PRELIMINARY RESULTS Year ended 31 December 2016
CAUTIONARY STATEMENT This presentation, the presentation materials and discussion may contain certain forecasts, projections and forward looking statements – that is, statements related to future, not past events - in relation to, or in respect of the financial condition, operations or businesses of Elementis plc. Any such statements involve risk and uncertainty because they relate to future events and circumstances. There are many factors that could cause actual results or developments to differ materially from those expressed or implied by any such forward looking statements, including, but not limited to, matters of a political, economic, business, competitive or reputational nature. Nothing in this presentation, presentation materials and discussion should be construed as a profit estimate or profit forecast. Elementis does not undertake any obligation to update or revise any forward looking statement to reflect any change in circumstances or expectations. March 2017 2
AGENDA 2016 HIGHLIGHTS Paul Waterman Ralph Hewins 2016 FINANCIALS STRATEGIC PROGRESS Paul Waterman & 2017 OUTLOOK Paul Waterman & Ralph Hewins Q&A 3
2016 HIGHLIGHTS Paul Waterman CEO
2016 SAFETY PERFORMANCE Recordable Incident rate 13 recordable incidents 3 Excellent performance at 3 sites – 2.5 time without RI: US Chemicals Recordable Incidents per 200,000 hours worked - Newberry Springs, CA – 25 years 2 - Corpus Christi, TX – 13 years 1.5 - Changxing, China – 14 years Elementis 1 Launched Take Two … Industry Leaders 0.5 for Safety TM 0 2011 2012 2013 2014 2015 2016 Source: Elementis 5
2016 RESULTS $m 2015** 2016 % Sales 677.2 659.5 (3)% Operating profit * 121.5 94.2 (22)% 18% 14% Operating margin * Profit before tax * 115.2 89.7 (22)% 74.0 77.5 5% Net cash 20.6c 16.8c (18)% Diluted EPS * Dividends per share 16.45c 16.80c 2% *After adjusting items **Restated 6
2016 ACCOMPLISHMENTS OUR ACCOMPLISHMENTS Organisation Strategic review Personal Care team restructured – flatter, completed increased by more than 50% simpler, more accountable Strengthened Initiated Key Account Strong cash distribution in Chromium Management generation North America 7
2016 PERFORMANCE – OPERATING PROFIT* Full Year % Change $m 2015** 2016 Reported Constant Currency 79.9 78.8 (1)% 4% Specialty Products 48.0 27.1 (44)% (44)% Chromium Surfactants 4.5 (0.6) (113)% (113)% Central Costs (10.9) (11.1) 2% 8% Total 121.5 94.2 (22)% (20)% *After adjusting items **Restated 8
SPECIALTY PRODUCTS 2015** 2016 H1 H2 Full year H1 H2 F u l l y e a r Sales $m 244.1 209.1 453.2 237.4 223.0 460.4 Operating profit * $m 44.8 35.1 79.9 41.8 37.0 78.8 Operating margin * 18% 17% 18% 18% 17% 17% Constant currency sales increased 3% Constant currency operating profit +4% H2 2016 operating profit up 5% vs H2 2015 *After adjusting items **Restated 9
SPECIALTY PRODUCTS – SALES GROWTH* DRIVEN BY COATINGS & PERSONAL CARE H1 H2 FULL YEAR % CHANGE $m 2015** 2016 2015** 2016 2015** 2016 H1-o-H1 H2-o-H2 Y-o-Y 186 188 162 173 348 361 1% 7% 4% Coatings Personal Care 30 32 25 31 55 63 7% 23% 14% Energy 23 17 20 19 43 36 -26% -5% -16% 239 237 207 223 446 460 -1% 8% 3% Total *Constant currency **Restated 10
COATINGS – STEADY GROWTH COATINGS – NEW PRODUCTS AS % OF SALES COATINGS SALES Reported currency Constant currency ($m) 14% 400 +4% 12% 350 10% 300 250 8% 200 6% 150 4% 100 2% 50 0% 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Source: Elementis 11
GLOBAL COATINGS – SALES GROWTH ACROSS ALL REGIONS ASIA + 6%* EMEA + 3%* AMERICAS + 2%* China revenue increased Y-o-Y Newly launched Organic Continued decorative coatings growth Thixatropes in Q4 behind New Martinsville investment Strong growth in Organic Thixatropes Strengthened route to market Latin America recovery by new distributor appointments Elementis named key partner at two global deco customers *Constant currency 12
PERSONAL CARE – RECORD SALES DOUBLE DIGIT GROWTH PERSONAL CARE SALES ($m) Reported currency Constant currency +14% 60 50 40 30 Investment in team paying off 20 Expanded distribution and deepened penetration 10 2016 growth of 14%* over a weaker 2015, higher than 12-16 CAGR of 12% 0 2012 2013 2014 2015 2016 Consistent double digit growth remains on track Source: Elementis *Constant currency 13
