4q20 earnings presentation...4.9% sales cagr4 rapidly accelerating pharma/consumer business: lsd...

Fourth Quarter and Full-Year 2020 Earnings Presentation

February 9, 2021

2021 W. R. Grace & Co. | 2

Statement Regarding Safe Harbor For Forward-Looking StatementsThis announcement contains forward-looking statements, that is, information related to future, not past, events. Such statements generally include the words “believes,” “plans,” “intends,” “targets,” “will,” “expects,” “suggests,” “anticipates,” “outlook,” “continues,” or similar expressions. Forward-looking statements include, without limitation, statements regarding future: financial positions; results of operations; cash flows; financing plans; business strategy; operating plans; capital and other expenditures; impact of COVID-19 on Grace's business; competitive positions; growth opportunities for existing products; benefits from new technology; benefits from cost reduction initiatives; succession planning; and markets for securities. For these statements, Grace claims the protections of the safe harbor for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Grace is subject to risks and uncertainties that could cause actual results or events to differ materially from its projections or that could cause other forward-looking statements to prove incorrect. Factors that could cause actual results or events to differ materially from those contained in the forward-looking statements include, without limitation: risks related to foreign operations, especially in areas of active conflicts and in emerging regions; the costs and availability of raw materials, energy and transportation; the effectiveness of Grace's research and development and growth investments; acquisitions and divestitures of assets and businesses; developments affecting Grace’s outstanding indebtedness; developments affecting Grace's pension obligations; legacy matters (including product, environmental, and other legacy liabilities) relating to past activities of Grace; its legal and environmental proceedings; environmental compliance costs (including existing and potential laws and regulations pertaining to climate change); the inability to establish or maintain certain business relationships; the inability to hire or retain key personnel; natural disasters such as storms and floods; fires and force majeure events; the economics of our customers' industries, including the petroleum refining, petrochemicals, and plastics industries, and shifting consumer preferences; public health and safety concerns, including pandemics and quarantines; changes in tax laws and regulations; international trade disputes, tariffs, and sanctions; the potential effects of cyberattacks; and those additional factors set forth in Grace's most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, which have been filed with the Securities and Exchange Commission and are readily available on the internet at www.sec.gov. Grace's reported results should not be considered as an indication of its future performance. Readers are cautioned not to place undue reliance on Grace's projections and other forward-looking statements, which speak only as of the dates those projections and statements are made. Grace undertakes no obligation to release publicly any revisions to the projections and forward-looking statements contained in this announcement, or to update them to reflect events or circumstances occurring after the date of this announcement.

Non-GAAP Financial TermsIn this presentation, Grace presents financial information in accordance with U.S. generally accepted accounting principles (U.S. GAAP), as well as the non-GAAP financial information described in the Appendix. Grace believes that this non-GAAP financial information provides useful supplemental information about the performance of its businesses, improves period-to-period comparability and provides clarity on the information management uses to evaluate the performance of its businesses. In the Appendix, Grace has provided reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. These non-GAAP financial measures should not be considered as a substitute for financial measures calculated in accordance with U.S. GAAP, and the financial results calculated in accordance with U.S. GAAP and reconciliations from those results should be evaluated carefully.

Disclaimer

33

2020 Highlights and Business Update

Hudson La ForcePresident and Chief Executive Officer

2021 W. R. Grace & Co. | 4

Key Messages

DELIVERED A VERY STRONG FINISH TO THE YEAR▪ Sales, earnings, and cash flow at the high end of our expectations▪ 4Q20 sales, Adjusted Gross Margin, and Adjusted Free Cash Flow more than 95% of pre-pandemic levels▪ Solid execution in a very challenging year; our early and decisive actions delivered strong operating performance and cash flow▪ No significant demand or supply chain impact from recent increase in COVID-19 cases

WE ARE SUCCESSFULLY BUILDING A HIGHER GROWTH PORTFOLIO▪ Our growth strategy is producing results▪ Specialty Catalysts and Materials Technologies combined are now 62% of our sales, 66% larger than Refining Technologies▪ Refining Technologies' robust cash flow is a valuable asset that helps fund our growth and shareholder returns▪ We are incorporating sustainability into our growth strategy and accelerating our ESG focus throughout our

organization

STRONG MOMENTUM IN 2021 AND BEYOND▪ Well-positioned to capture growth as the recovery continues; our growth and profitability opportunities

are strong▪ Long-term MSD sales growth and 40-42% Adjusted Gross Margin targets fully intact▪ Sales growth expected to be higher in 2021 and 2022 as our markets fully recover from the pandemic and

we fully benefit from our recent growth investments

WE ARE ACTIVELY SEEKING VALUE CREATION OPPORTUNITIES ▪ As we continue to execute our growth plan, we are also undertaking a review of potential strategic alternatives

to maximize shareholder value; the process is active and we are pursuing a number of potential opportunities

2021 W. R. Grace & Co. | 5

2020 Recovery: Strong Finish to the Year

Sales, Gross Margin, and Cash Flow Nearing Pre-Pandemic Levels

Sales

$489.5 $470.2

2019 Avg.

1Q20

2Q20

3Q20

4Q20

>96%

Near Complete Demand Recovery

($M except EPS)

*Definitions of non-GAAP financial measures and reconciliations to the closest GAAP measure are provided in the Appendix

