CDTi Leading the World in Emission Solutions

Transcription

1 CDTi Leading the World in Emission Solutions CDTi (NASDAQ:CDTI) Investor Presentation June

2 Legal Disclaimer This communication contains forward-looking statements, including statements regarding the Company s targeted business model. Forward-looking statements are identified by words such as believe expect, plan, will, should, could, anticipate, intend, estimate, and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. We based these forward-looking statements on our current expectations and projections about future events, and they speak only as of the date they are made. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Factors that could cause actual results to differ from those implied by the forward-looking statements include a number of risks and uncertainties, including that the Company may not be able to implement its strategic priorities, or that if implemented they will not prove successful, decreased government spending on emission control projects or decreased regulation of emissions, the failure to secure required regulatory approvals, the failure to achieve or sustain customer acceptance of our products, as well as those described risks set in our reports filed with the SEC, especially in the section entitled Risk Factors in the Annual Report on Form 10-K filed with the SEC on March 27, 2013, all of which could have a material impact on our financial performance and prospects. Subject to any legal or regulatory requirements, we assume no responsibility to update any of the forward-looking statements contained herein. This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities of CDTi, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. 2

3 A New Direction Leading materials technology company How do we get there? Where are we going? Where are we today? Manufacturer of emissions control products 3

4 The Company Today Manufacturer of emission control products for OEMs, integrators and retrofit markets $60.5M in total revenue for 2012 Catalyst Division: $19.8M revenue New light duty vehicle (LDV) three-way, diesel and other emission catalysts Heavy Duty Diesel Division: $40.7M revenue Retrofit & non-retrofit emission systems, exhaust parts and accessories Patented, proprietary state-of-the-art materials technology platform with advanced low-platinum group metal (PGM) products Validated in emissions control catalyst market by global OEMs Joint venture with in Europe Leading automotive emissions control provider 4

5 Divisions Serve Two Primary End Markets Catalyst/Materials New Light Duty Vehicle (LDV) and HDD Q Revenue $6.0M Heavy Duty Diesel (HDD) Systems Retrofit & Non-Retrofit HDD Market Q Revenue $7.3M Gasoline Heavy diesel Light diesel Natural gas Biofuels 1 Past customer 1 On-road Ports and marine Construction & mining Stationary power Aftermarket Exhaust/specialty parts Unique catalyst platform 5

6 Emission Control Catalyst Market Market size Current $6.0B 1 worldwide emission control catalyst market expected to reach $7.7B by Substrates and coating process fees only Catalyst coating process 90% controlled by three global players 3 Additionally, $6B+ spent annually by OEMs on PGM purchases for catalysts 4 Current CDTi Target Markets 4-wheel light-duty vehicles Heavy-duty on-road vehicles Off-road and stationary engine applications Small engines, 2- and 3-wheel vehicles 1 Source: BASF s Catalysts Division: Driving Accelerated Growth Presentation, September 5, Source: Global Industry Analysts, Inc., Report, April Source: Fidelity Report, December 2011 (1. BASF 2. Johnson Matthey 3. Umicore) 4 Source: JMI Platinum 2012 Interim Review New and tighter environmental regulations drive demand 6

7 Catalyst Division Develop advanced low- and zero-pgm (ZPGM) catalysts Coat substrates for LDV OEMs Challenges Dependent on single customer (Honda) Operating below capacity while incurring fixed costs Perceived supplier risk Insufficient capital to add manufacturing locations HDD Division Emissions control systems for HDD on- and off-road engines Regional exhaust and accessory business Challenges Need for additional sales resources Regulatory environment for retrofit sales less predictable Current Business Model Current business model does not play to strength 7

8 Targeted Business Model Focus R&D on technology development, patent protection and commercialization of new advanced low-and ZPGM technologies Grow customer set in emissions control while moving into new verticals Licensing, joint ventures and partnerships Explore strategic options for manufacturing assets Multi-level onsite research capabilities = effective, rapid & economical development Evolving from manufacturing to materials science company 8

9 Compelling Market Opportunity Why is advanced low- and zero-pgm important? Geo-political risks, e.g., Platinum in Southern Africa and Palladium in Russia = Volatility Metal scarcity issues especially for technology metals = Expensive Minimizing cost and exposure to PGM is a critical strategy for OEMs Heavy market concentration (90% in top 3) 1 Tightening legislation increases metal loading per vehicle No disruptive technology commercialized to date 1 Source: Fidelity Report, December 2011 Disruptive technology reduces cost and risk 9

