Avient Corporation · NYSE:AVNT
Avient — PolyOne — Investor Day (May 2018)
113 slides from Avient's investor day presentation, May 10, 2018
Slide 1: Investor Day
INVESTOR DAY ORLANDO, FLORIDA | MAY 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: Factors That Could Cause Actual Results to Differ Materially
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IMPLIED BY THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO: • The ability to successfully integrate acquired companies into our operations, retain the management teams of acquired companies, retain relationships
Slide 4: 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 5: Investor Day Agenda May 10, 2018
INVESTOR DAY AGENDA MAY 10, 2018 8:00 WELCOME BREAKFAST SEGMENT REVIEWS (CONTINUED) 9:00 Introduction: Performance Products & Solutions: Bob Patterson Don Wiseman 9:45 Investing for Growth: Color, Additives & Inks: Michael Garratt Mark Crist Commercial Resources Innovation 11:40 Mergers & Acquisitio
Slide 6: The Leaders Behind the Team
THE LEADERS BEHIND THE TEAM Robert M. Patterson Chairman, President and CEO Bradley C. Richardson Donald Wiseman Joel Rathbun Executive Vice President & Senior Vice President, President of Senior Vice President, Chief Financial Officer Performance Products & Solutions Mergers & Acquisitions John Mid
Slide 7: Introduction
INTRODUCTION BOB PATTERSON PolyOne Corporation 7
Slide 8: Historic Past, Inspired Future
HISTORIC PAST INSPIRED FUTURE PolyOne Corporation 8
Slide 9: Sustainability at PolyOne
SUSTAINABILITY AT POLYONE PEOPLE PRODUCTS PLANET PolyOne Corporation 9
Slide 10: 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 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PolyOne Corporation 10
Slide 11: The PolyOne Academy
THE POLYONE ACADEMY Campus Hires Leadership Program Participants 2008 0 2012 0 2013 47 2011 25 2014 86 2014 47 2015 125 2017 90 2016 169 2017 216 PolyOne Corporation 11
Slide 12: Sustainably Impacting Diverse End Markets
SUSTAINABLY IMPACTING DIVERSE END MARKETS Industrial 16% Transportation Building & With emphasis on: 18% Construction 12% • Light-weighting • Reducing packaging materials • Improving recyclability Appliance 5% • Reducing spread of infection Consumer Electrical & 12% • Facilitating alternative energy
Slide 13: Products and Portfolio Optimization
PRODUCTS AND PORTFOLIO OPTIMIZATION DIVEST (DSS) REINVEST GROW PolyOne Corporation 13
Slide 14: Our Planet
OUR PLANET 202 2,557 26 47 PolyOne LSS LSS Projects Energy Waste Blackbelts Executed Saving Projects Reduction Projects 2008 0 10% 11% 2,557 2011 67 REDUCTION REDUCTION 2014 147 0 2017 202 2008 2017 PolyOne Corporation 14
Slide 15: Sustainability at PolyOne
SUSTAINABILITY AT POLYONE PEOPLE PRODUCTS PLANET PERFORMANCE PolyOne Corporation 15
Slide 16: Adjusted EPS Expansion
ADJUSTED EPS EXPANSION $2.21 CONSECUTIVE 8 $1.96 $2.06 $1.80 YEARS $1.31 $1.00 $0.82 $0.68 $0.13 2009 2010 2011 2012 2013 2014 2015 2016* 2017* *Pro Forma for sale of DSS PolyOne Corporation 16
Slide 17: Mix Improvement
EARLY YEARS DEFINED BY SPECIALTY MIX IMPROVEMENT + 25% 65% + 33% 2% 2005 2014 Specialty OI $5M $242M % of Operating Income PolyOne Corporation 17
Slide 18: Commodity Pruning
COMMODITY PRUNING HELD ORGANIC SALES FLAT Acquisitions Organic Revenue 2010 2011 2012 2013 2014 PolyOne Corporation 18
Slide 19: Investment in Commercial Resources Driving Results
INVESTMENT IN COMMERCIAL RESOURCES DRIVING RESULTS Largest organic revenue growth Increased commercial headcount since recession R&D / Technical Marketing Sales Revenue in billions of $ $3.2 618 Total + 10% 504 + 23% $2.9 $2.9 153 130 680 + 18% Organic + 7% 531 + 28% 2014 Q1 2018 2015 2016 2017 Poly