Adj. GM

41.4% 39.5%

>95%

ProfitabilityIntact

Adj. EPS

$0.49$0.56

$0.88

Cumulative Adj. FCF

$9.3

$109.7

$170.0

$236.9

+80%

Strong Earnings Recovery From Q2 Bottom

>95%

Decisive Actions Produced Strong Cash Flow

2021 W. R. Grace & Co. | 6

Building a Higher Growth Portfolio

RT Cash Flow Funds Growth and Shareholder Returns

High-value specialty chemicals company

▪ Industry-leading technologies

▪ Deep, long-standing customer relationships

▪ Customer-focused sustainability strategy

▪ Top-quartile profitability and ROIC with strong, consistent cash flow generation

Specialty Catalysts (SC)

Materials Technologies (MT)

Refining Technologies (RT)

▪ HSD sales growth1

▪ 7.5% organic sales CAGR2

▪ Strong licensing momentum3:

▪ MSD sales growth1

▪ 4.9% sales CAGR4

▪ Rapidly accelerating pharma/consumer business:

▪ LSD sales growth1

▪ Attractive, high-value subsegments

▪ Adds scale and operating leverage to portfolio

▪ Robust cash flow:

3

67

License Agreements

16 in 3 years

1 Expected long-term growth rate.2 2016-2019 Specialty Catalysts sales growth, adjusted for acquisitions.3 New UNIPOL® polypropylene process licenses signed 2018-2020.4 2017-2019 Materials Technologies sales growth, constant currency basis.

2018 2019 2020

$133 $145$163

Pharma/Consumer Business ($M)

11% CAGR

2018 2019 2020

$277

$578

$831

$1,073$1,297

5-year Cumulative OCF ($M)

2018 2019 20202016 2017

2021 W. R. Grace & Co. | 7

FUTURE2020

Executing Our Transformation Strategy

Proactive Portfolio Actions and Investments in Growth

2018-20192016-2017

DEEP ROOTS HELD DURINGTHE PANDEMIC AND WE ARE GROWINGWE PLANTEDWE PRUNED

▪ Completed 3rd significant specialty catalysts acquisition

▪ Growth capacity investments in SC, MT

▪ Introduced Grace Value Model

▪ Refreshed Grace Leadership Team; 60% new including VP Growth and Strategy, President SC, President MT, SVP Integrated Supply Chain

▪ Upgraded 30% of global R&D and marketing talent and 35% of global sales and technical service team in SC and MT

▪ Continued scaling SG&A and corporate costs to support growth investments

▪ Acted quickly, driving strong cash flow with execution of cash and cost management actions in response to the pandemic

▪ Immediately rationalized RT manufacturing capacity investments

▪ Protected growth investments in R&D, Commercial Excellence, and Operating Excellence

▪ SC and MT combined now 62% of our portfolio, 66% larger than RT and up from 49% a decade ago

▪ Incorporated sustainability into growth strategy

▪ Long-term MSD sales growth target

▪ 40-42% Adjusted Gross Margin target

▪ Continued focus on diversifying away from RT and using its robust cash flow to fund growth in our faster growing businesses - SC and MT

▪ Leader in customer-focused sustainability technology

▪ Completed GCP spin

▪ Reduced total SG&A by 16%, or 400 bps of sales

▪ Reduced total corporate costs by 14%, or 90 bps of sales

2021 W. R. Grace & Co. | 8

Continued Portfolio Shift to Higher Growth, High Margin Businesses

RT's Robust Cash Flow Funding Investments in SC and MT to Drive Growth

1 Assumes target organic and inorganic growth in SC and MT and LSD growth in RT.

2020

62%

38%

Sales Mix

Specialty Catalysts and Materials Technologies

Refining Technologies

2010 FUTURE

49%51%80%-90%1

2021 W. R. Grace & Co. | 9

Specialty Catalysts Strategic Position

HSD Growth; Best Gross Margins in our Portfolio

#1 in Global Polyolefin Catalysts#1 in Global Independent Polypropylene Process Licensing

CLEAR COMPETITIVE ADVANTAGES▪ Broad catalyst and process technology portfolio▪ High-value, technology-driven sales and technical support▪ Licensing and services offerings broaden and deepen

customer relationships▪ Merchant strategy; trusted technology partner for customers▪ Global sales and technical support functions

STRONG GROWTH MOMENTUM▪ New growth-driven business unit president▪ Commercial Excellence: value selling focus, Salesforce.com

implementation▪ Capacity investments for growing PE and PP catalyst demand▪ Trial activity accelerating after pandemic related lockdowns▪ Licensing success and new services initiatives adding growth

– 16 licenses in 3 years drive future catalysts and services sales– Plant Lifetime PerformanceTM service initiatives

1 Includes organic and inorganic growth.

292401 398 439

518662 705

622

2013 2014 2015 2016 2017 2018 2019 2020 2023E

$1.2B Invested to Accelerate Growth and DiversificationSales ($M)

2016-2019 CAGR 7.5%

Organic Only

2013-2020CAGR 11.4%1

11 1116

26

1Q20 2Q20 3Q20 4Q20

Trial Activity Accelerating After Pandemic Lockdowns

2021 W. R. Grace & Co. | 10

Materials Technologies Strategic Position#1 in Global Specialty Silica GelsRapidly Accelerating Pharma/Consumer Business

