Value Times Three Grants Spring Conference April 7, 2015 - - PowerPoint PPT Presentation

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Value Times Three Grants Spring Conference April 7, 2015 - - PowerPoint PPT Presentation

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Value Times Three Grants Spring Conference April 7, 2015 Disclaimer The following information has been prepared solely for use by intended recipients and shall be maintained in strict confidence. The information contained herein reflect

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Value Times Three

Grant’s Spring Conference April 7, 2015

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The following information has been prepared solely for use by intended recipients and shall be maintained in strict confidence. The information contained herein reflect the opinions and projections of Mountain Lake Investment Management LLC and its affiliates (collectively “Mountain Lake”) as of the date of this presentation. All graphics, code, text and design are owned by Mountain Lake. This presentation, in its entirety or in parts, may not be reproduced without prior written permission from Mountain Lake. The information set forth herein does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. Certain statements, projections, or other estimates herein are based upon certain assumptions. Other events that were not taken into account may occur and may significantly affect the

  • analysis. Any assumptions should not be construed to be indicative of the actual

events that will occur. No representation or warranty is made concerning the accuracy

  • f any data presented. All information provided in this presentation is for

informational purposes only and should not be deemed as investment advice or a recommendation to purchase or sell any specific security. These materials do not constitute an offer to sell, or a solicitation of an offer to buy, interest in any Mountain Lake product.

Disclaimer

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Mountain Lake Partners

0% 10% 20% 30% 40% 50% 60% 70% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cash Position 9/30/2008: 54.5% 3/31/2015: 62.8%

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Mountain Lake Partners

billions $0 $5 $10 $15 $20 $25 $30 $35 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Weighted Median Market Cap

  • f Equity Investments
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Owens-Illinois

3/31/2015 Market Capitalization = $3.8 billion

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Owens-Illinois

1903 Michael Owens completes the automated bottle blowing machine and forms Owens Bottle Machine Company. 1929 Owens-Illinois was formed after the acquisition

  • f Illinois Glass.

1958 Owens-Illinois sells Kaylo, its asbestos containing insulation unit, to Owens Corning. During the 10 years of ownership, aggregate sales are less than $40 million. Corporate History

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Owens-Illinois

Corporate History 1987 KKR leveraged buyout for $3.7 billion 1988 With the acquisition of Brockway Glass, Owens-Illinois’ domestic market share is greater than 40% 1991 Initial public offering 2014 Asbestos related payments total $4.4 billion 2015 Current market capitalization is $3.8 billion

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$0 $20 $40 $60 $80 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Stock Price

Owens-Illinois

Recent Decade of Nothing

Source: Bloomberg

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  • High fixed costs
  • Consolidated market
  • Barriers to entry
  • Steady demand
  • Limited growth
  • Generates lots of cash

Owens-Illinois

Glass Bottle Industry Dynamics

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SLIDE 10

European Operating Margin 0% 5% 10% 15% 20% 2009 2010 2011 2012 2013 2014 2015E 2016E

  • In Europe, Owens-Illinois has 25% market share.
  • The top three firms have 67% market share.
  • Normal margins are 12.5%.

Owens-Illinois

Source: Company reports and Mountain Lake estimates

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North American Operating Margin

  • In North America, Owens-Illinois has 40%

market share.

  • The top three firms have 85% market share.
  • Normal margins are 15%.

0% 5% 10% 15% 20% 2009 2010 2011 2012 2013 2014 2015E 2016E

Owens-Illinois

Source: Company reports and Mountain Lake estimates

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  • In Brazil, Owens-Illinois has 65% market share.
  • In Peru, Ecuador and Columbia, Owens-Illinois

has 100% market share.

  • Normal margins are 20%.

0% 5% 10% 15% 20% 25% 2009 2010 2011 2012 2013 2014 2015E 2016E

Owens-Illinois

South American Operating Margin

Source: Company reports and Mountain Lake estimates

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  • In China, Owens-Illinois has about a 2% market

share with a 0% margin.

  • In Australia and New Zealand, Owens-Illinois has

70% market share. Normal margins are 15%. 0% 5% 10% 15% 20% 2009 2010 2011 2012 2013 2014 2015E 2016E

Owens-Illinois

Asia Pacific Operating Margin

Source: Company reports and Mountain Lake estimates

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0% 5% 10% 15% 20% 2009 2010 2011 2012 2013 2014 2015E 2016E

Owens-Illinois

All Regions Operating Margin

Source: Company reports and Mountain Lake estimates

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Owens-Illinois

millions $0 $100 $200 $300 $400 $500 $600 2009 2010 2011 2012 2013 2014 2015E 2016E Pretend Free Cash Flow*

Source: Company reports and Mountain Lake estimates *excluding payments for asbestos and restructuring

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$0 $1 $2 $3 $4 $5 $6 2000 2005 2010 2014 Net Debt Cash used since 2000: $191 million per year Current leverage ratio: 2.4

