Company Overview - Investor Relations Solutions

Focused.

Company Overview Innovative.

December 2016

Performance Driven.

Disclaimer

Statement Regarding Safe Harbor For Forward-Looking Statements This presentation 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, expected financial positions; results of operations; cash flows; financing plans; business strategy; operating plans; capital and other expenditures; competitive positions; growth opportunities for existing products; benefits from new technology and cost reduction initiatives, plans and objectives; and markets for securities. For these statements, Grace claims the protection of the safe harbor for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Like other businesses, Grace is subject to risks and uncertainties that could cause its actual results to differ materially from its projections or that could cause other forward-looking statements to prove incorrect. Factors that could cause actual results to materially differ from those contained in the forward-looking statements include, without limitation: risks related to foreign operations, especially in emerging regions; the cost and availability of raw materials and energy; the effectiveness of its research and development and growth investments; acquisitions and divestitures of assets and gains and losses from dispositions; developments affecting Grace’s outstanding indebtedness; developments affecting Grace's funded and unfunded pension obligations; its legal and environmental proceedings; uncertainties that may delay or negatively impact the separation transaction or cause the separation transaction to not occur at all; uncertainties related to the company’s ability to realize the anticipated benefits of the spin-off; the inability to establish or maintain certain business relationships and relationships with customers and suppliers or the inability to retain key personnel; costs of compliance with environmental regulation; and those additional factors set forth in Grace's most recent Annual Report on Form 10-K, quarterly report 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. Reported results should not be considered as an indication of future performance. Readers are cautioned not to place undue reliance on Grace's projections and forward-looking statements, which speak only as the date thereof. Grace undertakes no obligation to publicly release any revision 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 presentation. Non-GAAP Financial Terms In 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 nonGAAP 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.

2

© 2016 W. R. Grace & Co.

Company Snapshot We are a $2 Billion Technology Leader Catalysts Technologies 25%

Materials Technologies Chemical Process

SC

26% ART Coatings

77% Sales

Consumer/ Pharma

32%

Total 27% $0.5b

Total $1.6b(1)

RT 49%

Leadership Positions

1

29%

12% Other

     

#1 in FCC catalysts #1 in resid hydroprocessing catalysts #2 in hydrocracking catalysts #1 in polyolefin catalysts #2 in polypropylene process technology licensing #1 in specialty silica gel, pioneer in multiple segments

23% Sales

Connected Through our Materials Science Expertise Refining Catalysts

Polyolefin Polyolefin Catalysts Catalysts

Organic Chemicals

MgCl2

BioPharma

1

3

Includes sales of unconsolidated ART joint venture © 2016 W. R. Grace & Co.

(FCC and HPC)

Silica

Silica Alumina

Materials Technologies

Alumina

Chemical Catalysts

Raney Metal

Strategic Direction With Winning Strategic Positions in Both Segments Catalysts Technologies


 Value creating products in Refining and Polyolefin catalysts

 Leading position in high value niches

 Unmatched technical expertise to develop tailored products

 Proven innovation and application knowledge across many end uses

 Global direct sales force and field technical teams  Long history with blue-chip customers  Strong partnerships with leading customers and technology providers

How We Win

 Global direct sales force and field technical teams  Infrastructure in mature and emerging regions

Leading segment positions – #1 or #2 in over 80% of sales 4

© 2016 W. R. Grace & Co.

Strategic Direction Focused on Value  Leveraging the separation  We are now leaner, more focused, and more strategically nimble

 Maintaining ROIC discipline  Timing of capacity additions matched with demand  Tight working capital management reduces cash impact of slower growth

 Focusing on productivity  Manufacturing excellence

 High return opportunities for capital allocation  Growth and productivity investments  Synergistic, bolt-on acquisitions  Share repurchases and dividends

 Focusing on growth  In our end markets  Through synergistic bolt-on acquisitions

Nimble company with proven track record in challenging environments 5

© 2016 W. R. Grace & Co.

