Slide 1: PolyOne Investor Presentation August 2018
POLYONE INVESTOR PRESENTATION AUGUST 2018
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS • • • • • • • • • 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 To be be the the world’s world’s premier premier provider 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 0.57 0.54 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD PolyOne Corporation 5
Slide 6: PolyOne: 2017 Revenue $3.2 Billion
POLYONE 2017 REVENUE | $3.2 BILLION Segment End Market Geography PolyOne Europe Distribution Transportation Industrial 14% 18% United States Color 34% 16% 59% Additives & Inks 26% Asia 10% Appliance Building & 5% Construction 12% Electrical & Electronics 6% Latin America 9% Specialty Wire & Cable Co
Slide 7: Proof of Performance
PROOF OF PERFORMANCE ADJUSTED EPS EXPANSION 2006 2017 $2.21 “Where we were” “Where we are” CONSECUTIVE 8 $1.80 $1.96 $2.06 ROIC** Operating Income 5.0% 14.0% YEARS % of Sales $1.31 Color, Additives & Inks 1.7% 15.5% $1.00 Specialty Engineered Materials 1.1% 12.1% $0.82 Performance Products $0.68 & S
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 6-8% PEOPLE PRODUCTS PLANET PERFORMANCE PolyOne Corporation 8
Slide 9: Investment in Commercial Resources Driving Growth
INVESTMENT IN COMMERCIAL RESOURCES DRIVING GROWTH Increased commercial headcount Generating opportunities 35% R&D / Technical Marketing Sales 25% 633 1,000 504 + 23% $1.0B 157 Enhancing efficiency 130 + 18% 689 531 8% + 28% 20% 2014 Q2 2018 PolyOne Corporation 9
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 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 12: New Resources Fueling the Future
NEW RESOURCES FUELING THE FUTURE 2017 $4.0 billion 2014 $3.0 billion +34% POLYONE SALES FUNNEL PolyOne Corporation 12
Slide 13: 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 13
Slide 14: Innovation
INNOVATION Innovation comes from Research & Development Spend $52 Customization 55% $20 2006 2017 Vitality Index 38% M&A 30% Innovation Pipeline 12% 15% 2006 2017 PolyOne Corporation 14
Slide 15: Horizons of Development
3 HORIZONS OF DEVELOPMENT INNOVATION Market Transformational Adjacent Core Technical PolyOne Corporation 15
Slide 16: Innovation Pipeline
INNOVATION PIPELINE Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Breakthrough 10 4 8 6 Platform 5 5 5 2 1 Derivative 11 7 5 4 1 Frame Build Prototype Scale-up & Test Commercial Opportunity Business Case Market Launch (since 2015) FLAME ADVANCED THERMOPLASTIC BARRIER COLORANT RETARDANT COMPOSITES ELASTOME
Slide 17: Innovation Spotlight: Composites
INNOVATION SPOTLIGHT: COMPOSITES PolyOne Corporation 17
Slide 18: Composites Refresher
COMPOSITES REFRESHER Fiber Composite Polymer PolyOne Corporation 18
Slide 19: Strategic Investment History
STRATEGIC INVESTMENT HISTORY Thermoplastic Composites Continuous Continuous Fiber Thermosets Fiber Thermosets Long Fiber Reinforced Long Fiber Thermoplastics Reinforced Thermoplastics 2009 2011 2012 2015 2016 2018 PolyOne Corporation 19
Slide 20: Composites in Transportation
COMPOSITES IN TRANSPORTATION RAIL WATERCRAFT HEAVY TRUCK PolyOne Corporation 20
Slide 21: Invest-to-Grow M&A Strategy
INVEST-TO-GROW M&A STRATEGY Safety Technology Geography Service People Financial 8-10% with ability to double PolyOne Corporation 21
Slide 22: Invest-to-Grow M&A Playbook
INVEST-TO-GROW M&A PLAYBOOK Invest in commercial resources 18-20% Innovate with operating Implement LSS to combined margins drive efficiency portfolio improvements Leverage Safety Retain PolyOne’s employees global reach First! Capture Cross-sell Protect customers sourcing & blend Phase 3 synergies t
Slide 23: Invest-to-Grow Proof of Performance
INVEST-TO-GROW PROOF OF PERFORMANCE Established Acquisitions (> 7 years) Commercial Operating Operating Resources Income Margins ($ in millions) $90 20% 335 + 40% + 150% + 900 bps $36 11% 243 At Acquisition Today At Acquisition Today At Acquisition Today PolyOne Corporation 23
Slide 24: Invest-to-Grow Driving the Future
INVEST-TO-GROW DRIVING THE FUTURE Recent Acquisitions Commercial Operating Operating Resources Income Margins ($ in millions) 206 $60 18-20% 144 113 $18 8% $16 7% At Acquisition Today Goal At Acquisition Today Goal At Acquisition Today Goal PolyOne Corporation 24
Slide 25: Strong Pipeline
STRONG PIPELINE DRIVEN BY FRAGMENTED MARKET Average # of Rationale Company Size Possibilities • <$50M • • • $50M–$200M • • • • >$200M • PolyOne Corporation 25
Slide 26: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS OVER $1 BILLION SINCE 2011 Cumulative Share Repurchases Increasing Annual Dividend 3-Year Dividend Plan $809M $750 $0.70 $600 $0.58 $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 2017 2018 201
Slide 27: ROIC Drives Shareholder Return
ROIC DRIVES SHAREHOLDER RETURN 16-17% 15.0% 14.0% 6.3% 2009 2017 Platinum Vision Updated Expectations PolyOne Corporation 27
Slide 28: Why Invest in PolyOne?
