Slide 1: PolyOne Investor Presentation September 2019
POLYONE INVESTOR PRESENTATION SEPTEMBER 2019
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 specialized polymer 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 PolyOne Corporation 5
Slide 6: PolyOne Post PP&S Divestment
POLYONE POST PP&S DIVESTMENT 2018 REVENUE | $2.9 BILLION Segment End Market Geography Specialty Transportation Healthcare United States Engineered 17% 16% 53% Europe 19% Distribution Materials 43% 22% Appliance 4% Industrial Asia Electrical & 15% 12% Electronics 6% Building & Construction Canada 7%
Slide 7: Proof of Performance
PROOF OF PERFORMANCE ADJUSTED EPS EXPANSION $2.43 $2.21 9 2006 2018 $2.06 $1.96 ROIC** 5.0% 14.1% $1.80 CONSECUTIVE Operating Income YEARS % of Sales $1.31 Color, Additives & Inks 1.7% 15.1% $1.00 Specialty Engineered Materials 1.1% 11.2% $0.82 Performance $0.68 Products 4.3% 10.0% & Solutions $0.13
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 Sustained revenue increases led by organic business $3.5 R&D / Technical Marketing Sales Revenue in billions of $ 663 $3.2 Total Total + 10% + 9% 504 + 32% $2.9 $2.9 164 130 + 26% 710 531 Organic Organic + 7% + 5% + 34%
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
EXPANDED PATH ADDING CUSTOMER TOUCHPOINTS Investments in digital and dedicated inside sales to improve customer experience 110% increase in leads (from 6,000 to 12,700) driven by website, phone, and online chat Inside sellers Inside sales/digital revenue $109M 24 4 $11M 2014 2018 2014 2018 PolyOne C
Slide 12: Aligning with Trends for Growth
ALIGNING WITH TRENDS FOR GROWTH TRANSPORTATION PACKAGING HEALTHCARE CONSUMER Facilitate Reduce Reduce Light- alternative Improve packaging spread of weighting energy recyclability materials infection solutions PolyOne Corporation 12
Slide 13: Innovation
INNOVATION Innovation comes from Research & Development Spend ($ millions) $56 Customization 55% $20 2006 2018 Vitality Index % of sales from products launched last 5 years 35% M&A 30% Innovation Pipeline 12% 15% 2006 2018 PolyOne Corporation 13
Slide 14: 3 Horizons of Development
3 HORIZONS OF DEVELOPMENT INNOVATION Market Create new Transformational markets, target Opportunity for Growth Fiber-Line new customer Through M&A needs ColorMatrix – Liquid Color & Additives Gordon Composites/ Polystrand – Composites Service adjacent Adjacent Opportunity for GLS – Thermoplastic Ela
Slide 15: Innovation Pipeline
INNOVATION PIPELINE Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Breakthrough 1 1 5 2 3 Platform 4 1 8 3 3 Derivative 5 3 4 0 4 Frame Build Prototype Scale-up & Test Commercial Opportunity Business Case Market Launch (since 2017) Number of Projects 10 5 17 5 10 47 Total Addressable Market - - $1,767 $315
Slide 16: Innovation Spotlight: Composites
INNOVATION SPOTLIGHT: COMPOSITES PolyOne Corporation 16
Slide 17: 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 17
Slide 18: Strategic Investment History
STRATEGIC INVESTMENT HISTORY Acquired Polystrand Thermoplastic Composites Acquired Acquired Gordon Glasforms Composites Continuous Fiber Thermosets Continuous Fiber Thermosets Long Fiber Installed LFT Thermoplastic production Acquired Installed LFT Acquired (LFT) Barbastro, Fiber-Line, production Pl
Slide 19: 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 19
Slide 20: Fiber-Line Highlights
FIBER-LINE HIGHLIGHTS Fiber Processing Polymer Formulation Capabilities High Performance Capabilities Fiber and Polymers Suppliers • Abrasion resistance 2018PF Sales by Market • Adhesion • Entangling 12% 1% Fiber-Line enhancement • Extrusion • Anti-microbial Fiber Optics • Pultrusion • Chemical Proc
Slide 21: PolyOne Applications in Fiber Optic Cables
POLYONE APPLICATIONS IN FIBER OPTIC CABLES 3. Optical fibers –Two parts of an optical fiber: core (carries the signal and cladding Fiber-Line Product 1. Loose buffer tube – made of PBT, PTFE, Nylon 12, PP or other (reflects the signal to move it forward). Both parts are made of silica/glass or polym
Slide 22: Fiber Optical Growth Drivers
FIBER OPTICAL GROWTH DRIVERS 5G technology will be a leading growth driver in fiber optic cable for several years 5G vs. 4G 5G Networks Enable lower latency, greater flexibility & efficiency 10x Installation of these networks are in the very early stages Speed Increase Installation will start
Slide 23: 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 24: 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 25: Invest-to-Grow Proof of Performance
INVEST-TO-GROW PROOF OF PERFORMANCE Established Acquisitions (> 7 years) Commercial Operating Operating Resources Income Margins ($ in millions) $96 20% 340 + 40% + 165% + 900 bps $36 11% 243 At Acquisition Today At Acquisition Today At Acquisition Today PolyOne Corporation 25
Slide 26: Invest-to-Grow Driving the Future
INVEST-TO-GROW DRIVING THE FUTURE Recent Acquisitions Commercial Operating Operating Resources Income Margins ($ in millions) 251 $70 18-20% 181 138 $23 $25 7% 8% At Acquisition Today Goal At Acquisition Today Goal At Acquisition Today Goal PolyOne Corporation 26