Strategic Direction Return on “Focus:” Marking Progress Since Separation Across Grace Executing on Strategic Framework  Focus on creating a less complex organization that scales efficiently with growth

 Return cash to shareholders through dividend and buyback

Catalysts Technologies


 Closed polyolefin catalysts acquisition from BASF

 Fine Chemicals expected up double digits YoY  New products growth strategy in key markets:

 Positive average FCC price movement QoQ and positive indicators in the bid process

 Architectural coatings

 New MTO reference account

 Automotive catalysts

 Custom catalysts in edible oil space

 Started supplying the world’s largest FCC unit

 M&A pipeline remains robust

 New products in ART with good progress on hydro cracking

 Productivity focus

 Productivity focus, including removal of 10,000 mt of our least efficient capacity

6

 Maintain disciplined leverage ratios while investing in growth

© 2016 W. R. Grace & Co.

Adapting to the Global Operating Environment 2011-2015

7

2016-2020

Developed Regions

 Weak economic growth  Refining consolidation

 Slow moderate growth

Emerging Regions

 Growth at a declining rate

 Slow rebound in growth

Interest Rates

 Historic lows

 Slowly rising rates – moderating growth of emerging regions

Energy

 Before oil price crash, many new projects  Low natural gas price  After oil decline in ’15, strong refining margins driving by robust fuels demand

   

Petrochemicals

 Middle East and China investments  Oil primary feedstock

 Middle East continues to successfully compete  $100B build out of US gulf coast  Low cost gas, naphtha and alternative feedstocks

Construction Market

 Weak environment following recession in mature markets

 Moderate increase drives additional polymer consumption

Inflation

 Significant deflationary trends with pockets of volatility

 Increasing inflation over long term as demand and economy improve

Competitive Intensity

 2011-12 Rare earth hyperinflation  2013-15 Heavy price competition

© 2016 W. R. Grace & Co.

Oil demand continues to shift east Strong transportation fuels demand Product overhang due to refining overcapacity Low oil price delays refining and shale gas projects

 Industry capacity utilization improving  More focus on technology & value

Adapting to the Global Operating Environment Paths to Growth and Earnings  Grow sales with technology-oriented customers

 Position organization to serve growing regions

 Ongoing focus on productivity and margins

 Leverage our Adjusted Free Cash Flow

8

© 2016 W. R. Grace & Co.

Summary 1

Performance-Driven Management Team

2

Strong Track Record through Tough Economic Environments

3

Leading Strategic Positions in Both Segments

4

Exceptional R&D and Technological Differentiation

5

Solid Long-Term Growth Potential

6

High Profitability and Cash Flow

7

High Return on Invested Capital

Growth

Profitability

Return on Invested Capital (ROIC)

Unique strategic position, track record, and profitability make Grace a compelling investment 9

© 2016 W. R. Grace & Co.

Cash Flow

For more information visit grace.com or contact: Tania Almond Investor Relations Officer +1 410.531.4590 [email protected]

10

© 2016 W. R. Grace & Co.

Appendix

11

© 2016 W. R. Grace & Co.

Business Overview

12

© 2016 W. R. Grace & Co.

Catalysts Technologies 2015 Financial Highlights

   

$1.2 billion sales 42.2% Adjusted Gross Margin $415 million Adjusted EBITDA 35.7% Adjusted EBITDA margin

Large Global Opportunity

Refining Catalysts 2-4% CAGR

$3.8 $6.7

$16 billion $5.5

13

© 2016 W. R. Grace & Co.

Polymer Catalysts 3-4% CAGR

Petrochemical Catalysts 2-3% CAGR

Business Overview

Catalysts Technologies Product Offering

Financial Overview

Refining Technologies (RT)  FCC catalysts and additives for petroleum refiners Advanced Refining Technologies (ART)  Hydroprocessing catalysts Specialty Catalysts (SC)  Catalysts, supports, and technology licensing for polyolefins and specialty chemicals Key Industries  Oil Refining  Polyolefins

By Region

SC 34%

North America 33%

© 2016 W. R. Grace & Co.

