NASDAQ: TORM
June 2011
Forward‐Looking Statement
Certain portions of this presentation contain forward‐looking statements about the
business, financial condition and prospects of the Company. The actual results of the
Company could differ materially from those indicated by the forward‐looking statements
because of various risks and uncertainties including, without limitation, changes in demand
for the Company’s products, changes in competition, economic conditions, fluctuations in
market price for TiO
2
pigments, changes in foreign currency exchange rates, increases in
the price of energy and raw materials, such as ilmenite, interest rate fluctuations, changes
in the capital markets, changes in tax and other laws and governmental rules and
regulations applicable to the Company’s business, and other risks indicated in the
Company’s filings with the Securities and Exchange Commission.
These risks and
uncertainties are beyond the ability of the Company to control, and, in many cases, the
Company cannot predict all of the risks and uncertainties that could cause its actual results
to differ materially from those indicated by the forward‐looking statements. The Company
assumes no obligation to provide revisions to any forward‐looking statements should
circumstances change, except as otherwise required by securities and other applicable
laws.
When used in this presentation, the words
“believes,”
“estimates,”
“plans,”
“expects,” “anticipates” and similar expressions as they relate to the Company or its
management are intended to identify forward‐looking statements.
What We Do...
•
28 year operating history
Specialty Aluminas
TiO2
Color Pigments
•
High performance industrial minerals
Approx. 40% to 45%
Approx. 40% to 45%
Color titanium dioxide (TiO2)
Specialty hydrated aluminas (ATH, AMH)
•
Primary applications -
Pigments and
engineered fillers for use in plastics, paints &
coatings and catalysts
•
Headquartered in Corpus Christi, Texas
•
Global presence
with manufacturing
operations on three continents
Other Specialty Minerals
Corpus Christi, Texas
10% to 15%
Hattem, Netherlands
Ipoh, Malaysia
3
Investment Considerations
Investment Data (As of 3/31/11)
NASDAQ: TORM
•
15% to 20% targeted growth for next 3‐5 years
-
Recent Price (6/10/11)
$14.58
Current products present opportunity to grow
52‐Week Range
$5.30‐$24.50
revenue from
$30 million
to
$60 million+
in annual
Shares Outstanding
1.9 MM
sales in next 3 to 5 years.
Diluted Shares
3.2 MM
•
Margin expansion opportunities
Market Capitalization
$46 MM
‐ Revenue mix shift to higher margin products
TTM Revenue
$34 MM
‐ Fixed costs leverage (current utilization
60%)
TTM EPS
$0.81
Cash
$2.4 MM
•
TiO
2
Market in shortage ‐
drives favorable volume
and price trends
L‐T Debt
$5.1 MM
•
Niche products offer recurring revenue streams
-
by offering high value added
characteristics (cost savings / improved performance) once designed in, customers are less
likely to change formulations.
•
Strong Balance sheet
4
Historical Revenue Trends
Key Growth Drivers
1)Cyclical recovery
2)TiO2
market conditions
3)Geographic Expansion
4)New product introduction
20% ‐ total revenue growth during 2010
15% to 20% annual growth target for next three to five years.
23% 4‐year CAGR* in specialty alumina drives greater diversification
CAGR* ‐ Compound Annual Growth Rate. For purposes of this chart the
5
metric was calculated for years 2006 to 2010
40% to 45%
TiO2
Color Pigments
of Revenue
Unique Production Process
TiO2
Color Pigments
Synthetic Rutile:
HITOX® & TIOPREM®
Ilmenite: FeTiO3
95% TiO2
95% TiO
2
End Products
Master Batch
PVC Pipe
Paint
Plastics
Plastics
6
40% to 45%
TiO2
Color Pigment
of Revenue
Customers
7
40% to 45%
of Revenue
Specialty Aluminas
Industrial Catalysts
Composites
HALTEX®
ALUPREM®
OPTILOAD®
Electrical Insulators
Solid Surface
8
40% to 45%
Specialty Aluminas
of Revenue
Customers
BROLL BUNTPIGMENTE GMBH
and CO KG
9
Key Growth Drivers
1) Cyclical Recovery in End Markets
2) TiO2
Market Conditions Drives Substitute Affect
3) Geographic Expansion Opportunity
4) New Product Introduction ‐ Expand Addressable Markets
10
Cyclical Recovery in End‐Markets
TiO2
Supply/ Demand Imbalance
TiO2
Supply
TiO2
Demand
Shortage of TiO
2
supply
Worldwide demand recovery
‐Idling of plants using old production
‐Primary markets for paint and plastics
technology
markets have stabilized and are
‐$100’s of millions of investment and 3
beginning to increase
to 5 years to bring on new production
‐Emerging Market Growth
on line
‐Raw material supply shortage…
mining expansion takes 3 to 5 years
Imbalance
Some customers on allocation
Price increased 30% in 2010*
Price expected to increase 15% to 25%/yr. through 2012*
* Source: Wells Fargo Securities
11
TiO2
Market Conditions
Drive Substitute for TOR's TiO2
Color Pigment
HITOX®
TIOPREM®
Commodity
Versus
TOR Minerals’
White TiO
2
TiO
2
Color Pigments
Annual Production
4. 5 million tons
12,000 tons
TiO
2
Content
86% to 98%
88% to 95%+
Particle Size
0.3 micron
0.3 to 1.5 micron
Increased 30% during
Pricing
20% to 30% savings
2010
The substitute affect drives greater demand for our products
when TiO
2
prices rise or when TiO
2
is in shortage
Customer sample activity tripled year over year
Opportunity to follow price increases in commodity TiO2
12
Geographic Expansion Opportunity
Hattem, Netherlands
Corpus Christi,
Texas
Ipoh, Malaysia
Leverage Manufacturing Presence on Three
Continents to Increase Sales Outside U.S.
