Ciner Resources LP Investor Presentation August 2016

Transcription

1 Ciner Resources LP Investor Presentation August 2016

2 Safe Harbor Statement This presentation may contain forward-looking statements. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. Caution should be taken not to place undue reliance on any such forward-looking statements because actual results may differ materially from the results suggested by these statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and present expectations or projections. These risks and uncertainties include, but are not limited to, those described in the Risk Factors section of CINR s 10-K dated March 11, 2016, and those described from time-to-time in our periodic and other reports filed with the Securities and Exchange Commission. 2

3 Ciner Resources LP - At A Glance Fixed-distribution Master Limited Partnership IPO in September 2013 One of the largest and lowest cost producers of natural soda ash in the world Soda ash, an essential raw material used in the production of glass, chemicals and detergents, is a well structured global industry with steadily growing demand of ~3% annually, or ~ 1.8M tons per year Over 2.6 million short tons annual soda ash production ~475 employees 67+ years of mining reserves 2015 Revenue: $486.4 million 2015 Adjusted EBITDA: $133.9 million 3

4 Ciner Resources - Competitive Advantages Most efficient soda ash producer in North America Amongst lowest cost producers in the world Uniquely configured asset footprint Strong safety and environmental records Excellent workforce relationship; non-union Stable end markets and customer relationships Experienced management and operational team 4

5 Headlines 2015 Earnings per unit $2.58 increased 15.7% Volumes sold and produced both increased more than 100,000 ST Both site records Cash from operations increased from $106M in 2014 to $150M in 2015 Working capital initiative Completed sale to Ciner by OCI Distributable Cash Flow increased from $53.1M in 2014 to $55.7M in 2015 $ Millions Earnings Per Unit Distributable Cash Flow 2016 Volumes forecast to increase 2% - 4% Continue to examine acquisition opportunities 5

6 Delivering Value to Unitholders Long-term stable cash flows support MLP model 67+ year reserve life, significant cost inputs hedged, long-term customers Organic growth projects identified that would allow production volume growth at 2%-4% per year through 2019 Strong financial position at less than 1X leverage ratio 1.24X trailing 12 month distribution coverage ratio Compelling investment proposition through yield plus potential distribution growth ~7.5% current yield with ~5% distribution growth in last 12 months Quarterly Distribution Per Unit Quarterly Coverage Ratio 6

7 Growing Global Demand Diverse End-Market Uses (Global Soda Ash Consumption by End Market, By volume, 2015) Significant Consumption Growth Expected (Global Soda Ash Consumption, millions of tons) Demand = 61 million short tons Major Producer of Low-Cost Natural Soda Ash (2015 Soda Ash Production) Ample Room for per Capita Consumption to Grow (2015, kg / person) Hou 21% Other Other Synthetic Global 3% Natural 7% Searles 11% Ciner 20% Region Consumption per Capita (kg / person) U.S.A. 16 Solvay 48% U.S. Natural 21% Tata 22% Solvay 24% Tronox 23% Middle East 7 Latin America 5 Asia Ex-China 3 Africa 1 Source: IHS and USGS Soda Ash. 7

8 Amongst the Lowest Cost Producers in the World Trona Based Production is Significantly Cost Advantaged As a producer of natural soda ash from trona, Ciner Resources has a significant cost advantage compared to synthetic producers around the world Trona-based production consumes less energy and produces fewer undesirable by-products than synthetic production Synthetic producers incur additional costs associated with the storage, disposal, or attempted resale of byproducts Even accounting for higher freight and logistics costs, Ciner Resources is cost competitive with synthetic soda ash producers to most export markets around the world Ciner Resources consistently operates at high utilization rates and routinely sells 100% of its production Lowest-Cost Production Process Process Raw Materials Energy Usage By- Products Relative Soda Ash Production Costs U.S. Trona Solvay Hou Mining and refining trona Trona 4 6 MMBtu / ton Deca (able to process into soda ash) 1/2~3/4 cost of competing processes 1 1.0x U.S. Trona (Natural Gas) Synthetic production Salt (brine), Limestone, Ammonia MMBtu / ton Calcium Chloride (waste product) 1.4x European Solvay 1.3x China Solvay Synthetic production Salt (brine), Ammonia, Carbon Dioxide MMBtu / ton Ammonium Chloride (co-product) 2.0x China Hou Trona-based production is one-half to three-quarters the cost of synthetic production Source: IHS and Ciner estimates 8

9 Most Efficient Soda Ash Producer in Green River Basin Ciner has the highest soda ash production per employee and the best energy efficiency in the Green River Basin. Production Per Employee (x10 ST, 2015) Green River s Most Energy Efficient Producer (MMBtu/ton, 2015) 624 Peer Peer Peer Source: State of Wyoming Mining Report, Wyoming Department of Environmental Quality. Annual Report State Inspector of Mines of Wyoming. Bessemer Wyoming estimates. 9

10 Trona Beds Closest to the Surface Beds 24 & 25 (closest to surface) are the key for lower manufacturing costs as lower halite impurities and shallow beds are conducive to efficient mining Schematic Section Green River Basin 10

