A LEADING PRODUCER
OF NATURAL SODA ASH
OCI RESOURCES LP
OCI Resources LP
|
INVESTOR PRESENTATION
| April 2015
1
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 OCIR’s 10-K dated March
6, 2015, and those described from time-to-time in our periodic and
other reports filed with the Securities and Exchange Commission.
OCI Resources LP
2
OCI 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
Over 2.5 million short tons annual soda ash production
~450 employees
65+ years of mining reserves
Revenue: $465 million
Adjusted EBITDA: $120.5 million
OCI Resources LP
3
OCI’s Competitive Advantages
Most efficient soda ash producer in Green River Basin
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
OCI Resources LP
4
2014 Accomplishments
Financial & Operating
Performance
Distribution Growth &
Shareholder Return
Coverage Ratio of 1.29
Distribution Growth Since IPO
EBITDA Growth of 15.3%
6.3% (currently $0.5315/qtr)
Net Sales Growth of 5.2%
Total Shareholder Return
Sales Volume Growth of 2.3%
37.7% OCIR vs. 13.7% S&P
International Pricing up 6.8%
37.7% OCIR vs. 7.6% AMZI
Expansion CAPEX of $20.1M drove
production volume growth of 3.2%
OCI Resources LP
5
Delivering Value to Unitholders
Low cost position and production scale
MLP characteristics support long-term stable cash flows
66+ year reserve life, significant cost inputs hedged, long-term customers
Backlog of organic growth projects expected to generate 6-8% Adjusted
EBITDA growth annually through 2017 at attractive investment multiples;
supported recent distribution increase
Strong financial position at 1.3X leverage ratio; 1.27X distribution coverage ratio
Compelling investment proposition through yield plus distribution growth
~9.3% current yield with 5% distribution growth in last 12 months
Stable Adjusted EBITDA Attributable to OCIR and Distributable Cash Flow
Adj EBITDA
DCF
13.9
13.1
Q1 2014
OCI Resources LP
14.0
12.4
Q2 2014
14.5
13.3
Q3 2014
17.3
14.3
Q4 2014
6
Organizational Structure
OCI Company (Korea)
|
OCI Enterprises Inc.
|
OCI Chemical Corporation
|
OCI Resource
Partners LLC
(General partner)
Public Unitholders
Natural Resource
Partners L.P.
NYSE: NRP
72.9% L.P. Interest
2% G.P. Interest / IDRs
(Common units)
25.1% L.P. Interest
OCI Resources LP
NYSE: OCIR
49% Member Interest
51% Member Interest
OCI Wyoming LLC
(“OCI Wyoming”)
OCI Resources LP
7
Essential Raw Material
Soda ash is refined from mined Trona and is an essential raw material used
in the production of glass, chemicals, and detergents.
Trona
Soda Ash
End Markets
Trona
Sodium Carbonate
Glass
Sodium Sesquicarbonate
(2Na2CO3•NaHCO3•2H2O)
(Soda Ash)
(Na2CO3)
Silica (SiO2) + sodium oxide (Na2O) from
soda ash + lime (CaO)
Chemicals
Detergents
OCI Resources LP
8
Attractive Industry Structure
Limited Natural Capacity Globally
(Production Method, by Percentage of Volume)
Global Demand by Volume
(million of ST)
84.5
Other
Synthetic
5%
57.6
Natural
25%
Hou
25%
58.8
59.4
2012
2013
61.1
54.3
49.1
Total Global
Capacity:
73.5 mn ST
2009
Synthetic Production
Capacity
Source: IHS
OCI Resources LP
Solvay
45%
2010
2011
2014E
2024E
Global demand grew by ~4% annually from 20092014. Industry forecasts volume to grow ~ 4% over
the next 5 years with demand driven by emerging
markets.
Source: IHS.
9
Stable End-Markets with Broad Geographic Exposure
U.S. Soda Ash Domestic / Export Split
Global Soda Ash Consumption
by End Market
(By Percentage of Volume)
(By Volume)
Glass
Products
Flat
25%
Other
20%
Domestic
43%
Metals & Mining
6%
Total Global
Demand:
61 mn ST
Export
57%
Chemicals
8%
Container
19%
Soaps &
Detergents
16%
Other
6%
Global market demand expected to
grow at ~4% from 2014 – 2019E
Source: IHS
OCI Resources LP
10
Lowest Cost Soda Ash Production
US soda ash producers using Trona have significant cost advantages from lower
energy costs and raw material price exposures.
