROWTH
|
VALUE
NYSE / EURONEXT: CHMT
Forward Looking Statement
Cautionary Statement Regarding Forward-Looking Statement
This document includes forward-looking statements within the meaning of Section 27(a) of the Securities Act of 1933, as amended and Section 21(e) of the Exchange Act of 1934,
as amended. These forward-looking statements are identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,”
“may,” “plan,” “project,” “predict,” “will” and similar expressions and include references to assumptions and relate to our future prospects, developments and business strategies.
Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:
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The cyclical nature of the global chemicals industry;
Increases in the price of raw materials or energy and our ability to recover cost increases through increased selling prices for our products;
Disruptions in the availability of raw materials or energy;
Our ability to implement our growth strategies in rapidly growing markets and faster growing regions;
Our ability to execute timely upon our portfolio management strategies and mid and long range business plans;
The successful separation of the Chemtura AgroSolutions business from the rest of our businesses;
Our ability to execute timely on our restructuring plan and achieve the expected cost reductions;
Declines in general economic conditions;
The ability to comply with product registration requirements of regulatory authorities, including the U.S. Food and Drug Administration (the “FDA”) and European Union
REACh legislation;
The effect of adverse weather conditions;
Current and future litigation, governmental investigations, prosecutions and administrative claims;
Environmental, health and safety regulation matters;
Federal regulations aimed at increasing security at certain chemical production plants;
Significant international operations and interests;
Our ability to maintain adequate internal controls over financial reporting;
Exchange rate and other currency risks;
Our dependence upon a trained, dedicated sales force;
Operating risks at our production facilities;
Our ability to protect our patents or other intellectual property rights;
Whether our patents may provide full protection against competing manufacturers;
Our ability to remain technologically innovative and to offer improved products and services in a cost-effective manner;
Our ability to reduce the risks of cyber incidents and protect our information technology;
Our unfunded and underfunded defined benefit pension plans and post-retirement welfare benefit plans;
Risks associated with strategic acquisitions and divestitures;
Risks associated with possible climate change legislation, regulation and international accords;
The ability to support the carrying value of the goodwill and long-lived assets related to our businesses;
Whether we repurchase any additional shares of our common stock that our Board of Directors has authorized us to purchase and the terms on which any such repurchases
are made; and
Other risks and uncertainties described in our filings with the Securities and Exchange Commission, including Item 1A, Risk Factors, in our Annual Report on Form 10-K.
These statements are based on our estimates and assumptions and on currently available information. Our forward-looking statements include information concerning possible or
assumed future results of operations, and our actual results may differ significantly from the results discussed. Forward-looking information is intended to reflect opinions as of the
date of this document. We undertake no duty to update any forward-looking statements to conform the statements to actual results or changes in our operations.
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CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Managed Basis Financial Measures
See Appendix for Reconciliation to GAAP
The information presented in this presentation includes financial measures that are not calculated or presented in accordance with Generally Accepted
Accounting Principles in the United States (“GAAP”). Our managed basis financial measures consist of adjusted results of operations that exclude certain
expenses, gains and losses that may not be indicative of our core operations. Excluded items include costs associated with facility closures, severance and
related costs; gains and losses on sale of businesses and assets; increased depreciation due to the change in useful life of assets; unusual and non-recurring
settlements; accelerated recognition of asset retirement obligations; impairment charges; changes in our pension plans as a result of dispositions, merger or
significant plan amendments; the release of cumulative translation adjustments upon the complete or substantial liquidation of any majority-owned entity and the
recognition of the fair value net of accretion of any significant below market contractual obligation. They also include the computation of Adjusted EBITDA. In
addition to the managed basis financial measures discussed below, we have applied a managed basis effective income tax rate to our managed basis income
before taxes. Our managed basis tax rate of 31% in 2014 and 2013 represents refined estimated tax rates for our core operations to simplify comparison of
underlying operating performance. Our projected managed basis tax rate for 2014 is lower than 31%. However, as we will revise our tax rate for 2015 to reflect
the sale of our Chemtura AgroSolutions business, we deferred revising the rate to avoid two potential changes in one year and to assist investors with the
comparability of our reported managed basis results. Reconciliations of these managed basis financial measures to their most directly comparable GAAP
financial measures are provided in the attached financial tables. We believe that such managed basis financial measures provide useful information to investors
and may assist them in evaluating our underlying performance and identifying operating trends. In addition, management uses these managed basis financial
measures internally to allocate resources and evaluate the performance of our operations. While we believe that such measures are useful in evaluating our
performance, investors should not consider them to be a substitute for financial measures prepared in accordance with GAAP. In addition, these managed
basis financial measures may differ from similarly titled managed basis financial measures used by other companies and may not provide a comparable view of
our performance relative to other companies in similar industries.
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CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Adjusted Financial Measures
See Appendix for Reconciliation
The presentation also includes adjusted financial measures to portray how the Company may have performed in the applicable periods had the transactions
discussed in this document occurred prior to the commencement of those periods. The computation of these adjusted financial measures is also provided in the
Appendix. Such adjusted financial measures are provided as illustrative examples of the impact of the transactions and are not a projection of actual future
performance or the Company’s reported financial statements following the consummation of such transactions.
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CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Speaker Presentation Schedule
TIMES
PRESENTATIONS
SPEAKERS
1:00 PM
Welcome
Matthew Sokol
1:05 PM
Strategy and Outlook
Craig Rogerson
1:20 PM
Industrial Performance Products
Simon Medley
2:00 PM
BREAK
2:15 PM
Industrial Engineered Products (Intro)
Simon Medley
2:20 PM
IEP: Organometallics
Alan Swiech
2:40 PM
IEP: GLS
Simon Medley
3:30 PM
BREAK
3:40 PM
Operational Update
Chet Cross
3:55 PM
Financial Performance and Outlook
Stephen Forsyth
4:15 PM
Summary and Q&A
Craig Rogerson
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CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Presenters’ Biographies
CRAIG A. ROGERSON
Mr. Rogerson is President, Chief Executive Officer and Chairman of the board of Chemtura Corporation. Mr. Rogerson came to Chemtura in December 2008
after serving as President, CEO and Director of Hercules Inc. until its acquisition by Ashland Inc. in November 2008. Mr. Rogerson joined Hercules in 1979 in the
firm’s Water Management Chemicals Division. In April 1997, he left Hercules to join Wacker Silicones Corporation, where he served as President and CEO. In
May 2000, he rejoined Hercules as Vice President, business operations of their BetzDearborn Division. He was eventually named Vice President and General
Manager of that division in August 2000. Prior to being named CEO of Hercules in December 2003, Mr. Rogerson held a variety of senior management positions
with the company, including President of the FiberVisions and Pinova Divisions, Vice President of Global Procurement and COO. Mr. Rogerson serves on the
Boards of Directors of PPL, the Society of Chemical Industry, and the American Chemistry Council.
STEPHEN FORSYTH
Mr. Forsyth is Executive Vice President and Chief Financial Officer. Before joining Chemtura in 2007, Mr. Forsyth served for 26 years with Hexcel Corporation in
a variety of executive capacities, the last 11 years as Executive Vice President and Chief Financial Officer. Prior to becoming Hexcel’s CFO, he had held
positions of increasing responsibility including serving as the General Manger of their specialty chemicals and specialty resins businesses, Vice President of
International Operations and leading a number of their major M&A initiatives.
CHET CROSS
Mr. Cross is Executive Vice President of Supply Chain Operations. He is responsible for Chemtura’s supply chain, procurement, manufacturing, EHS&S and
engineering functions. Mr. Cross joined Chemtura in January 2010 from Ashland Corporation, where he was Vice President of operations for Ashland Hercules
Water Technologies, primarily responsible for strategic oversight of the global manufacturing footprint and for the global operations and planning organizations.
Previously, he held positions of increasing responsibility over two decades with Hercules Incorporated, most recently as General Manager for Hercules’s $700
million Americas pulp and paper business and as President of Hercules Canada.
SIMON MEDLEY
Mr. Medley is Executive Vice President of Industrial Performance Products and Great Lakes Solutions. Mr. Medley joined Chemtura in 2012 after 18 years with
BASF, where he built a track record of international success in diverse industries leading sustainable, profitable growth. His positions included Senior Vice
President of BASF’s Fine Chemicals and Care Chemicals North American business units, as well as Senior Vice President and Managing Director of BASF
Personal Care & Nutrition GmbH.
ALAN SWIECH
Mr. Swiech is Executive Vice President of Support Services for Chemtura Corporation, with responsibility for Human Resources, Corporate Communications,
Strategic Project Management, Information Technology and also serves as General Manager of Chemtura’s Organometallics Specialties business. Mr. Swiech
joined Chemtura in April 2006 as Vice President of Human Resources for Supply Chain Operations. Previously he was Vice President of Administration for
Akebono Corporation (North America), responsible for the HR, information systems, legal, public relations, environmental health and safety, purchasing and
customer service functions in North America. He also served as President of AMAK Brake, LLC a joint venture between Akebono and Itochu International. Before
that he served as HR Vice President for Cambridge Industries Inc., a privately held supplier to the automotive industry. His experience also includes positions of
increasing responsibility with United Technologies Corporation, including senior leadership positions in industrial and employee relations.
MATTHEW SOKOL
Mr. Sokol is Director of Investor Relations and Corporate Development for Chemtura. He joined Chemtura in 2005 and has served in a number of legal, corporate
and business roles. Most recently, he was General Manager of Chemtura’s flame retardant business. Prior to joining Chemtura, Mr. Sokol was a Senior
Associate with the law firm of Tyler Cooper & Alcorn in New Haven, Connecticut.
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CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Craig A. Rogerson
Chairman, President and Chief Executive Officer
Strategy and Outlook
7
Overview
Portfolio Transformation
Strategic Priorities Going Forward
Focused Shareholder Value Creation
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CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Portfolio Actions Taken to Maximize Value to Shareholders
CORE
IPP
Petroleum Additives
Urethanes
Antioxidants
CORE
IEP
Sold to SK Capital for
$200 million in April 2013
Minimal tax leakage due to
sizeable NOL’s
Deployed majority of
divestiture proceeds to
position the company for
the next stage of value
creation
Great Lakes Solutions
Organometallics
Consumer Products
Sold to KIK Products for
$300 million in December 2013
Chemtura AgroSolutions
Sold to Platform Specialty
Products for $1.0 billion in
November 2014
~ $800 million returned to
shareholders including a
successful $300 million
Dutch tender
~ $500 million used to delever, reduce pension
obligations and
strengthen the balance
sheet
PORTFOLIO ACTIONS DELIVERED $1.5 BILLION IN GROSS PROCEEDS
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
New Chemtura
Portfolio of four industrial businesses organized in two reporting segments
Industrial Performance Products
IPP
Industrial Engineered Products
IEP
Petroleum Additives
Urethanes
Great Lakes Solutions
Organometallics
Revenue $687m
Revenue $300m
Revenue $641m
Revenue $159m
Segment Adjusted EBITDA $141m
Segment Adjusted EBITDA $63m
Positioned to Grow
Positioned to Recover
FOCUSED ON DELIVERING REVENUE GROWTH AND MARGIN EXPANSION IN BOTH SEGMENTS
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Strategic Priorities
Execute on Portfolio Growth Levers
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Increasing customer demand for Petroleum Additives
Rapid market adoption of synthetic lubricant base-stocks
and finished fluids
Switch to Emerald InnovationTM flame retardants
Exploit growing demand for bromine based chemistries in
fine chemicals and Mercury Control
Duracast® and Thermo Plastic Urethanes (TPU)
Electronic applications for High Purity MOCVD
Manage What We Can Control
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Grow Our Businesses
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Leverage secular growth opportunities for our
chemistries
Innovation through customer collaboration
Commercial Excellence initiatives
Harvest recent new capacity investments
Invest in capacity and innovation
Positioned for cyclical recovery in international
markets
Manufacturing and SG&A cost-out programs
Driving productivity improvements through a simpler
organization and focus on continuous improvement
