Slide 1: PolyOne Investor Presentation March 2019
POLYONE INVESTOR PRESENTATION MARCH 2019
Slide 2: Forward Looking Statements
F O R W A R D L O O K I N G S T A T E M E N TS • • • • • • • • • • PolyOne Corporation 2
Slide 3: Use of Non-GAAP Measures
USE OF NON-GAAP MEASURES • • • PolyOne Corporation 3
Slide 4: Vision and Core Values
VISION CORE VALUES To be To be the the world’s world’s premier provider premier 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 PolyOne Corporation 5
Slide 6: PolyOne 2018 Revenue $3.5 Billion
POLYONE 2018 REVENUE | $3.5 BILLION Segment End Market Geography Color Transportation Industrial Europe Distribution 17% United States Additives & 15% 16% 35% 57% Inks 29% Appliance Asia 5% Healthcare 10% 13% Electrical & Electronics 6% Latin America Wire & Cable Consumer 10% Specialty 10% 12% Engin
Slide 7: Proof of Performance
PROOF OF PERFORMANCE ADJUSTED EPS EXPANSION $2.43 $2.21 2006 2018 CONSECUTIVE 9 $1.80 $1.96 $2.06 ROIC** Operating Income 5.0% 14.1% 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 600K-1M Double digit Innovate annual EPS growth strategic acquisitions Lean Six Sigma Double acquired commercial excellence margins commercial resources 5-7% PEOPLE PRODUCTS PLANET PERFORMANCE PolyOne Corporation 8
Slide 9: Investment in Commercial Resources Driving Growth
I N V E S T M E N T I N C O M M E R C IA L 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 Organ
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 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 $56 Customization 55% $20 2006 2018 Vitality Index 35% M&A 30% Innovation Pipeline 12% 15% 2006 2018 PolyOne Corporation 13
Slide 14: Horizons of Development
3 HORIZONS OF DEVELOPMENT INNOVATION Market Transformational Adjacent Core Technical PolyOne Corporation 14
Slide 15: Innovation Pipeline
INNOVATION PIPELINE Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Breakthrough 5 2 6 4 3 Platform 10 5 11 4 2 Derivative 7 5 8 0 2 Frame Build Prototype Scale-up & Test Commercial Opportunity Business Case Market Launch (since 2017) FLAME ADVANCED THERMOPLASTIC BARRIER COLORANT RETARDANT COMPOSITES ELASTO
Slide 16: Innovation Spotlight: Composites
INNOVATION SPOTLIGHT: COMPOSITES PolyOne Corporation 16
Slide 17: Composites Refresher
COMPOSITES REFRESHER Fiber Composite Polymer PolyOne Corporation 17
Slide 18: Strategic Investment History
STRATEGIC INVESTMENT HISTORY Thermoplastic Composites Continuous Fiber Thermosets Continuous Fiber Thermosets Long Fiber Reinforced Long Fiber Thermoplastics Reinforced Thermoplastics 2009 2011 2012 2015 2016 2018 2019 PolyOne Corporation 18
Slide 19: Composites in Transportation
COMPOSITES IN TRANSPORTATION RAIL WATERCRAFT HEAVY TRUCK PolyOne Corporation 19
Slide 20: Fiber-Line Highlights
FIBER-LINE HIGHLIGHTS Fiber Processing Polymer Formulation Capabilities Capabilities • • • Fiber-Line • • • • • • • • • • • • Customer Value • • • $100M • PolyOne Corporation 20
Slide 21: PolyOne Applications in Fiber Optic Cables
POLYONE APPLICATIONS IN FIBER OPTIC CABLES • • • • • • • • • PolyOne Corporation 21
Slide 22: Fiber Optical Growth Drivers
FIBER OPTICAL GROWTH DRIVERS 5G vs. 4G 5G Networks 10x 8x PolyOne Corporation 22
Slide 23: Invest-to-Grow M&A Strategy
INVEST-TO-GROW M&A STRATEGY Safety Technology Geography Service People Financial 8-10% with ability to double PolyOne Corporation 23
Slide 24: Invest-to-Grow M&A Playbook
