Ciner Resources LP
Investor Presentation
June 2016
Safe Harbor Statement
This presentation may contain “forward-looking statements.” All statements that address
operating performance, events or developments that we expect or anticipate will occur in
the future are forward-looking statements. Caution should be taken not to place undue
reliance on any such forward-looking statements because actual results may differ
materially from the results suggested by these statements. We undertake no obligation
to publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In addition, forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to differ
materially from our historical experience and present expectations or projections. These
risks and uncertainties include, but are not limited to, those described in the Risk Factors
section of CINR’s 10-K dated March 11, 2016, and those described from time-to-time in
our periodic and other reports filed with the Securities and Exchange Commission.
2
Ciner Resources LP - At A Glance
§
Fixed-distribution Master Limited Partnership
– IPO in September 2013
§
One of the largest and lowest cost producers of natural soda ash in the
world
– Soda ash, an essential raw material used in the production of glass,
chemicals and detergents, is a well structured global industry with
steadily growing demand of ~3% annually, or ~ 1.8M tons per year
§
Over 2.6 million short tons annual soda ash production
§
~475 employees
§
67+ years of mining reserves
§
2015 Revenue: $486.4 million
§
2015 Adjusted EBITDA: $133.9 million
3
Ciner Resources - Competitive Advantages
§ Most efficient soda ash producer in North America
§ Amongst lowest cost producers in the world
§ Uniquely configured asset footprint
§ Strong safety and environmental records
§ Excellent workforce relationship; non-union
§ Stable end markets and customer relationships
§ Experienced management and operational team
4
Headlines
2015
Earnings Per Unit
§
Earnings per unit $2.58 increased 15.7%
§
Volumes sold and produced both
increased more than 100,000 ST
§
§
Both site records
Cash from operations increased from
$106M in 2014 to $150M in 2015
§
Working capital initiative
§
Completed sale to Ciner by OCI
§
Distributable Cash Flow increased from
$53.1M in 2014 to $55.7M in 2015
Distributable Cash Flow
$ Millions
2016
§ Volumes forecast to increase 2% - 4%
§ Continue to examine acquisition
opportunities
5
Delivering Value to Unitholders
§
Long-term stable cash flows support MLP
model
Quarterly Distribution Per Unit
– 67+ year reserve life, significant cost
inputs hedged, long-term customers
§
Organic growth projects identified that
would allow production volume growth at
2%-4% per year through 2019
§
Strong financial position at less than 1X
leverage ratio
§
1.23X trailing 12 month distribution
coverage ratio
§
Quarterly Coverage Ratio
Compelling investment proposition
through yield plus potenitial distribution
growth
– ~8% current yield with ~5%
distribution growth in last 12 months
6
Growing Global Demand
Diverse End-Market Uses
Significant Consumption Growth Expected
(Global Soda Ash Consumption by End Market, By volume, 2015)
(Global Soda Ash Consumption, millions of tons)
Demand=61millionshorttons
Major Producer of Low-Cost Natural Soda Ash
(2014 Soda Ash Production)
Hou
25%
Other
Synthetic
5%
Other
Global
Natural
6%
U.S.
Natural
19%
Solvay
45%
Source: IHS and USGS Soda Ash.
Searles
9.0%
Ciner
19.5%
Tata
19.5%
Solvay
20.0%
Tronox
32.0%
Ample Room for per Capita Consumption to Grow
(2015, kg / person)
Region
Consumption per Capita
(kg / person)
U.S.A.
