Value Times Three Grant s Spring Conference April 7, 2015
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Mountain Lake Partners Cash Position 70% 60% 50% 9/30/2008: 54.5% 3/31/2015: 62.8% 40% 30% 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Mountain Lake Partners billions $35 $30 $25 $20 $15 $10 $5 $0 Weighted Median Market Cap of Equity Investments 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Owens-Illinois 3/31/2015 Market Capitalization = $3.8 billion
Owens-Illinois Corporate History 1903 Michael Owens completes the automated bottle blowing machine and forms Owens Bottle Machine Company. 1929 Owens-Illinois was formed after the acquisition of Illinois Glass. 1958 Owens-Illinois sells Kaylo, its asbestos containing insulation unit, to Owens Corning. During the 10 years of ownership, aggregate sales are less than $40 million.
Owens-Illinois Corporate History 1987 KKR leveraged buyout for $3.7 billion 1988 With the acquisition of Brockway Glass, Owens-Illinois domestic market share is greater than 40% 1991 Initial public offering 2014 Asbestos related payments total $4.4 billion 2015 Current market capitalization is $3.8 billion
Owens-Illinois Recent Decade of Nothing $80 Stock Price $60 $40 $20 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bloomberg
Owens-Illinois Glass Bottle Industry Dynamics - High fixed costs - Consolidated market - Barriers to entry - Steady demand - Limited growth - Generates lots of cash
20% 15% 10% 5% 0% Owens-Illinois European Operating Margin 2009 2010 2011 2012 2013 2014 2015E 2016E - In Europe, Owens-Illinois has 25% market share. - The top three firms have 67% market share. - Normal margins are 12.5%. Source: Company reports and Mountain Lake estimates
20% 15% 10% 5% 0% Owens-Illinois North American Operating Margin 2009 2010 2011 2012 - In North America, Owens-Illinois has 40% market share. - The top three firms have 85% market share. - Normal margins are 15%. 2013 2014 2015E 2016E Source: Company reports and Mountain Lake estimates
Owens-Illinois South American Operating Margin 25% 20% 15% 10% 5% 0% 2009 2010 2011 2012 - In Brazil, Owens-Illinois has 65% market share. - In Peru, Ecuador and Columbia, Owens-Illinois has 100% market share. - Normal margins are 20%. 2013 2014 2015E 2016E Source: Company reports and Mountain Lake estimates
20% 15% 10% 5% 0% Owens-Illinois Asia Pacific Operating Margin 2009 2010 2011 2012 2013 2014 2015E 2016E - In China, Owens-Illinois has about a 2% market share with a 0% margin. - In Australia and New Zealand, Owens-Illinois has 70% market share. Normal margins are 15%. Source: Company reports and Mountain Lake estimates
Owens-Illinois All Regions Operating Margin 20% 15% 10% 5% 0% 2009 2010 2011 2012 2013 2014 2015E 2016E Source: Company reports and Mountain Lake estimates
millions $600 $500 $400 $300 $200 $100 $0 Owens-Illinois Pretend Free Cash Flow* 2009 2010 2011 2012 2013 2014 2015E 2016E *excluding payments for asbestos and restructuring Source: Company reports and Mountain Lake estimates
billions $6 $5 $4 $3 $2 $1 $0 Owens-Illinois Net Debt 2000 2005 2010 2014 Cash used since 2000: $191 million per year Current leverage ratio: 2.4 Source: Company reports
$250 Owens-Illinois Restructuring Charges $200 millions $150 $100 $50 $0 2009 2010 2011 2012 2013 2014 2015E Asian and European restructurings completed in 2009 and 2015 Cash use since 2009: $114 million per year Source: Company reports and Mountain Lake estimates
$200 Owens-Illinois Asbestos Charges millions $150 $100 $50 $0 2009 2010 2011 2012 2013 2014 Cash used since 2009: $158 million per year Source: Company reports
Owens-Illinois Mesothelioma Incidence Source: National Cancer Institute
Owens-Illinois Core Competency in Asbestos Litigation 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Asbestos Claims Pending 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Asbestos Claims Filed 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Company reports
Owens-Illinois Recent Claims Activity 12,000 10,000 8,000 6,000 4,000 2,000 0 2009 2010 2011 2012 2013 2014 Disposed Filed Source: Company reports
Owens-Illinois $400 Reported Free Cash Flow millions $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 The impact in 2014 from the strong USD was $40 million. Source: Company reports
Owens-Illinois Reported Free Cash Flow with Estimates millions $400 $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 2015E 2016E Source: Company reports and Mountain Lake estimates
Owens-Illinois Reported Free Cash Flow with Estimates and Adjusted Estimates* millions $600 $500 $400 $300 $200 $100 $0 2009 2010 2011 2012 2013 2014 2015E 2016E *excluding payments for asbestos and restructuring Source: Company reports and Mountain Lake estimates
Koppers Holdings 3/31/2015 Market Capitalization = $403 million
Koppers Holdings Corporate History 1914 Heinrich Koppers sells patents for by-product coke ovens to Andrew Mellon for $300,000. Koppers Inc. reorganizes in Pittsburg. 1960 Fletcher Byrom focuses the company on end products. 1988 Beazer plc led an LBO 1997 Hansen plc, who acquired Beazer in 1991, wanted control. Management exercised right of first refusal. 2007 Streamlined company producing carbon materials and wood products has IPO.
