Kraton Polymers 8-K Third Quarter Earnings Call

Kraton Polymers LLC

Third Quarter Earnings Call

November 12, 2008

Exhibit 99.1

2

Disclaimers

Forward Looking Statements

This

presentation

may

include

“forward-looking

statements”

which

are

statements other than statements of historical fact and are often characterized

by

the

use

of

words

such

as

“believes,”

“expects,”

“estimates,”

“projects,”

“may,”

“will,”

“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 results to differ

materially from those expressed in forward-looking statements. Readers are

cautioned not to place undue reliance on forward-looking statements. We

assume no obligation to update such information.

GAAP Disclaimer

This presentation includes non-GAAP financial measures including EBITDA

and LTM Bank EBITDA.

Investors should consider these measures, which we

believe investors consider useful in assessing our performance and

compliance with our financial covenants, together with the GAAP measures

from

our

financial

statements.

A

reconciliation

of

the

non-GAAP

financial

measures used in this presentation to the most directly comparable GAAP

measures can be found in our press release dated November 12, 2008.

3

Third Quarter 2008 Recap

Cost-Out /

Efficiency Gains

Pernis SIS shutdown delivering expected results

New

RTS

facility

lease

–

custom

designed

and

cost

out

Paulinia

Brazil

workflow

improvement

project

on

track

–

cost

out in excess of $1 million per year

Innovation

Innovation revenue trending toward 15% of revenue and ahead of

our record 2007 pace 

Commercialized our latest innovation product MD 6705   

Reorganized

end

uses

and

created

marketing

services

group

–

all

focused on accelerating new products to market

Financial

Covenants /

Capital 

Structure

Solid third quarter and year-to-date results

$47 million improvement in LTM Bank EBITDA from YE 2007    

$84 million cash-on-hand at September 30, 2008 with revolver

draw of $50MM

Headwinds

Monomer and energy costs continue to escalate:

Butadiene cost increases continue into October and have doubled

since December 31, 2007

Current

expectation

is

an

increase

in

supply

and

a

lower

cost

in

the

long term

Uncertain global economic conditions

4

14%

19%

20%

17%

Revenue and Innovation Growth

19%

31%

30%

28%

5%

9%

12%

13%

2005

2006

2007

YTD 2008

New Innovations

(2)

Innovation revenue defined as revenues of products introduced within the last 5 years

Q3 2008 vs. Q3 2007

Revenue    Change By End-Use

Adhesives,

Sealants,

and Coatings

Total

Advanced

Materials

Paving

and

Roofing

(1)

Excludes footwear and noncore high styrenics, which aggregate approximately 2% of revenue

YTD

2008

vs.

YTD

2007

Revenue

Change

By

End-Use

Adhesives,

Sealants,

and Coatings

Total

Advanced

Materials

Paving

and

Roofing

Innovation

Revenue

as

a

%

of

Total

Revenue

(2)

(1)

(1)

Third Quarter and YTD 2008

Financial Performance

6

Summary Financial Information

($MM)

2.56

3.93

Interest Coverage

5.22

3.94

Leverage

$      538

$ 

576

Total Debt

$

99

$

146

LTM Bank EBITDA

(2)

$

63

$

111

$

26

$

61

EBITDA

(1)

$

832

$

994

$

290

$

382

Total Operating Revenues

275

261

96

90

Sales Volume (kT)

2007

2008

2007

2008

YTD September 30

Third Quarter

(1)

EBITDA

is

used

by

management

to

evaluate

operating

performance.

EBITDA

is

not

a

recognized

term

under

GAAP

and

does

not

purport to be an alternative to net income (loss) as an indicator of operating performance.

(2)

LTM

Bank

EBITDA

is

defined

as

EBITDA

adjusted

to

exclude

unusual

items

and

other

adjustments

permitted

in

calculating

covenant

compliance under the senior secured credit facility.

7

Sales

ByProduct

$26

$61

YTD May

'07

YTD May

'08

Third Quarter 2008 Financial Summary

Volume decline 6kt, mainly

feedstock constraint driven

Price & mix up $70 million

Price and mix more than

offset increase in

feedstocks and other costs

of production and lower

volume

Margin up 870 basis points

Over 60% pull through

from gross profit to EBITDA

EBITDA margin increased to

16%

Operating Revenue ($MM)

EBITDA ($MM)

$290

$382

$284

$363

$19

$46

$94

YTD May '07

YTD May '08

Gross Profit ($MM)

2007

2008

$6

2008

2007

2007

2008

8

$111

$63

YTD May

'07

YTD May

'08

Revenue

Sales

ByProduct

Year to Date 2008 Financial Summary

Volume decline of 14.6kt,

mainly feedstock constraint

driven

Price & mix up $106 million

Price and mix more than

offset increase in feedstocks

and other costs of

production and lower

volume

Margin up 500 basis points

$48 million improvement

includes more than $7

million of “one time”

increases associated with

restructuring and related

charges

Operating Revenue ($MM)

Financial EBITDA ($MM)

$832

$994

$20

$812

$948

$46

2007

2007

2008

Gross Profit ($MM)

2008

$206

$130

2007

2008

9

Capitalization Table and Covenants

LTM Bank EBITDA

(1)

($MM)

Leverage A/O

September 30

$

575.9

(36.9)

(13.0)

49.9

$

539.0

Total Debt

$

491.7

1.0

---

---

$

490.7

Net Debt

$

84.2

35.9

---

35.9

$

48.3

Cash

$

---

$

200.0

$

325.9

$

50

September 30, 2008

(0.5)

---

(12.6)

50

Total changes

(3.0)

---

(10.0)

---

Voluntary

repayments

2.5

---

(2.6)

50

Scheduled increase

(decrease)

$

0.5

$

200.0

$

338.5

$

---

December 31, 2007

January 2014

May 2013

May 2011

Maturity

8.125%

L + 200

L + 250

Rate

Insurance

Bond

Sr. Notes

Term

Revolver

(1)

LTM Bank EBITDA includes $9.6mm Equity Cure

$98.9

$104.1

$115.8

3.94

3.93

2.50

4.95

Interest Coverage A/O

September 30

$146.0

Actual

Covenant

Actual

Covenant

12/31/07

3/31/08

6/30/08

9/30/08

10

Status Of Our 2008 Roadmap Plan

Make It Happen

Smart Pricing

Balance the value created for our customers

Feedstock and energy cost headwinds continue……

…..countered by price increases, cost outs, and innovation

Leverage global procurement to mitigate monomer

constraints                

Restructure

Footprint

Optimize our production asset base consistent with 

our growth and innovation requirements

Pernis SIS closure and RTS restructuring completed

Paulina process redesign project well underway

Organizational

Efficiency

Organizational efficiency actions taken to date

are yielding the desired results:

Reorganized end uses and created marketing services group

Focused on accelerating new products to market

Investing in our

Future

Capture growth opportunities and cost outs

System upgrade and control optimization at Belpre site which

will improve competitiveness and operating efficiency

$30 million to $32 million capex plan for 2008

Project pipeline robust

11