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| 8-K - 8-K - OMNOVA SOLUTIONS INC | a3_9x18xinvestor8k.htm |
NYSE LISTED: “OMN”
Global Innovator of Performance-Enhancing Chemistries
and Surfaces
Investor Presentation – Year-End 2017
NYSE: “OMN”
Cautionary Statements
› Forward-Looking Statements
Year End 2017INVESTOR PRESENTATION |2
This presentation includes descriptions of OMNOVA's current business, operations, assets and other matters affecting the Company as well as "forward-looking statements" as defined by federal securities laws. All forward-looking statements by the Company,
including verbal statements, are intended to qualify for the protections afforded forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current expectation, judgment, belief,
assumption, estimate or forecast about future events, circumstances or results and may address business conditions and prospects, strategy, capital structure, debt and cash levels, sales, profits, earnings, markets, products, technology, operations, customers,
raw materials, claims and litigation, financial condition, and accounting policies among other matters. Words such as, but not limited to, "will," "may," "should," "projects," "forecasts," "seeks," "believes," "expects," "anticipates," "estimates," "intends," "plans,"
"targets," "optimistic," "likely," "would," "could," "committed," and similar expressions or phrases identify forward-looking statements.
All descriptions of OMNOVA's current business, operations and assets, as well as all forward-looking statements, involve risks and uncertainties. Many risks and uncertainties are inherent in business generally. Other risks and uncertainties are more specific to
the Company's businesses and strategy, or to any new businesses the Company may enter into or acquire. There also may be risks and uncertainties not currently known to the Company. The occurrence of any such risks and uncertainties and the impact of
such occurrences is often not predictable or within the Company's control. Such impacts could adversely affect the Company's business, operations or assets as well as the Company's results and the value of your investment in the Company. In some cases,
such impact could be material. Certain risks and uncertainties facing the Company are described below or in the Company's Quarterly Report on Form 10-Q and Annual Report and the value of your investment in the Company on Form 10-K.
All written and verbal descriptions of OMNOVA's current business, operations and assets and all forward-looking statements attributable to the Company or any person acting on the Company's behalf are expressly qualified in their entirety by the risks,
uncertainties, and cautionary statements contained or referenced herein. All such descriptions and any forward-looking statement speak only as of the date on which such description or statement is made, and the Company undertakes no obligation, and
specifically declines any obligation, other than that imposed by law, to publicly update or revise any such description or forward-looking statements whether as a result of new information, future events or otherwise.
The Company's actual results and the value of your investment in OMNOVA may differ, perhaps materially, from expectations due to a number of risks and uncertainties including, but not limited to: (1) the Company's exposure to general economic, business,
and industry conditions; (2) the risk of doing business in foreign countries and markets; (3) changes in raw material prices and availability; (4) the highly competitive markets the Company serves and continued consolidations among its competitors and customer
base; (5) extraordinary events such as natural disasters, political disruptions, terrorist attacks and acts of war; (6) extensive and increasing governmental regulation, including environmental, health and safety regulations; (7) the Company's failure to protect its
intellectual property or defend itself from intellectual property claims; (8) claims and litigation; (9) changes in accounting policies, standards, and interpretations; (10) the actions of activist shareholders; (11) the Company's inability to achieve or achieve in a timely
manner the objectives and benefits of cost reduction initiatives; (12) the Company's ability to develop and commercialize new products at competitive prices; (13) the Company's use of purchase orders rather than long-term contracts for most of its business; (14)
the disproportionate impact of certain product lines on the Company's operating profitability; (15) customer credit risk; (16) the Company's ability to identify and complete strategic transactions; (17) the Company’s ability to successfully integrate acquired
companies; (18) unanticipated capital expenditures; (19) risks associated with the use, production, storage, and transportation of chemicals; (20) information system failures and breaches in security; (21) continued increases in healthcare costs; (22) the
Company's ability retain or attract key employees; (23) the Company's ability to renew collective bargaining agreements with employees on acceptable terms and the risk of work stoppages; (24) the Company's contribution obligations under its U.S. pension plan;
(25) the Company's reliance on foreign financial institutions to hold some of its funds; (26) the effect of goodwill impairment charges; (27) the volatility in the market price of the Company’s common shares; (28) the Company's substantial debt position; (29) a
decision to incur additional debt; (30) the operational and financial restrictions contained in the Company's debt agreements; (31) the effects of a default under the Company's term loan or revolving credit facility; (32) the Company's ability to generate sufficient
cash to service its outstanding debt; and (33) the Company's subsidiaries' ability to provide the Company with cash.
