2015-2019 NA Market Report For Hot Melt Adhesives - ASC (v1)

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2015-2019 HOT MELT ADHESIVES IN NORTH AMERICA MARKET REPORT
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Table of Contents
Introduction 3
Definitions 7
Methodology 8
North American Demand and Growth Forecasts 11
Executive Summary 14
Regional Demand Statistics 29
Transportation 32
Paper Board & Related Products 51
Hygiene 72
Ultrasonic Welding 89
Woodworking 97
Assembly Operations, B&C, Footwear & Leather, Consumer/DIY 111
Key M&A 124
Cutting Edge Research & New Technologies 133
Raw Materials Supply/Demand Dynamics 138
Hot Melt Adhesive Manufacturers 146
Channels 148
Concluding Thoughts 178
CONFIDENTIAL 2
Copyright 2016, The Adhesive & Sealant Council All Rights Reserved
INTRODUCTION
CONFIDENTIAL
Research Scope
Geographic Scope End Market Scope
Transportation Hygiene
Paper & Board Products Woodworking
Technology Scope
Bulk Hot Melts, Reactive
Hot Melts and Glue Sticks: Other
EVA- ethylene vinyl acetate
Building & Assembly Footwear & Consumer /
SBC- styrene block copolymer
Construction Operations Leather DIY
PO- Polyolefin
PUR- Polyurethane
PES- Polyester
PA- Polyamide
Other- Silicone, butyl, etc.
CONFIDENTIAL 4
Qualitative Interview Coverage
A full breakdown of qualitative interviews is detailed below:
CONFIDENTIAL 5
Segmentation Coverage in U.S. Markets
Summary of segments in scope and out of scope is shown below:

Scope of Work Out of Scope
Paper Board & Related Products Niche Markets
Case & Carton, Envelope & Tobacco Sub-segments Tube Winding
Hygiene Markets Plastic Bags

Bedding, Diaper & Adult Care, Feminine Hygiene,
Paper-to Board Lamination
Mattress-bedding and Meat Pad Sub-segments
Transportation Paper Products And Paper Bags
Assembly Operations Tissues And Towels
Woodworking Bookbinding & Affiliated Sub-segments
Building & Construction High Gloss Laminating & Affiliated Sub-segments

Pressure-sensitive Adhesives (PSA) &
Consumer/DIY
Affiliated Sub-segments
This report will not cover all markets
Footwear & Leather
in which HMAs are used
CONFIDENTIAL 6
Industry Definitions
This industry market report is based on the Adhesive & Sealant
Harmonized Industry Definitions developed by the joint collaboration
between the ASC, FEICA and CATIA. This industry reference guide contains
definitions of adhesive and sealant technology families and end-use
market segments. Readers of this industry market report will be able to
refer these harmonized definitions by accessing the ASC website at:
ASC-FEICA-CATIA ADHESIVE AND SEALANT CLASSIFICATION MANUAL

https://ascouncil.site-
ym.com/store/ViewProduct.aspx?id=4717806&hhSearchTerms="harmoniz
ed"
CONFIDENTIAL 7
Methodology
The ChemQuest Group (ChemQuest) has been engaged in
consulting and market assessment to the adhesives &
sealants market since the founding of the company in 1976.
ChemQuests proprietary databases, experience, insight and
focus represent a strong base of knowledge of the end
markets and technologies in the industries it serves.
ChemQuest assembled this analysis utilizing predominantly
primary interviews with constituent companies within the
HMAs value chain and further supported via a
comprehensive search of secondary information (relevant
published information, internet searches, trade publications,
etc.). ChemQuest conducted in excess of ninety primary
interviews across the HMAs value chain within the U.S.,
Canada and Mexico.
CONFIDENTIAL 8
Examples of Companies Interviewed
CONFIDENTIAL 9
Disclaimer
This report contains qualitative comments obtained from various end
user respondents participating throughout the hot melt adhesives
value chain. While their opinions provide insights, they should not be
considered representative of the industry as a whole, ASC or
ChemQuest.
CONFIDENTIAL 10
Market size by volume and sales by segment
Paper Board, Transportation and Assembly Operations are by far the most
representative sectors utilizing hot melt adhesives within North America.
Combined, these sectors accounted for 78% of volume and 70% of sales in 2015.
2015 North America Hot Melt Adhesives 2015 North America Hot Melt Adhesives
2.4 Bn Pounds $4.0 Billion
Footwear & Footwear & Leather
Consumer/DIY Leather Consumer/DIY 0.2%
1% 0.1% 2%
Building & Building &
Construction Construction
Assembly 7% Transportation 8%
Operations 24% Transportation
11% 29%
Assembly
Woodworking Operations
5% 22%
Hygiene
9%
Woodworking
6% Paper Board &
Related Products
Paper Board &
Hygiene 19%
Related Products
14%
43%
11
Quick Insight Market Dynamics
Metric Results Drivers & Restraints

Scale (highly favorable +5, highly unfavorable -5)
Market Volume
2,409 Million Lbs.
Base Year 2015 Feedstock Stability
Market Revenue
$3,984 Million USD Industry Trends
Base Year 2015
Average Price $ 1.65 USD / Lb. Regulatory Drivers

Per Pound & Kg $ 3.64 USD / Kg.
Secular Market Growth
CAGR %
2.8%
2014-2019
Economic Growth
Intermediate
Price Sensitivity Threat of Imports
Degree of Unmet Important Political Climate

Needs
Forex
Substitution Intermediate
Threat -5 -3 -1 1 3 5
CONFIDENTIAL 12
Key Customer Selection Criteria
Curing time, higher performance unmet needs and price sensitivity play a
significant role in customer purchasing decisions. Transportation, assembly,
building & construction and hygiene segments are driving higher performance
requirements (e.g. solvent replacement, processing efficiency, heat resistance).
Price Environmental Hi-Performance Specification Substitution
Curing Time
Sensitivity Regulations Unmet Needs Driven Threat
Paper Board
Transportation
Assembly
Operations
Hygiene
Building &
Construction
Woodworking
Consumer /
DIY
Footwear &
Leather
High Important Intermediate Low
13
EXECUTIVE SUMMARY
CONFIDENTIAL 14
North American hot melt adhesive market achieved nearly
$4.0 Bn in 2015, consuming over 2.4 Bn pounds with volume
forecast to grow at 2.8% CAGR 15-19
Canada USA Mexico
USA is the largest

geography with 79% of
demand accounting for 1.9
Bn lbs..
155MM Lbs. 1.9 Bn Lbs. 365MM Lbs.
Mexico represents 15% 6% 79% 15%
share and 365 million lbs..

Mexico
15%
Canada is the smallest Canada
accounting for 6% share 6%
2.4 Bn lbs.
and 155 million lbs.. $4.0 Bn
USA
79%
Source: ChemQuest
CONFIDENTIAL 15
Paper Board & Related Products and Transportation segments
account for two-thirds of demand
Paper Board & Related 2015 North America Hot Melt Adhesives
Products is the largest market 2.4 Bn Pounds
Data in Lbs. and %
segments accounting for 42% Footwear &
of demand, while Consumer/DI

Y, 34, 1%
Leather
0.1%
transportation is second at
nearly one fourth of the share. Building &
Construction,
174, 7%
Assembly Operations come in Assembly Transportation,
third place with 11% of Operations, 263,

11%
573, 24%
demand, followed by Hygiene

at 9% share. Woodworking,
129, 5%
Building & Construction, Hygiene, 210, 9%
Woodworking, Consumer/DIY
followed by Footwear &
Leather account for the Paper Board &
Related
remaining 14% of demand Products, 1023,

43%
combined.
Source: ChemQuest
CONFIDENTIAL 16
Transportation applications are primary drivers of growth
North America Hot Melt Adhesives Growth Trends

2.4 bn Pounds and $4.0 Bn
1400 5.0%
1200 4.5%
CAGR 15-19 (volume)

4.0%
Volume in Millions
1000 3.5%
800 3.0%
2.5%
600 2.0%
400 1.5%
1.0%
200 0.5%
0 0.0%
Paper
Hygiene & Building &
Board & Transportat Assembly Woodworki Consumer/ Footwear
Other Key Constructio
Related ion Operations ng DIY & Leather
Markets n
Products
NA Adhesives (MM lb) 1023 579 263 210 174 129 34 3
NA Adhesives ($ MM) 766 1157 892 558 329 234 55 8
4-yr. % CAGR (2015-2019) 2.1% 4.4% 2.0% 1.5% 3.0% 2.3% 3.0% 2.0%
Source: ChemQuest
The highest growth potential exists for transportation applications where hot melts find use in a
diverse and growing number of automotive (interior & exterior trim, seating, lamp assembly,
emblems, etc.) as well as non-automotive applications.
The total market continues to reflect above GDP volume growth of 2.8% per annum through 2019.
A number of market segments are exhibiting mature and competitive dynamics growing below
2.5% per annum. Examples include Paper Board & Related Products, Footwear & Leather, Hygiene
and Assembly Operations.
CONFIDENTIAL 17
While some segments like Hygiene approach optimum
penetration, others like Building & Construction are coming off
the economic trough caused by the 2008 recession
Converting, specifically bookbinding, envelopes, bags and
tobacco applications are losing ground rapidly due to social
changes. For example, led by ubiquitous use of electronic
media, books and envelopes have declined profoundly, and
anti-smoking campaigns have negatively impacted tobacco
demand. Hygiene is heavily impacted by maximum
penetration in use of diapers and feminine products, albeit
adult care shows above average growth.
Building & Construction and Woodworking are finally seeing
a resurgence led by a recovery in residential and commercial
construction as well as resale of existing homes and surge in
multi-family units (driven heavily by Millennial preferences).
CONFIDENTIAL 18
Polyolefins steadily gaining ground against EVAs and SBCs
Ethylene vinyl acetate (EVA) and 2015 North American Hot Melt Adhesives
styrene block copolymer (SBC) hot Chemistry Types
melt adhesives maintain their
leading share of resin types in use,
with EVA at 37% share and SBC at Other
1%
31% respectively. PA PES
Both have been steadily losing PUR 4% 2%
4%
ground at the expense of polyolefins,
primarily due to metallocene EVA
substitution, as well as the rise in use PO 37%
of polyurethane hot melts. 21%
Polyolefins (PO), primarily driven by 2.4 Bn Lbs.

metallocene technology are gaining
share rapidly making up 21% of the
market presently.
Polyurethanes (PUR) at 4%, SBC
polyamide (PA) at 4%, polyester (PES) 31%
at 2% and minor others like butyl

rubber, silicones and acrylics make
up the remaining 10%.
Source: ChemQuest
CONFIDENTIAL 19
Polyurethane hot melts experiencing leading growth rate
Polyurethane hot melt adhesives 2015 Hot Melt Adhesives Hot Melt Adhesives
lead all other resin categories with North America Market North America Growth
expected growth rates of 7.4% per Share Trends 15-19 CAGR %
annum through 2019. Major areas
of use include, but not limited to Ethylene Vinyl
38% -0.3%
Transportation, Assembly Acetate
Operations and Woodworking.

Polyolefins, due to metallocene Styrene Block
Copolymer
32% 2.4%
substitution anticipate growth of

5.9% during the same period.
Polyolefin 21% 5.9%
EVA decline decelerating
considerably, but will not trough
until the end of the period, with Polyurethane 4% 7.4%
growth rate expected to be in -
0.3%.
Polyamide 1.7%
SBCs, while also losing minor share 4%
to polyolefins and polyurethanes,

are still gaining ground at a mature Polyester 2% 2.5%
rate of 2.4% annually.
0% 20% 40%-1.0% 4.0%
Source: ChemQuest
CONFIDENTIAL 20
Diverse set of chemistries play important roles within the
North American hot melt adhesives industry
EVAs play a major role in Paper 2015 North American Hot Melt Demand
Board & Related Products, By Market Segment and Chemistry- 2.4 Bn Pounds
Woodworking, Building &

Construction and Consumer/DIY Footwear & Leather 1
2
applications.
SBCs are important for Assembly Consumer/DIY 28
3 3
Operations, Transportation and Building & Construction

Hygiene. 162
12
Polyolefins have captured key Assembly Operations 208

5 22 18 7
positions in Hygiene, Paper Board
3
& Related Products and Woodworking 79

10 20 18 5
Woodworking. Hygiene 21
105
Polyurethane hot melts are 84
essential for Woodworking, Paper Board & Related Products 617

7 390
Footwear & Leather and emerging
5 4 0.3
Transportation
for Transportation, Assembly

409
38 68 39
22
Operations and Building & 0%

20%
40%
60%
construction.
80%
100%
EVA SBC PO PUR PA PE Other
Source: ChemQuest
CONFIDENTIAL 21
Hot melt adhesives will maintain growth trajectory long-term
Growth Drivers Implications on HM
Replacement of other fastening methods +++

Increasing demand for fuel efficiency ++
Increasing demand for light weighting & down
++
gauging
Increasing thermoplastics use & modular assembly ++
Regulatory profile/ VOC/ Sustainability ++
WB & SB Substitution ++
Shelf-ready Packaging Neutral
Convenience Packaging ++
Segmentation & specialization of food packaging
+
categories (diet, energy, organic, etc.)
Focus on operational efficiencies & productivity +++
+++ (Highly Favorable) ++ (Favorable) + (Moderately Favorable)