MSD SALES GROWTH, TOP QUARTILE PROFITABILITY▪ Large, fragmented $16B addressable market▪ Attractive, higher growth, higher margin subsegments▪ Significant organic and inorganic growth opportunities

SIGNIFICANT GROWTH INVESTMENTS SINCE 2018▪ New growth-driven business unit president▪ Upgraded 37% of global R&D and marketing talent and 30% of global

sales and technical customer service team▪ Customer-Driven Innovation: reinvigorated innovation engine▪ Commercial Excellence: strategic marketing, value selling focus,

Salesforce.com implementation▪ Capacity Investments: doubled colloidal silica capacity and doubled

paramagnetic silica capacity in 2020

435 435461 479 460

2016 2017 2018 2019 2020 2023E

Sales Growth($M Constant FX)

ACCELERATING GROWTH FROM 2017▪ 4.9% sales CAGR 2017-2019 (constant FX)▪ 10.7% sales CAGR 2018-2020 in pharma/consumer▪ 5.1% y/y sales growth in 2H20, rapid recovery from

pandemic

2021 W. R. Grace & Co. | 11

Refining Technologies Strategic Position#1 in Global Refining CatalystsUnmatched Technology and Global Technical Support

SOLID RECOVERY UNDERWAY▪ Refinery crude runs up 16% in the U.S. and 10% globally since

2Q20 bottom▪ Value of Grace technology intact - average FCC catalyst

pricing up 20 bps even in very difficult refining year▪ Maintaining market share to ensure strategic position and post-

pandemic recovery

TOP QUARTILE PROFITABILITY AND STRONG CASH FLOW▪ Maintain market-leading position and value selling strategy to grow

profitability in low-growth environment▪ Pivoting to focus on higher growth, higher margin subsegments

serving petrochemical, sustainability, and energy transition markets▪ Strategically investing in product technology, global technical

service, and operating excellence

SIGNIFICANT CONTRIBUTOR TO SUSTAINABILITY GOALS AND ENERGY TRANSITION TECHNOLOGIES▪ Clean fuels regulations drive HSD growth in ART hydroprocessing

applications▪ Renewable diesel subsegment growing double digits▪ Advanced plastic recycling based on FCC catalyst technology;

advanced recycling could account for 50% of recycled plastics market by 20401

1 Based on analysis of industry reports and Grace management estimates.

2021 W. R. Grace & Co. | 12

FCC Catalyst Outlook

Grace Well-Positioned to Address Long-Term Secular Trends

1 Based on analysis of industry reports and Grace management estimates.

▪ Stated policy scenarios: Industry experts expect total refined products demand to peak between 2030-2040– Demand expected to peak about 8% above 2018 levels with 1.4B ICE

vehicles in service and then plateau at this level for a decade or more

▪ 2°C scenario: Industry experts expect demand to be roughly 75% of 2018 level, even if the 2°C policy, technology, and consumer behavior changes are implemented by 2040– Sustainability trends will drive significant upside for chemical recycling

applications

▪ The FCC unit continues to be one of the most economic and flexible refinery units

▪ Industry experts expect 3-5% of existing refining capacity to be replaced by new capacity– Uneconomic refineries being replaced by larger, more complex refineries

integrated with petrochemical production– Newer refineries much more profitable for Grace– Some refineries being reconfigured for bio-based applications, creating

additional opportunities for Grace

8787 9090 9292 9494 9494 9292 9090

2018 2025 2030 2035 2040 2045 2050

Refined Products Demand1

(MBDOE)

Demand Forecasted to Grow for Next 15 Years as Middle Class Continues to Expand Globally

2°C

Recent FCC Unit Startups & Closures1

Opportunity to Capture Greater Value from NewFCC Unit Startups

Avg. Catalyst Additions per Unit of Feed (lb / bbl)

1.7x

Indicative Catalyst Revenue($ / bbl)

2.4x

Avg. FCC Propylene Yield

(wt %)

2.0x

Last 10 FCC Unit StartupsLast 10 FCC Unit Closures

2021 W. R. Grace & Co. | 13

▪ Advanced plastics recycling expected to account for 50% or more of the recycled plastics market by 20402

▪ Renewable fuels: Currently a $20M/year subsegment growing at double-digits

▪ 49% of our 2020 sales directly contribute to our customers' sustainability objectives

▪ 62% of R&D projects tied to at least one of four sustainability drivers

▪ Customer benefits:– Reduced emissions– Reduced energy use– Reduced water use– Enable product reformulations– Circularity and recycling

▪ Reduce greenhouse gas emissions by 22%

▪ Reduce water use by 10%▪ Reduce waste by 5%▪ Well aligned with our own

growth and productivity economics

▪ Added sustainability as a strategic imperative

▪ Named Chief Sustainability Officer

▪ Achieved strong ratings– Rated in the top quintile of

specialty chemicals peer group

– Ecovadis Gold: 95th percentile within the chemicals industry

– CDP: B- climate rating above chemical industry average

Elevating the Role of Sustainability Across Our Organization

Committed to Clear, Progressive Goals for All Our Stakeholders

Accelerating momentum in 2020

Clear, ambitiousenvironmentalgoals for 20301

Sustainabilityapproach alignedwith businesses

Investing ingame-changingtechnologies

ESG: Making Grace a More Sustainable Company Supporting Our Customers' Sustainability Efforts