OMNOVA Solutions provides greater detail regarding these risks and uncertainties in its 2017 Form 10-K and subsequent filings, which are available online at www.omnova.com and www.sec.gov.
OMNOVA Solutions Inc. is a global innovator of performance-enhancing chemistries and surfaces used in products for a variety of commercial, industrial and residential applications. As a strategic business-to-business supplier, OMNOVA provides The Science
in Better Brands, with emulsion polymers, specialty chemicals, and functional and decorative surfaces that deliver critical performance attributes to top brand-name, end-use products sold around the world. OMNOVA's sales for the trailing twelve months ended
November 30, 2017, were approximately $783 million. The Company has a global workforce of approximately 1,800 employees. Visit OMNOVA Solutions on the internet at www.omnova.com.
NON-GAAP FINANCIAL MEASURES
This presentation includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission, such as Adjusted Segment Operating Profit, Adjusted Segment EBITDA, Adjusted Income, Adjusted Diluted Earnings Per Share from
Adjusted Income, Adjusted Consolidated EBITDA and Net Leverage Ratio. For a reconciliation to the most directly comparable GAAP financial measures, refer to the Appendix.
NYSE: “OMN”
About OMNOVA Solutions
› Global technology-based supplier of customized
performance-critical products
› Established in 1999; formerly part of General
Tire/GenCorp and Goodyear
› Deep focus on Research and Development (R&D) and
Innovation across all our businesses
› Diverse end-markets with synergies in specialty
chemistries and performance materials
› World Class manufacturing facilities, optimized through
LEAN SixSigma to achieve operational excellence
~1,800
Employees
Facilities in
7 Countries
Strong
Technology
Focus
Sales in Over
90 Countries
+
Year End 2017INVESTOR PRESENTATION |3
NYSE: “OMN”
Our Vision and Values
To be a mid-sized premier global specialties provider delivering innovative,
tailored solutions to win leading positions in targeted high value markets.
Agility
We swiftly and efficiently adapt to
changing environments
We make timely, data-driven decisions
Integrity
Our legal, regulatory and ethical behavior is
impeccable
We are candid, transparent and respectful
Safety
We promote a safety-first culture
PRODUCE PRODUCT SAFELY – and
encourage safe working conditions
and behaviors
Accountability
We own our work and our results
We are committed to development –
ourselves and others
OMNOVA
VALUES
Year End 2017INVESTOR PRESENTATION |4
NYSE: “OMN”
Long Heritage as Solutions Provider
› More than a century of Transformation and Innovation
1915 1952
CHEMICAL/PLASTICS
DIVISION
1984 1999
THE GOODYEAR TIRE &
RUBBER COMPANY
1898 1941
GOODYEAR CHEMICALS
2001 2010 2015 2017
NEW FLUID
SOLUTIONS
CREOLE
CHEMICALS
Year End 2017INVESTOR PRESENTATION |5
NYSE: “OMN”
OMNOVA Locations
› An expanding geographic footprint
A GLOBAL COMPANY WITH MANUFACTURING ON THREE CONTINENTS
● World Headquarters
● Chemicals Manufacturing
● Surfaces Manufacturing
● Sales, Technology and / or Distribution
Shanghai (Regional HQ)
Rayong, Thailand
London, U.K.