11 Unique Pond Network Lowers Ore to Ash Ratio Wider pond surface area and a unique pond network facilitate the minimization of soda ash lost in processing Trona Advantageous Facility Layout Ponds enable Ciner to recover soda ash via deca rehydration otherwise lost in processing Trona Technological innovation enables Ciner to be more cost efficient Ore to Ash Ratio (1) (1) Amount of short tons of Trona ore required to produce one short ton of soda ash/liquor 11

12 Ability to Execute on Growth Opportunities Ciner has the balance sheet flexibility to capitalize on organic expansion & acquisition opportunities to drive growth Balance Sheet Flexibility to Support Growth Approximately ~$104 million in current available revolver capacity Conservative leverage profile with <1.0x Net Debt / EBITDA Well-capitalized sponsor to support growth with deep operational and industry expertise Capitalize on Organic Expansion Opportunities Emerging Market Growth Debottlenecking, deca and efficiency enhancements driving approximately 2-4% annual production volume growth Pursue Accretive Acquisitions Natural Resources / Industrial Minerals Logistics Assets Ciner Resources Leverage and Liquidity ($ in millions) Ciner Resources LP 6/30/2016 Cash & Cash Equivalents $16.8 Revolving Credit Facility Capacity - CINR 10.0 Revolving Credit Facility Capacity - Ciner Wyoming Less: Revolver and IRB Borrowings (96.0) Available Liquidity $120.8 Total Revolver Borrowings $76.0 IRB Term Loan 20.0 Total Debt $96.0 Net Debt 79.2 Total Debt / FY2015 EBITDA 0.7x Total Net Debt / FY2015 EBITDA 0.6x Assets currently existing or to be developed at Ciner Enterprises Note: Adjusted EBITDA is a non-gaap measure. For a description of Adjusted EBITDA and a reconciliation to the most comparable measures calculated in accordance to GAAP, see the Appendix to this presentation. 12

13 Stable Operating and Financial Results Soda Ash Volume Sold (millions of ST) Ciner Wyoming EBITDA ($ in millions)

14 Market Trends Asia pricing affected by environmental shutdown Largest producer in China had a complete shutdown in Q1, which temporarily tightened the Asian market. Ammonium Chloride price fell to $73/MT. Should stabilize Asia pricing in the short term. Other international markets South America demand resilient Growth in Brazil, Mexico, and Chile Domestic market share growth Continued share growth strategy should see domestic volume rise by 4 6 % Confidential 14

15 Ciner Resources - Investment Highlights Compelling investment proposition provided through yield plus distribution growth Stable cash generation Organic and acquisition growth opportunities supporting annual distribution growth Conservative coverage ratio Lowest cost soda ash production Significant mining reserve life Operational advantages Strong safety record and environmental responsibility Stable customer relationships Proven management and operational team 15

16 APPENDIX Confidential 16

17 Refining Process Flow Mining Process Flow Process Overview Continuous Mining Haulage Crushing Surge Storage Hoisting Ciner s Unique Process Screening & Crushing Calcining Dissolving Filtering Deca Rehydration Shipping Storage Drying Evaporation 17

18 Ciner Organizational Structure Ciner Enterprises (100.0% Ownership) Ciner Resources Corporation (100.0% Ownership) Public ~25% LP Interest Ciner Wyoming Holding Co. ~73% LP Interest million common units million subordinated units Natural Resource Partners L.P. (100% Ownership) 5.10 million common units Ciner Resource Partners LLC 2% GP Interest & IDRs million units NRP Trona LLC (49% Member Interest) Ciner Resources LP (51% Member Interest) Ciner Wyoming LLC 18

19 About Ciner Group Established in 1978, Ciner Group is primarily active in energy, mining, shipping and media and is one of the largest conglomerates in Turkey Energy, Mining and Glass Coal & Copper Mining Soda Ash and Sodium Bicarbonate Production (Eti Soda) Glass manufacturing Electricity Generation Media Newspapers & Printing Movie & TV Production TV & Radio Broadcasting Online media Shipping Owns a fleet of 26 Bulkers, Containers, and Tankers which are managed by time charters 19

20 Non-GAAP Reconciliation Ciner Resources LP Quarter Ended 6/30/16 Quarter Ended 6/30/15 Net Income $21.8 $24.5 Add: Depreciation, depletion and amortization Interest expense (net) Loss on Disposal of Assets (net) - - Adjusted EBITDA Less: Adjusted EBITDA attributable to non-controlling interest Adjusted EBITDA Attributable to Ciner Resources LP $14.2 $15.4 Non-GAAP Financial Measures We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation and amortization and certain other expenses that are non-cash charges or that we consider not to be indicative of ongoing operations. Adjusted EBITDA is a non-gaap supplemental financial liquidity and performance measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: our operating performance as compared to other publicly traded partnerships in our industry, without regard to historical cost basis or financing methods; the ability of our assets to generate sufficient cash flow to make distributions to our unitholders; our ability to incur and service debt and fund capital expenditures; and the viability of capital expenditure projects and the returns on investment of various investment opportunities. We believe that the presentation of Adjusted EBITDA in this investor presentation provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA are net income and cash flow from operations. Our non-gaap financial measure of Adjusted EBITDA should not be considered as an alternative to net income or cash flow from operations. Adjusted EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income and cash flows from operations. You should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies, including those in our industry, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. 20