2010 Sales in Asia Increased 64%
Americas
Asia
Europe & Africa
13
New Product Introduction
Specialty Alumina
Successful Track Record of Introducing New Specialty Hydrated Alumina Products
•From its introduction in 2001
ALUPREM®
has become a leading fire retardant filler for solid surface
applications all across Europe
•Successfully introduced new specialty alumina for applications outside of the plastics markets and
have nearly sold out near‐term production capacity in the Netherlands
•Secular growth in ATH from trend toward halogen‐free flame retardant legislation
(Deca‐bromine being phased out / discontinued in U.S. by 2012/13.)
•
OPTILOAD®
launched during 2010 - multi‐million $ annual revenue opportunity
- Cost effective, environmentally friendly solution for meeting highest flame retardant ratings
- Address new high volume applications, including a shift from metal to plastic components
Annual Specialty Alumina Sales
(in $millions)
2011 Plant expansion will
double ALUPREM® production
capacity to address growth
opportunities
14
New Product Introduction
TIOPREM®
•
TIOPREM®
“heat stability” greatly expands the addressable market into plastics,
specialty coatings and other select markets
•
Potential to more than double the addressable market longer term with current and
new product developments in progress
•
High value‐added characteristics generate a higher margin than standard products
TIOPREM® Sales are Gaining Traction
TIOPREM® grew to 9% of 1Q11
Total TiO2
Pigment Sales
Quarterly TiO2
Color Pigment Sales
(in $millions)
15
Efficiencies &
Operating Leverage
•
New manufacturing processes
•
Think global / act local
- Manage global logistics
- Apply technologies across product lines/ geographies
- Exploit cost advantages in each geography
•
Drive utilization
-
2011 Plant expansion will double ALUPREM®
production capacity
- TiO2
Color pigments at approximately 60% of capacity
- SR plant ‐ $650,000 in unabsorbed fixed costs during 2010
16
Efficiencies &
Operating Leverage
%
3-5 Year
2009
2010
Change
Targets
15% to 20%
Net Sales
$24.2 MM
$31.0 MM
+28%
annual growth
Gross Margin
15.8%
21.8%
600 bp
25% to 28%
Operating Margin
1.5%
8.7%
720 bp
10% to 12%
Net Margin
(0.6%)
7.1%
770 bp
8% to 10%
17
Quarterly Performance
Total Revenue
(in millions)
Trailing Twelve Month (TTM) Revenue - 33.1% increase to $33.7 million
•
TTM TiO2
Color pigments revenue increased - 26.1% increase
•
TTM specialty alumina increased - 41.6% increase
18
Quarterly Performance
Gross Margin
Trailing Twelve Month Gross Margin - 21.3% increase 300 basis points y‐o‐y
•
Increased efficiencies / Product shift / Greater plant utilization
•
Partially offset by raw material cost increases
Target 25% ‐ 28%
19
Quarterly Performance
Net Margin
Trailing Twelve Month Net Margin - 6.9% increase 420 basis points y‐o‐y
•
Increased efficiencies / Product shift / Greater plant utilization
•
Partially offset by raw material cost increases
20
Balance Sheet
1Q11
1Q10
Details
Cash
$2.4 MM
$1.1 MM
Accounts Receivable
$4.9 MM
$3.8 MM
Days Sales Outstanding
46 Days
50 days
Target ‐ 55 to 60 days
Inventory
$11.5 MM
$9.5 MM
Turns
2.6x
2.2x
Target ‐ 3.0 to 3.5 turns per year
Long‐Term Debt
$5.3 MM
$5.0 MM
Return on Equity *
8%
3%
Target ‐ 15%
* For the trailing twelve months ended March 31, 2011 and March 31, 2010 respectively
21
Investment Considerations
Investment Data (As of 3/31/11)
NASDAQ: TORM
•
15% to 20% targeted growth for next 3‐5 years
-
Recent Price (6/10/11)
$14.58
Current products present opportunity to grow
52‐Week Range
$5.30‐$24.50
revenue from
$30 million
to
$60 million+
in annual
Shares Outstanding
1.9 MM
sales in next 3 to 5 years.
Diluted Shares
3.2 MM
•
Margin expansion opportunities
Market Capitalization
$46 MM
‐ Revenue mix shift to higher margin products
TTM Revenue
$34 MM
‐ Fixed costs leverage (current utilization
60%)
TTM EPS
$0.81
Cash
$2.4 MM
•
TiO2
Market in shortage ‐drives
favorable volume
and price trends
L‐T Debt
$5.1 MM
•
Niche products offer recurring revenue stream
-
- by offering high value added
characteristics (cost savings / improved performance) once designed in, customers are less
likely to change formulations.
•
Strong Balance sheet
22