Le Havre, France
Villejust, France
(Regional HQ)
Mumbai, India
Singapore
Caojing, China
Ningbo, China
Monroe, NC
Chester, SC
Calhoun, GA
Fitchburg, MA
Auburn, PA
Jeannette, PA
Green Bay, WI
Akron, OH (Technology Center)
Mogadore/Akron, OH
Beachwood, OH (Headquarters)
Houston, TX
Columbus, MS
Plus Broad Distribution Network
Year End 2017INVESTOR PRESENTATION |
Stafford, TX
6
Dubai, UAE
NYSE: “OMN”
Specialty
Solutions
56%
Performance
Materials
44%
Coatings, Adhesives, Sealants, Elastomers
(C.A.S.E.) │ Laminates and Films │ Nonwovens │
Oil & Gas
OMNOVA at a Glance
OMNOVA consolidated sales for trailing twelve months ended November 30, 2017, represent Company estimates
*Non-GAAP adjusted values, GAAP reconciliation in the Appendix. Excludes corporate expense.7
GROUPINGS REFLECT DISTINCT OPERATING MODELS AND MARKET STRATEGIES
LTM Sales: $783M
LTM Adj. EBITDA: $85M*
Adj. EBITDA Margin: 10.8%*
Sales by end market
Profitable Growth Model:
Growth at >2X underlying market
LTM Sales: $441M
LTM Adj. EBITDA: $75M*
Adj. EBITDA margin: 17.1%*
Sales by segment
Reinforcing Resins │ Antioxidants │ Coated Fabrics
│ Paper & Carpet Chemicals │ Tire Cord
Operational Excellence Model:
Margin Growth and Cash Generation
LTM Sales: $342M
LTM Adj. EBITDA: $32M*
Adj. EBITDA margin: 9.4%*
Specialty Solutions Performance Materials
Higher Growth Markets:
Specialization is valued and more sustainable
More Mature Markets:
OMNOVA leading positions with established
product brands
Personal
Hygiene
8%
Industrial /
Other
11%
Transpor-
tation
17%
Paper and
packaging
15%
Refurbishment &
New Construction
41%
Oilfield
7%
NYSE: “OMN”
Goals Reflect Continuing Transition To Specialty Focus
6.9%
Mid
Teens
* Non-GAAP adjusted values, GAAP reconciliation in the Appendix. Excludes corporate expense.
2014 Goal
Growth:
2X Underlying Specialty Markets
› Specialty Volume Growth
› High Margin New Product
Introductions
› Commercial Excellence
› Cost Reductions
› Value Based Pricing
› Mix Improvement
Market Spectrum
Small, Low Price, Local
Chemical Companies
↓
L
e
v
e
l
o
f
T
e
c
hnolog
y
Willingness to Collaborate and Customize
HighLow
High
↑
Large Global, Vertically
Integrated Chemical
Companies
Market Opportunity
OMNOVA
↓
10.4%
2017
Adjusted Segment
Operating Margin*
8
CAPITALIZING ON UNIQUE OPPORTUNITY IN SPECIALTY SPACE
NYSE: “OMN”
Our Value-Creating Overarching Strategic Priorities
Accelerate
Growth In
Specialty
Businesses
Expand Margins,
Generate Cash
In Mature
Businesses
Portfolio
Optimization
“One OMNOVA”
Excellence
Year End 2017INVESTOR PRESENTATION |9
NYSE: “OMN”
Targeting Specialty Growth Markets
› Higher growth/higher margin businesses
› Significant opportunities to grow share
Strengthening Commercial Excellence
› Integrated sales, marketing and product development
› Cross-selling
› Value based pricing
› Aggressive strategic marketing plans
› Stronger key account value added selling
Strengthening Leadership & Capabilities
› Enhanced organization in place
Strong, Broad-Based Innovation w/ Global Footprint
› Facilities on three continents
› Transformed innovation pipeline
› Tailored solutions
Accelerate Growth in Specialty Businesses
>80%
of revenue
targeted from
specialty
businesses
Year End 2017INVESTOR PRESENTATION |10
NYSE: “OMN”
MARKET
SIZE:*
Specialty Growth: Targeted Markets
› Targeting robust markets with demand for high performance, high margin products
COMMON CHARACTERISTICS: HIGHER MARGIN, LARGE AND GROWING MARKETS, CUSTOMER NEED FOR
DIFFERENTIATION, STRONG OMNOVA NICHE POSITION WITH OPPORTUNITIES FOR GROWTH
ES PC PC PC E
Coatings Adhesives Sealants Elastomers Laminates Nonwovens Oil & Gas
› Masonry
› Intumescent (fire
resistant)
