Transcription
W. R. Grace & Co.Investor PresentationCambridge, MA facility tourMay 2015 2015 W. R. Grace & Co.Company Confidential
DisclaimerStatement Regarding Safe Harbor For Forward-Looking StatementsThis presentation contains forward-looking statements, that is, information related to future, not past, events. Such statements generallyinclude the words “believes,” “plans,” “intends,” “targets,” “will,” “expects,” “suggests,” “anticipates,” “outlook,” “continues” or similarexpressions. Forward-looking statements include, without limitation, expected financial positions; results of operations; cash flows; financingplans; business strategy; operating plans; capital and other expenditures; competitive positions; growth opportunities for existing products;benefits from new technology and cost reduction initiatives, plans and objectives; and markets for securities. For these statements, Graceclaims the protection of the safe harbor for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of theExchange Act. Like other businesses, Grace is subject to risks and uncertainties that could cause its actual results to differ materially from itsprojections or that could cause other forward-looking statements to prove incorrect. Factors that could cause actual results to materiallydiffer from those contained in the forward-looking statements include, without limitation: risks related to foreign operations, especially inemerging regions; the cost and availability of raw materials and energy; the effectiveness of its research and development and growthinvestments; acquisitions and divestitures of assets and gains and losses from dispositions; developments affecting Grace’s outstandingindebtedness; developments affecting Grace's funded and unfunded pension obligations; its legal and environmental proceedings;uncertainties that may delay or negatively impact the spin-off or cause the spin-off to not occur at all; uncertainties related to the company’sability to realize the anticipated benefits of the spin-off; the inability to establish or maintain certain business relationships and relationshipswith customers and suppliers or the inability to retain key personnel following the spin-off; costs of compliance with environmentalregulation; and those additional factors set forth in Grace's most recent Annual Report on Form 10-K, quarterly report on Form 10-Q andcurrent reports on Form 8-K, which have been filed with the Securities and Exchange Commission and are readily available on the Internet atwww.sec.gov. Reported results should not be considered as an indication of future performance. Readers are cautioned not to place unduereliance on Grace's projections and forward-looking statements, which speak only as the date thereof. Grace undertakes no obligation topublicly release any revision to the projections and forward-looking statements contained in this announcement, or to update them to reflectevents or circumstances occurring after the date of this announcement.Non-GAAP Financial TermsThese slides contain certain “non-GAAP financial terms” which are defined in the Appendix.Reconciliations of non-GAAP terms to the closest GAAP term (i.e., net income) are provided in the Appendix.2 2015 W. R. Grace & Co.Company Confidential
AgendaTimeTopics9:45Construction Products OverviewSpecialty Building MaterialsSpecialty Construction ChemicalsDarex PackagingBreak11:00SCC and SBM Laboratory Tours12:30Lunch (or grab box lunch to go)1:003Depart Grace 2015 W. R. Grace & Co.Company Confidential
Built on talent, technology, and trust, Grace high-performancespecialty chemicals and materials improve the products andprocesses of our customer partners around the world. Founded in 1854 – 160 years ofinnovation 2014 sales of 3.2 billion True specialty chemicals business, withhigh value, high margin product portfolio Strong franchises in large, global markets Operations in over 40 countries Leading positions in approximately 70%of the segments where we compete4 2015 W. R. Grace & Co.
Today: three business segments with global functional organizationConstruction Products 1.1BCatalysts Technologies 1.2B 3.2 Billion2014Materials Technologies 0.9B5 2015 W. R. Grace & Co.
Construction Products2014 Financial Highlights 1.1 billion sales 36.3% Gross margin 193.4 million Adjusted EBITDA4-5% CAGR 17.5% Adjusted EBITDA marginSpecialty BuildingMaterials Market 6.4 14.6 7.1BillionMarket 1.1Cement AdditivesMarket6 2015 W. R. Grace & Co.ConcreteChemicalsMarket
ConstructionProducts34%Construction ProductsIndustry DriversLong Term Outlook Mature market recovery Leverage existing footprint as globalmarket recovery takes hold Urbanization of emerging markets Invest in emerging markets Increasing sophistication of buildingpractices Drive global technology transfer frommature to emerging markets Develop new products and services tofurther differentiate Grace in themarketplaceGlobal Cement ConsumptionUS Commercial Building ce: CW Research, GCVFR, 1H 2015 (2009-2016), The GlobalCement Report, 10th ed, Tradeship Publications Ltd (2005-2008)7 2015 W. R. Grace & Co.20052007200920112013Source: Dodge Data & Analytics, CMFS Q1 2015 142,8322000ChinaSquare Feet3,0002,7654,0002,5705,0002,339TonnesTotal World(Millions)1,527(Millions)
Business DynamicsStrengthsIndustry requires multiple touch points in the valuechain and highly trained field representativesCompetitorsBusiness Position BASF SIKA Carlisle Leader in multiple high-value productsegments and geographies Mapei RPM Henry #1 in cement additives #2 in concrete admixtures #1 in pre-applied waterproofing8 2015 W. R. Grace & Co. Balanced exposure acrosscommercial, infrastructure,and residential Long-term customerrelationships Deep understanding ofour customers’businesses Preferred-supplier statusbuilt on deepproduct applicationknowledge
Infrastructure ApplicationsCement AdditivesGrinding aids and quality improversConcrete AdmixturesCorrosion inhibitors, superplasticizers,self-consolidating concrete, setaccelerators, shrinkage reducers,structural fibers, water reducersBridge DeckWaterproofing SystemsProducts that strengthen, protect and enhance structures9 2015 W. R. Grace & Co.