U.S. Trona
Solvay
Hou
Mining and refining Trona
Synthetic production
Synthetic production
Raw Materials
Trona
Salt (brine), Limestone,
Ammonia
Salt (brine), Ammonia,
Carbon Dioxide
Energy Usage
~1/3 energy cost
Energy Intensive
Energy Intensive
Deca
(able to process into soda ash)
Calcium Chloride
(waste product)
Ammonium chloride
(co-product)
Process
By-Products
1/3~1/2 cost of
competing processes(1)
Relative Soda Ash
Production Costs(1)
2.9x
2.7x
2.6x
China
Solvay
China
Hou
1.0x
U.S.
Trona
(Natural Gas)
European
Solvay
Source: IHS
(1) Cost to produce 1 metric ton of soda ash as a multiple of Trona based production.
OCI Resources LP
11
OCI Wyoming Strong Market Position
Well-Structured Industry
Situated in World’s Most Abundant
Trona Reserves
(North America Soda Ash Market Share by Capacity)
United States represents the vast majority
of the world’s Trona reserves
Searles
10%
Alcali
2%
OCI
19%
Green River Basin, WY
Tata
20%
Total North American
Capacity:
14 mn ST
FMC
30%
Tata
75 mi
FMC
Solvay
19%
Solvay
45 mi
Source: U.S. Geological Survey.
OCI Resources LP
12
Most Efficient Soda Ash Producer in Green River Basin
OCI has the highest soda ash production per employee. We have the most
efficient soda ash production facility in the Green River Basin.
Production Per Employee
(x10 ST, 2013)
575
547
Peer 1
468
Peer 3
Peer 2
422
Source: State of Wyoming Mining Report, Wyoming Department of Environmental Quality, Annual Report State Inspector of Mines of Wyoming.
OCI Resources LP
13
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
OCI Resources LP
14
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 OCI to recover soda ash via deca
rehydration otherwise lost in processing Trona

Technological innovation enables OCI to be more cost
efficient
Ore to Ash Ratio(1)
1.80
1.74
1.61
1.60
1.59
1.56
1.52
2008
2009
2010
2011
2012
2013
2014
(1) Amount of short tons of Trona ore required to produce one short ton of soda ash/liquor
OCI Resources LP
15
Strong Safety Record and Environmental Responsibility
Consistent safety recognition to date is a testament to our commitment.
Long Tradition
of Excellence
in Safety
•
2009, 2010 and 2011 IMA-NA / MSHA Top Safety Achievement Award (National)
•
2008, 2009, 2010, 2011 and 2012 WY State Mine Inspector’s Top Safety Excellence Award
• Trona based process produces less CO2 emissions than synthetic production processes
Environmentally
Responsible
• Technology for Tailings Management
• Zero discharge for waste water from operations
Safety Statistics for Wyoming Soda Ash Producers
(For Year Ended December 31, 2014)
153
149
102
30
12
7
Peer 3
14
9
Peer 2
Citations
7
4
8
3
Peer 1
Recordable Injuries
Lost Work Day Injuries
Source: Mine Safety and Health Administration.
OCI Resources LP
16
Significant Reserve Life
Reserve Life Summary
LOWER BED
UPPER BED
Ore Layout Summary
Upper Bed
800ft
Lower Bed
1,100ft
Reserve Life Calculation (Hollberg)
8ft. @ minimum
85% Grade
Basis
Recoverable Reserves
259 mn ST
Projected Annual Consumption
4 mn ST
= Implied Mine Life
65 Years
Source: Hollberg Professional Group
Note: Assumes 2013 mining rate of 4.0mn ST per year
OCI Resources LP
17
Stable Customer Relationships
Approximately 70% of OCI’s domestic sales were made to customers with which
OCI has had relationships in excess of 10 years.
Sales Breakdown by Revenue
Majority
export sales
via ANSAC
($ in millions)
$462.6
$421.9
52%
$218.6
$263.2
57%
$465.0
$442.1
 Most domestic customer contracts range from 1-3 years
 Domestic contracts are typically renewed upon expiration
 10+ year relationship with 70% of domestic customers
270.2
$247.1
56%
Domestic Customers
58%
Export Customers
48%
$203.3
2011
43%
$199.4
44%
2012
Domestic
$195.1
42%
2013
Export
194.8
2014
 Incremental increases in production volume have been exported
due to growing international demand
OCI Resources LP
 Majority of export sales sold through American Natural
Soda Ash Corp. (ANSAC)
– International sales, marketing and logistics for OCI and
two other leading U.S. producers
– Conducive to stability and growth of U.S. producers
– Leverages economies of scale (logistics)
– Operates under an exemption from the antitrust laws
allowing it to be the exclusive export outlet
18
Organic and Acquisition Growth Opportunities
OCI will capitalize on organic expansion & make accretive acquisitions to drive growth.
