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TREC
YourSpecialtyChemicalPartner
CowenEnergy&NaturalResourcesConferenceDecember5,2017
2
SafeHarbor
Statements in this presentation that are not historical facts are forward lookingstatements as defined in the Private Securities Litigation Reform Act of 1995. Forwardlooking statements are based upon Management’s belief, as well as, assumptionsmade by and information currently available to Management. Because suchstatements are based upon expectations as to future economic performance and arenot statements of fact, actual results may differ from those projected. These risks, aswell as others, are discussed in greater detail in Trecora Resources’ filings with theSecurities and Exchange Commission, including Trecora Resources’ Annual Report onForm 10-K for the year ended December 31, 2016, and the Company‘s subsequentQuarterly Reports on Form 10-Q.
3
CorporateHighlights
Ø TrecoraResources(NYSE:TREC)isaleadingproviderofhigh-puritylighthydrocarbonsandspecialtywaxes
Ø Twocorespecialtychemicalsegments• SouthHamptonResources:Leadingmanufacturerofhigh-
puritypentanes• Trecora Chemical:Manufacturerofpolyethylenewaxand
waxderivatives• Customprocessingcapabilities
Ø Nearlycompletedcapitalprojectswillincreasecapacityandprofitability
Ø Provenmanagementteamwithanaverageof>25yearsofindustryexperience
Ø ResurgenceofUSchemicalindustryprovidesnewopportunities
4
ResourceUpsideResourceUpside
BusinessOverview
SHRHigh-PurityLightHydrocarbons
C5
Silsbee,TX
Pasadena,TX
SHR/TCCustom
Processing
Silsbee,TXPasadena,TX
AMAKZincand
CopperMine33.4%Owner
NajranProvince,KSA
• Potentialexitandmonetization
• Significantoperationalimprovementscompleted
• Newgoldmininglicense• Newexplorationlicenses• Fullpotentialnotreflected
inTRECvaluation
TCSpecialty
SyntheticWaxesC2
2016TotalRevenues$212.4 Million
~81.5%Revenues
~9.6%Revenues
~8.9%Revenues
5
SouthHamptonResourcesSpecialtyPetrochemicalSegment
Ø Leadingmanufacturerofhigh-puritylighthydrocarbons• 2016 revenues: $182.0 million• Blue Chip customer base• 208 full-time employees• 180 acres in Silsbee, TX
Ø Marketleaderwithapproximately60%marketshareandonly1competitorinhigh-puritypentanes
Ø Internationalsalesrepresented19.6%ofrevenuesin2017YTD(allpricedinUSD)
Ø Easyaccesstomajortransportationnetworks
6
SHR:BlueChipCustomers
7
SHR:Products&Applications
Otherapplicationsinclude:Geothermal,Adhesives,Elastomers,Agricultural,ROSEUnit,andSpecialtyFuels
8
SHR:GrowthDrivers
EBITDA
TotalProductSoldØ NewpolyethyleneplantsinNorthAmerica• Adding8.0millionmetrictons/yearof
manufacturingcapacityby2020• 40%increaseovercurrentcapacity• Costadvantagedrivingpolyethyleneexports
Ø Newmarketopportunities• USchemicalindustryhasannouncedover$180
billionininvestmentover10years
Ø SecondCanadianoilsandscustomerexpectedtocommenceproductionin2018
Ø Globalgrowth(includingAsia)
Ø Majorcapitalprojectsnearlycomplete• Addscapacity,improvesefficiencyandincreases
capabilities
24.821.8
32.529.3
39.644.7
05101520253035404550
2011 2012 2013 2014 2015 2016($inm
illions)
*- IncludedaBargainPurchaseGainof$11.5million
*
010203040506070
2011 2012 2013 2014 2015 2016
(Millionsofgals)
PrimeProducts Byproducts
9
SHR:DTrainBenefits
Ø WorkingonnewproductsatSHRforthefirsttime
Ø Capitalprojectcompleted2015
Ø Protectscurrenthighpentaneglobalmarketshare
Ø Demonstrated6,000bpdofthroughput
Ø Expecttosell15to20millionadditionalgallonsofC5’sby2021/2022• Approximately35%above2016levels
Ø Threeproductiontrainsprovidesignificantlymoreflexibilityandreliability• Capacityallowsfornewproductdevelopment
10
SHR:AdvancedReformerUpdate
Ø CapitalprojectpermittedinMay2016• Significantlyhighervalue-added
byproductstream• Converts~30-40milliongal/yearto
highermarginaromatics• Completionexpectedin1Q’18with
increasedproductionshortlythereafter
Ø FinancialMetrics• $58millioninvestment• Adds$12-14M/yearinannualEBITDA
with~50%ofthisrunratebyendof2018
• EBITDAgrowsasprimeproductvolumesrampup
11
