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- 1. Arabian American Development Co. “Excep'onal Quality, Outstanding Service” ARSD April 2014
- 2. Safe Harbor 2 Statements in this presenta.on that are not historical facts are forward looking statements as defined in the Private Securi.es Li.ga.on Reform Act of 1995. Forward looking statements are based upon Management's belief, as well as, assump.ons made by and informa.on currently available to Management. Because such statements are based upon expecta.ons as to future economic performance and are not statements of fact, actual results may differ from those projected. These risks, as well as others, are discussed in greater detail in Arabian American's filings with the Securi.es and Exchange Commission, including Arabian American's Annual Reports on Form 10-‐K for the year ended December 31, 2013, and the Company‘s subsequent Quarterly Reports on Form 10-‐Q.
- 3. Snapshot 3 Ticker ARSD (NYSE) Stock Price1 $10.95 52 week High / Low1 $13.17 / $7.07 Market Cap1 $265 M Avg. Daily Volume (3 month) 1 78,226 Shares Outstanding / Float 24.2 M / 18.6 M Insider Ownership 23% Net Debt to Capital Ra.o2,3 5.2% Working Capital2,3 $32.1 M Current Ra.o2,3 3.2:1 1. All market statistics as of April 10, 2014 2. All balance sheet items as of December 31, 2013 3. See appendix for reconciliation of non-GAAP measures
- 4. Business at a Glance 4 Company Division LocaBon Ownership South Hampton Resources, Inc. High Purity Petrochemical Sugar Land, Texas Silsbee, TX ARSD 100% Al Masane Al Kobra Mining Co. Mining Kingdom of Saudi Arabia ARSD 35% Saudi Partners & ARMICO 65% 2012 Listed on NYSE AMAK mine profitable 2008 Listed on NASDAQ 2006 AMAK joint stock company formed 1987 Petrochemical operaBon purchased 1967 ARSD formed to develop Saudi mining project
- 5. South Hampton Resources Petrochemical Segment 5 ! South Hampton Resources – processing facility in Silsbee, Texas with ~165 employees; marke.ng and sales office in Sugar Land, Texas ! Market share leader in North America for pentanes for key industrial and commercial product manufacturers ! High purity hexanes and pentanes are small but cri.cal components in manufacturing process for the end market ! Stable customer base of predominantly Fortune 500 players ! High barriers to entry into the high-‐purity market ! Toll processing provider of choice for three customers ! Focused on adding new tolling customers in 2014/2015
- 6. 6 Products ApplicaBon End Products Normal Pentane Blowing Agent Expandable Polystyrene (EPS) Cup Grade/ Polyurethane Insula.on Foams Condensing Agent Polyethylene (PE) Isopentane Expanding Agent Foam Packaging Condensing Agent Polyethylene (PE) Catalyst Carrier Catalyst used in produc.on of Polyethylene (PE) and Polypropylene (PP) Normal Pentane/Isopentane Blends (Pentane Blends) Agent used in Blowing/ Expanding EPS Block and Shape Foams, Polyurethane Insula.on Foams, Extrac.on Solvent Normal Hexane Carrier or Diluents Polyethylene (PE), Polypropylene (PP) and Synthe.c Rubber (SR) Catalyst Carrier Catalyst used in produc.on of PE, PP and SR Isohexane Carrier or Diluents PE, PP and SR Catalyst Carrier Catalyst used in produc.on of PE and SR Other ApplicaBons/Processes: Geothermal, Adhesives, Elastomers, Agricultural, ROSE Units, and Specialty Fuels.
- 7. End Market Uses 7 Polyolefins, 41% Expandable Polystyrene, 19% Polyurethane Foams, 12% SyntheBc Rubber, 8% Extruded Polystyrene, 4% Other, 16%
- 8. Penhex Capacity and UBlizaBon 8 ! Permiped capacity of 7,000 barrels per day ! Based upon historic feed and capacity ! 2012 u.liza.on rate of 72% ! Up from 64% in 2011 and 54% in 2010 ! Expected to periodically u.lize capacity during 2014 ! Capacity doubled in 2008 into two independent process units ! Improved reliability by reducing total down .me ! Recently completely total capacity tes.ng ! Currently evalua.ng expansion op.ons to meet future demand ! Polyethylene facili.es and ethylene cracker projects in pipeline ! Due to begin to come on line in 2016-‐2018 ! Fueled by shale gas boom
- 9. Dedicated Toll Processing FaciliBes 9 ! Four processing units: Aroma.cs Hydrogena.on, White Oils Frac.ona.on, Hydrocarbon Processing Demonstra.on, P-‐Xylene Unit ! Operated as independent, completely segregated processes ! White Oils capacity 2,000 barrels/day ! Aroma.c Oil capacity 500 barrels/ day ! Bio-‐jet demonstra.on unit 10,000 gallons/month ! Para-‐xylene demonstra.on unit started up in September. ! Customers supply and maintain .tle to their feedstock. ! Process feedstock into products based upon customer specifica.ons ! These units have historically run below capacity on a take or pay basis.
