First Quarter 2020 Results Presentation May 6, 2020
General Disclosure This presentation includes “forward -looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. These forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information. When used in this presentation, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” or future or conditional verbs, such as “will,” “should,” “could,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management’s examination of historical operating trends and data, are based upon our current expectations of future events and various assumptions which may not be realized or accurate. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will be achieved. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this presentation. Such risks, uncertainties and other important factors include, among others: the impacts and duration of the global outbreak of the Coronavirus Disease 2019 pandemic on the global economy and all aspects of our business, including our employees, customers, suppliers, partners, results of operations, financial condition and liquidity, global economic conditions, our ability to maintain sufficient working capital, our ability to access capital markets on favorable terms, our ability to transfer technology and manufacturing capacity from our Pori, Finland manufacturing facility to other sites in our manufacturing network, the costs associated with such transfer and the closure of our Pori facility, our ability to realize financial and operational benefits from our business improvement plans and initiatives, impacts on TiO 2 markets and the broader global economy from the imposition of tariffs by the U.S. and other countries, changes in raw material and energy prices, or interruptions in raw materials and energy, industry production capacity and operating rates, the supply demand balance for our products and that of competing products, pricing pressures, technological developments, legal claims by or against us, changes in government regulations, including increased manufacturing, labeling and waste disposal regulations and the classification of TiO 2 as a carcinogen in the EU, geopolitical events, cyberattacks and public health crises and other risk factors as discussed in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC, and in our Quarterly Report on Form 10-Q for the three months ended March 31, 2020 filed with the SEC.. This presentation contains financial measures that are not in accordance with generally accepted accounting principles in the U.S. ("GAAP"), including EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and net debt and certain ratios and other metrics derived therefrom. We have provided reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures in the Appendix to this presentation.
First Quarter 2020 Highlights Financial summary $ in millions, except per share amounts 1Q20 1Q19 4Q19 Revenues 532 562 464 Net income (loss) attributable to Venator (a) 7 (3) (174) Adjusted net income (loss) attributable to Venator (1)(a) 12 14 (10) Adjusted EBITDA (1)(a) 57 60 23 Diluted earnings (loss) per share (a) 0.07 (0.03) (1.63) Adjusted diluted earnings (loss) per share (1)(a) 0.11 0.13 (0.09) Net cash (used in) provided by operating activities (58) (29) 69 Free cash flow (3) (85) (82) 20 (a) 4Q19 includes a $3 million benefit due to a change in plant utilization rates, which increased our overhead absorption and corresponding inventory valuation at certain facilities 3 See Appendix for reconciliations and important explanatory notes
COVID-19 Response Robust response to mitigate challenges 1. Prioritizing the safety of our employees and plant operations – Responded swiftly and decisively to safeguard the wellness of our employees and integrity of our assets 2. Maintaining reliable supply of our products to our customers – Our manufacturing sites are operating according to our customer-tailored approach 3. Immediate and long-term reduction of costs and cash uses – Planned capex reduced by ~$25 million compared to prior estimate – Implementing a range of cost reduction actions to augment current initiatives 4. Total liquidity (1) of $216 million as of March 31, 2020 – $25 million of cash; $191 million of availability under our ABL 5. Prepared to take additional actions should conditions warrant (1) Defined as cash and availability under the ABL 4
EBITDA Improvement Through Lower Costs >$20 million of COVID-19 initiatives; Existing programs on-track Delivering EBITDA Improvement Primarily Through Lower Costs $ in millions >$50 $40mm 2019 Business >$20 >$10 Improvement Program $7 >$10mm color pigments cost $13 improvements $20 COVID-19 initiatives 2019 2020 Thereafter EBITDA Improvement Highlights of Cost Initiatives Expect to deliver $40 million (1) of annual adjusted EBITDA benefit from our 2019 Business Improvement Program – Expect to exit 2020 at the targeted run-rate Target >$10 million (2) of annual adjusted EBITDA benefit in our color pigments business Implementing specific COVID-19 actions which are expected to reduce costs by >$20 million in 2020 – Salary freeze and other compensation reductions – Moved substantial portion of workforce to part-time working and furlough – Broad reduction in all other discretionary spending (1) Compared to year-end 2018 baseline 5 (2) Compared to year-end 2019 baseline
Titanium Dioxide Stable sequential average TiO 2 price and a seasonal improvement in demand Revenues Adjusted EBITDA $ in millions $ in millions $425 65 $61 $402 60 $354 14% 55 50 $46 45 40 35 11% $30 30 25 8% 20 15 10 5 0 1Q20 1Q19 4Q19 1Q20 1Q19 4Q19 Titanium Dioxide Adjusted EBITDA margin First Quarter Highlights Outlook TiO 2 prices were stable Q/Q (1) (declined 1% (1) Y/Y) Near Term Expectations TiO 2 prices to remain stable globally Volumes declined 1% Y/Y primarily due to lower sales Volumes to decline 15-20% sequentially in 2Q20 of certain specialty TiO 2 products Accelerate benefits from cost reduction initiatives Volumes increased sequentially in-line with historical seasonal patterns Longer Term Expectations $3mm adjusted EBITDA benefit from the 2019 Further cost reduction initiatives Business Improvement Program Demand to normalize after the COVID-19 pandemic Favorable industry fundamentals for TiO 2 (1) In local currency 6
Performance Additives Seasonal improvement in demand and delivery of cost initiatives Revenues Adjusted EBITDA $ in millions $ in millions $137 24 $22 23 $130 22 21 20 $110 19 18 17 $15 16 17% 15 14 13 12 11 11% 10 9 8 7 6 $4 5 4 3 2 4% 1 0 1Q20 1Q19 4Q19 1Q20 1Q19 4Q19 Performance Additives Adjusted EBITDA margin First Quarter Highlights Outlook Average prices remained stable (1) Y/Y Near Term Expectations Adjusted EBITDA benefit from cost reduction initiatives Volumes declined 4% Y/Y primarily in coatings and Soft demand for certain applications including coatings construction-related applications and construction applications due to COVID-19 $1mm adjusted EBITDA benefit from the 2019 Business Potential sale of color pigments business Improvement Program Longer Term Expectations Further cost reduction initiatives Demand to recover in automotive, coatings and construction applications (1) In local currency 7
Adjusted EBITDA Bridges First Quarter 2020 Year / Year Adjusted EBITDA Bridge $ in millions $60 $(20) $57 $13 $4 $(3) $3 1Q19 Adjusted Price/Mix Volume COGS 2019 Business SGA / FX / Other 1Q20 Adjusted EBITDA Improvement Program EBITDA Quarter / Quarter Adjusted EBITDA Bridge $ in millions $57 $6 $(2) $2 $25 $3 $23 4Q19 Adjusted Price/Mix Volume COGS 2019 Business SGA / FX / Other 1Q20 Adjusted EBITDA Improvement Program EBITDA See Appendix for reconciliations and important explanatory notes 8
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