TrecoraChemicalSpecialtyWaxesSegment
Ø Manufacturespolyethylenewaxandwaxderivatives• 2016Revenues:$30.4million• 40millionannualcapacity• 100full-timeemployees• LocatedinPasadena,TX
Ø WaxMarkets• HotMeltAdhesives&PVCLubricants• Newproductsforthesemarketsbeing
well-received• IncreasingdemandfromEuropean
distributortohighervaluemarkets
Ø Significantcustomprocessingcapabilities
Ø Strongfeedstocksupplynetwork
12
TrecoraChemical:WaxVolumeandRevenueOverview
Revenues Volumes
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317
WaxRevenues($) WaxVolume(Lbs)
13
TC:Hydrogenation/DistillationProjectCompleted
Ø Hydrogenation/DistillationUnit• Leverageexistingrelationshipswith
petrochemicalcustomersandgeneratenewcustomprocessingbusiness
• Doublespotentialcustomprocessingrevenue
• Withsomestart-upstrugglesDistillationUnitstillgeneratedrevenueof$300Kin3Q17
• HydrogenationUnitstartingup
Ø Financials• $25millioninvestment
• Expectadditional$6-$8M/yearinEBITDArunratebyendof2018
14
CustomProcessingOverview
Ø Convertfeedstockintovalue-addedproductsbaseduponcustomerspecifications• Customerssupplyandmaintaintitleto
feedstock
Ø Contractualtakeorpayagreementswithhighoperatingmargins• Significantoperatingleverageabove
break-even
Ø Addingprocesscapabilitiesthatareinshortsupplyintheregion
• WillbenefitfromtheresurgenceinU.S.Chemicals
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317
SHR TC
InTho
usands
15
TotalPotentialIncrementalAnnualEBITDAEstimate:
$28million- $36millionby2022
SignificantCapitalProjectsNearlyComplete
DTrainAdd:$6-8Masvol.rampsup2018- 2022
AdvancedReformer
Add:$12-14M2018- 2022
BPlantAdd:$4-6M
2018
Hydrogenation/DistillationAdd:$6-8M2018- 2019
SouthHampton
TrecoraChemical
Completed:Sept2015 Estimated:1Q18
Completed:2Q17Completed:June2016
Capex:$30M Capex:$58M
Capex:$25MCapex:$2M
• Capitalprojectsfundedfromoperatingcashflowandrevolverborrowings• Revolverborrowingsincreasedto$23millionfrom$9millionin2016• Totalliquidityof$35M(9/30/17):$4Mofcash/$37Mofrevolveravailability
16
ExpectedCapitalProjectContributions
*- DenotesAdjustedEBITDAfor2016^- DenotesProjectedEBITDAfor2022
$31
$51$63$6
$7
$7
$12
0
10
20
30
40
50
60
70
0
10
20
30
40
50
60
70
2016* ByProductsUpgrade
AdvReformer2018
AdvReformerVolumeRampUp
2018-2022
DTrainVolumeRampUp
2018-2022
TCCustomProcessing2018- 2019
TotalRampUp2022^
($inm
illions)
($inm
illions)
AnnualEBITDA
17
AMAKMineUpdate
Ø ThirdQuarterOperations– ContinuedImprovementØ 8000drymetrictonshipmentsduringthequarter(copperandzincconcentrates)
Ø 16%moreCuconcentrateand40%moreZnconcentrateshippedtotheportin3Q17thanin2Q17
Ø Curecoveriesnowconsistentlyabove80%,zincrecoverieshoveringbetween63%and68%
Ø ExplorationØ InitialexplorationresultsandmineralresourcesupdateforGuyan completeØ DrillingcontinuesinGuyan andsurroundingareaswithasimilargeologicalprofileØ ExpectfirstLifeofMineupdate(forcopperandzinc)in4Q17
Ø PreciousMetalCircuitØ Leachingprocessisgoingwellandsmeltinghasbeen
re-initiatedØ Expectadditionalgoldandsilverdoré salesin1Q18
Ø FourmilliontotalnewsharesissuedinJuly2016Ø 3.75MsharespurchasedbyArmico for$5.33pershareØ ValuesTREC’s26.1Msharesat~$139M(33.4%stake)
18
InvestmentSummary
Ø Strongspecialtychemicalcompanyaddressingexpandingprofitablemarketopportunities
Ø Investinginhighermarginbusinesses
Ø Internationallycompetitiveinhigh-growthdevelopedandemergingmarkets• FootprintinCanada,MiddleEastandAsia,and
expandingintoadditionalmarkets
Ø Capitalprojectswillincreaseproductioncapacityandimprovecorporateprofitability• Newcapacityexpectedtoadd$28- $36millionofincrementalannualEBITDA2018- 2022
Ø AMAKmonetizationopportunity• Objectiveisfinancialexit(possiblythroughIPO)
Ø Provenmanagementteamthathasexecutedonitscorestrategy
19
Q&A
Pleasevisitourwebsites:
www.trecora.com
www.southhamptonr.comwww.TrecChem.com
www.amak.com.sa
ThankYou
20
FinancialSummary– 3rd Quarter2017
Ø AdjustedEBITDAwas$7.5millionascomparedto$7.2millionthirdquarter2016and$8.4millionsecondquarter2017.