10 CDTi has pioneered discoveries in ZPGM catalysts CDTi believes that first mover advantage will be critical ZPGM: The Future for Emissions Control Largest number of known ZPGM patents; 19 patent applications filed in 2013 with more expected to come Focus on ZPGM diesel oxidation catalysts (DOC) 1 and three-way catalysts (TWC) 2,3 DOC: On- and off-road diesel catalysts/systems and diesel light- and heavy-duty OEMs TWC: Light-duty OEMs; 2-Wheel; 4-Wheel 1 A device that utilizes a chemical process in order to break down pollutants from a diesel engine in the exhaust stream, turning them into less harmful components, similar to an automobile's catalytic converter. 2 A catalyst in a catalytic converter capable of simultaneously converting carbon monoxide, hydrocarbons and oxides of nitrogen into carbon dioxide, water and nitrogen. 3 Depicts sample vehicles and OEMs that we believe use the indicated products generally. Critical to monetize first mover advantage 10

11 Materials Technology Platform Mixed Phase Catalyst (MPC ) Technology Platform Proprietary nano-structure materials platform To develop advanced low-pgm To develop ZPGM products Standard competitor PGM platforms are prone to sintering and loss of surface area No apparent competition in ZPGM 50 nm PGM stabilized in CDTi mixedmetal oxide structures Sintered Palladium (Pd) in aged conventional catalysts Building on advanced low-pgm leadership to pioneer ZPGM technology 11

12 Lower emissions Market Validation and Sustainable Advantage Catalyst sector is highly competitive CDTi is well positioned via technical advantage against major coaters (JMI, BASF, Umicore) Case Study Est. savings of ~ $100M in PGM costs since Sustainable improvements Ongoing NOx emissions improvement and PGM reduction CDTi Products Competitive Product $ PGM in Catalyst LEV2 Emission Regulations ULEV2 Emission Regulations 1 CDTi estimate Honda Accord 2008 Honda Accord 2013 Honda Accord Sustainable leadership validated continuously 12

13 Advanced Low-PGM Three-way Catalysts 2.4L 4-Cylinder EPA Certified Passenger Cars - PGM Content 1,2 MY08 Honda Accord MY11 Toyota Camry (Cataler Catalyst) MY12 Honda CRV (Johnson Matthey Catalyst) CDTi Catalyst Other Catalyst MY13 Honda Accord 1 CDTi internal analysis of products 2 Rh $1,150 USD per troy ounce; Pd $720 USD per troy ounce (May 2013) $- $20 $40 $60 $80 $100 $120 $140 $160 CDTi enables emissions compliance with greatly reduced PGMs 13

14 NO Conversion, % Reducing the Gap Between ZPGM and PGM Formulation without PGM Rapid improvement in testing of ZPGM Gen3_2 with reduced gap between PGM Targets defined by Pd/Rh expected to be reached in % Sweep test at 450C on flow reactor Positive trends in 2012 with dramatic improvements in 2013 Initial targets defined by performance of Pd/Rh catalyst Reduce NOx T50 toward PGM level 80% PGM April 2013 Feb Oct % PGM (0/6/6) 40% 20% ZPGM Gen-1 ZPGM Gen-3 ZPGM Gen-3_2 PGM (Pd/Rh) Target 0% LEAN RICH Average R-Value Step 1: Reach light-off and cross-over PGM (Pd/Rh) performance targets with a variety of aging conditions Accelerating development effort to close the gap 14

15 Small Engine, Motorcycle Time to Market Oxicat Technical Roadmap of ZPGM Products TWC Light-Duty 4-wheel Vehicles Heavy-Duty Diesel Vehicle Underfloor TWC Stand-alone DOC Pre-filter DOC Pre-filter DOC Close coupled TWC Off-road and Stationary Stand-alone DOC Pre-filter DOC Multiple market opportunities for ZPGM 15

16 Core Competencies to Enable Commercialization Advanced Material Science Platform Formulation Fundamental characterization Rapid Prototyping Unique lab testing Proven Manufacturing Process Scaled mass production for Honda, GM, Ford, and Renault Over 11 million units sold since 2001 with no known or reported defects Manufacturing validation of technology platform 16