Enhanced customer focus
Maintain strength and flexibility of balance sheet
Best-in-class Safety and Environmental stewardship
Deliver Shareholder Value
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Sustainable and consistent results
Adjusted EBITDA margins approaching 20%
Consistent free cash flow generation
Long term leverage of 2X Adjusted EBITDA
Continue to return value to shareholders
Disciplined M&A
FOCUSED TO EXPOLIT SECULAR GROWTH TRENDS WHILE IMPROVING ABILITY TO EXECUTE AND DELIVER
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
IPP: Key Revenue and Margin Growth Drivers
Positioned to deliver repeatable organic growth
Leveraging increasing customer demand with broad based portfolio of Lubricant Additives
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Inhibitors (antioxidants)
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Detergents and Friction modifiers
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Corrosion inhibitors and Anti-wear additives
Benefiting from growth in usage of Synthetic Lubricants
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HVPAO base-stocks
Gear oils for wind turbines & industrial gearboxes
Refrigerant compatible lubricants
Developing Urethane products to meet customer performance needs
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ULTRALAST™ TPU demonstrated resilience and strong price: performance ratio
Duracast® unparalleled performance benefits
Secular growth from increasing Regulation
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Increasing CAFE standards
Reducing emission targets
Hydrochlorofluorocarbon (HCFC) phase-out in Refrigerants
Driving Commercial and Operational Excellence
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Focus on customer intimacy, executions and value creation
Manufacturing and SG&A cost-out programs
Innovation and continuous improvement
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
IEP: Key Revenue and Margin Growth Drivers
Positioned to return to 2012 performance levels and grow beyond
Continuing to introduce next generation Emerald InnovationTM products
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Emerald InnovationTM 3000 benefits from full market conversion in EPS/XPS foams
Next generation products for connectors market
Innovative flame retardants for enclosure applications
Diversifying applications for Bromine and Bromine Derivatives
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Fine chemical brominated intermediates
Geographic expansion of markets for clear brine fluids used in deep well offshore oil and gas production
Mercury Control
Diversifying Organometallics applications
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High purity MOCVD agents used in the production of high brightness LEDs and Photovoltaics
MAO single site catalysts
Octyl tin products
Driving Commercial and Operational Excellence
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Focus on customer intimacy, executions and value creation
Manufacturing cost and productivity improvements in Bromine and Organometallics
Accelerated margin improvement when bromine market conditions recover
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Geographic Diversity to Support Growth Initiatives
Post-transformation global footprint (pro-forma revenues excluding the divested businesses and the Platform Supply
Agreements)
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55% of 2014 Net Sales outside North America
Manufacturing Plants
by Region
Operate 21 manufacturing sites in 11 countries
North America
El Dorado, AR
Mapleton, IL
Adrian, MI*
East Hanover, NJ
Fords, NJ
Perth Amboy, NJ
Gastonia, NC
Elmira, Canada
West Hill, Canada
29%
Europe/Africa
2014
Net Sales
45%
23%
North America
2014
Net Sales
Asia/Pacific
2014
Net Sales
3%
Latin America
2014
Net Sales
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EMEA
Latina, Italy
Bergkamen, Germany
Accrington, UK
Trafford Park, UK
Ankerweg, The Netherlands
Asia/Pacific
Nantong, China
Nanjing, China*
Kaohsiung, Taiwan
Hyeongok, South Korea
Latin America
Rio Claro, Brazil
Altamira, Mexico
Reynosa, Mexico
* Plants to be closed
STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Maintaining a Strong Balance Sheet
Outstanding Debt
$1,000
Interest Expense
$450M 5.75%
Senior Notes
$500
$80
$800
Maturity Profile
$400
$60
$250M ABL
(Undrawn)
$300
$600
$40
$200
$400
$20
$200
$0
$100
$0
$0
2012
2013
2014(1) 2015E
$82M Senior
Secured Term
Loan
2012
2013
2014(1) 2015E
2016
2018
MAINTAINING FINANCIAL FLEXIBILITY
(1)
2014 data is preliminary and unaudited
15
STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2021
Long Range Projections(1)
REVENUE GROWTH
Preliminary
2014
2015
2016
ADJUSTED EBITDA GROWTH
2017
2018
Preliminary
2014
2015
2016
2017
2018
ADJUSTED EBITDA MARGIN GROWTH
Preliminary
2014
2015
2016
2017
2018
EXECUTION OF STRATEGIC PRIORITIES TO DRIVE SIGNIFICANT ADJUSTED EBITDA AND MARGIN GROWTH
(1)
2014 data is preliminary and unaudited. It has been adjusted to exclude Chemtura AgroSolutions and expenses incurred in the process to sell the business
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2014 – 2015 Adjusted EBITDA Bridge
Cost improvement actions underpin 2015 performance
2014
Preliminary
Selling Price
Vol/Mix
RM/Energy
Mfg Cost Out
SG&A
Reductions
FX / Other
NOTE: 2014 data is preliminary and unaudited. It has been adjusted to exclude Chemtura AgroSolutions and expenses incurred in the process to sell the business
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2015
Managing What We Control
Manufacturing cost-out and productivity goals to deliver more with less
Cost-Out Principles
$62 MILLION
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$ 50 MILLION
2015
Manufacturing
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2016
SG&A
Reduced organizational layers
Increased spans of control
Standardized role definitions
Role consolidation & elimination
Increased focus on what matters
Step-change in other categories such as:
− Procurement
− Yield improvement
− Plant Consolidation
Commenced initiatives in Fourth Quarter 2014 to deliver $50 million in sustainable cost reductions in 2015 ($62 million
in 2016 reflecting full run rate)
– Builds upon success of lean operating initiatives implemented in two locations in 2014
– Primarily driven by headcount rationalization
– Complemented by yield improvement and plant consolidation
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Impact should be evident by Second Quarter 2015
In addition, commenced the elimination of stranded costs related to Chemtura AgroSolutions in Fourth Quarter, 2014
– actions will be completed by the end of the First Quarter 2015
ENTERPRISE‐WIDE COST‐OUT INITIATIVES UNDERWAY TO UNDERPIN 2015 EARNINGS GROWTH
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Rewarding Our Shareholders
Deployed majority of net divestiture proceeds to position company for next stage of value creation
3-Year Stock Performance vs. Russell 3000 & Chemicals Indices
Billion
$0.9 Billion in cumulative targeted share repurchases
$885
0.9
180%
160%
0.8
$719
140%
0.7
0.6
100%
0.5
^CEX
↑68%
80%
0.4
60%
0.3
40%
0.2
0.1
CHMT
↑118%
120%
^RUA
↑65%
20%
$22
$41
2011
2012
$95
0%
12/31/11
06/30/12
12/31/12
06/30/13
12/31/13
06/30/14
12/31/14
0
Open Market
2013
2014
2015
CHMT
RUSSELL 3000
^CEX - Chemicals Index
Remaining Authorization
REPURCHASED ~34% OF OUTSTANDING SHARES THROUGH 1/31/15 AT AN AVERAGE COST OF $22.50 PER SHARE
TARGETING 65 MILLION OF SHARES OUTSTANDING BY YEAR END 2015
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Continuing the Transformation
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Proven track record of portfolio management
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Simplified and streamlined portfolio makes us an
attractive and sensible partner
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Full flexibility on debt structure to promote a growth
agenda
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Leadership and organizational teams experienced in
M&A allows us to move quickly and decisively
POSITIONED TO DELIVER NEXT STAGE OF VALUE CREATION
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STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Simon Medley
Executive Vice President
Industrial Performance Products
Petroleum
Additives
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Urethanes
Industrial Performance Products: Industries and Key Growth Drivers
Chemtura is a recognized leader in Industrial Performance Products
Portfolio
Market
Mega-Trend
Performance
Industrialization
Sophistication
High quality
OEM approved
Durability
Low maintenance
Synthetic
Base-stocks
Industry
Automotive
Aviation
Marine
Refrigeration
Lubricant
Additives
Synthetic Lubricants
5.5% CAGR
Globalization
Demographics
Global economy
Extreme conditions
Market standard
Compatibility
Synthetic
Finished Fluids
Steel
Military
Specialty Industrial
Sustainability
Urethanes
Powergen
Hot Cast Elastomers
IPI*+2% CAGR
Regulations
Legislation
Emissions
Energy efficiency
Fuel efficiency
Oil & Gas
Mining
Recreational
Electronics
*IPI – Industrial Production Index
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INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industrial Performance Products Overview: Strategy
Common approach to innovation management
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Innovation infrastructure
Marketing-led innovation process
Innovation
through
Collaboration
Collaborative approach
Business specific strategies & execution
models
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The IPP “House of Growth”
Industrial Performance Products
Industry and application view
Product, technology and asset view
Common foundations
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Market-focused & Value-based strategy
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Processes & people with a culture of rigorous
and disciplined execution
Organization designed for successful
implementation
23
Petroleum Additives
Strategy
Structure
Urethanes
Execution
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industrial Performance Products Overview: Value Chain and Portfolio
Petroleum Additives
Urethanes
Market-Driven Valued Innovator
Applications-Focused Solutions Provider
Raws
Base-stocks
Raws
Additives
System Houses
Packages
Finished Fluid Manufacturers
Formulators and Processors
End-User Applications
End-User Applications
Simplified Industry Value Chains
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Intermediates for antioxidant inhibitors
Synthetic Group IV & V Base-stocks
Antioxidant inhibitors
Detergents
Friction modifiers
Corrosion inhibitors
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Polyester Polyol intermediate for polyurethanes
Customized curatives
Customized cast elastomers
Customized thermoplastic urethanes
Polyurethane dispersions
Urethane coatings
Anti-wear additives
Extreme pressure additives
Industrial high performance grease
Synthetic finished fluids
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INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industrial Performance Products Overview: Applications
Petroleum Additives
Urethanes
Market-Driven Valued Innovator
Applications-Focused Solutions Provider
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Drive line fluids across the
transportation segment
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Off-shore pipe protection bend
stiffeners / restrictors
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High performance engine oils
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Oil transportation line pigging
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Turbine fluids
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Drilling equipment components
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Control valve hydraulic fluids
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Mining sieves, screens, scraper
blades & liners
Gear oil for wind turbines &
industrial gearboxes
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Structured wheels / airless tires
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Refrigerant compatible
lubricants
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High performance seals, valves,
pistons, hoses & belts
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Specialty grease in
transportation & heavy industry
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Industrial rollers in printing, paper
& steel industries
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High performance military
applications
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Electronics: CMP pads for semiconductors manufacture
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High performance military
applications
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INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industrial Performance Products Overview: Customers
Petroleum Additives
Market-Driven Valued Innovator
Raws
Base-stocks
Urethanes
Applications-Focused Solutions Provider
Raws
Additives
System Houses
Packages
Finished Fluid Manufacturers
Formulators & Processors
End-User Applications
End-User Applications
Simplified Industry Value Chains
26
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Innovation through Collaboration: Establishing the Network
Open Innovation
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Chemtura ideation portal
‘Think Tanks’
Knowledge network
Suppliers
Customers
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Universities
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UMass CUMIRP University of Connecticut
27
Collaboration projects
Joint Development Agreements
Technology forum
Marketing Voice of the Customer
External Research Institutes
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Warner Babcock Institute Southwest Research Institute
Gersen Lehman Group
National Renewable Energy Laboratory
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Innovation through Collaboration: Focusing the Efforts using Innovation Vectors as ‘Aiming Points’
Petroleum Additives
Urethanes
Market‐Driven Valued Innovator
Applications‐Focused Solutions Provider
Longer life finished fluids
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Reduced maintenance costs
Extended drain life
Durability
Energy efficiency
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Fuel economy
Regulatory requirements
Environmental impact
Advances in OEM technology
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Cost effective solutions for new
specifications
Reduced emissions
Longer component life
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Abrasion
Extreme conditions
Durability
Dynamic performance
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Increased speeds
Increased loads
Heat dissipation
Broader performance range
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Harder and softer grades as
rubber replacement solutions
Superior processing

