Slide 1: PolyOne Investor Presentation November 2018
POLYONE INVESTOR PRESENTATION NOVEMBER 2018
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS In this presentation, statements that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or for
Slide 3: Use of Non-GAAP Measures
USE OF NON-GAAP MEASURES • This presentation includes the use of both GAAP (generally accepted accounting principles) and non-GAAP financial measures. The non-GAAP financial measures include: adjusted EPS, adjusted operating income, and return on invested capital. • PolyOne’s chief operating decisio
Slide 4: Vision and Core Values
VISION CORE VALUES To To be be the the world’s world’s premier premier provider provider of of Collaboration Innovation Excellence specialized polymer specialized polymer materials, materials, services services and and solutions solutions Commercial Excellence Operational Excellence Globalization PE
Slide 5: Safety First
SAFETY FIRST Injuries per 100 Workers 1.3 Spartech Acquisition 1.1 1.1 0.97 0.85 0.84 0.74 0.74 0.69 0.65 0.57 0.54 0.51 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD PolyOne Corporation 5
Slide 6: PolyOne 2017 Revenue $3.2 Billion
POLYONE 2017 REVENUE | $3.2 BILLION Segment End Market Geography PolyOne Europe Distribution Transportation Industrial 14% 18% United States Color 34% 16% 59% Additives & Inks 26% Asia 10% Appliance Building & 5% Construction 12% Electrical & Electronics 6% Latin America 9% Specialty Wire & Cable Co
Slide 7: Proof of Performance: Adjusted EPS Expansion
PROOF OF PERFORMANCE ADJUSTED EPS EXPANSION 2006 2017 $2.21 8 “Where we were” “Where we are” $2.06 $1.96 ROIC** 5.0% 14.0% $1.80 CONSECUTIVE Operating Income YEARS % of Sales $1.31 Color, Additives & Inks 1.7% 15.5% $1.00 Specialty Engineered Materials 1.1% 12.1% $0.82 Performance Products $0.68 & S
Slide 8: Sustainable Path to Double-Digit EPS Growth
SUSTAINABLE PATH TO DOUBLE-DIGIT EPS GROWTH Repurchase 600K-1M Double digit shares annually Innovate and develop new annual EPS technologies and services growth Expand specialty portfolio with strategic acquisitions Enhance efficiencies through Lean Six Sigma Double acquired and commercial excellenc
Slide 9: Investment in Commercial Resources Driving Growth
INVESTMENT IN COMMERCIAL RESOURCES DRIVING GROWTH Increased commercial headcount Generating opportunities 35% more sales calls R&D / Technical Marketing Sales 25% more marketing campaigns 656 1,000 new customers, expanding + 30% customer base by 5% 504 $1.0B increase in new opportunities 158 Enhanci
Slide 10: The Evolving Customer Relationship
THE EVOLVING CUSTOMER RELATIONSHIP Traditional Path Customer Strategic Accounts/ Business Service Field Sales Development Expanded Path Lead Web and Social Inside Sales Specialists Media PolyOne Corporation 10
Slide 11: Expanded Path: Adding Customer Touchpoints
EXPANDED PATH ADDING CUSTOMER TOUCHPOINTS Investments in digital and dedicated inside sales to improve customer experience 80% increase in leads (from 6,000 to 11,000) driven by website, phone, and online chat Inside sellers Inside sales/digital revenue 21 $88M 4 $11M 2014 2017 2014 2017 PolyOne Cor
Slide 12: New Resources Fueling the Future
NEW RESOURCES FUELING THE FUTURE 2017 $4.0 billion 2014 $3.0 billion +34% POLYONE SALES FUNNEL PolyOne Corporation 12
Slide 13: Aligning with Trends for Growth
ALIGNING WITH TRENDS FOR GROWTH TRANSPORTATION PACKAGING HEALTHCARE CONSUMER Facilitate Reduce Reduce Light- alternative Improve packaging spread of weighting energy recyclability materials infection solutions PolyOne Corporation 13
Slide 14: Innovation
INNOVATION Innovation comes from Research & Development Spend ($ millions) $52 Customization 55% $20 2006 2017 Vitality Index % of sales from products launched last 5 years 38% M&A 30% Innovation Pipeline 12% 15% 2006 2017 PolyOne Corporation 14
