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Paper Gift
Cards & Packaging
Filtration
Digital
Transfer
Media
Backings
(Tape &
Abrasives)
Commercial
and Consumer
Fine Papers
High End
Spirits Labels
Premium
Packaging
Other Specialty
Materials (Labels,
Coated Covers, etc…)
2
3
Sound financial position and
attractive shareholder returns
Enhance leadership in core categories
Capital-efficient investments in
growing markets
Strong balance sheet
Increasing dividends
Transportation filtration
Coated backings
Fine papers
Organic and M&A• Filtration• Premium Packaging• Digital transfer
29%
13%16%
NP R2000 S&P500
Total Shareholder Return
% CAGR (2012-2017)
• North American transportation filtration capacity expansion
• U.S. laminating acquisition adding to premium packaging capabilities
• European digital transfer media acquisition
4
5
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
6
35
55
75
95
115
135
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 16 17
Europe NAFTA Asia RoW
Other
Neenah
H&V
Ahlstrom
Consolidated global market growing ~4%, with tight global capacity
Products include air, fuel, oil and cabin air filters for cars and trucks, with >80% of sales to after-market
More demanding engines requiring higher performing filters
Present in fast-growing markets including water, industrial, and beverage filters
7
Net Sales
Organic CAGR 7%
Growth consumed European capacity; world class US asset started up in 2017
Common global customers and competitors
Five-year ramp up to $80 mm EOC sales supports historic growth rate
Asia an exciting future opportunity
Global Transp. Filtration Market/Shares
~ US $1 billion
Sizeable global category with media primarily used in tapes and abrasives
Markets generally grow with GDP
Focused on performance niches requiring downstream applications, opportunity to gain share overseas
Smaller, specialty markets include digital transfer, labels, security, décor, and others
Markets generally growing at GDP+
Saturating and coating know-how used to impart unique characteristics
8
9
Based in the Netherlands, Coldenhove is a leading producer of dye sublimation media used for digital image transfer for clothing, sportswear, and other materials
Complementary technologies and geographies 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
Neenah
28%Others
72%
Digital Transfer Market ~$200 million
Immediately accretive, with added sales of $45 mm and EBITDA of $6 mm
Purchase price of $45 million equivalent to pre-synergy EBITDA multiple of 7.5x
Synergies (purchasing, sales, manufacturing, new products) to further grow returns
$353
$404 $429
$466
$502
11%
12%
13%14%
11%
14%
6%
8%
10%
12%
14%
16%
18%
20%
$114
$164
$214
$264
$314
$364
$414
$464
$514
2013 2014 2015 2016 2017
Net SalesAdjusted EBIT %Excluding U.S. Filtration start-up
present in growth markets
gaining share through performance, innovation and geographic expansion
investing organically and through M&A
10
mix enhancement, led by profitable and faster growing filtration products
cost efficiencies and scale
R&D investments driving new or improved products valued by customers
2017 reflects temporary impact of US filtration start-up
5 Yr CAGR> 8%/yr
11
LeadingBrands
12
Go To MarketInnovation
Best in Class Manufacturing
Capabilities
Creating image and leading brand equity pulls demand
Demonstrated pricing ability to recoup input costs over time
Unique purpose-built assets able to provide fast, flexible and low cost offerings at highest quality
Specialty coating, saturation, colors and textures allow creation of a unique and customized breadth of portfolio
Design and rapid prototyping, provides customers a more holistic solution and create barriers for competitors
Able to replicate short lead times with outstanding service
13
Consolidated $650 million niche market of premium textured and colored papers
Neenah is the clear market leader in both commercial and consumer channels
Uses include high-end commercial print applications, marketing collateral and well-known brands at retail
Market is pressured by electronic substitution
Neenah
63%
Mohawk
Fine
Papers
19%
Others
18%
Market Size~$650 million
14
Premium niche market growing 3-5% annually, Neenah growing at double-digit pace
Products include spirit & wine labels, premium folding board, luxury box wrap, and others
Targeting beauty, alcohol and retail categories; largest opportunity in beauty products
Paper (gift) cards growing as “green” alternative to plastic. Recent investment to accelerate growth.