Capitalize on organic expansion opportunities
 Emerging Market Growth
 Debottlenecking, Deca and Efficiency Enhancements driving
approximately 100,000 ST annual production volume growth
2014-2017
– Low additional fixed cost from expansion projects leads to
annual Adjusted EBITDA growth of 6%-8%
Pursue accretive acquisitions
 Industrial Minerals / Inorganic Chemical Assets
 Logistics Assets
 Assets currently existing or to be developed at OCI
OCI Resources LP
19
FINANCIAL SUMMARY
Strong Financial Position and Financial Strategy
Maintain conservative balance sheet (current debt to
Capitalization of 37%)
Available liquidity under existing credit facilities to
fund multi-year organic expansion capital plans
Total Debt / Adjusted EBITDA of 1.2X supports
organic and acquisitive growth
Strong 1.29X coverage ratio provides capacity for
future distribution growth
Reduced cost volatility from multi-year natural gas
hedge program
Maintain financial flexibility
OCI Resources LP
21
Stable Operating and Financial Results
Soda Ash Volume Sold
(millions of ST)
1.8
2009
2.2
2.3
2.5
2.5
2.55
2010
2011
2012
2013
2014
Quarterly Coverage Ratio
1.31
1.24
1.27
1.35
Q1 2014
Q2 2014
Q3 2014
Q4 2014
OCI Resources LP
22
Strong Financial Performance Since IPO*
$ Millions
(except volume amounts)
4Q14
4Q13
2014
2013
Net Sales
126.0
117.6
465.0
442.1
Adjusted EBITDA
34.8
25.4
120.5
104.4
Distributable Cash
14.3
13.2
53.1
14.0
Net Income
27.6
25.4
114.0
108.1
Volumes Sold – ST
686
658
2,548
2,492
Ore to Ash Ratio / Efficiency (lower
is better)
1.53
1.62
1.52
1.62
Financial Metrics
Operating Metrics
*IPO September 2013
OCI Resources LP
23
OCI 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 reserve life
Operational advantages
Strong safety record and environmental responsibility
Stable customer relationships
Proven management and operational team
OCI Resources LP
24
Appendix
Mining Process Flow
Process Overview
Continuous Mining
Haulage
Crushing
Surge Storage
Hoisting
Dissolving
Filtering
Refining Process Flow
OCI’s Unique Process
Screening & Crushing
Calcining
Deca Rehydration
Shipping
OCI Resources LP
Storage
Drying
Evaporation
26
Facilities Overview and Mining Assets
Mining Assets
•
•
Land
–
Surface Area: approx. •
880 Acres
–
Mine Lease Area:
23,500 Acres
Water Supply
–
•
•
Green River
Mining Assets
–
2 mining beds (upper
& lower)
–
6 large continuous
mining machines
–
5 active faces
–
10 underground
shuttle cars
–
3 shafts
Electricity
–
•
Mining Lease Map
Rocky Mountain
power
Railroad
–
Union Pacific
–
WATCO (Switching
Provider)
Storage
–
7 storage silos with
65,000 short ton
capacity
•
Shafts
–
1 – Man & materials |
Fresh air
–
2 – Ore | Return air to
fans
–
3 – Ore | Fresh Air
Source: Hollberg Professional Group (for “Mining Lease Map”)
OCI Resources LP
27
Chinese FOB Export Prices
$320
$290
$290
$265
$255
$250
$240
$270
$225
$220
$250
$230
$240
$230
$230
$205
$230
$230
$195 $195
$220
$190
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
$185
Q3
2012
High - Per Metric Ton
$213
$223 $220
$220
$185
$180
Q4
2012
$220
$165
$165
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Low - Per Metric Ton
Source: IHS.
OCI Resources LP
28
Non-GAAP Reconciliation
OCI Resources LP
Quarter Ended 12/31/14
Net Income
Quarter Ended 12/31/13
$27.6
$25.4
Depreciation, depletion and amortization
5.9
5.8
Interest expense (net)
1.3
1.1
Loss on disposal of assets
-
-
Provision for income taxes
-
-
Adjusted EBITDA
34.8
32.3
Less: Adjusted EBITDA attributable to non-controlling interest
17.5
16.1
$17.3
$16.2
Add:
Adjusted EBITDA Attributable to OCI Resources LP
Non-GAAP Financial Measures
We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation and amortization, unrealized derivative gains and losses and certain other expenses that are noncash 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.