› Direct-to-Metal
› Primers
› Odor and Stain
Blocking
› Wood Treatment
› Tapes
› Release Coatings
› Adhesives
› Construction
Binders
› Roofing
› Caulking
› Casting
› Cement
› Gaskets
› Foam Sealants
› Concrete
› Transportation
› Industrial
› Consumer
Thermoplastic
Products
› Retail Display
› Cabinets
› Food Service
› Kitchen and Bath
› Recreational Vehicles
› Flooring
› Healthcare
› Commercial Furniture
› Diapers
› Adult Incontinence
› Healthcare
› Wipes
› Transportation
› Filtration
› Drilling
› Cementing
› Fracking
>$25.0B >$20.0B >$5.0B >$10.0B >$5.0B >$25.0B >$5.5B
3 – 4% /yr 4 – 5% /yr 3 – 4% /yr 3 – 5% /yr 2 – 3% /yr 3 – 5% /yr 3 – 5% /yr
* Market data based on internal estimates and OMNOVA’s place in the value chain.
** Estimated market growth rate.
C.A.S.E
GROWTH
RATE:**
Year End 2017INVESTOR PRESENTATION |11
NYSE: “OMN”
Diversifying Chemistries & Geographies
› Increased access to specialty markets
Other
Chemistries
SB Latex
Diversifying Chemistries
and Markets
Total OMNOVA
Global Expansion
Total Company Total Company
80%
20%
69%
31%
Pre-2010 2017
87%
11%
2%
21%
11%
87%
15%
2017Pre-2010
Asia
N. America
Europe
Year End 2017INVESTOR PRESENTATION |12
64%
NYSE: “OMN”
2017 New Product Introductions
› Transforming the portfolio to be a leading provider of Sustainable, Greener, SMARTer innovative solutions
Targeting Vitality Index >25% at Specialty Margins
Voice of the
Customer
Sustainable
Solutions
SMART
Technologies
Disruptive
Innovation
2017 New Products
Pliotec PA145 – Acrygen Product
Modification for Rollers
Pliotec SC140 – Base Polymer for Zero
VOC, Direct to Metal Coatings
Year End 2017INVESTOR PRESENTATION |13
Novajet 3800 – Specialty Coating
Binder for Inkjet Print Media
Hydro Pliolite 211 – Base Polymer
Waterborne Intumescent Coatings
GenFlo 3967 – Improved Binder for
Sports Surfaces
OMNAPEL – Hydrophobic Polymer for
Sealants
GenFlo – Binder for Softer Personal
Hygiene Products
SoftWick SF20 – Hydrophilic Surface
Treatment for Nonwovens
GenFlo 6850 – Best-in-class Carpet
Binder
Paint Replacement Films – For Kitchen &
Bath Cabinetry
Premium Woodgrain Paper – For cabinet
exteriors harmonized with wood.
Decorative
Laminates
Pexorate 332 – Rate of Penetration
Enhancer for Drilling
IF-201L – Dispersant for Well Cementing
Oil & Gas
NYSE: “OMN”
Expand Margins, Increase Cash Generation in Performance Materials Businesses
Strengthening Customer Relationships
› Value-based pricing
› Capture growth in carpet and non-carpet flooring
› Working capital optimization
Lowering Our Cost Base
› Realigned manufacturing
› SG&A effectiveness and efficiency
Improving Ability to Serve
› New GM & management team
› Selective innovation
Expand and
grow margins
Increase cash generation
to fund specialty growth
Maintain leadership
positions
Year End 2017INVESTOR PRESENTATION |14
Exiting Commodity Paper in 2018
NYSE: “OMN”
Performance Materials Manufacturing Realignment and SG&A Restructuring
2018:
› Exit Commercial Paper
› Value Pricing
› Antioxidant Investment
› Cost Savings
› Selective Innovation in Carpet
2015 – 2017:
› Realigned Manufacturing Footprint
through facility closures, capacity reductions,
and manufacturing consolidations
› Restructured SG&A Company-Wide
by appointing new leadership and reorganizing
regional and commercial structure
CONTINUED FOCUS ON COST SAVINGS & EFFICIENCY
N. America SB capacity
reduction~300M lbs
N. America SB capacity
utilization (previously 62%)>80%-90%
in annual operating savings
by year end 2017$17-$20M
Year End 2017INVESTOR PRESENTATION |15
NYSE: “OMN”
Portfolio Optimization
M&A
1. Close-in
› Emulsion polymers
› Consolidation opportunities
2. Adjacencies
› Market driven
C.A.S.E.
