annual report 2014 - peroxychem

Annual Report 2014

Our Company 4

Overview 6

Our Approach 9

Our Commitment to Sustainability 12

Our Global Presence 14

Our Products and Markets 16

Products 18

Markets 21

Specialty Markets 22

Consumer & Industrial Markets 26

Chemical Distribution Market 27

Corporate Information 28

From the CEOWelcome to PeroxyChem. 2014 was an extraordinary year as we began to build an exciting 21st century company at the forefront of innovation in oxidation chemistry.

In our first year we have successfully separated from FMC to establish a robust, independent company, continuing to expand our business and build for the future as a leader in the peroxygen industry. We are well capitalized, favorably levered and investing for growth.

We’ve developed our organization with corporate functions in finance, IT, customer service and HR, and successfully implemented systems and processes to operate efficiently and effectively. Our teams have worked hard to ensure the continuity of service for our customers and employees.

Through every transformation we have remained committed to our vision and strategy of supplying oxidation solutions to the electronics, energy, environmental, food safety, and other consumer and industrial markets globally, built on our peroxygen chemistries and adjacent technologies.

At the heart of our enterprise are our Core Values, defining who we are and how we work. Significant among them is the idea that we operate each day as “owners,” an idea that separates us as a value-added global technology company, solving market needs and providing community integrity, exceptional customer commitment and an enthusiasm for business creativity. Peroxygens are what we do, and we are 100 percent committed to these and the adjacent chemistries that go to work in the markets we serve.

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Our use of advanced technology in the specialty chemical business and innovation on behalf of our customers has earned us recognition and loyalty. We are proud of our achievements and hope you enjoy the examples within this report of how our chemistries and products advance the diverse industries we serve.

Looking ForwardAs we continue to grow we remain focused on continuously improving as an organization without sacrificing our commitment to safety and sustainability.

Safety is our first and foremost priority. Extreme diligence and focus must be placed on safety at all times, in all areas, and all functions. Last year we again incurred recordable incidents, and although we are fortunate none were serious or life threatening, when compared to 2013 numbers, we did not improve our incident rate year-over-year. We are cognizant that our injuries spanned across functional areas, reminding us that our focus on safety must extend past the traditional manufacturing setting, and incidents can happen anywhere, anytime. In our effort to be a top-tier safety company we are committed to operating safely and strive to obtain and maintain an incident-free workplace. No amount of time or money justifies the risk and impact of unsafe practices on our people, the community or the environment. We have developed a useful pneumonic device to serve as a reminder of the types of oversights that can lead to injuries: PERLS (Personal protective equipment, Excessive force, Repetitive motion, Line of fire and Surroundings). I am hopeful that by including this, readers may also benefit from the tool and use it to enhance their own safety and that of those around them.

We continue to execute on our strategy to become a diversified portfolio company with growth in specialties supported by a strong industrial and consumer core business. This focus also dictates that we must pursue our strategy in the most inviting domains, and despite several years of trying, it has become clear that Europe does not offer the same market landscape for all of our specialty thrusts. Therefore we’ve made the decision to divest our European hydrogen peroxide business in Delfzijl and silicates business in Bilbao/La Zaida to focus even more strategically. This process is underway, and a conclusion is anticipated in 2015.

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Bruce Lerner President and CEO

We remain committed to deploying resources for PeroxyChem’s growth and sustainability as we continue to improve and address market needs. We are focusing our resources on innovations in research and development (R&D), operations, new products and processes.

As an organization we strive for continuous improvement in all areas as we ask ourselves, “How can we achieve the same or greater results: more consistently, efficiently, productively and with higher quality while reducing waste and cost?” In 2014 we commissioned a project to assess our existing “order to cash” process to identify improvements and enhancements in all activities related to customer service, planning, distribution, transportation and delivery of our products. Our processes were set up more than a decade ago, at a time when we were part of a larger corporation with integrated shared services and a different product mix. But now, as our organization evolves, we’ve recognized the need for improvements and changes in our business processes and will continue to make enhancements to align service levels with customer expectations, simplify and improve efficiencies and optimize our costs to serve. Our “Road to Excellence” project is nearly complete with the study phase and we’ll be entering an execution phase later in 2015 to capture the improvements, enhancements and efficiencies of the study while being better positioned for our impending growth.

I thank all of our employees, customers and partners for their efforts and commitment in 2014. We had a very good year, growing our EBITDA year-over-year by approximately 15%, standing up and sprinting forward. We are anticipating even better things in 2015; because all of us, as leaders, insist on it.

