Q4 2019 Q4 2019 In Invest stor or Pr Prese sentation ion We - - PowerPoint PPT Presentation

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NYSE: NP

Q4 2019 Q4 2019 In Invest stor

• r Pr

Prese sentation ion

60% 40%

We We a are a a gl globa

• bal specia

cialty ty mate teria ials com company y fo focuse sed on hi n high v h val alue NI NICHE HE mar marke kets

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Image age-ori rien ented ed

FIN INE P PAPER & R & PACKA CKAGIN GING

Perf erform rmance-ba based ed

TECH CHNICA ICAL P PRO RODUCT UCTS

Net Sa Sales s $1 b $1 bn

Prov

• ven S

STR TRATE TEGIE GIES To cr To create te LON ONG-TERM v M val alue

Drive organic growth in core businesses where we have defensible, leading market positions, supplemented by value-adding M&A Deliver meaningful cash flow with balanced capital deployment to maintain a high ROIC, strong balance sheet, and attractive dividend Protect or enhance margins through cost and pricing initiatives and relentless focus on

• ptimizing operational efficiencies

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Filtration Digital Media Pkg & Design

3-5% 5-7% 3-4% Filtration Digital Print Media Pkg & Design

$247 $233 $239 $253 $232 7% 6% 7% 9% 9%

Q318 Q418 Q119 Q219 Q319

Net Sales Fx/Divest

• Adj. EBIT %

 Added US filtration capacity ramping up (though cost inefficiencies remain due to smaller run sizes and underutilization)  Margins now recovering from an unprecedented run-up in input costs  Weaker global economies impacting demand near term; addressing through cost management, asset optimization and focus on cash flow generation

Emergin ging g From

• m rece

cent ch t challengin ging p g period iod WITH WITH K KEY gr Y growth

• wth CA

CATALYSTS TS IN IN P PLACE CE

Targeted growth markets with opportunities to expand w/out significant capital

 US transportation filtration capacity to provide profitable ~$80 mm EOC sales  Air/liquid industrial filtration markets offer additional opportunities to expand  Leading global position in a fast growing digital transfer media market  Premium packaging/design mitigating secular pressures in fine paper

• Geographic expansion (80+% of TP sales currently in No. America/Europe)
• Strong financial position to weather storms/support value-adding investments

Target Market Size ($3bn) Target Market Growth Rates

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Perf erform rmance M e Materi erials ( (~55%) Fil iltration ion ( (~45% ~45%) Growing and profitable performance-based markets

~ $600MM ~ $600MM Net Sa Sale les

TE TECH CHNICA ICAL P PROD ODUCTS CTS

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Strong customer relationships with long qualification periods Leading Positions in Defensible Niche Markets Broad Range of Technical Abilities

• Innovative offerings from a global footprint
• Long-term joint development relationships
• Strong technical support and service
• High value, growing specialty markets
• Long customer qualifications - strong barrier
• Our media is a key performance driver, but a small

part of product cost

• Multiple technologies and chemistries
• Proprietary formulations & strong “dark” IP
• Leading performance and innovation

Te Tech chnica ical P Prod

• ducts

cts - Why hy WE ar are su successfu ssful

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35 55 75 95 115 135 155 175

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 E ur

• pe

NAF T A Asia RoW

Othe r Ne e na h H&V Ahlstro m

Fil iltr tration tion

Tr Tran anspo portati tion

• Global market growing ~3+% per year, with

tight capacity and only 3 global players

• Filter media used for air, fuel, oil and cabin

air in cars and trucks/heavy duty equipment

• Trend towards more demanding engines that

require higher performing filters

• > 80% of sales recurring (after-market)

Other er Mark rket ets

• Present in fast-growing markets including

water, industrial, and beverage filter media

Ne t Sale s Org a nic CAGR 7% Global T r anspor tation F iltr ation Mar ke t/ Shar e s ~ US $1.3 b illio n

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Run Runway f for r gro rowth

• First US asset started up in 2017 after

consuming available capacity in Europe

• Global customers support our expansion

and desire added choice in No. America

• Asset provides best in class capabilities and

cost position

• ~$80 million EOC sales at attractive margins

to lead to meaningful profit turnaround

Pe Perfo formanc mance Ma Material als

Backi king ngs

• Sizeable global category with media

primarily used in tapes and abrasives

• Markets generally grow with GDP though

currently under pressure

• Focused on performance niches requiring

downstream applications

spe peci cial alti ties

• Markets include digital transfer media,

labels, security, and others

• Markets generally growing at GDP+
• Saturating and coating know-how used

to impart unique characteristics

Ab Abrasive back ckin ings gs Ta Tape back ckin ings gs Digital t transfer media Medical pack ckagin ging g Perfor