Regulatory requirements

Improved productivity

After treatment devices


Process flexibility
Regulatory requirements
28
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Innovation through Collaboration: New Friction Modifier Update
Providing Fuel Economy Retention through a new Durable Friction Modifier Additive
›
Research into new friction modifiers has led to improved fuel
economy retention as proven in engine testing
›
Durability and additional anti-wear formulation credit
›
Collaborating with a major oil company and auto-OEM
Sequence VEI Engine Test Stand
− Pilot scale development follows engine tests
− Target launch 2017
Fuel Economy Increase (FEI)
Fuel Economy of 0W-20 Motor Oil with 0.5% CHMT FM
6
5
4
3
2
1
0
0W-20
FEI-SUM
29
0W-20 + CHMT FM
FEI-1
Photo Courtesy of Southwest Research Institute
FEI-2
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Innovation through Collaboration: New Synthetic Gear Oil
Providing long life performance in extreme conditions through a new synthetic gear fluid
›
Very high performance Industrial Gear Fluids to achieve maximum efficiency in use
− Extreme performance for the ‘next-generation’ high power-density gear boxes
− Extended drain intervals for low maintenance
− High-efficiency for energy cost saving
›
Anderol® 5000 Plus fluids are formulated using Chemtura synthetic base-stock technology to meet the most
stringent and demanding industry specifications
− Developed in partnership and fully approved by top global gear box manufacturers
− Launch in 2015
30
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Innovation through Collaboration: Manufacturing Process Innovations in Petroleum Additives
Providing continued competitiveness in our flagship product lines of Inhibitors and HVPAO
›
Anti-oxidants are the key additives involved in enabling durable, longer life fluids
−
›
›
›
Engine oil durability is mandated in new engine oil specifications to support OEM targets
Research into the manufacturing process for antioxidant inhibitors has been successful
−
Processing steps eliminated, reduced investment cost & raw material efficiencies gained
−
Currently in scale up with new technology asset expansion targeted for 2017
−
Chemtura strengthens its industry leadership position
−
Collaboration with a major customer in base-loading future assets
HVPAO synthetic base-stock is the technology of choice for extreme condition gear oils
−
Chemtura expanded its HVPAO asset platform with Ankerweg, NL in 2014
−
Chemtura is the leading producer in the merchant market
Research into further improving the manufacturing process has been successful
−
Conversion performance, improved catalyst productivity and raw material efficiencies gained
−
Chemtura’s knowledge network in action
−
Phased launch already underway
31
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Innovation through Collaboration: Thermo Plastic Polyurethanes Technology Platform in Urethanes
A new technology platform providing extended component life
›
Initial proof of concept enabled business development with Callaway golf balls
− ULTRALAST™ TPU demonstrated its resilience, scuff resistance and excellent processability
›
Chemtura has superior technology
− Thermoset properties and better processing than other specialty TPUs
− ULTRALAST™ is the only TPU to provide high temperature oil, water and chemical resistance
− Enabling a strong price: performance ratio
›
New target applications identified through market collaborations
− High performance seals and gaskets
$200
− Mining screens
$150
Addressable Market
− Pumps and valves
− Tubes and hoses
− Belting
›
Launched successfully in 2014
− Expanding into more applications in 2015
$100
$50
$0
Seals &
Gaskets
Pumps &
Valves
Mining
Screens
Tubes &
Hoses
Source: Internal Estimates
32
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Belt Drives
New Capacity Update
New HVPAO Facility in Ankerweg, NL
−
Providing our customers with business continuity planning
−
Europe has the highest demand and fastest projected growth
−
Approvals gained rapidly
−
Despite initial start-up difficulties, strong growth in 1H14
Market shortfall in raw material has curtailed initial trajectory
−
Raw material availability impacts the entire market
−
Chemtura has been exploring all options to improve availability
−
Chemtura is working closely with customers to navigate through this period
New Multi-Technology Facility in Nantong, PRC
−
Calcium Sulfonate Grease running to plan with new applications
−
Anderol® Synthetic Fluids began commercial sales mid-2014
−
Urethanes construction progressing to plan
−
Urethanes commercial sales planned end of 2015
33
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Commercial Excellence
›
Significant progress has been made in upgrading commercial standards
− Significant gross profit improvements have been realized
− The capability of the Chemtura team has been improved
›
›
The full year impact of these improvements will bring an additional $14M in 2015
An Implementation Manager role has been created to continue to drive execution
Sales Force
Effectiveness
›
›
›
›
Channel management with differentiated segmentation
Strategic growth accounts opportunity management process
‘Hunting’ process with identification to penetration
Rigorous implementation discipline
Operational
Marketing
›
›
›
›
Fully loaded account profitability
New pricing model with database and tools
Enhanced demand process to support hunting activities
Margin management process established
34
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Commercial Excellence
›
Demonstrated improvement in commercial performance diluted by raw material disruption
›
The PAO supply disruption cost Chemtura ~$7M in 2014 in lost contribution and extra costs
Includes freight and
manufacturing inefficiencies
Lost contribution
Gross Profit
$M
~ 6% improvement
2013 A
35
(1)
2014 preliminary and unaudited
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Business improvement
Supply chain
inefficiencies - PAO
Unabsorbed
manufacturing
2014 A
Preliminary
Expansion
Expansion through ‘bolt-on’ acquisitions have been explored against our strategic criteria
Petroleum Additives – Market Driven Valued Innovator expansion
− Strengthening the core of our lubricant additives portfolio
− Further strengthening or accelerating our innovation pipeline
− Enabling penetration of one step adjacencies:
− New geographies using the existing product portfolio
− New markets using the existing technology base
− We have an active target list, but continue to search for the right project
Urethanes – Applications Focused Solutions Provider expansion
− Strengthening our core cast elastomer business to accelerate growth
− Further strengthening the innovation pipeline with additional technology platforms
− Further strengthening our application know-how for target industries
36
INDUSTRIAL PERFORMANCE PRODUCTS SEGMENT: PETROLEUM ADDITIVES & URETHANES
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industrial Performance Products Strategic Plan
Growth at sustainable profitability levels
›
›
›
Cost improvement actions are expected to provide a significant contribution to our 2015 plan
2015 pricing includes substantial carry-over from 2014
Volume growth in PAO, the inhibitors value chain, finished fluids and cast elastomers
2014A
2014
Preliminary
Price
Vol / Mix
Cost COGS
Cost SG&A
FX / Other 2015 B
Price
Vol / Mix
Cost COGS
Cost SG&A
NOTE: 2014 preliminary and unaudited
37
INDUSTRIAL ENGINEERED SEGMENT
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2018
LRF
2018
Simon Medley
Executive Vice President
Industrial Engineered Products (IEP)
Organometallic Specialties
38
Key Drivers and Growth Rates
Organometallic Specialties
Key Drivers
Industries Served
Industrial Engineered Products
ELECTRICAL & ELECTRONICS
 Printed Wiring Boards flat
 TVs and Computers 3-4%/ yr
 Electrical Connectors 5% /yr
 LED : 12-14%/yr
CONSTRUCTION
 Insulation 4-6%/yr
 Glass Coating flat
TRANSPORTATION
 Automotive
 Tires
 3-5%/yr
FINE CHEMICAL
Pharmaceutical & Agricultural
5%/yr
ENERGY
 Oil & Gas 5-15%/yr (TBD)
 Mercury Control 30-40% /yr
 Photovoltaic 20-30%/yr
 Miniaturization
 Shift toward high performance
and flexible circuits
 Emerging market TV growth
 Greener Innovation; Energy
Efficiency
 SSL: Solid State Lighting (LED
bulbs)
 Demand Greener Innovation
 Greener Alternatives
Automotive Foam
 Increased Fire Safety
Standards
 Longer Term Asia Pacific
Growth
 Increased Electric Vehicles
 Declining Chinese Brine
Reserves
 Customer Base Shift to
China & India
 Increase in International
Discovery/Drilling
 Increased US Regulation on
Mercury Emissions from
Coal Fired Power Stations.
 Emerging Chinese & Global
Regulation
 Emerging Shale Gas
 Photovoltaics: Solar
Recovery
39
 Energy Efficient Thermal
Insulation
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Alan Swiech
Executive Vice President, Human Resources and Support Services
IEP: Organometallics Specialties
40
Key End Markets
Key Drivers
Industries Served
AXION® Organometallics
Al, Zn, B, Si, Zr, Hf, Mg, Sn, In, Ga
Electronics / LED
$10Bn (2012)
CAGR : 12-14% for SSL*
 Energy Efficiency
 SSL: Solid State
Lighting (LED
bulbs)
Energy /
$45Bn (2012)
Photovoltaic
Pharmaceutical /
Fine Chemicals
$40Bn (2010)
CAGR: 12% for
Crystaline Panels*
CAGR: 5%, higher for
Generica*
 Politics support
renewable energy
 Increased panel
performance
approaching grid
parity
 HIV treatment
supported by WHO
 Blockbuster API’s
becoming generic
 Customer Base
