Slide 1: PolyOne Investor Presentation
PolyOne Investor Presentation Goldman Sachs Basic Materials Conference May 2015 PolyOne Corporation Page 1
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 f
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, earnings before interest, tax, depreciation and amortization (EBITDA), adjusted EBITDA, net de
Slide 4: PolyOne Commodity to Specialty Transformation
PolyOne Commodity to Specialty Transformation 2000-2005 2006 - 2009 2010 – 2014 2015 and beyond • Accelerating growth • Substantial EPS growth from $0.13 to all-time • Deliver consistent • Steve Newlin double digit annual high of $1.80 appointed, Chairman, EPS growth President and CEO • Shift to fas
Slide 5: PolyOne At A Glance
PolyOne At A Glance 2014 Revenues: $3.8 Billion 2014 Revenues: $3.8 Billion Canada Europe 7% Asia Latin America PP&S 6% 5% 13% 20% Distribution 28% Specialty 52% United States 69% End Markets Specialty Operating Income ($M) Packaging $242 14% Industrial $195 14% Transportation 20% Healthcare $122 11
Slide 6: Mix Shift Highlights Specialty Transformation
Mix Shift Highlights Specialty Transformation 2020 Old PolyOne Transformation Platinum Vision 100% % of Operating Income* 80% 60% 80%+ 69% 40% 65% 62% 43% 34% 20% 0% 2% 2005 2008 2010 2013 2014 Q1 2015 2020 Specialty OI $5M $46M $87M $195M $242M $60M Platinum Vision JV's Performance Products & Solut
Slide 7: Confirmation of Our Strategy
Confirmation of Our Strategy Specialization Globalization Operational Commercial Excellence Excellence The World’s Premier Provider of Specialized Polymer Materials, Services and Solutions PolyOne Corporation Page 7
Slide 8: Strategy and Execution Drive Results
Strategy and Execution Drive Results Adjusted EPS Share Price vs. S&P 500 600% $1.80 500% 400% $1.31 300% $1.00 $0.82 200% $0.68 100% $0.27 $0.21 0% $0.12 $0.13 -100% '06 '07 '08 '09 '10 '11 '12 '13 '14 ‘06-‘14 Adjusted EPS CAGR = 40% PolyOne Corporation Page 8
Slide 9: Proof of Performance & 2020 Goals
Proof of Performance & 2020 Goals 2006 Q1 2015 2020 “Where we were” “Where we are” Platinum Vision 1) Operating Income % Specialty: Global Color, Additives & Inks 1.7% 16.2% 20%+ Global Specialty Engineered Materials 1.1% 16.3% 20%+ Designed Structures & Solutions 1.4% (2012) 2.7% 12 – 14% Performan
Slide 10: Platinum Vision: Pathway to Accelerated Growth
Platinum Vision: Pathway to Accelerated Growth Organic Margin Share Acquisitions Sales Growth Expansion Repurchases PolyOne Corporation Page 10
Slide 11: Innovation Drives Earnings Growth
Innovation Drives Earnings Growth Research & Development Specialty Platform Specialty Platform Spending Vitality Index Progression* Gross Margin % ($ millions) 27% 44% $53 20% 14% $20 2006 2014 2006 2014 2006 2014 Specialty Vitality Index Target ≥ 35% *Percentage of Specialty Platform revenue from p
Slide 12: Megatrends Aligned with Key End Markets
Megatrends Aligned with Key End Markets Megatrend End Markets Improving Health & Health and Wellness Wellness Protecting the Transportation Environment Globalizing and Packaging Localizing Decreasing Dependence on Fossil Consumer Fuels PolyOne Corporation Page 12
Slide 13: A Rich Pipeline of Opportunity
A Rich Pipeline of Opportunity Phase Phase Phase Phase Phase 1 2 3 4 5 Breakthrough 8 4 6 7 5 Platform 4 3 9 3 12 Derivative 2 1 3 2 5 Frame Build Prototype Scale-up & Commercial Opportunity Business Case Test Market Launch Number of Projects 14 8 18 12 22 74 Addressable Market $700 $600 $600 $1,900
Slide 14: Debt Maturities & Pension Funding
Debt Maturities & Pension Funding $800 Debt Maturities Pension Funding** As of March 31, 2015 As of March 31, 2015 ($ millions) 98% $700 100% $600 $600 90% 80% $500 70% $400 60% $317 60% $300 50% $200 40% $100 30% $49 $0 20% 2015 2020 2023 2008 Q1 2015 Coupon Rate: 7.500% 7.375% 5.250% Net Debt / EB
Slide 15: Free Cash Flow and Strong Balance Sheet Fund Investment / Shareholder Return
Free Cash Flow and Strong Balance Sheet Fund Investment / Shareholder Return Expanding our sales, Repurchased over marketing, and 500k shares in Q1 technical capabilities 2015 Investing in operational Repurchased 11.8 and LSS initiatives million shares since ~75% of capital early 2013 expe
Slide 16: PolyOne Core Values
PolyOne Core Values Excellence Innovation Collaboration PolyOne Corporation Page 16
Slide 17: Why Invest In PolyOne?