Koppers Holdings 2013 Revenues $1.5 billion Carbon Materials and Chemicals 61% Railroad and Utility 39% Source: Company reports
Koppers Holdings COAL TAR Carbon Pitch 50% Chemical Oils 20% Distillate 30% Naphthalene Creosote Phthalic Anhydride Primary End Products Aluminum Vinyl, Paint and Concrete Additives Railroad Crossties Source: Company reports
15% Koppers Holdings Carbon Materials and Chemicals Operating Margins 10% 5% 0% -5% 2008 2009 2010 2011 2012 2013 2014 2015E Source: Company reports and Mountain Lake estimates
30% 25% 20% 15% 10% 5% 0% -5% Koppers Holdings Carbon Materials and Chemicals Return on Invested Capital 2011 2012 2013 2014 2015E Source: Company reports and Mountain Lake estimates
Koppers Holdings Net Debt millions $1,000 $800 $600 $400 $200 $0 2011 2012 2013 2014 Date Acquisition Product or Service Price 8/15/2014 Osmose Wood preservation $491 M 1/20/2014 Ashcroft Crosstie treating $29.8 M Source: Company reports
Koppers Holdings 11/7/2014 Walt Turner resigns, Leroy Ball appointed CEO 1/14/2015 Company announces delay of low cost naphthalene plant to preserve cash 1/22/2015 Attempt to refinance high cost debt fails 2/26/2015 Company misses earnings guidance for 8 th quarter in a row 2/26/2015 Company announces $200mn-$250mn debt reduction target 2/26/2015 Board of Directors suspends dividend
Koppers Holdings $60 Stock Price $50 $40 $30 $20 $10 $0 2011 2011 2012 2012 2013 2013 2014 2014 2015 2014 Year End Shares = 20.5 million Source: Bloomberg
Koppers Holdings $800 Debt Maturities $600 millions $400 $200 $0 2015 2016-2017 2018-2019 2020+ Source: Company reports
Koppers Holdings 2015 Revenues $1.8 billion Carbon Materials and Chemicals 41% Railroad and Utility 38% Performance Chemicals 21% Source: Company reports
Koppers Holdings 14% 12% 10% 8% 6% 4% 2% 0% Railroad and Utility Operating Margins 2012 2013 2014 2015E Source: Company reports and Mountain Lake estimates
Koppers Holdings Railroad and Utility is a Good Business - Largest supplier of railroad ties to North American railroads - Two firm concentration is about 80% - Steady replacement market demand 600 million railroad ties wear out; over 20 million replaced every year - Long-term contracts with cost-plus pricing - Minimal capital investment - Margin opportunity from process improvements
Koppers Holdings 50% Railroad and Utility Return on Invested Capital 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015E Source: Company reports and Mountain Lake estimates
Koppers Holdings Performance Chemicals $400 Revenues 15% Operating Margins $300 $200 $100 10% 5% $0 2014 2015E 2016E 0% 2014 2015E 2016E Source: Company reports and Mountain Lake estimates
Koppers Holdings Performance Chemicals is a Good Business - Wood treatments for outdoors decks - They are a dominant provider, still gaining market share - High IP content; patent protection - Not capital intensive - Sell to wood treaters who in turn sell to big box stores, contractors and small stores - Housing starts is a small percent of demand; driven by remodels
Koppers Holdings 30% Performance Chemicals Return on Invested Capital 25% 20% 15% 10% 5% 0% 2011 2012 2013 2014 2015E Source: Company reports and Mountain Lake estimates