Ø HarveyEBITDAimpactof$1.5millionto$1.8million.Includesexpensesrelatedtogeneratorrentals,overtimelabor,andmaintenanceandrepairsof$0.7million.
Ø AdjustedEBITDAof$23.2millionforfirstninemonthsof2017comparedto$25.3millionforfirstninemonthsof2016
Ø CapExof$39.3millionforfirstninemonthsof2017Ø DebtatSeptember30of$89.7millionincludingrevolverbalanceof$23.0million
Q32017 Q22017 Q12017 Q32016 9M2017 9M2016
DilutedEPS $0.07 $0.03 $0.06 $0.11 $0.16 $0.81
AdjustedEPS* $0.09 $0.12 $0.09 $0.08 $0.29 $0.37
AdjustedEBITDA* $7.5 $8.4 $7.4 $7.2 $23.2 $25.3
AdjEBITDAMargin* 12.2% 13.5% 13.3% 12.7% 13.0% 16.0%
CapEx** $11.5 $13.9 $13.9 $9.5 $39.3 $27.9
Debt $89.7 $89.8 $84.8 $79.0 $89.7 $79.0*seeGAAPreconciliation**2016includesBPlant
21
TREC3Q2017IncomeStatement(unaudited)
THREE MONTHS ENDEDSeptember 30,
2017 2016(unaudited)
Revenue $62,115 $48,854
COGS 51,008 37,280COGS% 82% 76%
Gross Profit 11,107 11,574GM% 17.90% 23.70%
G&A 5,740 5,491Depreciation and amortization 205 187Total operating expenses 5,945 5,678
Operating Income 5,162 5,896Op Inc% 8% 12%
Interest expense (678) (607)Bargain purchase gain from acquisition - 11549 Equity in earnings/(losses) AMAK (3,298) (1,017)Misc income (expense) (22) 123
Income before income taxes 1,164 15,944Income tax expense 332 5,692
Net Income $832 $10,252
(InThousands)
22
TRECAdjustedEBITDACalculation(unaudited)
THREE MONTHS ENDEDSeptember 30,
2017 2016NET INCOME (LOSS) $1,718 $2,799Interest 795 568Taxes 577 1,768Depreciation and amortization 246 192Depreciation and amortization in cost of sales 2,564 2,373EBITDA 5,900 7,700Share based compensation 716 608Bargain purchase gain - Gain from additional equity issuance by AMAK - -3,168Equity in losses of AMAK 897 2,089Adjusted EBITDA $7,513 $7,229
Revenue 61,508 57,141Adjusted EBITDA Margin 12.20% 12.70%(adjusted EBITDA/revenue)
(InThousands)
23
TRECBalanceSheetasofSeptember30,2017(unaudited)
ASSETS LIABILITIES
Current Assets Current Liabilities
Cash $4,219 A/P $12,381
Trade receivables, net 22,738 Derivative Instruments 7
Inventories 12,849 Accrued liabilities 6,304
Prepaid expenses and other assets 3,276 CP - post-retirement benefit 308
Taxes receivable 3,764 CP- LTD 8,061
Total current assets 46,846 Other 1,131
Current Liabilities 28,192
PPE, net 172,049 LTD 81,011
Goodwill and Intangibles 43,070 PRB 897
Investment in AMAK 44,225 Other 1,681
Mineral properties in the United States 588 Deferred income taxes 24,654
Other assets 21 Total equity 170,364
TOTAL ASSETS $306,799 TOTAL LIABILITIES AND OE $306,799
(InThousands)