1 Reduction from 2019.2 Based on analysis of industry reports and Grace management estimates.

2021 W. R. Grace & Co. | 14

Looking Ahead to 2021

Adj. FCF

Adj. EPS

Adj. EBIT

Sales▪ Delivered a very strong finish to 2020; encouraged by the positive

momentum we are seeing in our markets

▪ Well-positioned as we begin 2021; our growth and profitability opportunities are fully intact

▪ We are reinstating our annual outlook with a wider range to account for the continued uncertainties related to the pandemic

▪ Long-term we are well-positioned to drive MSD sales growth while maintaining Adjusted Gross Margins of 40-42%

▪ Sales growth will be above MSD in 2021 and 2022 as our end markets fully recover from the pandemic and we fully benefit from our recent growth investments

Well-Positioned to Capture Growth in 2021 and Beyond

2021 Outlook

$240M - $260MUp 1% - 10%

$3.63 - $3.93Up 38% - 49%

$400M - $430MUp 28% - 38%

Up 7% - 11%


15

Financial Review

Bill DockmanSenior Vice President and Chief Financial Officer

2021 W. R. Grace & Co. | 16

Consolidated Performance - 4Q 2020 Results

Sales and Adj. Gross Margin

▪ Sales down 6.8% as reported y/y (up 12.1% sequentially)– Continue to see improving demand

trends in end markets and geographies

▪ Adj. Gross Margin down 170 bps y/y (up 130 bps sequentially)

▪ Sales and gross margin are nearing pre-pandemic levels

$504.5

$419.4$470.2

41.2% 38.2% 39.5%

4Q19 3Q20 4Q20

Adj. EBIT and Margin Adj. EPS Adj. Free Cash Flow

Sales up 12.1%sequentially


▪ Adj. EBIT down $36.7M, or 27.6% (up 38.2% sequentially)– Lower gross profit and $6.3M lower

income from ART JV, partially offset by lower operating expenses

– Includes $8M impact from hurricane-related costs; the year ago period included $8M in business interruption insurance recoveries

▪ Adj. EBIT margin down 580 bps y/y (up 390 bps sequentially)

$132.9

$69.6

$96.2

26.3%

16.6%20.5%

4Q19 3Q20 4Q20

Adj. EBIT up 38.2%sequentially

▪ Adj. EPS of $0.88, down $0.43 or 32.8% y/y (up 57.1% sequentially)– Primarily due to lower Adj. EBIT

$1.31

$0.56

$0.88

4Q19 3Q20 4Q20

Adj. EPS up 57.1%sequentially

▪ AFCF down $10.3M, or 4.2%– Strong cash flow despite lower

earnings– Reflects strong execution of cash

and cost management actions in response to the pandemic

▪ Adj. EBIT ROIC of 13.9%

$247.2 $236.9

FY19 FY20

Strong cash flow despite lower earnings

($M except EPS)

2021 W. R. Grace & Co. | 17

Catalysts Technologies - 4Q 2020 Results

$205.4 $183.5

$184.5$165.2

4Q19 Volume Price Currency 4Q20

▪ Specialty Catalysts sales down 10.5% y/y (up 5.1% sequentially)– Primarily due to order timing in the prior year

▪ Refining Technologies sales down 10.7% y/y (up 23.6% sequentially)– Global refinery operating rates and demand for transportation fuels are improving but

remain below pre-pandemic levels▪ Gross margin down 300 bps y/y (up 80 bps sequentially)

– Primarily due to lower sales and production volumes, partially offset by lower raw materials and energy costs and cost mitigation actions

Note: 4Q20 CT sales by geography: NA 31%, EMEA 41%, APAC 24%, LA 5%

Sales and Gross Margin Operating Income and Margin

Refining TechnologiesSpecialty Catalysts Gross Margin

40.0% 43.0%

$348.7 $389.9 (10.8)%

(0.9)% 1.1%

ê(10.5)%

ê(10.7)%

ê(10.6)%

ê(300) bps

▪ Operating income down $45.0M or 33.6% y/y (up 32.3% sequentially)– Primarily due to lower gross profit and

$6.3M lower income from ART joint venture, partially offset by lower operating expenses

– Includes $8M impact from hurricane-related costs; the year ago period included $8M in business interruption insurance recoveries

▪ Operating margin 25.5%, down 880 bps y/y (up 360 bps sequentially)

$133.8

$67.1

$88.8

34.3%21.9% 25.5%

4Q19 3Q20 4Q20

é32.3% seq.

é360 bps seq.