Nonwovens
Oil & gas
Diversification
› Products
› Markets
› Geographies
› Customers
Strategic Alliances
› Lower investment risk
› Accelerate innovation
› Expand portfolio
› Geographic expansion
Balanced
specialty portfolio
Sustainable earnings
growth
› Joint development &
licensing agreements
› Geographic swaps/tolling
› Manufacturing and/or full
function JVs
Year End 2017INVESTOR PRESENTATION |16
NYSE: “OMN”
Strategic Alliances and M&A to Accelerate Specialty Growth
M&A
Emulsion Polymers
› N.A. SB consolidation
› Specialty acrylics
› Joint development
agreements
› License technology
› Geographic swaps / tolling
› License cost-saving
production technology
› Use contract
manufacturing
› Manufacturing JVs
› License 3rd party
technology
› Full function JVs
› Joint distribution
BENEFITS:
› Profitable growth
and minimal risk
› Accelerates
innovation
› Expands
portfolio
› Low investment
for geographic
expansion New Polymers Selected Additives
TARGET MARKETS
C.A.S.E., Nonwovens, Oil & Gas
Technologye
Technology
Operations &
Supply Chain
TechnologyCommercial
STRATEGIC ALLIANCES
Close-In
Adjacencies
Year End 2017INVESTOR PRESENTATION |17
NYSE: “OMN”
“One OMNOVA” Excellence
Excellence Focus
› Sales
› Innovation
› Marketing
› Operations
Reporting Segment Alignment with
Business Model
› Specialty Solutions
› Performance Materials
Reduced Complexity
› Common processes, tools and systems
› Reduced SG&A >$3M /yr
› Organizational redesign
› Cost competitive manufacturing
Agile, strong
foundation to drive
profitable growth
Year End 2017INVESTOR PRESENTATION |18
NYSE: “OMN”
Adjusted Segment Operating Profit and Adjusted Earnings Per Share (EPS)
STRATEGIC ACTIONS DRIVING IMPROVEMENT IN PROFITABILITY, EARNINGS AND CASH FLOW
$68.4
$81.5
2014 2017
$0.28
$0.56
2014 2017
PM
8.9%
OPM
6.9%
Adjusted Segment Operating Profit* Adjusted EPS*
Year End 2017INVESTOR PRESENTATION |19
* Non-GAAP adjusted values, GAAP reconciliation in the Appendix.
OPM
10.4%
NYSE: “OMN”
Record of Cash Generation and De-Leveraging
Volume growth
› Gaining traction on specialty growth
Refinancing completed in Q3 2016
Reduced gross debt by ~$140M since 2011
Increasing earnings and consistent cash flow driving
down adjusted net leverage
Strong cash conversion driven by:
› Improved earnings
› Low maintenance capex requirement
› Working capital management
› No US cash taxes in near term (Federal N.O.L. $99M)
3.8
0.0
2.0
4.0
6.0
11/2014 11/2015 11/2016 11/2017
OMNOVA Net Adjusted Leverage*
3.5
* Non-GAAP adjusted values, GAAP reconciliation in the Appendix.