Slide 15: Horizons of Development
3 HORIZONS OF DEVELOPMENT INNOVATION Market Create new Transformational markets, target Opportunity for Growth new customer Through M&A ColorMatrix – Liquid Color needs & Additives Gordon Composites/ Polystrand – Composites Service adjacent Adjacent Opportunity for GLS – Thermoplastic Elastomers mar
Slide 16: Innovation Pipeline
INNOVATION PIPELINE Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Breakthrough 10 4 8 6 Platform 5 5 5 2 1 Derivative 11 7 5 4 1 Frame Build Prototype Scale-up & Test Commercial Opportunity Business Case Market Launch (since 2015) Number of Projects 26 16 20 15 2 79 Total Addressable Market - - $1,230 $1,
Slide 17: Innovation Spotlight: Composites
INNOVATION SPOTLIGHT: COMPOSITES PolyOne Corporation 17
Slide 18: Composites Refresher
COMPOSITES REFRESHER Strength Continuous Fiber Thermoset Fiber Composites Continuous Fiber Thermoplastic Composites Composite Long Glass Fiber Thermoplastics Short Glass Polymer Fiber Thermoplastics Design Flexibility PolyOne Corporation 18
Slide 19: Strategic Investment History
STRATEGIC INVESTMENT HISTORY Acquired Polystrand Thermoplastic Composites Acquired Acquired Gordon Glasforms Composites Continuous Continuous Fiber Thermosets Fiber Thermosets Long Fiber Installed LFT Thermoplastic production (LFT) Acquired Barbastro, Installed LFT Technology PlastiComp, Spain produ
Slide 20: Composites in Transportation
COMPOSITES IN TRANSPORTATION RAIL WATERCRAFT HEAVY TRUCK Flooring Bulkheads and Transoms Flooring & Side Panels Door Panels Ceilings and Hatches Aerodynamic Fairings Side Walls Doors and Cabinetry Seat and Bunk Reinforcements PolyOne Corporation 20
Slide 21: Invest-to-Grow M&A Strategy
INVEST-TO-GROW M&A STRATEGY Safety Technology Geography Service People Financial Low EH&S New and Leverage our Strong Motivated team Foundational risk profile complementary global footprint customer with a specialty operating technologies relationships culture margins of 8-10% with ability to double
Slide 22: Invest-to-Grow M&A Playbook
INVEST-TO-GROW M&A PLAYBOOK Invest in commercial resources 18-20% Innovate with operating Implement LSS to combined margins drive efficiency portfolio improvements Leverage Safety Retain PolyOne’s employees global reach First! Capture Cross-sell Protect customers sourcing & blend Phase 3 synergies t
Slide 23: Invest-to-Grow Proof of Performance
INVEST-TO-GROW PROOF OF PERFORMANCE Established Acquisitions (> 7 years) Commercial Operating Operating Resources Income Margins ($ in millions) $90 20% 335 + 40% + 150% + 900 bps $36 11% 243 At Acquisition Today At Acquisition Today At Acquisition Today PolyOne Corporation 23
Slide 24: Invest-to-Grow Driving the Future
INVEST-TO-GROW DRIVING THE FUTURE Recent Acquisitions Commercial Operating Operating Resources Income Margins ($ in millions) 206 $60 18-20% 144 113 $18 8% $16 7% At Acquisition Today Goal At Acquisition Today Goal At Acquisition Today Goal PolyOne Corporation 24
Slide 25: Strong Pipeline Driven by Fragmented Market
STRONG PIPELINE DRIVEN BY FRAGMENTED MARKET Average # of Rationale Company Size Possibilities • Local to regional footprint <$50M >250 • Niche technology focus • Concentrated customer base • Regional to global footprint $50M–$200M 150 • 1–3 specialty technologies • Diversified customer base • Global
Slide 26: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS OVER $1 BILLION SINCE 2011 Cumulative Share Repurchases Increasing Annual Dividend (In millions) 3-Year Dividend Plan $820M $750 $0.78 $0.70 $600 $0.58 $0.48 $450 $0.40 $0.32 $300 $0.24 $0.20 $0.16 $150 $0 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 201
Slide 27: ROIC Drives Shareholder Return
ROIC DRIVES SHAREHOLDER RETURN 16-17% 15.0% 14.0% 6.3% 2009 2017 Platinum Vision Updated Expectations PolyOne Corporation 27
Slide 28: Why Invest in PolyOne?