Shift to China &
India
Industrial /
Polymerization
Catalysts
$2.4Bn (2010)
CAGR: 4%(Z/N)-12% SCC*
 Single Site Catalyst
growth
 Oligomer/LAO /PO
capacity increases
Construction /
Glass Coating
$40Bn (2009)
Flat Glass Market
Tin Intermediates
 EU Regulation
forces tin stabilizer
changes
 Energy Efficient
Thermal Insulation
 Recycling
Transportation /
Rubber Catalysts
Paint Catalysts
CAGR 3-5%*
 Proportional to
Automotive industry
growth trend
 EU Regulation
forces tin catalyst
changes
OMS MANUFACTURES AND MARKETS HIGHLY REACTIVE, METAL CONTAINING SPECIALTIES THAT ARE ESSENTIAL FOR
A VARIETY OF LARGE, FAST GROWING AND ATTRACTIVE END MARKETS
* Compound Annual Growth Rates (CAGR): Chemtura Internal Estimates
41
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Current Organometallics Landscape
The organometallic industry has experienced a series of changes and challenges over the past three years:
›
Aggressive new competition in metal alkyls, particularly in APAC, significantly impacted TEA
– Increased production capacities exacerbated pricing pressures
›
›
Overcapacity in non-captive tin intermediates business led to unsatisfactory profit contribution
Identified emerging markets, especially LEDs, developed at a slower pace than anticipated
Changes in profitability 2011 to 2014 by driver
TEA accounts for
42% of MA price
declines
Metal Alkyls
Volume decline due to
overcapacity and
increased competition
Tin Compounds
Other costs
DayStar™ slow to
start up
Tin – negative
contribution
2011
2014
NOTE: 2014 preliminary and unaudited
42
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
What We Will Do: Aggressive Cost-Out - Bergkamen
Savings Plan
›
Multiple waste reduction
projects (MAO, DEAC from
DEZ)
›
External solvent disposal
›
Site support contract
improvements
›
Reduction of Rental Equipment
and Tainers
›
›
›
Spans and Layers
Waste
Others
Personnel
43
Staffing: manufacturing
Shorter hours/fewer days of
operation
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
What We Will Do
Overall focus on differentiated, higher margin products
Seek out growth and higher profits for these
differentiated products in growth markets
Manage as commodity business
MA (excluding
MAO/BEM)
Tin
›
Leverage expertise
and strong customer
relationships
-
-
-
›
Benefit from process
improvement - new
purification
technology
Take advantage of
European regulation
change and local
footprint
APAC – grow at
existing customers
›
Focus on products
and regions where we
have “right to win”
-
-
-
Significant volume
contribution from new
customer
44
MAO
›
Major customers
strongly desire two
suppliers (surety of
supply)
Maintain TEA
business in US and
Europe
›
Selectively pursue
APAC TEA
opportunities
CHMT one of two
globally capable
suppliers
›
MAO growth also
benefits TMA
Specialties
›
Capitalize on growth
of pharma in India
›
Focus on higher
margin Photovoltaic
business in South
East Asia
Daystar™
›
Leverage local cost
competitive Korean
footprint
›
Begin local production
of highly differentiated
TMI
›
Take advantage of
rapid market growth in
APAC
Focus growth on
solutions and more
differentiated neat
products
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
MAO - Polymerization Single Site Catalysts (SSC)
Chemtura is committed to support high growth of Single Site Catalysts technologies
›
AXION® MAO (methylaluminoxane) products from our world-scale production
site deliver high performance at reliable quality.
›
SSCs are growing at a faster pace (+7-10% p.a.) than traditional Ziegler-Natta
catalysts
›
Chemtura has decades of experience that give it the “right to win” in the
highly-complex MAO market:
− a proven track record of producing and transporting highly specialized
MAOs
− achieved customer qualifications that are difficult to earn
− one of only three fully backward integrated trimethylaluminum (TMA)
AXION® Metallocene Products
producers globally
− one of only two globally capable MAO producers
45
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Specialty Chemicals – Higher Margin Opportunities
Differentiated Products in higher margin businesses:
Energy and Electronics: Photovoltaics
Pharmaceuticals and Fine Chemicals
Tailor-made AXION® Organometallic
Specialties for all high efficiency Photovoltaics
›
Markets:
› Crystalline Technologies:
Silicon (mono- & polycrystalline)
supplied with AXION® 1303 HP
(TMA, Trimethylaluminum)
Tailor-made AXION® Organometallics are essential for
Active Pharmaceutical Ingredients (API´s) i.e. for
treatment of hypertension, cholesterol and HIV
›
Security of supply from our integrated manufacturing
capacities for AXION® Organometallic Specialties
›
Our Technology teams are working closely with
important pharmaceutical companies to help develop
advanced organometallic reagents and novel API´s
›
Strengthening our position in the fast growing Generic
Pharma market in India
›
›
ThinFilm Technologies:
Silicon ThinFilm (amorph & micromorph): CIGS (CopperIndiumGallium
Selenide) supplied with AXION® EP 2201
HP (DEZ, Diethylzinc)
Chemtura can provide highly effective
solutions for the 2 leading and growing PV
technologies
CAGR 12% p.a.
Source: European Photovoltaic Industry Association
NOTE: Annually added PV capacities: Global market scenarios until 2018
46
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Light Emitting Diodes (LEDs)
Market demand driven by shift away from incandescent lighting
›
Double digit growth in spite of saturated markets in other applications like
screens or monitors:
− General lighting market expected to the primary growth driver for the LED
industry with a rapid growth over the next decade
− More than 1 billion LED lamps shipped in 2014, increasing to 3 billion in 2016*
− The LED market is expected to reach a total volume of $42.7 billion by 2020*
* Source: Aixtron Q3 2014 Financial Report
Daystar™ can reasonably grow greater than market expectations because:
›
Offers the full range of high purity metal organics for LED (eTMG, eTMA,
eTEG, eTMI) - the purity of these MO’s exceeds 99.9999%.
›
Excellent economies of scale as fully backwards integrated with proven best in
class production technology and regional footprint (cost competitive)
›
Sufficient capacity to cover growing market demand.
›
Opportunities to bid on new business at key customers in 2015
Developing strong relationships at key customers and numerous product
qualifications in progress.
47
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Tin – Business Improvements
2016 - 2018
Tin Catalysts (DBTO, DOTO)
2015
2014
Lean Production and SKU
rationalization:
- Improvement of critical feedstock
supply of Octyl- and Butyl-tin
MOTCL (Mono-Octyltin Chloride)
- Traditional DOTE (DiOctylTin) will
be treated as REACH substance
of very high concern (SVHC)
effective January 01, 2015.
- Chemtura partnered with a major
PVC stabilizer company to
introduce the next generation of
Octyltin Products
New agreement with major
PVC stabilizer partner will
improve output of Tin
Intermediates
-
Products with improved purity
profile to meet regulatory
requirements, providing a catalyst
for growth
-
Better purity characteristics over
incumbent tin catalysts allows
CHMT to sustain EU automotive
paint business
Next generation of Monooctyltin
Stabilizers
- Patent-pending high purity
precursor for MonoOctyltin
Stabilizers fulfilling the market
requirements in 2018
- “make to order” business model
with a lean organization resulting
in improved cash flow
- Reduced number of packaging
sizes to reduce complexity
- Abandoned unprofitable product
lines
48
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Summary
Well Positioned to Serve Higher Margin Growth Markets
Accomplishments and next steps:
› Significant operational cost
savings implemented early in
2015
› Focused regional strategies in our
key markets and expand in the
markets and product lines where
we have strong “right to win”
› Robust, detailed initiatives with
clear accountabilities and strong
organizational “buy-in”
› Full product portfolio, local cost
competitive production in our
Daystar™ business
› Execution of defined, customized
and customer-driven R&D
projects in Catalyst Systems
Strong focus on growing the higher
margin value chain from TMA:
› Single Site Catalysts (MAO)
› Opto electronics (eTMA, et. al)
› Photovoltaic (TMA, DEZ)
› Pharma (DEZ)
49
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Organometallics Strategic Plan
Resulting Adjusted EBITDA Improvement 2015 - 2018
Note: 2014 preliminary and unaudited
50
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: ORGANOMETALLICS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2018
Cost out
Daystar
Tin/Specialties
PCC
2015
EBITDA improvements greater in early years (2015/2016), but margins continue to expand throughout the period
Cost out
›
Daystar
2016-2018 – progressive continued improvement with EBITDA margins approaching 20%, by building off of 2015 initiatives,
specifically, achieving second source positions in MAO (PCC) and further business penetration at DayStar™
Tin/Specialties
›
PCC
2015 – significant EBITDA improvement, driven in large part by cost out actions, the start-up of local production, introduction of
full product portfolio at DayStar™ and profitability improvement in Tin
2014 Base
›
Simon Medley
Executive Vice President
Industrial Engineered Products: Great Lakes Solutions
51
The Journey to Sustainable Value Creation
Performance characteristics:
Earnings capability:
 Attractive Adjusted EBITDA margins
Industry
Diversification