Koppers Holdings Operating Income by Segment In millions 2011 2012 2013 2014 2015E 2016E Carbon Materials and Chemicals $89.1 $83.1 $43.9 -$5.3 -$9.1 $6.5 Railroad and Utility $34.8 $45.1 $58.3 $53.6 $73.8 $72.6 Performance Chemicals $0.0 $0.0 $0.0 $1.6 $40.6 $37.2 Total Segment Operating Income $123.9 $128.2 $102.2 $49.9 $105.3 $116.3 Source: Company reports and Mountain Lake estimates
Koppers Holdings Free Cash Flow In millions 2011 2012 2013 2014 2015E 2016E Net Income $37.6 $67.2 $40.1 -$39.4 $37.2 $46.4 Depreciation and Amortization $48.8 $27.6 $29.7 $44.0 $65.0 $61.0 Capital Expenditures -$33.2 -$28.9 -$72.9 -$83.8 -$45.0 -$44.0 Free Cash Flow $53.2 $65.9 -$3.1 -$79.2 $57.2 $63.4 Source: Company reports and Mountain Lake estimates
Koppers Holdings In millions Stella Jones Koppers Holdings Koppers without CMC Date 3/31/2015 3/31/2015 3/31/2015 Market Capitalization $2,161 $403 $403 Enterprise Value $2,548 $1,217 $1,217 2015E Revenues $1,138 $1,705 $1,005 2015E Operating Income $142 $105 $114 2015E Operating Margin 12.5% 6.2% 11.4% Source: Bloomberg and Mountain Lake estimates
Tidewater Big Floating Trucks Boat and/or truck pictures 3/313/2015 Market Capitalization = $898 million
Tidewater Big Floating Trucks with a Bow for Extra Beauty - Safe, efficient and compliant operations - New vessels that service all water depths - Geographic diversity - Strong customer base, relationships and contracting
Tidewater Vessel Population by Owner Deepwater Vessels only Source: Company reports
Tidewater Vessel Commitments Jan. 2000 Dec. 2014 Vessel Count Total Cost Deepwater PSVs 102 $2,900m Deepwater AHTSs 12 $387m Towing Supply/Supply 111 $1,667m Other 53 $227m Totals 278 $5,181m Source: Company reports
$90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Tidewater Stock Price 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Bloomberg
Tidewater 12/31/2014 Balance Sheet Items (in Billions) Vessel and Related Equipment $4.63 Net PP&E $3.67 Goodwill $0.00 Net Debt $1.41 Equity $2.51 Shares 46.9 M Book Value per Share $53.50 Stock price as of 3/31/2015 $19.14 Market cap as of 3/31/2015 $897 M Source: Company reports and Bloomberg
Tidewater Debt Maturities millions Fiscal Year ending March 31 Source: Company reports
Tidewater 60% 50% 40% 30% 20% 10% 0% Vessel Cash Operating Margin 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E Fiscal Year ending March 31 Source: Company reports and Mountain Lake estimates
50% 40% 30% 20% 10% 0% -10% Tidewater Operating Margin 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E Fiscal Year ending March 31 Source: Company reports and Mountain Lake estimates
millions $300 $200 $100 $0 -$100 -$200 -$300 -$400 Tidewater Free Cash Flow 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Fiscal Year ending March 31 2015E 2016E Source: Company reports and Mountain Lake estimates
millions $200 $150 $100 $50 $0 Tidewater Capital Expenditures We are here, 85 days until positive free cash flow 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018 4Q2018 Fiscal Year ending March 31 Source: Company reports and Mountain Lake estimates
millions $300 $200 $100 $0 -$100 -$200 -$300 -$400 Tidewater Free Cash Flow 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E Fiscal Year ending March 31 Source: Company reports and Mountain Lake estimates