Slide 27: 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 28: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS OVER $1.2 BILLION SINCE 2011 Cumulative Share Repurchases Increasing Annual Dividend (In millions) 3-Year Dividend Plan $890M $900 $0.78 $750 $0.70 $600 $0.54 $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 2
Slide 29: ROIC Drives Shareholder Return
ROIC DRIVES SHAREHOLDER RETURN 16-17% 14.1% 6.3% 2009 2018 Updated Expectations PolyOne Corporation 29
Slide 30: 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 31: Service: The Timeless Differentiator
SERVICE: THE TIMELESS DIFFERENTIATOR PolyOne Corporation 31
Slide 32: 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 32
Slide 33: IQ Design Labs
IQ DESIGN LABS Material Industrial Manufacturing & Color Design Expertise Expertise A UNIQUE CUSTOMER EXPERIENCE Industrial designers Opportunity funnel New business revenue $80M $10M 14 3 $4M $0 2014 2018 2014 2018 2014 2018 PolyOne Corporation 33
Slide 34: 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 2018 2 104 PolyOne Corporation 34
Slide 35: 3D Printing: Bringing New Ideas to Life
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 35
Slide 36: 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 37: Segment Highlights
SEGMENT HIGHLIGHTS INNOVATING WITH POLYONE PolyOne Corporation 37
Slide 38: Color, Additives & Inks: End Markets & Solutions
COLOR, ADDITIVES & INKS END MARKETS & SOLUTIONS Packaging Industrial 28% 14% Solid Liquid Electrical & Textiles Colorants Colorants Electronic 1% 13% Appliances 2% Healthcare 5% Wire & Cable Consumer 11% 8% Transportation Building & Construction 8% 10% Performance Screen Additives Printing Inks Poly
Slide 39: Color, Additives & Inks
COLOR, ADDITIVES & INKS 2018 REVENUE | OVER $1 BILLION Revenue by Region Operating Income & Margin 15.1% 170 16.0% 160 Canada 12.2% 1% Europe 150 $159 14.0% 35% 140 130 12.0% United 120 States Asia 10.0% 110 5.5% 45% 14% 100 $104 8.0% 90 Mexico 80 6.0% 3% 70 South 60 0.9% 4.0% America 50 2% 40 2.0%
Slide 40: Specialty Engineered Materials: End Markets & Solutions
SPECIALTY ENGINEERED MATERIALS END MARKETS & SOLUTIONS Consumer Transportation 21% 18% Appliance 3% Building & Construction 4% Electrical & Electronics Engineered Advanced Thermoplastic Packaging 16% 7% Formulations Composites Elastomers Industrial 9% Wire & Cable Healthcare 13% 9% PolyOne Corporati
Slide 41: Specialty Engineered Materials
SPECIALTY ENGINEERED MATERIALS 2018 REVENUE | $646 MILLION Revenue by Region Operating Income & Margin 11.2% 90 12.0% Canada 80 10.0% 2% Europe 9.3% 28% $72 70 8.0% Asia United 60 States 24% 5.1% 6.0% 46% $57 50 4.0% 40 0.1% 2.0% 30 $21 20 0.0% 2005 2009 2013 2018 PolyOne Corporation 41
Slide 42: Performance Products & Solutions: End Markets
PERFORMANCE PRODUCTS & SOLUTIONS END MARKETS & SOLUTIONS Building & Industrial Construction 18% 28% Specialty Vinyl Flame Retardant Solutions Polymers Electrical & Electronics Transportation 4% 17% Packaging 4% Appliance 6% Wire & Cable Consumer 16% 7% Healthcare Smart Device Formulations Materials
Slide 43: Performance Products & Solutions
PERFORMANCE PRODUCTS & SOLUTIONS 2018 REVENUE | $736 MILLION Revenue by Region Operating Income & Margin 100 16.0% 10.0% 90 14.0% 80 7.2% 12.0% Canada 15% 70 $74 10.0% United 60 States Asia 3.6% 2% 78% 50 $56 8.0% Mexico 4.6% 5% 40 6.0% $40 30 4.0% 20 $24 2.0% 10 0 0.0% 2005 2009 2013 2018 PolyOne C
Slide 44: Distribution
DISTRIBUTION END MARKETS & SUPPLIERS 2018 Revenue | $1.3 Billion Operating Income & Margin 75 7.0% Healthcare Transportation 6.0% 27% 65 5.6% 22% $71 5.0% 55 5.9% $63 4.0% Wire & Cable 45 2% Packaging 3.0% 3% 35 Building & Industrial 2.0% Construction 18% 4.0% 5% 25 1.0% Electrical & 2.9% $25 Electr
Slide 45: Overview of Raw Material Purchases
OVERVIEW OF RAW MATERIAL PURCHASES Performance Other Raw Additives Materials 15% 27% PVC 11% Styrenic Block Copolymer Pigments 5% 9% Nylon 5% TiO2 Polyethylene 6% 8% Polypropylene Plasticizers 7% 7% $1.3 billion of raw material purchases in 2018 excluding Distribution business Note: All figures excl
Slide 46: Target End Markets & Application Examples
TARGET END MARKETS & APPLICATION EXAMPLES PolyOne Corporation 46
Slide 47: 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 48: 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 49: Target End Markets: Consumer
Target End Markets… Consumer Elastomeric Grips and Handles Polymer Colorants Thermally Conductive Components Structural Composite Components
Slide 50: 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 51: 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 52: 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 53: 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 54: 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 55: 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 56: 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 57: 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 58: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in millions, except per share data) Senior management uses comparisons of adjusted net income from continuing operations attributable to PolyOne shareholders and diluted adjusted earnings per share (EPS) from continuing operations at