Source: ChemQuest
CONFIDENTIAL 22
Hot melt adhesives possess a compelling value proposition as
perceived by adhesive users
There is growing confidence in advantages of hot melts. This value
proposition includes:
Weight reduction: Replacement of other adhesives leading to lower
weight components.
Superior properties: Benefits include high elastic modulus, optimum

viscosity, higher green strength and durable bonds.
Environmental sustainability - Elimination of VOCs.
Faster processing speed and easier processability with flexible open

times.
Lower total cost of ownership: Relatively low investment in capital

equipment.
Stable and predictable supply in the foreseeable future.
CONFIDENTIAL 23
Innovations in hot melt adhesives and dispensing equipment
improve productivity and total cost
Perceived Benefits- Relevant quotes from respondents
We switched to a higher quality and more expensive hot melt because it allowed
us to reduce our labor cost, eliminate downtime and reduce our waste. Its about
productivity and total cost.
Innovation in production process and dispensing technologies leads to
optimization of performance parameters and consumption of HM at lower
volumes.
Equipment innovations, like melt-on-demand, eliminated downtime, improved our
productivity and efficiency and reduced our volume of adhesive demand.
An adhesive that alleviates more than one line problem & reduces processing time
and labor cost will be substantially rewarded. Thats what we got from our hot melt
supplier even though it was more expensive compared to what we were using
prior.
Cracking of natural gas in addition to crude oil for hot melt feedstocks led to supply
stability in the near-term.
End user interviews are intended to provide qualitative information based on small sample sizes.
When interpreting these statements the reader should be cautious of the opinions provided.
CONFIDENTIAL 24
Migration of contaminants, malodor and sustainability are
major themes that emerged during the course of this study
High concern of migration of contaminants and malodor from HM into food
products.
Sustainability guidelines changes in the air, consumer goods companies and
retailers will be demanding limitations on sourcing materials - no fuel or
food! sources will be accepted for future development. The concept of no
fuel or food means retailers and consumer product companies will not
accept sustainable solutions that will deplete food sources and/or originate
from crude oil. However, waste by products of such sources are acceptable.
For example, polymers coming from the corn kernel are not acceptable, but
the corn stalk, on the other hand is an acceptable source.
While sustainability is a top-of-mind expressed need, users are still not willing to
pay a premium. Rather, sustainability will be the differentiator in awarding new
business for those solutions that meet the desired performance criteria.
Consumers understand recycling far more than compostability. That said,
messaging that drives consumer behavior using words such as the famous 3-Rs
recycle, re-use, re-purpose are gaining popularity.
Packaging and hygiene are presently the major drivers of sustainability.
As recycling is becoming a standard procedure in these industries due to
environmental concerns, it is essential for hot melt manufacturers to develop
products showing excellent compatibility with the recycling processes.
CONFIDENTIAL 25
Other key themes included technology substitution, changing
landscape of distribution channels and consumer behavior
Substitution trends active and dynamic
Reactive hot melt adhesives
Metallocenes
Liquimelt
Ultrasonic welding
Bio-based polymers
Changes in consumer behavior:
Online shopping;
Continues to take share away from brick & mortar stores;
Leading to Increased use of packaging for shipment to customers;
Increased popularity of bulk food purchasing through discount
outlets such as Sams, Costco, Aldi.
CONFIDENTIAL 26
Amazon is changing the landscape of distribution channels
Amazon is changing the landscape of distribution:
Launch new generic diaper;
Provide small adhesive businesses access to new revenue stream via access to their
distribution centers as well as product customization to target customers through
web-optimization tools.
Amazon can often undercut a brick-and-mortar retailer on its significantly lower overhead
a. Amazon fulfillment centers are cheaper infrastructure vs. the store/warehouse model, with
optimal geographic locations in terms of "per-square-foot" real estate costs, facility
maintenance costs, and local taxes.
b. Amazon can also beat the brick-and-mortar retailer in terms of volume purchasing (placing a $1
million dollar order for diapers) and exclusive "drop ship" agreements with brand owners and
manufacturers.
c. Amazon fulfillment centers have higher
productivity and lower staffing costs due
to warehouse automation that isn't suitable
or safe in a consumer retail environment.
However, consumers like the convenience of
obtaining all of their groceries on their weekly
shopping list in one location at one time. Amazon
may be taking share from brick-and-mortar stores,
but in grocery shopping Amazon has stiff competition from stores due to the convenience
factor. From the consumer's perspective, traditional grocery shopping still takes less time vs.
online shopping (exception maybe large metropolitan cities like New York) for every item on their
weekly grocery list. With diapers specifically, an upper middle class working mother may indeed
prefer buying a month's supply of diapers on Amazon vs. lugging the large diaper packages home
from the store. Amazon addresses that need by offering free standard shipping for $49+ orders.
CONFIDENTIAL 27
Rare peek inside Amazons fulfillment centers
www.wired.com/2014/06/inside-amazon-warehouse/
Time Magazine December 2014 article:

Meet the Robots shipping your Amazon orders
time.com/3605924/amazon-robots/
Current Job openings:

Packaging Manager (develop & scale sustainable
e-commerce packaging standards and sustainable
packaging solutions across all of Amazon)
Principal, Procurement Packaging
CONFIDENTIAL 28
REGIONAL DEMAND STATISTICS
CONFIDENTIAL
Mexico exceeds Canada in every hot melt adhesive segment
within North America
2015 North America Hot Melt Adhesives - 2.4 Bn Pounds
Market Segment Demand By Country
100% 90 152 31 22 39.5 26 5 0.5

90% 54 15 13.2 9 2 0.2
47 15
80%
70%
60%
50%
437 816 165 92 210.4 139 27 2
40%
30%
20%
10%
0%
Transportation Paper Board & Hygiene Woodworking Assembly Building & Consumer/DIY Footwear &
Related Products Operations Construction Leather
Adhesives
Volume 90 152 31 22 39.5 26 5 0.5
MM lb Mexico
Adhesives
Volume 47 54 15 15 13.2 9 2 0.2
MM lb Canada
Adhesives
Volume 437 816 165 92 210.4 139 27 2
MM lb U.S.A.
Overall U.S. share is 76% of the total North American market.

Source: ChemQuest
U.S. shares by segment range from a low of 50% to a high of 90% of the total.
Mexicos overall share is 15% of the North American market.
Canada is the smallest country with 6% share of the market.
CONFIDENTIAL 30
Mexico is also driving growth within North America
Mexico is exhibiting leading growth 2015 North America Hot Melt Adhesives
rates of 4.1% per annum through Growth Trends By Country
2019 for hot melt adhesives. 2000
1889
4.5%
Mexicos growth is driven by the 1800 4.0%

growth in manufacturing industries,
(particularly auto industry 1600
3.5%
expansions and transplants) and 1400
construction. Auto applications, 3.0%
particularly, are set for substantial
Volume (MM Lbs.)

1200
CAGR % 15-19
growth. Construction activities, 2.5%
where adhesives are used in panel 1000

2.0%
laminating, flooring, assembly 800
amongst other functionalities will 1.5%
similarly deliver disproportionate 600
growth. 400
365 1.0%
U.S. and Canada, by contrast

demonstrate mature growth in line 200 155 0.5%
with expected GDP at 2.6% for the 0 0.0%

U.S. and 2.4% for Canada US Mexico Canada
respectively. Volume (MM lbs) CAGR % 15-19
Source: ChemQuest
CONFIDENTIAL 31
TRANSPORTATION
CONFIDENTIAL
Automotive applications dominate the use of hot melt
adhesives within the North American market
70% of hot melt demand in North 2015 North America Hot Melt Adhesives
America is for various automotive Transportation Volume Share By Sub-segment
applications, while other

transportation, such as heavy
trucks, buses, trailers, RVs, etc.
account for the remaining 30%. Total Non-
Auto interior trim followed by auto (trucks,

trailers, RVs,
Auto
interior/Trim
auto exterior are the largest etc.)
30%
30%
applications making up 30% share

of the total and 20% respectively. 573 MM Lbs.
Seating accounts for 9% of Auto Lamp
demand while headliners make Assembly

4%
up 7% of demand. Auto Seating
9%
Auto exterior
Auto 20%
Finally, auto lamp assembly Headliner
7%
represents 4% of total demand.
Source: ChemQuest
CONFIDENTIAL 33
Auto trim and non-auto applications in aggregate drive
growth in transportation
North America Hot Melt Adhesives
Transportation Volume & Value Growth Trends By Subsegment
400 6.0%
350
5.0%
CAGR % 15-19 (volume)

300
Value in Millions
4.0%
250
200 3.0%
150
2.0%
100
1.0%
50
0 0.0%
Total Non-auto
Auto interior/Trim (trucks, trailers, RVs, Auto exterior Auto Seating Auto Headliner Auto Lamp Assembly
etc.)
TOTAL NA Adhesives (MM lb) 174 168 116 52 41 23
TOTAL NA Adhesives ($ MM) 347 340 232 104 81 46
CAGR % 2015 - 2019 (Volume) 4.1% 4.7% 4.8% 3.8% 3.6% 4.4%
Source: ChemQuest
Auto exterior trim, the 2nd largest automotive application, exhibits the fastest growth potential within hot melt
adhesives with a forecasted CAGR growth of 4.8%.
Non-auto in aggregate for truck, bus, RV and trailer illustrate 4.7% growth potential.
Auto lamp assembly, is the smallest application, but third in growth at 4.4% per annum.
Auto interior trim, the largest application is fourth with 4.1% CAGR.
Auto seating and headliner, combined representing 16% of total volume are growing the slowest at 3.8% and
3.6% respectively.
CONFIDENTIAL 34
TRENDS, DRIVERS AND DYNAMICS
CONFIDENTIAL 35
Production in the Transportation sector in North America is
forecast to reach 20.1 million unit builds, a 1.2% CAGR 15-19
Light vehicles (auto, SUV and North America Transportation Production Forecast
pickup trucks) make up 93% of 2015-2019
production. 20.5
Continued growth in light vehicle 20 0.041

sales is being driven by many 0.42
factors:
0.039
19.5 0.038 0.41 0.32
Continued economic recovery 0.036
0.40
0.31
Low interest rates 19
0.037
0.40 0.31
0.49
Low fuel prices 0.37

0.48
Million Units
0.37 0.46
18.5
The growth rates are conservative, 0.39
fuelled by household creation, 18
0.49
debt levels, continuously improving 0.57

economic conditions, delayed 17.5
retirement and replacement 18.5
18.8
demand. 17 17.9
18.3
Rising interest rates and fuel costs 17.5
could add potential upside risk, but 16.5

less likely in the short-medium
term. 16
2015 2016 2017 2018 2019
Auto & Light Vehicle Med & Heavy Duty Trailers RV Bus
Source: IHS, Americas Commercial Transportation Research Co., LLC
CONFIDENTIAL 36
Auto/light vehicle trends favor adhesives applications long-term
Replacement of many interior and exterior

components with thermoplastics.
Thermoplastics offer lower overall materials cost
than many steel, most aluminum, and many
thermosetting plastics, not to mention increased
styling latitude for design engineers. Headlamp lens attachment
Substrates are trending more and more toward With PUR HMA
sustainable technology wood based, cellulose
using recycled materials for HMAs but no one
will pay for them and performance is still
required. Design Engineer, Auto Tier
Manufacturer Seat foam bonding with HMA
More modular assembly and construction
methods, where more components will be
assembled off-line to reduce costs and improve
quality.
New cradle-to-grave regulations require plastic
components to be recycled.
Use of plastic substrates is the key driver to Instrument panel, center console and
glove compartment door covering, pre-
adhesive use and selection and is highly model coating on PVC/TPO compact or foam
specific. films, all using PUR HMA
Drive to further weight reduction to meet CAFE
standards will be a driver toward more lighter
Edge turning and foam block
weight, yet structurally-sound components. attachment in door assembly
with HMA
CONFIDENTIAL 37
Pronounced shift towards SUVs in light vehicles
Forecasted growth for auto and light vehicles through 2019 is 1.4% per
annum.
Driven largely by CAFE, product activity will be concentrated in the Small
and Compact segments over the forecast horizon. The combined market
share of both the Small and Compact segments is projected to grow to
46% by 2020.
There is also a pronounced shift towards SUVs
as more modern car-based models boast fuel
economy performance, ride comfort and
handling that is much improved from
the body-on-frame models of the past. CAFE
is forcing automakers to adjust their product portfolios, and OEMs are
concentrating on 7seat Midsize SUVs as peoplemovers as opposed to
the Large SUVs (such as the Chevy Suburban and Ford Expedition) of the
past. At the lower end, there are several B-sized SUVs slated to enter the
market, which is previously untapped territory in the US. These small
utilities will compete with models in several segments, notably Compact
Car and SUV, as well as Small Car.
CONFIDENTIAL 38
Premium brands expanding in North America.
Mexico is outpacing its neighbors
Premium automakers are aggressively expanding their
line-ups. Most of this activity is aimed at the entry-level
luxury segment, with models such as the Mercedes Benz
CLA, Audi A3 and BMW 2 Series. These lower price points
at around $30,000 close the gap between Premium
vehicles and many non-Premium models, creating a new
dynamic that pressures the mainstream brands. Prestige,
perceived quality and dealership experience are some of
the factors that lead us to believe that Premium brands
will win the battle of the middle. Premium share will
grow to over 13% by the end of 2020.
Mexico has become the 7th largest manufacturer of
vehicles and the 1st in Latin America. Why the boom?
There are a number of reasons. Mexico has 10 free trade
agreements that give it access to 45 countries (and 1.2
billion people). Many manufacturers and industries are
moving to Mexico for the less expensive labor force,
rather than outsourcing manufacturing to Asia.
Companies looking to return are choosing Mexico (and
Brazil) for their near-shoring access. Mexico is forecast to
produce 5 million vehicles by 2020, representing 27%
share of North American production. Since 2000, Mexico
gained 11% share. Mexico is also the largest supplier of
auto parts to the U.S. market.
CONFIDENTIAL 39
Lackluster performance continues to plague the medium &
heavy duty segment
Medium and heavy duty trucks
are expected to decline at -
2.8% CAGR through 2019.
A number of factors drive
lackluster performance:
Freight volumes,
A rather sluggish economy, Perceived Benefits- Relevant quotes from respondents
Concerns of fleet overcapacity, The major sectors that drive motor freight transportation,
and construction, and vocational (bulk liquid and dump trucks)
activity - and ultimately tractor and straight truck purchases
Variable freight rates have there doesnt appear to be a catalyst for a break with the
performance trends.
combined to generate Procurement Director, Heavy Truck Manufacturer
disappointing fleet financials The average age of the tractor fleet was reported at 20
and, correspondingly, a months, the youngest fleet since Q107. This newer fleet
and the large growth in capacity combined with lackluster
reassessment of equipment freight demand will generate headwinds for significant fleet
requirements. growth in the near to medium term. Design Engineer,
Heavy Truck Manufacturer
CONFIDENTIAL 40
Trailers fare better than tractors short-term
Trailer builds are expected

to decline at -3.9% per
annum rate, although they
have begun recovery off
their trough.
Fleet owners continue to assess their investment plans, but

their bias toward trailer acquisition remains. The long-term
average for trailer to truck (trailer : tractor) investment has
been 1.5:1.0; this ratio has been at, or above, 2.0:1.0 for the
past year. Production Manager, Trailer Manufacturer
Fleets are replacing older equipment, despite soft freight
volumes and rates. Dry vans and reefers have benefited most
from this fleet investment surge.
VP Engineering, Trailer Manufacturer
CONFIDENTIAL 41
Green House Gas regulations will drive major redesign for
aerodynamics
EPAs Green House Gas
(GHG) phase 1 goes into
effect 1/2017.
Most of these changes
have not been significant
and mainly engine related.
GHG phase 2 (which will be defined in the next few years)

will drive major cab/body redesign for aerodynamics. The
big effect at least from an adhesive use stand point will
be that trailers will have more required aerodynamic
devices. Truck customers almost universally have them
already so there will not be much growth there. But trailers
do not and this will drive that growth. Probably not a
traditional HMA use case except, possibly, for reactive
HMAs. Engineering Director, Heavy Truck Manufacturer
CONFIDENTIAL 42
Overall conditions improved in RV
RV growth forecast is 2.2% per Class A
annum through 2019.
The industry has transitioned to
offering products with a much
broader range of sizes and price
points. This accommodates buyers
from more income brackets, Class B
allowing consumers to opt for
smaller, less expensive units, but it
detracts from the Type A (large RV)
market. Class C
Type A RVs fall into the Classes 5-7
vehicle weight range.
There are two other types of self-
propelled RVs, types B and C. Type
B units are van conversions, while
Type C are mini-motor homes. The
vast majority of these units are Perceived Benefits- Relevant quotes from respondents
below the Classes 5-7 vehicle
weight range. Growth in sales of smaller, less expensive, self-propelled
units is far outpacing that of the remaining market. As the
In addition, there is a growing industry has adapted, it has seen a preference for smaller,
offering of Type A RVs that fall into less expensive units, hence the contraction of the Type A
the Class 8 space. There are also a market. Design Engineer, RV Manufacturer
host of towable units.
CONFIDENTIAL 43
Bus builds steadily improve, continuing trend since 2010
Bus builds are expected to

grow at a CAGR of 2.1%
through 2019.
School buses dominate the Perceived Benefits- Relevant quotes from respondents
production spectrum within School districts continue with proposed cuts to

this segment. transportation services by cutting bus service for students
living within a one mile radius from school. These move are
made to save budgeted expenditures, although parents in
some school districts have able to pressure reversal of these
decisions and force school districts to look elsewhere for
budget cuts. Process Engineer, Bus Manufacturer
Although capacity utilization is an issue that is largely
foreign to bus transportation. Most districts do their best to
optimize capacity utilization with routing software and other
tools, none of which guarantee success. Some public schools
are considering a different approach to fill empty seats;
allowing school-of-choice students to ride as long as they are
able to make their way to an existing bus stop. The move is
also expected to encourage and increase school attendance.
Procurement Manager, Bus Manufacturer
CONFIDENTIAL 44
UNMET NEEDS
CONFIDENTIAL 45
Hot melt unmet needs focus on repair, surface prep and
bonding diversity
Repairing parts with the hot melt technology is a big problem and
caused long delays in shipping. Parts have to be heated to 300
degrees F to break the hot melt bond for a repair.
Engineer, Auto OEM
Minimum surface preparation- can be an issue primarily at OE
assembly operations, but also at key Tier 1 suppliers. Surface prep
process costs can often equal or exceed actual assembly cost.
Adhesives that can work with minimal surface prep will be highly
favored. Engineer, Tier 1 Supplier
Assembly of major components will require the ability to bond
diverse and dissimilar substrates. Marketing Director, Adhesive
Manufacturer
CONFIDENTIAL 46
TECHNOLOGY DYNAMICS
CONFIDENTIAL
Copyright 2016, CONFIDENTIAL
The ChemQuest Group, Inc. 47
Copyright 2016, The Adhesive & Sealant
All Rights Council All Rights Reserved
Reserved
Reactive hot melts taking share