$1,162 35.7%

35.7%

$445

$415

34.0%

2014A Adj EBITDA

2015A Adj EBITDA Margin

Constant currency

 Grow sales with technology oriented customers  Continue focus on growth regions  Develop new FCC profit pools and grow polyolefin catalysts  Curtail least profitable capacity in FCC

Sales $1.2b

Emerging Regions 38%

14

$1,247

Key Strategies

Western Europe 18% Total $1.2b

4.2% CAGR at Constant Currency

$1,222

$1,124

2013A Sales

2015 Sales

RT 66%

$1,247

$382

 Petrochemicals and Biochemicals

By Product

$1,125

 Support customer investment decisions with product and process technology Developed Asia 11%

 Build or buy required growth capacity

Business Overview

Catalysts Technologies Application

2009

2015

Segment earnings mixing toward high growth Specialty Catalysts

FCC Refining

HPC EB Resid

~8-9% CAGR

HPC FB Resid HPC Distillate

~13% CAGR

HPC Hydrocracking Polyethylene (PE) Catalyst

Specialty

72%

Polypropylene (PP) Catalyst PP Process Technology Licensing

-

PE / PP Single Site Catalyst

2009

Future

Zeolite Technology

Technology Leader

Strong Position

Developing Position

A strong portfolio getting stronger with a more diversified earnings base 15

© 2016 W. R. Grace & Co.

64%

2015

Refining Technologies

Chemical Catalysts

MTO Catalysts

36%

28%

PE Catalyst Support

40%

60%

2020E Specialty Catalysts

Completed Polyolefin Catalysts Acquisition

The Leader in Polyolefin Catalysts and Licensing #1 in Polyolefin Catalysts #2 in Polypropylene Process Technology Licensing Broadest Catalysts Portfolio  Gas phase and bulk process PP and PE catalysts  Sixth-generation non-phthalate gas phase and bulk process PP catalysts  Catalysts optimized for UNIPOL® PP process  Chromium PE catalysts  Custom Ziegler-Natta PE and PP catalysts  Custom Single-Site PE and PP catalysts Global Catalysts Manufacturing Flexibility, capability, process knowledge, and capacity

Acquisition Brings Strong Synergies  Creates the world’s broadest portfolio of polypropylene and polyethylene catalysts technologies  Strengthens our ability to innovate as a strategic partner to our customers  Well-defined cost and operational synergies, increasing operational flexibility to optimize global manufacturing network  Expect to achieve full synergies by end of 2018

Track Record of Building Leadership Position 2016 – Acquired BASF PO Catalyst business 2013 – Acquired UNIPOL business 2010 – Acquired Synthetech for single site and PP catalyst manufacturing

2006 – Acquired PP catalyst manufacturing capacity 2005 – Acquired single site technology for PE and PP catalysts Newly acquired sites 16

Polyolefin Catalysts Acquisition | July 2016

2002 – Acquired Z-N technology for PE and PP © 2016 W. R. Grace & Co. | Confidential

Materials Technologies 2015 Financial Highlights*

   

$0.5 billion sales 38.8% Adjusted Gross Margin $120 million Adjusted EBITDA 25.8% Adjusted EBITDA margin

Large Global Opportunity

Consumer/Pharma 2-3% CAGR

Other 2-3% CAGR

Coatings 2-4% CAGR $1.1 $1.3

$5.7 billion $0.6 $2.7

* 2015 data on discontinued operations basis, available in 8-K filed April 13, 2016

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© 2016 W. R. Grace & Co.

Chemical Process 3-4% CAGR

Business Overview

Materials Technologies Product Offering

Financial Overview1

Coatings  Functional additives across a broad range of specialized coatings applications

$485

Chemical Process  Adsorbents and surface modifiers for plastics, petrochemical, and other broad industrial end uses

$485

Consumer/Pharma  Processing aids and customized, high purity products for beverage, personal care, and pharmaceutical end uses 2015 Sales1 By End Market Coatings 29%

Consumer/ Pharma 27%

Total $0.5b

Chemical Process 32% 1

18

25.1%

$119 2013 Sales

$466

$128 2014 Adj EBITDA

25.8%

$120

2015 Adj EBITDA Margin

Constant currency

 Grow new applications in high margin end uses

By Region North America 24%

Western Europe 37%

Emerging Regions 33%

 New product pipeline to sustain above market rate  Build or buy for growth  Continue to expand geographic and end use diversification  Capitalize on regulatory changes driving growth in sustainable technologies

Developed Asia 6%

2015 data on discontinued operations basis, available in 8-K filed April 13, 2016 © 2016 W. R. Grace & Co.