Owens-Illinois

billions

Source: Company reports

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Asian and European restructurings completed in 2009 and 2015 Cash use since 2009: $114 million per year

Owens-Illinois

Source: Company reports and Mountain Lake estimates

$0 $50 $100 $150 $200 $250 2009 2010 2011 2012 2013 2014 2015E Restructuring Charges millions

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Cash used since 2009: $158 million per year $0 $50 $100 $150 $200 2009 2010 2011 2012 2013 2014 Asbestos Charges

Owens-Illinois

Source: Company reports

millions

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Owens-Illinois

Mesothelioma Incidence

Source: National Cancer Institute

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10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Asbestos Claims Pending

10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Asbestos Claims Filed

Owens-Illinois

Core Competency in Asbestos Litigation

Source: Company reports

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Owens-Illinois

Recent Claims Activity 2,000 4,000 6,000 8,000 10,000 12,000 2009 2010 2011 2012 2013 2014 Disposed Filed

Source: Company reports

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$0 $100 $200 $300 $400 2009 2010 2011 2012 2013 2014 Reported Free Cash Flow

Owens-Illinois

The impact in 2014 from the strong USD was $40 million. millions

Source: Company reports

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$0 $100 $200 $300 $400 2009 2010 2011 2012 2013 2014 2015E 2016E

Owens-Illinois

Reported Free Cash Flow with Estimates millions

Source: Company reports and Mountain Lake estimates

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Owens-Illinois

Reported Free Cash Flow with Estimates and Adjusted Estimates* millions $0 $100 $200 $300 $400 $500 $600 2009 2010 2011 2012 2013 2014 2015E 2016E

Source: Company reports and Mountain Lake estimates *excluding payments for asbestos and restructuring

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Koppers Holdings

3/31/2015 Market Capitalization = $403 million

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Koppers Holdings

1914 Heinrich Koppers sells patents for by-product coke ovens to Andrew Mellon for $300,000. Koppers Inc. reorganizes in Pittsburg. 1960 Fletcher Byrom focuses the company on end products. 1988 Beazer plc led an LBO 1997 Hansen plc, who acquired Beazer in 1991, wanted

  • control. Management exercised right of first

refusal. 2007 Streamlined company producing carbon materials and wood products has IPO. Corporate History

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Koppers Holdings

Railroad and Utility 39% Carbon Materials and Chemicals 61% 2013 Revenues $1.5 billion

Source: Company reports

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SLIDE 28

COAL TAR

Carbon Pitch 50% Chemical Oils 20% Distillate 30% Naphthalene Creosote Phthalic Anhydride

Primary End Products

Aluminum Vinyl, Paint and Concrete Additives Railroad Crossties

Koppers Holdings

Source: Company reports

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Koppers Holdings

Carbon Materials and Chemicals

  • 5%

0% 5% 10% 15% 2008 2009 2010 2011 2012 2013 2014 2015E Operating Margins

Source: Company reports and Mountain Lake estimates

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Koppers Holdings

Carbon Materials and Chemicals

  • 5%

0% 5% 10% 15% 20% 25% 30% 2011 2012 2013 2014 2015E Return on Invested Capital

Source: Company reports and Mountain Lake estimates

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Koppers Holdings

$0 $200 $400 $600 $800 $1,000 2011 2012 2013 2014 Net Debt Date Acquisition Product or Service Price 8/15/2014 Osmose Wood preservation $491 M 1/20/2014 Ashcroft Crosstie treating $29.8 M millions

Source: Company reports

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Koppers Holdings

11/7/2014 Walt Turner resigns, Leroy Ball appointed CEO 1/14/2015 Company announces delay of low cost naphthalene plant to preserve cash 1/22/2015 Attempt to refinance high cost debt fails 2/26/2015 Company misses earnings guidance for 8th quarter in a row 2/26/2015 Company announces $200mn-$250mn debt reduction target 2/26/2015 Board of Directors suspends dividend

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Koppers Holdings

$0 $10 $20 $30 $40 $50 $60 2011 2011 2012 2012 2013 2013 2014 2014 2015 2014 Year End Shares = 20.5 million

Source: Bloomberg

Stock Price

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$0 $200 $400 $600 $800 2015 2016-2017 2018-2019 2020+ Debt Maturities

Koppers Holdings

millions

Source: Company reports

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Koppers Holdings

Railroad and Utility 38% Performance Chemicals 21% Carbon Materials and Chemicals 41%

Source: Company reports

2015 Revenues $1.8 billion

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SLIDE 36

Koppers Holdings

Railroad and Utility 0% 2% 4% 6% 8% 10% 12% 14% 2012 2013 2014 2015E Operating Margins

Source: Company reports and Mountain Lake estimates

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Koppers Holdings

Railroad and Utility is a Good Business

  • Largest supplier of railroad ties to North American

railroads

  • Two firm concentration is about 80%
  • Steady replacement market demand – 600 million

railroad ties wear out; over 20 million replaced every year

  • Long-term contracts with cost-plus pricing
  • Minimal capital investment
  • Margin opportunity from process improvements
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Koppers Holdings