Expect adhesive growth to be level with automotive CAGR, down
in truck with market. Generally, the OEMs and Tiers are working to
eliminate adhesives (HMAs) at about the same rate as the growth
due to light weighting and new materials. But structural bonding is
growing much quicker.
Sales Manager, Adhesive Manufacturer
Performance and durability improvements are driving the change
to better materials, especially reactive hot melts. Drivers include
higher performance materials, solvent based replacement, better
heat resistance, broader range of bonding surface compatibility,
recyclability and environmental concerns.
Design Engineer, Auto Manufacturer
CONFIDENTIAL 48
Hot melt adhesives replacing epoxy in cosmetic spot welds

Major car & truck manufacturers closures applications, i.e. vehicle doors and
hoods are bonded both inner parts/panels and outer parts/panels with hot melt
adhesives it was switched from an epoxy compound. Process Engineer, Major
Car and Truck Manufacturer
In hand joints, we converted from spot welds to a hot melt adhesive bonding
operation for a 10% improvement in productivity. You have a metal tongue - where
an outer panel has steel that comes in and overlaps onto the inner panel - this is
what we call a mechanical joint, helped us replace spot welding - roughly a
spot - about 100 spot welds for each hood - with adhesive bonding (hot melt). By
replacing the spot welds with adhesive bonding in that mechanical joint we
experienced a 10% improvement in productivity. Spot welding is expensive: 25 to
50 cents for each spot weld very high material costs.
Process Engineer, Major Car and Truck Manufacturer
CONFIDENTIAL 49
Hot melt adhesives use is growing quickly in RV

HMA use is growing very quickly in RV and trailer use. We are
actively looking for new and better ways to take advantage of its
properties such as using FIP for gasketing and other applications.
Hard lamination is still split between hot and cold reactives as well
as 2K production. Soft materials to the hard surface is
predominantly reactive HMAs.
Technical Director, Adhesives Manufacturer
RV is a boom or bust market and we need to build fast in the
boom, so better efficiency is extremely important as manufacturers
have outstripped the labor market.
Production Manager, RV Manufacturer
CONFIDENTIAL 50
PAPER BOARD & RELATED
PRODUCTS
CONFIDENTIAL
Case & Carton applications make up 90% of hot melt usage
90% of the 1.0 billion pound 2015 North America Hot Melt Adhesives
Paper Board & Related Products Share By
market is for case and Subsegment
carton sealing.
Paper converting is second Tobacco
0.1%
with 6% of hot melt Envelopes
Paper 4%
demand.
Converting
6%
Hot melt adhesives for

envelopes is next,
accounting for 1.0 Bn Lbs.
approximately 4% of
demand Case &
While tobacco applications Carton

90%
are negligible at 0.1% of hot

melt usage.
Source: ChemQuest
CONFIDENTIAL 52
Case & Carton driving growth
2015 North America Hot Melt Adhesives

Paper Board & Related Products Growth Trends By Subsegment
1000 3.0%
900 2.0%
800

1.0%
700
Value in Millions
600 0.0%
500 -1.0%
400 -2.0%
300
-3.0%
200
100 -4.0%
0 -5.0%
Case & Carton Paper Converting Envelopes Tobacco
TOTAL NA Adhesives (MM lb) 921 56 45 1
TOTAL NA Adhesives ($ MM) 623 106 35 2
CAGR % 2015 - 2019 (Volume) 2.5% 2.0% -4.0% -3.0%
Source: ChemQuest
Given bookbinding, bags, labeling and tray forming are out scope, then Case & Carton adhesives
used for packaging of fast moving consumer goods dominate.
The primary growth is coming from Case & Carton applications, where forecasts show a 2.5% CAGR
through 2019.
Converting follows with 2.2% growth per annum.
Unfortunately, envelopes and tobacco are both declining markets, with envelopes declining at 4%
while Tobacco is declining at 3% rate through 2019.
CONFIDENTIAL 53
Paper board markets perceived as commodity

Packaging is perceived as commodity. HM are on slippery slope of
commoditization, 90% based on price.
Sales Manager, Adhesive Distributor
Lots of sunk capital exists in the market with thousands of tanks.
Vice President, Adhesive Manufacturer
Envelopes are forecast to decline at a 4% pace. Envelopes are going
by way of dinosaur. What used to be 156 Bn envelope production
market, today is less than 50% of that resulting in considerable
consolidation across the entire value chain
Marketing Manager, Adhesive Manufacturer
CONFIDENTIAL 54
CONFIDENTIAL 55
Corrugated production in North America forecast to grow at a
moderate 1.7% per annum
North America ranks third North America Corrugated Production Forecast
2015-2019
overall behind China and 49000
the EU in corrugated 48500
production, with in excess 48000
of 46 billion square meters 47500
produced in 2015. 47000
Million Square Meters

The industry is forecast to 46500
grow at a 1.7% CAGR in 46000 48474
volume from 2015 through

47676
45500
46971
2019. 45000
46277
44500 45420
44000
43500
2015 2016 2017 2018 2019
Source: International Corrugated Case Association (ICCA)
CONFIDENTIAL 56
CONFIDENTIAL
Fast moving consumer goods dominate end-use applications
Fast moving consumer 2015 North America Corrugated End-Use

Market Shares
goods (FMCG) represent
44% share of end-uses
within the corrugated
sector. Others
5%
Industrial machinery follows Industrial &
with 22% share, while Machinery

22%
Processed
Foods
durable goods are third with Durable

FMCG
44%
24%
12% share. Goods &

Clothing
Drinks
10%
Non food
Appliances & electrical

12% Consumables
10%
goods and fresh Domestic

foods/produce follow Appliances &
Electrical
Fresh
Foods/Produc
closely with 9% share and Goods
9%
e
8%
8% share respectively.
Source: International Corrugated Case Association (ICCA)
57
Major packaging themes driving greater segmentation and
higher demand for adhesives
Key Trends Packaging Implications
Rush Quick and easy purchasing
Pre-prepared ingredients, ready-to-eat meals
Down Aging Brand segmenting on 40+ yrs. old (have money)
Use trends from 20+ w/ convenience for 60+ yrs. old
My Space (Personal) Individualized packaging; single, aseptic portions, personalized
cosmetics
Correctness Ethically correct product & packaging
Escape Contents are safe with reliable taste leads to transparency, tamper
evident and organoleptic proof
See-Buy confidence
Mobility Instant meals, microwaveable, wide-mouth bottles, snap-on/off
closures, designs not requiring spoon/knife/fork, tough containers,
functional containers allowing direct use of product
Advertising space on the packaging and presentation
CONFIDENTIAL 58
Tape preference for case sealing still outpaces adhesive
bonding
Ratio of packaging tape to HM
in case sealing is
approximately 65:35 but that is
reversed for carton sealing.
Decision factors related to use
of tape include:
Number of differing boxes in
production;
Speed of line vs. complexity Perceived Benefits- Relevant quotes from respondents
of operation;
Hot melts are less expensive with large dedicated, high speed
Labor skill level; application lines but tapes are more flexible from manufacturing
Aesthetics of package. standpoint. With new products would generally go with tapes due
to flexibility with smaller volume, start-up products. Currently,
probably 65 / 35 in favor of tape - however equipment in place at
a given packaging facility determines in part whether tape or hot
melt is used. Tape will give better seal against exteriors easier
for smaller packaging and becoming most cost effective. Recyclers
are not complaining about use of tape. HMA has its principal
value in high volume, long run manufacturing. Packaging
Supervisor, CPG
CONFIDENTIAL 59
Total cost of ownership and process efficiency drive decision
process
The drivers (for equipment) is total cost of ownership and process efficiency.
If you have a high-speed production line, tape is not the most efficient way
and the most cost-effective way to end-of-line packaging. Global Marketing
Director, Equipment Manufacturer
There are a lot of cartoning and packaging solutions that do not use HM.
For instance, take the on-line buying sector, e.g. Amazon etc. Most of those
packages are sealed with tape. That is different than packages you would
see in a supermarket, which are almost 100% closed with HM. Because they
are produced in an industrial environment, high volume, low mix. Where as
an on-line shop has high-mix, low volume. So, they have different sized
boxes and that is much more difficult to handle in a packaging machine than
using a hand-taper and somebody in a warehouse.
Engineering Director, Adhesive Dispensing Equipment Manufacturer
CONFIDENTIAL 60
CONFIDENTIAL
Flexible packaging outpacing case & carton by 1.5-2X
Flexible packaging forecast to grow

at 3.5%-4% CAGR through 2020.
Drivers of growth:
Point of sale presentation with
sexier looking package (colorful Perceived Benefits- Relevant quotes from respondents
graphics, glossier);
Offers greater multi-functional Point of sale presentation demands promotional packaging,
capabilities, e.g. pouring spouts, re- differentiate with glossier and colorful graphics.
closable seal, enhanced barrier Global Marketing Director, CPG
properties, etc.; Multi-functional packaging to facilitate use (pouring sprout, re-
Provides enhanced performance closable seal).
properties for Modified Atmosphere Engineering Director, Flexible Packaging Manufacturer
Packaging (MAP) and active
packaging; Flexible packaging has been the fastest growing sector of the
market, driven by continuing replacement of metal cans and glass
Offers great consumer convenience bottles, as well as similar trends across other application areas in
for active life styles- Portion food, cosmetics and healthcare. Across flexpack, foil is the fastest
packaging for prepared foods; growing, driven by rising demand for blister packaging in
Fueled by advances in printing and healthcare applications, although in US, foil has been losing share
barrier technologies. to plastic laminates in food applications due to cost.
Process innovations Technical Director, Flexible Packaging Producer
Advances in manufacturing Buy today, pay today and consume today- Single portion flexible
efficiencies
packs for freshness without preservatives
Higher fill rates for stand-up Merchandizing Manager, National Grocery Chain
pouches/ bags End user interviews are intended to provide qualitative information based on small sample sizes.
CONFIDENTIAL 61
Online shopping, bulk-food purchasing and time spent enjoying
home nesting projects is enhancing packaging growth
Perceived Benefits- Relevant quotes from
respondents
Developed markets like U.S. and Canada
have been experiencing increases in spending
time at home with family and friends driving
more prepared packaged food requirements,
for example, the emergence of man-caves.
Brand Manager, CPG
Online shopping Continues to take share
away from brick & mortar stores and thus
increasing use of packaging for shipment to
customers. Marketing Manager, Retailer
Increased popularity of bulk food purchasing
through discount outlets such as Sams, Cosco,
Aldi.
Merchandizing Manager, Retailer
CONFIDENTIAL 62
Convenience, healthy foods and recycling important growth drivers
Increased demand for convenient (on-the-go lifestyles among increasingly time-constrained consumers),
quality and healthy foods to combat obesity. Eco-consciousness will push recycling efforts further upwards.
Buyers want more corrugated and paperboard.
Director, Packaging, CPG
Many of our customers want consumers, relative to packaging, to get more of an emotional experience or
more feeling associated with not just the food, if we do food packaging which is what we primarily do, but
more experience interacting with the packaging. Take coffee - Three things need to happen a good coffee.
The coffee needs to be good, a good experience while consuming the coffee in the package, and then in the
caf or store experience needs to be intimate for success. R&D Director, Converting Company
Growing requirements for brand enhancement/ differentiation in an increasingly competitive environment
will lead to more package segmentation and drive adhesive usage.
Packaging Manager, CPG
There is a trend towards smaller household as well as a move towards smaller package sizes as incidence of
families eating together at the dinner table becomes less common.
Brand Manager, CPG
Retailers have been experiencing substantial growth of retail/shelf-ready packaging (RRP/SRP).
Merchandizing Manager, Retailer
CONFIDENTIAL
Copyright 2016, The Adhesive & Sealant Council All Rights Reserved 63
Wave of new sustainability efforts surge ahead
Sustainability efforts gain as environmental awareness surges:
Recycled content
Material reduction
Life cycle analysis
Distinct changes emerging relative to cradle-to-cradle LCA. The notion of Cradle to Cradle
(C2C) conveys a message of Do good instead of Do less bad implying that the C2C model is
sustainable and considerate of life and future generations. As a result, one large national
retailer for example is turning away from food & fuel origins toward by-products, protein and
sea. Sustainability Manager, National Retailer
Consumers understand recycling far more than sustainability and compostability. That said,
messaging that drives consumer behavior using words such as the famous 3-Rs recycle, re-use,
re-purpose are gaining popularity and would be consistent with CPG and Retailer voice-of-
customer findings. Sustainability Manager, National Retailer
Relative to consumer sustainability is a trend consumers want to know where their food and
where their packaging comes from. More specifically, more sustainable options such as paper
or certified paper; more Kraft or more natural is a trend. R&D Director, Paper Converter
CONFIDENTIAL 64
Food safety front and center
Series of safety recalls leads to increased scrutiny and decreased consumer trust leading to
more prospects for legislation. Retailers taking serious measures by submitting for
voluntary inspections and certification by the Global Food Safety Initiative (GFSI). GFSI,
operated by The Consumer Goods Forum (U.S., Tokyo, Paris) is an industry-driven initiative
providing thought leadership and guidance for food safety management systems along the
supply chain. While threat of chemical migration is important, there are no standards
being established for preventative measures yet. CPGs, Retailers and GFSI monitoring
media, scientific studies, NGOs, etc., e.g. BPA, triclosan and parabens issues. Therefore,
media awareness and NGO pressures are driving the agenda more so than systematic
means to measure and detect contamination via scientific facts and/or unsafe practices.
GFSI recognizes the need and has the desire to create a standardized benchmarking
category code but priority now is on more important safety initiatives like:
Exposure of food to processing contamination.
Detecting food spoilage at retail outlets prior to sale to consumers.
Processing and handling of plant, animal and perishable products.
Production of food packaging is near the bottom of the list of priorities for now.
Chairman, Large National Grocery Chain.
CONFIDENTIAL
Package technology focuses on active and MAP
Active packaging growth

