Avient Corporation · NYSE:AVNT
Avient — PolyOne — RW Baird 2015 Industrial Conference
36 slides from Avient's conference presentation, November 2015
Slide 1: PolyOne Investor Presentation
PolyOne Investor Presentation RW Baird 2015 Industrial Conference November 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 Adjusted EPS Packaging $1.80 14% Industrial 14% Transportation 20% $1.31 Healthcare $1.00 11% Wire & Cable $
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%+ 66% 40% 65% 62% 43% 34% 20% 0% 2% 2005 2008 2010 2013 2014 YTD 2015 2020 Specialty OI $5M $46M $87M $195M $242M $183M Platinum Vision JV's Performance Products & Sol
Slide 7: Confirmation of Our Strategy
Confirmation of Our Strategy Specialization Globalization Operational Commercial Excellence Excellence Driven by our core values of Collaboration, Innovation and Excellence, we are the world’s premier provider of specialized polymer materials, services and solutions PolyOne Corporation Page 7
Slide 8: Proof of Performance & 2020 Goals
Proof of Performance & 2020 Goals 2006 YTD 2015 2020 “Where we were” “Where we are” Platinum Vision 1) Operating Income % Specialty: Global Color, Additives & Inks 1.7% 17.2% 20%+ Global Specialty Engineered Materials 1.1% 15.1% 20%+ Designed Structures & Solutions 1.4% (2012) 3.5% 12 – 14% Performa
Slide 9: Innovation Drives Earnings Growth
Innovation Drives Earnings Growth Research & Development Specialty Platform Specialty Platform Spending Vitality Index Progression* Gross Margin % ($ millions) 28% 43% $52 14% $20 12% 2006 TTMTTM 9/30/15 2006 TTMTTM 9/30/15 2006 TTMTTM 9/30/15 Specialty Vitality Index Target ≥ 35% *Percentage of Spe
Slide 10: Innovation Pipeline Potential
Innovation Pipeline Potential Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Breakthrough 5 1 12 9 1 Platform 6 7 4 6 6 Derivative 1 2 7 4 3 Frame Build Prototype Scale-up & Test Commercial Opportunity Business Case Market Launch Number of Projects 12 10 23 19 10 74 Specialty Addressable Market - - $1,150
Slide 11: Innovation Initiatives
Innovation Initiatives Lightweighting with Advanced Composites Expansion in Consumer Markets $$$ $$ $ Increasing Healthcare Penetration New Market Development High Temperature Polymers PolyOne Corporation Page 11
Slide 12: Design and Service as a Differentiator
Design and Service as a Differentiator Right Material & Color Desired Product Design Appropriate Manufacturing Process Connecting the Dots with iQ Design Labs and Delivering Concept to InVisiO Color Design Commercialization PolyOne Corporation Page 12
Slide 13: Customer First Through World-Class Service
Customer First Through World-Class Service Strengthening relationships through: Providing LSS services to small/medium sized customers • Supporting customers who lack their own formal process improvement initiatives Providing training in Customer Centric Selling Skills with customers’ sales forc
Slide 14: Debt Maturities & Pension Funding
Debt Maturities & Pension Funding $800 Debt Maturities Pension Funding** As of September 30, 2015 As of September 30, 2015 ($ millions) 97% $700 100% $600 $600 90% 80% $500 $400 70% $400 60% $317 60% $300 50% $200 $121 40% $100 30% $49 $0 20% 2015 2018 2020 2023 2008 Q3 2015 Coupon Rate: 7.500% Vari
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 nearly marketing, and 2.4 million shares in Q3 technical capabilities 2015 Investing in operational Repurchased 14.8 and LSS initiatives million shares since ~75% of capital early
Slide 16: 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 17: Appendix
Appendix PolyOne Corporation Page 17
Slide 18: Q3 2015 Financial Highlights
Q3 2015 Financial Highlights GCAI Operating Profit Color Additives & Inks operating $40 $35 $29 $30 margin reaches record third quarter $30 $19 $20 $13 level of 17.3% $10 $0 Q3'11 Q3'12 Q3'13 Q3'14 Q3'15 GSEM Operating Profit Specialty Engineered Materials $22 $20 operating margin grew 210 basis
Slide 19: 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 17.2% 31% Textiles 14.7% 7% 12.2% Industrial 14% Transport
Slide 20: 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 21: 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 22: 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 23: 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 52% Operating Income % of Sales 6.4% 6.6% 6.5-7.5%
Slide 24: 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 25: 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% Five consecutive years – CFO Magazine Best Working Capital Ma
Slide 26: Application Examples
Application Examples PolyOne Corporation Page 26
Slide 27: 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 Source: Outdoor In
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: 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 sensory properties PolyOne Corpor
Slide 34: 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 35: Reconciliation of Non-GAAP Financial Measures (Unaudited)
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 income excl
Slide 36: Adjusted EPS
Adjusted EPS 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 Net income attributable to PolyOne common shareholders $ 16.0 $ 19.4 $ 23.2 $ 32.3 $ 44.5 Special items, after tax(1) 3.1 5.3 10.5 13.2 12.6 Tax adjustments(2) (0.3) 0.1 1.8 (0.1) (9.6) Adjusted net income $ 18.8 $ 24.8 $ 35.5 $ 45.4 $ 47.5 Dilute