Strong cash flow

ROIC
Cyclicality:
 Electronics and Insulation
Fire Safety Advocacy
Sustainable Value Creation
Continuous Innovation

Timing new product introductions

Bromine Supply vs. Demand – The Capital Cycle
Managing for Value:
 Diversify - Oil, Gas, Mercury Control and Fine Chemicals
Business Excellence
52

Flexible strategic sourcing deals

Capital efficiency

Timing new product introductions

Cost-out to ensure lean, efficient and effective operations

An integrated business approach to value optimization
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Global Mega Trends
›
›
Emerging
Economies
Rise of Middle Class
Increased Regulation
Business Segment with Strong
Fundamentals
Great Lakes Solutions:
Sustainable
Tomorrow
Urbanization
Technology
Innovation
53
›
›
›
›
›
›
›
›
Energy Efficiency
Mercury Control
Construction
Transportation
Lifestyle and Quality
›
Backward integration to a unique raw material
›
Regulation driven
›
Demands Responsible Care and product
stewardship
›
Recognized leading brands and portfolio
›
Aligned strongly with global megatrends
›
Cleaner and more efficient energy
›
Emerging economies
›
Sustainability
›
Technology innovation
Alternative Energy
Advanced Electronics
Mobile Communication
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Bromine: Global Availability and Demand
The global supply-demand balance has been challenged in recent years, but improvements are ahead
'08
'09
'10
'11
'12
Global Supply
'13
'14
'15
'16
'17
'18
Global Demand Baseline
2015 – 2018 Volume based on Company Estimates
Bromine Availability Assumptions:
Demand Assumptions:
›
›
›
›
All supply based upon nameplate capacity
‒
Chinese bromine estimated at approx. 90 KMT in 2014
Chemtura bromine availability from South Arkansas
production and flexible long term strategic sourcing
agreements with ICL and ALB
54
Conservative growth in traditional industries served
›
›
Reduction in furniture foam applications
Gradual Macroeconomic Recovery
Emerging new bromine application in Mercury Control
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Global Bromine Sources
Bromine Source
GLOBAL BROMINE SOURCES1:
Israel, Dead Sea, Jordan……………………...………6,000-12,000 ppm
Great Lakes Solutions Source
South Arkansas/ US………………………………….. 4,000-6,000 ppm
India…………………………………………………….. 1,000-3,000 ppm
China……………………………………………...……. 200 ppm
GREAT LAKES SOLUTIONS BROMINE FRANCHISE:
1
55
U.S.:
Investment of >$150 million and Long Term Strategic Sourcing Arrangement
Dead Sea:
Long Term Strategic Sourcing Arrangements
ISO fleet:
Expanded by 200% since 2009 to serve faster growing regions
Based on internal estimates.
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Continuing Industry Diversification
Diversified industry segments drive significant growth 2014-2018
›
›
›
›
›
Electronics: Less dependent on cyclicality of demand
Insulation: Grow in energy efficient flame resistant thermal insulation
Fine Chemicals: Grow in agricultural and pharmaceutical intermediates
Oil & Gas: Grow international demand to reduce dependence on Gulf of Mexico
Utilities: Mercury Control to reduce emissions from coal fired power stations
GLS - 2007 Margin Distribution
Electrical & Electronics
Fine Chem/Pharma
Building & Construction
Energy
Biocides
Fumigants
Auto
GLS – 2014 Margin Distribution
Electrical & Electronics
Fine Chem/Pharma
Electrical & Electronics
Fine Chem/Pharma
Building & Construction
Energy
Building & Construction
Energy
Biocides
Fumigants
Biocides
Fumigants
Auto
Industrial
Auto
56
GLS – 2018 Margin Distribution
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industry Diversification – Electronics
Flame retardant cyclicality dampened through sub-segment focused innovation and flexible sourcing model
Electronics Long-Term Fundamentals Remain Favorable
‒
‒
Automotive Electronic Systems projected to grow from $157Bn to $240Bn by 2020
BFRs to grow at 4.1% CAGR through 2018, especially those in E&E segments. Phosphorus Flame
Retardants into plastics growing at 9.7% (BCC Research)
Electrical Connectors
Computers & Peripherals; Industrial; Transportation & Auto; Telecom all growing 7-9% through 2019 with
Business Equipment at 4.3%
Printed Wire Boards
Stabilizing demand for business computing, combined with a persistent growth in the Internet, smart
devices, wearable technology as well as new applications in LED lighting, support GDP or better growth
for circuit boards business
Electronic Enclosures
TV growth is returning—both in number of units & screen size—IHS projects 7% 2015 vs. 2014
– New Innovation for Connectors and High Performance electronics
57
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industry Diversification - Insulation
Great Lakes Solutions is first to market with a sustainable alternative for energy efficient insulation foams:
Emerald Innovation™ 3000. Vast majority of EPS/XPS customers in EU converted to Emerald Innovation
3000™ in 2014
58
›
›
›
›
Insulation market: 2000 – 2010 average growth = 3% / yr
›
2013 – 2018 growth focused on APAC with average growth estimated at
5% / yr
›
Central and South America lead by Mexico and Brazil will stimulate
housing construction in urban areas and thus insulation consumption
Rigid Board Insulation 2012 – 2018 = 4% / yr
Europe’s growth driven by rigorous insulation requirements for buildings
Chinese thermal insulation market growth driven by improvement in
energy conservation and emissions reduction
Smithers Apex Information Ltd 2013
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industry Diversification – Fine Chemicals
ISO Fleet investment drives growth in less cyclical Fine Chemicals markets
›
Bromine and bromine based intermediates serve as building
blocks for complex organic molecules for Fine Chemical applications
›
Continue expansion into FGRs where opportunity exists for strong
penetration and growth into the generic agrochemical and
pharmaceutical markets
›
Fine Chemical markets more resilient to macroeconomic volatility
›
Opportunity to leverage industry knowledge to grow OMS and GLS
›
Ongoing investment in Bromine ISO fleet tanks
‒
›
›
59
Drive for improved productivity
Sustainable footprint for global supply
Demonstrated sales growth in FGRs
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industry Diversification – Oil and Gas
International growth opportunity reduces Gulf of Mexico dependence
›
Overall Global Growth 4 - 6%
›
Deep-water / Ultra-Deep-water up to 10 - 12%
›
Current Oil Market Price - offshore activity impacts with
supply/demand balance
Source: IHS Petrodata RigBase
Growth Drivers:
›
›
›
60
Deep-water Completion / Fracking Fluids
Shale Oil and Natural Gas
Work-over Fluids
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industry Diversification – Utilities
GeoBrom® for Mercury Control
MATS Rule Publication
in Fed. Reg.
2012
US state regulations in
place, Section 45 tax
credit
US MATS Rule
Compliance
2013
2014
2015
UNEP Program target
negotiations complete;
ratification by parties thereafter
2016
MATS Rule Compliance
with 1 Year Extension
›
Significant demand today for Section 45 tax credit units
›
US growth driven by Mercury and Air Toxics Standards
(MATS) and state regulations 2015
›
EU and China – regulations in place but with higher allowable
limits than US MATS rule
›
UNEP (United Nations Environmental Program)
Mercury rule – to drive global regulation and compliance
61
More extensions requested.
More applied and received in
latter part of 2014 (>98 granted)
More extensions granted before
compliance - April 2015
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Mercury Control Estimated Total Bromine Demand
Significant new bromine based application
US Electricity Supply/ Demand and Fuel Type
100,000
1800
16
1600
90,000
14
1400
12
80,000
1200
70,000
Billion kWH/ day
8
600
400
6
200
4
0
‐200
2
‐400
0
2010
2011
Coal
Natural Gas
Total Consumption
U.S. Heating Degree‐Days
2014
Jan
Feb
2015
U.S. Cooling Degree‐Days
Mar
Oct
Dec
Nov
Jul
Jun
Sep
Aug
Apr
May
Jan
Feb
Mar
Oct
2013
Total Supply
Dec
Nov
Jul
Sep
Jun
Aug
May
Apr
Feb
Jan
2012
Nuclear
Mar
Oct
Dec
Nov
Jul
Sep
Jun
Aug
Apr
May
Jan
Feb
Dec
Mar
Nov
Jul
Oct
Sep
Jun
Aug
Apr
May
Jan
Feb
Mar
Oct
Dec
Nov
Jul
Jun
Sep
Aug
Apr
May
Feb
Mar
Jan
‐600
Heating/ Cooling Days
800
Volume (MT)
1000
10
Est. Total Mercury Control Volume (MT) - GeoBrom® Products
and Bromine Equivalent
60,000
50,000
40,000
30,000
20,000
10,000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total
Regulations
Coal Type
Pollution
Equipment
Mercury
Technology
Indirect
Technology
Plant CapEx vs.
Operation Cost
Total Equivalent Bromine
ASSUMPTIONS:
›
US driven by Section 45 Tax Credits and State regs until April 2015 / 2016 (EGU MATS)
›
No further delays anticipated for MATS rule implementation – Supreme Court reviewing MATS rule, outcome uncertain
›
China/India/South Africa will follow UNEP guidelines
›
China = 2X US coal burned; requires less bromide – plants are more standardized than US
›
Assumes most US demand is for low halogen content coals – 50% of US coal burned
62
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Innovation
Proactive innovation continues to drive a stronger, more sustainable flame retardant portfolio
Emerald Innovation™ 3000
› U.S. EPA DfE “…safer substitute”
› Successful launch into growing EPS and XPS
insulation market ahead of formal regulations
› Continued process improvements for capacity and
efficiency
Next Generation for Flexible Foam
› Reactive solution for flexible PU foam
› Non-emissive, non-scorching additive
› Compliant with TB117-2013 and SB-1019 rules in
California
Next Generation for Connectors
› Product platform for PBT and polyamide
› Halogen free in response to market demands
› Highest performance for thin walled parts
63
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Fire Safety and Flame Retardant Advocacy
Dispelling myths on flame retardants and participating in fire safety policy developments
EFRA and “The
Fire Safety
Platform” working
with stakeholders
on furniture and TV
fire safety
› Potential backslide in CA
has motivated NFPA and
CPSC to act on furniture.
› Activity at a state level on
school bus fire safety
development
› Implementation of new national standard,
now includes insulation foam
› Supporting officials in TV and bus standards
New group established
to educate officials and
industry
ABICHAMA supporting
regulators, fire service
officials on new
standards for B&C and
furniture
High Fire Safety Regulation
Positive Recent Trends
Moderate Safety Regulation
Little or No Fire Safety Regulation
Fire Safety
Standards are
Essential to
Modern Life!
64
Flame Retardants Work!
Flame retardants are
an effective, reliable
and economical way
to meet fire safety
codes
Flame Retardants Are
Extensively Tested!
Over a decade of
innovation has led to a
sound, sustainable
portfolio of products
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Leveraging Capabilities Across Chemtura
Using Chemtura’s scale as an advantage – connecting and capturing synergy value
Strategy
Structure
Process and People
Application diversification
Consolidated business team
Leverage Chemtura approach
Participation in growth trends
Customer segmentation
 Process optimization
Integrated business approach
Sales channel management
 Tools and capabilities
 Operational excellence
Differentiated business rules
 Synergy value capture
 Commercial excellence
The New Chemtura
Leverage Chemtura talents
Integrated Chemtura approach
Global Technology Center
 Career development
Global footprint optimization
Dedicated marketing
 Disruptive innovation
Managing for Value focus
Connected organization
Implementation discipline
Differentiated growth
strategy
Bromine & Derivatives
Global Business Unit
Reduced operational
complexity and cost
Marketing-led and valuebased innovation
Local market coverage
with global connectivity
Customer
segmentation and
business rules
Excellence in global
supply chain capability
Differentiated sales
channel management
Optimized working
capital
Footprint optimization
Connected technology
centers of excellence
Margin management
process
65
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Operational Excellence
Focus on reduced capital intensity, fixed costs reduction and flexible and reliable supply
SUSTAIN
GROW
DIVERSIFY
Phase I: 2009 - 2011
Phase II : 2011-2013
Phase III : 2013 - 2018
›
US Footprint Restructure to
reduce capital intensity
›
Investment in less cyclical new
product assets
›
Reducing capital intensity
›
›
›
>$150M to upgrade bromine
and brine infrastructure.
Flexible Clear Brine Fluid
Sourcing Deal
Responsible sustaining capital
investment
›
Flexible sourcing deal for
cyclical FR products
›
Further ISO fleet expansion
Continuous Cost Reduction
Focus
›
Acquisition of ISO maintenance
capability
›
Supply Chain Optimization
›
Footprint Optimization
›
Portfolio leadership with
Emerald InnovationTM 3000
›
›
ISO Fleet Expansion
›
66
Cost-out
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Commercial Excellence
Disciplined and rigorous implementation to drive improved profitability and cash flow
›
Employing the successful approach used in Industrial Performance Products
Sales Force
Effectiveness
›
›
›
›
Operational
Marketing
67
›
Channel management with differentiated segmentation
Rigorous implementation discipline
Improved pricing levels
Expand margins