packaging that performs an active
function after the contents are
packaged by interacting with the
contents to deliver improvements
in quality, shelf life, safety and
usability.
The growing demand for organic
food encouraging development of
Modified Atmospheric Packaging
(MAP) solutions that suit an
extended distribution chain. Perceived Benefits- Relevant quotes from respondents
Modified Atmosphere Packaging (MAP) is a Even though its expensive, the trend for consumers to
technique used for prolonging the shelf-life of demand more convenient packaged foods drives sales of
fresh or minimally processed foods. In this Modified Atmosphere Packaging (MAP) and active
preservation technique the air surrounding the packaging, including use of moisture scavengers, self-
food in the package is changed to another venting films and microwave susceptors.
composition.
Merchandizing Manager, CPG
CONFIDENTIAL
UNMET NEEDS
CONFIDENTIAL 67
Unmet need themes focus on processing robustness, malodor,
diversity and bio-based materials
Still deficiencies in using hot melts vs. water-based systems like lower strength and
bad penetration into carton substrates. Packaging Line Supervisor
Eliminating malodor is an issue particularly with multi-national customers.
Vice President, Adhesive Manufacturer
A growing need is for adhesives that will not soften when in contact with aromatic
oils contained within the package. Chemist, Adhesive Manufacturer
Processing aspect is where we have the most unmet needs. Processing
improvement is driven by line conditions- not all about speed necessarily, just don't
want the packaging line to shut down. Packaging Engineer, CPG
Increasing imports of cartons from Asia containing plasticizers like DIPP, DBP which
are no longer used in NA or Europe. This impacts adhesion characteristics and
recycling of the cartons. Sales Director, Adhesive Distributor
Increased use of compostable bio plastics (poly lactic polymers, and cellophanes)
making adhesion more difficult. Packaging Engineer, CPG
CONFIDENTIAL
Unmet need themes focus on processing robustness, diversity
and bio-based materials
Hot melts with zero migresives to satisfy the trends coming from EU to avoid migration of
chemical substances into packaged food materials.
Marketing Director, Adhesive Manufacturer
A hot melt adhesive based on bio-based raw materials that alleviates more than one problem
on the line (or reduces labor costs/ processing time) would be substantially rewarded.
Technical Manager, CPG
A hot melt adhesive that can adhere to a wide breadth of non-polar substrates, alleviating
need for multiple SKUs. Packaging Design Engineer, CPG
We want the performance at low cost and something thats recyclable and compostable and
finally minimum amount of usage source reduction. Fast processing so a hot melt with a
wide range of applications. One glue fits all, if you will. Lets say were using 6 different types
of adhesives. Why? Do we really need 6 types? Could we do it with 2 or 1? It would help the
economy of scale of the operation. Makes everything easier because you dont have to secure,
store and manage all of these different adhesives and then #2 there is less risk of somebody
selecting the wrong adhesive and #3 simplification all the way around.
R&D Director, Converting Company
CONFIDENTIAL
TECHNOLOGY DYNAMICS
CONFIDENTIAL 70
Natural or bio-based polymers on the forefront of
development
Natural polymers are ranked as the number one disruptive technology. It is
considered to have significant potential in fast food/ grocery packaging due to
sustainability implications and consumer behavior.
Product Development Chemist, CPG
New HM adhesives emerging on the market with bio-based content of 25%-75%.
Technical Director, Adhesive Manufacturer
CONFIDENTIAL
HYGIENE
CONFIDENTIAL
Diapers make up 71% of hot melt demand
The North American hygiene 2015 North America Hot Melt Adhesives
Hygiene Volume Share By Subsegment
market is 210 million pounds
in 2015.
71% of the market is Bedding
1%
dominated by diaper
Meat pads,
etc.
assembly. Fem Sanitary

5%
8%
Adult incontinence is a
Adult Care
distance second with 15% 15%
share. 210 MM Lbs.
Feminine sanitary uses

account for 8% share. Diapers
71%
Meat pads and Bedding follow

with 5% and 1% share
respectively.
Source: ChemQuest
CONFIDENTIAL 73
Adult care driving growth of hot melt adhesives in hygiene
Adult incontinence is forecast 2015 North America Hot Melt Adhesives

to grow at 4.7% CAGR through Hygiene Volume & Value Growth Trends By
Subsegment
2019. This application use 450 5.0%
more adhesives due to size of 4.5%
each unit and the aging of the
400
4.0%
population in North America, 350
particularly in the U.S. and 3.5%

300
Value In Millions
Canada. 250
3.0%
2.5%
Diapers and sanitary uses are 200
relatively mature and

2.0%
150
penetrated heavily, hence 100
1.5%
exhibiting growth in range of 1.0%
1%. 50 0.5%
Likewise, Meat Pads and 0

Diapers Adult Fem Meat Bedding
0.0%
Bedding, which exhibit growth Care Sanitary pads, etc.
of 2% and 1.5% respectively. TOTAL NA Adhesives (MM lb)

TOTAL NA Adhesives ($ MM)
CAGR % 2015 - 2019 (Volume)
Source: ChemQuest
CONFIDENTIAL 74
CONFIDENTIAL 75
Diapers, sanitary and adult care account for 28 billion units of
production volume
Diapers make up 76% of 2015 North American Hygiene Production
Forecast
2015 production, while 35000
adult care represents 16%. 30000
Feminine sanitary 4559.973683 4742.372631

4932.067536
CAGR
5129.350237 5334.5242474%
represents the remaining

25000
2362.026463 2389.424756
1.1%
2285.765729 2308.623387 2334.018244
8% of production share. 20000
Million Units
Adult care is gaining 15000
momentum and will grow to 1.2%

22463.68826
21489.15912 21704.05071 21942.79527 22206.10881
make up 18% of the market 10000
by 2019. 5000
0
2015 2016 2017 2018 2019
Diapers Fem Sanitary Adult Care
Source: Euromonitor
CONFIDENTIAL 76
Construction applications account for the majority of volume
Excluding meat pads and 2015 North America Hygiene Applications

bedding, the hygiene market in (Excluding Meat Pads and Bedding)
North America is 198 million Stretch, core,
pounds.
hooks,
wetness
Within the 198 million pound indicator

7%
market, approximately two thirds
of the volume is for construction Positioning
applications, which are generally 8%
considered commoditized.
Elastics account for 20% of the
volume. Elastic
20%
Positioning adhesives make up
8% share, while the remaining 7% Construction
65%
is for a diverse set of value added
features like stretch panels, core,
hooks, wetness indicators, etc.
Source: ChemQuest
CONFIDENTIAL 77
Continuing innovation drives growth and differentiation

Trends reflect the whole article will be stretch and more conforming leading to higher stress
applications including elastics- leg cuffs, stretch panels, tabs, etc. R&D Director, CPG
Increasing the use of stretch fabric components with customized elastic performance and soft,
cloth-like aesthetics. Engineering Mgr., CPG
Continued innovations and niche applications, e.g. training pants, swimmers, wetness liner,
etc.. Owner, Adhesive Manufacturer
Diapers with excellent softness, cloth-like aesthetics and brilliant printing for nonwoven, film
and laminate components. Procurement Mgr. CPG
Thin profiles eliminating fluff pulp also more environmentally friendly and lighter weight with
superior fluid absorption and retention performance.
Global Marketing Mgr., Equipment Supplier
Were taking a hard look at ultrasonics welding. Advancements have garnered our attention.
After all, we buy millions of dollars per year of consumables in the form of hot melt adhesives,
and ultrasonic welding could reduce that cost substantially.
Procurement & Supply Chain Mgr., CPG
CONFIDENTIAL 78
Stable, predictable business and customer dynamics

This segment is stable with a consolidated customer base. Good predictability in terms of
market and customer dynamics. Even private branded materials, which was hot five yrs. ago
has calmed down. Business Director, Adhesive Manufacturer
Branded products have regained some lost ground Marketing Mgr. Adhesive Manufacturer
Demand for local supply chain and local solutions. Supply Chain Mgr., CPG
Sustainability a major theme particularly with SCA.
Business Director, Equipment Manufacturer
Adult care is gaining momentum!
Consumer and institutional use with institutional the largest component.
New innovation "Always" brand for feminine "light incontinence is a new category
straddling feminine care and incontinence
Business Director, Adhesive Manufacturer
Medline recently began in-sourcing, putting pressure on competitive brands, i.e. Domtar, First
Quality, Presto and Covidien Owner, Adhesive Manufacturer
CONFIDENTIAL 79
Meat pads provide a sense of security, that the meat or poultry
is fresh
Eye-appealing meat, poultry, seafood and produce packages that are free from excess juice -
coupled with clean display cases - drive purchases and consumer satisfaction in retail perishable
departments.
A consumer market research study confirms 85 percent of shoppers prefer an absorbent food
pad in their packages of fresh meat, poultry, and seafood.
More than 90 percent of consumers recognize absorbent pads' value for controlling excess
fluids and natural juices. Shoppers appreciate absorbent pads for their important benefits:
prevents juices from leaking outside the package
keeps perishable foods fresher and cleaner
eliminates mess in grocery carts, bags, cars and at home
enhances overall appearance of packaged fresh foods
improves customer satisfaction
74% of consumers noted that absorbent pads prevent juices from leaking on the kitchen
counter, floor, or in the refrigerator once the package has been opened.
54% of consumers believe that absorbent pads keep meats from clinging to the foam tray.
Consumers Market Research Conducted by Paper Pak Industries
CONFIDENTIAL 80
UNMET NEEDS
CONFIDENTIAL 81
Processing issues, sensory experience and higher stress lead
unmet needs requests
We have considerable problems with hot melt buildup in hoses, malodor and
downtime.
Chief Engineer, CPG
Resolving HM processing issues is a major need! We consider HMs as MRO item
and its our biggest headache (hoses and nozzles clogging, tanks plugged, malodor
complaints, overall cost.
Plant Mgr. CPG
Need more sensory performance and tie-in to consumer experienced value, its
the highest portion of the value pyramid for us. For example, wetness indicators,
smart-grip (like pallet stabilization grips the diaper but releases with slight finger
pressure)
Design Engineer and Marketing Manager, CPG
Adhesive able to withstand higher stress loading due to increased usage of elastics.
R&D Director, CPG
CONFIDENTIAL 82
Demand for ultra-thin products
Outlook for ultra-thin design.

Underwear like products in thinness, aesthetics and feel
Using very thin air laid pulp composites containing superabsorbent... Substituting for
fluff pulp/ superabsorbent cores in baby diapers
Produced using lower cost simplified converting lines w/o hammer mills for processing
fluff pulp or superabsorbent applicators
Potentially reduce adhesive usage by an additional 5-7% per unit
Maximizing absorbency and non-leakage performance using the lowest
cost raw materials and manufacturing methods
Demand for ultra-thin products with no leakage.
Improved grades of superabsorbent...less fluff pulp and more
superabsorbent per unit (current design)
Air laid composite cores
More elastics for conformability
Fluid acquisition and distribution sub-layers
CONFIDENTIAL 83
Demand for ultra-thin products (contd)
Consumer Benefits.
More comfortable to wear
Less bulky and more discreet appearance
More convenient to carry
Require less household storage space
Reduced waste disposal bulk
Retailer Benefits.
Reducing shelf space requirements per package that frees up space
for new brands or specialized products
Reduced warehouse space requirements
Reduced freight costs
CONFIDENTIAL 84
Promoting skin health
Promoting skin health

Improving the dry surface performance by improving the fluid
dynamics and storage performance of sub-layer materials and
absorbent cores
CONFIDENTIAL 85
TECHNOLOGY DYNAMICS
CONFIDENTIAL 86
Metallocene substitution and ultrasonic welding headline
technology advances
Metallocene technology has come a long way. It was only a few years ago that we
didnt use any, now were at 20-30% usage and within a couple of years we could
reach 45%. R&D Director, CPG
Ultrasonic welding is a real threat. Business Director, Equipment Manufacturer
We dont see ultrasonic welding as a huge risk! Bigger risk is from HM machine
companies, e.g. Nordson- with every new innovation, a reduction in glue ensues, for
example "Duet" applies less on center of the elastic strand than edges, thus
optimizing on stress points. Business Director, Adhesive Manufacturer
Relative to the threat of ultrasonic welding displacing adhesives for

hygiene applications (namely diapers, adult care and sanitary
napkins), ChemQuest observed a fundamental difference of opinion
between adhesive manufacturers and the combination of their
customers and equipment manufacturers.
CONFIDENTIAL 87
Ultrasonic welding advances prompt interest by CPGs
Perceived Benefits- Relevant quotes from