$511 24.5%

3.2% CAGR at Constant Currency

$517

Key Strategies

Total $0.5b

Other 12%

$512

Business Overview


Product Strategy Focused on High-Value Specialty Applications

Specialty Applications Product Value and Differentiation

 Continuous product innovation drives margin improvement  Products translate very well into high-growth emerging markets

Semi-specialty Applications

Commodity Applications (No play zone)

19

 ~70% of segment sales are generated from high-margin specialty applications

© 2016 W. R. Grace & Co.

Business Overview

Materials Technologies Key Competitive Advantages

Products we use everyday

 Strong technology base and market positions  Broad scope of industries with high value niches  Strong application knowledge and technical service programs  Proven innovation in material sciences, instrumentation and laboratory consumables

 Global footprint to support emerging regions growth

Furniture

Toothpaste

Beer

Coatings

Abrasives

Clarification

Petrochemical

Pharma

Personal Care

Gas purification

Manufacturing

Ingredients

Overview of Key Customers  Paint and coatings companies  Consumer products companies  Plastics manufacturers  Pharmaceutical and biotech companies

20

© 2016 W. R. Grace & Co.

Business Overview

Materials Technologies – End Uses Coatings  Functional additives that provide matting effects in a variety of specialty coatings such as:  In wood coatings, to provide matting without impacting clarity or applications properties  In coil coatings, to provide matting without impact on film properties such as durability or chemical resistance  In high-performance architectural coatings, to provide superior film smoothness, burnish, and stain resistance  Environmentally friendly corrosion inhibitors providing corrosion protection for metal surface coatings  Specialty additives to enhance print quality in ink jet coatings applied to paper  Desiccant or moisture adsorption protection for moisture sensitive paints Consumer/Pharma  In consumer applications:  In food and personal care products, as processing aids as free-flow agent or carrier  In edible oils, for purification; and in beer and other beverages, for stabilization  In toothpaste, as an abrasive or thickener that can carry medicinal ingredients  In Pharma applications, such as:  In chromatography, to provide chemical purification in drug discovery and production  In custom pharmaceutical intermediates, for oncology and other drug therapies Chemical Process  Surface modifiers for thin polymer films, to prevent inter-film adhesion without impacting clarity of food and consumer materials packaging  Molecular sieve adsorbents to remove moisture in a range of industrial gases including natural gas, cracked gas, and ethanol; also as a specialty desiccant in glass  Colloidal dispersions of silica which provide chemical inertness and heat resistance in precision investment castings and industrial catalysts  Processing aid in the production of edible oils and bio-diesel 21

© 2016 W. R. Grace & Co.

Business Overview

Businesses Connected Through Materials Science Fluid Cracking Catalysts Environmental Single Site Catalysts Ziegler Natta Catalysts

Polypropylene Catalysts

Fixed Bed Light Olefins

Chromium Catalysts Polyolefin Catalysts

UNIPOL® Licensing

Organometallic Components

Ebullating Bed

FCC Additives

Hydroprocessing Catalysts

Refining Catalysts

Distillate Hydrocracking

Organic Chemicals

MgCl2

Silica

Silica Alumina

Raney Metal

Alumina

Molecular Sieve Adsorbents BioPharma

Coatings Additives

Pharmaceutical Intermediates


Reinforcement / Binder Agents Chromatography Products Food/Beverage/Personal Care Processing Aids

Basic Science

22

© 2016 W. R. Grace & Co.

Applications

Chemical Catalysts

Catalyst Carriers

Hydrogenation Catalysts Surface Modifiers

Zeolite Catalysts

Catalysts Technologies


Business Overview

Exceptional R&D and Technological Differentiation Market Dynamic FCC

HPC

Technology Challenges

 Heavy resid processing, primarily in Middle East and Asia

 Heavy crudes

 Growth in resid-to-propylene applications, primarily Asia

 Activity

 Shale: important component of North American crude diet

 Stability

 Contaminants  Selectivity

 Heavy resid treating and conversion

 Heavy crudes

 Growing demand for low-sulfur diesel fuel

 Contaminants

 Investment in hydrocrackers

 Selectivity

 Activity  Stability

Specialty Catalysts

 Population growth

 Strength

 Increased consumer consumption – emerging economies

 Flexibility

 Substitution of other materials

 Processability

 Feedstock cost position

 Clarity

Offerings  ACHIEVE® FCC catalyst family – maximize product yield and octane from opportunity crudes  Midas® GOLD FCC catalysts – heavy resid  ICR® catalyst systems for hydrocracking and fixed bed resid hydrotreating  SmART Catalyst System® for ultra-low sulfur diesel production  MAGNAPORE® chromium PE catalysts  CONSISTA® 6th generation nonphthalate PP catalysts  UNIPOL® Polypropylene Process technology

Helping customers with innovative products drives growth 23

© 2016 W. R. Grace & Co.