(14.8)
19.7
25.3
22.7
-20.0
0.0
20.0
40.0
2014 2015 2016 2017
Cash Flow from Operations less CAPEX
Year End 2017INVESTOR PRESENTATION |20
3.2
3.9
3.2
1.1%
6.7%
1.0%
5.1%
0%
5%
10%
Q1 2017 Q2 2017 Q3 3017 Q4 2017
Specialty Sales Growth Due to Volume YOY
NYSE: “OMN”
Capital Structure / Liquidity / Net Leverage
WEIGHTED AVERAGE COST OF DEBT ~ 5.3% / SUFFICIENT LIQUIDITY
Liquidity
Revolver $72
› Balance Drawn $0
› Letters of Credit $0
Remaining Capacity $72
Cash $88
Total Liquidity $160
Net Leverage Ratio
Total Net Debt $274
LTM EBITDA* $85
Net Leverage Ratio* 3.2x
DEBT = $362*
Foreign Debt & Other
› Capital lease
› Letters of credit
Term Loan B
(excludes deferred financing to 5.0M)
› 2023 maturity
› L+425; floor 1.00%
› Total Net Leverage Ratio Covenant
* Non-GAAP adjusted values, GAAP reconciliation in the Appendix.
As of November 30, 2017 – (in millions)
$348
$17
$346
$16
Year End 2017INVESTOR PRESENTATION |21
NYSE: “OMN”
Goal: Become a Premier Global Innovative Specialty Solutions Provider
Specialty Growth
› Marketing, Innovation and Sales Excellence
› First to market with differentiated, high margin new products
› Key account growth
› Geographic expansion
Continued focus on operational excellence, delivered margin expansion, mix optimization and increased cash generation
Transform the business through organic growth and portfolio optimization in specialties
One OMNOVA to reduce complexity and lead as an agile, innovative specialty solutions provider
GDP+
Growth versus underlying
specialty markets
>15%
Targeted Segment
Operating Profit Margin
>80%
Specialty Markets as
a % of total revenue
Year End 2017INVESTOR PRESENTATION |22
Appendix
› SB Raw Material Costs and Performance Features
› Non-GAAP Financial Measures
› Reconciliations
Year End 2017INVESTOR PRESENTATION |23
NYSE: “OMN”
DESPITE THE RECENT UPTICK, SB LATEX MAINTAINS AN ADVANTAGED POSITION
SB Raw Material Costs and Performance Features Contribute to Greater Cost-in-Use Advantage
Year End 2017INVESTOR PRESENTATION |24
NYSE: “OMN”
Momentum for Strong Continued Earnings Growth and Cash Generation
SIGNIFICANT MARGIN EXPANSION; AND STRONG CASH FLOW
Near-term (2016-2019) drivers
Medium to longer term (2016-2020) drivers
2010 Adj.
EBITDA
Paper & Carpet
Market Erosion
Growth in
Specialty
2014 Adj.
EBITDA
Growth
Paper/Carpet
REVERSED
TREND
Margin Expansion
Cost/Pricing
Growth in Key
Accounts
Further
Geographic
Expansion
Higher Margin from
Improved Specialty Mix
New Product
Development
M&A
Year End 2017INVESTOR PRESENTATION |25
NYSE: “OMN”
Appendix – Non-GAAP Financial Measures
This presentation includes Adjusted Segment Operating Profit, Adjusted Segment EBITDA, Adjusted Income from Continuing Operations Before Income Taxes,
Adjusted Consolidated EBITDA and other financial measures which are Non-GAAP financial measures as defined by the Securities and Exchange Commission.
OMNOVA’s Adjusted Segment Operating Profit is calculated as Segment Operating Profit (Loss) less restructuring and severance expenses, asset impairments and
other items. Adjusted Segment EBITDA is calculated as Adjusted Segment Operating Profit less depreciation and amortization expense less accelerated depreciation.
OMNOVA’s Adjusted Income from Continuing Operations Before Income Taxes is calculated as Adjusted Segment Operating Profit less corporate expenses, interest,
restructuring and severance, asset impairments and other items. OMNOVA’s Adjusted EBITDA is calculated as Adjusted Income from Continuing Operations Before
Income Taxes less interest expense less debt premium and depreciation and amortization expense less accelerated depreciation.