• rmance

label els Security covers rs

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$263 $324 $352 $336 $353 $404 $429 $466 $502 $583 5% 9% 9% 10% 11% 12% 13% 14% 11% 8%

• 3%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ne t Sa le s Adjuste d E BI T %

*

Techni hnical al Pr Products Fi s Financ nancial al Trend nds

CAGR 6%/yr

EMERG RGING NG FRO ROM C CHAL HALLENG NGING NG PE PERI RIOD

• Selling prices and cost management beginning

to overcome rapid run up of input costs

• Global volumes remain pressured, addressing

through cost management and R&D efforts

FA FAST-GRO ROWING NG T TOP L P LINE NE; RE RECENT NT marg argins ns Refle flect US S FI FILTRATION A Asse sset st start-up up

• Markets growing GDP+
• Organic investments supplemented with M&A lead

to volume and share gains through performance, innovation and geographic expansion

• Historical margin expansion through:

 Mix enhancement, led by profitable and faster

growing filtration products

 Leveraging cost efficiencies and scale  Managing pricing and costs to offset inputs  R&D-driven new or improved products

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* includes ~$16 mm for products previously in “Other” segment includes US filtration start up

Fi Fine ne P Pape aper & & Pac ackag kaging ng

Premium Packaging (~20%) Commercial print (~60%) Retail (~20%)

High returns and cash flows while repositioning for growth

~ $425MM ~ $425MM Net Sa Sale les

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Fi Fine ne P Pape aper & & Pac ackag kaging ng: WHY HY W WE AR ARE SU SUCCESSFU SSFUL

Leading Brands Go To Market Innovation Best in Class Manufacturing Capabilities

• Leading brand equity pulls demand
• Pricing ability to recoup input costs
• Selective distribution
• Specialty colors, textures and coatings allow creation of

unique and customized product portfolio

• Unique purpose-built assets provide fast, flexible and

low cost offerings at highest quality

• Design and rapid prototyping, provides customers a more

holistic solution and create barriers for competitors

• Able to replicate short lead times with outstanding service

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• Consolidated niche market of unique

papers used for high-end commercial printing and consumer applications

• Neenah is the clear market leader in

both commercial and consumer channels with our well-known brands

• Market faces secular pressures from

electronic substitution. Opportunistic volume opportunities in lower value premium opaque and other grades

Comme mmercial al pr print nt/R /RETAI AIL

Premium market $575 MM & shares

12 Opportunistic volume adjacencies

Ne e nah 60%

Mohawk F ine Pape r s 20% Othe r s 20%

Pr Premi mium P m Pac ackag kaging ng

• Targeted addressable market of

$450 MM of high value items in small packages.

• Growing 3-5%/yr. Neenah growth

target =2x market

• Products include spirit & wine

labels, premium folding board, luxury box wrap, and plastic- substitute gift cards and others

• Efficiently uses fine paper assets

and texture & color capabilities

Be auty 49% Alc ohol 29% Re tail/ Othe r 22%

2014 2015 2016 2017 2018

Neenah Sales Targeted Markets

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$256 $273 $275 $402 $428 $436 $443 $452 $455 $446 14% 15% 14% 14% 14% 14% 16% 16% 15% 12%

• 1.0%

• 4

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ne t Sa le s

• Adj. E

BI T %

FP&P FP&P Fi Financ nancial al T Trend nds

CAGR > 5%/yr

ST STABLE LE M MID-TEEN E N EBIT M MARG ARGINS NS pro provi viding ng STRO RONG NG C CAS ASH H FLOWS f for re r redepl ployment nt

• Commercial print secular market pressures partly

mitigated through growth in premium packaging, digital and wide format, M&A, and other actions

• Mid-teen EBIT margins supported by pricing with

strong brands and careful management of costs

• High return on capital
• Substantial cash generation

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EMERG RGING NG FRO ROM C CHAL HALLENG NGING NG PE PERI RIOD

• Selling prices and other actions helping to

restore margins and overcome rapid rise in input costs and freight in 2017-18

• Divestiture of non-strategic mill in Dec. 2018

improving utilization and operating efficiencies

 Consistent profitable growth  Capital Efficiency/ROIC  Strong balance sheet  Shareholder returns, including an attractive dividend

Fina inancia ncial P PRINCIP INCIPLES

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Va Value-ad adding ng c capi apital al d depl ployme ment nt

 Mid-single digit top line growth

 Sound Return on Capital  Strong balance sheet  Increasing cash returns to shareholders  Market-beating shareholder returns

Re tur n to Shar e holde r s $160 MM Value - Adding Or ganic Capital $150 MM Ac quisitions $245 MM

Substantial cash flows and balanced capital deployment has resulted in:

Fi Five-year year cash d h deplo ployme ment t

17% 11% 8%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%

NP S&P500 R2000 Value

Annual Shareholder Return (2010-18)

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$3.21 $3.70 $4.54 $4.32 $3.50 2014 2015 2016 2017 2018 Adjuste d E .P.S.

