Credit Suisse Chemicals and Ag Science Conference. September 2013

Transcription

1 Credit Suisse Chemicals and Ag Science Conference September

2 Forward-Looking Statements This presentation contains certain statements relating to future events and our intentions, beliefs, expectations, and predictions for the future. Any such statements other than statements of historical fact are forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of Words or phrases such as "anticipate," "believe," "plan," "estimate," "project," "may," "will," "intend," "target," "expect," "would" or "could" (including the negative variations thereof) or similar terminology used in connection with any discussion of future plans, actions or events generally identify forward-looking statements. These statements relate to, among other things, our outlook for future periods, global demand for our products, pricing trends and market forces within the chemical and building products industries, expected benefits of the merger with the PPG chemicals business, integration plans, the expected cost advantage of natural gas in North America and the expected duration of any such cost advantage and other statements of expectations concerning matters that are not historical facts. These statements are based on the current expectations of our management. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements included in this presentation. These risks and uncertainties include, among other things: (i) a material adverse change, event or occurrence affecting Axiall or the newly acquired chemicals business; (ii) the ability of Axiall to successfully integrate the businesses of the chemicals business formerly owned by PPG with which Axiall has merged, which may result in the combined company not operating as effectively and efficiently as expected; (iii) the possibility that the merger and related transactions may involve other unexpected costs, liabilities or delays; and (iv) uncertainties regarding future prices, industry capacity levels and demand for Axiall s products, raw materials and energy costs and availability, feedstock availability and prices, changes in governmental and environmental regulations, the adoption of new laws or regulations that may make it more difficult or expensive to operate Axiall s businesses or manufacture its products, Axiall s ability to generate sufficient cash flows from its business after the merger, future economic conditions in the specific industries to which its products are sold, and global economic conditions. In light of these risks, uncertainties, assumptions, and factors, the forward-looking events discussed in this presentation may not occur. Other unknown or unpredictable factors could also have a material adverse effect on Axiall s actual future results, performance, or achievements. For a further discussion of these and other risks and uncertainties applicable to Axiall and its business, see Axiall s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and subsequent filings with the SEC. As a result of the foregoing, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Axiall does not undertake, and expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events, or changes in its expectations, except as required by law. 2

3 Axiall Overview 3

4 Axiall Value Drivers U.S. Shale Gas has Changed the Structure of Global Chlorovinyls Markets On low end of global cost curves for chlor-alkali and ethylene North American vinyl exports up ~250% since 2008, caustic up ~100% U.S. Housing Recovery Drives vinyl demand Growth and Margin Expansion U.S. demand for vinyl expected to grow 5+% for several years U.S. vinyl operating rates likely >90% in the near term North American vinyl demand expected to be satisfied by export repatriation Building Products Volume & Margins Expected to Improve with U.S. Housing Recovery U.S. housing activity well below historical levels Volume recovery underway Significant Cost Synergies and Well-Positioned to Capitalize on Growth Opportunities Expected ~$115 million of annualized cost synergies in the first two years Strong capital structure and cash flows Well positioned to participate in North American ethylene expansion Scale, Integration and Global Cost Advantage Creates Opportunity for Axiall 4

5 Axiall Pro Forma 2012 Sales Aromatics 22% Cumene Phenol Acetone Chlorovinyls 60% Building Products 18% Caustic Soda Chlorine Vinyl Resin Compounds Siding Pipe Windows/Doors Mouldings 5

6 Building Products Portfolio Siding Soffit Accessories Shutters Shakes Corner Post Shutters Columns Pipe & Fittings Corners Windows Railing Surrounds Decking Mouldings Fascia 6

7 Building Products Sales Mix & Drivers US 47% Single Family Sales Geography End Use Mix 53% CANADA Key Drivers: Canadian Single Family homes Canadian Repair & Remodel U.S. NE & Midwest Repair &Remodel U.S. NE & Midwest Single Family homes Minimal exposure to U.S. South & West 45% 55% Repair & Remodel 7

8 Aromatics Largest cumene plant in the world Integrated producer of phenol/acetone 100% merchant marketer of phenol and acetone Refinery Grade Propylene Benzene CUMENE 2.0 billion lbs. 50% Sold Primary End Uses Intermediate for Phenol and Acetone Gasoline Additive ACETONE 408 million lbs. PHENOL 660 million lbs. 100% Sold Primary End Uses Phenolic Resins Engineered Plastics Specialty Chemicals 100% Sold Primary End Uses Acrylic Resins Engineered Plastics Industrial Solvents Note: Capacity includes Pasadena plant (160 million lbs. of phenol and 100 million lbs. of acetone) which has been idled. 8

9 Chlorovinyls Building Products Integration Ethane Ethylene Merchant Resin Chlorine VCM Vinyl Resins Salt Chloralkali Derivatives and Merchant Chlorine Vinyl Compounds Merchant Caustic Soda Electricity Building Products Natural Gas Cogen Facilities Merchant Compound 9