Adjusted Segment Operating Profit and Adjusted Segment and/or Consolidated EBITDA and the other financial measures (collectively, the “Non-GAAP financial
measures”) are not calculated in the same manner by all companies and, accordingly, are not necessarily comparable to similarly titled measures of other companies
and may not be appropriate measures for comparing performance relative to other companies. The Non-GAAP financial measures should not be construed as
indicators of the Company’s operating performance or liquidity and should not be considered in isolation from or as a substitute for net income (loss), cash flows from
operations or cash flow data, which are all prepared in accordance with GAAP. The Non-GAAP financial measures are not intended to represent, and should not be
considered more meaningful than or as an alternative to, measures of operating performance as determined in accordance with GAAP. Management believes that
presenting this information is useful to investors because these measures are commonly used as analytical indicators to evaluate performance and by management to
allocate resources. Set forth in the appendices are the reconciliations of these Non-GAAP financial measures to their most directly comparable GAAP financial
measure.
All appendix results are pro forma reflecting continuing business excluding the sale of the global wallcovering business.
Year End 2017INVESTOR PRESENTATION |26
NYSE: “OMN”
› Appendix 1
Reconciliation of Reported Segment Sales and Operating Profit to Net Sales and Net (Loss) Income
Year End 2017INVESTOR PRESENTATION |27
Three Months Ended Year Ended
November 30, November 30,
(Dollars in millions) 2017 2016 2017 2016
Net Sales
Specialty Solutions $ 111.1 $ 101.4 $ 441.4 $ 404.3
Performance Materials 75.2 85.6 341.7 355.6
Total Net Sales $ 186.3 $ 187.0 $ 783.1 $ 759.9
Segment Operating Profit (Loss)
Specialty Solutions $ 14.3 $ 12.2 $ 59.9 $ 59.8
Performance Materials (18.4) (.1) (12.6) 8.5
Interest expense (5.5) (7.3) (21.5) (24.7)
Corporate expense (5.7) (4.9) (24.5) (25.8)
Corporate severance (.4) (4.9) (2.9) (4.9)
Operational improvement costs — .4 — .8
Asset impairment (.4) — (1.8) —
Debt issuance costs write-off — (1.2) — (2.9)
Acquisition and integration related expenses (.1) (.5) (.3) (.9)
Pension settlement — — (.4) —
Income (Loss) Before Income Taxes (16.2) (6.3) (4.1) 9.9
Income tax expense (76.7) (4.9) (83.7) (10.3)
Net Income (Loss) $ (92.9) $ (11.2) $ (87.8) $ (.4)
Depreciation and amortization $ 7.2 $ 7.1 $ 27.9 $ 30.6
Capital expenditures $ 8.1 $ 9.1 $ 25.1 $ 25.6
NYSE: “OMN”
› Appendix 2
OMNOVA Consolidated Adjusted EBITDA
Year End 2017INVESTOR PRESENTATION |28
(Dollars in millions except per share data) 2013 2014 2015 2016 2017
Sales $ 1,018.1 $ 987.4 $ 838.0 $ 759.9 $ 783.1
Unadjusted Segment Operating Profit $ 79.7 $ 65.4 $ 34.8 $ 68.3 $ 47.3
Segment Excluded Items
Restructuring and severance 5.1 0.9 5.8 3.5 2.3
Asset impairment, facility closure costs and other 2.8 - 20.0 7.2 33.9
Accelerated depreciation on production transfer 1.0 2.2 5.8 3.0 -
Operational improvements costs - - 5.0 (0.4) -
(Gain) loss on notes receivable 0.9 (1.1) - - -
(Gain) on assets sales (5.4) - - - -
Coated fabrics manufacturing transition costs 0.7 - - - -