2016 PERSONAL CARE – DEEPER PENETRATION, BROADER DISTRIBUTION ASIA GROWTH KEY ACCOUNTS Double digit growth* with our top 3 GLOBAL KEY accounts ACCUNTS China Up > 50% South Korea Up > 30% India Up > 100% *Constant currency 14
ENERGY – CAUTIOUSLY OPTIMISTIC HIGHLIGHTS 2017 ACTIVITY INCREASING ENERGY SALES US & Canada Rig Count Volumes down, margins stable Reported currency Constant currency ($m) 80 Drilling activity increasing 1200 70 +46% Hectorite technology supports 1082 60 most difficult drilling applications 50 800 -16% 2016 new business in Middle East 743 40 and SE Asia 30 400 20 10 0 0 2012 2013 2014 2015 2016 Feb 2016 Feb 2017 Source: Elementis Source: Baker Hughes 15
CHROMIUM
CHROMIUM – OVERALL DECLINE, NORTH AMERICA RESILIENT Chromium locations in the US 2015** 2016 H1 H2 Full year H1 H2 F u l l y e a r Sales $m 91.8 89.3 181.1 82.2 86.6 168.8 Operating profit * $m 27.0 21.0 48.0 14.5 12.6 27.1 Operating margin * 29% 24% 27% 18% 15% 16% Strong US dollar negatively impacted 2016 results North America ~60% of global sales, leveraging unique delivery systems Expect to recover from impact of Q4 2016 operational interruptions (hurricane, centrifuge failure) *After adjusting items **Restated 17
CHROMIUM – COMPETITIVE ENVIRONMENT CHROME ORE SPIKING – US $ STRONG BUT STABLE MARKET SHARE TRIGGERING PRICE INCREASES Foreign exchange Chrome ore price 100% $/t 450 120 Other USD 400 80% 100 350 Russian Ruble 300 80 60% Kazak Tenge Turkish Lira 250 Other 60 200 40% Elementis 150 40 100 20 20% 50 0 0 Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb 2011 2012 2013 2014 2015 2016 2017 0% 2014 2015 2016 2017 1 2 North America ROW Source: Bloomberg Source: Bloomberg Source: Elementis 18
SURFACTANTS
SURFACTANTS 2015 2016 H1 H2 Full year H1 H2 F u l l y e a r Sales $m 29.7 24.1 53.8 21.8 21.3 43.1 Operating profit * $m 2.4 2.1 4.5 (0.2) (0.4) (0.6) Strategic review of business targeting resolution in early 2018 *After adjusting items 20
2016 FINANCIALS Ralph Hewins CFO
2016 GROUP RESULTS $m 2015** 2016 % Sales 677.2 659.5 (3)% Operating profit * 121.5 94.2 (22)% 18% 14% Operating margin * Profit before tax * 115.2 89.7 (22)% 74.0 77.5 5% Net cash 20.6c 16.8c (18)% Diluted EPS * Dividends per share 16.45c 16.80c 2% *After adjusting items **Restated 22
ADJUSTING ITEMS Business Strategy review and Credit/(charge) Environmental Acquisition Review & Total Provisions & Other $m restructuring costs Restructuring Specialty Products (1.3) - - (1.3) Lower discount rate used to value environmental provisions Surfactants (0.3) - - (0.3) 2016 costs associated with Chromium - (5.5) - (5.5) SummitReheis acquisition Central costs (3.8) (2.5) (0.8) (7.1) Total before tax (5.4) (8.0) (0.8) (14.2) 23
TAX CHARGE 2016 underlying rate 12%, mostly $m 2015 2016 due to reduced US earnings Underlying 19.0 11.1 tax charge 2017 tax rate expectations ~ 20% Tax charge: 7.2 (3.7) adjusting items Beyond 2017 tax rate low 20s, Reported with cash tax convergence 26.2 7.4 tax charge 16% 12% Tax rate 11% 3% Cash tax rate 24
CASH FLOW* NET CASH/(DEBT) $m $m 2015** 2016 100 EBITDA 148.4 122.2 77.5 74.0 80 Working Capital (11.8) 13.4 54.1 60 44.0 (31.3) (35.3) Capital Expenditure 40 26.2 Adjusting Items 20.1 (5.1) 20 0 (22.8) (4.7) Pensions 2011 2011 2012 2013 2014 2015 2016 -20 Dividends (71.1) (76.2) -40 Interest, Tax, Other (21.7) (10.8) -60 9.8 3.5 Net Cash Flow -80 (79.3) Net Balance Sheet Cash 74.0 77.5 -100 *After adjusting items **Restated 25
CAPITAL SPENDING Increased spending in 2016 $m 2015 2016 due to HSE compliance projects 15.8 21.5 Specialty Products Estimated 2017 - up to $40 million 10.1 9.3 Chromium Other 5.4 4.5 Total Group Capital Spending 31.3 35.3 Depreciation 26.9 28.0 26
DIVIDENDS DIVIDEND Cents per ordinary share 18 Per Share 2015 2016 16 Interim Paid 2.70c 2.70c Maintained 14 12 Proposed Final 5.75c 5.75c Maintained 10 Special Special Special Special Special 8 Special Dividend 8.00c 8.35c +4% 6 Total Dividends 16.45c 16.80c +2% 4 Ordinary Ordinary Ordinary Ordinary Ordinary 2 0 2012 2013 2014 2015 2016 27
STRATEGIC PROGRESS & 2017 OUTLOOK
HOW WILL WE REIGNITE GROWTH? – STRATEGIC PRIORITIES IN ACTION PURSUE PURSUE INNOVATE FOR CREATE A BEST GROWTH SUPPLY CHAIN DISTINCTIVENESS CULTURE OF HIGH OPPORTUNITIES TRANSFORMATION & HIGH MARGINS PERFORMANCE 29
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