Business Overview

Exceptional R&D and Technological Differentiation Market Dynamic Materials Technologies

Technology Solutions

 Environmentally friendly coatings with improved performance attributes

 Unique additives to enhance coatings performance

 Outsourcing of drug intermediates manufacture

 Sophisticated custom chemistries to meet pharmaceutical requirements

 Growth of environmental and custom catalysts  Banning of plastic microbeads in personal care applications  High cleaning/low abrasivity toothpastes

 Customized materials to improve catalyst performance

Offerings  SYLOID® silica matting  SHIELDEX® corrosion inhibitors  SYLOSIV® adsorbents  Synthetech pharmaceutical intermediates  LUDOX® colloidal silica  SYLOID® silica gels  SYLODENT® silicas

 Specialized silicas with tailored particles  Specialized materials for personal care

Helping customers with innovative products drives growth 24

© 2016 W. R. Grace & Co.

Business Overview

Solid Long-Term Growth Potential High Margin Organic Investment Opportunities …

Focused Growth Programs

Projected Industry Annual Growth

FCC Invest to maintain #1 position

2-4%

Hydroprocessing Invest to improve position

4-5%

 Focused on expanding existing portfolio Risk

Return

 Investment criteria based on:  Strategic fit (technology, capacity, market access)  Scalability and global application  Hard cost and capital synergies  Risk-adjusted return  Investment criteria can be widened for specific opportunities Track Record of Execution1

Polyolefins Aggressively grow

4-5%

Materials Grow in adjacent markets

2-4%

High

… Supported by Acquisitions

    

Medium

1

Over $1.5B invested between 2003-2015 22 acquisitions and 7 divestitures Increased Adj EBIT ROIC 1,770 basis points Increased Adj EBITDA margins 1,100 basis points UNIPOL sales and earnings ahead of acquisition plan  Integration completed in four months  Multiple 11x pre-synergies and 7x after realized synergies

Data is based on Old Grace performance pre-spin

Visible pipeline of growth opportunities 25

© 2016 W. R. Grace & Co.

Capital Allocation and Structure

26

© 2016 W. R. Grace & Co.


Disciplined Capital Allocation Approach

1

Annual Business Planning

 Establish long term sales, earnings, and cash flow targets  Determine R&D and plant maintenance requirements  Identify growth and productivity investment opportunities

2

Corporate Financial Planning

 Confirm leverage targets and liquidity requirements  Set pension funding strategy  Update company and business segment valuations

3

Capital Allocation Decisions

 Prioritize highest return investments above risk-adjusted return requirement

 Dynamically manage capital allocation as conditions change and opportunities arise  Grow dividend, continue share repurchase

Investments 27

© 2016 W. R. Grace & Co.

Acquisitions

Return Cash to Shareholders


High Return Opportunities for Capital Allocation Growth and Productivity Investments

Synergistic, Bolt-on Acquisitions

 Typically our best opportunities

 Small bolt-ons: Returns as good as internal investments

 High return projects in both segments  Large projects with returns >2x WACC

 Larger bolt-ons: Returns above riskadjusted return requirement

Share Repurchases and Dividends

 Framed as an investment opportunity with an expected return requirement  Returned over $1.3 billion to shareholders since 2014  $490 million warrant settlement equivalent to buying 10 million shares at $66/share (pre-spin value)

Capital allocation focused on the highest expected return opportunities 28

© 2016 W. R. Grace & Co.


Investing to Grow Top Line and Increase Shareholder Return

Reinvest in the Business

Capital Investment

Acquisitions

 Adjusted Free Cash Flow

Dividends Return Cash to Shareholders Share Repurchases

© 2016 W. R. Grace & Co.