10 North American Competitors and Capacity ECU 1) VCM (intermediate) Vinyl ('000s short tons) 4,000 ( 000s short tons) 3,500 ( 000s short tons) 3,000 3,000 2,000 1,000 3,000 2,500 2,000 1,500 1, ,500 2,000 1,500 1, ) Electrochemical Unit (ECU) defined as 1 ton of chlorine and 1.1 tons of caustic Source: IHS (CMAI) 10

11 Diverse Product Portfolio Creates Optionality Chlorine Downstream Vinyl Downstream Merchant Up to 40% Derivatives 15% VCM/Vinyl 45% Domestic Merchant 56% Export 20% Compound 12% Building Products 12% 60% internally consumed by a broad mix of chlorine derivatives Multiple downstream growth opportunities Gulf Coast logistics provide excellent access to export markets Organic growth expected in Building Products as U.S. housing recovers 11

12 Synergies to be Realized Over First 2 Years Expected Value Procurement & Logistics Operating Rate G&A Reduction Savings from combined $2+ billion/year purchased materials and services Freight and terminal optimization Operating rate optimization through the chain of combined assets Reduced overhead charges Information Technology savings Impact of purchase accounting pension adjustments (~$15M) ~$40M ~$35M ~$40M Annualized Cost Synergy Run Rate ~$115M Total Cash to Achieve Professional fees, consultants Information Technology implementation Relocation and Severance costs ~$55M $60 Million annualized run rate expected by end of first year 12

13 Chlor-alkali and Vinyl Outlook 13

14 Axiall 3 rd Largest Global Player Projected 2013 Global Capacity Over 90 Million ECU/Year 460 Others 73% Dow 7% Oxy 4% Solvay TOSOH 1% 1% Formosa 3% Olin Akzo Bayer 2% 2% 2% Ineos 2% Axiall 3% Source: IHS (CMAI) and Axiall marketing 14

15 Global Chlor-Alkali Operating Profile Advantaged cost, export growth, stable economy High cost, slow economy Cooling demand, oil/coal based cost structure 84% 77% 74% 67% 70% 82% Strong demand, net importer 2012 Operating Rates 79% Low cost, no local demand, political instability Insufficient caustic supply Source: IHS (CMAI), Chlorine Institute, Eurochlor, Axiall marketing 15

16 US Chlor-Alkali Remains Cost Advantaged Global Chlor-Alkali Manufacturing Costs 250% Relative Cost (US = 100%) 200% 150% 100% 50% 0% % of Global Capacity 16% 42% 17% 4% Source: IHS, Axiall marketing, sunsirs.com 16

17 Projected NA Chlor Alkali Capacity Changes 6,500 NA Capacity Change (Chlorine TPD) 5,500 4,500 3,500 2,500 1,500 Additions Reductions % CAGR Growth Capacity Additions Match Demand Growth Sources: Company announcements, PPG estimates 17

18 North American Chlorine Demand Water, 6% EPI, 5% HCI, 6% TiO2 5% 2012 Demand: 14 million ECUs PO 10% MDI/TDI 7% Vinyl 35% Org/Inorg 26% U.S. Housing Recovery Satisfied by Fewer Exports, not more Chlorine Source: IHS (CMAI), ACC, Axiall marketing 18

19 US Vinyl Chain Ethylene Consumption Ethylene MM lbs/yr Captive Purchased Oxy Shintech Axiall Formosa Westlake Source: IHS (CMAI) and Axiall management estimates of current annualized consumption ~75% of North American Vinyl from Purchased Ethylene 19

20 North American Ethylene Expansions Thousand metric tons 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, capacity North America: 27 million metric tons World: 149 million metric tons Source: IHS (CMAI) and Axiall management estimates Cumulative Total of 11 million metric tons/year by

21 Operating rates moving up over time U.S. and Canadian Vinyl Industry 100% 100% 90% 80% 70% 60% 100% 90% 80% 70% 60% Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 U.S. Chlor-alkali Industry 90% 80% 70% 60% Source: CDI and AXLL mgt estimates 100% 90% 80% 70% 60% Source: Chlorine Institute and IHS 21

22 Combined Mid-Cycle EBITDA (1) to $850mm+ All charts in $ millions Chlorovinyls EBITDA Hawk Eagle Synergies Georgia Gulf PPG Synergies Trough Mid-Cycle Drivers: Operating rates Natural Gas advantage Chlorine-caustic demand balance Building Products EBITDA Drivers: US and Canadian Housing Starts Remodel/Renovation activity 0 Trough Mid-Cycle 50 Aromatics EBITDA Drivers: Operating rates Cumene-phenol capacity balance Export demand 0 Trough Mid-Cycle Higher Integration Level Reduces EBITDA Cyclicality Source: Axiall Management 1. Assumes corporate costs of $60 million and all business segments experiencing mid cycle conditions at the same time. 22

23 Q&A 23