Maintain discipline

Capitalize on cost improvements
Optimize capacity allocations

By product profitability

By customer profitability

By strategic potential
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
An Integrated Approach to Value Creation
Consolidating our commercial, technology and manufacturing capabilities into an integrated, global
platform
Commercial Hubs
Manufacturing Plants
Technology Centers
NOTE: The selection of logos above represent a portion of the customer base for our Industrial Engineered Products segment, and are used with permission
68
INDUSTRIAL ENGINEERED PRODUCTS SEGMENT: GREAT LAKES SOLUTIONS
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Industrial Engineered Products Strategic Plan
Growth at sustainable profitability levels
›
›
Cost improvement actions underpin the path to our 2015 projections
The 2015 pricing environment is cautiously optimistic
2014 A
Preliminary
Price
Vol / Mix
Cost COGS
Cost SG&A
FX / Other
2015 B
Price
Vol / Mix
Cost COGS
Cost SG&A
Note: 2014 is preliminary and unaudited
69
INDUSTRIAL ENGINEERED SEGMENT
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2018
2018LRF
Chet Cross
Executive Vice President, Supply Chain and Operations
Operational Cost-Out Update
70
Safety Performance
Safety by the Numbers

Safety performance ranked in the top 25% of similar-sized member companies of the American
Chemistry Council®


Twelve facilities received 2014 Responsible Care® Certificate of Excellence Awards

East Hanover and Fords facilities received the 2014 Environmental Stewardship Award by the New
Jersey Department of Environmental Protection



