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February 16, 2011 Fourth Quarter Results. 2 02/16/2011 Forward Looking Statements This conference call may contain certain "forward-looking statements"

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Presentation on theme: "February 16, 2011 Fourth Quarter Results. 2 02/16/2011 Forward Looking Statements This conference call may contain certain "forward-looking statements""— Presentation transcript:

1 February 16, 2011 Fourth Quarter Results

2 2 02/16/2011 Forward Looking Statements This conference call may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the business, operations and financial condition of Rockwood Holdings, Inc. and its subsidiaries (Rockwood). Although Rockwood believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. "Forward-looking statements" consist of all non-historical information, including the statements referring to the prospects and future performance of Rockwood. Actual results could differ materially from those projected in Rockwoods forward-looking statements due to numerous known and unknown risks and uncertainties, including, among other things, the "Risk Factors" described in Rockwoods Form 10-K filed with the Securities and Exchange Commission. Rockwood does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

3 3 02/16/2011 Where to Find Materials/Archives A replay of the conference call will be available through March 2, 2011 at (800) 475-6701 in the U.S., access code: 186628, and internationally at (320) 365-3844, access code: 186628. The webcast and the materials will also be archived on our website at www.rocksp.com and are accessible by clicking on Company News.

4 4 02/16/2011 Agenda Fourth Quarter Highlights Financial Summary Summary Appendices Note: All 10 and 09 data, other than as noted, are for continuing operations only.

5 5 02/16/2011 Fourth Quarter Highlights

6 6 02/16/2011 Fourth Quarter Highlights Net sales of $798.3 mm-Up 13.7% versus prior year on a constant currency basis -Strong volume growth in all markets except US construction Adjusted EBITDA (a) of $153.7 mm-Up 10.2% versus prior year on a constant currency basis Adjusted EBITDA (a) margin of 19.3% -Higher volumes and continued cost discipline enable Rockwood to maintain high margins Adjusted EPS of $0.49 (a) (b) -Increase versus prior year driven primarily by higher volumes, continued focus on cost control and lower interest expense Free cash flow of $68.3 mm (a) (b) -$320.3 million free cash flow in full year - Strong Adj. EBITDA, combined with continued tight working capital management, contributed to excellent free cash flow generation Divestiture of AlphaGary -Sold AlphaGary plastic compounding business to Mexichem S.A.B.de C.V. (closed January 7, 2011) for $300 million in cash; 9.0 times LTM Adj. EBITDA -Proceeds used to reduce debt (a) Non-GAAP measure; see reconciliation in the appendix. (b) Including discontinued operations AlphaGary plastic compounding business.

7 7 02/16/2011 Fourth Quarter and Full Year Summary

8 8 02/16/2011 Net Sales Growth

9 9 02/16/2011 Results By Segment – Fourth Quarter

10 10 02/16/2011 Results By Segment – Full Year

11 11 02/16/2011 Specialty Chemicals In the Fine Chemicals business, significantly higher volumes of lithium products were partially offset by lower selling prices of potash and lithium carbonate and higher selling, general and administrative costs. In the Surface Treatment business, higher volumes in most markets, particularly in automotive and aerospace, were partially offset by higher variable compensation costs. (a)A reconciliation of Net Income to Adjusted EBITDA is provided. See Appendices. (b)Based on constant currencies. See Appendices.

12 12 02/16/2011 Performance Additives Net sales were up primarily from higher volumes of oilfield and other applications in the Clay-based Additives business; and a favorable product mix and increased selling prices in the Color Pigments and Services business. Adjusted EBITDA was negatively impacted by higher raw material costs. (a)A reconciliation of Net Income to Adjusted EBITDA is provided. See Appendices. (b)Based on constant currencies. See Appendices.

13 13 02/16/2011 Titanium Dioxide Pigments Net sales and Adjusted EBITDA were up primarily from higher selling prices, as well as a favorable product mix. This was partially offset by higher production and raw material costs. (a)A reconciliation of Net Income to Adjusted EBITDA is provided. See Appendices. (b)Based on constant currencies. See Appendices.

14 14 02/16/2011 Advanced Ceramics Net sales and Adjusted EBITDA were up from higher volumes in most product applications, primarily medical, cutting tool and electronic applications, partially offset by higher maintenance costs. (a)A reconciliation of Net Income to Adjusted EBITDA is provided. See Appendices. (b)Based on constant currencies. See Appendices.

15 15 02/16/2011 Financial Summary

16 16 02/16/2011 Income Statement - Reported

17 17 02/16/2011 Reconciliation of Net Income to Adjusted EBITDA

18 18 02/16/2011 Reconciliation of Net Income/EPS as Reported to Net Income/EPS as Adjusted

19 19 02/16/2011 Tax Provision Reconciliation – Fourth Quarter 2010

20 20 02/16/2011 Consolidated Net Debt (as reported)

21 21 02/16/2011 Debt Repayment and Refinancing Rockwood prepaid $409 million of senior secured debt and refinanced $850 million (b) of senior secured debt (on 2/10/11) at a lower interest rate (c). Debt repayment used the cash proceeds from the sale of the plastic compounding business and cash on-hand. Following is Rockwoods net debt and leverage as reported at December 31, 2010 and pro forma for the debt repayment and refinancing. Debt repayment and lower interest rate will reduce on-going interest expense by approx. $40 million (pro forma for 2011). (a) Including proceeds of AlphaGary sale of $289 million. (b) New term loan has a 7-year maturity, new revolving credit facility ($180 million) a 5-year maturity. (c) Interest rate for new term loan: LIBOR+275 bps, with a 1% LIBOR floor.

22 22 02/16/2011 Net Debt / LTM Adjusted EBITDA Note: Net Debt / LTM Adjusted EBITDA as per definition for covenant leverage ratio calculation under senior credit agreement for Rockwood Specialties Group, Inc., but using total Cash. Covenant Calculation (pro forma) - based on Senior Debt only - not to exceed 2.75x - Rockwood at 1.56x at Dec. 31 (using total Cash)

23 23 02/16/2011 Free Cash Flow

24 24 02/16/2011 Estimates for 2011

25 25 02/16/2011 Appendices

26 26 02/16/2011 Reconciliation of Net Income to Adjusted EBITDA

27 27 02/16/2011 Reconciliation of Pre-Tax Income to Adjusted EBITDA - Fourth Quarter

28 28 02/16/2011 Reconciliation of Pre-Tax Income to Adjusted EBITDA – Full Year

29 29 02/16/2011 Constant Currency Effect on Results – Fourth Quarter

30 30 02/16/2011 Constant Currency Effect on Results – Full Year

31 31 02/16/2011 Reconciliation of Net Income/EPS – Fourth Quarter and Full Year 2009

32 32 02/16/2011 Tax Provision Reconciliation – Full Year 2010

33 33 02/16/2011 Tax Provision Reconciliation 2009

34 34 02/16/2011 Reconciliation of Net Cash to Adjusted EBITDA


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