Bolt-on opportunities with returns above risk adjusted requirements Completed polyolefin catalysts acquisition in 2Q16

 Optimal Net Leverage 2x-3x Adjusted EBITDA

29

~ 8-10% of sales High return opportunities in each segment

$0.17/share regular quarterly cash dividend

Programmatic share repurchase


Capital Structure Summary of Leverage Profile (US$ in Millions)

Cash and cash equivalents $300 million revolving credit facility

Capital Structure Net 1 Leverage

9/30/2016

 Liquidity well over $400 million  ~$81 million in 2016 interest expense 3

$ 204 0

 Low leverage provides flexibility for growth and investment

Term Loan B

491

5.125% Senior Notes due 2021

692

X

5.625% Senior Notes due 2024

296

X

Other borrowings

112

x

Total debt

$ 1,590

3.2x

Net Debt

$ 1,386

2.8x

Total Liquidity 2

$ 458

1 Assumes

Adj. EBITDA at middle of 2016 outlook range liquidity is cash plus available amount under revolving credit facility 3 Excludes ~$11 million of accelerated amortized financing fees (non-cash) due to debt prepayment 2 Total

Low leverage provides strategic, operational and financial flexibility 30

© 2016 W. R. Grace & Co.


Valuation considerations for Grace  We use our 2016 outlook range for valuation  Grace’s tax attributes are worth $6-$7 per share today  Currently provides an annual $50 to $60 million favorable impact on cash flow

EBITDA Approach

Adjusted EBITDA Net debt 9/30/2016

Grace

$500-505M $1,386M

Share count

~70M

Tax attributes

+ $6-$7/share1

 Present value of Grace tax attributes is greater than $470 million on current tax law or $6$7/share  In a 25% corporate tax rate scenario it would be worth ~$400 million or $5-$6/share  Grace dividend  $0.17/share regular quarterly cash dividend

1

31

P/E Approach

Adjusted EPS

$3.05-3.10

Tax attributes

+ $0.78 1

Total

$6-$7 is the per share present value of Grace’s tax attributes. $0.78 is the per share value of the mid-point of Grace’s tax attributes expected to be utilized in 2016. © 2016 W. R. Grace & Co.

Grace

$3.83-3.88

Appendix – Additional Information

Trademark Notices  GRACE®, ACHIEVE®, MIDAS® GOLD, MAGNAPORE®, CONSISTA®, SmART Catalyst System® (Stylized), SYLOID®, SYLOBLOC®, LUDOX®, SYLOBEAD®, CBA®, ADVA®, HEA2®, DCI®, are trademarks, registered in the United States and/or other countries, of W. R. Grace & Co.-Conn.  VYDAC® and REVELERIS® are trademarks, registered in the United States and/or other countries, of Alltech Associates, Inc.  TALENT | TECHNOLOGY | TRUST™ is a trademark of W. R. Grace & Co.-Conn.  UNIPOL® is a trademark of The Dow Chemical Company or an affiliated company of Dow. W. R. Grace & Co.Conn. and/or its affiliates are licensed to use the UNIPOL trademark in the area of polypropylene.  SIX SIGMA® is a trademark, registered in the United States and/or other countries, of Motorola, Inc.  This trademark list has been compiled using available published information as of the publication date of this brochure and may not accurately reflect current trademark ownership or status. © Copyright 2016 W. R. Grace & Co.-Conn. All rights reserved.

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© 2016 W. R. Grace & Co.