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PeroxyChem is a $340 million global producer of

specialty oxidation chemicals. Starting in the early

20th century with Foret in Barcelona, Spain and

Buffalo Electro-Chemical Company (BECCO) in

Tonawanda, New York, PeroxyChem is built on

over 114 years of experience with high-quality

peroxygen products and innovative applications

across diverse industries.

Food Safety EnergyEnvironmental Electronics

042004: Launched soil and groundwater remediation business with introduction of Klozur® Persulfate in situ oxidation technology

072007: Started developing a specialized sales force knowledgeable in poultry processing

2007: Developed on-site chemical delivery systems for poultry and aseptic packaging customers

092009: Built dedicated microbiology and environmental lab in Tonawanda, New York

2009: Started developing a specialized sales force for aseptic packaging customers

Core

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Within the last decade we’ve refined our strategy as

we diversify our portfolio, growing in new specialty

businesses while maintaining our historically strong

consumer and industrial core. R&D has been critical

in this strategy as we innovate new technologies,

processes and delivery systems across all markets.

Growth in specialty markets also requires

knowledgeable professionals to service and

deliver value. Today PeroxyChem sells 85%

of its products through direct channels using

a mixture of product-focused specialists and

highly technical market experts.

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2011: Expanded electronics hydrogen peroxide purification facility in Bayport, Texas and established a new plant in Thailand

2011: Acquired Adventus, LLC to broaden soil and groundwater portfolio

2011/2012: Launched new aseptic packaging products Durox® LRA and Durox LRD

2011: Acquired RheinPerChemie, establishing a market position for persulfates in Europe

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2012: Established Chinese JV for soil remediation initiatives

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2013: Launched wastewater disinfection business

2014: Announced plans for new hydrogen peroxide purification facility in Saratoga Springs, New York

2013: Completed expansion of specialty persulfate capacity at Tonawanda

2014: Launched the oil field biocide business with our team based in Pocola, Oklahoma

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Our nearly 30 unique patent titles across 62

countries are a testament to our successful

track record of developing and manufacturing

unique products, technologies and delivery

systems for our end markets.

Tomorrow’s products start here

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Our Approach

At PeroxyChem, we are committed to

conducting our business honestly, ethically

and in compliance with all applicable laws.

Our Core Values and Code of Ethics and

Business Conduct exemplify our dedication

to high standards while summarizing the legal

and ethical principles that we follow every day.

We are proud to participate in the American

Chemistry Council Responsible Care® initiative

and are dedicated to operating our business

according to its guiding principles.

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Core Values

Safety Safety is our first and foremost priority in everything we do because no amount of profit or savings of time or money would justify the risk and impact of unsafe practices on our people, the community or the environment. We strive to obtain and maintain an incident-free workplace.

Our People We believe that our people are our greatest resource. We work with a sense of purpose and never take lightly the responsibility we have to provide the products, solutions and expertise that our customers expect from us.

Innovation Innovation fuels our ability to excite customers. Industry demands are constantly evolving, and so are we. We pride ourselves on the quality products and innovative applications we develop. We’re committed to constantly advancing our chemistries and technologies to help our customers find enhanced solutions that meet their current and future needs.

Passion for Focus & Growth We are committed to growth—in ourselves and our business—so that we may safeguard the sustainability of our enterprise. This dedication provides more opportunities to meet customer demands and provide leadership as we grow key markets.

Our company is founded on strong core values that

emphasize safety, our people, innovation, teamwork,

accountability, and passion for growth and improvement.

Continuous Improvement We encourage each other to find better, more efficient and more productive ways of performing our work and reaching the greatest end result. We recognize that continuous improvement requires training and education, as well as using our colleagues and business partners as resources for new ideas and assistance.

One Team By working as teammates, we leverage the power of the group. We build on each other’s ideas to generate better outcomes and always treat one another with respect. Keeping an open dialogue is key to helping us grow as individuals and as a business.

Act Like Owners By fostering responsibility amongst all our employees, we create mutual value with customers and ensure the growth of our business. We take great pride and ownership in our work, making the right choices and investing in sound decisions.

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Mexico City, Mexico 10 years without a recordable incident.

Bilbao, Spain 16 years without a recordable incident.

Rheinfelden, Germany 20+ years without a recordable incident.

Delfzijl, Netherlands 20+ years without a recordable incident. No accidents registered since Delfzijl start of operations in 1995.

Congratulations to our facilities on their safety achievements.

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Our Commitment to Sustainability

As an industry leader with a global reach, we are able to

positively impact the world through the use of our technologies

and innovations. Our products and services are helping to

conserve natural resources, improve food safety and reclaim

compromised ecologies.

Our wastewater treatment business works with local

municipalities to replace chlorination with VigorOx® WWT II

wastewater disinfection technology, minimizing safety and

environmental impact concerns and reducing toxicity to

aquatic life without generating disinfection byproducts.

And our environmental solutions business offers a portfolio

of remediation technologies for treating a wide spectrum

of soil and groundwater contaminants.

With environmentally friendly sanitizers and

disinfectants for food processing, and innovative

technologies to eliminate pathogens and extend

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shelf life, our tailored solutions help our customers

set new benchmarks for efficiency and productivity,

not to mention deliver the highest standards of

food safety. PeroxyChem’s proven next-generation

antimicrobial solutions multiply the benefits of

efficient, effective and reliable bacterial control.

Global demand for consumer beverages

packaged for convenience, shelf life and

portability continues to grow. To ensure

freshness and safety, many beverages must

be packaged aseptically to eliminate the

presence and growth of microbes and

bacteria. Our technologies address the needs

of aseptic packaging processors worldwide.

In addition, we aim to be mindful of efficient

and sustainable ways to operate our business

as we develop our technologies. We are proud

that our peroxygens plants in Tonawanda, New

York; Prince George, British Columbia; and

Rheinfelden, Germany utilize clean, renewable

hydroelectric power generated by nearby

facilities for use within our operations, just

another example of our commitment to

environmental responsibility.

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Our Global PresenceSupporting our portfolio of hydrogen peroxide,

peracetic acid, persulfate and adjacent technologies

are more than 600 employees operating at locations

in the Americas, Europe and Asia as well as two joint

venture companies. As our greatest resource, our

team complements our chemistry with the know-how,

service and innovation necessary to make customers

successful and confident.

Americas63% of revenue 380 Employees1 Headquarters4 Manufacturing Facilities 3 Research Facilities 3 Regional Offices 2 Distribution Centers

1. Bayport, Texas Bayport has been producing multiple grades of hydrogen peroxide since 1979. The plant is home to a strong quality control department to support the production of high-purity products, and the Process Technology Group, which provides technical expertise to all PeroxyChem sites.

2. Mexico City, Mexico

3. Mississauga, Ontario

4. Philadelphia, Pennsylvania

5. Pocola, Oklahoma

6. Prince George, British Columbia Strategically positioned, the Prince George plant has been manufacturing industrial-grade hydrogen peroxide for over 25 years. Prince George has consistently operated as our safest site in North America.

7. São Paulo, Brazil

8. Saratoga Springs, New York Expected to be operational in 2016, this plant is focused on production of ultra-high-purity hydrogen peroxide utilized in the electronics semiconductor chip manufacturing market and helps PeroxyChem ensure a reliable supply to our customers.

9. Tonawanda, New York Producing peracetic acid since 1938 and persulfates since 1959, Tonawanda is one of the world’s largest persulfate salt manufacturing sites. The plant maintains ISO 9001 certification to ensure quality and uses hydropower obtained from Niagara Falls to keep manufacturing costs low.

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Europe, Middle East and Africa36% of Revenue 240 Employees4 Manufacturing Facilities2 Regional Offices

Asia PacificTwo Joint Ventures with Thai Peroxide Co., Ltd. and Beijing Enviro-Chem1 Regional Office1. Barcelona, Spain

2. Bilbao, Spain Dedicated to manufacturing solid and liquid silicates for value-added markets in tire manufacturing, flame retardants, fiber production, detergents, chemical synthesis and other end markets.

3. Delfzijl, Netherlands Produces industrial grades of hydrogen peroxide for the Central European market. Delfzijl has never incurred a recordable injury in its 20+ year history.

4. Hamburg, Germany

5. La Zaida, Spain Located in the Iberian Peninsula, in close proximity to important industrial areas and ports, La Zaida produces hydrogen peroxide, liquid silicates and peracetic acid mainly for the Iberian peninsula and Mediterranean rim countries.

6. Rheinfelden, Germany Our European manufacturing facility for persulfates. This peroxygens plant utilizes clean, renewable hydroelectric power generated by nearby facilities.