Slide 20: Sustainable Path to Double-Digit EPS Growth
SUSTAINABLE PATH TO DOUBLE-DIGIT EPS GROWTH Repurchase 600K-1M Double digit shares annually annual EPS Innovate and develop new technologies and services growth Expand specialty portfolio with strategic acquisitions Enhance efficiencies through Lean Six Sigma Double acquired and commercial excellenc
Slide 21: Raising the Bar: ROIC
RAISING THE BAR ROIC DRIVES SHAREHOLDER RETURN 16-17% 15.0% 14.0% 5.0% 2006 2017 Platinum Vision Updated Expectations PolyOne Corporation 21
Slide 22: Commercial Excellence
COMMERCIAL EXCELLENCE MICHAEL GARRATT PolyOne Corporation 22
Slide 23: Strategic Investment in Key Areas
STRATEGIC INVESTMENT IN 3 KEY AREAS COMMERCIAL SERVICE INNOVATION RESOURCES PolyOne Corporation 23
Slide 24: Key Commercial Investments
KEY COMMERCIAL INVESTMENTS Increased commercial headcount Generating opportunities 35% more sales calls R&D / Technical Marketing Sales 25% more marketing campaigns 618 1,000 new customers, expanding + 23% customer base by 5% 504 $1.0B increase in new opportunities 153 Enhancing efficiency 130 + 18%
Slide 25: New Resources Fueling the Future
NEW RESOURCES FUELING THE FUTURE 2017 $4.0 billion 2014 $3.0 billion +34% POLYONE SALES FUNNEL PolyOne Corporation 25
Slide 26: 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 26
Slide 27: Innovation
INNOVATION Innovation comes from 3 Horizons of Development Transformational Customization Opportunity for Growth 55% Through M&A Adjacent Opportunity for Growth Through New Product Pipeline Core M&A Business Focus 30% Innovation Pipeline 15% PolyOne Corporation 27
Slide 28: Horizons of Development
3 HORIZONS OF DEVELOPMENT INNOVATION Market Create new Transformational markets, target Opportunity for Growth new customer Through M&A needs Service adjacent Adjacent markets and Opportunity for customers Growth Through New Product Pipeline Core Service existing Business Focus markets and customers
Slide 29: Horizons of Development
3 HORIZONS OF DEVELOPMENT INNOVATION Market Create new Transformational markets, target Opportunity for Growth new customer Through M&A needs Service adjacent Adjacent markets and Opportunity for customers Growth Through New Product Pipeline ColorMatrix – Liquid Color & Additives Core Gordon/Polystr
Slide 30: Horizons of Development
3 HORIZONS OF DEVELOPMENT INNOVATION Market Create new Transformational markets, target Opportunity for Growth new customer Through M&A needs Non-Halogen Flame Service adjacent Adjacent Retardant Polymers markets and Opportunity for customers Growth Through New Product Pipeline Barrier Technologies
Slide 31: 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 Number of Projects 26 16 20 15 2 79 Color Technologies – – $335 $670 $410 19 $1,415 Barr
Slide 32: Innovation Drives Earnings Growth
INNOVATION DRIVES EARNINGS GROWTH Research & Development Spend Vitality Index ($ millions) % of sales from products launched last 5 years $52 38% $20 12% 2006 2017 2006 2017 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 14 $7M $40M 3 $4M $0 2014 2017 2014 2017 2014 2017 PolyOne Corporation 33
Slide 34: 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 34
Slide 35: 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 35
Slide 36: 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 36
Slide 37: Expanded Path
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 38: Inspired Future