$148.5 $183.5

$157.2$165.2

3Q20 4Q20

$305.7

39.2% $348.7

40.0%

é5.1%

é23.6%

é14.1%

é80 bps

2021 W. R. Grace & Co. | 18

Materials Technologies - 4Q 2020 Results

$38.6 $46.8

$32.3$35.8

$39.4$34.6

4Q19 Volume Price Currency 4Q20

▪ Sales up 6.0% y/y (up 6.9% sequentially)– Continued strength in pharma/consumer and coatings were partially offset by lower

demand in chemical process▪ Gross margin up 310 bps y/y (up 250 bps sequentially)

– Primarily due to higher sales and increased production volumes, favorable mix, lower raw materials and energy costs, and cost mitigation actions

Sales and Gross Margin Operating Income and Margin

Coatings Gross MarginPharma/Consumer

38.2%35.1%

$121.5$114.6 4.3% 0.2% 1.5%

ê(12.2)%

é21.2%

é6.0%

é310 bps

▪ Operating income up $5.5M or 23.3% y/y (up 19.8% sequentially)– Primarily due to higher gross profit

▪ Operating margin 24.0%, up 340 bps y/y (up 260 bps sequentially)

$23.6 $24.3$29.1

20.6% 21.4% 24.0%

4Q19 3Q20 4Q20

é19.8% seq.

Note: 4Q20 MT sales by geography: NA 25%, EMEA 50%, APAC 17%, LA 9% (figures may be off due to rounding)

é260 bps seq.

é10.8%

Chemical Process

$38.6 $46.8

$35.3$35.8

$35.2$34.6

3Q20 4Q20

$113.7 35.7%

$121.5

38.2%

é1.4%

é21.2%

ê1.7%

é250 bps

é6.9%

2021 W. R. Grace & Co. | 19

Disciplined Capital Allocation Approach

CAPITAL ALLOCATION FRAMEWORK

Manage Debt for Maximum Flexibility

Return Cash to Shareholders

Pursue Strategic Acquisitions

Invest in Organic Growth

▪ Capex and R&D investments accelerate organic growth and extend our competitive advantages

▪ Strategic growth and productivity investments typically generate 20%-30% IRR

▪ Focused on strategic bolt-on acquisitions▪ Continue to diversify our portfolio toward markets with

compelling growth, profitability, and cash flow characteristics

▪ Increasing our cash dividend by 10% in 2021 to $1.32 per share

▪ Fully committed to maintaining cash dividend▪ Expect to resume share repurchase program in 2021

▪ Targeting net leverage of 2.0x-3.0x (post-pandemic) ▪ Expect reduction in net leverage with recovery in

EBITDA; net debt of $1.7B and net leverage of 4.0x as of 12/31/2020 2016 2017 2018 2019 2020 Post-

Pandemic

3.0x2.6x

2x - 3x Target

3.2x4.0x

3.0x

$250M Acquisition

(3Q16)

$418M Acquisition

(2Q18)

CAPITAL DEPLOYED2016 - 2020

Capex

Acquisitions

Dividends

Share Repurchases

$2.2B36%

31%

19%

14%

Supporting Our Growth and Rewarding Our Shareholders

2021 W. R. Grace & Co. | 20

2021 Financial Outlook: A Year of Strong Recovery

Metric 2021 Outlook Key Assumptions

Sales Up 7% to 11%

Adj. EBIT$400M - $430Mup 28% to 38%

Adj. EPS$3.63 - $3.93up 38% - 49%

Adj. FCF$240M - $260M

up 1% to 10%

Depreciation & Amortization ~$120M

Adj. Effective Tax RateAdj. Cash Tax Rate

~26%12% - 15%

▪ Our outlook assumes continued strength in SC and MT and a steady recovery in the demand for transportation fuels as the year progresses, with refining demand approaching pre-pandemic levels by the end of the year

▪ Our outlook does not assume a double dip recession or resurgence in the pandemic

▪ Full-year Adj. GM expected to recover to low end of pre-pandemic range of 40%-42% on stronger demand and operating leverage

▪ FX assumptions based on forward rates; EUR/USD of ~1.19

▪ Interest expense of ~$79M

▪ Solid cash generation; includes dividend from ART JV▪ Includes $150M-$160M of capital expenditures

▪ Up from 2020 levels; includes full year depreciation from new growth investments

▪ Adj. ETR roughly flat with 2020▪ Low cash tax rate expected until 2026

1Q21 Outlook: Sales up 6% to 8% y/y, Adj. EPS of $0.77 to $0.80

21

Closing Comments

Hudson La ForcePresident and Chief Executive Officer

2021 W. R. Grace & Co. | 22

Grace Offers A Compelling Investment Opportunity

So Much More Than Refining Catalysts

We are successfully building a higher growth portfolio▪ SC and MT now 62% of our sales▪ RT's robust cash flow is a valuable asset that helps fund our growth investments and shareholder returns▪ Proven track record of successfully deploying capital to faster growing end markets

Our growth opportunities and profitability are strong▪ Long-term MSD sales growth and 40-42% Adj. Gross Margin targets fully intact▪ 4Q20 sales and Adj. Gross Margin >95% of pre-pandemic levels▪ Clear momentum in our fastest growing businesses

Sustainability focus plays to our strengths▪ Embedded sustainability mindset in innovation and new product development approach▪ Accelerating ESG focus throughout our organization▪ Committed to becoming a more sustainable company and supporting our customers' sustainability goals

2323

Appendix

Jason HershiserSenior Manager, Investor Relations

+1 [email protected]