Residential ApplicationsCement AdditivesGrinding aids and quality improversConcrete AdmixturesSelf-consolidating concrete, setaccelerators, shrinkage reducers,structural fibers, water reducersDecorative ConcreteColor pigments and surface retardersFoundation WaterproofingSpray-applied and sheet-appliedWindow and Door FlashingsRoofing MembranesRoof detail membranes,roofing underlaymentsProducts that strengthen, protect and enhance structures10 2015 W. R. Grace & Co.
Commercial ApplicationsCement AdditivesGrinding aids and quality improversConcrete AdmixturesSuperplasticizers, self-consolidatingconcrete, set accelerators, shrinkagereducers, structural fibers, water reducersDecorative ConcreteColor pigments and surface retardersFoundation WaterproofingPre-applied blindside sheetwaterproofing, post-applied sheetand spray-applied membranesFireproofingWall and Window Flashing MembranesSpray-Applied Wall Membranes and Vapor BarriersProducts that strengthen, protect and enhance structures11 2015 W. R. Grace & Co.
Specialty Building Materials12 2015 W. R. Grace & Co.
Core Brands – Building EnvelopeWaterproofing Global leader in the advancement of waterproofing technologies Preprufe – Leading below-grade solution with a full line of accessory products. Pioneer of thefully bonded preapplied waterproofing technology Silcor – Liquid applied deck waterproofing Bituthene – Original rubberized asphalt self adhesive membrane Adcor & Bentorub – Hydrophilic waterstops for joint protectionAir Barriers Specified barriers to manage movement of air, water & vapor through the buildingenvelope to improve energy use and indoor air quality Perm-A-Barrier – full line of vapor permeable and impermeable sheet and liquid appliedproductsResidential North America focused business providing Weather Protection Systems in specificchannels to improve the durability of wood constructed homes Grace Ice & Water Shield – category leading self adhesive underlayment for sloped roofs Vycor – flashing and sheet membranes to protect & manage moisture in the wall13 2015 W. R. Grace & Co.
Below-grade WaterproofingPreprufe : The Premier Pre-Applied Waterproofing System Improved leak prevention through uniqueadhesive bond Specified on major projects throughout theworld Drives full portfolio system selling Preprufe Plus increases quality andcontractor productivity Patented technologyMuseum of Islamic Arts(Doha, Qatar)Below-grade Waterproofing Market22%Asia PacificAmericas42%36%EMEA14 2015 W. R. Grace & Co.The Morocco Mall(Casablanca, Morocco)
Preprufe PLUS eprufe-videos.aspx15 2015 W. R. Grace & Co.
Specialty BusinessesDe Neef Pieri Resin injectionsfor leak sealingand groundstabilizationDecorativetreatmentsfor concrete Polyurethane resins for crack injections High technology surface retarders, release agents,pigments and form liners Ground stabilization & curtain grouting with PU, Acrylate,Organomineral and Silica/ Silicate based products Thin toppings for interior applications with Solacir Betec Fire ProtectionHigh-qualityengineeredcementitiousgrouts andmortarsSpray applied fireprotection forstructural steel Specializing in flowable high-strength grouts forindustrial and infrastructure applications Monokote - the world's most widely specified sprayapplied cementitious fireproofing Growth in new segments for wind turbine constructionand specialty niche grouting applications Growing in new specialty applications for petrochemicaland tunnels16 2015 W. R. Grace & Co.
