EX-99.1 2 dex991.htm INVESTOR PRESENTATION Investor presentation
NORANDA
ALUMINUM
HOLDING
CORPORATION—NOVEMBER
2010
Exhibit 99.1

Mr. Mahoney was appointed Chief Financial Officer in May
2009
Mr. Mahoney has over 23 years of cyclical industry
experience in senior financial management positions for
semiconductor and electrical components companies
including Hi-P International Limited and Molex Inc.
Mr. Mahoney received a BA in Economics and History from
the University of Virginia and an MBA from the University
of Michigan
President
and
Chief Executive
Officer
Chief Financial
Officer
Robert B. Mahoney
Mr. Smith was appointed President, Chief Executive Officer
and Director in 2008
Mr. Smith has diverse leadership experience, including
various management assignments with The Dow Chemical
Company and positions as COO of Resolution
Performance Products and CEO of Covalence Specialty
Materials
Mr. Smith holds a BA in Chemistry and an MBA from
Harvard University
Layle “Kip”
Smith
2

Forward Looking Statements
The following information contains, or may be deemed to contain,
"forward-looking statements" (as defined in the U.S. Private Securities
Litigation Reform Act of 1995).  By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in
the future.  The future results of the issuer may vary from the results
expressed in, or implied by, the following forward looking statements,
possibly to a material degree.  For a discussion of some of the
important factors that could cause the issuer's results to differ from
those expressed in, or implied by, the following forward-looking
statements, please refer to our filings with the SEC, including our
annual report on Form 10-K.
3

Downstream Business
Downstream Business
Annual Capacity:  495mm lbs
(2)
St. Ann   Bauxite
Mine
New Madrid
Aluminum
Smelter
Newport
Rolling Mills
Salisbury
Rolling Mills
East
Mill
West
Mill
Huntingdon
Rolling Mills
Bauxite
Discovery Bay,
Jamaica
4.5mm Mt
Alumina
Gramercy, LA
1.2mm Mt
Aluminum
Primary  Metal
New Madrid, MO
263k Mt (580mm lbs)
Fin stock (HVAC) and Auto, Semi-Rigid Container Stock, Flexible
Packaging, Transformer Windings
Huntingdon, TN
Huntingdon West
235mm lbs
(2)
Huntingdon East
130mm lbs
Newport, AR
35mm lbs
(2)
Salisbury, NC
95mm lbs
(2)
Products:
Location:
Annual
Capacity:
Upstream Business
Upstream Business
Annual Capacity: 580mm lbs
YTD 2010 Cash Cost is $0.71
2009 Cash Cost at Full Production: $0.72 / lb
(1)
Gramercy Refinery
Revenue
Drivers:
Volume & LME
Residential construction / remodeling, packaging, U.S. consumer
_______________________
(1)
We
estimate
that
due
to
lost
production
volume
in
2009
from
the
smelter
outage,
which
caused
lost
efficiency
and
fixed
cost
absorption,
our
upstream
cash
cost
of
primary
aluminum
for
FYE
2009
of
$0.77
per
poundwas
negatively
impacted
by
approximately
$0.05
per
pound.
(2)
Maximum
capacity,
with
actual
capacity
depending
upon
production
mix.
Noranda’s
Integrated Footprint
4

Key Messages
•
Aluminum’s fundamentals support long
term demand growth
•
Noranda
is a pure aluminum play
o
We are highly leveraged to the LME
o
We are fully integrated, from bauxite
to aluminum foil
o
We choose to manage with a
passionate focus on productivity
o
We have a value-added growth
strategy
Demonstrated Ability to Create Value
•
During the 2008/2009 downturn, we
o
Lowered our cost of producing a
pound of primary aluminum
o
Generated cash
o
Decreased our safety incidents
o
Decreased our debt
o
Increased our share of demand in key
product segments
•
We have produced solid post-IPO
results
5

Noranda is well positioned to take advantage of demand growth and a recovery in Aluminum prices
6

Global aluminum demand is expected to
continue to grow
o
Global economic growth
o
Higher standards of living and increased
demand from emerging markets
•
Substitution from other metals such as copper
o
CRU: Copper to aluminum price ratio has “hit
new highs in recent months and is set to widen
further in 2011”
o
Gains are occurring in wire and cable and bus-
bars, heat transfer applications, commercial
heat exchanger applications
•
Aluminum is highly correlated with
o
GDP growth
o
Rapid urbanization
o
Increasing environmental consciousness
Beta to Global GDP (30 Years)
Aluminum Consumption Growth vs.
Global GDP Growth since 1976
2.4
2.3
1.6
1.0
0.0
1.0
2.0
3.0
Aluminum
Nickel
Copper
Zinc
7
*
Source:
Harbor
Intelligence;
5
Ali
analysts
most
accurate
from
2001
through
2009
We Hold a Positive Outlook For Aluminum
Forecasts of Average Annual LME
We see stable demand, at prices sufficient to support value creation

