Fluoroproducts Business Overview Paul Kirsch, President, Fluoroproducts
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Fluoroproducts Business Summary BUSINESS OVERVIEW Supplies fluoropolymer products for high performance applications across broad array of industries Supplies fluorochemical products for air conditioning, refrigeration and foam blowing agent markets Global market leader in Fluoroproducts Fluorochemicals: #1 refrigerants, #1 propellants, #3 foam blowing agents Fluoropolymers: #1 industrial resins, #1 fluoropolymer specialties Brands: Teflon, Freon, Opteon, Krytox, Nafion, Viton FINANCIAL SUMMARY $ Millions 2015 2016 TTM 3Q17 1 Revenue 2,230 2,264 2,567 Adjusted EBITDA 300 445 621 Adj. EBITDA Margin 13.5% 19.7% 24.2% Product 2 Fluorochemicals 51% North America 42% Geography 2 Asia Pacific 22% Fluorochemicals refrigerants, propellants, foam blowing agents, fire suppressants Fluoropolymers industrial resins and specialty products and coatings Fluoropolymers 49% Latin America 9% EMEA 27% Key end markets air conditioning, refrigeration, automotive, electronics, communications, wire & cable, energy, consumer, oil & gas, aerospace Source:Company filings and data 1. Results on a trailing twelve-month basis ending 3Q17 2. Segment net sales on a trailing twelve-month basis ending 3Q17 See reconciliation of Non-GAAP measures in our appendix 3
Fluoroproduct Innovation Fluoropolymers discovered (1938) Viton, first fluoroelastomer developed (1957) Teflon FEP developed (1960) Teflon AF developed (1985) HFC refrigerants introduced (1990) Teflon PFA 951-HP (lower permeability) developed (2004) Low Global Warming HFO refrigerant commercialized (2013) 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 CFC refrigerants invented (1928) Teflon brand trademarked (1945) Krytox lubricants developed (1959) Nafion membrane developed (1967) Teflon PFA developed (1972) Teflon PFA 451-HP (smooth surface) developed (1993) Teflon FEP 9898 (high frequency) developed (2015) Building on Our Legacy of Product Innovation 4
VALUE Unique Fluorine Attributes Chemical Inertness Thermal Stability Non-stick / Low Friction Dielectric Properties Weather Resistance/Non-aging Insensitive to UV Broad Temperature Range (-200 C / +260 C) Fluorine-based Products Provide Better Performance, Higher Value Versus Other Offerings 5
Chemours Journey To High-Value Application Developer APPLICATION DEVELOPER MATERIAL SPECIALIST Invest in technology through marketing, R&D and intellectual property Reliance on fluorine performance Deep expertise in core offerings Dependence on existing applications PRODUCT VIEW R&D MARKETING APPLICATION DEVELOPMENT VIEW Expand fluoroproducts application universe into additional offerings Partner with customers across value chain Become specified into customers products P R O D U C T O R I E N T A T I O N M A R K E T O R I E N T A T I O N Capturing the Value of Future Trends by Leveraging Fluorine Attributes and Investing in Our Capabilities 6
Fluoropolymers Business Chemours Fluoropolymers Are Used in a Broad Portfolio of Applications 7
Fluoropolymers End-Market Growth Trends E L E C T R O N I C S 9% CAGR 5% CAGR A U T O M O T I V E 21% CAGR E N E R G Y New Trends Within Chemours Core Markets Require Fluorine Performance Note: 10 year CAGRs represent internal estimates for Fluoropolymers growth within these markets 8
Chemours Is Well Positioned In Automotive Market A U T O M O T I V E EXTERIOR INTERIOR ELECTRICAL/ELECTRONIC (Architecture) CHASSIS HVAC AUTOMOTIVE ELECTRICAL VEHICLES POWERTRAIN We Have a Wide Range of Offerings to Address Various Automotive Needs 9
INCREASE IN REGULATION Fluoropolymers Applications in Automotive Market Emerging auto industry trends drive increased need for fluoropolymers Cables Gaskets Lubricants Coatings Additives HOSES OF CO 2 G/KM 1 180 150 100 50 AIR MANAGEMENT APPLICATION Emissions Standards Tightening CORRIDOR FOR POTENTIAL CO 2 REGULATION 2015 2020 2025 2030 172 166 130 Regulation corridor 144 121 95 107 96 68-78 A U T O M O T I V E ~50 Year Communicated Estimate ~80 ~70 Tightening emission standards Smaller engines operating at higher temperatures Transition from internal combustion engines to alternative energy vehicles CO 2 g/km Source: Government and Environmental regulations 1 To ensure comparability, CO 2 figures are cycle-adjusted and normed to NEDC Turbo Charger Growth $M Fluoroelastomers in Turbocharger Hose Application ~$50 +8% p.a. United States China Europe 2017 2020 2022 2025 Source: Industry trade publications, company disclosures, and Chemours estimates 10
Chemours Is Well Positioned in Electronics and Communications Market SPEAKERS E L E C T R O N I C S WIRE AND WIRELESS ANTENNAS ANTENNA LENS IN CAMERA SCREEN VENT MEMBRANE EXTERIOR COATING MICROPHONE HEADPHONES DATA CENTER/CLOUD COMPUTING USB OR LIGHTENING CABLES BATTERY Fluoropolymers Are an Integral Part of Mobile Phones and Communications Systems 11
Fluoropolymers Applications in Electronics Market E L E C T R O N I C S Emerging trends in electronics industry drive need for fluoropolymers due to exceptional dielectric properties and chemical inertness Consumer Electronics LAN Cabling Autonomous Vehicles Communications Technology Wearable Technology Semiconductors SEMICONDUCTOR FABRICATION Decreasing Node Size (nm) 50 40 30 20 10 0 2005 2010 2015 2020 Strong Growth in Semiconductors ($B USD) ~$350 +6% p.a. Next generation connectivity (5G, Internet of Things (IoT)) Smarter, thinner devices Mobility, wearables technology Higher data speeds and LAN traffic Semiconductor fabrication builds and decreasing node size 2016 2017 2018 2019 2020 2021 Fluoropolymers Addressable Market in Semiconductors ($M) +6% p.a. $160 2017 2020 2022 2025 Source: Industry trade publications, company disclosures, and Chemours estimates 12
Fluoropolymers Applications in Energy Market E N E R G Y Trends in energy production and storage increase need for fluoropolymer performance Heat Exchangers Alternative Energy Fuel Cells Oil & Gas Energy Storage - Need for affordable renewable energy generation - Rapid expansion of stationary power storage - Energy storage in front of the meter expected to grow substantially - Government & OEMs driving decarbonization of transportation - Environmental control and energy efficiency in fossil fuel power plants Energy Storage for Smart Grid Applications GWh 6 2016 2020 2024 Fluoropolymer Addressable Market in Energy Storage Million USD ($M) ~$100 +19% p.a. +23% p.a. 2017 2020 2022 2025 Source: Industry trade publications, company disclosures, and Chemours estimates 35 13
Chemours Fluoropolymers Impact Investing in application development is driving greater portfolio mix of higher value differentiated offerings Leveraging our market leadership to expand into key, attractive applications and end market Shifting to higher differentiation product mix enhances margin profile Fluoropolymers Gross Contribution ($M) 2016-2025E Differentiated CAGR ~5% - 7% 2016 2020 2025 Core Differentiated 14
Chemours Fluorochemicals MOBILE AIR CONDITIONING RESIDENTIAL AIR CONDITIONING FOAM BLOWING AGENTS INDUSTRIAL COOLING COMMERCIAL REFRIGERATION FIRE SUPPRESSION PROPELLENTS T E C H N O L O G Y T I M E L I N E 1900s 1920s 1930s 1980s Today CO 2 NH 3 Industrial Gases Zero ODP/Low GWP CFCs High ODP/High GWP HCFCs Low ODP/High GWP HFCs Zero ODP/High GWP HFOs Zero ODP/Very Low GWP ODP = Ozone Depletion Potential GWP = Global Warming Potential 15
Opteon Innovation Recognized 2017 Polyurethane Innovation Award for Low GWP Foam Blowing Agent Supermarkets can save 10% on energy bills by using Opteon XP40 blends By end of 2017, more than 50 million vehicles on the road using HFO1234yf Project global fleet will exceed 150 million vehicles globally by end of 2020 Opteon 1100 reduces CO 2 while increasing efficiency 2017 RAC Cooling Industry Awards: Cold Chain Project Award for transition to Low GWP Refrigerant 1 million houses using Opteon 1100 = 6 trillion kg of CO 2 reduction 16
Fluorochemicals Regulatory Environment MAJOR REGULATORY DRIVER WHAT IT DOES CONVERSION TO LOW GWP* EU Mobile Air Conditioning (MAC) Directive Bans HFC-134a for auto A/C US Corporate Average Incentivizes auto OEMs to reduce Fuel Economy (CAFE) CO 2 footprint for U.S. domestic CO 2 Credits market 0% 100% 0% 100% 2018 2022 2025 EU Fluorinated Gas (FGas) II Caps HFC quota and phases down use 100% 0% Montreal Protocol / Kigali Amendment Caps HFC quota and phases down use Staggered rollouts across countries US upside beyond 2020 if ratified by current Administration 100% 0% Opteon Innovation Enables Easier Transition to Meet Regulatory Needs *Percent of market Source: Government and environmental regulations and Chemours estimates 17
Fluorochemicals Long-Term Market View TOTAL REFRIGERANT MARKET S TAT I O N A RY $8.8B M O B I L E $2.4B F O A M B L O W I N G A G E N T S $5.4B $0.6B $4.8B $6.4B 2016 2025 Non-HFOs HFOs Chemours Is Well Positioned to Capture Market Growth and Value for Both HFOs and Non-HFOs Source: Industry trade publications, company disclosures, and Chemours estimates 18
Fluorochemicals Long-Term Market View Non-HFOs HFOs M O B I L E REVENUE 2016 2025 $1B ~$450M ~$540M 12% CAGR ~$1.3B (1%) CAGR $1.8B ~$500M S TAT I O N A RY ~$850M $3.7B ~$50M ~$3.65B 41% CAGR 4% CAGR ~$5.25B $6.1B F O A M B L O W I N G A G E N T S ~$50M $0.7B ~$650M 31% CAGR (11%) CAGR ~$650M ~$250M $0.9B Chemours Is Well Positioned to Capture Market Growth and Value for Both HFOs and Non-HFOs Source: Industry trade publications, company disclosures, and Chemours estimates 19
Opteon Intellectual Property: Multiple Tiers of Protection COMPOSITION OF MATTER PATENTS APPLICATION/USE PATENTS MANUFACTURING PROCESS PATENTS KNOW HOW TRADEMARK Broad Portfolio of IP Providing Layers of Protection for Multiple Applications in Key Countries 20
Opteon Plant in Corpus Christi, Texas Investing $300 million to establish the world s largest and lowest cost facility for manufacturing HFO YF Utilizes proprietary process technology Construction started in February 2017, expected completion by end of 2018 3x capacity Corpus Christi Facility Secures Lowest Cost Manufacturing of HFO 21
Chemours Fluorochemicals Impact Driving profitability of fluorochemicals within regulatory environment Investing in low-cost HFO manufacturing and further technology development Supporting market need through HFC phasedown Chemours Fluorochemicals Contribution ($) 2016-2020E HFO CAGR 20%+ 2016 2017E 2018E 2019E 2020E Non-HFOs HFOs Source: Based on Chemours company estimates 22
Chemours Fluoroproduct Summary Invest in technology through marketing, R&D and intellectual property Positioning to capture value from emerging industry and regulatory trends Reliance on fluorine performance Deep expertise in core offerings R&D MARKETING Expand fluoroproducts application universe into additional offerings Increasing investment to shift our business to an application development focus Dependence on existing applications PRODUCT VIEW APPLICATION DEVELOPMENT VIEW Partner with customers across value chain Become specified into customers products Delivering long-term GDP+ growth with enhanced profitability Source: Chemours estimates 23