Why Invest In PolyOne? Addressable market exceeds $40 billion Strong performance demonstrates that our strategy and execution are working Megatrends and emerging opportunities align with our strengths Innovation and services provide differentiation, incremental pricing power, and competitive
Slide 18: Appendix
Appendix PolyOne Corporation Page 18
Slide 19: Q1 2015 Financial Highlights
Q1 2015 Financial Highlights GSEM Operating Income Global Specialty Engineered $25 (in millions) $23 Materials’ operating margin of +26% 16.3% above the 2015 target $20 $18 $15 Q1 2014 Q1 2015 GCAI Operating Income (in millions) Global Color Additives and Inks’ $35 +11% $34 operating margin grew
Slide 20: At a Glance: Global Color, Additives and Inks
At a Glance Global Color, Additives and Inks 2014 Revenues: $0.9 Billion Solutions United States 44% Europe 36% Asia 12% Latin America 6% Canada 2% 2014 Revenue by Industry Segment Expanding Profits Operating Income % of Sales 20%+ Packaging 16.2% 31% Textiles 14.7% 7% 12.2% Industrial 14% Transport
Slide 21: At a Glance: Global Specialty Engineered Materials
At a Glance Global Specialty Engineered Materials 2014 Revenues: $0.6 Billion Solutions United States 44% Europe 33% Asia 19% Latin America 2% Canada 2% 2014 Revenue by Industry Segment Expanding Profits Appliances 4% Operating Income % of Sales 20%+ Wire & Cable Building & Packaging Transportation
Slide 22: At a Glance: Designed Structures and Solutions
At a Glance Designed Structures and Solutions 2014 Revenues: $0.6 Billion Solutions United States 96% Canada 4% 2014 Revenue by Industry Segment Expanding Profits Appliances 2% Building & Operating Income % of Sales Transportation Construction 12-14% 30% 8% Consumer 5% 7.3% Healthcare 5.6% Packaging
Slide 23: At a Glance: Performance Products and Solutions
At a Glance Performance Products and Solutions 2014 Revenues: $0.8 Billion Solutions United States 80% Canada 14% Latin America 4% Asia 2% 2014 Revenue by Industry Segment Expanding Profits Consumer 5% Electrical & Operating Income % of Sales Building & Electronics Construction 3% 10-12% 33% Healthc
Slide 24: At a Glance: Distribution
At a Glance Distribution 2014 Revenues: $1.1 Billion Key Suppliers Electrical & Electronics 6% Healthcare 23% Consumer Building & 13% Industrial Construction 15% 5% Appliances 6% Transportation Packaging 25% 4% Wire & Cable 3% ROIC Expanding Profits Operating Income % of Sales 50% 6.4% 6.5-7.5% 5.6%
Slide 25: Plastics: Key to Future Sustainable Development
Plastics: Key to Future Sustainable Development 2 lbs Plastic Requires 91% less energy to = recycle a pound of plastic versus 3 lbs aluminum a pound of paper or 8 lbs steel or 27 lbs glass 33% less material by weight than aluminum 75% less material by weight than steel 93% less material by weight th
Slide 26: Commitment to Operational Excellence
Commitment to Operational Excellence On-Time Delivery World’s Best Start-up World’s Best Business Program for Lean Six Sigma Process Excellence 93% Deployment in 2009* Program in 2012* 81% 2006 2014 Working Capital % of Sales 16.2% 9.9% Four consecutive years – CFO Magazine Best Working Capital Ma
Slide 27: Application Examples
Application Examples PolyOne Corporation Page 27
Slide 28: PET Bottling Technology