Though
we
can’t
control
the
LME,
we
exercise
significant
control
and
influence
over
the
basic
drivers
of
our
success
8

The integration of our Upstream Business is
the cornerstone to our strategy and
sustainability
–
Significant Operating Leverage to LME
Integration provides for a more stable cost base
relative to non-integrated producers whose margins
may be eroded by rising input costs that are
correlated to LME
Third party sales of excess raw materials (e.g.,
bauxite and alumina) enhance our leverage to LME
–
Low Cost & Operating Flexibility
Expanded portfolio of opportunities to drive cost out
and increase productivity and sales
–
Secure Supply
For our smelter and refinery, we have the ability to
provide over 100% of our alumina and bauxite needs
Vertically Integrated Upstream Business
Primary
Aluminum
Alumina
Noranda
Bauxite
Mine
Noranda
Alumina
Refinery
New Madrid
Primary Aluminum
Smelter
Bauxite
Integration drives leverage to LME, secure supply and expanded cost-cutting opportunities
9

New Madrid Smelter Has Returned to Full Operations
•
At full capacity, New Madrid is 15% of U.S.
primary
aluminum
production
(1)
•
Despite low capacity utilization, 2009 cash cost
was $0.77/lb vs. $0.81/lb in 2008
•
CRU ranked us near the midpoint of the 2009
global smelter power cost curve
•
We estimate that, at full production, 2009 cash
cost
would
have
been
$0.72/lb
(2)
YTD 2010 cash cost is $0.71/lb
We Are Focused on Cost Competitive Power
•
AmerenUE—Missouri’s largest electric utility
provides electricity to New Madrid
•
New Madrid Contract Terms; Expires in 2020,
with renewal options and notice periods; No
"Take or Pay" provisions (except 5 MW)
•
Noranda
is its own ratepayer class
•
Rate History—Proactively managed our rates
since the divestiture from Xstrata. Most recent
rate case had no impact to Noranda
•
Rate Outlook—In July 2010, AmerenUE
filed a
rate case.  Time for a rate case to be decided by
the MoPSC
is eleven months
_______________________
(1)
CRU
Aluminum
Quarterly,
October
2010
(2)
Lost
efficiency
and
fixed
cost
absorption,
impacted
our
upstream
cash
cost
of
primary
aluminum
for
FYE
2009
of
$0.77
per
pound
by
an
estimated
$0.05
per
pound
(3)
Reflects
impact
of
2009
smelter
outage
due
to
January
2009
ice
storm.
Cost effective New Madrid smelter is leveraged to aluminum prices
Production Volume 2006 to 2009
Strategic Drivers Enable Leverage to the LME
•
Grow production and value-added sales
•
CORE productivity
o
Re-launched New Madrid capacity expansion,
adding 35 million pounds by 2013
•
Drive cost independence from LME
o
Neither alumina supply nor power contract is tied
to the LME price
•
According to CRU estimates, smelter expected to be
in 2nd quartile globally for 2010
10

•
Low cost Production
o
Huntingdon West is the lowest conversion
cost foil mill in North America according to
CRU
o
CORE Productivity
o
Footprint efficiency
•
Flexibility
o
Provides more stable source of free cash
flow
o
Maintenance capital expenditures average
25% of EBITDA
o
Historically, 10-30% of metal consumed by
flat rolled products segment is purchased
from New Madrid, but inter-company
volume can be varied based on market
conditions
•
Focused Growth
o
Grow with key customers to “Win with
Winners”
o
Increase share of demand in 2009
o
Top 10 customers 56% of sales in 2009
•
HVAC fin stock
•
Container
•
Transformer winding
•
Foil products
•
Light gauge sheet
Low Cost, Leading –
Rolling Mill Operations
Four Rolling Mills in Three States
Products
Huntingdon, TN
2 plants, East and West
Started 1967 & 2000
Max. East capacity: 130mm lbs
(1)
Max. West capacity: 235mm lbs
(1)
Salisbury, NC
Started 1965
Max. Capacity:95mm lbs
(1)
Newport, AR
Started 1951
Max. Capacity:
35mm lbs
(1)
Downstream Segment is a stable free cash flow generator
11
(1) Maximum capacity, with actual capacity depending upon production mix.