INSPIRED FUTURE COMMERCIAL 6-8% annual increase in commercial resources RESOURCES 4 focused end-markets aligned with global megatrends 5 strategic innovation platforms SERVICE 30% increase in IQ Design projects 35% increase in revenue from inside sales/digital ≥35% vitality index INNOVATION PolyOne
Slide 39: Segment Reviews
SEGMENT REVIEWS INNOVATING WITH POLYONE PolyOne Corporation 39
Slide 40: PolyOne Distribution
POLYONE DISTRIBUTION SCOTT HORN PolyOne Corporation 40
Slide 41: Distribution: End Markets & Suppliers
DISTRIBUTION END MARKETS & SUPPLIERS 2017 Revenue | $1.2 Billion Operating Income & Margin 75 6.3% 7.0% Transportation Healthcare 6.0% 65 5.9% 23% 22% $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 42: Service Is Our Business
SERVICE IS OUR BUSINESS 132 6 Service Centers 250 1.2B 24 $ Sales Reps Warehouse Locations Dedicated Commercial Strategic Global Employees Annual Sales Team Presence Uniquely positioned to help our customers grow their brand and value-added solutions PolyOne Corporation 42
Slide 43: Service Is Our Business: Safely and Responsibly
SERVICE IS OUR BUSINESS SAFELY AND RESPONSIBLY 95% on-time delivery 6,500 14,000 27,000 $ In-Person Customer/Product Transactions/Month Customer Visits Combinations PolyOne Corporation 43
Slide 44: Key Commercial Investments
KEY COMMERCIAL INVESTMENTS Increased commercial headcount Generating opportunities Sales R&D / Technical Marketing 37% more sales calls $65M in new revenue from + 53% 23 inside sales 15 13 11 + 18% 132 $400M increase in new 119 opportunities Enhancing efficiency + 11% 24% increase in close rate 51%
Slide 45: Growth Through Inside Sales
GROWTH THROUGH INSIDE SALES Providing differentiated services that meet the needs of the changing customer landscape PolyOne Distribution Inside Sales $ in millions $65 $4 2014 2017 PolyOne Corporation 45
Slide 46: Growth Through Multiple Sales Channels
GROWTH THROUGH MULTIPLE SALES CHANNELS Technical Key Accounts / Inside Field Sales Industry Sales Sales Serving a broad spectrum of customers Leveraging digital systems to drive awareness and enhance the customer experience PolyOne Corporation 46
Slide 47: New Resources Fueling the Future
NEW RESOURCES FUELING THE FUTURE 2017 $1.6 billion 2014 $1.2 billion +27% POD SALES FUNNEL PolyOne Corporation 47
Slide 48: Inspired Future
INSPIRED FUTURE COMMERCIAL 6-8% annual increase in commercial resources RESOURCES >10% annual increase in revenue from inside sales and digital with expanded customer touch points 8% annual expansion of sales funnel with best-in-class service and technical expertise SERVICE 6-8% compound annual oper
Slide 49: Specialty Engineered Materials
SPECIALTY ENGINEERED MATERIALS MICHAEL GARRATT PolyOne Corporation 49
Slide 50: Specialty Engineered Materials: End Markets & Solutions
SPECIALTY ENGINEERED MATERIALS END MARKETS & SOLUTIONS Transportation 19% Consumer 20% Electrical & Electronics 15% Building & Construction 3% Appliance Engineered Advanced Thermoplastic 4% Formulations Composites Elastomers Packaging Wire & Cable 7% 13% Industrial 8% Healthcare 11% PolyOne Corporat
Slide 51: Specialty Engineered Materials
SPECIALTY ENGINEERED MATERIALS 2017 REVENUE | $624 MILLION Revenue by Region Operating Income & Margin 90 12.1% 14.0% Canada 80 12.0% 2% Europe 28% 9.3% $76 70 10.0% Asia United 60 8.0% 22% States 48% 5.1% $57 50 6.0% 40 4.0% 0.1% 30 2.0% $21 20 0.0% 2005 2009 2013 2017 PolyOne Corporation 51
Slide 52: Capitalizing on the Global Market
CAPITALIZING ON THE GLOBAL MARKET Demand for engineered materials is accelerating Expanding thermoplastic elastomer portfolio to meet the demands of local consumption Grow and develop low smoke, non-halogen technologies to meet increasing European standards Adding capacity in strategic markets India
