Kraton (KRA) 8-K Oppenheimer 5 Annual Industrials Conference

Oppenheimer 5  Annual Industrials Conference

September  29, 2010

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Exhibit 99.1

Forward-Looking Statement Disclaimer

This

presentation

may

include

“forward-looking

statements”

that

reflect

our

plans,

beliefs,

expectations

and

current

views

with

respect

to,

among

other

things,

future

events

and

financial

performance.

Forward-looking

statements

are

often

characterized

by

the

use

of

words

such

as

“believes,”

“estimates,”

“expects,”

“projects,”

“may,”

“intends,”

“plans”

or

“anticipates,”

or

by

discussions

of

strategy,

plans

or

intentions.

All

forward-looking

statements

in

this

presentation

are

made

based

on

management's

current

expectations

and

estimates,

which

involve

risks,

uncertainties

and

other

factors

that

could

cause

actual

results

to

differ

materially

from

those

expressed

in

forward-looking

statements.

Readers

are

cautioned

not

to

place

undue

reliance

on

forward-looking

statements.

These

risks

and

uncertainties

are

more

fully

described

in

“Part

I.

Item

1A.

Risk

Factors”

contained

in

our

Annual

Report

on

10-K,

as

filed

with

the

Securities

and

Exchange

Commission

and

as

subsequently

updated 

in

our

Quarterly

Reports

on

Form

10-Q,

and

include

risks

related

to:

conditions

in

the

global

economy

and

capital

markets;

our

reliance

on

LyondellBasell

Industries

for

the

provision

of

significant

operating

and

other

services;

the

failure

of

our

raw

materials

suppliers

to

perform

their

obligations

under

long-term

supply

agreements,

or

our

inability

to

replace

or

renew

these

agreements

when

they

expire;

limitations

in

the

availability

of

raw

materials

we

need

to

produce

our

products

in

the

amounts

or

at

the

prices

necessary

for

us

to

effectively

and

profitably

operate

our

business;

competition

in

our

end-use

markets,

by

other

producers

of

SBCs

and

by

producers

of

products

that

can

be

substituted

for

our

products;

our

ability

to

produce

and

commercialize

technological

innovations;

our

ability

to

protect

our

intellectual

property,

on

which

our

business

is

substantially

dependent;

infringement

of

our

products

on

the

intellectual

property

rights

of

others;

seasonality

in

our

Paving

and

Roofing

business;

financial

and

operating

constraints

related

to

our

substantial

level

of

indebtedness;

product

liability

claims

and

other

lawsuits

arising

from

environmental

damage

or

personal

injuries

associated

with

chemical

manufacturing;

political

and

economic

risks

in

the

various

countries

in

which

we

operate;

the

inherently

hazardous

nature

of

chemical

manufacturing;

health,

safety

and

environmental

laws,

including

laws

that

govern

our

employees’

exposure

to

chemicals

deemed

harmful

to

humans;

regulation

of

our

customers,

which

could

affect

the

demand

for

our

products

or

result

in

increased

compliance

costs;

international

trade,

export

control,

antitrust,

zoning

and

occupancy

and

labor

and

employment

laws

that

could

require

us

to

modify

our

current

business

practices

and

incur

increased

costs;

our

relationship

with

our

employees;

loss

of

key

personnel

or

our

inability

to

attract

and

retain

new

qualified

personnel;

fluctuations

in

currency

exchange

rates

;

the

fact

that

we

do

not

enter

into

long-term

contracts

with

our

customers;

a

decrease

in

the

fair

value

of

our

pension

assets,

which

could

require

us

to

materially

increase

future

funding

of

the

pension

plan;

and

concentration

of

ownership

among

our

principal

stockholder,

which

may

prevent

new

investors

from

influencing

significant

corporate

decisions.

We

assume

no

obligation

to

update

such

information.

Further

information

concerning

issues

that

could

materially

affect

financial

performance

related

to

forward

looking

statements

can

be

found

in

our

periodic

filings

with

the

Securities

and

Exchange

Commission.