OCI Resources LP
29
Non-GAAP Reconciliation
OCI Resources
Year Ended 12/31/14
Net Income
Year Ended 12/31/13
$91.9
$70.6
22.4
23.9
Interest expense (net)
5.2
2.8
Loss on disposal of assets (net)
1.0
-
-
7.1
120.5
104.4
60.8
57.3
$59.7
$47.1
Add:
Depreciation, depletion and amortization
Provision for income taxes
Adjusted EBITDA
Less: Adjusted EBITDA attributable to non-controlling interest
Adjusted EBITDA Attributable to OCI Resources LP
Non-GAAP Financial Measures
We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation and amortization, unrealized derivative gains and losses 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.
OCI Resources LP
30
Non-GAAP Reconciliation
OCI Resources LP Historical
Year Ended December 31,
2008
Net Income
2009
2010
2011
2012
$77.6
$54.9
$51.6
$88.0
$101.8
22.7
22.6
23.2
22.2
22.9
Interest expense (net)
7.4
3.4
2.7
1.3
1.3
Provision for income taxes
3.8
8.8
6.5
14.6
16.4
111.5
89.8
84.0
126.1
142.5
Add:
Depreciation and amortization
Adjusted EBITDA
Non-GAAP Financial Measures
We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation and amortization, unrealized derivative gains and losses 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.
OCI Resources LP
31
Non-GAAP Reconciliation Coverage Ratio
Rolling Non-GAAP Reconciliation Schedule
Q 1-2014
Q 2-2014
Q 3-2014
Q 4-2014
YTD 2014
($ in millions, except per unit data)
Reconciliation of Adjusted EBITDA to net income:
Net income
Add backs:
Depreciation, depletion and amortization expense
Interest expense
Loss on disposal of assets, net
Adjusted EBITDA
Less: Adjusted EBITDA attributable to non-controlling interest
Adjusted EBITDA attributable to OCI Resources LP
$
21.6
$
5.4
1.2
28.2
14.3
13.9
Adjusted EBITDA attributable to OCI Resources LP
Less: Cash interest expense, net attributable to OCIR
$
$
Maintenance capital expenditures attributable to OCIR(1)
Distributable cash flow attributable to OCI Resources LP
$
21.1
$
5.8
1.3
28.2
14.2
14.0
13.9
0.5
$
$
$
$
0.3
13.1
Cash distribution declared per unit
$
Total distributions to unitholders and general partner
$
$
$
21.6
$
5.3
1.4
1.0
29.3
14.8
14.5
14.0
0.8
$
$
$
$
0.8
12.4
0.5000
$
10.0
$
$
$
27.6
$
5.9
1.3
34.8
17.5
17.3
14.5
0.6
$
$
$
$
0.6
13.3
0.5000
$
10.0
$
$
$
91.9
$
22.4
5.2
1.0
120.5
60.8
59.7
17.3
0.3
$
$
59.7
2.2
$
$
2.7
14.3
$
$
4.4
53.1
0.5250
$
0.5315
$
2.0565
10.5
$
10.6
$
41.1
$
$
Reconciliation of distributable cash flow to Adjusted EBITDA
attributable to O CI Resources LP:
Distribution coverage ratio
1.31
1.24
1.27
1.35
1.29
(1) T he 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.
OCI Resources LP
32
Capital Structure
Capitalization – OCI Resources
($ in millions)
Available Liquidity
As of
December 31, 2014
Cash and Cash Equivalents
$31.0
Long Term Debt
OCI Wyoming Credit Facility
Facility
Size
Available
Liquidity
Revolving Credit Facility
$10.0
$10.0
OCI Wyoming Credit Facility
190.0
45.0 (1)
$200.0
$55.0
$125.0
Revenue Bonds due 2017
8.6
Revenue Bonds due 2018
11.4
Revolving Credit Facility
($ in millions)
Total
0.0
Total Long Term Debt
$145.0
Total Equity
$248.5
Total Capitalization
$393.5
(1) Includes outstanding borrowing of $125 mn and $20 mn of revenue bonds.
OCI Resources LP
33
IDR Structure and Subordination Period
OCIR IDR Structure
Marginal Percentage
Distribution per Unit Range
Interest in Distributions
(expressed as % of MQD)
LP Share
GP Share
From
To
Initial Split
98%
2%
0%
--
115%
2nd Split
85%
15%
115%
--
125%
3rd Split
75%
25%
125%
--
150%
4th Split
50%
50%
150%
--
above
OCIR Subordinated LP Units
Subordination %
 49%
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
Early Termination of
Subordination Period
 None
OCI Resources LP
34