2021 W. R. Grace & Co. | 24

Appendix: Definitions and Reconciliations of Non-GAAP Measures

Non-GAAP Financial Measures

(A) In the above, Grace presents financial information in accordance with U.S. generally accepted accounting principles (U.S. GAAP), as well as the non-GAAP financial information described below. Grace believes that this non-GAAP financial information provides useful supplemental information about the performance of its businesses, improves period-to-period comparability and provides clarity on the information management uses to evaluate the performance of its businesses. In the below charts, Grace has provided reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. These non-GAAP financial measures should not be considered as a substitute for financial measures calculated in accordance with U.S. GAAP, and the financial results calculated in accordance with U.S. GAAP and reconciliations from those results should be evaluated carefully. Grace defines these non-GAAP financial measures as follows:

▪ Adjusted EBIT means net income attributable to W. R. Grace & Co. shareholders adjusted for interest income and expense; income taxes; costs related to legacy matters; restructuring and repositioning expenses and asset impairments; pension costs other than service and interest costs, expected returns on plan assets, and amortization of prior service costs/credits; gains and losses on sales and exits of businesses, product lines, and certain other investments; third-party acquisition-related costs and the amortization of acquired inventory fair value adjustment; gains and losses on modification or extinguishment of debt; the effects of these items on equity in earnings of unconsolidated affiliate; and certain other items that are not representative of underlying trends.

▪ Adjusted EBITDA means Adjusted EBIT adjusted for depreciation and amortization and depreciation and amortization included in equity in earnings of unconsolidated affiliate (collectively, Adjusted Depreciation and Amortization). Grace uses Adjusted EBITDA for its calculation of net leverage, a non-GAAP financial measure, which means Gross debt, less cash dividend by Adjusted EBITDA.

▪ Adjusted EBIT Return on Invested Capital means Adjusted EBIT (on a trailing four quarters basis) divided by Adjusted Invested Capital, which means equity adjusted for debt; underfunded and unfunded defined benefit pension plans; liabilities related to legacy matters; cash, cash equivalents, and restricted cash; net income tax assets; and certain other assets and liabilities.

▪ Adjusted Gross Margin means gross margin adjusted for pension-related costs included in cost of goods sold, the amortization of acquired inventory fair value adjustment, and write-offs of inventory related to exits of businesses and product lines and significant manufacturing process changes.

▪ Adjusted EPS means diluted EPS adjusted for costs related to legacy matters; restructuring and repositioning expenses and asset impairments; pension costs other than service and interest costs, expected returns on plan assets, and amortization of prior service costs/credits; gains and losses on sales and exits of businesses, product lines, and certain other investments; third-party acquisition-related costs and the amortization of acquired inventory fair value adjustment; gains and losses on modification or extinguishment of debt; certain other items that are not representative of underlying trends; and certain discrete tax items and income tax expense related to historical tax attributes.

▪ Adjusted Free Cash Flow means net cash provided by or used for operating activities minus capital expenditures plus cash flows related to legacy matters; cash paid for restructuring and repositioning; capital expenditures related to repositioning; cash paid for third-party acquisition-related costs; cash flows related to debt modification; accelerated payments under defined benefit pension arrangements; and certain other items that are not representative of underlying trends.

▪ The change in net sales on a constant currency basis, which we sometimes refer to as "Net Sales, constant currency," means the period-over-period change in net sales calculated using the foreign currency exchange rates that were in effect during the previous comparable period.

▪ Organic sales growth means the period-over-period change in net sales excluding the sales growth attributable to acquisitions.

“Legacy matters” include legacy (i) product, (ii) environmental, and (iii) other liabilities, relating to past activities of Grace.

2021 W. R. Grace & Co. | 25

Appendix: Definitions and Reconciliations of Non-GAAP Measures (continued)


In the 2020 first quarter, the definition of Adjusted EBIT was modified to adjust for the effects of interest and taxes on equity in earnings of unconsolidated affiliate. The definition of Adjusted EBITDA was modified to adjust for the effects of depreciation and amortization on equity in earnings of unconsolidated affiliate. We made these changes to provide clarity about the impacts of these items on our equity in earnings of unconsolidated affiliate and to improve consistency in Grace's application of non-GAAP financial measures. Previously reported amounts were revised to conform to the current presentation.

Adjusted EBIT, Adjusted EBITDA,(and net leverage based upon Adjusted EBITDA), Adjusted EBIT Return On Invested Capital, Adjusted Gross Margin, Adjusted EPS, Adjusted Free Cash Flow, Net Sales, constant currency, and Organic sales growth do not purport to represent income or liquidity measures as defined under U.S. GAAP, and should not be considered as alternatives to such measures as an indicator of Grace's performance or liquidity.

Grace uses Adjusted EBIT as a performance measure in significant business decisions and in determining certain incentive compensation. Grace uses Adjusted EBIT as a performance measure because it provides improved period-to-period comparability for decision making and compensation purposes, and because it better measures the ongoing earnings results of its strategic and operating decisions by excluding the earnings effects of legacy matters; restructuring and repositioning activities; certain acquisition-related items; and certain other items that are not representative of underlying trends.

Grace uses Adjusted EBITDA, Adjusted EBIT Return On Invested Capital, Adjusted Gross Margin, and Adjusted EPS as performance measures and may use these measures in determining certain incentive compensation. Grace uses Adjusted EBITDA in its calculation of net leverage. Grace uses Adjusted EBIT Return On Invested Capital in making operating and investment decisions and in balancing the growth and profitability of operations. Grace uses the change in Net Sales on a constant currency basis as a performance measure to compare current period financial performance to historical financial performance by excluding the impact of foreign currency exchange rate fluctuations that are not representative of underlying business trends and are largely outside of its control. Grace uses Organic sales growth to measure its businesses' sales performance, excluding the impacts of acquisitions.