WHY INVEST IN POLYONE? THE NEW POLYONE: A SPECIALTY GROWTH COMPANY PolyOne Corporation 28
Slide 29: Service: The Timeless Differentiator
SERVICE: THE TIMELESS DIFFERENTIATOR PolyOne Corporation 29
Slide 30: 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 30
Slide 31: 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 31
Slide 32: LSS Customer First
LSS CUSTOMER FIRST Customer Projects 2014 2017 2 85 PolyOne Corporation 32
Slide 33: 3D Printing
3D PRINTING BRINGING NEW IDEAS TO LIFE PolyOne Corporation 33
Slide 34: 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 34
Slide 35: Segment Highlights
SEGMENT HIGHLIGHTS INNOVATING WITH POLYONE PolyOne Corporation 35
Slide 36: Color, Additives & Inks: End Markets & Solutions
COLOR, ADDITIVES & INKS END MARKETS & SOLUTIONS Industrial Packaging 14% 27% Textiles 12% Solid Liquid Colorants Colorants Appliance 3% Electrical & Electronics Building & 3% Construction Healthcare 10% 6% Consumer 7% Wire & Cable Transportation 10% 8% Performance Screen Additives Printing Inks Poly
Slide 37: Color, Additives & Inks: 2017 Revenue $893 Million
COLOR, ADDITIVES & INKS 2017 REVENUE | $893 MILLION Revenue by Region Operating Income & Margin 15.5% Canada 12.2% 1% Europe $139 32% United States Asia 46% 15% 5.5% $104 Mexico 4% Brazil 0.9% 2% $25 $4 2005 2009 2013 2017 PolyOne Corporation 37
Slide 38: Specialty Engineered Materials: End Markets & Solutions
SPECIALTY ENGINEERED MATERIALS END MARKETS & SOLUTIONS Transportation Consumer 19% 20% Building & Construction 3% Appliance Electrical & 4% Electronics 15% Packaging Engineered Advanced Thermoplastic 7% Formulations Composites Elastomers Industrial 8% Wire & Cable 13% Healthcare 11% PolyOne Corporat
Slide 39: Specialty Engineered Materials: 2017 Revenue $624 Million
SPECIALTY ENGINEERED MATERIALS 2017 REVENUE | $624 MILLION Revenue by Region Operating Income & Margin 12.1% Canada 2% Europe 9.3% $76 28% Asia United 22% States 5.1% $57 48% 0.1% $21 2005 2009 2013 2017 PolyOne Corporation 39
Slide 40: Performance Products & Solutions: End Markets & Solutions
PERFORMANCE PRODUCTS & SOLUTIONS END MARKETS & SOLUTIONS Industrial Building & 18% Construction 30% Specialty Vinyl Flame Retardant Solutions Polymers Healthcare 1% Transportation Electrical & 16% Electronics 3% Consumer 5% Packaging Wire & Cable 5% 15% Appliance 7% Healthcare Smart Device Formulati
Slide 41: Performance Products & Solutions: 2017 Revenue $721 Million
PERFORMANCE PRODUCTS & SOLUTIONS 2017 REVENUE | $721 MILLION Revenue by Region Operating Income & Margin 10.7% 7.2% Canada $77 16% United Asia 3.6% States 2% 77% $56 Mexico 4.6% 5% $40 $33 Sales $886 $668 $773 $721 2005 2009 2013 2017 PolyOne Corporation 41
Slide 42: Distribution: 2017 Revenue $1.2 Billion
DISTRIBUTION END MARKETS & SUPPLIERS 2017 Revenue | $1.2 Billion Operating Income & Margin 6.3% Transportation Healthcare 23% 22% 5.9% $73 4.0% Wire & Cable $63 2% Packaging 3% 2.9% Building & Industrial Construction 18% 4% Electrical & Electronics $25 6% Appliance $20 Consumer 7% 15% 2005 2009 2013
Slide 43: Target End Markets & Application Examples
TARGET END MARKETS & APPLICATION EXAMPLES PolyOne Corporation 43
Slide 44: 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 45: 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 46: Target End Markets: Consumer
Target End Markets… Consumer Elastomeric Grips and Handles Polymer Colorants Thermally Conductive Components Structural Composite Components
Slide 47: 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 48: Luxury Packaging
GravitechTM Density Modified Polymers Luxury Packaging
Slide 49: Optimize Color Usage
OnColorTM Super Concentrates Optimize Color Usage
Slide 50: Combat Bacteria Formation
WithStandTM Antimicrobial Technology Combat Bacteria Formation
Slide 51: Medical Device Housings
Chemically Resistant Engineered Polymers Medical Device Housings
Slide 52: Color & Design Services
Color & Design Services
Slide 53: Outdoor Applications
Outdoor Applications
Slide 54: 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 v Extrusion-spun fibers colored via solid masterbatch
Slide 55: Smart Home Devices
ResilienceTM Vinyl Solutions Smart Home Devices
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