- 10. South Hampton Resources Process 10 25% 25% 13% 11% 26% Isopentane Normal Pentane Normal Hexane Isohexane Other Approximate % of Revenue Natural Gas Source Pipeline Grade Natural Gas Natural Gas Liquids Propane C3 23% n-Butane nC4 10% i-Butane iC4 10% Pentanes+ C5’s – C8’s 13% Ethane C2 44%
- 11. Natural Gas Liquids Key to U.S. Cost Advantage ! Natural gas liquids, especially ethane, are primary feedstock for chemical-‐making in the U.S. ! Companies overseas mostly use an oil-‐based feedstock ! Due to vast new NGL supplies, U.S. ethane feedstock is selling at historically low prices ! Huge NGL growth predicted; sustained opportunity for U.S. chemical industry NGL produc.on to double by 2020 Ethane supplies to quadruple by 2025 IHS Report: “America’s New Energy Future: The Unconven@onal Oil and Gas Revolu@on and the U.S. Economy – Volume 3: A Manufacturing Renaissance,” Sept. 2013
- 12. US Chemical Industry Capital Investment: Incremental Due to Shale Gas $0 $2 $4 $6 $8 $10 $12 $14 $16 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Billions of 2012 Dollars ! The $89 billion in investment announced as of October 31, 2013 is spread over 10 years ! Peak year for investment spending: 2016 Source: ACC analysis
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- 14. Executed ObjecBves in 2013 Record Annual Results 14 ! Record revenue up 6% to $236 million ! Record volume up 6% to 67.1 million gallons ! Record opera.ng income up 14% to $20 million ! Strong Interna.onal results with increase in revenue and volume ! Revenues up 5.5% ! Volume up 5.6% ! Expanded South Hampton management team with a new President ! Tasked with diversifying product line ! Broadening customer base and ! Expanding domes.c and interna.onal business
- 15. Strategic ObjecBves South Hampton Resources 15 Create near-‐term Growth ! Expand Toll Processing customer base ! Increase capacity through deboplenecking ! Acquire strategic business – add new products and diversify customer base ! Build interna.onal business Improve Profitability ! Improve margins on sales ! Control costs throughout enterprise PosiBon for Future Growth ! Evaluate future expansion op.ons ! Online by 2016 for an.cipated ethylene crackers
- 16. Growing InternaBonal Presence 16 South Hampton Sales Office TX Brazil Shanghai
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- 18. AMAK Basics 18 ! Mining lease area of approximately 44 square kilometers in Saudi Arabia ! ARSD has 35.25% ownership in AMAK ! In development since 1967; in opera.on and profitable since Q4 2012 ! Metal concentrates trucked and stored at Port of Jizan facility ! Currently at capacity for zinc and copper concentrate with rou.ne shipments to Far East ! Precious metals circuit undergoing modifica.ons-‐ opera.onal late 2014 ! IPO required two years aser apaining profitability
- 19. AMAK Mining ParBculars Per Feasibility Study 19 Mine Ore available to Mill 8,267,000 tons proven reserves: Zinc = 3.85% Copper = 1.13% Gold = 0.89 g/t Silver = 28.90 g/t Annual Mine Ore to Mill 720,000 tons per annum Targeted Product Grade Copper = 24% Zinc = 50% Targeted ProducBon Copper Concentrate =35,000 dry t/a Zinc Concentrate = 45,000 dry t/a Gold = 7,600 oz Silver = 193,000 oz Mine Life (producBon) 11.5 years with current proven reserves
- 20. AMAK Mining ParBculars 20 Year-to-Date Description 12/31/2013 Running time, hours 7,637.3 Mill throughput, DMT 699,316 Processing rate, DMT/hour 91.6 Raw ore grade Copper 1.48% Zinc 3.19% Concentrate quantity, DMT Copper 35,140 Zinc 33,460 Concentrate grade Copper 25.20% Zinc 49.80% Recovery Copper 85.70% Zinc 74.60% Shipments, wmt Copper 39,760 Zinc 42,254 Cash Cost (~$/tonne ore) 60$
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- 22. ARSD Balance Sheet December 31, 2013 22
- 23. Management Team 23 ! Nicholas N. Carter -‐ President, CEO and Director: Over 30 years of petrochemical opera.ng experience with South Hampton -‐involved with ARSD for the last seven years. Has a BBA degree in Accoun.ng from Lamar University. ! Simon Upfill-‐Brown – President, South Hampton Resources: Has over 20 years in the Chemical Industry. Has a BS in Mathema.cal Sta.s.cs and Chemistry and an MBA from Stanford Graduate School of Business. ! Connie Cook – CFO, Secretary, Treasurer : Has served South Hampton for over 20 years, with a BBA degree in Accoun.ng Lamar University and is a CPA. ! Mark Williamson – VP Marke@ng: Has a BBA degree in Marke.ng and has been with South Hampton over 25 years. ! Ron Franklin -‐ VP Manufacturing: Has a BS in Electrical Engineering and a Masters in Engineering Management with 31 years of petrochemical experience.
- 24. Reasons to Invest 24 ! Robust sales pipeline and stable customer base ! Capacity expansion and tolling opportuni.es ! U. S. shale gas expansion will produce a) Plen.ful feedstock supply b) Expansion of domes.c customer base ! AMAK Mine producing and ramping to full commercial capacity ! Opportuni.es to expand AMAK mine to other leases with addi.onal minerals including silver and gold
- 25. Q&A 25 Thank you Please visit our websites: www.arabianamericandev.com www.southhamptonr.com www.amak.com.sa
- 26. Appendix RECONCILIATION OF SELECTED GAAP MEASURES TO NON-‐GAAP MEASURES(1) 26 (1) This presenta.on includes non-‐GAAP measures. Our non-‐GAAP measures are not meant to be considered in isola.on or as a subs.tute for comparable GAAP measures and should be read only in conjunc.on with our consolidated financial statements prepared in accordance with GAAP. 12/31/13 (in thousands except ratio) Current assets 46,350$ Current liabilities 14,288 Working capital 32,062$ (current assets less current liabilities) Current ratio 3.2 (current assets divided by current liabilities) Total long term debt 13,239$ less cash 7,608 Net long term debt 5,631$ Total capital 103,219$ Net debt to capital ratio 5.2% (net debt divided by net debt plus capital)