Grace uses Adjusted Free Cash Flow as a liquidity measure to evaluate its ability to generate cash to support its ongoing business operations, to invest in its businesses, and to provide a return of capital to shareholders. Grace also uses Adjusted Free Cash Flow as a performance measure in determining certain incentive compensation.

Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT Return On Invested Capital, Adjusted Gross Margin, Adjusted EPS, Adjusted Free Cash Flow, Net Sales, constant currency, and Organic sales growth do not purport to represent income measures as defined under U.S. GAAP, and should not be used as alternatives to such measures as an indicator of Grace’s performance. These measures are provided to investors and others to improve the period-to-period comparability and peer-to-peer comparability of Grace’s financial results, and to ensure that investors and others understand the information Grace uses to evaluate the performance of its businesses. They distinguish the operating results of Grace's current business base from the costs of Grace's legacy matters; restructuring and repositioning activities; and certain other items. These measures may have material limitations due to the exclusion or inclusion of amounts that are included or excluded, respectively, in the most directly comparable measures calculated and presented in accordance with U.S. GAAP and thus investors and others should review carefully the financial results calculated in accordance with U.S. GAAP.

Adjusted EBIT has material limitations as an operating performance measure because it excludes costs related to legacy matters, and may exclude income and expenses from restructuring and repositioning activities, which historically have been material components of Grace’s net income. Adjusted EBITDA also has material limitations as an operating performance measure because it excludes the impact of depreciation and amortization expense. Grace’s business is substantially dependent on the successful deployment of capital, and depreciation and amortization expense is a necessary element of our costs. Grace compensates for the limitations of these measurements by using these indicators together with net income as measured under U.S. GAAP to present a complete analysis of our results of operations. Adjusted EBIT and Adjusted EBITDA should be evaluated together with net income and net income attributable to Grace shareholders, measured under U.S. GAAP, for a complete understanding of Grace’s results of operations.

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Grace is unable without unreasonable efforts to estimate the annual mark-to-market pension adjustment or future net income or diluted EPS. Without the availability of this significant information, Grace is unable to provide reconciliations for certain forward-looking information set forth in the Outlook, above.

(B) Grace's segment operating income includes only Grace's share of income from consolidated and unconsolidated joint ventures.(C) Certain pension costs include only ongoing costs recognized quarterly, which include service and interest costs, expected returns on plan assets, and amortization of prior service costs/credits. Catalysts

Technologies and Materials Technologies segment operating income and corporate costs do not include any amounts for pension expense. Other pension related costs including annual mark-to-market adjustments and actuarial gains and losses are excluded from Adjusted EBIT. These amounts are not used by management to evaluate the performance of Grace's businesses and significantly affect the peer-to-peer and period-to-period comparability of our financial results. Mark-to-market adjustments and actuarial gains and losses relate primarily to changes in financial market values and actuarial assumptions and are not directly related to the operation of Grace's businesses.

(D) Restructuring and repositioning expenses attributable to W. R. Grace & Co. shareholders is net of restructuring expenses attributable to noncontrolling interests.

(E) Inventory write-off in 2020 related to the changes of hydroprocessing catalysts manufacturing operations. Inventory write-off in 2019 related to the idling of Grace’s methanol-to-olefins (“MTO”) manufacturing facility in China.

(F) Grace's historical tax attribute carryforwards (net operating losses and tax credits) unfavorably affected its tax expense with respect to certain provisions of the Tax Cuts and Jobs Act of 2017. To normalize the effective tax rate, an adjustment was made to eliminate the tax expense impact associated with the historical tax attributes.

NM - Not Meaningful

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Adjusted EBIT by Operating Segment:Q1

2019Q2

2019Q3

2019Q4

2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020

Catalysts Technologies segment operating income $ 101.7 $ 125.8 $ 105.1 $ 133.8 $ 466.4 $ 82.0 $ 71.7 $ 67.1 $ 88.8 $ 309.6

Materials Technologies segment operating income 24.0 24.1 26.1 23.6 97.8 19.0 12.6 24.3 29.1 85.0

Corporate costs (16.2) (18.0) (18.5) (20.0) (72.7) (15.6) (16.7) (18.2) (17.5) (68.0)

Certain pension costs(C) (4.8) (4.6) (4.5) (4.5) (18.4) (3.1) (3.5) (3.6) (4.2) (14.4)

Adjusted EBIT (A)(B) 104.7 127.3 108.2 132.9 473.1 82.3 64.1 69.6 96.2 312.2 Pension MTM adjustment and other related costs, net — — — (85.9) (85.9) — — — (94.6) (94.6) Loss on early extinguishment of debt — — — — — — — (39.4) — (39.4) Costs related to legacy matters (46.9) (1.5) (3.7) (51.4) (103.5) (2.7) (2.8) (30.6) (3.3) (39.4)

Restructuring and repositioning expenses (2.3) (6.4) (3.4) (1.6) (13.7) (2.7) (21.4) (2.4) (10.4) (36.9)