Slide 53: Strategic Investment in Key Areas
STRATEGIC INVESTMENT IN 3 KEY AREAS COMMERCIAL SERVICE INNOVATION RESOURCES PolyOne Corporation 53
Slide 54: Key Commercial Investments
KEY COMMERCIAL INVESTMENTS Increased commercial headcount Generating opportunities R&D / Technical Marketing Sales 13% more sales calls 147 36% increase in customization projects 120 + 23% $270M increase in new opportunities 39 Enhancing efficiency 35 + 11% 173 12% reduction in average territory 133
Slide 55: New Resources Fueling the Future
NEW RESOURCES FUELING THE FUTURE 2017 $880 million 2014 $610 million +43% SEM SALES FUNNEL PolyOne Corporation 55
Slide 56: Growth Through Service
GROWTH THROUGH SERVICE LSS CUSTOMER FIRST Reduced 80% innovation project Leading Sporting Goods cycle times by over 10% Manufacturer Provided Lean Six Sigma training increased and led an onsite Black Belt production project to improve product and prototyping by resulting in development cycle times $
Slide 57: Innovation Spotlight: Composites
INNOVATION SPOTLIGHT: COMPOSITES PolyOne Corporation 57
Slide 58: 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 58
Slide 59: Strategic Investment History
STRATEGIC INVESTMENT HISTORY Acquired Polystrand Thermoplastic Composites Acquired Acquired Gordon Glasforms Composites Continuous Fiber Thermosets Long Fiber Installed Thermoplastic LFT (LFT) production Installed LFT Technology production Barbastro, Spain Avon Lake Long Fiber Reinforced Thermoplast
Slide 60: 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 60
Slide 61: Advanced Composites
ADVANCED COMPOSITES Commercial Resources 44 8 Operating Margins 20% 17 Test Market Innovation 0% At Acquisition Now Projects At Acquisition Goal Long-term investments align with key global megatrends Light-Weighting Design Flexibility Sustainability PolyOne Corporation 61
Slide 62: Inspired Future
INSPIRED FUTURE COMMERCIAL 6-8% annual increase in commercial resources RESOURCES >10% annual increase in customization projects 10% annual expansion of sales funnel, enhancing portfolio in 4 focus end markets SERVICE 20% increase in global capacity 12-15% compound annual operating income growth 14-
Slide 63: Performance Products & Solutions
PERFORMANCE PRODUCTS & SOLUTIONS DON WISEMAN PolyOne Corporation 63
Slide 64: Performance Products & Solutions: End Markets & Solutions
PERFORMANCE PRODUCTS & SOLUTIONS END MARKETS & SOLUTIONS Building & Construction 30% Industrial 18% Specialty Vinyl Flame Retardant Solutions Polymers Healthcare 1% Electrical & Electronics 3% Transportation Consumer 16% 5% Packaging 5% Appliance 7% Wire & Cable 15% Healthcare Smart Device Formulati
Slide 65: Performance Products & Solutions
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 $33 4.0% 20 2.0% 10 Sales 0 $886 $668 $773 $721 0.0% 200
Slide 66: Strategic Investment in Key Areas
STRATEGIC INVESTMENT IN 3 KEY AREAS COMMERCIAL SERVICE INNOVATION RESOURCES PolyOne Corporation 66
Slide 67: Key Commercial Investments
KEY COMMERCIAL INVESTMENTS Increased commercial headcount Generating opportunities R&D / Technical Marketing Sales 25% more sales calls 53 113% increase in innovation pipeline 37 + 43% $240M increase in new opportunities 18 17 Enhancing efficiency + 6% 66 57 36% increase in prospecting calls + 16% 3
Slide 68: New Resources Fueling the Future
NEW RESOURCES FUELING THE FUTURE 2017 $850 million 2014 $610 million +40% PP&S SALES FUNNEL PolyOne Corporation 68
Slide 69: Growth Through Service