Appendix: Definitions and Reconciliations of Non-GAAP Measures

Non-GAAP Financial Terms Adjusted EBIT means income from continuing operations attributable to W. R. Grace & Co. shareholders adjusted for interest income and expense; income taxes; costs related to Chapter 11, and legacy product and environmental; 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; income and expense items related to divested businesses, product lines, and certain other investments; gains and losses on sales of businesses, product lines, and certain other investments; third-party acquisition-related costs; and certain other unusual or infrequent items that are not representative of underlying trends. Adjusted EBITDA means Adjusted EBIT adjusted for depreciation and amortization. Adjusted Free Cash Flow means net cash provided by or used for operating activities from continuing operations minus capital expenditures plus cash flows related to Chapter 11, and legacy product and environmental; cash paid for restructuring and repositioning; capital expenditures related to repositioning; cash paid for third-party acquisition-related costs; and accelerated payments under defined benefit pension arrangements. Adjusted Earnings Per Share (EPS) means diluted EPS from continuing operations adjusted for costs related to Chapter 11, and legacy product and environmental; 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; income and expense items related to divested businesses, product lines, and certain other investments; gains and losses on sales of businesses, product lines, and certain other investments; third-party acquisition-related costs; certain other unusual or infrequent items that are not representative of underlying trends; and certain discrete tax items. Adjusted EBIT Return On Invested Capital means Adjusted EBIT (on a trailing four quarters basis) divided by the sum of net working capital, properties and equipment and certain other assets and liabilities. Adjusted Gross Margin means gross margin adjusted for pension-related costs included in cost of goods sold. Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT Return On Invested Capital, Adjusted Gross Margin, Adjusted EPS and Adjusted Free Cash Flow 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 the Chapter 11 proceedings, legacy product and environmental matters, restructuring and repositioning activities, and divested businesses. 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 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. 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 Chapter 11 proceedings, legacy product and environmental matters, restructuring and repositioning activities, and divested businesses. 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.

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© 2016 W. R. Grace & Co.

Appendix – Reconciliation of Non-GAAP Financial Measures

Adjusted EBIT by Operating Segment: Catalysts Technologies segment operating income

2013 $

Materials Technologies segment operating income Corporate costs Gain on termination and curtailment of postretirement plans related to current businesses Certain pension costs

327.5

$

2015 378.3

$

347.3

93.2

101.7

96.9

(82.7)

(95.3)

(79.9)

—

23.6

1.9

(22.1)

(24.5)

(20.4) 345.8

Adjusted EBIT

315.9

383.8

Costs related to Chapter 11 and asbestos, net

(46.1)

(26.3)

(5.6)

58.8

(137.6)

(30.5)

Pension MTM adjustment and other related costs, net

Gain on termination and curtailment of postretirement plans related to divested businesses Restructuring expenses and asset impairments Repositioning expenses

—

15.9

2.6

(5.1)

(4.3)

(11.3) (9.1)

—

—

Gain on sale of product line

(1.0)

0.2

—

Income and expense items related to divested businesses

(4.1)

(5.2)

1.0

Default interest settlement

(129.0)

—

—

Interest expense, net

(39.8)

(121.9)

(99.1)

Provision for income taxes

(29.2)

12.4

(69.8)

Net income from continuing operations attributable to W. R. Grace & Co. shareholders

34

2014

© 2016 W. R. Grace & Co.

$

120.4

$

117.0

$

124.0

Appendix – Reconciliation of Non-GAAP Financial Measures (continued)

Adjusted profitability performance measures: Gross margin: Catalysts Technologies Materials Technologies Adjusted gross margin Certain pension costs in cost of goods sold Total Grace Adjusted EBIT: Catalysts Technologies Materials Technologies Corporate Total Grace Depreciation and amortization: Catalysts Technologies Materials Technologies Corporate Total Grace Adjusted EBITDA: Catalysts Technologies Materials Technologies Corporate Total Grace Adjusted EBIT margin: Catalysts Technologies Materials Technologies Total Grace Adjusted EBITDA margin: Catalysts Technologies Materials Technologies Total Grace

35

© 2016 W. R. Grace & Co.

2013

2014 40.1% 36.3% 38.9% 0.7% 39.6%

2015 42.8% 37.9% 41.4% -3.6% 37.8%

42.2% 38.8% 41.2% -1.2% 40.0%

$

327.5 93.2 (104.8) 315.9

$

378.3 101.7 (96.2) 383.8

$

347.3 96.9 (98.4) 345.8

$

54.2 25.7 7.9 87.8

$

66.3 26.2 10.2 102.7

$

68.1 23.2 7.9 99.2

$

381.7 118.9 (96.9) 403.7

$

444.6 127.9 (86.0) 486.5

$

415.4 120.1 (90.5) 445.0

29.1% 19.2% 19.6%

30.3% 19.9% 21.8%

29.9% 20.8% 21.2%

34.0% 24.5% 25.1%

35.7% 25.1% 27.7%

35.7% 25.8% 27.3%