WHY INVEST IN POLYONE? THE NEW POLYONE: A SPECIALTY GROWTH COMPANY Growing leadership position in attractive markets Innovation, technology and service are differentiators Capital management is a strength: Record-setting cash generation to continue for years Expand ROIC while increasing inve
Slide 29: Service: The Timeless Differentiator
SERVICE: THE TIMELESS DIFFERENTIATOR PolyOne Corporation 29
Slide 30: Talent Development
TALENT DEVELOPMENT Campus Hires PolyOne LSS Blackbelts Leadership Program Participants 2008 0 2008 0 2012 0 2013 47 2011 25 2011 67 2014 86 2014 47 2014 147 2015 125 2017 90 2018 2016 169 141 220 2018 2018 315 PolyOne Corporation 30
Slide 31: IQ Design Labs
IQ DESIGN LABS Material Industrial Manufacturing & Color Design Expertise Expertise A UNIQUE CUSTOMER EXPERIENCE Industrial designers Opportunity funnel New business revenue 14 $7M $40M 3 $4M $0 2014 2017 2014 2017 2014 2017 PolyOne Corporation 31
Slide 32: LSS Customer First
LSS CUSTOMER FIRST Enables sales growth by building more intimate customer relationships, giving us insight to customers’ needs, with a service that is not easily replicated Customer Projects 2014 2017 2 85 PolyOne Corporation 32
Slide 33: 3D Printing
3D PRINTING BRINGING NEW IDEAS TO LIFE Enables validation of fit and function Shortens design cycle and time to market Avoids tooling rework Drives innovation Delivers substantial customer value PolyOne Corporation 33
Slide 34: ColorMatrix Select
COLORMATRIX SELECT™ Innovative system for processors and OEMs to develop colors in real time Complete system that provides customers with the freedom to match, prototype and produce color entirely within their own facility From concept to production M O N T H M O N T H M O N T H M O N T H 99.9% Redu
Slide 35: Segment Highlights
SEGMENT HIGHLIGHTS INNOVATING WITH POLYONE PolyOne Corporation 35
Slide 36: Color, Additives & Inks: End Markets & Solutions
COLOR, ADDITIVES & INKS END MARKETS & SOLUTIONS Industrial Packaging 14% 27% Textiles 12% Solid Liquid Colorants Colorants Appliance 3% Electrical & Electronics Building & 3% Construction Healthcare 10% 6% Consumer 7% Wire & Cable Transportation 10% 8% Performance Screen Additives Printing Inks Poly
Slide 37: Color, Additives & Inks 2017 Revenue
COLOR, ADDITIVES & INKS 2017 REVENUE | $893 MILLION Revenue by Region Operating Income & Margin 15.5% 150 18.0% 140 Canada 12.2% 16.0% 1% Europe 130 $139 32% 120 14.0% United 110 12.0% States Asia 100 46% 15% 5.5% $104 90 10.0% 80 8.0% Mexico 70 4% 6.0% 60 Brazil 50 0.9% 4.0% 2% 40 30 $25 2.0% $4 20
Slide 38: Specialty Engineered Materials: End Markets & Solutions
SPECIALTY ENGINEERED MATERIALS END MARKETS & SOLUTIONS Transportation Consumer 19% 20% Building & Construction 3% Appliance Electrical & 4% Electronics 15% Packaging Engineered Advanced Thermoplastic 7% Formulations Composites Elastomers Industrial 8% Wire & Cable 13% Healthcare 11% PolyOne Corporat
Slide 39: Specialty Engineered Materials 2017 Revenue
SPECIALTY ENGINEERED MATERIALS 2017 REVENUE | $624 MILLION Revenue by Region Operating Income & Margin 12.1% 14.0% 80 Canada 12.0% 2% Europe 9.3% $76 28% 70 10.0% 60 Asia United 8.0% 22% States 5.1% $57 48% 50 6.0% 40 4.0% 0.1% 30 2.0% $21 20 0.0% 2005 2009 2013 2017 PolyOne Corporation 39
Slide 40: Performance Products & Solutions: End Markets
PERFORMANCE PRODUCTS & SOLUTIONS END MARKETS & SOLUTIONS Industrial Building & 18% Construction 30% Specialty Vinyl Flame Retardant Solutions Polymers Healthcare 1% Transportation Electrical & 16% Electronics 3% Consumer 5% Packaging Wire & Cable 5% 15% Appliance 7% Healthcare Smart Device Formulati
Slide 41: Performance Products & Solutions 2017 Revenue
PERFORMANCE PRODUCTS & SOLUTIONS 2017 REVENUE | $721 MILLION Revenue by Region Operating Income & Margin 100 16.0% 10.7% 90 14.0% 80 7.2% 12.0% Canada 70 $77 16% 10.0% United 60 States Asia 3.6% 2% 77% 50 $56 8.0% Mexico 4.6% 5% 40 6.0% $40 30 4.0% 20 $24 2.0% 10 Sales 0 $886 $668 $773 $721 0.0% 200