respondents
Presently, used in higher stress applications
jointly with adhesives. Glue aids the process
at the speeds applied- for example diaper
tab is affixed to the chassis with ultrasonic
weld but assisted by adhesive. Concern
over pieces coming off and being
swallowed. Development Chemist, CPG
Ultrasonic advantages center around
application efficiency (overall cost) and
elimination of HM adhesive malodor.
Equipment cost only, depreciation over time,
no material cost (30 plus bonds in a diaper,
requiring different adhesives for certain
Source: Altrasonic.com
bond, etc.) R&D Director, CPG
CONFIDENTIAL 88
ULTRASONIC WELDING
CONFIDENTIAL 89
Fundamentals of ultrasonic welding
Ultrasonic welding is a bonding method that uses high frequency mechanical sound
waves to create molecular bonds between thermoplastic materials such as nonwovens.
During the ultrasonic welding process, mechanical vibrations are introduced into the
material at a high frequency of 20,000 or more cycles per second with specific amplitude
in the magnitude of the diameter of a human hair and a certain weld force.
Ultrasound is a term used for high frequencies ranging from 20 kilohertz (kHz) to 1 Rigid mounted
gigahertz (gHz) (Hz = cycles per second). These frequencies are beyond the range of what sonotrodes
humans can hear. Ultrasonic welding systems commonly use frequencies of 20, 30 or 35
kHz.
An ultrasonic generator electronically converts line voltage into a high voltage/high
frequency signal and delivers it to a converter. In the converter, piezoelectric crystals are
sandwiched between two titanium discs and vibrate (expand and contract) at the
frequency of the applied electrical signal. The vibration produces a very fast mechanical
movement of 20,000 cycles per second with small amplitude of about 18 microns (peak-
to-peak).
All thermoplastic resins can be welded using ultrasonics. Best are hard, amorphous
plastics such as PC, PS, SAN, ABS, and PMMA. They have ideal transmission properties for
ultrasonic energy, thus they are also easily weldable and achieve good results even with Rotary
larger dimensions. Semi-crystalline plastics, such as PA, PP, PE, and POM melt generally sonotrodes
faster. Consequently they can only be welded within the near field of the sonotrode
(weld tool). Design Engineer, Equipment Manufacturer
End user interviews are intended to provide qualitative information based on small sample sizes. Source: Herrmann Ultrasonics
CONFIDENTIAL 90
Ultrasonic welding SWOT Analysis
Strengths Weaknesses
Provides savings on repeat buying of consumables and Initial equipment investments given considerable
lower energy costs existing sunk capital
Bonding layers of material simultaneously, such as Specifically designed joints are required
multiple layers in side seams of training pants High tooling costs
Intermittent bonding patterns - allows for better diaper Small contact area between the substrate surfaces
design and construction (higher absorption rates) by Throughput rate is lower in some applications
trapping the absorbent in more strategic areas Stiffens the joint and causes melting of fabric and burns
Safe process - works without hot medium A means for aligning the mating parts is
No machine downtime by adhesive required for to ensure proper repeatable
contamination and clogging nozzles alignment and to avoid marking.
Presently, adhesives and ultrasonic welding Current ultrasonic welding suppliers are
co-exist where combination are jointly used small causing concerns among CPGs
in higher stress applications. Adhesives aid about their scale and global supply.
the process at the speeds applied.
Many variables to consider for each application in
Smart business model is to link ultrasonic welding
determining the appropriate joint design, bond pattern
with diaper equipment manufacturers, e.g.
and melt points.
Fameccanica as total bond solutions rather than
present competition pitting one ultrasonic welding
manufacturer against the other. Whats lacking is
coordination- theyre all small.
Opportunities Threats
Image Source: Science How Stuff Works
CONFIDENTIAL 91
Ultrasonic welding FAQ and opinions
1. What kind of applications in diapers or fem care lend themselves well to ultrasonic welding?
Primarily elastics and tabs on a diaper, wing attachment and ADL attachment on a sanitary
napkin. R&D Director, CPG
2. What kinds of applications in diapers or fem care will likely never go to ultrasonic welding?
Pulp core because a lot of SAP is in the way where bond point exist. Engineer, CPG
Has a ways to move into mainstream. One global CPG have had it on their lines for 3 decades.
Sales Mgr. Equipment manufacturer
3. What are the benefits of ultrasonic welding?
It saves all the consumables, i.e. hot melt adhesives, particularly given the volatility thats
existed over the past decade Vice President Sales, Equipment Manufacturer
Creating attractive, embossed laminates by using decorative bonding patterns for product
differentiation or brand recognition Chief Engineer, CPG
Safe process - ultrasonic bonding works without hot, pressurized medium that could hurt
operators or maintenance personnel;
Instantaneous system availability, not heat-up time required;
Immediate bond strength with virtually no open time or cooling phase;
No repair of hot and sticky parts required; and
Low energy costs. Process Engineer and Line Superintendent, CPG
CONFIDENTIAL 92
4. What are the down sides?
Due to the nature of the process, ultrasonic bonding normally requires some
thermoplastic contents in the material that can melt to create bonds.
Its an art- whats the right bond pattern
Chemistry is melt points. Many variables can impact it requiring a lot of trial and error.
R&D Chemist, CPG
Ultrasonic vibrations can damage electric components.
Tooling costs for fixtures are high. Process Engineer, CPG
The initial contact area between the mating surfaces need to be small to concentrate
and decrease the total energy (and thus the time) needed to start and complete melting.
Horn contact and placement must be considered to provide proper bearing over the joint
area, to direct the mechanical energy and force to prevent marking of the contact
surface. Design Engineer, Equipment Manufacturer
Vibrating horn typically is narrow width, 1-3 inches. Stationary or blade horn can go
wider, 4-5 inches, but one can put multiple horns to scale across the width of a web.
Both generate higher output. Rotary sonotrodes are used for high-speed
Sales Manager, Equipment Manufacturer
CONFIDENTIAL 93
5. How much does it cost to include ultrasonic welding (especially relative to adhesives) from a
capital standpoint when starting up a new line or retrofitting an existing line?
Its highly dependent on the application. Example 1: Adult incontinence- attach the ear to the
core, maybe slight tack down feature of the ear to stay folded.
3 attachment bond points- that use 20 KHz unit. Cost New would be $600,000. Retrofit cost
$800,000 to $1,000,000.
Example 2: Elastic strand entrapment- glueless- for leg cuff. Cost would be $50K -$60K per unit.
$200,000 per line retrofit.
For example, that one large global CPG is buying $70 million globally in elastic adhesives for leg
cuff- this could wipe that out. In our analysis, we demonstrated payback is less than 12 months
for leg cuffs. Vice President Marketing, Equipment Manufacturer
6. What are the maintenance costs? Is there a significant investment needed in spare parts?
Main maintenance issues- back up parts including horn stack assembly. So need to have $20K
for horn stack spare parts.
Horn has to be pulled out every six months.
Power generation unit as a back up for another $10K.
Another $10K for miscellaneous parts.
All in- $40K of back up equipment per system. Line
Engineer, CPG and Salesperson, Equipment Manufacturer
CONFIDENTIAL 94
7. Do typical diaper or fem care product manufacturers have the technical capabilities to properly
manage ultrasonics once implemented?
Absolutely! Originally developed by CPG. Multiple
respondents from various entities concur
8. What line speeds are possible with ultrasonics?
As lines went faster, stationary horns cant keep up. Rotary can keep up but caveat is width of
bond. Friction creates heat to melt thermoplastic to melt and flow. So different melt flow
points is a challenge (OPP and PE different melt flows, pulp core in middle and doesnt melt).
Line speed of high speed diaper machine is going 1800 ft. / min (500 meters/min)- Aurizon can
go up to 2000. Aurizon is rotary.
Available in 20 kHz, 30 KHz, 50 KHz
At 20 kHz there is more movement more current and more
resident frequency.
Reasonable width is 2 in.
At 30 kHz width is 1 1/3 inch
At 40kHz width is about 1 inch width
Bond force is reduced with higher number.
All made of special high grade titanium that need to be resurfaced over time.
Vice President Sales and Marketing, Ultrasonic Welding Equipment Manufacturer
CONFIDENTIAL 95

9. With an eye on the future, when (if ever) do you believe ultrasonics will be a serious threat
to adhesive consumption? When will usage peak?
YES if the forces align!
Aurizon (spun off of Kimberly Clark, based in Appleton) too mom and pop, produces
rotary ultrasonics, horn is rotating and its a wheel. But if partner with equipment
manufacturer it could be a factor.
Glueless platform on Fameccanica maybe a good platform
Herrmann (German)- primarily in Hygiene, produces stationary horn-vibrates up and
down.
Branson is small also. Former CEO, Ultrasonics Equipment Manufacturer
Hard to tell when usage will peak, but its several years away. One global CPG is using it,
another global CPG is considering it, but adhesive volatility has subsided, so theres not as
much urgency. Vice President Sales, Equipment Manufacturer
CONFIDENTIAL 96
WOODWORKING
CONFIDENTIAL
Woodworking primarily for furniture assembly dominates
The Woodworking segment in 2015 North America Hot Melt Adhesives

Woodworking Share By Subsegment
North America represents a
size of 129 million pounds in
2015.
Sandwich
Flooring is the largest market Fenestration
7%
Panels
2%
with 43% share. Other
8%
Furniture & cabinets follow
with 40% share. Flooring
43%
Fenestration (window & door) 129 MM Lbs.
assembly follows with 7%

share. Furniture &
Cabinets
Sandwich panels account for 40%
2% share followed by all

others making up the balance.
Source: ChemQuest
CONFIDENTIAL 98
Relatively mature segment with 2.3% aggregate growth
Flooring, as the largest 2015 North America Hot Melt Adhesives

Woodworking Growth Trends By Subsegment
segment, is forecasted to 100 3.5%
grow at 2.5% CAGR through 90

80
3.0%
2019. 2.5%

70
Value In Millions
60
Furniture & cabinets and 50
2.0%
fenestration show a mature 40

1.5%
growth rate of 1.9%, and

30 1.0%
20
1.5% respectively. 10
0.5%
0 0.0%
Sandwich panels and other
applications reflect a
growth forecast of 3% per
annum.
TOTAL NA Adhesives (MM lb)
CAGR % 2015 - 2019 (Volume)
Source: ChemQuest
CONFIDENTIAL 99
CONFIDENTIAL 100
Furniture sales forecast at 2.7% CAGR through 2019
Furniture sales in North 2015 North America Furniture Production

Forecast
America are forecast to 135
grow to $131 Bn in 2019

from $117 Bn in 2015. 130
The U.S. furniture industry 125

is re-shoring slowly after
more than 50% of the
$ Billion
120
market offshored to various 131
parts of Asia since 2000.

127
115
124
120
117
110
105
2015 2016 2017 2018 2019
Source: International Tropical Timber Organization (ITTO)
CONFIDENTIAL 101
Window & Door sales forecast at 1.8% CAGR through 2019
Furniture sales in North 2015 North America Window & Door Production
195
America are forecast to grow
to 188 million unit production
in 2019 from the existing 174
190
million units, driven by

strengthening new 185
construction activity.
Million Units
180
On the remodeling side, 193
growth rates appear to have 187
peaked in 2013. Still, 175

183
remodeling will continue its 178
upward trend growing at a low 170 174
single-digit pace based on

industry respondent forecasts. 165
2015 2016 2017 2018 2019
Source: Window&Door, AAMA/WDMA
CONFIDENTIAL 102
Flat laminating dominates hot melt usage
Flat laminating end-uses 2015 North America Segmentation, Flooring,

(flooring, doors, windows, Furniture & Fenestration Assembly (excludes
Sandwich Panels and others categories)
partitions) leads this 115 115 million Lbs., $200 million
million pound hot melt market
with 54% share.
Profile wrapping and General Profile
contour/edge banding Assembly
14%
Wrapping
16%
(furniture, cabinets, etc.)
follow, each with 16% share of Contour/Edge
market. Banding
16%
General assembly (decorative
films, extrusion/spray for
cabinet assembly, non-
permanent/fixture for Flat
accessory attachment and Laminating
54%
insulation, etc.) is closely
behind at 14% share.
Source: ChemQuest
CONFIDENTIAL 103
Steady growth since 2009
Demand is primarily driven by housing starts, remodeling. Very sensitive to GDP growth
rates.
Very robust since 2009. Starting to slow but still growing.
Hard floors is growing 4-6% / year
Engineered Wood or Laminated Floors growing 5%
Vinyl floors growing 5% favoring demand in SBC hot melts
Kitchen & Bath Cabinets growing 5%
Polyamide Hot Melt growing 7%.
Composite Panel Market growing 4%
Engineered wood flooring, furniture driving growth
Decorative Laminate Market growing 3%
Upholstered Furniture
While mainly made overseas, some re-shoring taking place due to lead-times and
customization
Profile wrap and Edge Banding growing 3%.
Business Directors and Marketing Managers at three different Adhesive Manufacturers
CONFIDENTIAL 104
Rising construction and investment activity spur sales
Rising construction and investment activity,
supported by general economic recovery and
positive consumer sentiment, are projected to
spur purchases.
Non-upholstered wood products are expected
to see fastest growth short-term.
However, longer-term, upholstered furniture
can require more frequent replacement, as
the quality of the fabric and cushioning
generally deteriorates due to wear at a faster
rate than non-upholstered wood.
In addition, upholstery is more fashion-
oriented and increasing demand for the latest
styles has the effect of shortening product life
cycles.
Popularity of outdoor furniture, particularly in
USA, where consumers are treating the
outdoor as extensions to their indoor living
spaces lends more growth opportunity to both
upholstered and non-upholstered furniture.
CONFIDENTIAL 105
Furniture industry moving toward higher performance and
many technical advantages
Furniture industry moving to more difficult to bond decorative plastic foils, thick high gloss
foils, lighter panels, high performance, high production speed, versatile adhesion.
Increased use of chipboard and honeycomb (less MDF and HDF).
Production Manager, Furniture Manufacturer
Increasing demand for woodworking and furniture (although most of growth is likely to come
from reactive HM).
Chemist, Adhesive Manufacturer
Demands for more work place safety drive more furniture sales.
Purchasing Manager, Furniture Manufacturer
CONFIDENTIAL 106
UNMET NEEDS
CONFIDENTIAL 107
Heat resistance, green strength and energy consumption
highlight additional unmet needs
Higher performances at lower application temperatures and reduced energy consumption.
Plant Engineer, Sandwich Panel Manufacture
Higher green strength.
Optimizing cost to performance ratio.
Comparable heat resistance (120 C over 3 days) and water resistance to liquid counterparts
Production Manager, Plywood Manufacturer
Exceptional heat resistance that allow manufacturers to produce, lacquer and cure profiles in a
single pass operation
Plant Superintendent, Furniture Manufacturer
CONFIDENTIAL 108
TECHNOLOGY DYNAMICS
CONFIDENTIAL 109
Polyurethane hot melts favored and growing strongly,
although environmental concerns exist
Woodworking- generally speaking polyurethane hot melts are growing substantially, as well as
polyolefins as well, whereas EVAs stagnate.
General Manager, Adhesive Manufacturer
Hot melt moisture cures growing in engineered wood due to performance over water
based and addressing formaldehyde issues.
Decorative laminate predominantly water based but pre-applied hot melts to decorative
papers are growing
Profile wrap and edge banding- Hot melt moisture cure is growing faster than non-reactive
hot melts due to better heat resistance. Environmental concerns exist relative to
polyurethanes, but our suppliers are on top of the situation.
Laser Edge Banding, using pre-applied polymer to tape, is taking small share of traditional
EVA hot melt edge banding. Equipment dependent and expensive, but excellent results.
CONFIDENTIAL 110
ASSEMBLY OPERATIONS
BUILDING & CONSTRUCTION
FOOTWEAR & LEATHER
CONSUMER/DIY
CONFIDENTIAL
Assembly operations dominates hot melt usage
These remaining segments of 2015 North America Hot Melt Adhesives

All Other Segments Share By Market
the market are highly
fragmented, but represent 474
million pounds and nearly $1.3 Footwear &
Bn.
Leather
1%
Consumer/DI
Assembly operations (non- Y

7%
wood) make up 55% share of

the total.
Building & construction Building &
Construction 474 MM Lbs. Assembly
Operations
follows next with 37% share. 37%
55%
Consumer/DIY and Footwear

& Leather are relatively minor
with 7% share and 1% share
respectively.
Source: ChemQuest
CONFIDENTIAL 112
Mature segments growing in aggregate at 2.4% CAGR
through 2019
All four segments exhibit 2015 North America Hot Melt Adhesives
All Other Segments Share By Market
mature growth rates. 1000 3.5%
900
Assembly operations are 800
3.0%
the largest segment and

700 2.5%
Value In Millions
600
growing at 2% per annum.
2.0%
500
1.5%
400
Building & Construction and 300 1.0%
Consumer/DIY are growing 200

0.5%
100
at 3% CAGE each. 0 0.0%
Footwear & Leather is

growing at 2% over the
forecast period. TOTAL NA Adhesives (MM lb)
CAGR % 2015 - 2019 (Volume)
Source: ChemQuest
CONFIDENTIAL 113
TRENDS AND DRIVERS
CONFIDENTIAL
Higher performance, durability, processability and
sustainability drive general assembly growth
Performance and durability improvements are driving the change to better materials,
especially reactive hot melts as a result of delivering higher performance based on improved
heat resistance, chemical resistance, water resistance and broader range of bonding surface
compatibility.
Environmental concerns and sustainability driving solvent based adhesive replacement due to
better recyclability.
Business Director Adhesive Manufacturer
LSE (low surface energy) applications and higher heat resistance.
Production Engineer, General Assembly Shop
Processing aspect is where we have the most unmet needs. Processing improvement is driven
by line conditions- not about speed necessarily, just don't want it to shut down.
Plant Manager, Equipment Manufacturer
CONFIDENTIAL 115
Growing use of hot melts in Building & Construction
Many fragmented applications for
construction
Weather-strips
Roofing
Acoustic seals
Floor covering
Wall covering
General non-structural
Many others
Use of diverse dissimilar materials
on the rise such as masonry,
wood, plaster, paper, glass,
composites, fiber-cement, etc.
Due to increasing energy
regulations more usage of
material requiring adhesives and
foam is expected.
CONFIDENTIAL 116
Re-shoring driving footwear growth