YTD 2010 CORE Savings by Location
YTD 2010 CORE Savings
by Type
Strong Record of Productivity
12
•
CORE–
Noranda’s comprehensive
productivity program
•
Fundamental to our integrated strategy
•
Plan to generate $140 million of CORE
savings during the period from 2009 through
2011
Through September 2010, our results
reflect nearly $58 million in CORE
productivity savings
Cumulative ’09, ’10 total is $101 million
•
CORE will continue to be a key focus in 2011
as we expect to see inflation, particularly in
carbon and caustic soda

Track Record of Growth
•
Noranda
has several avenues through which to pursue growth
o
Capital Investment
Invested over $410 million in our assets since 2003
o
Debottlenecking
Increased primary aluminum production capacity by 37m lbs in 5 years
Re-launched New Madrid capacity expansion, adding 35 million
pounds by 2013
Will complete St. Ann dredging project in 1Q of 2011
o
Increase share of demand
During economic downturn, gained share in key upstream (rod) and
downstream (foil, finstock) product segments
In 2010, gained share in billet
o
Acquisitions and Acquisition-related growth
Purchased and consolidated the bauxite and alumina joint venture
Long position in bauxite and alumina allows for commercial sale.
Success with major customers
Noranda
continues to evaluate acquisition based growth opportunities
Growth
offers
new
opportunities
to
leverage
a
CORE
competency
–
CORE
productivity
13

Debt Balances Trend
Free Cash Flow Generation
•
From January 2009 through IPO –
Repurchased or repaid $439 million of debt,
primarily through proceeds of terminated
aluminum hedges
•
IPO –
Used $83 million IPO Proceeds and
$96 million from terminating remaining
aluminum hedges to purchase or repay $176
million of debt
•
3Q-10—Used operating cash flow to
repurchase
$21
million
of
debt
We Have Deleveraged Substantially
Deleveraging is a part of our portfolio of growth and value creation opportunities
-$75
$0
$75
$150
$225
2H 07
1H 08
2H 08
1H 09
2H 09
1H 10
14

Post-IPO, we’ve done the right things the right way, and we’ve achieved results
15

Third Quarter Highlights
•
Noranda
produced solid 3Q results…
•
Reported $25.2 million net income ($0.45 per share, diluted), which includes
$16.6 million ($0.29 per share) positive impact from hedge and debt repurchase
gains
•
Business units produced $38.9 million combined segment profit; Adjusted EBITDA
was $33.0 million. 3Q reflects a full quarter of seasonal peak power rates
•
CORE
contributed
$19.1
million
in
cost
reduction
and
capital
expenditure
savings.
Year-to-date
CORE
savings
are
$57.7
million
•
Grew share of demand in billet, with 15% 3Q growth and 33% YTD growth
•
Another quarter of outstanding performance in flat rolled products segment, with
$14.4 million of segment profit
•
...despite lower LME and seasonal peak power rates
•
Realized MWTP was $0.99 compared to $1.04 in 2Q-10
•
Compared to 2Q-10, $0.77 integrated cash cost reflected seasonal peak power
rates, fuel adjustment charge, and lower LME
•
Production and shipping timing differences in July caused 4% decrease in primary
aluminum shipments from 2Q-10
•
New Madrid achieved record metal production in September
16

Third Quarter Highlights
•
We strengthened our balance sheet and preserved liquidity…
•
Generated $31.0 million of operating cash flow; ending cash balances totaled
$33.0 million
•
No outstanding borrowing on senior revolving credit facility; $215.2 million
available capacity
•
Repurchased $20.6 million AcquisitionCo notes, reducing total debt to $533.1
million
•
…while addressing key projects
•
Completed renegotiation of Gramercy labor agreement
•
Announced capacity expansion projects in New Madrid and Salisbury
•
Initiated dredging project at St. Ann bauxite mine
17

Corporate Overview
Upstream Business
•
Seasonal peak power had $0.11 per pound total
impact on cash cost in 3Q, $.08 incremental to
2Q
•
Record production in New Madrid in September
•
Billet shipments growth ahead of industry
•
Re-launched $38 million capital expansion to
increase New Madrid capacity by 35 million
pounds
•
Dredging project to be completed during 1Q-11,
removing volume constraint and reducing
shipping costs
Flat Rolled Products Business
We see stable demand, at prices sufficient to support value creation
•
$14.4 million 3Q segment profit reflects
continued strong performance in favorable
demand environment
•
Performance driven by improve throughput and
by cost savings through CORE program
18