Slide 42: Distribution
DISTRIBUTION END MARKETS & SUPPLIERS 2017 Revenue | $1.2 Billion Operating Income & Margin 75 6.3% 7.0% Transportation Healthcare 65 6.0% 23% 22% 5.9% $73 5.0% 55 4.0% Wire & Cable $63 4.0% 2% 45 Packaging 3.0% 3% 2.9% Building & Industrial 35 Construction 18% 2.0% 4% 25 Electrical & 1.0% Electronic
Slide 43: Target End Markets & Application Examples
TARGET END MARKETS & APPLICATION EXAMPLES PolyOne Corporation 43
Slide 44: Target End Markets: Healthcare
Target End Markets… Healthcare Structural Composites Elastomeric Grips and Handles Antimicrobial Technologies Thermally Conductive Technologies Anti-Counterfeiting Technologies Catheter Technologies Chemical Resistant Technologies Polymer Colorants
Slide 45: Target End Markets: Automotive
Target End Markets… Automotive Roof Systems Interior Structural Components Exterior / Interior Trim Seals & Flaps Fasteners Lighting Under-hood Components Electronics and Cameras Braces & Brackets Air Management Sound & Vibration Management
Slide 46: Target End Markets: Consumer
Target End Markets… Consumer Elastomeric Grips and Handles Polymer Colorants Thermally Conductive Components Structural Composite Components
Slide 47: Target End Markets: Packaging
Target End Markets… Packaging UV Light Barrier Technologies Cap & Closure Colorants Laser Marking Additives Oxygen Scavenger Technologies Antistatic Technologies Process Optimization Technologies Antioxidant Technologies Density Modified Technologies
Slide 48: Luxury Packaging
GravitechTM Density Modified Polymers Luxury Packaging Impart weight, sound and metallic finish to caps and closures for cosmetics and spirits applications Elevate quality and prestige perceptions among high-end consumers Eliminate time and cost associated with secondary operations and assembl
Slide 49: Optimize Color Usage
OnColorTM Super Concentrates Optimize Color Usage Eliminate costs by increasing pigment density Enhance color performance without altering form and formulation Increase design capabilities by reducing weight and layer thickness
Slide 50: Combat Bacteria Formation
WithStandTM Antimicrobial Technology Combat Bacteria Formation Inhibit microbial growth on polymer surfaces Enhance value or products and devices Highly versatile concentrate with the ability to be incorporated into a wide variety of products
Slide 51: Medical Device Housings
Chemically Resistant Engineered Polymers Medical Device Housings Durable, long-lasting products stand up to the most aggressive disinfectants Minimize environmental stress cracking and discoloration One of the broadest medically approved polymer and colorant portfolios
Slide 52: Color & Design Services
Color & Design Services Greater control of color development and supply chain Work across entire design process from concept to commercialization Inspire creativity in the use of polymer materials, colors, and effects Innovative brand differentiation Faster development timelines
Slide 53: Outdoor Applications
Outdoor Applications Leading provider of high performance specialty materials for the recreational and sports & leisure industry Well positioned across all segments to address market needs Metal to Polymer Conversion Lightweighting Thermal Management Impact Performance
Slide 54: Fiber Colorants
Fiber Colorants ColorMatrix Fiber Colorant Solutions Proprietary advanced liquid color formulations and equipment enable greater efficiency and productivity Eliminates aqueous dyeing and its associated wastewater treatment Solid Color Concentrates Extrusion-spun fibers colored via solid ma
Slide 55: Smart Home Devices
ResilienceTM Vinyl Solutions Smart Home Devices High flame retardancy to meet strict UL standards Greater processing and design flexibility Specialized additives provide long term color stability Diffusive lens materials improve light dispersion