Inventory write-offs and disposal costs — (3.6) — — (3.6) — (19.7) (0.1) (0.9) (20.7)

Third-party acquisition-related costs (0.3) (1.0) (1.4) (0.9) (3.6) (1.5) (2.0) (0.3) (1.4) (5.2) Taxes and interest included in equity in earnings of

unconsolidated affiliate (0.3) (0.6) (0.4) 1.4 0.1 — (0.2) (0.4) (0.1) (0.7)

Benefit Plan Adjustment — — — (5.0) (5.0) — — — — —

Interest expense, net (19.3) (19.2) (18.3) (18.0) (74.8) (17.7) (18.9) (19.6) (18.7) (74.9)

(Provision for) benefit from income taxes (10.9) (18.8) (27.3) 0.2 (56.8) (15.7) (6.4) 30.2 (10.3) (2.2)

Net income (loss) attributable to W. R. Grace & Co. shareholders $ 24.7 $ 76.2 $ 53.7 $ (28.3) $ 126.3 $ 42.0 $ (7.3) $ 7.0 $ (43.5) $ (1.8)


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Adjusted Free Cash Flow (A): YTD 2020 YTD 2019Net cash provided by (used for) operating activities $ 349.6 $ 392.1 Capital expenditures (155.5) (194.1) Free Cash Flow 194.1 198.0 Cash paid for legacy matters 21.0 19.3 Cash paid for repositioning 10.7 16.8 Cash paid for third-party acquisition-related costs 5.1 2.9 Cash paid for restructuring 3.1 10.2 Cash paid related to modification of debt 2.6 — Other items 0.3 — Adjusted Free Cash Flow $ 236.9 $ 247.2

* Definitions of non-GAAP financial terms and reconciliations to the closest GAAP term are provided in the Appendix


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Calculation of Adjusted EBIT Return On Invested Capital (trailing four quarters): Q4 2020 Q4 2019Adjusted EBIT $ 312.2 $ 473.1 Net Income (1.8) 126.3 Reconciliation to Adjusted Invested Capital:Total equity 234.5 402.2 Debt 1,990.4 1,980.4 Underfunded and unfunded pension plans 649.0 519.8 Liabilities related to legacy matters 224.1 206.7 Cash, cash equivalents, and restricted cash (306.2) (282.9) Net income tax assets (555.3) (501.6) Other items 13.7 19.7 Adjusted Invested Capital $ 2,250.2 2,344.3

GAAP Return on Equity (0.8) % 31.4 %Adjusted EBIT ROIC 13.9 % 20.2 %

* Definitions of non-GAAP financial terms and reconciliations to the closest GAAP term are provided in the Appendix


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Three Months Ended December 31,2020 2019

(In millions, except per share amounts) Pre-TaxTax

EffectAfter Tax

Per Share Pre-Tax

Tax Effect

After Tax

Per Share

Diluted earnings per share $ (0.66) $ (0.42) Pension MTM adjustment and other related costs, net $ 94.6 $ 22.6 $ 72.0 1.09 $ 85.9 $ 24.0 $ 61.9 0.93 Restructuring and repositioning expenses 10.4 3.5 6.9 0.10 1.6 0.4 1.2 0.02 Costs (benefit) related to legacy matters 3.3 0.2 3.1 0.05 51.4 11.1 40.3 0.60 Third-party acquisition-related costs 1.4 0.3 1.1 0.02 0.9 0.2 0.7 0.01 Inventory write-offs and disposal costs 0.9 (0.1) 1.0 0.02 — — — — Loss on early extinguishment of debt — (0.3) 0.3 — — — — — Benefit plan adjustment — — — — 5.0 1.1 3.9 0.06 Discrete tax items (17.0) 17.0 0.26 (8.4) 8.4 0.13 Income tax expense related to historical tax attributes — — — 1.4 (1.4) (0.02) Adjusted EPS (A) $ 0.88 $ 1.31


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Twelve Months Ended December 31, 2020 2019

(In millions, except per share amounts) Pre-TaxTax

EffectAfter Tax

Per Share Pre-Tax

Tax Effect

After Tax

Per Share

Diluted earnings per share $ (0.03) $ 1.89

Pension MTM adjustment and other related costs, net $ 94.6 $ 22.6 $ 72.0 1.09 $ 85.9 $ 24.0 $ 61.9 0.93 Loss on early extinguishment of debt 39.4 9.5 29.9 0.45 — — — — Costs (benefit) related to legacy matters 39.4 9.5 29.9 0.45 103.5 25.2 78.3 1.17 Restructuring and repositioning expenses 36.9 8.7 28.2 0.43 13.7 3.0 10.7 0.16 Inventory write-offs and disposals costs 20.7 5.0 15.7 0.24 3.6 — 3.6 0.05 Third-party acquisition-related costs 5.2 1.3 3.9 0.06 3.6 0.9 2.7 0.04 Benefit plan adjustment — — — — 5.0 1.1 3.9 0.06 Discrete tax items 3.1 (3.1) (0.05) 3.6 (3.6) (0.05) Income tax expense related to historical tax attributes — — — (8.6) 8.6 0.13 Adjusted EPS (A) $ 2.64 $ 4.38


4q20 earnings presentation...4.9% sales cagr4 rapidly accelerating pharma/consumer business: lsd...

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