TECHNICAL FINE PAPER & PACKAGING PRODUCTS End markets: - - PowerPoint PPT Presentation

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Image-oriented FINE PAPER & PACKAGING Performance-based TECHNICAL PRODUCTS

End markets: filtration media, tape and abrasive backings, labels, and other specialized products End markets: premium packaging and print communications, and crafting

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• Global sales of ~$1 billion in

more than 80 countries

• Global manufacturing footprint:

 U.S. (10 sites)  Germany (2 sites) and U.K. (1 site)  India (small JV)  Headquarters near Atlanta, GA

• >2,500 employees worldwide
• Spun off from Kimberly-Clark

Corp in 2004

Enhance leading positions in high value core categories Invest efficiently in growing and defensible niche markets Maintain a strong financial position and provide attractive returns

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Transportation Filtration Premium Fine Paper Specialty Backings Performance Labels Premium Packaging Industrial Filtration Disciplined capital allocation Conservative balance sheet Meaningful dividend

Filtration 45%

~ $500 million net sales

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Performance Materials 55%

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Strong Customer Relationships 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 a key performance driver, but small part of

final product cost

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

Europe NAFTA Asia RoW

Other Neenah H&V Ahlstrom

Transportation Media (75%)

• Consolidated global market growing

~4%, with >80% of sales in aftermarket

• Products include air, fuel, oil and

cabin air filters for cars and trucks

• Positive outlook as more demanding

engines need higher performing filters and global capacity remains tight

• Strong organic growth history

Other Filtration Media (25%)

• Expanding in other fast-growing markets

including water, industrial, and beverage

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35 55 75 95 115 135

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 16

Net Sales

Organic CAGR 8%

Long Runway for Future Growth

• After becoming leaders in Europe and

reaching capacity, investment in best in class US asset starting up in 2017

• Five year ramp up to $80 mm EOC sales
• Asia remains a future opportunity

Global Transportation Filtration Market/Shares

~ US $1 billion

Backings (55%)

• Sizeable global category with media

primarily used in tapes and abrasives

• Focused on performance niches

requiring downstream applications

• Markets generally grow with global GDP

Specialties (45%)

• Smaller, specialty markets include labels,

security, digital transfer, décor, others

• Saturating and coating know-how to

impart unique characteristics

• Markets generally growing at GDP+

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$353 $404 $429 $466 $468

11% 12% 13% 14% 12%

$114 $164 $214 $264 $314 $364 $414 $464 $514

2013 2014 2015 2016 LTM Q217*

Net Sales Adjusted EBIT %

Increasing top line

• present in growth markets
• gaining share with performance,

innovation and geographic expansion

• investing organically and through M&A

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Expanding margins

• cost efficiencies and scale
• mix enhancement, led by profitable and

fast growing filtration products

• R&D investments leading to new or

improved products valued by customers

* 2017 includes start up costs for US filtration asset while Europe is at full capacity

~ $450 million net sales

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Graphic Imaging 80% Premium Packaging 15% Specialty 5%

Leading Brands

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Supply Chain Innovation Best in Class Manufacturing Capabilities

• Brand equity helps pull demand
• Ability to recoup changes in input costs
• Highest quality products with a variety of colors and textures
• Highly-utilized purpose built assets provide leading cost

position

• Technology to accommodate market driven changes
• Able to meet short lead times with outstanding service
• Prototyping capabilities allowing for faster commercialization

Neenah 55%

Others 45% Retail Channel

~$150 million

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• Consolidated $650 million niche market of

premium textured and colored papers

• Neenah the clear market leader in both

commercial and retail channels

• Used for high-end commercial printing,

marketing collateral and retail products

• Market pressured by electronic substitution

Neenah 65%

Mohawk Fine Papers 25% Others 10% Commercial Channel ~$500 million

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• Market growing 3-5% annually; highly

fragmented with no clear leader

• Targeted premium niche market of $450

million in beauty, alcohol and retail/other; largest opportunity in beauty packaging