GROWTH THROUGH SERVICE LSS CUSTOMER FIRST Reduced Increased over 400 Leading Wire & Cable manufacturing Manufacturer throughput value Provided Lean Six Sigma training and led on-site Kaizen process improvements $1.4M labor hours through reorganized work area and floor space PolyOne Corporation 69
Slide 70: Growth Through Service: Healthcare Innovations
GROWTH THROUGH SERVICE HEALTHCARE INNOVATIONS IQ Design is collaborating with a leading medical device manufacturer to replace metal and provide chemical resistance to solve cracking issues related to intense cleaning requirements PolyOne Corporation 70
Slide 71: Innovation Spotlight: Flame Retardant Polymers
INNOVATION SPOTLIGHT: FLAME RETARDANT POLYMERS PolyOne Corporation 71
Slide 72: Flame Retardant Drivers
FLAME RETARDANT DRIVERS Shift toward less toxic solutions Increased consumer awareness Focus on environmentally friendly solutions New regulatory standards PolyOne Corporation 72
Slide 73: Flame Retardant Performance Spectrum
FLAME RETARDANT PERFORMANCE SPECTRUM REGULATORY CHANGES PROVIDE OPPORTUNITY HALOGEN NON-HALOGEN LSFOH (Low Smoke and Fume, Non-Halogen) Low Toxicity & Corrosiveness Low Smoke No Dripping Non-Halogen Non-Halogen Flame Retardant Flame Retardant Flame Retardant PolyOne Corporation 73
Slide 74: LED Solutions
LED SOLUTIONS Solutions for rigid molded & extruded applications Superior outdoor weather performance Excellent light dispersion qualities Formulated to meet stringent flame-rating regulations Custom design support to meet demand PolyOne Corporation 74
Slide 75: Inspired Future
INSPIRED FUTURE COMMERCIAL 6-8% annual increase in commercial resources RESOURCES 8% more sales calls annually 10% annual expansion of sales funnel, including breakthroughs in healthcare technologies SERVICE 8-10% compound annual operating income growth 12-14% operating margins INNOVATION PolyOne Co
Slide 76: Color Additives & Inks
COLOR ADDITIVES & INKS MARK CRIST PolyOne Corporation 76
Slide 77: Color, Additives & Inks: End Markets & Solutions
COLOR, ADDITIVES & INKS END MARKETS & SOLUTIONS Packaging Industrial 27% 14% Textiles Solid Liquid 12% Colorants Colorants Appliance 3% Electrical & Electronics 3% Building & Healthcare Construction 6% 10% Consumer 7% Transportation Wire & Cable 8% 10% Performance Screen Additives Printing Inks Poly
Slide 78: Color, Additives & Inks
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 79: Capitalizing on the Global Market
CAPITALIZING ON THE GLOBAL MARKET Emerging markets driving strong demand for color and additives Rapid adoption of food and beverage packaging additives Fiber colorants growth focused on expanding Asia-Pacific market Increase commercial investments focused on China, India and Mexico Expand capacity
Slide 80: Strategic Investment in Key Areas
STRATEGIC INVESTMENT IN 3 KEY AREAS COMMERCIAL SERVICE INNOVATION RESOURCES PolyOne Corporation 80
Slide 81: Key Commercial Investments
KEY COMMERCIAL INVESTMENTS Increased commercial investment Generating opportunities R&D / Technical Marketing Sales 35% more sales calls 275 30% increase in customized color formulations 209 + 32% 106% increase in innovation pipeline 43 382 $170M increase in new opportunities 38 + 13% 301 Enhancing
Slide 82: New Resources Fueling the Future
NEW RESOURCES FUELING THE FUTURE 2017 $710 million 2014 $540 million +32% CAI SALES FUNNEL PolyOne Corporation 82
Slide 83: Growth Through Service
GROWTH THROUGH SERVICE LSS CUSTOMER FIRST Optimize Developed manufacturing: inventory Printing Equipment management and Supply Manufacturer Provided Lean Six Sigma training 45% framework to and conducted process mapping improvement in assembly process, reduce exercises to identify key working improv