Enviornmental costs - 1.0 3.0 0.3 (2.0)
Acquisition and integration related expense - 1.1
Vacation policy change - - - (2.8) -
Subtotal for Segment Excluded Items 5.1 3.0 39.6 11.9 34.2
Adjusted Segment Operating Profit $ 84.8 $ 68.4 $ 74.4 $ 80.2 $ 81.5
Adjusted Segment Operating Profit as a % of Sales 8.3% 6.9% 8.9% 10.6% 10.4%
Corporate Expense (21.3) (20.8) (27.6) (33.7) (29.9)
Interest expense (31.9) (32.9) (28.3) (24.7) (21.5)
Corporate Excluded Items
Restructuring and severance - - 0.1 4.9 2.9
Asset impairment, facility closure costs and other - - 0.6 - 1.8
Operational improvements costs - - 0.4 - -
Debt issuance costs write-off 1.5 0.8 0.6 4.9 -
Pension settlement - - - - 0.4
orporate headquarters relocation costs 0.1 0.6 - (0.2) -
Other financing costs - 2.4 1.0 - -
Shareholder activist costs - - 1.9 - -
Acquisition and integration related expense - - 0.4 0.9 0.3
Vacation accrual adjustment - - - (0.6) -
Subtotal for Management Excluded Items 1.6 3.8 5.0 9.9 5.4
Year Ended November 30,
NYSE: “OMN”
› Appendix 2
OMNOVA Consolidated Adjusted EBITDA (continued)
Year End 2017INVESTOR PRESENTATION |29
(Dollars in millions except per share data) 2013 2014 2015 2016 2017
Adjusted Income from Continuing Operations before
Income Taxes $ 33.2 $ 18.5 $ 23.5 $ 31.7 $ 35.5
Tax Expense (30% rate)** (10.0) (5.6) (7.0) (9.5) (10.7)
Adjusted Income From Continuing Operations 23.2 $ 12.9 $ 16.5 $ 22.2 $ 24.8
Adjusted Diluted Earnings Per Share from Adjusted
Income from Continuing Operations *** $ 0.50 $ 0.28 $ 0.36 $ 0.50 $ 0.56
Adjusted Income from Continuing Operations before
Income Taxes $ 33.2 $ 18.5 $ 23.5 $ 31.7 $ 35.5
Unallocated corporate interest (excluding debt premium) 31.9 30.9 27.3 22.7 21.5
Adjusted Consolidated EBIT 65.1 49.4 50.8 54.4 57.0
Depreciation and amortization excluding accelerated
depreciation 32.6 32.5 28.2 27.6 27.9
Adjusted Consolidated EBITDA $ 97.7 $ 81.9 $ 79.0 $ 82.0 $ 84.9
Adjusted Consolidated EBITDA as a % of Sales 9.6% 8.3% 9.4% 10.8% 10.8%
Consolidated Capital Expenditures $ 29.2 $ 29.8 $ 24.0 $ 25.6 $ 25.1
Net Leverage
Total Short and Long Term Debt**** 448.6 412.0 356.7 366.0 361.8
Less Cash and Restricted Cash (164.9) (99.5) (44.9) (72.0) (88.0)
Net Debt 283.7 312.5 311.8 294.0 273.8
Net Leverage Ratio***** 2.9 X 3.8 X 3.9 X 3.6 X 3.2 X
**** LTM excludes OID and deferred financing fees of $7.8M
***** The above calculation is not intended to be used for purposes of calculating debt covenant compliance
**Tax rate is based on the Company's estimated normalized annual effective tax rate
*** Adjusted EPS is calculated using Diluted Shares Outstanding at the end of the period
Year Ended November 30,
NYSE: “OMN”
› Appendix 3
OMNOVA Volume Impact on Sales
Third Quarter 2017INVESTOR PRESENTATION |30
Q1 Q2 Q3 Q4
Specialty Solutions 1.1% 6.3% 1.0% 5.1%
Performance Materials -9.3% -13.3% -16.8% -16.9%
China Coated Fabrics (CCF) Effect -1.9 -3.3 -4.8 -7.9
Performance Materials excluding CCF -7.4% -11.5% -12.0% -9.0%
Investor Relations Contacts
Paul DeSantis, Senior Vice President, Chief Financial Officer & Treasurer
Frank Esposito, Corporate Secretary and Investor Relations
(216) 682-7003
IR@omnova.com
World Headquarters
25435 Harvard Road
Beachwood, OH 44122
(216) 682-7000
www.omnova.com
Year End 2017INVESTOR PRESENTATION |