Perth Amboy facility received the 2014 ACC RC14001 Facility Safety Award
Fords, Perth Amboy and East Hanover facilities received the 2014 New Jersey Governor’s Award for no
lost time injuries
Rio Claro, Brazil facility celebrated 15 years without a recordable injury
Gastonia facility received the 2014 Gold Award for Safety Performance by North Carolina Department of
Labor
71
OPERATIONAL COST-OUT UPDATE
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Organization Design – Streamlined and Efficient
Supply Chain & Operations
Procurement
Americas
Procurement
Eurasia
Manufacturing
Americas
Manufacturing
Eurasia
Supply Chain
Global
EH&S
Global
Regulatory
Global
Engineering/ Capital/
Facilities
72
OPERATIONAL COST-OUT UPDATE
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Manufacturing Sustainable Cost Reduction – Guiding Principles
›
›
›
$50 Million reduction in ongoing manufacturing costs
Requires a shift in the way our manufacturing organizations are structured
Safety, compliance and service levels cannot be compromise
Reduced
Organizational
Layers
Step Change
Reductions In
Other
Categories
Increased
Spans
Of Control
Six Principals of
Manufacturing
Transformation
Role
Consolidation
and
Elimination
Increased
Focus
On What
Matters
Standardized
Role
Definitions
73
OPERATIONAL COST-OUT UPDATE
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Manufacturing Sustainable Cost Reductions: Cost-Out Schedule 2015
$50M Cost-Out
Cadence of expected $50M Cost Reductions
2015
Q1
Q2
Q3
Q4
Manufacturing Costs
COST SAVING INITIATIVES WELL UNDERWAY AND WILL ACCELERATE AS WE MOVE THROUGH 2015
74
OPERATIONAL COST-OUT UPDATE
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Manufacturing Sustainable Cost Reduction – The Process – Where We Are
Define Targets
and Operating
Guidelines
Gain Alignment
within Organization
Achieve $50MM actual bottom line run rate savings by 4Q 2015 ($40MM minimum in 2015)
All savings efforts must be transparent, trackable, verified and directly tied to EBITDA growth.
Establish alignment on savings areas of focus
Work through an established process for the organizational changes
Compile global summary of external contractor data and challenge status quo
Plant-by-plant COGS targets rolling up to $50MM has been cascaded and included in the overall
business plans.
Execute our
Transformation
Weekly performance reviews between manufacturing directors and sites will ensure delivery of the
commitments.
Yield savings initiatives will be formally documented & reviewed post-implementation to ensure
targeted benefits are realized and tracked on a monthly basis.
Continuous improvement plans with savings identified.
We will take the appropriate action to meet sustainable cost reductions.
75
OPERATIONAL COST-OUT UPDATE
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Facility Reductions Since 2009
50
45
Number of Facilities
40
35
30
25
20
15
10
5
2009
New Facilities
PVC
AO/UV
Consumer
Chemtura
AgroSolutions
Other Facility
Closures
Planned
Closures
2016
RATIONALIZING GLOBAL MANUFACTURING FOOTPRINT RESULTS IN SUSTAINABLE COST SAVINGS
76
OPERATIONAL COST-OUT UPDATE
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Procurement Initiatives
Procurement “Cost-Out Acceleration Initiative” is yielding results
Wave 1 savings
Wave 2 savings
Wave 3 savings
Capability Implementation
July
Aug
Sep
Oct
Nov
Dec
Feb
2015
2015 Focus Remains Razor Sharp
›
Capitalizing on momentum started in 2014 with aggressive 2015 targets that exceed chemical industry benchmark as
percentage of total spend
›
Executing on expanded portfolio of cost-out opportunities across a range of categories
›
Enhancing capabilities of the organization through skillset development
›
Driving both consumption control and unit cost savings
›
Implementing progressive contract structures that deliver year-over-year savings
›
Institutionalizing use of new tools such as e-catalog platform
77
OPERATIONAL COST-OUT UPDATE
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Stephen Forsyth
Executive Vice President and Chief Financial Officer
Financial Performance and Outlook
78
Financial Performance Summary (Managed Basis)
Financial results “as reported” – 2014 are unaudited preliminary data
For details, see GAAP Reconciliation in Appendix and press release issued on February 4, 2015
Net Sales
( $ in Millions )
$2,400
$2,200
Adjusted EBITDA(1)
( $ in Millions and % of Net Sales )
$600
$2,196
$2,231
$2,184
$500
14.3%
12.6%
$400
$300
$2,000
$313
12.0%
$281
$262
2013
2014 Preliminary
$200
$1,800
$100
$0
$1,600
2012
2013
Capital Expenditures
( $ in Millions )
$200
Adjusted EBITDA less CapEx
$164
149
$149
$150
$113
$111
$100
$100
$50
$50
$0
$0
2012
(1)
( $ in Millions )
$200
$170
$150
2012
2014 Preliminary
2013
2014 Preliminary
2012
2013
2014 Preliminary
See reconciliation to GAAP and Preliminary in appendix for components of Adjusted EBITDA. (Excluding expenses incurred in the Chemtura AgroSolutions sale process)
79
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2010 - 2014 Managed Basis Segment Adjusted EBITDA(1) Trend
2014 Adjusted EBITDA computed from unaudited, preliminary data
$ in millions and % of Net Sales
Industrial Engineered Products
Industrial Performance Products
16.0%
15.4%
14.5%
14.3%
14.3%
$140
$141
19.9%
14.7%
$134
$145
$129
$173
20.6%
$185
12.3%
7.9%
$107
$99
$63
2010
2011
2012
2013
2010
2014
Preliminary
2011
2012
2013
2014
Preliminary
Petroleum Additives and Urethanes
Great Lakes Solutions and Organometallics
› The relatively flat performance trend masks (due to investing in change
›
Excess industry capacity in bromine and organometallic
polymerization catalysts has depressed selling prices and
performance in 2013 and 2014 – we are not relying on a recovery in
2015
›
Substantial benefit in 2015 from manufacturing and SG&A cost
reductions
›
Great Lakes Solutions continuing diversification from electronics
through growth from insulation foam, mercury control and
intermediates applications
›
Organometallics expects growth from all applications except TEA
and higher fixed costs associated with capital projects) the
transformation the business has undertaken in the last two years
› Have invested in the business team, business processes and
execution skills to lay the foundation for revenue and margin growth
› Significant capacity expansion in HVPAO, Inhibitors and in China
supports increasing customer demand
› The secular trends of the substitution of traditional lubricants with
synthetics and regulation driving lower emissions and higher MPG
remain robust
EXPECT TO START TO REVERSE THESE TRENDS IN 2015 LED BY COST REDUCTION
(1)
See reconciliation to GAAP and Preliminary in appendix for components of Adjusted EBITDA
80
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Adjusted Financial Performance Summary (Managed Basis)
Financial results adjusted to exclude Chemtura AgroSolutions, Platform Specialty Products Supply Agreements (2014
only) and expenses incurred in the process to divest the business. 2014 based on preliminary and unaudited data
Net Sales
( $ in Millions )
$2,000
$1,800
Adjusted EBITDA(1)
$400
$1,787
$1,782
$1,787
( $ in Millions and % of Net Sales )
13.1%
10.1%
$300
9.7%
$234
$1,600
$200
$1,400
$100
$1,200
2012
2013
Capital Expenditures(2)
2014 Preliminary
( $ in Millions )
$200
$150
$180
$173
2013
2014 Preliminary
$0
2012
Adjusted EBITDA less CapEx
( $ in Millions )
$150
$150
$103
$131
$109
$100
$100
$64
$50
$50
$0
2012
(1)
(2)
2013
2014 Preliminary
$30
$0
2012
2013
2014 Preliminary
See reconciliation to GAAP, Preliminary and Adjusted in appendix for components of Adjusted EBITDA
Excludes capital expenditures of Antioxidants business, Consumer Products and Chemtura AgroSolutions segments
81
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Managed Basis General Corporate Expense
A deeper dive – data extracted from tables provided in press release dated February 4, 2015
Corporate Expense
›
Corporate Expenses consists of stewardship (public company cost and
corporate management) and legacy costs (pension expense and OPEB
expense, environmental oversight for former sites, etc.)
$ Millions
Prelim.
2014 FY
Adjusted
2014 FY
Expense (Adjusted EBITDA
basis) excluding sale process
expenses
$31
$31
Chemtura AgroSolutions sale
process expenses
18
-
Expense (Adjusted EBITDA)
$49
$31
›
›
Q4 14 expense lower than trend due to non-recurring income
›
All but $1 million of stranded costs associated with the former Consumer
Product business had been eliminated prior to the start of 2014. The
remaining cost was eliminated by the end of Q1 2014
›
As Chemtura AgroSolutions was not treated as a discontinued operation, the
approximately $15 million of annual stranded costs have not been reclassified
to Corporate Expense. Plans being implemented that should eliminate these
costs by the end of Q1 2015. Stranded costs incurred in Q1 2015 estimated
at $2 million
Depreciation & Amortization
16
16
Non-Cash Stock Based
Compensation
11
11
The component if non-cash Stock Based Compensation incurred in Corporate
Expense will be approximately $10 million in 2015. The first quarter expense
is always higher than the expense in the remaining quarters
Expense (Operating Income)
$76
$58
›
In 2014, included $18 million of expenses related to the process to divest the
Chemtura AgroSolutions business. Assume $2 million of expense in 2015
Note: 2014 is preliminary and unaudited
2015 Outlook
›
Due to the lower discount rates used in the actuarial computation pension and OPEB liabilities as of December 31, 2014 compared to the
prior year and the adoption of the updated mortality tables, pension expense in 2015 will increase by approximately $6 million. Cash funding
of pension and OPEB obligations will continue to trend down in 2015 despite the change in the actuarial assumptions and book expense
›
Reflecting this increased expense and eliminating a non-recurring gain in 2014, Corporate Expense in 2015 on an Adjusted EBITDA basis
will be in the order of $40 million and $65 million on an Operating Income basis
82
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2015 Outlook
Improving operating performance led by Manufacturing and SG&A cost reductions
Segment Performance
Segment Adjusted EBITDA
›
Cost Reductions in manufacturing and SG&A will underpin the profitability improvement of our
two industrial segments. The actions will be in place by the end of the first quarter and will deliver
in the order of $50 million in 2015 ($62 million annualized). Expect a net benefit from lower oil
prices through lower raw material costs
›
Industrial Performance Products will benefit from volume growth from additives and finished
fluids and the annualized benefit of price increases implemented in 2014
›
Industrial Engineered Products will benefit from customers completing their adoption of
Emerald InnovationTM 3000 as well as organometallic growth from MOCVD agents, tin and
pharmaceutical applications
›
IPP
Agrochemical Manufacturing, post-sale activities under the Platform Specialty Products supply
agreements. For modeling purposes, assume $25 million net sales/quarter and breakeven
Adjusted EBITDA
Consolidated Performance (compared to 2014 Adjusted excluding CAS)
›
Revenues Up around 7-10% year-on-year before the addition of the Platform Specialty
Products supply agreements
›
›
›
›
›
Adjusted EBITDA Our base projection will deliver $250 million in 2015 led by cost reduction
Preliminary 2014
IEP
2015 E
Note: 2014 is preliminary and unaudited
Consolidated Adjusted
EBITDA $ and % Margin
Adjusted EBITDA Margins Expand ~250bps for 2015
Corporate Expense See previous slide
Depreciation & Amortization ~$100 million
12%+
9.6%
Non-Cash Stock Compensation Expense $13 million
Preliminary 2014
2015 E
Note: 2014 is preliminary and unaudited
83
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Improving Free Cash Flow
Reduction in uses of cash continues
Annual Cash Expenditures
2011
$ Millions
2012
2013
Prelim
2014
2015 E
Low
Cash Interest
Capital Expenditures
Pension & OPEB Cash
Contributions
High
57
58
57
46
30
34
154
149
170
113
85
95
94
91
57
49
40
45
Note: 2014 is preliminary and unaudited
›
Cash interest expense has declined due to the 2013 re-financing together with the call of the stub of the 2018 Notes and the
repayment of debt made from divestiture net proceeds
›
›
Growth capital project spending has declined as major projects completed and we drive for returns from what we have invested
Requirements for cash contributions to pension plans is declining as funding levels rise
CASH SPENDING ON THESE ITEMS HAS REDUCED SIGNIFICANTLY IN 2014 AND WILL CONTINUE TO DECLINE IN 2015,
AIDING OUR DELIVERY OF FREE CASH FLOW IN THE YEAR
84
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Maintaining a Strong Balance Sheet
Outstanding Debt
Interest Expense
$1,000
Maturity Profile
$800
$450M 5.75%
Senior Notes
$500
$80
$400
$60
$250M ABL
(Undrawn)
$300
$600
$40
$200
$400
$20
$200
$0
$100
$0
$0
2012
2013
2014
2015E
$82M Senior
Secured Term
Loan
2012
2013
2014
2016
2015E
2018
2021
›
Long term gross leverage target remains 2X Adjusted EBITDA – will move back to these levels as Industrial Engineered Products