17 Patent Landscape: Emission Control All DOC and TWC Catalysts Mature and densely populated category ZPGM DOC and TWC Catalysts Relatively empty category indicating opportunity Top US Patent Holders in Emissions Products as of Jan Company Grants Applications BASF Toyota Ford Umicore Johnson Matthey Kennametal 44 4 General Motors NGK Inuslators Delphi 18 6 Honda 14 8 Corning 16 5 CDTi 12 3 Cataler Corporation 12 8 Dupont 4 13 International Catalyst Tech Top US Patent Holders in DOC & TWC ZPGM as of Jan Company Grants Applications Ford Motor 2 1 Umicore AG & Co. KG 1 0 Honda Motor 1 0 General Motors 1 0 Cataler Corporation 1 0 Basf Ag Ads 0 2 CDTi 0 1 Toyota Motor 0 1 Unassigned patents filed YTD positions CDTi for first mover advantage 1 Source: PatentVest data except CDTi Establish IP Leadership Through Aggressive Patent Activity 17

18 Enablers for Commercial ZPGM Roll-Out Enablers for Commercialization Accelerated investment in development CDTi New ZPGM DOC & TWC Filings 14 Ramp up in patent filings Sales resources experienced in JV/Licensing Engage with all appropriate emission verticals Q1 '13A Q2 '13A Ensure enablers in place for successful ZPGM roll-out 18

19 Large New Vertical Opportunities Mixed Phase Materials Platform Enables Potential Entry Into New Verticals Fuel Cells Petrochemical/ Refinery Thermoelectrics * $910.3 Million market by * Reforming of natural gas into H2 * Replace Pt catalyst with CDTi mixed-metal oxide * $4.9 Billion market by * PGM and base metals * Nascent and wide open market * Electricity from waste heat using inexpensive, earth-abundant oxides 1 Source: Transparency Market Research, Source: Transparency Market Research, 2012 Substrates Capitalizing on disruptive materials technology beyond emissions 19

20 Financials 20

21 Income Statement Summary Income Statement ($ in millions, except per share amounts) Three Months Ended Year Ended March 31, December 31, Revenues $13.3 $17.0 $60.5 $61.6 Gross margin 23.4% 23.2% 24.3% 28.5% Operating expenses $5.1 $6.4 $22.5 $24.1 Non-operating (expense) income - $(0.6) $(2.3) $(0.4) Net loss $(2.1) $(2.8) $(9.7) $(7.3) Net loss per share $(0.29) $(0.39) $(1.34) $(1.31) 21

22 Business Segments Revenue Business Segment Information ($ in millions) Three Months Ended Year Ended March 31, December 31, Heavy Duty Diesel Systems $7.3 $12.6 $40.7 $47.4 Catalyst Eliminations (0.5) (1.7) (4.5) (6.6) Total $13.3 $17.0 $60.5 $61.6 Gross margin Heavy Duty Diesel Systems 25.2% 22.0% 27.0% 27.4% Catalyst 19.2% 19.8% 15.3% 23.7% Income (loss) from operations Heavy Duty Diesel Systems $(0.3) $(0.4) $(0.6) $1.4 Catalyst 0.1 (0.3) (1.8) (1.0) Corporate (1.8) (1.7) (5.5) (6.7) Eliminations (0.2) Total $(2.0) $(2.4) $(7.8) $(6.5) 22

23 Balance Sheet Summary Balance Sheet ($ in millions) As of March 31, As of December 31, Total current assets $21.3 $22.8 $27.1 Fixed assets Total assets $33.6 $35.4 $41.1 Total current liabilities $19.4 $15.7 $15.8 Total long-term liabilities Total liabilities $24.7 $24.0 $21.2 Stockholders' equity $8.9 $11.4 $19.9 Total liabilities and stockholders' equity $33.6 $35.4 $41.1 Cash Balance $4.6 $6.9 $3.5 Short-Term Debt $8.2 $5.6 $4.5 Long-Term Debt $4.5 $7.5 $4.5 23

24 Summary & Key Takeaways Disruptive technology delivers cost and risk advantage to emission control industry Leading advanced low- and zero-pgm patent position Materials science technology provides access to other large verticals Grow rapidly without significant fixed cost investment through JV/licensing Investing in R&D to increase growth opportunities Current/Past Future Manufacturing Company Technology Company Undercapitalized Focused Capital Investments Constrained R&D Investment Expanded R&D Investment US Centric Global Reach Limited Commercial Resources Expanded Sales & Marketing 24