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meadwestvaco 9_18_2_6_2007LPXEARNINGSPRESENTATION
- 1. Primary & Systems & Insights & Packaging Secondary Services Innovation Materials Packaging THE POWER BEHIND THE CONSUMER PACKAGE.
- 2. Forward Looking Statement This presentation includes certain forward-looking statements, and actual results may differ. Any such statement involves risks and uncertainties described in the company’s Annual Report on Form 10-K for 2006. We may or may not update these statements at a future time to reflect new information, future events or otherwise. 2
- 3. Investment Rationale • Packaging transformation delivering higher returns to shareholders • