Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - AK STEEL HOLDING CORP | exhibit991to7517finalinvesto.pdf |
| 8-K - 8-K - AK STEEL HOLDING CORP | form8-kinvestorpresentatio.htm |
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Strategic Acquisition
Precision Partners Holding Company
July 5, 2017
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Forward-Looking Statements
2July 2017
We have made forward-looking statements in this presentation that are based on our management’s beliefs and assumptions and on information available to our management at the time such
statements were made and hereby are identified as “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential
operating performance improvements, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and
can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “should” or the
negative of these terms or similar expressions.
Actual results may differ materially from those expressed in our forward-looking statements. You should not rely on any forward-looking statements. Forward-looking statements are only predictions and
involve risks and uncertainties, resulting in the possibility that actual events or performance will differ materially from such predictions as a result of certain risk factors, including that our acquisition of
Precision Partners may not be consummated, or may not be consummated in a timely manner; that regulatory approval not be obtained or may only be obtained subject to conditions that are not
anticipated; that we will not integrate Precision Partners successfully following the consummation of the acquisition; and that growth initiatives, cost savings, synergies, accretion to earnings and other
anticipated benefits and opportunities from the acquisition may not be fully realized or may take longer to realize than expected.
In addition, factors that could cause our actual results and financial condition and any benefits from the acquisition, if consummated, to differ materially from the results contemplated by such forward-
looking statements include: reduced selling prices, shipments and profits associated with a highly competitive and cyclical industry; domestic and global steel overcapacity; changes in the cost of raw
materials and energy; our significant amount of debt and other obligations; severe financial hardship or bankruptcy of one or more of our major customers or key suppliers; our significant proportion of
sales to the automotive market; reduced demand in key product markets due to competition from aluminum and other alternatives to steel; excess inventory of raw materials; supply chain disruptions or
poor quality of raw materials; production disruption or reduced production levels; our healthcare obligations; our pension obligations; not reaching new labor agreements on a timely basis; major
litigation, arbitrations, environmental issues and other contingencies; regulatory compliance and changes; climate change and greenhouse gas emission limitations; conditions in the financial, credit,
capital and banking markets; our use of derivative contracts to hedge commodity pricing volatility; potential permanent idling of facilities; inability to fully realize benefits of margin enhancement
initiatives; and information technology security threats and cybercrime.
The risk factors discussed under “Item 1A.—Risk Factors” in AK Holding’s Annual Report on Form 10-K for the year ended December 31, 2016 and under similar headings in AK Holding’s subsequently
filed quarterly reports on Form 10-Q could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to
predict at this time or that we currently do not expect to have a material adverse effect on our business. We expressly disclaim any obligation to update our forward-looking statements other than as
required by law.
Non-GAAP financial measures included in this presentation are certain non-GAAP financial measures designed to complement the financial information presented in accordance with generally accepted
accounting principles in the United States of America because management believes such measures are useful to investors. Because our calculations of these measures may differ from similar measures
used by other companies, you should be careful when comparing our non-GAAP financial measures to those of other companies. A reconciliation of non-GAAP financial measures to GAAP financial
measures is included in an Appendix to this presentation.
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
AK Steel to Acquire Precision Partners Holding Company (“PPHC”)
3July 2017
Snapshot of PPHC
Leading North American engineering, tooling and hot and cold stamping provider of lightweight
parts for the transportation market
Specialist in lightweight, complex, hard-to-manufacture components and assemblies
Acquisition Benefits
Further advances our core focus on product innovation, including in the high-growth automotive
lightweighting space, and enhances our position in advanced high strength steels
Provides a fully integrated downstream platform that further strengthens our close collaboration
with our automotive OEM customers and Tier 1 suppliers
Strong synergies that leverage our materials and metals-forming expertise with PPHC’s
technology and advanced capabilities in tooling and stamping
Adds a proven, experienced management team, providing the foundation for seamless
integration and future growth in lightweighting solutions for automotive and other markets
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
PPHC Overview
4July 2017
Founded in 1955
Eight facilities in North America with a total of more than 1,000
employees, including ~300 engineers and skilled tool makers
Specializes in the design and engineering of tooling and die
making and the stamping of complex automotive components
Broad portfolio of highly-engineered solutions
Technology-focused company
‒ Unique intellectual property and extensive track record of
innovation
‒ Focus on complex, difficult-to-manufacture parts
‒ Results-oriented culture with a proven track record of
providing customer solutions
Full range of manufacturing
capabilities including:
‒ Advanced tool design
technology
‒ 5 hot stamping cells with
9 lines
‒ 85 cold stamping
presses, including 17
“tryout” presses
‒ 123 welding and
assembly cells
‒ 6 laser-cutting machines
‒ E-coating line
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Strategic Logic – Downstream Platform Serving Our Core Market
5July 2017
Creates a premier integrated supplier to the automotive market combining AK Steel’s advanced
materials expertise with PPHC’s leading die design, tool manufacturing and stamping capabilities
Enhances our product offerings with end-to-end solutions and further strengthens our close
collaboration with our automotive OEM and Tier 1 customers
Leverages both AK Steel’s and PPHC’s research and innovation capabilities in both the materials and
metals-forming areas to accelerate our development and innovation efforts in the high growth
automotive lightweighting space
Accelerates introduction of advanced high strength steels and facilitates innovation in fast-growing
hot stamping market
Creates a differentiated, innovative leader in the steel industry
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Terms of the Transaction and Financial Benefits
6July 2017
$360 million in cash, ~7x 2017E Adjusted EBITDA
Acquisition is on a cash-free, debt-free basis
Expected to be accretive to EPS, margins and cash flow in year one
Attractive growth profile with reasonable capital outlays
Currently anticipate permanent financing will include a prudent combination of debt and equity
targeted to maintain current credit metrics
Closing expected in the third quarter of 2017, subject to completion of customary regulatory review
and closing conditions
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Business Capabilities Complement AK Steel
7July 2017
Full-service solution provider, from steel production to designing dies to stamping final parts
Differentiated in-house tooling and product engineering capabilities cater to complex hot and cold
stamped parts
Integrated with extensive tooling capabilities to serve internal stamping requirements as well as
serving OEM and Tier 1 customers
Comprehensive portfolio provides solid platform to serve lightweighting needs of OEMs and Tier 1
suppliers
Serves OEMs directly, as well as through Tier 1 suppliers
Strategically focused on transportation market, including light truck, SUV and CUV platforms
Supplier for 13 of the 15 best-selling vehicle platforms in the U.S.