2

GAAP Disclaimer

3

This

presentation

includes

the

use

of

both

GAAP

(generally

accepted

accounting

principles)

and

non-GAAP

financial

measures.

The

non-GAAP

financial

measures

are

EBITDA

and

Adjusted

EBITDA.

The

most

directly

comparable

GAAP

financial

measure

is

net

income/loss.

A

reconciliation

of

the

non-GAAP

financial

measures

used

in

this

presentation

to

the

most

directly

comparable

GAAP

measure

is

included

herein.

We

consider

EBITDA

and

Adjusted

EBITDA

important

supplemental

measures

of

our

performance

and

believe

they

are

frequently

used

by

investors

and

other

interested

parties

in

the

evaluation

of

companies

in

our

industry.

EBITDA

and

Adjusted

EBITDA

have

limitations

as

analytical

tools

and

should

not

be

considered

in

isolation

or

as

a

substitute

for

analysis

of

our

results

under

GAAP

in

the

United

States.

37%

21%

42%

4

4%

7%

31%

26%

32%

Kraton

Overview

We

invented

and

commercialized

Styrenic

Block

Copolymer (SBC) technology nearly 50 years ago

We believe that we hold #1 market share positions in each

of our end-use markets providing industrial, consumer and

geographical diversification that is second to none

We design and manufacture customized SBC polymer and

compound solutions to meet our leading customers’

specific innovation needs

We produce the following:

•

Unhydrogenated

Styrenic

Block Copolymers

(USBC’s)

•

Hydrogenated Styrenic

Block Copolymers

(HSBC’s)

•

Isoprene Rubber and Isoprene Rubber Latex

We currently offer approximately 800 products to more

than 700 customers, in over 60 countries

We employ approximately 830 people in 9 locations in all

major regions of the world

First half 2010 revenue of $605 million and Adjusted

EBITDA

(1)

of $106 million; 17.5% margin

(1)

Adjusted EBITDA is GAAP EBITDA excluding sponsor fees, restructuring and related charges, non-cash expenses, and the gain on extinguishment of

debt

(2)

Management Estimates

2009 Revenue by End-Use

(2)

2009 Revenue by Geography

(2)

North and

South

America

Europe,

Middle

East &

Africa

Asia Pacific

Paving and

Roofing

Adhesives,

Sealants and

Coatings

Other

Emerging

Businesses

Advanced

Materials

Clear SBC Market Leader Globally

5

Investment Highlights

Leadership

Clear leader in the fast growing, attractive SBC market

More

than

1.6x

the

size

of

our

largest

competitor

in

each

of

our

end-use

markets

The only producer with a global footprint and service capabilities

Innovation-

Driven Top-

Line Growth

Most-productive innovator of new SBC polymers

Successfully leveraging product knowledge and technical expertise to commercialize

next generation of innovative solutions

Earnings

Growth

Driven by compelling organic growth platforms, expanding presence in Asia, sustained

volume growth and new product introductions

Margin

enhancement

through

continued

“Smart

Pricing”

strategy

and

innovation

Created meaningful operating leverage through significant improvement in cost structure

Investing

capital

in

high-return

projects

–

driving

profitable

growth

in

key

products

and

geographies

Experience

Strong leadership team demonstrating continuous improvement in productivity,

innovation and margin improvement

High

Barriers to

Entry

Patented technology, custom designed product, process excellence, global reach

and customer relationships create strong competitive position that cannot be

matched by existing or potential competitors

Competitive position allows for price leadership

Best-in-class service levels: 100% of products delivered on-demand on-time

6

SBCs

Enhance Performance Attributes

Durability

Elasticity

Impact

Soft Touch

Clarity

Adhesion

We are a Highly Engineered, Performance Materials Business

Recyclable

7

Clear Leader in Attractive Markets

Market Position

2009 Revenue

(1)

#1

77%

Adhesives, Sealants,

and Coatings

Advanced Materials

#1

74%

Paving and Roofing

#1

63%

Emerging Businesses

(4)

#1

100%

32%

31%

26%

7%

1.9x

2.0x

1.6x

N/A

Source:

Management  estimates

(1)

Based on 2009 sales of $920 million (excludes by-product sales which are reported as other revenues)

(2)

Industry

volume

growth

from

2001-2009,

Emerging

Businesses

growth

rate

refers

to

Kraton’s

Isoprene

Rubber

(“IR”)

and

Isoprene

Rubber

Latex

(“IRL”)

growth

from

2005-2009

(3)

Management’s estimates vs. next largest competitor based on 2009 sales

(4)

The Emerging Businesses end use market includes our IR and IRL business. We believe that we are the only major third-party supplier of IR and IRL, and therefore end use market share

metrics are not meaningful

#1 Market Position and More than 1.6x the Size of Our Closest Competitors

Growth

(2)

5.9%

7.4%

6.5%

26.8%

Kraton

Market

Share Relative

To #2

Competitor

(3)

Top 4 Market

Share

8

Before Kraton

After Kraton

Kraton

Makes Products Better

Stretch in legs only

(Spandex)

Not a fitted garment

High leakage rate

Overall improvement in stretch

(where it’s needed)

Better fit

Low leakage rate

Kraton

market share: 50%

2001 –

2009 CAGR: 11.5%

Kraton

material as % of Diaper cost: <2%

Phthalate plasticizers are

used to make PVC soft

but they can leach from

finished products and

create health concerns

Limited recyclability

PVCs

are unsafe when

burned or incinerated

improperly

Environmentally friendly –

100% recyclable

Kraton

imparts softness, toughness and clarity

Plasticizer & chlorine free

Kraton material as % of finished product cost: <5%

9

SBCs

Are a Growth Industry

SBC Industry Volume (kT)

(1)

SBCs

Grow Faster Than GDP

Adoption and penetration of SBCs

into

new applications and end-markets lead to

industry growth of ~2x GDP

Growing demand from emerging

economies

Innovation and new SBC product

introductions

End use application growth (e.g.,

PVC alternatives for wire & cable

and medical applications such as IV

bags, etc.)

Growing demand for

environmentally friendly and greener

alternatives in electronics, medical

and baby care markets

Low cost relative to value added /

performance with limited substitution risk

(1)

Management Estimates. Excludes footwear end-use in which Kraton

does not actively compete

675

1,112

1,599

2001

2009

2014

10

Sustainable Competitive Advantages

Almost 50 years of process know-how and

expertise

Performance-critical products and manufacturing

complexity

Technical

Barriers

Globally recognized brand –

Kraton

®

Industry-leading R&D infrastructure

Global low-cost manufacturing footprint

Significant regulatory hurdles / barriers to new

manufacturing sites

Stable raw material base with multiple sources of

supply and contracts / relationships

Collaborative customer relationships –

15+ years

with majority; sole source with several customers

Infrastructure

Barriers

Superior and

Innovative Products

+

High Customer

Switching Costs

+

Long-Term

Customers

Relationships

=

Leading

Market Position

Products designed collaboratively to meet

specific customer needs / applications

Preferred partner based on manufacturing

consistency and process know-how

Ongoing technical service offering

100% of products offered with no lead times

High

Value

Added

Compelling Organic Growth Platforms

11

Advanced

Materials

Adhesives,

Sealants &

Coatings

Paving and

Roofing

Emerging markets growth

Expansion into new and differentiated markets, such as

protective films, oilfield service applications, spray and

extrusion coatings, hot melt adhesives, elastic adhesives,

labels and sealant applications

Superior performing SBS modified emulsions for

asphalt

modification

Low VOC roof coating formulations for superior water

resistance, improved adhesion and reduced installation cost

“Green”

PVC alternatives to the wire and cable industry

Enabling technology for high performance fabric solutions

“Soft Touch”

covers and solutions to the automotive industry

NEXAR

®

–

high-end membrane technology markets for

performance clothing, HVAC applications and fuel cells

Co-extrusion technology for surface protection

Applications

Isoprene

Rubber Latex

Medical applications –

surgical gloves

Material substitution –

condoms

HiMA

Protective Films

Soft Skins

IRL Gloves

12

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