• Most products made on Fine Paper asset

base; includes label, premium folding board, luxury box wrap, gift cards and others

• Continuing to expand our presence and

capabilities, allowing us to make award winning and customer-preferred products

Beauty 49% Alcohol 29% Retail/ Other 22%

$450 million Targeted Market

Packaging growth to offset secular pressures in traditional business

$428 $436 $443 $452 $455

14% 14% 15% 16% 16%

2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 36.0% 38.0% 40.0%

350 358 366 374 382 390 398 406 414 422 430 438 446 454 462 470 478 486 494

2013 2014 2015 2016 LTM Q217

Net Sales Adjusted EBIT % 14

Consistently strong financial results

• stable mid-teen EBIT margins with brand

equity that supports pricing

• capital efficient, substantial cash generation
• countering top-line pressures with

 consolidating acquisitions  packaging growth  manufacturing cost efficiencies  share gains and price optimization

 Consistent, profitable growth  High Return on Capital/Return on Equity  Flexible and prudent capital structure  Attractive shareholder returns

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 Double digit earnings growth  High Return on Capital  Increasing cash returns to shareholders  Strong balance sheet  Market-beating shareholder returns

Return to Shareholders $125mm Value-Adding Organic Capital $150mm Acquisitions $220mm

Our businesses provide substantial cash flows that we’ve deployed in a balanced manner to result in:

Five-year key cash deployment

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$2.87 $3.21 $3.70 $4.54 $4.34

2013 2014 2015 2016 LTM Q217*

Adjusted E.P.S.

 Five-year sales growth reflecting share gains, new products, price/mix improvement and acquisitions  Faster earnings growth with focus on market-back pricing, cost control and efficiencies, and mix shift to higher value products

8% 16% 20%

Sales

• Adj. EBIT
• Adj. E.P.S

% Annual Growth 2011- 2016 $782 $840 $888 $942 $944 11% 11% 12% 13% 12%

2013 2014 2015 2016 LTM Q217*

Net Sales Adjusted EBIT %

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*2017 includes impacts from US filtration asset start up

12% 13% 12% 13% 11% 2013 2014 2015 2016 LTM 2017*

WACC ~ 7-10%

Delivering double-digit ROIC through:

 Profitable growth  Focus on asset efficiency  Disciplined organic capital spending  Good returning projects  Value-adding acquisitions (and divestitures)

Primary measure to evaluate investment decisions and judge business performance and a key compensation plan measure

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* 2017 includes impacts from US filtration asset start up

175 175 175 175 175 32 53 54 46 46 1.7x 1.8x 1.6x 1.4x 1.5x

0.5 1 1.5 2 2.5 3 50 100 150 200 250

Dec 13 Dec 14 Dec 15 Dec 16 Jun 17

2021 Bonds S-T Debt

$207 $229 $228 $221 $221

 Debt/EBITDA well below targeted range of 2 to 3x  $175 mm bond due in 2021with attractive 5.25% rate and rating

• f Ba3/BB

 Remaining short term debt primarily ABL (sized at $200 million)  Capital structure and availability provides significant flexibility to act on opportunities

Debt ($ millions) 19

Debt/ EBITDA

Pro Forma Cash Flow

($ millions)

EBITDA $ 155 - $170 Interest Expense (10 - 15) Other (tax, wkg cap, pension, etc.) (25 - 30) Cash From Operations $ 110 – 135 Total Capital Spend (3-5% sales) ~(40) Free Cash Flow $ 70 – 95