16
Middle East
7
Latin America
5
Asia Ex-China
3
Africa
1
7
Amongst the Lowest Cost Producers in the World
Trona Based Production is Significantly
Cost Advantaged
• As a producer of natural soda ash from trona,
Ciner Resources has a significant cost
advantage compared to synthetic producers
around the world
•
–
Trona-based production consumes
less energy and produces fewer
undesirable by-products than
synthetic production
–
Synthetic producers incur additional
costs associated with the storage,
disposal, or attempted resale of byproducts
Even accounting for higher freight and
logistics costs, Ciner Resources is cost
competitive with synthetic soda ash
producers to most export markets around
the world
• Ciner Resources consistently operates at
high utilization rates and routinely sells 100%
of its production
Lowest-Cost Production Process
Process
Raw
Materials
Energy
Usage
ByProducts
U.S. Trona
Solvay
Hou
Mining and
refining trona
Synthetic
production
Synthetic
production
Trona
Salt (brine),
Limestone,
Ammonia
Salt (brine),
Ammonia,
Carbon
Dioxide
4–6
MMBtu / ton
10 – 14
MMBtu / ton
10 – 14
MMBtu / ton
Deca
(able to process
into soda ash)
Calcium
Chloride
(waste product)
Ammonium
Chloride
(co-product)
1/2~3/4costof
competingprocesses 1
Relative
Soda Ash
Production
Costs
1.4x
2.0x
1.3x
1.0x
U.S. Trona
(Natural Gas)
European China
Solvay Solvay
China Hou
Trona-based production is one-half to three-quarters the cost of synthetic production
Source:
IHS and Ciner estimates
8
Most Efficient Soda Ash Producer in Green River Basin
Ciner has the highest soda ash production per employee and the best energy
efficiency in the Green River Basin.
Green River’s Most Energy Efficient
Producer (MMBtu/ton, 2014)
Production Per Employee
(x10 ST, 2014)
591
548
Peer 1
482
Peer 2
458
Peer 3
Source:State ofWyomingMiningReport,WyomingDepartmentofEnvironmentalQuality.AnnualReportStateInspectorofMinesofWyoming.BessemerWyomingestimates.
9
Trona Beds Closest to the Surface
Beds 24 & 25 (closest to surface) are the key for lower manufacturing costs as
lower halite impurities and shallow beds are conducive to efficient mining
Schematic Section – Green River Basin
10
Unique Pond Network Lowers Ore to Ash Ratio
Wider pond surface area and a unique pond network facilitate the minimization
of soda ash lost in processing Trona
Advantageous Facility Layout
·Ponds enable Ciner to recover soda ash via deca
rehydration otherwise lost in processing Trona
·Technological innovation enables Ciner to be more cost
efficient
Ore to Ash Ratio(1)
1.80
1.74
1.61
1.60
1.59
1.56
2008
(1) Amount of short tons of Trona ore required to produce one short ton of soda ash/liquor
2009
2010
2011
2012
2013
1.52
1.52
2014
2015
11
Ability to Execute on Growth Opportunities
Ciner has the balance sheet flexibility to capitalize on organic expansion &
acquisition opportunities to drive growth
Balance Sheet Flexibility to Support Growth
· Approximately ~$97 million in current available revolver
capacity
· Conservative leverage profile with <1.0x Net Debt /
EBITDA
· Well-capitalized sponsor to support growth with deep
operational and industry expertise
Capitalize on Organic Expansion Opportunities
· Emerging Market Growth
· Debottlenecking, deca and efficiency enhancements
driving approximately 2-4% annual production volume
growth
Pursue Accretive Acquisitions
· Natural Resources / Industrial Minerals
Ciner Resources Leverage and Liquidity
($inmillions)
CinerResourcesLP
3/31/2016
Cash&CashEquivalents
RevolvingCreditFacilityCapacity-CINR
RevolvingCreditFacilityCapacity-CinerWyoming
Less:RevolverBorrowings
AvailableLiquidity
$22.9
10.0
190.0
(103.5)
$119.4
TotalRevolverBorrowings
TermLoan
TotalDebt
NetDebt
$103.5
–
$103.5
80.6
TotalDebt/FY2015EBITDA
TotalNetDebt/FY2015EBITDA
0.8x
0.6x
· Logistics Assets
· Assets currently existing or to be developed at Ciner
Enterprises
Note:AdjustedEBITDAisanon-GAAPmeasure.Foradescription ofAdjustedEBITDAandareconciliation tothemostcomparable measures
calculated inaccordance toGAAP,seetheAppendixtothispresentation.
