Kraton Polymers 8-K Bank of America 2008 Credit Conference

CONFIDENTIAL

Bank of America 2008 Credit Conference

November 21, 2008

Exhibit 99.1

CONFIDENTIAL -

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 third quarter 2008 earnings press release

dated November 12, 2008.

CONFIDENTIAL -

3

$1B+ global engineered polymer company

Inventor and world’s leading producer of

styrenic block copolymers (SBCs)

Designs customized products on a molecular

level to meet specific performance needs

Serves a highly diverse set of end-use

applications

Organized around core businesses

Advanced Materials

Adhesives, Sealants & Coatings

Paving and Roofing

Emerging Businesses

Sells over 800 products to approximately 700

customers in approximately 60 countries

Employs approximately 800 people in 18

locations around the world

Owned since 2003 by TPG and CCMP

(60% and 40%, respectively)

Kraton At a Glance

CONFIDENTIAL -

4

Company Overview

Kraton believes

it

is

the

industry

leader

with

clear

competitive

advantage

Leader in innovation

Broadest product line

Best technical service

Leading proprietary process technology and low cost manufacturer

SBCs represent an incredibly diverse and growing market

Kraton Upsides

New product innovations and new business entry

Cost rationalization opportunities

Next generation process technology

Working capital optimization and complexity reduction

SBCs are

usually

a

small

proportion

of

the

overall

cost

of

the

customers’

finished

products,

but a key enabler of ultimate performance

Process and technical services leader

High technical expertise and significant capital investment required to develop formulations and produce

quality products

Limited access to competitive process technology

Customer switching costs in many applications

Beginning in Q1 2008, Kraton began evaluating its product / customer profitability and has

implemented

significant

steps

to

optimize

its

product

portfolio;

process

is

ongoing

CONFIDENTIAL -

5

Strong Position in Diverse End-uses

Source:  Company presentation and website

Note:

Revenue splits exclude non-core segments (high styrenics, footwear and lubricant additives) which contributed $51 million

of product revenue

(1)

Excludes by-product sales

Medical /

PVC–replacement

Soft touch grip consumer

products

Elastic films for disposable

diapers

Wire and cable

Impact resistant plastics

#1

32%

$380

7% / 8%

Advanced Materials

Adhesives, Sealants, and

Coatings

Specialty tapes

Labels

Clear and hot melt

sealants

Non-wovens

#1

32%

$382

8% / 7%

Paving and Roofing

Roadways

Industrial roofing felts

#1

31%

$367

9% / 7%

Emerging Businesses

Surgical gloves

Condoms

Separation / filtration

Protective, breathable

clothing

Fuel cells

3%

$30

LTM September

30,

2008

-

Product

Revenue:

$1.2

Billion

(1)

CONFIDENTIAL -

6

Kraton Value Chain

Primary Raw

Materials

Products

Customer

Value

End-Use

Applications

Styrene

Unhydrogenated

SBCs

SBS

SIS

SIBS

Butadiene

Isoprene

Hydrogenated

SBCs

SEBS

SEPS

Isoprene Rubber

and Latex

Compounds

Consumer Goods

Personal Care

Medical

Adhesives

Sealants

Coatings

Automotive

Packaging

Paving

Roofing

Lubricants

Stretch

Soft-Touch

Adhesion

Strength

Durability

Thickening

Compatibility

Clarity

Recyclability

CONFIDENTIAL -

7

Global SBC Industry

SBC Industry

(Styrenic Block Copolymers)

Market Size: 1,500kT

(~$3.5bn)

USBC Production

(Unhydrogenated Styrenic

Block Copolymers)

HSBC Production

(Hydrogenated Styrenic Block

Copolymers)

SBS

(Styrene-Butadiene-

Styrene)

SIS

(Styrene-Isoprene-

Styrene)

SEBS

(Styrene-Ethylene-

Butylene-Styrene)

SEPS

(Styrene-Ethylene-

Propylene-Styrene)

Footwear

Paving and Roofing

Adhesives, Sealants

and Coatings

Advanced Materials

Advanced Materials

Adhesives, Sealants

and Coatings

Lubricant Additives

Adhesives, Sealants

and Coatings

Advanced Materials

89%

11%

88%

12%

85%

15%

77%

23%

76%

24%

88%

12%

Source:

Kraton

Management and SRI Consulting

Note:

Blue percentages correspond to industry split and red percentages represent Kraton split

% Industry

% Kraton

Kraton

Industry

Industry

Kraton believes it is better positioned than the industry in HSBCs, which have higher

performance characteristics, are significantly more complex to produce and generate

higher margins

CONFIDENTIAL -

8

4.7%

4.5%

2.0%

7.6%

3.4%

Asia (excl.

Japan)

South

America

Europe

North

America

Japan

1,177

1,206

1,314

1,398

1,447

1,497

1,581

1,661

1,752

1,849

1,101

2001

2002

2003

2004

2005

2006

2007

2008E

2009E

2010E

2011E

Favorable Global SBC Industry Demand

Trends Expected to Continue

Source:

Kraton

Management

(1)

Excludes footwear with 389 kT annual demand and (0.1%) growth. Kraton has very limited participation in the footwear market

Global SBC Industry Demand Trends ('000 MT)

SBC Industry

Average

Annual

Demand

Growth

Trends

(CAGR

%

’07

–

’11)

631 kT

44 kT

420 kT

315 kT

86 kT

By Region

By End-Use

(1)

6.5%

7.2%

8.1%

0

0

0

0

0

0

0

0

0

0

Advanced

Materials

Paving & Roofing

Adhesives,

Sealants &

Coatings

2007

volume:

282 kT

523 kT

284 kT

CONFIDENTIAL

Key Investment Highlights

CONFIDENTIAL -

10

Key Investment Highlights

Leading Strategic Positions

Diverse Geographic and End Uses, with Broad Portfolio of Products, Customers and

Suppliers

Track Record of Innovation and Continuous Operational Improvement

Process, Technical Service, and Manufacturing Leadership

Significant Asset Coverage and Cash Flow Generation

Experienced and Energized Management Team

CONFIDENTIAL -

11

Leading Strategic Positions …

Major SBC producers

Sources of competitive advantage

A

B

C

D

E

Industry revenue share 

29%

15%

10%

8%

4%

3%

Multi-regional manufacturing

USBC and HSBC breadth

Breadth of product families and grades

Demonstrated innovation capability

Ability to produce high-quality products at high rates

Manufacturing cost per ton

Customer and end-use application knowledge

Technical support capability

Source:

Management estimates

(1)

2007 global SBC revenue share estimates for top producers

(1)

CONFIDENTIAL -

12

…

and Unparalleled Global Footprint

Global Headquarters

Houston, Texas U.S.

RTS Center

Belpre, Ohio U.S.

Manufacturing

Facility

Amsterdam,

RTS Center

Pernis, Netherlands

Manufacturing Facility

Mont St. Guibert, Belgium

Technical Service Office

Wesseling, Germany

Manufacturing Facility

Kashima,

Japan

RTS Center

Manufacturing

Facility

(1)

Berre, France

Manufacturing Facility

Paulinia, Brazil

Manufacturing Facility

Netherlands

Shanghai, China

Customer Service and

Technical Center

Asia

(1)

Kashima is a 50/50 joint venture with JSR

Kraton is the only SBC producer with manufacturing and service capabilities on four continents

enabling our multinational customers to meet their global needs with a single supplier

Our Belpre, Ohio manufacturing facility represents the largest dedicated SBC production facility

in the world

CONFIDENTIAL -

13

Advanced

materials

32%

Emerging

businesses

3%

Paving &

roofing

31%

Adhesive,

sealants and

coatings

32%

Diverse Geographies and End-users

Diverse Geographies...

...and Diverse End-users

We sell to over 700 customers across a diverse range of end-uses in over 60 countries worldwide

Our diverse customer base makes our sales less sensitive to market conditions in any single

end-use or region of the world

Americas

42%

Europe

43%

Asia Pacific

15%

Sales:

$1.2

Billion

LTM September 30, 2008

Sales:

$1.2

Billion

LTM September 30, 2008

CONFIDENTIAL -

14

Broad Portfolio of Customers

and Suppliers

Customers

Suppliers

Blue-chip customer base

Relationships with majority of top

customers for 15 years or more

No single customer accounts for more than

5% of sales

Top ten customers comprise only 27% of

sales

Typically multiple sources of supply

Kraton consumes less than 2% of global

butadiene supply

Kraton is an attractive customer given it

produces higher value products than tire, ABS

and carpet manufacturers

Expiration of raw material contracts not

expected to have a significant impact on

profitability

Monomer

Suppliers

Styrene

BASF, ChevronPhillips, Dow, Innova,

LyondellBasell, SABIC, and Shell

Butadiene

Copesul, Dow, Equistar, Exxon, Ineos, JSR,

Lanxess, LyondellBasell, Petroquimica, PQU,

Total, TPC, Shell, Sabina and Uniao

Isoprene

Braskem, Exxon, Goodyear, Jinshan, Shandong

Yuhuang, Shell, and Togliatti 

2%

2%

2%

2%

5%

4%

3%

2%

3%

Top 10

27%

Other

Customers

73%

2%

Sales: $1.2 Billion

LTM September 30, 2008

CONFIDENTIAL

-

15

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)

CONFIDENTIAL

-

16

Process, Technical Service, and

Manufacturing Leadership

Over 40 years of process know-how and expertise

Performance-critical products

1,400 granted patents and 700 pending patent applications

Approximately 65 research and development staff

Proven track record of customer service and support

leveraging Kraton’s globally recognized brand

Long-term relationships with top customers for 15 years or

more

R&D infrastructure required for new product development and

close customer

interaction

–

customized

formulations

Typically long customer qualification processes

FDA approval for selected food applications

Facilities in 6 countries across 4 continents

Capital investment

of

$75

—

$100

million

for

a

new

world

scale plant

Long lead-time (>24 months) required to build

Technical

Leadership

Investment

Leadership

Infrastructure

Leadership

CONFIDENTIAL

2008 Overview

CONFIDENTIAL

-

18

2008 Overview

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 continued into October and have doubled

since December 31, 2007

Current

expectation

is

an

increase

in

supply

and

a

lower

cost

in

the

near

term

CONFIDENTIAL -

19

Summary Financial Information

($MM)

3.93

2.45

Interest Coverage

3.94

5.22

Leverage

$ 

576

$     

541

Total Debt

(3)

$

146

$    

104

LTM Bank EBITDA

(2)

$

111

$

63

$

61

$

26

EBITDA

(1)

$

994

$

832

$

382

$

290

Total Operating Revenues

261

275

90

96

Sales Volume (kT)

2008

2007

2008

2007

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.

(3)

Includes

insurance

bond

financing

of

$2

million

at

September

30,

2007

CONFIDENTIAL

-

20

$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

2007

2008

2008

$6

2008

2007

CONFIDENTIAL

-

21

$111

$63

YTD May

'07

YTD May

'08

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

2008

Gross Profit ($MM)

2007

2008

$206

$130

CONFIDENTIAL -

22

2008 Cash Flow

($MM)

$

(2)

10

(63)

(15)

(8)

(37)

$

111

YTD

September

2008

$

15

$

10

(24)

(24)

(9)

(44)

$

106

LTM

September

2008

Cash taxes

Cash Flow

Equity investment

Working capital and

other

Capex

Cash interest

EBITDA

112

135

103

101

12/31/2007

3/31/2008

6/30/2008

09/30/08

Cash Conversion Cycle (Days)

CONFIDENTIAL -

23

Capitalization Table and Covenants

($MM)

LTM Bank EBITDA

($MM)

Leverage at

September 30

$

576

(37)

(10)

47

$

539

Total Debt

$

492

1

---

1

$

491

Net Debt

$

84

36

(10)

46

$

48

Cash

$

200

$

326

$

50

September 30, 2008

---

(13)

50

Total changes

---

(10)

---

Voluntary

repayments

---

(3)

50

Increase (decrease)

$

200

$

339

$

---

December 31, 2007

January 2014

May 2013

May 2011

Maturity

8.125%

L + 200

L + 225

Rate

Sr. Notes

Term

Revolver

$98.9

$104.1

$115.8

3.94

4.95

Actual

Covenant

12/31/07

3/31/08

6/30/08

$146.0

9/30/08

Interest Coverage at

September 30

3.93

2.50

Actual

Covenant

CONFIDENTIAL -

24

Status Of Our 2008 Roadmap Plan

Make It Happen

Smart Pricing

Balance the value created for our customers

Feedstock and energy cost headwinds ……

…..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

CONFIDENTIAL

Bank of America 2008 Credit Conference

November 21, 2008