Slide 84: Innovation Spotlight: Additive & Colorant Technologies
INNOVATION SPOTLIGHT: ADDITIVE & COLORANT TECHNOLOGIES PolyOne Corporation 84
Slide 85: Barrier Technologies
BARRIER TECHNOLOGIES Market leader in oxygen, light and UV barrier solutions for the PET bottle market STRATEGIC ADDRESSABLE MARKET >$200M Amosorb™ HyGuard™ Lactra™ SX Active oxygen scavenging Evolving technology for active UV and visible light blocking additive in the bottle wall oxygen scavenging
Slide 86: Fiber Colorants
FIBER COLORANTS Eliminate waste water associated with conventional dyeing Help meet sustainability targets for brand owners Enable “uncolored fiber” producers to bypass dyehouse Strategic addressable market >$300M PolyOne Corporation 86
Slide 87: Strategic Investment History
STRATEGIC INVESTMENT HISTORY Revenue from Fiber Color ($ in millions) Thermoplastic Acquired Composites Expanded IQAP solid $45 colorant offerings Invested in Acquired development Magenta of liquid fiber colorant technology Acquired ColorMatrix $10 2011 2015 2018 2014 2017 PolyOne Corporation 87
Slide 88: Investing for the Future
INVESTING FOR THE FUTURE Commercial Resources 43 5 $125M 38 Innovation Fiber Projects Sales Funnel At Acquisition Now Nearly 900 projects identified Gaining sustainable momentum & building trust with consumers PolyOne Corporation 88
Slide 89: Nike Sustainability Quote
“We are unleashing the power of human potential, all to advance the game. But the world where we live and play is changing, fast, because the world has limits. Athletes seek to defy limits, so do we. Limits challenge us to reimagine what is possible. We knit a shoe with precision creating less waste
Slide 90: ColorMatrix Select
COLORMATRIX SELECT™ REDEFINING COLOR CREATION 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 PolyOne Corporation 90
Slide 91: Enabling the Customer
ENABLING THE CUSTOMER Empowers the customer to move at their speed by reducing complexity and simplifying the supply chain. 3D printing. Online purchasing. The world is getting faster—so are we. SPEED TO MARKET 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% Reduction in tur
Slide 92: Customer Testimonial: CEO, Industry Leader
“Being able to create color and produce parts in 1 day is unheard of in this industry. This system is clean and the consistency of colored parts from shot to shot is excellent… We want to purchase more dosers now.” CEO, Industry Leader PolyOne Corporation 92
Slide 93: Inspired Future
INSPIRED FUTURE COMMERCIAL 6-8% annual increase in commercial resources RESOURCES 8% more sales calls annually 10% annual expansion of sales funnel, including advances in barrier additives and fiber colorants SERVICE 12-15% compound annual operating income growth 16-18% operating margins INNOVATION
Slide 94: M&A Review
M&A REVIEW JOEL RATHBUN PolyOne Corporation 94
Slide 95: Over a Decade of Successful Specialty Acquisitions
OVER A DECADE OF SUCCESSFUL SPECIALTY ACQUISITIONS TPE PolyOne Corporation 95
Slide 96: Invest-to-Grow Strategy
INVEST-TO-GROW 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 Pol
Slide 97: Invest-to-Grow Playbook
INVEST-TO-GROW 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 techn
Slide 98: 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 98
Slide 99: Invest-to-Grow Proof of Performance