Cash Deployment

• Priority on highest

returning investments

 Organic initiatives  Value-adding M&A

• Committed to cash

returns via attractive and growing dividend

• Authorized $25 mm

stock repurchase plan

Cash Generation

• Strong business cash

flows, compounded with acquisitions

• Significant US R&D tax

credits; well-funded pension plan

• Efficient asset base;

maintenance cap-ex < $15 mm/year

$0.48 $0.70 $1.02 $1.20 $1.32 $1.48

0.2 0.4 0.6 0.8 1 1.2 1.4 1.6

2012 2013 2014 2015 2016 2017

Dividends per share 20

$84 $95 $111 $116 $104

20 40 60 80 100 120 140

2013 2014 2015 2016 LTM 2017*

Cash From Operations

*2017 includes impacts from US filtration asset start up

• All employees have a

component of pay that is performance-based

• Management is required to hold

a multiple of their salary in stock (CEO = 6x, NEO = 4x)

• Majority of pay is performance-

based (CEO = 70%) that is split:

• Cash: based on growth in

business profit/EBITDA

• Equity: stock options and

performance shares

Performance-based and aligned with shareholders

21 Return on Capital Total Shareholder Return (vs. Russell 2000) Revenue Growth

Performance Share Metrics

Earnings per Share

 Active and disciplined process with dedicated resources  Focused on growing, profitable and defensible niche markets, with bias to performance-based technical products  Expect strategic fit to unlock synergies  Most targets sized between $50 and $250 million of sales  Demonstrated record of deal execution and integration to capture value

Strategic Touch Points

Geographies Technologies Products/ End Markets Customers 22

• Leading positions in defensible and

profitable core categories generating cash and double digit Return on Capital

• Catalysts to enhance organic growth

 Transp. Filtration geographic expansion  Premium packaging capabilities  Adjacent technical product markets

• Financial strength and flexibility to act
• n attractive opportunities
• Track record of value-adding capital

deployment and execution

23 Fine Paper & Packaging Technical Products

Neenah Today

Fine Packaging & Paper

Technical Products

Neenah Future

For more information

visit our website: www.neenah.com email: investors@neenah.com

Investor Relations

Bill McCarthy

VP, Financial Planning and Analysis & Investor Relations 3460 Preston Ridge Rd., Suite 600 Alpharetta, GA 30005 Phone: (678) 518-3278 Email: bill.mccarthy@neenah.com

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Continuing Operations $ millions

2013 2014 2015 2016 LTM 2017

GAAP Operating Income $ 82.6 $ 86.6 $ 101.4 $ 114.1 $ 105.0 Integration/Restructuring Costs 0.4 2.3 6.5 7.0 4.5 Other Costs 0.7 3.7

• 0.8

0.8 Adjusted Operating Income $ 83.7 $ 92.6 $ 107.9 $ 121.9 $ 110.3 Depreciation & Amortization 25.1 25.0 27.5 30.1 29.9

• Amort. Equity-Based Compensation

4.9 6.0 6.5 5.8 5.0 Adjusted EBITDA $ 113.7 $ 123.6 $ 141.9 $ 157.8 $ 145.2 Earnings (Loss) per Share $ 2.91 $ 3.99 $ 3.53 $ 4.26 $ 4.38 Prior Period Tax Adjustment (0.24) Integration/Restructuring Costs 0.01 0.08 0.24 0.25 0.16 Prior Period R&D Tax Credits (0.08) (1.00) (0.07)

• Other

0.03 0.14

• 0.03

0.03 Adjusted Earnings per Share $ 2.87 $ 3.21 $ 3.70 $ 4.54 $ 4.33

Results for year ended December 31, 2013, include integration and restructuring costs of $0.4 million, a post-retirement benefit plan settlement charge of $0.2 million and costs related to the early extinguishment of debt of $0.5 million. Results for the year ended December 31, 2014, include integration and restructuring costs of $2.3 million, a pension plan settlement charge of $3.5 million and costs related to the early extinguishment of debt of $0.2 million. Results for the year ended December 31, 2015, include integration and restructuring costs of $6.5 million. Results for the year ended December 31, 2016, include integration and restructuring costs of $7.0 million and a pension plan settlement charge of $0.8 million.

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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 Paper, Inc. at the time this presentation was

• made. Although Neenah Paper 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

• f 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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