21 Non-GAAP Reconciliation Ciner Resources LP Year Ended 12/31/15 Year Ended 12/31/14 Net Income $106.2 $91.9 Add: Depreciation, depletion and amortization Interest expense (net) Loss on disposal of assets (net) Provision for income taxes - - Adjusted EBITDA Less: Adjusted EBITDA attributable to non-controlling interest Adjusted EBITDA Attributable to Ciner Resources LP $66.2 $59.7 Non-GAAP Financial Measures We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation and amortization and certain other expenses that are non-cash charges or that we consider not to be indicative of ongoing operations. Adjusted EBITDA is a non-gaap supplemental financial liquidity and performance measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: our operating performance as compared to other publicly traded partnerships in our industry, without regard to historical cost basis or financing methods; the ability of our assets to generate sufficient cash flow to make distributions to our unitholders; our ability to incur and service debt and fund capital expenditures; and the viability of capital expenditure projects and the returns on investment of various investment opportunities. We believe that the presentation of Adjusted EBITDA in this investor presentation provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA are net income and cash flow from operations. Our non-gaap financial measure of Adjusted EBITDA should not be considered as an alternative to net income or cash flow from operations. Adjusted EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income and cash flows from operations. You should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies, including those in our industry, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. 21

22 Non-GAAP Reconciliation Coverage Ratio Rolling Non-GAAP Reconciliation Schedule The following table presents a reconciliation of the non-gaap financial measures of Adjusted EBITDA to GAAP financial measure of net income for the periods presented: ($ in millions, except per unit data) Cumulative Four Quarters ended Q Q Q Q Q Q Reconciliation of Adjusted EBITDA to net income: Net income $ 98.1 $ 21.8 $ 21.1 $ 28.3 $ 26.9 $ 24.5 Add backs: Depreciation, depletion and amortization expense Interest expense, net Adjusted EBITDA $ $ 29.1 $ 28.2 $ 35.9 $ 33.6 $ 31.4 Less: Adjusted EBITDA attributable to non-controlling interest Adjusted EBITDA attributable to Ciner Resources LP $ 62.7 $ 14.2 $ 13.9 $ 17.9 $ 16.7 $ 15.4 Adjusted EBITDA attributable to Ciner Resources LP $ 62.7 $ 14.2 $ 13.9 $ 17.9 $ 16.7 $ 15.4 Less: Cash interest expense, net attributable to Ciner Resources LP $ 1.8 $ 0.4 $ 0.4 $ 0.5 $ 0.5 $ 0.6 Maintenance capital expenditures attributable to Ciner Resources LP (1) $ 5.3 $ 0.8 $ 1.0 $ 0.7 $ 2.8 $ 2.7 Distributable cash flow attributable to Ciner Resources LP $ 55.6 $ 13.0 $ 12.5 $ 16.7 $ 13.4 $ 12.1 Cash distribution declared per unit $ $ $ $ $ $ Total distributions to unitholders and general partner $ 44.8 $ 11.4 $ 11.3 $ 11.1 $ 11.0 $ 10.9 Distribution coverage ratio (1) The Partnership may fund expansion-related capital expenditures with borrowings under existing credit facilities such that expansion-related capital expenditures will have no impact on cash on hand or the calculation of cash available for distribution. In certain instances, the timing of the Partnership s borrowings and/or its cash management practices will result in a mismatch between the period of the borrowing and the period of the capital expenditure. In those instances, the Partnership adjusts designated reserves (as provided in the partnership agreement) to take account of the timing difference. Accordingly, expansion-related capital expenditures have been excluded from the presentation of cash available for distribution. 22

23 Capital Structure Capitalization Ciner Resources Available Liquidity ($ in millions) As of June 30, 2016 ($ in millions) Facility Size Available Liquidity Cash and Cash Equivalents $16.8 Long Term Debt Ciner Wyoming Credit Facility $76.0 Revenue Bonds due Revenue Bonds due Revolving Credit Facility 0.0 Total Long Term Debt $96.0 Total Equity $262.2 Total Capitalization $358.2 Revolving Credit Facility $10.0 $10.0 Ciner Wyoming Credit Facility (1) Total $200.0 $104.0 (1) Includes outstanding borrowing of $83.5 mn and $20 mn of revenue bonds. 23

24 IDR Structure & Subordination Period CINR IDR Structure Marginal Percentage Interest in Distributions Distribution per Unit Range (expressed as % of MQD) LP Share GP Share From To Initial Split 98% 2% 0% % 2nd Split 85% 15% 115% % 3rd Split 75% 25% 125% % 4th Split 50% 50% 150% -- above CINR Subordinated LP Units Subordination % 49% Subordination Period Early Termination of Subordination Period The subordination period will end on the first business day after the MLP has earned and paid at least the minimum quarterly distribution on an annualized basis on each outstanding common, subordinated and general partner unit, for each of three consecutive, non-overlapping four-quarter periods ending on or after September 30, 2016 None 24