Con Consis iste tent p t prof

• fit

itabl ble gr growth

• wth…

 Five-year top-line growth driven by share gains, new products, price/mix improvement and acquisitions  2017-18 profitability reflecting impacts of filtration capacity ramp-up and temporarily unrecovered input costs following a period of rapid increases

$840 $888 $942 $980 $1,035

11% 12% 13% 11% 8%

• 3.0%

2014 2015 2016 2017 2018 Ne t Sa le s Adjuste d E BI T %

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13% 12% 13% 10% 9% 2014 2015 2016 2017 2018

% ROIC

WACC ~ 8%

…whi hile mai maint ntai aini ning ng so solid roic

• ic

 Disciplined organic capital

investments, with majority of spending delivering attractive financial returns  Improvement expected as new US filtration capacity ramps up and continual focus on asset efficiency and footprint optimization  History of value-adding acquisitions as well as divestitures

• f non-returning assets

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175 175 175 175 175 54 46 80 64 30

1.6x 1.4x 1.8x 1.9x 1.8x

De c - 15 De c - 16 De c - 17 De c - 18 Se p- 19

Bo nds S-T De b t

$229 $221

$255

 Strong cash generation has kept Debt to EBITDA ratio below 2 times despite significant organic investments and M&A  Ample borrowing capacity and flexibility to act on future opportunities

• $175 million bond due 2021;

5.25% Ba3/BB

• Short-term debt through ABL revolver

(sized $200 MM)

• All debt pre-payable without fees or

penalties

De bt

($ millio ns)

….and and A st A strong ng b bal alanc ance she sheet

De bt/ E BIT DA

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$239 $205

USE SES S OF C F Cash sh

• Prioritize highest return investments

(organic, value-adding M&A, debt reduction)

• Track record of dividend growth;

providing attractive yield

• Authorized $25MM share buyback

plan used opportunistically

Cash G Gen enera eration

• Sizeable cash flow generation
• Efficient assets; capital spend 3-5% of

sales (maintenance spend ~ $15 MM)

• Low cash tax rate (mid-teen) supported

by prior period R&D tax credits

$1.20 $1.32 $1.48 $1.64 $1.80

2015 2016 2017 2018 2019 Divide nds pe r shar e

Capi apital al d depl ployme ment nt

$67 $63 $47 $57 $55

7% 7% 5% 6% 5%

0% 5% 10% 15% 20% 25%

2014 2015 2016 2017 2018

F r e e Cash F low FCF FCF % NS

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Compe mpensa nsation phi n philoso sophy phy

• Performance-based pay

important for both salary and hourly personnel

• Bulk of executive team pay

is performance-based (CEO = 70%)

• Management also required

to hold a multiple of base salary in stock (4-6 times)

Re tur n o n Capital Shar e ho lde r Re tur n

(vs. Russe ll 2000)

Re ve nue Gr

• wth

Pe r fo r manc e Shar e Me tr ic s

E ar nings pe r Shar e

Performance-based and aligned with shareholders

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• Active and disciplined process with

dedicated resources and ideas from a robust network of sources

• Focused on growing, profitable and

defensible niche markets, with a strong bias to technical products categories

• Most targets $50 - $250 MM of sales
• Require strategic fit to unlock synergies
• Part of how we will add value and increase

company growth rate

Str ate gic T

• uc h Points

Ge ogr aphie s T e c hnologie s Pr

• duc ts/

E nd Mar ke ts Custome r s 2014

Crane

(F iltr ation) 2015

F ib e rMark

(Pac kaging, Pe r

• f. Mate r

ials) 2017

Haze n

(Pac kaging) 2017

Co lde nho ve

(Pe r

• f. Mate r

ials) 2013

So uthwo rth

(F ine Pape r )

tr track ck r recor cord of

• f v

value-ad adding ng M&A M&A

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We Well-pos

• sition

itioned f for

• r FUTU

TURE

• Leading positions in defensible and

profitable core categories

• Catalysts to increase organic growth

 US filtration ramp up and share gains  Expanded presence in digital transfer market  Premium packaging growth

• Sizeable base cash flow and a strong

balance sheet

• Record of value-adding capital

deployment

F ine Pape r & Pac kaging T e c hnic al Pr

• duc ts

Ne Neenah nah Tod Today

Pr e mium Pac kaging & F ine Pape r T e c hnic al Pr

• duc ts

Ne Neenah nah Fut utur ure

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Appe Append ndix

Ab About N ut NEEN EENAH AH

• Sales of over US$ 1 billion

in more than 80 countries

• Global manufacturing footprint:

U.S. (9 sites, plus Atlanta HQ) Europe & U.K. (4 sites)

• >2,600 employees worldwide
• Diverse capabilities with purpose-

built assets

Fine Paper and Packaging Technical Products 25

GA GAAP R Recon concil cilia iation tion

Co ntinuing Ope r atio ns

$ millio ns

2014 2015 2016 2017 2018 YT D 2019 GAAP Ope r ating Inc ome

$ 86.6 $ 101.4 $ 114.1 $ 104.3 $54.1 $56.2 Impa irme nt lo ss 31.1 Pe nsio n/ Insura nc e Se ttle me nt/ Othe r 3.7 0.8 (2.6) 1.4 5.2 Re struc turing , Inte g ra tio n a nd Othe r Co sts 2.3 6.5 7.0 1.3 (1.8) 0.8

Adjuste d Ope r ating Inc ome $ 92.6 $ 107.9 $ 121.9 $ 103.0 $ 84.8 $62.2 De pr e c iation & Amor tization

25.0 27.5 30.1 32.1 35.0 25.5

Amor

• t. E

quity- Base d Compe nsation

6.0 6.5 5.8 6.4 4.0 4.8

Adjuste d E BIT DA $ 123.6 $ 141.9 $ 157.8 $ 141.5 $123.8 $92.5 E ar nings (L

• ss) pe r

Shar e

$ 3.99 $ 3.53 $ 4.26 $ 4.68 $2.17 $2.33 Impa irme nt lo ss 1.37 Pe nsio n/ Insura nc e Se ttle me nt/ Othe r 0.14 0.03 (0.10) 0.06 0.24 Re struc turing , Inte g ra tio n a nd Othe r Co sts 0.08 0.24 0.25 0.06 (0.11) 0.03 T a x Ad justme nts (1.00) (0.07) (0.32) 0.01

Adjuste d E ar nings pe r Shar e $ 3.21 $ 3.70 $ 4.54 $ 4.32 $3.50 $2.60

Re sults fo r ye ar e nde d De c e mb e r 31, 2014, inc lude inte g ratio n and re struc turing c o sts o f $2.3 millio n, a pe nsio n plan se ttle me nt c harg e o f $3.5 millio n and c o sts re late d to the e arly e xting uishme nt o f de b t o f $0.2 millio n. Re sults fo r the ye ar e nde d De c e mb e r 31, 2015, inc lude inte g ratio n and re struc turing c o sts

• f $6.5 millio n. Re sults fo r the ye ar e nde d De c e mb e r 31, 2016, inc lude inte g ratio n and re struc turing c o sts o f $7.0 millio n and a pe nsio n plan se ttle me nt

c harg e o f $0.8 millio n. Re sults fo r the ye ar e nde d De c e mb e r 31, 2017, inc lude inte g ratio n and re struc turing c o sts o f $1.3 millio n, a pe nsio n plan se ttle me nt c harg e o f $0.6 millio n and I nsuranc e Se ttle me nt o f ($3.2). Re sults fo r the ye ar e nde d De c e mb e r 31, 2018, inc lude an impairme nt lo ss o f $31.1 millio n, ac q uisitio n-re late d adjustme nts, inte g ratio n and re struc turing c o sts o f ($1.8) millio n, a pe nsio n plan se ttle me nt c harg e o f $1.8 millio n and I nsuranc e Se ttle me nt o f ($0.4)

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Fo Forwar ard L Looki king ng St Stateme ment nts

Statements in this presentation which are not statements of historical fact are “forward- looking statements” within the “safe harbor”' provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, Neenah, Inc. at the time this presentation was made. Although Neenah believes that the assumptions underlying such statements are reasonable, it can give no assurance that they will be

• attained. Factors that could cause actual results to differ materially from expectations

include the risks detailed in the section “Risk Factors” in the Company’s most recent Form 10-K and SEC filings. In addition, the company may use certain figures in this presentation that include non- GAAP financial measures as defined by SEC regulations. As required by those regulations, a reconciliation of these measures to what management believes are the most directly comparable GAAP measures would be included as an appendix to this presentation and posted on the company’s web site at www.neenah.com

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Con Contact U ct Us

For

• r mor
• re in

infor

• rmation

ion

Visit Our Website: www.neenah.com Email: investors@neenah.com

Inves vestor Rel r Relations

Bill McCarthy

Vice President- Investor Relations 3460 Preston Ridge Road Suite 600 Alpharetta, GA 30005 Phone: (678) 518-3278 Email: bill.mccarthy@neenah.com

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