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Differentiated Business Model
8July 2017
Attractive strategic positionCompetitive attributes
Critical direct supplier to both OEM and Tier 1
customers
Entrenched customer relationships across diverse
platforms
Strategically located, highly efficient and scalable
operating footprint
Favorable industry dynamics driving light-
weighting and safety
Expansive, highly engineered product portfolio
Top-tier, vertically integrated manufacturing
operations
Engineering and tooling expertise drives
operational excellence
Unique hot stamping process capabilities
Proven management team with broad
organizational capabilities
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Fully Integrated Operating Model
9July 2017
Hot stamping Cold stamping
Engineering Tooling
Product co-development
Highly collaborative
process
with customers
Assembly and finishing
Value-added in-house
assembly / finish to
capture enhanced margins
Drives efficiency, quality and performance in production
World-class performance for the industry’s most complex components
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Engineering and Tooling Expertise
10July 2017
Simulation software utilized to
validate product designs and
production processes
Expedites development and
production of highly complex parts
Predictive Engineering 17 Die and Stamping Tryout Presses
Strong Technical Foundation Emergency production supportTooling Heritage
Specialists in simplifying complexity
~300 engineers and skilled tool
makers
Automated CNC Tool Machining
Drives efficiency, quality and production performance
High-speed, fully automated
machining capabilities
Increases overall productivity and
efficiency of tool production
Long track record of tool and die
design and manufacturing
Tooling expertise materially
enhances hot stamping production
Tryout presses offer customers
product validation without
disruption to their own production
24-hour production takeover
capabilities
Go-to source for solving the most
challenging die and stamping problems
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Overview of Cold Stamping and Hot Stamping Processes
11July 2017
Hot Stamping Process OverviewCold Stamping Process Overview
Furnace
Single step stamping
Final product
Blank
Progressive step stamping
1
Final product
2 3
Blank
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Cold Stamping – Efficient Production of Complex, High-Strength Components
12July 2017
Provides extensive capability in the production of stamped components
Focused on complex cold stamp components
Leverages advanced tooling capabilities to optimize manufacturing processes
2,000-ton and 3,000-ton large-bed presses enables PPHC to manufacture
components using the strongest and most advanced high strength steels
Cold stamping capabilities complement hot stamping excellence, facilitating
supply of complete lightweighting solutions
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Hot Stamping – Making the Most Complex Components Stronger and Lighter
13July 2017
Hot stamping can produce the most complex components while delivering
significant mass reduction and material strength
‒ Allows advanced high strength steels to be formed into complex
geometries
‒ 30–50% weight savings achievable versus cold stamping mild steels
Hot stamped solutions often reduce the number of total components and
finishing operations
‒ Further reduces weight
‒ Increases overall component strength
Unique hot stamping process capabilities provide a sustainable advantage
to serve our customers
‒ Lower capital requirements, lower operating costs, smaller footprint,
highly automated, increased throughput
‒ Supports large-scale components
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Precision Partners Provides a Platform to Expand Lightweighting Solutions
14July 2017
Expand
geographies
Incremental
services at existing
AK Steel sites
Diversify customer
solutions
Expand customer
collaboration
Expand materials
offering
Accelerate
innovative steel
solutions
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N 15July 2017
PPHC Represents Another Step in Executing our Strategy
Investing resources in higher-value products
− Positioning with customers that align with our “best value” approach
− Minimizing exposure to commoditized products and markets where quality is less valued
Implementing margin enhancement actions
− Dedicating capacity to more profitable products
− Relentless focus on cost and process improvements
Accelerating investment in research and innovation
− Working hand-in-hand with our customers and technical partners
− Substantial expansion and investments in research and innovation
Focusing on downstream, value-added products
− Advances our product innovations in the high growth automotive lightweighting space
− Expand into complementary and synergistic steel processes and products
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N July 2017
Questions & Answers
16
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
Investor Contact Information
17July 2017
Douglas O. Mitterholzer
Assistant Treasurer and
General Manager, Investor Relations
(513) 425-5215
doug.mitterholzer@aksteel.com
S A F E T Y | Q U A L I T Y | P R O D U C T I V I T Y | I N N O V A T I O N
THANK YOU!
July 2017 18