Adjusted EBITDA recovers
›
›
Over $500 million of available liquidity including undrawn $250 million Asset Based Revolver
Flexible debt covenants and full access to Capital Markets
HAVE LOWERED COST OF DEBT AND INCREASED FINANCIAL FLEXIBILITY
NOTE: 2014 is preliminary and unaudited
85
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Capital Expenditures
2014 capital expenditures of $113 million
›
Maintenance (sustaining) capital of $65-70 million
›
Growth capital included: Nantong and DayStar™ projects
›
Chemtura AgroSolutions capital $4 million
$200
$150
$100
$149
$170
$113
$50
Spending historically concentrated within Industrial Segments
›
Capital Expenditures Incurred
$90
$0
2012
Has received about 90%+ of Chemtura’s total capital spending
2013
2014
Preliminary
2015 E
Note: 2014 is preliminary and unaudited
Major project spending has declined
›
Focus on delivering expected returns from recent projects
›
Final phase of Nantong project will be completed by summer
2015
2015 Capital Expenditure projected as range of $85-$95 million
Capital Expenditures ex Divestitures(1)
$200
$150
$100
$50
$131
$150
$109
$90
$0
2012
2013
2014
Preliminary
Note: 2014 is preliminary and unaudited
(1)
Excludes Chemtura AgroSolutions, Consumer Products and Antioxidants
86
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
2015 E
Pension Liability Management
Pension and OPEB Liability
Pension and OPEB Cash Contributions
$600
$100
$80
$400
$60
$200
$464
$479
$235
$277
$40
$94
$91
$57
$20
$49
$42
$0
2011
2012
Note: 2014 is preliminary and unaudited
›
›
›
›
›
›
›
2013
2014
Preliminary
$0
2011
2012
2013
2014
Preliminary
2015 E
Note: 2014 is preliminary and unaudited
Decrease in interest rates in 2014 is driving discount rates lower, increasing liability
U.S. liabilities reflect an 8% increase due to new mortality assumptions released by the Society of Actuaries
Assets delivered returns in excess of expected rate of return assumptions
U.S. Terminated Vested Lump Sum program was successful at eliminating $52 million of PBO
Approximately $90 million of net Pension liabilities has been transferred with divestitures
Unfunded Pension / OPEB as % of market capitalization expected to decrease from ~30% (2011) to ~14% in 2014
Annual Pension / OPEB cash contributions expected to be $40 to $45 million in 2015
LIABILITY DRIVEN ASSET MANAGEMENT REDUCES VOLATILITY AS FUNDING LEVELS IMPROVE
87
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Book and Cash Taxes
Continuing benefit of U.S. Net Operating Losses (“NOLs”) and Tax Rate Outlook
Available US Federal NOLs
$100
Chemtura’s US Federal NOLs
› Chemtura emerged from its reorganization with over $1 billion of U.S. Federal
NOLs
›
The issuance of new common stock upon Chemtura’s emergence from its
reorganization was a “change of control” for US tax purposes, resulting in a
limitation in the rate at which it can utilize the US NOLs that existed as of
emergence
$59
›
In 2014, we have utilized all of the NOLs released to date, and those
generated post our emergence ,in connection with the sale of Chemtura
AgroSolutions
Estimated Annual NOL
Release: 2016-2023
›
Under the limitation $72 million of these NOLs will be released for utilization in
2015. There after $59 million will be release annually until 2023. The
remainder of $34 million will be released in 2024. This represents a significant
asset of the Company that will cause our cash tax rate to continued to be
lower than our book tax rate until 2025
$80
$60
$40
$72
$20
$0
2015 E
$ millions
Book Tax Rate
› Chemtura’s GAAP tax rate is low and varies from period to period as we apply a valuation allowance in the U.S. and, as a result, do
not record a tax provision on U.S. income/(losses). Our GAAP tax provision therefore primarily reflects tax on foreign income
›
To assist investors, we set a “managed basis” tax rate for our non-GAAP managed basis reporting. This provides an estimation of
what our tax rate might be if we did not apply a valuation allowance in the U.S.. This rate has been 31% in 2013 and 2014.
Evidence during 2014 has suggested that we should reduce this rate but we have held off making a change until we completed the
sale of Chemtura AgroSolutions as the resulting change in sources of our income will effect the rate selected. We will advise our
conclusion as to the rate to be used for 2015 when we report First Quarter, 2015 earnings
›
We monitor whether we have met the criteria to cease applying a valuation allowance in the U.S. When we meet those criteria, our
GAAP tax rate will increase and we will reflect the value of our U.S. deferred tax assets on our balance sheet
88
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Common Stock Outstanding
Share-count used for computing EPS resets at the start of each year
Shares Outstanding as of December 31
(millions)
100
80
60
96.3
98.0
96.5
40
71.7
20
0
2011
2012
2013
2014
›
›
›
With the benefit of our stock repurchases in 2014, we start 2015 with 71.7 million shares outstanding
›
For modeling purposes, assume diluted shares are 1 million shares of common stock higher than the number of shares
outstanding
Will execute on the remaining $166 million of our stock repurchase program authorization in 2015
As EPS computations use a weighted average, the reduction of the average share count by these repurchases will depend
upon the timing of purchases partially offset by the issuance of shares under our stock compensation programs
2015 EPS WILL REFLECT BENEFIT OF 2014 STOCK REPURCHASES
89
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Summary and Investment Thesis
Financial Outlook for “Pure Play” Industrial Portfolio
Revenue Growth Target in $ Billions
›
A sharper, more focused, specialty chemicals company
›
Leading positions in portfolio of global specialty
chemicals businesses serving diverse end-markets
›
2.0
1.0
Each segment benefits from strong secular growth trends
that they can address through their technologies
›
Driving growth and differentiation through product and
application innovation
›
Emphasis on driving meeting our long standing goals for
margin expansion and building free cash flow
›
Focus on continuous improvement
›
3.0
Experienced management team
$2.5
$1.8
0.0
2012
Adjusted EBITDA Margin Targets
13%
2012
90
2018
Approaching
20%
2018
FINANCIAL PERFORMANCE AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Craig A. Rogerson
Chairman, President and Chief Executive Officer
Summary and Q&A
91
Strategic Priorities
Execute on Portfolio Growth Levers
›
›
›
›
›
›
Increasing customer demand for Petroleum Additives
Rapid market adoption of synthetic lubricant base-stocks
and finished fluids
Switch to Emerald InnovationTM flame retardants
Exploit growing demand for bromine based chemistries in
fine chemicals and Mercury Control
Duracast® and Thermo Plastic Urethanes (TPU)
Electronic applications for High Purity MOCVD
Manage What We Can Control
›
›
›
›
›
Grow Our Businesses
›
›
›
›
›
›
Leverage secular growth opportunities for our
chemistries
Innovation through customer collaboration
Commercial Excellence initiatives
Harvest recent new capacity investments
Invest in capacity and innovation
Positioned for cyclical recovery in international
markets
Manufacturing and SG&A cost-out programs
Driving productivity improvements through a simpler
organization and focus on continuous improvement
Enhanced customer focus
Maintain strength and flexibility of balance sheet
Best-in-class Safety and Environmental stewardship
Deliver Shareholder Value
›
›
›
›
›
›
Sustainable and consistent results
Adjusted EBITDA margins approaching 20%
Consistent free cash flow generation
Long term leverage of 2X Adjusted EBITDA
Continue to return value to shareholders
Disciplined M&A
FOCUSED TO EXPOLIT SECULAR GROWTH TRENDS WHILE IMPROVING ABILITY TO EXECUTE AND DELIVER
92
STRATEGY AND OUTLOOK
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Long Range Projections
REVENUE GROWTH
2014
2015
2016
ADJUSTED EBITDA GROWTH
2017
2018
2014
2015
2016
2017
2018
ADJUSTED EBITDA MARGIN GROWTH
2014
2015
2016
2017
2018
EXECUTION OF STRATEGIC PRIORITIES TO DRIVE SIGNIFICANT ADJUSTED EBITDA AND MARGIN GROWTH
(1)
2014 data is preliminary and unaudited. it has been adjusted to exclude Chemtura AgroSolutions and expenses incurred in the process to sell the business
93
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
Appendix
›
›
›
›
94
Pro-Forma Capital Expenditures
Pro-Forma Adjusted EBITDA
GAAP Reconciliation
GAAP Reconciliation by Segment
Computation of Capital Expenditures
Computation to exclude capital expenditure of the divested businesses and then for Chemtura AgroSolutions
Preliminary
($ in Millions)
Capital Expenditure
Year Ended December 31,
2014
$
113
$
2013
2012
2011
170
149
154
Less Capital Expenditure related to:
Antioxidants Business
-
4
7
6
Consumer Products Segement
-
7
6
6
Capital Expenditure related to Continuing Operations
$
113
$
159
$
136
$
142
Less:
Chemtura AgroSolutions Capital Expenditures
Capital Expenditure related to Continuing Operations less Chemtura AgroSoltuions
95
6
$
107
7
$
152
5
$
131
APPENDIX
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
6
$
136
GAAP Reconciliation - Segments
Reconciliation of Segment Operating Income to Adjusted EBITDA
($ in Millions)
INDUSTRIAL PERFORMANCE PRODUCTS
Segment Operating Income
Depreciation and amortization
Preliminary
2014
$
106
Year Ended
2013
2012
$
34
1
-
Stock-based compensation expense
Other Operating Adjustments
109
$
28
1
2
102
25
2
Adjusted EBITDA
$
141
$
140
$
129
INDUSTRIAL ENGINEERED PRODUCTS
Segment Operating Income
Depreciation and amortization
$
16
44
$
55
$
140
Stock-based compensation expense
43
1
1
2
Other Operating Adjustments
43
2
Adjusted EBITDA
$
63
$
99
$
185
CHEMTURA AGROSOLUTIONS/AGROCHEMICAL MANUFACTURING
Segment Operating Income
Depreciation and amortization
$
80
$
88
$
65
$
8
1
89
Stock-based compensation expense
Other Operating Adjustments
Adjusted EBITDA
12
1
$
101
13
1
$
NOTE: 2014 preliminary and unaudited
96
APPENDIX
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
79
Reconciliation of Managed Basis Adjusted for CAS
Reconciliation of Managed Basis Adjusted for CAS to Managed Basis Segment Presentation
Managed
Basis
NET SALES
Industrial Performance Products
Industrial Engineered Products
Chemtura AgroSolutions
(1)
Agrochemical Manufacturing
Total net sales
OPERATING INCOME
Industrial Performance Products
Industrial Engineered Products
Chemtura AgroSolutions
Segment operating income
General corporate expense, including
(2) & (3)
amortization
Total operating income
DEPRECIATION AND AMORTIZATION
Industrial Performance Products
Industrial Engineered Products
Chemtura AgroSolutions
(2)
General corporate expense
Total depreciation and amortization
$
$
$
987
800
987
800
-
(16)
(397)
1,787
$
(75)
133
30
44
8
$
NON-CASH STOCK-BASED COMPENSATION EXPENSE
Industrial Performance Products
$
Industrial Engineered Products
Chemtura AgroSolutions
General corporate expense
Total non-cash stock-based compensation expense
$
1
1
1
11
14
$
$
(381)
$
$
-
16
2,184
16
98
Adjusted EBITDA by Segment:
Industrial Performance Products
Industrial Engineered Products
Chemtura AgroSolutions
(3)
General corporate expense
Adjusted EBITDA
$
381
110
18
80
208
$
Year ended December 31, 2014
CAS
Managed Basis
Adjustments
Adjusted for CAS
141
63
89
(48)
245
$
$
$
(80)
(80)
$
18
(62)
$
-
$
$
-
$
1,782
$
(88)
(88)
$
8
(80)
(92)
162
$
(1)
$
(1)
$
$
(89)
18
(71)
$
$
-
$
$
16
90
1
1
11
13
141
63
(30)
174
$
$
$
$
$
979
803
(449)
(57)
71
$
$
(449)
$
$
-
2,231
$
30
44
-
$
$
449
$
(8)
$
$
979
803
111
55
88
254
$
(8)
$
Year ended December 31, 2013
CAS
Managed Basis
Adjustments
Adjusted for CAS
110
18
128
$
Managed
Basis
28
43
12
17
100
1
1
1
10
13
140
99
101
(65)
275
$
$
$
(12)
(2)
(14)
-
$
Year ended December 31, 2012
CAS
Managed Basis
Adjustments
Adjusted for CAS
891
896
$
(409)
$
2,196
$
(409)
$
111
55
166
$
102
140
65
307
$
(84)
82
$
(116)
191
$
$
$
$
$
$
(1)
$
$
(101)
6
(95)
$
$
28
43
15
86
1
1
10
12
140
99
(59)
180
$
$
$
$
$
$
25
43
13
19
100
2
2
1
17
22
129
185
79
(80)
313
1,787
$
(65)
(65)
$
102
140
242
$
2
(63)
$
(114)
128
$
$
$
(13)
(2)
(15)
-
$
$
$
(1)
$
(1)
$
$
(79)
(79)
$
$
APPENDIX
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015
891
896
$
Notes:
(1) Does not reflect the effect of the continuing product supply agreements to Platform Specialty Products or actual sales under these agreements
(2) Excludes amortization expense related to the Chemtura AgroSolutions business
(3) Excludes expenses incurred in the process to sell the Chemtura AgroSolutions business
(4) Stranded costs related to the CAS business have not been added back in the presentation. Expect to have eliminated these costs in 2015
except for $2 million of expense in Q1 2015
97
$
409
(1)
$
Managed
Basis
$
25
43
17
85
2
2
17
21
129
185
(80)
234
Investor Relations
IR CONTACTS:
Matthew Sokol, Director, Investor Relations
Daniel Murray, Senior Investor Relations Analyst
Investor Relations Tel: 1.203.573.2153
http://investor.chemtura.com, or
http://www.chemtura.com
NYSE / EURONEXT: CHMT
98
CHEMTURA CORPORATION INVESTOR DAY - FEBRUARY 5, 2015