INVEST-TO-GROW M&A PLAYBOOK Invest in commercial resources 18-20% Innovate with operating Implement LSS to combined margins drive efficiency portfolio improvements Leverage Safety Retain PolyOne’s employees global reach First! Capture Cross-sell Protect customers sourcing & blend Phase 3 synergies t
Slide 25: Invest-to-Grow Proof of Performance
INVEST-TO-GROW PROOF OF PERFORMANCE Established Acquisitions (> 7 years) Commercial Operating Operating Resources Income Margins ($ 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 • <$50M • • • $50M–$200M • • • • >$200M • PolyOne Corporation 27
Slide 28: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS OVER $1.2 BILLION SINCE 2011 Cumulative Share Repurchases Increasing Annual Dividend 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 2014 2015 2016
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 PolyOne Corporation 30
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 Customer Projects 2014 2018 2 104 PolyOne Corporation 34
Slide 35: 3D Printing
3D PRINTING BRINGING NEW IDEAS TO LIFE PolyOne Corporation 35
Slide 36: ColorMatrix Select
COLORMATRIX SELECT™ M O N T H M O N T H M O N T H M O N T H 99.9% M O N T H M O N T H 6 hours up to 24 weeks PolyOne Corporation 36
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 2018 Revenue
COLOR, ADDITIVES & INKS 2018 REVENUE | OVER $1 BILLION Revenue by Region Operating Income & Margin 15.1% Canada 12.2% 1% Europe $159 35% United States Asia 5.5% 45% 14% $104 Mexico 3% South 0.9% America 2% $25 $4 2005 2009 2013 2018 PolyOne Corporation 39
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 2018 Revenue
SPECIALTY ENGINEERED MATERIALS 2018 REVENUE | $646 MILLION Revenue by Region Operating Income & Margin 11.2% Canada 2% Europe 9.3% 28% $72 Asia United States 24% 5.1% 46% $57 0.1% $21 2005 2009 2013 2018 PolyOne Corporation 41
Slide 42: Performance Products & Solutions: End Markets & Solutions
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 2018 Revenue
PERFORMANCE PRODUCTS & SOLUTIONS 2018 REVENUE | $736 MILLION Revenue by Region Operating Income & Margin 10.0% 7.2% Canada 15% $74 United Asia 3.6% States 2% 78% $56 Mexico 4.6% 5% $40 $24 2005 2009 2013 2018 PolyOne Corporation 43
Slide 44: Distribution
DISTRIBUTION END MARKETS & SUPPLIERS 2018 Revenue | $1.3 Billion Operating Income & Margin Healthcare Transportation 27% 5.6% 22% $71 5.9% $63 Wire & Cable 2% Packaging 3% Building & Industrial Construction 18% 4.0% 5% Electrical & 2.9% $25 Electronics $20 5% Appliance Consumer 6% 12% 2005 2009 2013
Slide 45: Overview of Raw Material Purchases
OVERVIEW OF RAW MATERIAL PURCHASES PolyOne Corporation 45
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
Slide 52: Optimize Color Usage
OnColorTM Super Concentrates Optimize Color Usage
Slide 53: Combat Bacteria Formation
WithStandTM Antimicrobial Technology Combat Bacteria Formation
Slide 54: Medical Device Housings
Chemically Resistant Engineered Polymers Medical Device Housings
Slide 55: Color & Design Services
Color & Design Services
Slide 56: Outdoor Applications
Outdoor Applications
Slide 57: Fiber Colorants
= ColorMatrix Fiber Colorant Solutions Y Proprietary advanced liquid color formulations and equipment enable greater efficiency and productivity Y Eliminates aqueous dyeing and its associated wastewater treatment = Solid Color Concentrates Y Extrusion-spun fibers colored via solid masterbatch
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