12
Stable Operating and Financial Results
Soda Ash Volume Sold
(millions of ST)
2.66
2.5
2.5
2.55
2012
2013
2014
2015
120.5
133.9
2014
2015
2.3
2011
Ciner Wyoming EBITDA
($ in millions)
126.0
2011
142.4
104.4
2012
2013
13
Market Trends
Asia pricing affected by environmental shutdown
§ Largest producer in China had a complete shutdown in Q1, which
tightened the Asian market. As a result, we saw spot prices rise $20 $30/ MT. Plant should be back to full production sometime this
summer.
Other international markets
§ South America demand weak, offset by strong demand in Mexico
§ Europe supply is tight in 2016
Domestic market share growth
§ Continued share growth strategy should see domestic volume rise by
4–6%
Confidential
14
Ciner Resources - Investment Highlights
§ Compelling investment proposition provided through yield
plus distribution growth
§ Stable cash generation
§ Organic and acquisition growth opportunities supporting
annual distribution growth
§ Conservative coverage ratio
§ Lowest cost soda ash production
§ Significant mining reserve life
§ Operational advantages
§ Strong safety record and environmental responsibility
§ Stable customer relationships
§ Proven management and operational team
15
APPENDIX
Confidential
16
Mining Process Flow
Process Overview
Continuous Mining
Haulage
Crushing
Surge Storage
Hoisting
Dissolving
Filtering
Refining Process Flow
Ciner’s Unique Process
Screening & Crushing
Calcining
Deca Rehydration
Shipping
Storage
Drying
Evaporation
17
Ciner Organizational Structure
Ciner Enterprises
(100.0%Ownership)
CinerResources
Corporation
(100.0%Ownership)
NaturalResourcePartnersL.P.
CinerWyoming
HoldingCo.
Public
~73%LPInterest
(100%Ownership)
4.776millioncommonunits
9.776millionsubordinatedunits
~25%LPInterest
5.10million
commonunits
CinerResource
PartnersLLC
NRPTronaLLC
0.399millionunits
(49%MemberInterest)
2%GPInterest
&IDRs
Ciner
ResourcesLP
(51%MemberInterest)
CinerWyomingLLC
18
About Ciner Group
• Established in 1978, Ciner Group is primarily active in energy, mining,
shipping and media and is one of the largest conglomerates in Turkey
Energy, Mining and
Glass
Media
• Coal & Copper Mining
• Newspapers & Printing
• Soda Ash and Sodium
Bicarbonate Production
(Eti Soda)
• Movie & TV Production
• Glass manufacturing
• Online media
• TV & Radio Broadcasting
Shipping
• Owns a fleet of 26
Bulkers, Containers, and
Tankers which are
managed by time charters
• Electricity Generation
19
Non-GAAP Reconciliation
Ciner Resources LP
Quarter Ended 3/31/16
Net Income
Quarter Ended 3/31/15
$21.1
$26.5
Depreciation, depletion and amortization
6.2
5.6
Interest expense (net)
0.9
0.9
-
-
Adjusted EBITDA
28.2
33.0
Less: Adjusted EBITDA attributable to non-controlling interest
14.3
16.7
$13.9
$16.3
Add:
Loss on Disposal of Assets (net)
Adjusted EBITDA Attributable to Ciner Resources LP
Non-GAAP Financial Measures
We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation and amortization and certain other expenses that are non-cash charges or that we consider not to
be indicative of ongoing operations. Adjusted EBITDA is a non-GAAP supplemental financial liquidity and performance measure that management and external users of our consolidated financial
statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:
•
our operating performance as compared to other publicly traded partnerships in our industry, without regard to historical cost basis or financing methods;
•
the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
•
our ability to incur and service debt and fund capital expenditures; and
•
the viability of capital expenditure projects and the returns on investment of various investment opportunities.
