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Third Quarter 2014 Results | November 7, 2014
Driving Growth
Third Quarter
2014
Delivering
Returns
Conference Call
Q3 2014
Agenda
Topics for today’s discussion
Q3 2014 Financial Results & Key Takeaways
NATO Operations Update
Potential Sale of NATO Update
Chemicals Business Review
Looking Forward
2
Q3 2014
Results & Key Takeaways
Results
Cash operating profit
$16.9
million
Key Takeaways
Solid quarter for NA sodium chlorate
Planned shutdowns impacted results
for Brazil, NA chlor-alkali and NATO
Q4 results expected to improve with
increased uptime
3
NATO
Operations Update
Expanded facility complete & ramping up
Unit train expansion completed
in mid-September
Facility can now accept both
AWB and CLB
Both NATO contracted customers
have nominated volumes for Q4
Expect to load first CLB unit train
in the next few days
4
NATO
Potential Sale Update
Sale process on track and progressing well
Significant interest in NATO
Players along the oil and gas value
chain spectrum represented
Numerous proposals received from
North American parties
Certain parties being invited back to
complete reviews and submit
definitive offers
5
Chemical Business Units
Update & Outlook
NA Sodium chlorate – Solid assets and fundamentals
NA sodium chlorate operations
Solid third quarter performance
expected to continue into Q4
Chlorate market fundamentals
NA pulp operations stable. Market
pulp shipments up 1.5% ytd. Sept
demand spike balanced inventory
NA demand for sodium chlorate
holds steady
YTD chlorate exports on course to
match prior two years
NA operating rates estimated to
be in low-90% range
Price environment currently stable
6
Chemical Business Units
Update & Outlook
Chlor-alkali – Stable fundamentals
Caustic soda
NA production up 5% ytd; inventories
balanced
Western Canada prices remain stable. USGC
producers attempting modest Q4 increases
Chlorine
Higher demand in Q3 due to seasonal factors
in water treatment and construction
Price improvement in the west
Hydrochloric acid
Tight supply-demand balance supported
Q3 and Q4 price increases
Strong demand being driven by oil sector
Despite recent decline in WTI, producers
expected to hold to Q4 drilling plans
7
Chemical Business Units
Update & Outlook
Brazil – Strong demand for our products
Sodium chlorate & Chlor-alkali
Stable and sustainable cash flow
given 27-year supply contract with
fixed US margin
Solid relationship with Fibria, primary
customer
Fibria is a low-cost producer
considering aggressive growth plans
8
Canexus
Looking Forward
Positioning Canexus for the future
NATO sale will help stabilize Canexus
Allow us to de-lever the balance sheet
Explore growth opportunities within
our existing businesses
Look for smaller strategic acquisitions
aligned with our core competencies
Improve returns from existing
operations with enhanced efficiencies
and more cost/capital discipline
9
Forward-looking
Statements
This presentation contains forward-looking statements and information relating to expected future events relating to
Canexus and its subsidiaries, including with respect to: improved fourth quarter results due to expected operating
levels for chemical plants and increased volumes at NATO; the completion and timing of any NATO disposition;
expectations for operating performance of the North American Sodium Chlorate business, including operating rates
in the fourth quarter and 2015; expectations with respect to capacity rationalization, North American sodium chlorate
exports and Canexus’ Brandon facility’s operating rate; expectations for North American chlor-alkali industry
operating rates and for Asian caustic soda import prices; expectations for hydrochloric acid and sodium chlorate
demand; annual 2014 exports and operating rates for the North American sodium chlorate business; expectations for
sodium chlorate, hydrochloric acid and caustic soda pricing; expectations for market conditions for the sodium
chlorate and chlor-alkali businesses; and expectations for the impact of the disposition of NATO on stabilizing
Canexus and the de-levering of Canexus’ balance sheet. The use of the words "expects", “anticipates", "continue",
"estimates", "projects", "should", "believe", "plans", "intends", "may", "will" or similar expressions are intended to
identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other
factors that may cause actual results to differ materially from those anticipated in such forward-looking statements
for a variety of reasons, including market and general economic conditions, future costs, treatment under
governmental regulatory, tax and environmental regimes and the other risks and uncertainties detailed under "Risk
Factors" in the Corporation’s Annual Information Form filed on the Corporation’s SEDAR profile at www.sedar.com.
Management believes the expectations reflected in these forward-looking statements are currently reasonable but no
assurance can be given that these expectations will prove to be correct and such forward-looking statements should
not be unduly relied upon. Due to the potential impact of these factors, Canexus disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise, unless required by applicable law. Financial outlook information contained in this presentation about
prospective results of operations, financial position or cash flows is based on assumptions about future events,
including economic conditions and proposed courses of action, based on management’s assessment of the relevant
information currently available. Such financial outlook information should not be used for purposes other than those
for which it is disclosed herein.
All dollar amounts are in Canadian dollars, except as otherwise noted
10
Third Quarter 2014 Results | November 7, 2014
Driving Growth
Third Quarter
2014
Delivering
Returns
Conference Call