Grace Project Selling PrinciplesTechnology PlatformsProject Selling CompetencyInternational DimensionThe Grace Building EnvelopeRoof Grace Ice & Water Shield RoofingUnderlayment Tri-Flex Roofing UnderlaymentBalcony Betec Cementitious Waterproofing Procor Liquid WaterproofingSteel Structure Monokote FireproofingClientFlat Deck Bituthene Post-appliedWaterproofingMembrane Betec CementitiousWaterproofing Procor LiquidWaterproofing Decorative ConcreteExternal Wall ADVA for Self-consolidatingConcreteInterior Floor DecorativeConcreteSubstructure Preprufe 160R Pre-appliedWaterproofing Membrane Bituthene Post-appliedWaterproofing Membrane Procor Liquid Waterproofing Hydroduct Drainage CompositesArchitectWet Areas Betec Cementitious WaterproofingSwimming Pool BetecCementitiousWaterproofingLift Pit Betec CementitiousWaterproofing Monokote FireproofingSubstructure Preprufe 300R WaterproofingMembrane MIRA Mid-range Water Reducer STRUX Synthetic Macro FibreStructuralEngineerGeotechCivilEngineerGRACE ctorGround ingPrecastValue Drivers Technical expertise Understanding of local codes& construction practice Technology solutions System approach Custom specifications anddrawings17 2015 W. R. Grace & Co. Develop market/projectintelligence throughout design &construction Executive selling toinfluencers and decision makers –Key accounts Project Tracking – CRM Consistent linkage throughoutvalue chain More projects driveninternationally Globalisation, customerconsolidation – localpartners Leverage brand awareness Drive geographicexpansion
Specialty Construction Chemicals18 2015 W. R. Grace & Co.
Specialty Construction Chemicals (SCC) – OverviewChemicals to Improve the Performance of Cement-Based Materials2014 Business Profile Two core product lines: Concrete Admixtures andCement Additives Major technology platforms: concrete waterreducers (water soluble polymers) and cementquality improvers (higher amines) Global customers and markets #1 globally in cement additives #2 globally in concrete admixturesSCC Global Strategy Market-driven development of innovative technologies Rapid deployment of new products globally Market expansion as regions adopt modern cementproduction facilities and ready mix concrete Continuous optimization of supply chain costs19 2015 W. R. Grace & Co.
Why does concrete crack?Chemical additives make cement-based materialseasier and cheaper to install, more durable,with less impact on the environment20 2015 W. R. Grace & Co.
Concrete Construction Value ChainWe create value throughout the concrete construction ecosystem, but focusprimarily on value creation with cement manufacturers and concrete producers21 2015 W. R. Grace & Co.
Specialty Construction Chemicals: Global FootprintKey SCC marketsshaded in blueA strong sales, manufacturing, and technical presence in key global markets22 2015 W. R. Grace & Co.
Cement Additives Customers:Multinational cement companies Users: Cement Plants Typical output: 1 million tons/yr Approx 100 plants in the US Grace products: Grinding Aids Quality ImproversGrace has been a leader in the cement additives technology for 80 years23 2015 W. R. Grace & Co.
Concrete AdmixturesCustomers: Multinational buildingmaterials companies, local concreteproducersUsers: ready-mix concrete plantsTypical Output: 50,000 yd3/yrCement consumption: 15,000 tons/yr Approx 70 ready mix plants for eachcement plantProducts: 24 2015 W. R. Grace & Co.Water-reducersAdmixtures for Self Compacting ConcreteAir Entraining AgentsSet Accelerators and RetardersCorrosion InhibitorsShrinkage Reducing AgentsStructural Fibers
Translating leading science into high-value solutions Polymer SynthesisNanoscienceFormulation ScienceFiber EngineeringRheology ControlCement ChemistryCivil EngineeringChemistry &MaterialSciencesMarket &CustomerInsights Market Knowledge Needs Assessment Design SpecificationsResearch &DevelopmentLaboratories 25 2015 W. R. Grace & Co.PetrographyFracture MechanicsThermal AnalysisTesting
New products in test market phase26 2015 W. R. Grace & Co.
Extending leadership to underground constructionFull shotcrete system offering withstrong differentiated products STRUX BT50TYTRO RC27 2015 W. R. Grace & Co. being validated in test marketand existing marketsTYTRO SA Offering launched into the test area Added field technical resource Leveraging existing commercial team
Key Advances in Cement AdditivesCBA Qualityimproversdeveloped andpatented28 2015 W. R. Grace & Co.ESE Non-chlorideearly strengthenhancersintroducedSynchro Liquid additivefor chromiumreduction incementGlyzana Cost-efficientgrinding aidbased onrenewable source
Why We Win – Technology and Capabilities World-class R&D facilities inCambridge, MA Disciplined stage-gateprocess Robust product pipeline Joint developmentrelationships29 2015 W. R. Grace & Co. Leading position in keymarkets Effective, customer focusedorganization Strong partnerships Targeted offerings Regional laboratories andtechnical service centersclose to customer base Best-in-class field support
World-class Technical Service CapabilitiesConcreteCementField30 2015 W. R. Grace & Co.Analytical
What is in ngesEconomicdriversInnovationRegulatory Our cement and concrete customers will continue to seek operational savings and betterquality assurance Environmental pressures will create change in materials selection, materials availability,and process technologies The drive for life-cycle costing and performance specifications will place a greater premiumon high-quality durable concrete Breakthroughs in cement chemistry, materials science, and nanotechnology will create newopportunities to solve problems31 2015 W. R. Grace & Co.