Bringing the labor-intensive footwear industry back to the U.S. is also at
the top of Wal-Mart's agenda. With the dramatic increase in labor costs in
many traditional low-cost countries like China, the business case for pure
low-cost country sourcing is less obvious today than it was previously.
Modern manufacturers understand that there are several other factors they
have to consider beyond low-labor-cost opportunities when adding new
production capacity. For example: lead-time considerations, sustainability
implications, higher working capital and supply chain disruptionsto name
but a feware essential drivers, which have often been overlooked in the
past.
Merchandizing Mgr., Retailer
CONFIDENTIAL 117
Targeting diversification and lighter materials headline
additional footwear growth
Achieving Growth through Diverse Product Development targeting different parts of the
population and different activities.
Catering to Baby Boomers Needs and Style Sense in Therapeutic Footwear. Baby boomers
looking for therapeutic footwear today are part of the original Nike generation and have spent
much of their lives wearing athletic shoes. They want to be fashionable, and therapeutic shoes
now meet that desire with a range of options from running and court styles to walking shoes.
Design Engineer, Shoe Manufacturer
Baby boomers now entering the market for therapeutic shoes are driving an emphasis on
appearance as well as benefits. Baby Boomers are not willing to compromise on look and
style. We want to provide footwear that is good looking and healthy for their feet.
Among the product trends is a swing back from a recent emphasis on minimalism, with shoes
that are now more biomechanically inclined and take advantage of newer materials. Shoes are
getting lighter and lighter, but they still feel comfortable and supportive, despite how light they
are.
Brand manager, Shoe Manufacturer
CONFIDENTIAL 118
UNMET NEEDS
CONFIDENTIAL 119
Safety, energy, sustainability and processing drive innovation
needs
Safe-to-use, less hazardous
Replace solvent contacts.
Lower or eliminate VOCs.
Lower or eliminate formaldehydes
Sustainability or Green
USGBC LEED initiatives.
Safe Indoor Air Quality
Energy Conservation
Insulation properties, Radiant Barriers.
Decrease energy to apply adhesives
Design Engineer, Window Manufacturer
Process improvements:
Improve productivity example, reduce press times
Improved Heat, Water, Chemical resistance
CONFIDENTIAL 120
Cost reduction, low surface energy and environmental
concerns drive additional unmet needs
Continuous cost reduction reducing material prices and processing cost.
Production Manager Filter Manufacturer
Ability to disassemble and repair components in the aftermarket.
Sales Person, Building & Construction distributor
Weight reduction lower density materials and/or lower weight parts and
assemblies.
Low-surface energy bonding polyolefins continue to grow in hard parts and
composites increasing the problems with bonding and laminating.
Plastic and Composite Parts Manufacturer
Reduced environmental footprint technologies and processes with less waste,
emissions and greenhouse gases.
Applications Chemist, Adhesive Manufacturer
CONFIDENTIAL 121
TECHNOLOGY DYNAMICS
CONFIDENTIAL 122
Polyurethane hot melts headline technology growth

Polyurethane taking share away from EVA due to higher performance requirements
such as improved heat resistance, chemical resistance and water resistance.
Use of HM, particularly polyurethane and SBC adhesives in construction projects is
rising rapidly in both structural and non-structural applications where theyre used
to bond or join dissimilar substrates.
SBC HM adhesives can also address the growing use of pre-fabricated building
elements and expanding use within building insulation.
CONFIDENTIAL 123
KEY MERGERS AND
ACQUISITIONS
CONFIDENTIAL
Sellers market driving significant rise in multiples
Large multinational firms Specialty Chemicals Historical Multiples of

EBITDA
continue to consider 35 14
inorganic growth to bolster 12.1

12.5
sales and market share 30

10.7
10.4
12
through acquisitions. 25
9.8 9.6
9.5 9.5
9.9
10
9 9.1
Historically low interest 8.6
Number of Transactions
EBITDA Multiples
rates and the continued 20 7.3 8
strength of the U.S. dollar 15 6
make acquisitions attractive

for both strategic and 10 4
financial buyers. But that 5 2

environment has also
increased the multiples paid 0 0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016f
to the target firms.
Number of Transactions EBITDA Multiple
Source: ChemQuest
CONFIDENTIAL 125
Adhesives M&A poised for continued growth and consolidation

The middle market, generally defined as below $1.0 Bn revenues, continues to be
the sweet spot in M&A. Smaller specialty chemical businesses ($25 million - $250
million) are in demand, especially profitable, well-managed firms that have an
established presence in growing niche markets.
Partner, Investment Banking Firm
Adhesives and sealants continue to provide fertile ground for deal-making. A high
degree of fragmentation, diversity of uses, attractive margins, stickiness of
customers, good growth prospects, a large pool of prospects and an active number
of strategic buyers.
General Manager, Private Equity Firm
CONFIDENTIAL 126
Key Transactions
Avery Dennison agreement to acquire the European business of Mactac
from Platinum Equity (2016)
Purchase price of 200 million
2015 year-end run-rate revenues of 147 million and approximately 470
employees, the business is a leading manufacturer of high-quality pressure-
sensitive materials
Kraton Polymers purchase of Arizona Chemical (2016)
Purchase price of $1.37 billion
Further strengthens Kratons position as the leading global producer of
styrene block copolymers
Arkemas purchase of Bostik (2015) and Den Braven (2016)
Bostik purchase price of 1.71 billion
1.5 billion sales and 4,900 employees Bostik is the 3rd largest adhesive
company in the world
Dutch sealant-and-adhesives maker Den Braven deal valued at 485
million ($534 million). Den Braven will add sales of about 350 million
and create a global market leader in high performance sealants for
insulation and construction.
CONFIDENTIAL 127
Key Transactions
HB Fullers purchase of Beijing TONSON (2015)

Purchase price of $225 million
TONSAN generated approximately $100 million in revenue in
2014 and is among the largest engineered adhesive firms in China
Henkels purchase of Novamelt (2015)
Purchase price not disclosed
Novamelt had about 50 million in annual sales at the time of the
transaction
Novamelt specializes in UV-curable hot melts that can withstand
high temperatures and varying weather conditions
CONFIDENTIAL 128
Global Adhesives Related M&A Transactions 2016/15
Acquirer Country Target Country Month Year Description
Avery Dennison US Mactac Europe US Apr 2016 Graphic Arts

Dow US DuPont US Dec 2016 Merger of equals to be spun off into 3 separate companies post-merger
Dow to acquire remaining shares of Dow corning joint venture in advance of DuPont
Dow US Dow Corning US Dec 2016
Merger
HB Fuller US Advanced Adhesives AU Apr 2016 Industrial Adhesives in Australia and New Zealand
Industrial adhesives for the electronics, medical, audio equipment, automotive, and
HB Fuller US Advanced Adhesives US Jun 2016
structural markets
Innovative Chemical Products Group US 3M's Polyurethane Foam Adhesives US Jan 2016 formerly known as Polyfoam
Royal Adhesives US Adhesive Systems Inc. US Jan 2016 OEM assembly adhesives
Royal Adhesives US Bacon Adhesives US Jul 2016 Adhesives for aerospace applications
Accella Performance Materials
US IPS Polymer Systems US Mar 2015 Polyurethanes
(Arsenal Capital)
American Securities US Royal Adhesvies (from Arsenal Capital) US Apr 2015 Diversified adhesive/sealant formulator
Arkema FR Bostik US Feb 2015 Adhesives and sealants
Arkema FR Den Braven NL Jul 2016 Sealants
Dominus Capital US W.F. Taylor US May 2015 Flooring adhesives
Edge Adhesives US Isothermal Protective Coatings US Mar 2015 Elastomeric roof coatings
Fenzi IT Kadmar. Sp. z o.o. PL Mar 2015 Poland-based insulating glass sealants manufacturer
Engineering adhesives, sealants, coatings
HB Fuller US Beijing TONSAN Adhesives CN Feb 2015
and putties
Henkel DE Novamelt DE Apr 2015 Hot-melt PSAs
Intertape Polymer Group US RJM Manufacturing Inc (TeraTape) US Nov 2015 pressure sensitive adhesive (PSA) tapes primarily used for industrial packaging
Kommerling UK Ltd. GB Chemical Innovations Ltd GB Apr 2015 UK-based adhesives and sealants manufacturer
Kraton US Arizona Chemical US Sep 2015 Pine based chemicals
India-based waterproofing systems construction services provider, to increase its
Pidilite Industries IN Nina Waterproofing Systems IN Mar 2015
shareholding to 70 percent
Sika SW BMI Products of Northern California US Mar 2015 Mortar
Sika SW Axson Technologies FR Jan 2015 Epoxy and polyurethane polymer formulations
Sika CH Construction Technologies Australia AU Mar 2015 Australia-based adhesive and waterproofing products manufacturer
Sika CH Duro-Moza's assets MZ Jan 2015 Mozambique-based mortar and tile adhesive manufacturer
Sika CH BMI Products US Mar 2015 California-based mortar products manufacturer
The Reynolds Company US Progressive Adhesives US Oct 2015 Packaging adhesives and sealants
Tremco US Chemtron Manufacturing CA Jul 2015 Canadian construction adhesives and tapes
Tremco Illbruck Group DE Firetherm Intumescent & Insulation Supplies Ltd GB Apr 2015 UK-based fire prevention metal fibre boards manufacturer
CONFIDENTIAL 129
Global Adhesives Related M&A Transactions 2014
80 per cent stake in Seal It Services Ltd (dba Bond It), an Elland, UK-based
Astral Poly Technik IN Seal It Services Ltd GB Aug 2014 industrial sealants and adhesives manufacturer. The consideration was GBP 4.4
million.
Taiwan-based thermoplastic polyurethanes (TPU) adhesives base material
BASF DE Taiwan Sheen Soon Co. TW Dec 2014
manufacturer
Beardow Adams GB Klebstoffwerke Colodin DE Jan 2014 Germany-based adhesive manufacturer
Brenntag DE Philchem Inc. US Jun 2014 South Carolina-based adhesive distributor
CCL Industries Inc. CA Bandfix Ag CH Jun 2014 Switzerland-based self-adhesive tapes and labels manufacturer for $18 million
France-based flexible packaging and corrugated cardboard labels printing

Chemence GB Mediaflex Cliches France FR Nov 2014
services provider
HB Fuller US Prospec Construction Products US Sep 2014 US-based tile grouts and tile setting mortars manufacturer
HB Fuller US Continental Products Ltd. KE Dec 2014 Kenya-based industrial and construction adhesives manufacturer
Purchased 95 per cent of Beijing Tosan Adhesive Co.,Ltd., a Beijing, China-
HB Fuller SG Beijing Tosan Adhesive Co. CN Jun 2014
based adhesive manufacturer for approximately $225 million
Lohmann GmbH & Co. DE H A Converting Ab SE Jun 2014 Sweden-based self-adhesive materials processing services provider
Mapei US General Resource Technology Inc. US May 2014 Minnesota-based chemical admixtures manufacturer
Mellifera Zehnte
DE PRC (Uk) Ltd GB Feb 2014 UK-based industrial adhesive producer
Beteillgungsgesellschaft
Pidilite Industries IN Blue Coat's adhesive business IN Sep 2014 India-based adhesives manufacturer
France-based automotive sealants, dampers, coatings and other anti-corrosion
PPG US Revocoat FR Dec 2014
products manufacturer from Axson Technologies SAS (Axson Group)
Royal Adhesives & Sealants US Advanced Polymers International Inc. US Sep 2014 Syracuse, New York-based microsphere-based adhesives manufacturer
Royal Adhesives & Sealants Ontario-based polyurethane adhesives, sealants, resins and foams
CA Chemque Inc. CA Sep 2014
Canada manufacturer
Sika CH Klebag Chemie CH May 2014 Switzerland-based adhesive manufacturer
Sika CH Lwart Qumica BR Feb 2014 Brazil-based waterproofing products manufacturer.
Soudal BE Zaklady Chemiczne Bochem Sp. z.o.o. PL Oct 2014 Poland-based adhesives manufacturer
Soudal BE Accumetric US Jun 2014 Kentucky-based adhesives and sealants manufacturer.
75 per cent stake in Oliv Qumica SA, the Gava, Spain-based silicones and
Wolf Group EE Oliv Qumica ES Feb 2014
sealant manufacturer
CONFIDENTIAL 130
Global Adhesives Related M&A Transactions 2013/12
51 per cent stake in Cemix Construction Products Ltd, an Auckland, New

Ardex Australia AU Cemix Construction Products Ltd NZ Jan 2013
Zealand-based construction materials including adhesives and grouts
Arkema FR AEC Polymers FR Apr 2013 France-based industrial glues manufacturer
Eltek Holding NO Dynea NO Jun 2013 Norway-based wood adhesives manufacturer
HB Fuller US Plexbond Qumica BR May 2013 Brazil-based chemical polyurethane products manufacturer
Konishi Co. JP Mikuni Paint Co., Ltd JP Dec 2013 Toyonaka, Japan-based paint manufacturing company,
Lamons Gasket Company Inc. US Gasket Vedaes Tcnicas BR Jan 2013 Brazil-based industrial sealing products manufacturer and wholesaler
Wallmerk Construction Chemicals Building
Mapei IT TR Jan 2013 Turkey-based sealant manufacturer
Industry and Trade Inc.
Merger of industrial adhesives and sealants manufacturers, in a restructuring

Royal Adhesives & Sealants US Adco Global US Jul 2013
transaction. Both companies are owned by Arsenal Capital Management
India-based roofing, both waterproofing, thermal and insulation materials

Sika CH Texsa India IN Jul 2013
manufacturers
Sika CH LCS Optiroc SG Dec 2013 Malaysia-based mortar manufacturer
Sika CH Akzo Nobel's building adhesives business NL May 2013 Construction adhesive products business with sales of 200 million EUR
Sika CH Everbuild Building Products GB Apr 2013 UK-based Sealants, adhesives, and fillers manufacturer
Germany-based chemical products for the automotive industry and Diffutherm
Adolf Wrth GmbH & Co. DE Dinol GmbH DE Jun 2012 BV, a Bergeijk, Netherlands-based adhesive manufacturer, from Facilitas
Bergeyk BV
Bostik FR Usina Fortaleza BR Jul 2012 Brazil-based construction adhesive manufacturer
Pawtucket, Rhode Island-based adhesives and other components
Chase Corporation US NEPTCO Inc. US Jun 2012
manufacturer for $67 million
Costa Rica-based paints and coatings manufacturer from HB Fuller Company
Compaa Global De Pinturas CO Kativo Chemical Industries CR May 2012
for USD 120 million
Fuji Seal International, Inc. JP Pago Holding CH May 2012 Switzerland-based self-adhesive label manufacturing holding company
Industrial Adhesive Solutions GB Avanti Tapes GB Mar 2012 UK-based protection tape and film manufacturer
Acquired a 90 per cent stake in Olin SAS, a Corbas, France-based glaze and
Isoltema Spa IT Olin SAS FR Apr 2012
coatings manufacturer
Australia-based acoustic materials and laminates and radical pressure
L&L Products Australia AU Inc Corporation Pty Ltd'S Assets AU Jul 2012
sensitive adhesives manufacturer
Monta Klebebandwerk DE Fix-Pack Kft HU Jan 2012 Hungary-based adhesive tapes manufacturer
Planatol Holding Gmbh DE Wetzel GmbH & Co. DE Apr 2012 Germany-based wood and industrial adhesives manufacturer and wholesaler
CONFIDENTIAL 131
Global Adhesives Related M&A Transactions 2012
Germany-based chemical products for the automotive industry and Diffutherm

Adolf Wrth GmbH & Co. DE Dinol GmbH DE Jun 2012 BV, a Bergeijk, Netherlands-based adhesive manufacturer, from Facilitas
Bergeyk BV
Bostik Sa FR Usina Fortaleza BR Jul 2012 Brazil-based construction adhesive manufacturer
Pawtucket, Rhode Island-based adhesives and other components
Chase Corporation US NEPTCO Inc. US Jun 2012
manufacturer for $67 million
Costa Rica-based paints and coatings manufacturer from HB Fuller Company
Compaa Global De Pinturas CO Kativo Chemical Industries CR May 2012
for USD 120 million
Fuji Seal International, Inc. JP Pago Holding CH May 2012 Switzerland-based self-adhesive label manufacturing holding company
Industrial Adhesive Solutions GB Avanti Tapes GB Mar 2012 UK-based protection tape and film manufacturer
Acquired a 90 per cent stake in Olin SAS, a Corbas, France-based glaze and
Isoltema Spa IT Olin SAS FR Apr 2012
coatings manufacturer
Australia-based acoustic materials and laminates and radical pressure
L&L Products Australia AU Inc Corporation Pty Ltd. AU Jul 2012
sensitive adhesives manufacturer
Monta Klebebandwerk DE Fix-Pack Kft HU Jan 2012 Hungary-based adhesive tapes manufacturer
Planatol Holding Gmbh DE Wetzel GmbH & Co. DE Apr 2012 Germany-based wood and industrial adhesives manufacturer and wholesaler
Roxtec SE Sleev-It Fire Systems Ltd GB Mar 2012 construction and marine penetration seal manufacturer based in Kent, UK
Royal Adhesives & Sealants US Clifton Adhesive US May 2012 New Jersey-based aerospace industry adhesives manufacturer
Raymond, New Hampshire-based industrial glues manufacturer and
Royal Adhesives & Sealants US Extreme Adhesives Inc. US Apr 2012
wholesaler
Massachusetts-based adhesives, sealants and resins custom packaging
Royal Packaging Specialties US Adhesives Packaging Specialties US Dec 2012
company
Sherwin-Williams US Geocel Holdings Corporation US Jul 2012 Elkhart, Indiana-based caulks, sealants, and adhesives manufacturer
Germany-based wood coatings, wood preservation and fire protection
Sika CH Rtgers Organics DE Oct 2012
products manufacturer
Sika CH Inatec PY Dec 2012 Paraguay-based construction chemicals manufacturer and wholesaler
CONFIDENTIAL 132
CUTTING EDGE RESEARCH AND
NEW TECHNOLOGIES
CONFIDENTIAL
Bio-based efforts headline innovation
In a review of some 100 scholarly articles published in the last

three and one-half years, there are two trends that are
unmistakable
1) The efforts to manufacture hot melt adhesives that contain
up to 100 % bio-renewable / biomass based products driven
primarily by sustainability initiatives across the value chain,
and
2) The increasing interest in using hot melt extruded materials
for drug delivery in bio-adhered films.
CONFIDENTIAL 134
Materials for Renewable Resources
The use of bio-renewable materials per se in adhesive applications, including hot melt adhesives, is not
particularly new tree rosin ester based tackifiers and dimer acid (derived from fatty acids) based
polyamides have been in use for years. What is trending is the studying of replacements for
petroleum-derived polymers (EVA, SBS / SIS). As mentioned in a recent review1, replacements to
the base polymers have been found mainly from soy, modified starch, polylactides and vegetable oils.
The most popular approach has been the use of poly(lactic acid) (PLA) and its blends due to their
excellent hot tack, moderate setting time and cost effectiveness. Polyamides and polyesteramides from
seed oil and soy-derived dimer fatty acids have been reported to provide strength comparable to best
HMAs. Work has also been reported on the use of starch esters and ethers as components in low
melting, high flexibility HMA formulations for packaging applications.
One specific example of this type of approach was recently reported by Severtson2 and colleagues at
the University of Minnesota where the normal acrylic monomer was replaced by a macromonomer
derived from L- lactide. Utekar, P. "Hot-Melt Adhesives from Renewable Resources: A Critical
Review". Reviews of adhesion and adhesives (2168-0965), 4 (1), p. 104 (03/24/2016).
1 Utekar, P. Hot-Melt Adhesives from Renewable Resources: A Critical Review. Reviews of adhesion and adhesives (2168-0965), 4 (1), p.104
(03/24/2016).
2 Cheng Gu, Matthew R. Dubay, and Steven J. Severston*,
Department of Bioproducts and Biosystems Engineering, University of Minnesota Kaufert Laboratory, 2004 Folwell Avenue, Saint Paul, Minnesota 55108,
United States
Larry E. Gwin
Franklin International, 2020 Bruck Street, Columbus, Ohio 43207, United States
Ind. Eng. Chem. Res., 2014, 53 (27), pp 11000-11006
CONFIDENTIAL 135
Materials for Drug Delivery
In efforts to improve the efficacy of pharmaceuticals delivery, there have been
multiple studies of hot melt adhesives and hot melt extruded materials as
transdermal or dental film drug delivery vehicles. As two examples, studies have
come from the laboratory of Repka and colleagues3 at the University of Mississippi as
well as from several pharmaceutical laboratories in China4 - examples of which are
cited below.
In many of the publications, the hot melt materials offered better, time release
delivery of the active ingredients.
3 Jun-Born Park, Suneela Prodduturi, Joe Morott, Vijay I Kulkarni, Melissa R Jacob, Shabana I Khan, Steven P Stodghill & Michael A Repka
The University of Mississippi, School of Pharmacy, Pii Center for Pharmaceutical Technology, Department of Pharmaceutics and Drug Delivery, USA
Expert Opinion of Drug Delivery, 12:1, 1-13
4 Fabrication of pH sensitive amphiphilic hot-melt pressure sensitive adhesives for transdermal drug-delivery system
Xiao Tong, QingWang, Hai-xiaWang, Xiao-HuiLi, WeiWuc, Xin-yiChe

School of Pharmaceutical Science and Technology, Dalian University of Technology Linggong Road, Ganjingzi District, Dalian City 116024, Liaoning
Province, PR China et.al.
International Journal of Adhesion and Adhesives Volume 34, April 2012, Pages 62-67
CONFIDENTIAL 136
Other Published Studies
Additional work of interest consists of a variety of reactive polyurethane hot melt
products including materials that are electrically conductive5 as well as materials that
are more thermally processable6.
5 Rheology, electrical conductivity and crystallinity of a polyurethane/graphene composite: Implications for its use as a hot-melt adhesive
Jorge Canales, Mara Eugenia Muoz, Mercedes Fernndez, Anton Santamara
POLYMAT and Polymer Science and Technology Department, Faculty of Chemistry, University of the Basque Country UPV/EHU, P.O. Box 1072, 20080 San
Sebastin, Spain
6 J. Appl. Polym. Sci. 2015, 132, 41444.
CONFIDENTIAL 137
RAW MATERIALS
SUPPLY DEMAND DYNAMICS
CONFIDENTIAL
Key Raw Materials and Feedstocks for Hot Melt Adhesives
Crude Oil and Natural Gas

Derivatives
EVA
Ethylene, VAM (vinyl acetate monomer)
SBC
Styrene, Butadiene, Isoprene
Reactive Hot Melts including Polyurethane and Polyesters
MDI, Adipic Acid
Poly-Olefin (mPE/mPP/APO/APAO)
Polyethylene
Polypropylene
Adhesives are several steps away from crude and represent a
very small end use for the above feedstocks
CONFIDENTIAL 139
Petrochemical Feedstock Diagram
CONFIDENTIAL 140
Crude Oil and Natural Gas
The downturn in crude prices 160 16
that began in the second half of

2014 had a significant impact on 140 14
downstream derivatives. A
rebound in crude pricing 120 12
beginning in Q2 2016
notwithstanding, it appears that 100 10
$ per MM BTU
most of the key raw materials are
Spot $/barrel
likely be in equilibrium through 80 8
2020.
60 6
Shale gas is a game-changer for
the U.S. petrochemical industry 40 4
that is driving a paradigm shift for
the U.S. cost position, catapulting 20 2
it down the cost curve. The
expanding supply of natural gas 0 0
has led to considerably lower
prices anduntil 2015a
pronounced divergence from
crude oil. WTI Crude Oil Spot Henry Hub Natural Gas Spot
Source: U.S. Energy Information Association
CONFIDENTIAL 141
Ethane and Ethylene
Global Ethylene Production costs for Ethane (cents/lb.)

The ethylene (C2) chain and its
derivatives appears to have
peaked in 2015 expected to
remain in supply/demand
balance through 2020, with
effective operating rates in the
88% range.
The U.S. continues to enjoy lower
prices than other regions due to
the price advantage of ethane vs. Regional Ethylene Prices $/mt)
naphtha crackers
Polyethylene dominates the
spectrum of ethylene end uses
with 62% share of the volume.
The derivatives most important to
the hot melts reside in the ethyl
benzene chain to produce styrene
and methanol chain to produce
vinyl acetate monomer.
Source: IHS
CONFIDENTIAL 142
VAM (vinyl acetate monomer)
Vinyl acetate monomer (VAM) VAM End Uses

dynamics were characterized
by tight supplies following
several plant closures in 2013.
North American producers
declared force majeure events
in 2014, and all producers put PVAc/VAE
in place allocations to (includes
PVOH
customers. By mid-2014 spot homopolymer
and
45%
prices had climbed 60%. Now copolymers)

42%
that supply has come back
online, prices have stabilized.
Over the longer term
operating rates are expected
to range between 85%-90% Other
6%
EVA
7%
over the medium term
through the end of 2020.
Source: ChemQuest
CONFIDENTIAL 143
Styrene, Butadiene, Isoprene
The C3 chain (propylene, Adiponitrile &

Butadiene End Uses
acetone, propanol, acrylic other

9%
acid) as well as butadiene are
facing structural shortage in Other
elastomers
Polybutadiene
rubber
the U.S., resulting from 14% 29%
increased use of shale gas, Styrene

butadiene latex
since new capacity will
Emulsion
9% styrene
produce less material Solution

ABS plastic
12%
butadiene
rubber
commensurate with utilization styrene
20%
of lighter feedstock. butadiene

rubber
7% Source: ChemQuest
Operating Rates for Key Raw Materials (values are percentages)
Products 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Ethylene 84.9 85.9 86.1 86.5 87.4 89.1 88.7 87.6 86.8 88.6 89.8
Propylene 82.5 82.7 81.6 83.1 83.0 83.8 83.0 83.0 83.7 85.0 86.4
Acrylic Acid 83.0 90.5 84.0 83.2 75.3 64.9 63.8 66.2 68.4 69.7 72.4
MDI 81.4 81.6 84.7 87.0 86.1 83.6 84.5 84.4 85.9 86.3 87.9
TDI 88.3 89.7 81.1 81.6 84.6 81.7 84.8 85.8 84.8 84.0 83.4
Butadiene 77.3 79.8 78.4 77.8 76.2 75.0 73.2 72.6 74.0 75.5 77.3
Source: Deutsche Bank, IHS, Nexant
CONFIDENTIAL 144
MDI, Adipic Acid
Pricing looks to be stable MDI End Uses
Planned increases capacity

over the next three years in:
Adipic acid (Ascend
Performance Materials, BASF,
Invista, Shandong Hali and
Solvay)
Methylene diphenyl
diisocyanate (MDI) (BASF,
Source: IHS
Convestro, Dow Chemical, MDI Global Capacity Utilization

Huntsman, Mitsui Chemicals
and Yanti Wanhua)
Nexant has presented data
showing MDI demand
growth of 5.1%/yr to 2020,
increasing utilizations over
that timeframe as capacity
adds will be less (~90%)
Source: Deutsche Bank
CONFIDENTIAL 145
HOT MELT ADHESIVE SUPPLIERS
CONFIDENTIAL
Key Hot Melt Adhesives Manufacturers in North America
Building & Footwear/ Paper Board &
COMPANY Assembly Consumer/DIY Hygiene Transportation Woodworking
Construction Leather Related Products
3M X X X X X
American Adhesive Coatings, LLC X X
Artecola Quimica X X X X X
Ashland, Inc. X X X X X
BeardowAdama, Inc. X X x X X X X
Bostik, Inc. X X X X X X
BTI Bond Tech Industries, Inc. X X
Cattie Adhesives X X X X
Chicago Glue Machine & Supply Company, Inc. X X X X X X X
Chief Adhesives, Inc. X X
DHM Adhesives, Inc. X X X X X X X
Dow Corning X X
Evans Adhesive Corporation, Ltd. X X
Flexo-Technologies, Inc. X X
Franklin International X X X X X
H.B. Fuller X X X X X X
Henkel Corporation X X X X X
Henry Company X X X
IFS Industries X X X X X
Jowat Corporation X X X X X
Novamelt Americas, LLC X X X
Palmetto Adhesives Company X X X X X
Paramelt USA X X X X
PPI S. DE R.L. DE C.V. X X X
Royal Adhesives X X X X
Savare Specialty Adhesives X X X X
SCHAETTI AMERICA, Inc. X X X X X X X
Selena USA, Inc. X
Sika Corporation X X
The Reynolds Company X X X X X X
Warren Adhesives, Inc. X X
Wisdom Adhesives Worldwide X X X
Worthen Industries, Inc. Upaco Adhesives Division X X
YH America, Inc. X X
CONFIDENTIAL 147
CHANNELS
CONFIDENTIAL
Key channel players have become de facto regulators
Retailers such as Walmart have become de facto regulators by quickly enacting (and competently
enforcing) comprehensive chemicals policies for suppliers. A decision made in Bentonville has far
reaching global implications and arguably can have a far greater impact on ASC members vs. a
regulatory decision made by the US EPA or by an individual state on a product category.
CONFIDENTIAL 149
Walmart informs consumers on chemical ingredients
Walmart promotes transparency
as integral to product quality in
its 2016 Global Responsibility
Report.
Consumers are empowered to
make their own choices with
Walmart as the information
provider on materials and
ingredients.
Walmart aspires to use its
strength to make choices easier
for consumers, and to work with
government and other retailers
to provide better transparency
standards for products.
CONFIDENTIAL 150
Disclosure practices for online product ingredients
78% of suppliers are reporting full online disclosure of their product

ingredients (according to Walmart).
Walmart is striving for ingredient substitutions in PL brands.
Whose criteria is Walmart using for Exposure and Risk assessments?
CONFIDENTIAL 151
Bridging the regulatory-environment divide
A Shift from Public to Private Sector Advocacy

The American Chemistry Council (ACC) recognized it was losing ground about 3 years
ago: ACC had built a strong advocacy organization to foster relationships in the
public sector to effectively represent its members in U.S. government and regulatory
affairs, yet was missing out on equivalent educational and advocacy opportunities in
the marketplace.
Subsequently, ACC began building advocacy apparatus in the marketplace in order to
frequently put ACC members in front of channel decision-makers (Ex: Walmart and
Amazon) with the goal of building trust. As pending decisions about supply chains
and chemical ingredients are researched, ACC wanted to position itself as a resource.
ACC identified baseline gaps in general information about chemicals and some
common principles of hazard vs. risk, the notion of exposure, the trajectory of
industry performance and safety as it relates to workers, to communities, to the
environment, and ultimately to the people who use the products.
CONFIDENTIAL 152
Bridging the regulatory-environment divide
A Shift from Public to Private Sector Advocacy

Persistent baseline information gaps have been to some degree fueling the
mistrust, and even fueling some of the de facto regulations.
Building trust would depend on carrying over to the marketplace some of the same
principles traditionally employed by ACC in the public sector principles deeply
rooted in risk evaluation and in multi-attribute thinking.
A three-pronged approach for bridging the informational gaps was taken:
Develop reliable, trusted (easy-to-access) communication channels for
complete information on chemicals.
Educate and advocate for a technical component that demonstrates scientific
approaches through exposure science, life cycle analysis (LCA), and
alternatives assessment the tools required to make comprehensive and
sophisticated decisions.
Relationship building through structured outreach to key stakeholders.
CONFIDENTIAL 153
Outreach to Channel Leaders
Private Sector Advocacy

ACC prioritized its outreach to the following market sectors:
B&C sector
Retail channel/packaging segment
Auto sector (e.g., plastics; process chemicals; and ancillary products).
Different approaches to defining and implementing sustainable chemistry
initiatives have been observed in the marketplace. These initiatives are often
driven not only by the personalities that lead them but also by where the channel
players fit into the marketplace picture: in terms of market share, diversity of
portfolio, and leadership on other topics.
Who they trust for information and how a retailer prioritizes its efforts, together
with the types of tools they use and their desired outcomes, are all central to
defining and enacting sustainable chemistry policies.
CONFIDENTIAL 154
Perceptions of chemicals among Information Consumers
What comes to mind when you hear the word chemical?

ACC conducted focus groups with information consumers as a first step in
understanding the marketplace dynamics that shape sustainable chemistry
policies. Retailers place a high degree of importance on consumer perceptions and
attitudes. Recent focus group make-up and findings are as follows:
Focus group participants included educated and environmentally- and health-
conscious consumers of information.
Participants identified friends, family members, doctors and the internet (web
chatter) as trusted sources of information relative to claims made about
chemical ingredients.
Hearing the same claim about a chemical from multiple sources lent
credibility to the claim, according to participants.
This chemical causes X resonated more with participants than scientific
evidence that would support such a claim.
CONFIDENTIAL 155
Perceptions of chemicals among Information Consumers
What comes to mind when you hear the word chemical?

Recent focus group findings - continued:
To ACCs surprise, participants were much less familiar with specific chemicals
such as phthalates.
Overall, the intent was to understand what sort of information is useful and
helpful to the consumer, and which of the following angles would sway them:
Why is a chemical in the product?
What type of benefits does it provide to the product?
What type of testing does the chemical undergo for safety (and exposure
rates)?
ACCs beliefs about the behaviors and motivations of information consumers
were mostly affirmed (albeit some new insights were brought to light
regarding consumers perceptions of chemicals).
Gaining a deeper understanding from the data is the next challenging step.
CONFIDENTIAL 156
Organizational hierarchy of de facto regulators
Retail Audience: Overcoming hurdles in organizational layers

Another key takeaway relates to the retail audiences (relatively broad) spectrum
of perception vs. the facts.
On the one hand, a big box retailer may seem monolithic
Yet beliefs and attitudes among the following division and business unit
managers vary significantly when it comes to public policy and product
ingredients:
Legal and regulatory compliance officer
Private label manager
Sustainability manager
Successfully identifying the influencers and decision-makers at the retail level
entails a complex and time-consuming weeding out process that has yet to
be perfected.
CONFIDENTIAL 157

That is only half the battle: Crafting a message that will resonate with a
particular business unit or individual is equally complex.
After a considerable investment of time with a marketplace actor who
appears to be convinced to take a reasonable stance negativity in the public
domain may persist for reasons that remain unclear!
Breaking down the concept of risk into hazard vs. exposure topics for discussion
is an essential exercise.
Translating those topics audience by audience and from there creating and
delivering to the intended audience the right informational angle (while making
it easily accessible) is the real challenge.
CONFIDENTIAL 158

A one-size-fits-all message is inappropriate.
In the toy sector, as one example, what one toy brand is after wont resonate
with another toy brand due to differences in manufacturing location, selling
location, and the recommended age range of the child for whom the toy is
intended, to name a few.
Requires a slow, methodical communications campaign, with a customized
message.
One alternative to the negative perception that (chemical X is in our product but
shouldnt be because it is hazardous to human health) involves redirecting the
conversation:
What benefit does chemical X provide to the product?
What purpose does chemical X have in my product?
CONFIDENTIAL 159

Redirecting the conversation - continued
Which replacements can be used instead of chemical X?
Will those replacements be equal to chemical X in performance and cost?
Not surprisingly, there is more leeway when you are discussing chemicals that go
into a paint thinner vs. chemical ingredients in a baby bottle.
People assume and accept that paint thinners are hazardous.
Conversely, baby bottles are assumed to be safe.
Parents have zero tolerance for any risk associated with exposure to
unsafe products for their children.
CONFIDENTIAL 160

Among retailers and brands, there is typically a desire for differentiation.
When a reseller or brand is billing themselves as green, they have a
more rigorous benchmarking or measuring system.
Retailers acknowledge the science behind exposure and its overall
importance to assessing risk, but sometimes the science doesnt
matter. For instance, in marketplace differentiation.
CONFIDENTIAL 161
Role of Procurement Officers

In large organizations like state governments, large-scale health systems and
education conglomerates, the procurement officer plays a role in utilizing
chemicals policies in their buying decisions.
One of the 9 Technical Advisory Groups of the Sustainable Purchasing Leadership
Council (SPLC) is tasked with advising the SPLC leadership on what it calls a
priority purchasing category:
Chemically Intensive Products
15-member roster
Scope includes HI&I (Household, Institutional and Industrial Cleaning
Products) and Building Maintenance Products (e.g. boiler treatment,
cooling tower chemistry, paints, coatings, adhesives, sealants, varnish).
Solution types include behavior change, product substitution, supplier
engagement and accountability, and supplier substitution.
CONFIDENTIAL 162
Sustainable Purchasing Leadership Council (SPLC)

SPLCs Chemically Intensive Products Technical Advisory Groups member roster
includes the American Coatings Association (ACA) and the Consumer Specialty
Products Association (CSPA).
ASC should investigate the cost/benefits of joining this TAG roster. The SPLC is
a multi-stakeholder initiative that brings together leaders from government,
industry academia, standards organizations and NGOs to develop an
integrated guidance, benchmarking, and recognition program for institutional
leadership in sustainable purchasing.
SPLC general member organizations include Kimberly-Clark , Office Depot,
Hilton, the Independent Purchasing Coop (Food & Beverage), and others of
interest at https://www.sustainablepurchasing.org/members/
CONFIDENTIAL 163
Walmart and EDF

Michelle Mauthe Harvey, Supply Chain Director of the Environmental Defense Fund
(EDF) in Bentonville, co-leads EDFs on-site partnership with Walmart to advance
sustainable business practices throughout Walmarts operations and supply chain.
The SPLCs Chemically Intensive Products TAG was started (according to Ms.
Harvey) by Walmart who worked closely with vendors and non-profit advisors
including the EDF to develop the policy that covers formulated (chemical
intensive) consumable products sold in U.S. Walmart and Sams Club stores.
The initial policy will be expanded: The list of hundreds of priority chemicals
meet the criteria for classification as a carcinogen, mutagen, reproductive
toxicant, or is persistent, bio-accumulative, and toxic; or any chemical for
which there is scientific evidence of probable serious effects to human health
or the environment which give rise to an equivalent level of concern.
CONFIDENTIAL 164
Walmart and the EDF

Walmarts assessment was based on a large set of authoritative, scientific and
regulatory reference lists.
Walmart, EDF and 3rd party service providers will continue to refine Walmarts
approach for assessing the ingredients in chemical intensive products sold by
Walmart and Sams Club.
While developed through Walmarts initiative, the GreenWERCs tool that screens
product ingredient data for adverse risks to humans or to the environment is
available for other retailers to use. GreenWERCs tool provides instant access to
consumer product composition on almost any retailers shelf to its users.
Walmarts ultimate goal is to encourage innovation in the chemistry industry to
achieve competitively priced improved chemical alternatives.
CONFIDENTIAL 165
Role of Procurement Officers

Other outside pressures are influencing procurement officers including top-down
management policies and even limitations imposed on office-supply retailers
inventory.
The pallet has shrunk at Staples due to the position Staples sourcing
organization has taken as a sustainability leader in its space.
Market drivers have placed limitations on the availability of certain chemicals.
Ex: PVC-free conference badge holders only.
One countermeasure to the growing skepticism about chemicals is
ChemicalSafetyFacts.org , which was launched a few years ago as an online
resource brought to chemicals information seekers by the chemical industry.
It is pretty well optimized for search engines like Google to be a visible search
result for public information concerning chemicals in the news a viable
alternative to the Environmental Working Group (EWG), Sierra Club, etc.
CONFIDENTIAL 166
Rampant misinformation in the age of mass-information
It always seems impossible until its done.

Nelson Mandela
CONFIDENTIAL 167
Rampant misinformation in the age of mass-information
Google searches produce pages of results with
sexy headlines and scary stories about
consumables, plus People also ask results.
Scientific evidence is rare and not required.
~ 15 to 20% of hard-core environmentalists
are firm in their positions (i.e., My mind is
made up. Dont confuse me with the facts.)
Scare tactic of Do you know what is in your
childs backpack? demands answers from a
good parent while posing no obligation to
the other side in terms of a risk assessment.
There are few attorneys willing to take on the
spread of misinformation and less fact-
checking is required vs. traditional
investigative journalism. In short, few checks
& balances to curtail this trend; the spread of
misinformation is flourishing and profitable.
CONFIDENTIAL 168
Chemical Industrys online resource for information seekers
Organic search result on Google:
CONFIDENTIAL 169
Chemical Industrys online resource for information seekers
CONFIDENTIAL 170
B2B online resources for retailers
UL Wercs is an on-line
supplier portal for use by
the retail channel.
Retailers ask their product
suppliers to submit their
product and chemical
composition data using this
tool.
Hazard communication and
sustainability documents
can also be uploaded by
retailers to UL Werc to
facilitate regulatory
compliance.
CONFIDENTIAL 171
Retailers standard for making ethical purchasing decisions
Create and meet retailer standards

Streamline the process of creatingand
meetingretailer sustainability
standards with our PurView platform.
With this multi-attributes supply chain
risk management platform, retailers can
survey and request information from
manufacturers on any topicenabling
more sustainable, ethical purchasing
decisions.
Meanwhile, manufacturers can simplify
the information-sharing process and
immediately gauge how their products
live up to retailer product standards.
CONFIDENTIAL 172
Example of Sourcing Decision Support Promotions
Green Chemistry Scoring
Through GreenWERCS, manufacturers can drive
greener formulations by analyzing ingredients
and their potential impact on human health
and the environment.
Use pre-identified scoring and weighting
algorithmsor input your own parametersto
flag bio-accumulative and toxic substances
(PBT); carcinogens; mutagens or reproductive
toxicants (CMR); potential hazardous waste;
and probable endocrine disrupters in your
products.
The resulting green score and visual analysis
provides actionable information about the most
immediate opportunities for reformulation.
Retailers and distributors benefit by gaining the
information they need to drive sustainability
throughout the supply chain.
CONFIDENTIAL 173
Challenges of full ingredient disclosure in retail channels
Retailers unmet informational needs for merchandise is due

to the complex challenges associated with sharing
information:
Effective and efficient transfer of actionable
information from one point to the next in a global supply
chain (factoring in position, culture, language barriers
and different units of measure). What you need to know
as a transporter is different from an industrial handler or
a stock person and the consumer.
Efficiency would remove the burden of having to answer
repetitive requests for information at every level.
Suppliers and retailers are feeling this pressure.
CONFIDENTIAL 174
Yet there is a push for full ingredient disclosure that at

times may be unreasonable and leaves unanswered
questions such as in what form and what level of
information?
How do chemical suppliers and brand owners protect
proprietary and confidential business information when
chemical ingredients are submitted via 3rd party online
tools? A security protocol is needed.
In the absence of secure systems, repetitive
questionnaires are going unanswered by suppliers due to
the lack of security and philosophical differences with
the process and with Bentonville. Silence compounds
the problem of distrust.
CONFIDENTIAL 175
The ACC is an advisor to 3rd party tools, but concedes the

infrastructure for sharing information is largely under-
developed (albeit technology companies are working
diligently to fix this in spite of ongoing hurdles and barriers
such as systems being unable to talk to other systems ).
Note: ACC is not developing its own tool; it is strictly an
advisor to tool developers and stakeholders.
Potential concern with adhesives is ranked in terms of use:
inside a person (Ex: surgical adhesives)
on a person (Ex: band-aids; garment adhesives)
near a person (Ex: wall hanging in home or office)
CONFIDENTIAL 176
Discerning risk is an ongoing challenge. For example,

plasticizers used in flooring are associated with unfounded
fears relative to a baby crawling on the floor. Harmful
exposure entails the baby eating the floor (literally eating,
not licking). But that level of scrutiny is difficult to bring into
the conversation. Restricted use and deselecting materials is
the preferred response.
With respect to human health, the conversation around
natural vs. synthetic is evolving but slowly. Questions such
as at what cost and what other impacts will occur with
substitution are not top of mind.
Investors are also feeling the pressures. NGOs arent going
away and demand for propaganda isnt slowing down.
CONFIDENTIAL 177
CONCLUDING THOUGHTS
CONFIDENTIAL
Concluding Thoughts
Hot melt adhesives represent an attractive and growing
technology sector with a compelling value proposition.
Hot melts will experience disproportional growth as a result
of a number of factors amongst the strongest being
conversions from mechanical fastening as well as substitution
of solvent-borne and water-borne adhesives.
Sustainability and food safety are major emerging drivers of
change.
Higher performance requirements, HM processing /
operational efficiency & productivity and evoking consumer
sensory response headline unmet needs.
Ultrasonic welding is a potential, albeit not imminent, threat
for hygiene.
CONFIDENTIAL 179
Thank You
TM
. The Obvious Choice
CONFIDENTIAL

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LEGAL AGREEMENT

Purchasers of Single Copy

Paper & Board Products Woodworking

A full breakdown of qualitative interviews is detailed below:

Summary of segments in scope and out of scope is shown below:

Case & Carton, Envelope & Tobacco Sub-segments Tube Winding

Hygiene Markets Plastic Bags

Assembly Operations Tissues And Towels

Woodworking Bookbinding & Affiliated Sub-segments

Building & Construction High Gloss Laminating & Affiliated Sub-segments

ASC-FEICA-CATIA ADHESIVE AND SEALANT CLASSIFICATION MANUAL

Metric Results Drivers & Restraints

Average Price $ 1.65 USD / Lb. Regulatory Drivers

Degree of Unmet Important Political Climate

USA is the largest

Mexico represents 15% 6% 79% 15%

share and 365 million lbs..

of demand, while Consumer/DI

Assembly Operations come in Assembly Transportation,

third place with 11% of Operations, 263,

demand, followed by Hygiene

Building & Construction, Hygiene, 210, 9%

remaining 14% of demand Products, 1023,

North America Hot Melt Adhesives Growth Trends

CAGR 15-19 (volume)

Polyolefins (PO), primarily driven by 2.4 Bn Lbs.

at 2% and minor others like butyl

Operations and Woodworking.

substitution anticipate growth of

to polyolefins and polyurethanes,

Woodworking, Building &

Operations, Transportation and Building & Construction

Polyolefins have captured key Assembly Operations 208

& Related Products and Woodworking 79

Polyurethane hot melts are 84

essential for Woodworking, Paper Board & Related Products 617

for Transportation, Assembly

Operations and Building & 0%

EVA SBC PO PUR PA PE Other

Growth Drivers Implications on HM

Replacement of other fastening methods +++

+++ (Highly Favorable) ++ (Favorable) + (Moderately Favorable)

Superior properties: Benefits include high elastic modulus, optimum

Environmental sustainability - Elimination of VOCs.

Faster processing speed and easier processability with flexible open

Lower total cost of ownership: Relatively low investment in capital

Stable and predictable supply in the foreseeable future.

Time Magazine December 2014 article:

Current Job openings:

100% 90 152 31 22 39.5 26 5 0.5

Overall U.S. share is 76% of the total North American market.

Mexicos growth is driven by the 1800 4.0%

Volume (MM Lbs.)

where adhesives are used in panel 1000

U.S. and Canada, by contrast

with expected GDP at 2.6% for the 0 0.0%

applications, while other

Auto interior trim followed by auto (trucks,

applications making up 30% share