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v Filtra tratio tion Comme mmerci rcial l and Consum sumer - PowerPoint PPT Presentation

Jan 25, 2023 •507 likes •818 views

v Filtra tratio tion Comme mmerci rcial l and Consum sumer r Fine Papers rs Backi ckings s (Tap ape e Premi mium m & Abra rasive sives) s) Pack ckagin ing Paper Gift t Other r Perfo rform rmance ce Cards rds

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  2. Filtra tratio tion Comme mmerci rcial l and Consum sumer r Fine Papers rs Backi ckings s (Tap ape e Premi mium m & Abra rasive sives) s) Pack ckagin ing Paper Gift t Other r Perfo rform rmance ce Cards rds & Packa ckagin ing Mate teri rials ls (Labels, ls, Coa oate ted Cove vers, s, etc …) High End Spir irits its Labels ls Digita ital l Transfe sfer Media ia 2

  3. Accelerate growth Maintain a strong Enhance leading rate through efficient financial position positions in core investments in and provide categories growing and shareholders with defensible markets attractive returns 3

  4.  Recent investment in filtration  Continued pulp cost increases being capacity to provide end of curve countered by selling price actions sales of $80 million  U.S. regulatory change driving  Double-digit premium packaging higher freight costs, especially in growth supported by added Fine Paper. Actions underway to laminating capabilities address  Digital transfer media acquisition  New filtration capacity underutilized providing synergies and leading during ramp up; expected to turn position in growing global market profitable in 2019 4

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  6.  High value, growing specialty markets Leading Positions in  Long customer qualifications - strong barrier Defensible Niche  Our media is a key performance driver, Markets but a small part of product cost  Broad Range of Multiple technologies and chemistries Technical  Proprietary formulations & strong “dark” IP Abilities  Leading performance and innovation Strong customer  Innovative offerings from a global footprint relationships with  Long-term joint development relationships long qualification  Strong technical support and service periods 6

  7.  Consolidated global market growing ~4%,  Capacity in European base consumed, new with tight global capacity world class asset in U.S. started up in 2017  Products include air, fuel, oil and cabin air  Global customers support expansion and filters for cars and trucks, with >80% of looking for added choice in No. America sales to after-market  Five-year ramp up to $80 mm EOC sales will  More demanding engines requiring higher support historic growth rate performing filters 135  Asia represents a future opportunity Net Sales 115 Organic CAGR 7% 95 Global Transp . Filtration Market/Shares 75 ~ US $1 billion 55 35 Other '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 16 17 Neenah H&V Ahlstrom  Present in fast-growing markets including water, industrial, and beverage filters Europe NAFTA Asia RoW 7

  8.  Sizeable global category with media  Smaller, specialty markets include labels, primarily used in tapes and abrasives digital transfer, security, décor, and others  Markets generally grow with GDP  Markets generally growing at GDP+  Focused on performance niches requiring  Saturating and coating know-how used to downstream applications, opportunity to impart unique characteristics gain share overseas 8

  9.   Based in the Netherlands, Coldenhove is a leading Immediately accretive, with added sales of producer of dye sublimation media used for digital $45 mm and EBITDA of $6 mm  image transfer for clothing, sportswear, and other Purchase price of $45 million equivalent to materials pre-synergy EBITDA multiple of 7.5x  Synergies (purchasing, sales, manufacturing,  Complementary technologies and geographies new products) to further grow returns that expand our digital transfer platform and customer base  Combined with our existing business, provides Neenah leadership in fast-growing ~$200 million digital transfer market Digital Transfer Market Neenah Others ~$200 million 28% 72% 9

  10. 5 Yr CAGR  present in growth markets $552 > 9%/yr 20% $564 $502  gaining share through performance, $466 $514 18% innovation and geographic expansion $429 $464 $404 16%  investing organically and through M&A $414 14% 14% 14% $364 14% 13% $314 12% 12% 11%  mix enhancement, led by profitable and $264 11% 10% faster growing filtration products $214 8%  cost efficiencies and scale $164 $114 6%  R&D investments driving new or improved 2014 2015 2016 2017 LTM Q218 products valued by customers Net Sales Adjusted EBIT %  2017 reflects temporary impact of US Excluding U.S. Filtration start-up filtration start-up 10

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  12.  Creating image and leading brand equity pulls demand Leading  Demonstrated pricing ability to recoup input costs over time Brands  Unique purpose-built assets able to provide fast, flexible and Best in Class low cost offerings at highest quality Manufacturing  Capabilities Specialty coating, saturation, colors and textures allow creation of a unique and customized breadth of portfolio  Design and rapid prototyping, provides customers a more Go To Market holistic solution and create barriers for competitors Innovation  Able to replicate short lead times with outstanding service 12