Construction Products and Darex: A Shared HistoryDarex historyConstructionProducts history32 2015 W. R. Grace & Co.
Darex Packaging33 2015 W. R. Grace & Co.
Darex HistoryMT2015Acquisition ofSBK Coatings2010BPA-NILaunchedDarex invented flowed-in sealant and has grown through acquisitions in packaging34 2015 W. R. Grace & Co.
Darex Business DynamicsCan Sealants #1 global can sealant supplier Serves food, beverage, aerosol and general line metal packaging industries Ensures quality in over 300 billion food and beverage cans annually Only supplier with both solvent and water based sealants Developed “flowed-in” gasket technology Best-in-class products and technical support Major competitors: Altana (Actega), UBIS, Wakol-ForecoCan Coatings Global sales, manufacturing, and technical support footprint Leverages strength across segments for unparalleled regulatory and food law compliance knowledge Strong technology position in BPA-NI can coatings Strong technology position in aluminum monobloc coatings through Sistiaga acquisition Major competitors: Valspar, PPG, Akzo Nobel, MetlacClosure Sealants Leader in closure sealants for taste sensitive beverages Crown, aluminum, and plastics applications Provider of PVC and PVC-Free technologies Strong technology and market position Oxygen scavenger sealants for sensitive beverages e.g. Beers / Juices / Nutritional drinks Scavenger additives and master batch solutions for synthetic corks and 1 piece closures Major competitors: Altana (Actega), D-Plast, Self-Manufacturers35 2015 W. R. Grace & Co.
Supply Chain in the Packaging IndustryRaw l Producers Can Sealants CoatingsCan MakersBrand OwnersRetailerConsumersSealants and Coatings are a small cost( 5%) of the package, but vital to its performance36 2015 W. R. Grace & Co.
Technology Overview – Can Sealants BasicsProvide hermetic seal by filling the void created in double-seamCan BodyFlange (Curl)Can EndPrimarySealing AreaBacteria,Oxygen,MoistureContainer content–Food, beverage, oils,solvent, gasesKey Requirements Must have sufficient chemical resistance to the pack Must have sufficient thermal and mechanical resistance towithstand the retort or processing conditions Must not affect the aroma or flavor of the pack contents Sealant protects the package during the life of the can Where applicable, must be food law compliant37 2015 W. R. Grace & Co.
Technology Overview – Can Coatings BasicsProtect contents from the environment, and the pack from the contentsChemical Protection Prevent interaction betweenmetal and contentsKey Requirements Flexible and spread evenly Resist physical deformationduring fabrication of containerOther FunctionalitiesDecoration Improved canappearance Primer for inks Easy removal of contents(e.g. meat release) Oxygen scavenging Heat Seal Must not impart any flavor Perform for the whole shelf lifeof the container Comply with global food lawsMechanical Protection Protection against physicalabuse (scratching) Protection against environmentMost metal containers and lids must be coated, internally and externally38 2015 W. R. Grace & Co.
Technology Overview – Closure Sealants BasicsProvide hermetic seal, filling natural voids between container and closureProvides pressure seal Prevents oxygen, bacteria fromcoming inFills voids Contents stay in the packageClosure TypeMajor End UseLug CapRoll-on PilferProof (ROPP)One piece PlasticCapCarbonated SoftDrink (CSD),BeerGlass Food JarsWater(Germany),Spirits, WinePET Food JarsSealant andCoatingSealant andCoatingSealant andCoatingOST MasterbatchPlastic CapMetal CrownCarbonated SoftDrink (CSD),WaterSealantDarex SalesKey Requirements Must not impart any flavor Have low chemical migration Be lineable at very high speeds Adhere to the metal/plastic Perform for the shelflife of container Be food compliantBrand Owner Pull Key to Closure Sealant Strategy39 2015 W. R. Grace & Co.
Tania AlmondInvestor Relations Officer 1 410.531.4590Tania.Almond@grace.com40 2015 W. R. Grace & Co.
Appendix: Definitions and Reconciliations of Non-GAAP Measures41 2015 W. R. Grace & Co.
Appendix: Reconciliations of Non-GAAP Financial Measures(continued)42 2015 W. R. Grace & Co.
Appendix: Reconciliations of Non-GAAP Financial Measures(continued)43 2015 W. R. Grace & Co.
Appendix: Reconciliations of Non-GAAP Financial Measures(continued)44 2015 W. R. Grace & Co.
Waterproofing Global leader in the advancement of waterproofing technologies Preprufe - Leading below-grade solution with a full line of accessory products. Pioneer of the fully bonded preapplied waterproofing technology Silcor - Liquid applied deck waterproofing Bituthene - Original rubberized asphalt self adhesive membrane