We believe that the presentation of Adjusted EBITDA in this investor presentation provides useful information to investors in assessing our financial condition and results of operations. The GAAP
measures most directly comparable to Adjusted EBITDA are net income and cash flow from operations. Our non-GAAP financial measure of Adjusted EBITDA should not be considered as an
alternative to net income or cash flow from operations. Adjusted EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income and cash flows
from operations. You should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by
other companies, including those in our industry, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
20
Non-GAAP Reconciliation
Ciner Resources LP
Year Ended 12/31/15
Net Income
Year Ended 12/31/14
$106.2
$91.9
23.7
22.4
4.0
5.2
Loss on disposal of assets (net)
-
1.0
Provision for income taxes
-
-
133.9
120.5
67.7
60.8
$66.2
$59.7
Add:
Depreciation, depletion and amortization
Interest expense (net)
Adjusted EBITDA
Less: Adjusted EBITDA attributable to non-controlling interest
Adjusted EBITDA Attributable to Ciner Resources LP
Non-GAAP Financial Measures
We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation and amortization and certain other expenses that are non-cash charges
or that we consider not to be indicative of ongoing operations. Adjusted EBITDA is a non-GAAP supplemental financial liquidity and performance measure that management
and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:
• our operating performance as compared to other publicly traded partnerships in our industry, without regard to historical cost basis or financing methods;
• the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
• our ability to incur and service debt and fund capital expenditures; and
• the viability of capital expenditure projects and the returns on investment of various investment opportunities.
We believe that the presentation of Adjusted EBITDA in this investor presentation provides useful information to investors in assessing our financial condition and results of
operations. The GAAP measures most directly comparable to Adjusted EBITDA are net income and cash flow from operations. Our non-GAAP financial measure of Adjusted
EBITDA should not be considered as an alternative to net income or cash flow from operations. Adjusted EBITDA has important limitations as an analytical tool because it
excludes some but not all items that affect net income and cash flows from operations. You should not consider Adjusted EBITDA in isolation or as a substitute for analysis of
our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies, including those in our industry, our definition of Adjusted
EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
21
Non-GAAP Reconciliation Coverage Ratio
Rolling Non-GAAP Reconciliation Schedule
The following table presents a reconciliation of the non-GAAP financial measures of Adjusted EBITDA to GAAP financial measure of net income for
the periods presented:
22
Capital Structure
Capitalization – Ciner Resources
($ in millions)
Available Liquidity
As of
March 31, 2016
Cash and Cash Equivalents
$22.9
Long Term Debt
Ciner Wyoming Credit Facility
$83.5
Revenue Bonds due 2017
8.6
Revenue Bonds due 2018
11.4
Revolving Credit Facility
Facility
Size
Available
Liquidity
Revolving Credit Facility
$10.0
$10.0
Ciner Wyoming Credit Facility
190.0
86.5 (1)
$200.0
$96.5
($ in millions)
Total
0.0
Total Long Term Debt
$103.5
Total Equity
$259.8
Total Capitalization
$363.3
(1) Includes outstanding borrowing of $83.5 mn and $20 mn of revenue bonds.
23
IDR Structure & Subordination Period
CINR IDR Structure
Marginal Percentage
Distribution per Unit
Range
Interest in Distributions
(expressed as % of MQD)
LP Share
GP Share
From
To
Initial Split
98%
2%
0%
--
115%
2nd Split
85%
15%
115%
--
125%
3rd Split
75%
25%
125%
--
150%
4th Split
50%
50%
150%
--
above
CINR Subordinated LP Units
Subordination %
· 49%
Subordination Period
· The subordination period will end on the first business day after the MLP has earned and
paid at least the minimum quarterly distribution on an annualized basis on each
outstanding common, subordinated and general partner unit, for each of three
consecutive, non-overlapping four-quarter periods ending on or after September 30,
2016
Early Termination of
Subordination Period
· None
24