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
Beauty
49%
Alcohol
29%
Retail/
Other
22%
$450 million
addressable market
$428$436
$443
$452$455
14% 14%16% 16%
15%
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 2017
Net Sales
Adjusted EBIT %
15
strong growth in fragmented packaging market and in digital and wide format categories with recent investments in capabilities
potential for small, consolidating acquisitions
mid-teen EBIT margins with brand equity that supports pricing through input cost cycles
efficient cost position and high ROIC
substantial cash generation
5 Yr CAGR> 2%/yr
Consistent, profitable growth
Return on Capital Focused
Flexible and prudent capital structure
Attractive shareholder returns
16
Double digit earnings growth
High Return on Capital
Increasing cash returns to shareholders
Strong balance sheet
Market-beating shareholder returns
Return to
Shareholders
$140mm
Value-Adding
Organic Capital
$150mm
Acquisitions
$250mm
Our businesses provide substantial cash flowsthat we’ve deployed in a balanced manner to result in:
Five-year key cash deployment
17
$2.87 $3.21$3.70
$4.54
$4.32
2013 2014 2015 2016 2017
Adjusted
E.P.S. Five-year sales growth driven by share gains, new products, price/mix improvement and acquisitions
2017 results reflect impact of U.S. filtration start up
6% 6%
10%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Sales Adj. EBIT Adj. E.P.S
% Annual
Growth
2012- 2017
$782
$840
$888
$942$980
11% 11%
12%
13%
11%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
500
600
700
800
900
1000
1100
2013 2014 2015 2016 2017
Net Sales
Adjusted EBIT %
18
*U.S. Filtration start-up impact
*
*
12%13%
12%13%
10%
2013 2014 2015 2016 2017*
WACC~ 7-9%
Profitable growth
Continual focus on asset efficiency and footprint optimization
Disciplined organic capital spending
Value-adding acquisitions (and divestitures)
Component of compensation metrics
19
*2017 U.S. Filtration start-up impact
175 175 175 175 175
3253 54 46
80
1.7x1.8x
1.6x1.4x
1.8x
0
0.5
1
1.5
2
2.5
3
3.5
0
50
100
150
200
250
300
Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Bonds S-T Debt
$207$229$228
$221
$255
Strong cash generation keeping Debt/EBITDA below targeted range of 2 to 3x (even with organic capital investments and acquisitions)
$175 mm bond due in 2021; 5.25% rate and Ba3/BB rating
Short-term debt primarily from existing ABL (sized at $200 million)
Capital structure and credit availability provides significant flexibility to act on opportunities
Debt
($ millions)
20
Debt/EBITDA
Priority on highest returning investments
Organic initiatives
Value-adding M&A
Committed to cash returns via attractive dividend. Five-year compound growth rate of ~20%
Authorized $25 mm stock buyback plan
Strong business cash flows, compounded with acquisitions
Favorable cash tax position with prior period R&D tax credits, US tax changes to provide future $3-5 mm/yr benefit
Well-funded pension plan
Efficient asset base; capital spend 3-5% of sales; maintenance spend < $20 mm
$0.70
$1.02$1.20
$1.32$1.48
$1.64
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2013 2014 2015 2016 2017 2018
Dividends
per share
21
$84$95
$111 $116$100
0
20
40
60
80
100
120
140
2013 2014 2015 2016 2017*
Cash From
Operations
*2017 includes US filtration asset start up
All employees have a component of pay that is performance-based
Management required to hold a multiple of salary in stock (4-6 times)
Majority of pay is performance-based (CEO = 70%)
22
Return on Capital
Total Shareholder
Return (vs. Russell
2000)
Revenue Growth
Performance Share Metrics
Earnings per
Share
Focused on growing, profitable and
defensible niche markets, with bias to
performance-based technical products
Active and disciplined process with
dedicated resources. Ideas come from
robust network of sources
Most targets sized between $50 and
$250 million of sales
Expect strategic fit to unlock synergies
Strategic Touch Points
Geographies
TechnologiesProducts/
End Markets
Customers
23
Effective process leading to demonstrated record of value-adding deal execution and integration and a continued pipeline of targets
2014Crane
(Filtration)
2015FiberMark
(Packaging, Other)
2017Hazen
(Packaging)
2017Coldenhove(Perf. Matls)
2013Southworth(Fine Paper)
Leading positions in defensible and profitable core categories generating cash and double digit Return on Capital
Catalysts to enhance organic growth
Transp. Filtration geographic share gains
Adjacent technical product markets Premium packaging expansion
Financial strength and flexibility to act on additional attractive opportunities
Track record of value-adding capital deployment
24
Fine Paper &
PackagingTechnical
Products
Neenah Today
Fine
Packaging
& PaperTechnical
Products
Neenah Future
v
Continuing Operations
$ millions 2013 2014 2015 2016 2017
GAAP Operating Income $ 82.6 $ 86.6 $ 101.4 $ 114.1 $ 104.3
Acquisition/Integration/Restructuring Costs 0.4 2.3 6.5 7.0 1.3
Pension/Insurance Settlement/Other 0.7 3.7 0.8 (2.6)
Adjusted Operating Income $ 83.7 $ 92.6 $ 107.9 $ 121.9 $ 103.0
Depreciation & Amortization 25.1 25.0 27.5 30.1 32.1
Amort. Equity-Based Compensation 4.9 6.0 6.5 5.8 6.4
Adjusted EBITDA $ 113.7 $ 123.6 $ 141.9 $ 157.8 $ 141.5
Earnings (Loss) per Share $ 2.91 $ 3.99 $ 3.53 $ 4.26 $ 4.68
Acquisition/Integration/Restructuring Costs 0.01 0.08 0.24 0.25 0.06
Prior Period R&D Tax Credits (0.08) (1.00) (0.07)
Tax Adjustment for Indefinite Reinvestment (0.24)
TCJA and Other Tax Adjustments (0.08)
Pension/Insurance Settlement/Other 0.03 0.14 0.03 (0.10)
Adjusted Earnings per Share $ 2.87 $ 3.21 $ 3.70 $ 4.54 $ 4.32
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. Results for the year ended December 31,
2017, include integration and restructuring costs of $1.3 million, a pension plan settlement charge of $0.6 million and Insurance Settlement of ($3.2).
26
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 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
27
Visit Our Website: www.neenah.com
Email: [email protected]
Bill McCarthyVP Investor Relations and Corporate Analysis
3460 Preston Ridge Road
Suite 600
Alpharetta, GA 30005
Phone: (678) 518-3278
Email: [email protected]
28