Railroad and Utility 0% 10% 20% 30% 40% 50% 2011 2012 2013 2014 2015E Return on Invested Capital

Source: Company reports and Mountain Lake estimates

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Koppers Holdings

Performance Chemicals

Source: Company reports and Mountain Lake estimates

$0 $100 $200 $300 $400 2014 2015E 2016E Revenues 0% 5% 10% 15% 2014 2015E 2016E Operating Margins

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Koppers Holdings

Performance Chemicals is a Good Business

  • Wood treatments for outdoors decks
  • They are a dominant provider, still gaining

market share

  • High IP content; patent protection
  • Not capital intensive
  • Sell to wood treaters who in turn sell to big box

stores, contractors and small stores

  • Housing starts is a small percent of demand;

driven by remodels

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Koppers Holdings

Performance Chemicals 0% 5% 10% 15% 20% 25% 30% 2011 2012 2013 2014 2015E Return on Invested Capital

Source: Company reports and Mountain Lake estimates

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Koppers Holdings

Operating Income by Segment In millions 2011 2012 2013 2014 2015E 2016E Carbon Materials and Chemicals $89.1 $83.1 $43.9 -$5.3 -$9.1 $6.5 Railroad and Utility $34.8 $45.1 $58.3 $53.6 $73.8 $72.6 Performance Chemicals $0.0 $0.0 $0.0 $1.6 $40.6 $37.2 Total Segment Operating Income $123.9 $128.2 $102.2 $49.9 $105.3 $116.3

Source: Company reports and Mountain Lake estimates

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Koppers Holdings

Free Cash Flow In millions 2011 2012 2013 2014 2015E 2016E Net Income $37.6 $67.2 $40.1 -$39.4 $37.2 $46.4 Depreciation and Amortization $48.8 $27.6 $29.7 $44.0 $65.0 $61.0 Capital Expenditures

  • $33.2 -$28.9 -$72.9 -$83.8 -$45.0 -$44.0

Free Cash Flow $53.2 $65.9

  • $3.1 -$79.2 $57.2 $63.4

Source: Company reports and Mountain Lake estimates

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In millions Stella Jones Koppers Holdings Koppers without CMC Date 3/31/2015 3/31/2015 3/31/2015 Market Capitalization $2,161 $403 $403 Enterprise Value $2,548 $1,217 $1,217 2015E Revenues $1,138 $1,705 $1,005 2015E Operating Income $142 $105 $114 2015E Operating Margin 12.5% 6.2% 11.4%

Koppers Holdings

Source: Bloomberg and Mountain Lake estimates

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Tidewater

Big Floating Trucks

Boat and/or truck pictures

3/313/2015 Market Capitalization = $898 million

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Tidewater

  • Safe, efficient and compliant operations
  • New vessels that service all water depths
  • Geographic diversity
  • Strong customer base, relationships and

contracting Big Floating Trucks with a Bow for Extra Beauty

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Tidewater

Vessel Population by Owner Deepwater Vessels only

Source: Company reports

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Tidewater

Vessel Commitments

  • Jan. 2000 – Dec. 2014

Vessel Count Total Cost Deepwater PSVs 102 $2,900m Deepwater AHTSs 12 $387m Towing Supply/Supply 111 $1,667m Other 53 $227m Totals 278 $5,181m

Source: Company reports

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Tidewater

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Stock Price

Source: Bloomberg

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(in Billions)

Vessel and Related Equipment $4.63 Net PP&E $3.67 Goodwill $0.00 Net Debt $1.41 Equity $2.51 Shares 46.9 M Book Value per Share $53.50 Stock price as of 3/31/2015 $19.14 Market cap as of 3/31/2015 $897 M

Tidewater

12/31/2014 Balance Sheet Items

Source: Company reports and Bloomberg

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Tidewater

Debt Maturities Fiscal Year ending March 31 millions

Source: Company reports

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Tidewater

0% 10% 20% 30% 40% 50% 60% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E Vessel Cash Operating Margin Fiscal Year ending March 31

Source: Company reports and Mountain Lake estimates

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Tidewater

  • 10%

0% 10% 20% 30% 40% 50% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E Operating Margin Fiscal Year ending March 31

Source: Company reports and Mountain Lake estimates

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Tidewater

Fiscal Year ending March 31

Source: Company reports and Mountain Lake estimates

millions

  • $400
  • $300
  • $200
  • $100

$0 $100 $200 $300 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E Free Cash Flow

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Tidewater

We are here, 85 days until positive free cash flow Fiscal Year ending March 31

Source: Company reports and Mountain Lake estimates

$0 $50 $100 $150 $200 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018 4Q2018 Capital Expenditures millions

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Tidewater

Fiscal Year ending March 31

Source: Company reports and Mountain Lake estimates

  • $400
  • $300
  • $200
  • $100

$0 $100 $200 $300 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E Free Cash Flow millions

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