PET Bottling Technology Market Opportunity $1.5 billion attractive, growing market Additives improve performance and reduce cost through light-weighting, reduced waste, faster Shelf-life extension cycle times, and extended shelf life of finished product Weight reduction Aligned with megatrend
Slide 29: Authentication Technology
Authentication Technology • Includes formulation and consultative services to assist manufacturers and brand owners in positively identifying their finished goods • Protects brand equity & consumer welfare • Reduces exposure to unwarranted recall expenses • Secures supply chain integrity – support f
Slide 30: 2015 Range Rover Evoque Interior
2015 Range Rover Evoque Interior • Color harmonization across 15 unique color-and-polymer combinations • Eliminated need for multiple pre- colored materials • Reduced Land Rover’s working capital PolyOne Corporation Page 30
Slide 31: CT Scanner
CT Scanner • Reduced health and environmental impact • System cost reduction • Radiation-shielding performance • Parts consolidation • Design freedom PolyOne Corporation Page 31
Slide 32: Metal Replacement Solutions
Metal Replacement Solutions • Replaces metal in LED lighting • Extends LED durability and life span eliminating hot spots • Greater design flexibility with fewer parts • Weight reduction • Simplifies manufacturing and lowers total production cost PolyOne Corporation Page 32
Slide 33: Next Generation Solar Charger
Next Generation Solar Charger • Ginkgo Solar Tree charger utilizing our unique reSound™ material • reSound™ is a durable material consisting of 50% bio-derived plastic and 50% traditional petroleum-based plastic • Use of reSound™ reduced the carbon footprint for this product by 35% • reSound™ Is cla
Slide 34: High-Barrier Packaging Containers
High-Barrier Packaging Containers • Capability to extrude up to 13 layers • Strong oxygen and moisture vapor transmission protection • Can be made symmetrical or asymmetrical to meet customized needs of broad variety of applications • Barrier protection and superior organoleptic properties PolyOne C
Slide 35: Aerospace Applications
Aerospace Applications • Leading provider of specialty materials for the aerospace industry • Typical applications Mil-spec aircraft windows, canopies, windscreens, instrument panels, wingtip lenses Interior – gallery furnishings, tray tables, arm rests, trim strips, joint/edge coverings • Benef
Slide 36: Schedule I Reconciliation of Non-GAAP Financial Measures
Schedule I Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in millions, except per share data) Below is a reconciliation of non-GAAP financial measures to the most directly comparable measures calculated and presented in accordance with U.S. GAAP. Senior management uses operating
Slide 37: Adjusted EPS Reconciliation
Adjusted EPS 2006Y* 2007Y* 2008Y* 2009Y* 2010Y 2011Y 2012Y 2013Y 2014Y Net income attributable to PolyOne common shareholders $ 130.9 $ 40.9 $ (417.0) $ 106.7 $ 152.5 $ 153.4 $ 53.3 $ 94.0 $ 78.0 Joint venture equity earnings, after tax (68.5) (26.1) (20.8) (19.0) (14.7) (3.7) - - - Special items, a
Slide 38: Net Debt to Adjusted EBITDA Calculation
Net debt to adjusted EBITDA is calculated as follows: Trailing Twelve Three Months Twelve Months Three Months Months (TTM) Ended Ended Ended Ended (In millions) March 31, 2014 December 31, 2014 March 31, 2015 March 31, 2015 Short-term portion and current portion of $ 12.8 $ 61.8 $ 61.9 long-term deb