INVEST-TO-GROW PROOF OF PERFORMANCE Commercial Operating Return on Sales EBITDA Resources Income (millions) Multiple $45 109 23% 10.5x Acquisition #1 53 $12 3.0x 10% (10 years) At Acquisition Today At Acquisition Today At Acquisition Today At Acquisition Today 12 $4 4.9x 30% Acquisition #2 3 $2 21%
Slide 100: Invest-to-Grow Driving the Future
INVEST-TO-GROW DRIVING THE FUTURE Advanced Composites Commercial Operating Operating Resources Income Margins ($ in millions) 65 20% $25 44 17 $0 $0 0% 0% At Acquisition Today Goal At Acquisition Today Goal At Acquisition Today Goal PolyOne Corporation 100
Slide 101: Invest-to-Grow Driving the Future
INVEST-TO-GROW DRIVING THE FUTURE Recent Color Acquisitions Commercial Operating Operating Resources Income Margins ($ in millions) 141 $36 18-20% 100 $18 11% 12% 96 $16 At Acquisition Today Goal At Acquisition Today Goal At Acquisition Today Goal PolyOne Corporation 101
Slide 102: Strong Pipeline
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 103: Summary
SUMMARY Proven track record with specialty acquisitions using invest-to-grow strategy Our approach to integration differentiates PolyOne in a competitive M&A market Trusted brand and reputation Buyer of choice Robust pipeline with a range of opportunities that fit our strategy PolyOne Corporation 10
Slide 104: Financial Review
FINANCIAL REVIEW BRAD RICHARDSON PolyOne Corporation 104
Slide 105: Adjusted EPS Expansion
ADJUSTED EPS EXPANSION $2.21 CONSECUTIVE 8 $1.96 $2.06 $1.80 YEARS $1.31 $1.00 $0.82 $0.68 $0.13 2009 2010 2011 2012 2013 2014 2015 2016* 2017* *Pro Forma for sale of DSS PolyOne Corporation 105
Slide 106: Strategic Cash Deployment
STRATEGIC CASH DEPLOYMENT ORGANIC GROWTH M&A OPPORTUNITIES SHAREHOLDER RETURN 11 Investing in R&D and 2 Continued pursuit of strategic bolt 3 Dividends and share buybacks capacity on acquisitions that expand specialty offerings Capital Expenditures 60% Strategic Growth Increase in annual Investments
Slide 107: Proof of Performance: Expanding Margins & ROIC
PROOF OF PERFORMANCE EXPANDING MARGINS & ROIC 2006 2017 “Where we were” “Where we are” ROIC 5.0% 14.0% Operating Income % of Sales Color, Additives & Inks 1.7% 15.5% Specialty Engineered Materials 1.1% 12.1% Performance Products & Solutions 4.3% 10.7% Distribution 2.6% 6.3% PolyOne Corporation 107
Slide 108: Investment in Commercial Resources Driving Results
INVESTMENT IN COMMERCIAL RESOURCES DRIVING RESULTS Largest organic revenue growth Increased commercial headcount since recession R&D / Technical Marketing Sales Revenue in billions of $ $3.2 618 Total + 10% 504 + 23% $2.9 $2.9 153 130 680 + 18% Organic + 7% 531 + 28% 2014 Q1 2018 2015 2016 2017 Poly
Slide 109: Sustainable Path to Double-Digit EPS Growth
SUSTAINABLE PATH TO DOUBLE-DIGIT EPS GROWTH Repurchase 600K-1M Double digit shares annually annual EPS Innovate and develop new technologies and services growth Expand specialty portfolio with strategic acquisitions Enhance efficiencies through Lean Six Sigma Double acquired and commercial excellenc
Slide 110: ROIC Drives Shareholder Return
ROIC DRIVES SHAREHOLDER RETURN 16-17% 15.0% 14.0% 6.3% 2009 2017 Platinum Vision Updated Expectations PolyOne Corporation 110
Slide 111: ROIC Drives Shareholder Return
ROIC DRIVES SHAREHOLDER RETURN ROIC 16-17% 15.0% 14.0% 6.3% 2009 2017 Platinum Vision Updated Expectations Invested Capital $2,000 ($ in millions) $1,650 $1,750 $570 2009 2017 Platinum Vision Updated Expectations Improving ROIC + Expanding Invested Capital = Outperforming the Market PolyOne Corporat
Slide 112: Conclusion
CONCLUSION BOB PATTERSON PolyOne Corporation 112
Slide 113: Reconciliation of Non-GAAP Financial Measures
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