1. Beijing, China

2. Manila, Philippines

3. Saraburi, Thailand Thai Peroxide Limited (TPL), is a joint venture between PeroxyChem and the Aditya Birla Group. Serving most Asian countries for over 25 years, the plant manufactures a wide range of hydrogen peroxides and peracetic acids, from industrial to ultra-high purity grades.

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LegendDistribution Center

Regional OfficeHeadquarters

Joint Venture Research Facility

Manufacturing Facility

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Our Products

57%

10%

5%

21%

7%

Peracetic Acid

Silicates

Persulfates

Other

Hydrogen Peroxide

Percentages based on revenue

“Other” products primarily include soil and groundwater remediation products

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Hydrogen Peroxide One of the world’s most versatile and environmentally compatible oxidizing

agents, hydrogen peroxide plays an important role in some of the world’s most

vital industries. As a leading manufacturer and supplier of hydrogen peroxide,

PeroxyChem offers a broad range of concentrations and purities for various

end-use applications.

Peracetic Acid Peracetic acid is a versatile oxidizing agent that dissolves easily in water

and decomposes into non-toxic byproducts. Peracetic acid formulations

are registered for use as sanitizers, disinfectants and sterilizers by the U.S.

Environmental Protection Agency and EU Biocidal Products Directive as

well as food contact substances by the U.S. Food and Drug Administration

and the U.S. Department of Agriculture. PeroxyChem is one of the largest

producers of peracetic acid in North America, offering high-quality products

in a range of concentrations for use in multiple markets.

• Electronics

• Energy

• Food Safety

• Environmental

• Pulp & Paper

• Mining

• Chemical Synthesis

• Personal Care

• Military & Space Propulsion

• Food Safety

• Wastewater Disinfection

• Biocides

Key End Markets and Applications:


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Persulfates PeroxyChem is one of the largest global manufacturers of persulfates, a powerful

active oxygen containing salt. Persulfates act as initiators for polymerization and are

efficient oxidants, making them useful in a variety of applications. Our high-quality

ammonium, sodium, and potassium persulfates, measured for thermal stability as

a product safety and quality metric, are among the most stable available in the world.

Silicates PeroxyChem is a leading manufacturer and supplier of silicates, offering a variety

of high-quality grades suited to meet diverse customer demands.


• Environmental

• Energy

• Polymer Initiation

• Printed Circuit Board Micro-etching

• Personal Care/Cosmetics

• Tires

• Detergents

• Pulp & Paper

• Flame-retardants


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Our Markets

PeroxyChem’s resources are fully focused on the

production and innovation of peroxygen and related

chemistries critical to meeting global demands for

emerging specialty markets, as well as our strong

foundation in the industrial and consumer markets.

Percentages based on revenue “Other” markets include Personal Care/Pharma and Tires/Fibers

32%20%

10%

10%

9%

8%

7%

4%

Energy

Pulp & Paper

Environmental

Chemical Synthesis

Polymer Initiation

Food Safety

Other

Electronics

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Electronics From research and development to distribution and delivery, PeroxyChem is a

leading supplier of hydrogen peroxide to the global electronics industry. We

produce several different grades for a variety of electronic needs, including

ultra-high purity for semiconductor wafer cleaning.

The global proliferation of smartphones and other electronic devices has resulted

in corresponding growth for the semiconductor industry and subsequent

demand for ultra-high purity hydrogen peroxide. Accordingly, we’re investing in a

new purification facility in Saratoga Springs, New York to meet this growing market

demand and better serve our customers, supplementing our other production

locations in Bayport, Texas and Saraburi, Thailand.

Specialty Markets

Our new facility in Saratoga

Springs will help North

America production keep up

with an ever-growing market.

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Energy PeroxyChem is steadily becoming a valued partner in the production of oil and

natural gas, whether it comes from traditional oil wells, hydraulic fracturing or oil

sands processing.

Our persulfates, hydrogen peroxide and peracetic acid are used to help stimulate oil

and gas wells, treat water in fracturing applications, allow for the reuse of water at

fracturing sites and control hydrogen sulphide for increased efficiency, productivity,

sustainability and environmental responsibility.

In 2014 we expanded our market by offering our rapid-acting, dynamic VigorOx® Oil

and Gas product as a biocide for down-hole applications, reuse water treatment and

saltwater disposal wells.

VigorOx Oil and Gas supports

the responsible development

of shale resources in the oil

and gas industry.