We have two #1 Priorities: Get the Results, and Do the Right Things the Right Way
19

Noranda Mission
20

Experienced Management Team
•
Management has created significant shareholder value at Noranda
•
13
members
of
the
executive
team
have
an
average
of
more
than
21
years
of
experience
in
cyclical
and
commodity industries
o
Layle
“Kip”
Smith,
President
and
Chief
Executive
Officer,
has
25
years
of
leadership
experience,
including
in
various
management
positions
with
The
Dow
Chemical
Company,
as
COO
of
Resolution
Performance
Products
and
as
CEO of Covalence Specialty Materials
o
Kyle
D.
Lorentzen,
Chief
Operating
Officer,
has
20
years
of
experience
in
cyclical
industries,
including
senior
positions
at
Berry
Plastics,
Covalence
Specialty
Materials
and
Hexion’s
Epoxy
and
Phenolics
Division
o
Robert
B.
Mahoney,
Chief
Financial
Officer,
has
over
23
years
of
cyclical
industry
experience
in
senior
financial
management
positions
for
semiconductor
and
electrical
components
companies
o
Gail
E.
Lehman,
Vice
President
&
General
Counsel,
has
22
years
of
corporate
law
experience,
having
held
senior
roles at industrial companies Honeywell, Covalence Specialty Materials and Hawker Beechcraft
o
Scott
Croft,
President
of
Norandal
USA,
Inc,
has
24
years
of
experience
in
the
rolling
mill
business
o
Richard
Lapine,
Vice
President
of
Sales
&
Marketing,
has
over
30
years
of
experience
in
Chemicals,
Plastics
and
Automotive segments as a former executive at The Dow Chemical Company
o
Charles
Skoda,
Vice
President
of
Operations
Support,
has
9
years
of
experience
in
cyclical
industries,
including
as
an executive at Capital One, following a decorated career as an aviator in the U.S. Navy
o
Remaining
executive
team
members
bring
strong
experience
and
are
experts
in
their
functional
areas
21

22

APPENDICES
*
*
*
*
*

Non-GAAP Financial Measures
This presentation contains non-GAAP financial measures as defined by SEC rules. We think that these measures are
helpful to investors in measuring our financial performance and comparing our performance to our peers. However,
our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures used by
other companies. These non-GAAP financial measures have limitations as an analytical tool and should not be
considered in isolation or as a substitute for GAAP financial measures. To the extent we discuss any non-GAAP
financial measures on the earnings call, a reconciliation of each measure to the most directly comparable GAAP
measure will be available the presentation slides filed as an Exhibit 99 to our Current Report on Form 8-K furnished
to the SEC concurrent with the use of this presentation.
Certain covenants contained in our debt instruments, which restrict our ability to take certain actions and determine in
part interest rates, we pay under our senior secured credit facilities, use Adjusted EBITDA. Under our debt
instruments, “Adjusted EBITDA”
means net income before taxes, net interest expense and depreciation and
amortization, adjusted to eliminate related party management fees, certain charges resulting from the use of
purchase accounting and specified other non-cash items of income or expense. Adjusted EBITDA is not a measure
of financial performance under GAAP, and may not be comparable to similarly titled measures used by other
companies in our industry. Adjusted EBITDA should not be considered in isolation from or as an alternative to net
income, income from continuing operations, operating income or any other performance measures derived in
accordance with GAAP. Adjusted EBITDA has limitations as an analytical tool and you should not consider it in
isolation or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA
excludes certain tax payments that may represent a reduction in cash available to us; does not reflect any cash
requirements for the assets being depreciated and amortized that
may have to be replaced in the future; does not
reflect capital cash expenditures, future requirements for capital expenditures or contractual commitments; does not
reflect changes in, or cash requirements for, our working capital needs; and does not reflect the significant interest
expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness.
Adjusted EBITDA also includes incremental stand-alone costs and adds back non-cash hedging gains and losses,
and certain other non-cash charges that are deducted in calculating net income. However, these are expenses that
may recur, vary greatly and are difficult to predict. In addition, certain of these expenses can represent the reduction
of cash that could be used for other corporate purposes. You should not consider our Adjusted EBITDA as an
alternative to operating or net income, determined in accordance
with GAAP, as an indicator of our operating
performance, or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an
indicator of our cash flows or as a measure of liquidity.
24

Non-GAAP Measure: Adjusted EBITDA
25

Non-GAAP Measure: Adjusted EBITDA (Cont’d)
26

27

28