  13.  Consolidated $650 million niche market of premium textured and colored papers Mohawk  Neenah is the clear market leader in both Neenah Fine commercial and consumer channels Papers 63% 19%  Uses include high-end commercial print Others 18% applications, marketing collateral and well-known brands at retail Market Size  Market is pressured by electronic substitution ~$650 million 13

  14.  Premium niche market growing 3-5% annually, Neenah growing at double-digit pace Alcohol Products include spirit & wine labels, premium 29%  Beauty folding board, luxury box wrap, and others 49% Targeting beauty, alcohol and retail categories;  Retail/ largest opportunity in beauty products Other 22%  Paper (gift) cards growing as “green” alternative to plastic. Recent investment to accelerate growth. $ 450 million addressable market  Shares Fine Paper asset base and high quality texture/color capabilities that provide customers preferred products unique to their brands  Neenah Design Center helping customers visualize final products more quickly and accelerate time to commercialization 14

  15. 40.0% 494 38.0% 36.0% 486 5 Yr CAGR 34.0% 478 32.0% > 1%/yr 30.0% 470 28.0%  top line outperforming market with double-digit 462 $455 $453 $452 26.0% premium packaging growth, gains in digital and wide 454 24.0% $443 22.0% format categories and other initiatives 446 $436 20.0% 438  potential for small, consolidating acquisitions 18.0% 16% 430 16.0% 16% 15% 14.0% 14% 422 13% 12.0% 414 10.0%  expected mid-teen EBIT margins with brand equity 8.0% 406 6.0% that supports pricing through input cost cycles 398 4.0%  recent headwinds from input cost/freight increases 390 2.0% 2014 2015 2016 2017 LTM  planned sale of office products mill and other Q218 Net Sales optimization efforts to increase efficiencies Adjusted EBIT %  substantial cash generation for redeployment  high return on capital 15

  16.  Consistent, profitable growth  Return on Capital Focused  Flexible and prudent capital structure  Attractive shareholder returns 16

  17. Our businesses provide substantial cash flows that we’ve deployed in a balanced manner to result in:  Double digit earnings growth Return to Shareholders $140mm  High Return on Capital  Increasing cash returns to shareholders Acquisitions $250mm  Strong balance sheet Value-Adding Organic Capital  Market-beating shareholder returns $150mm Five-year cash deployment 17

  18. Net Sales % Annual 1110 19.0% $1,027 Adjusted EBIT % Growth 12.0% 10% $980 2012- 2017 1010 17.0% $942 10.0% $888 910 15.0% $840 8.0% 6% 6% 810 13.0% 6.0% 13% 12% 710 11.0% 4.0% 11% 11% 10% 610 9.0% 2.0% 510 7.0% 0.0% 2014 2015 2016 2017 LTM Q218 Sales Adj. EBIT Adj. E.P.S Adjusted  Five-year growth driven by share gains, E.P.S. $4.54 $4.29 $4.32 new products, price/mix improvement $3.70 $3.21 and acquisitions  2017-18 results reflect short term impact of U.S. filtration start-up 2014 2015 2016 2017 LTM Q218 18

  19. 13% 13% 12%  Profitable growth to leverage asset base 11% 10% WACC  Disciplined organic capital spending ~ 7-9%  Continual focus on asset efficiency and footprint optimization  Value-adding acquisitions (and divestitures of non-returning assets) 2014 2015 2016 2017 LTM Q218 19

  20.  Capital structure provides significant flexibility to act on future opportunities Debt ($ millions) • $175 mm bond due in 2021; 300 3.5 5.25% rate and Ba3/BB rating $255 $254 $228 $ 229 250 $221 3 • Short-term debt primarily from 80 79 53 54 46 200 2.5 existing ABL (sized at $200 million, 1.8x current draw only $69 million) 1.8x 1.8x 2 Debt/ 150 1.6x EBITDA 1.4x  Strong cash generation has kept 1.5 100 175 175 175 175 175 Debt/EBITDA below targeted range of 2 1 50 to 3x (even with organic capital 0.5 investments and acquisitions) 0 0 Dec 14 Dec 15 Dec 16 Dec 17 LTM Q218  Willing to go up to 4x Debt/EBITDA for Bonds S-T Debt right opportunity  Limited overseas cash; no repatriation concerns 20

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