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Environmental With years of experience, impressive technology and a proven portfolio of products,

PeroxyChem is well equipped to help clients improve the environment. We’ve

disinfected wastewater in municipalities nationwide and treated contaminated

soil and groundwater from dry cleaners, gas stations and military bases across the

globe. No matter the challenge, we always remember collaboration is key. Our team

of scientists and technical experts work side by side with companies, governments

and other parties to address unique treatment challenges and find suitable solutions.

PeroxyChem has developed a

proven portfolio of products

and technologies focused on

the environment.

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Food & Beverage Safety We take pride in overcoming the great challenges of safely feeding an ever-

expanding global population with efficiency and environmental responsibility.

Our focus is on antimicrobial interventions in proteins, produce and packaging;

improving food safety and reducing spoilage and waste. We work with poultry,

red meat, and fruit and vegetable processors to target a variety of pathogens

including E.coli, Salmonella, and Campylobacter that cause food-borne illness.

We supply beverage manufacturers with proven, easy-to-use and cost-effective

sterilants and sanitizers to treat harmful microorganisms encountered during

the packaging process. Our chemistries meet the evolving global demands of

aseptic and extended shelf-life applications. We work diligently to support the

industry to make our food and beverage supply safer and of higher quality.

side with processors to develop, design and

implement full turnkey solutions for each

facility, including application chemistry, dosing,

equipment and regulatory compliance.

Growth in the protein market PeroxyChem’s team is comprised of food scientists

and experts with experience in poultry and beef

processing and an intimate understanding of each

customer’s unique needs. Our team works side by

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Pharmaceutical & Cosmetic

PeroxyChem supplies high-quality

pharmaceutical and cosmetic

grade chemistries that are used

widely for medical and hygienic

purposes. From hair bleach to

contact lens solution to first aid

antiseptics—our chemistries

are used in bulk pharmaceutical

manufacturing as well as everyday

drug store products.

Polymers & Chemical Synthesis

Our persulfates are preferred solutions

for initiating a wide range of chemical

reactions, especially emulsion

polymerization reactions for latex and

acrylics used in paints, coatings and

other end products. Our hydrogen

peroxide is also used as an oxidizer and

free radical generator in the synthesis

of chemicals such as epoxides, organic

peroxides and amine oxides.

Consumer & Industrial Markets

Pulp & Paper Our hydrogen peroxide is a key,

environmentally friendly bleaching

chemical used in pulp and paper

manufacturing to provide brightness

as well as improve water quality

during the process.

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Distribution Our sales and marketing team

collaborates with channel distributors

to ensure the highest level of service,

product stewardship and technical

expertise, expanding the reach of our

products and meeting the demands of

our customers over a range of markets.

Chemical Distribution

Market

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Our Leadership Team Bruce Lerner, President & Chief Executive Officer Jay Bertsch, Executive Vice President & Chief Financial Officer Thomas Ball, Executive Vice President, Sales and Marketing Alberto Garibi, Vice President, Business Development Eva Gomez, Vice President, EMEA Operations Walter Kramer, Vice President, North American Operations John Rovison, Vice President, Research and Development Pete Zografakis, Vice President, General Counsel & Chief Compliance Officer

Our Contact InformationPeroxyChem Global Headquarters One Commerce Square 2005 Market Street Suite 3200 Philadelphia, PA 19103 USA +1 267 422 2400 peroxychem.com

Regional Office Barcelona, Spain +34 9 34167400

Regional Office Hamburg, Germany +49 7623 91 7227

Regional Office Manila, Philippines +63 2 669 2759

Regional Office Mexico City, Mexico +52 5 776 3933, 3433,4050

Regional Office Pocola, Oklahoma +1 918 626 8020

Regional Office São Paolo, Brazil +55 11 3280 1610

Thai Peroxide Co., Ltd. Saraburi, Thailand +66 2 253 6745

Beijing Enviro-Chem Beijing, China +86 010 89230845

Board of Directors & Advisors David Han, Senior Managing Director, One Equity Partners Capital Advisors Joseph Huffsmith, Managing Director, One Equity Partners Capital Advisors Kevin Boyle, COO, Aditya Birla Carbon Harold Nidetz, Former Vice Chairman of Ernst & Young Bruce Lerner, President & Chief Executive Officer, PeroxyChem Inna Etinberg, Associate, One Equity Partners Capital Advisors

Klozur®, Durox® and VigorOx® are registered trademarks of PeroxyChem Responsible Care® is a registered trademark of the American Chemistry Council

annual report 2014 - peroxychem

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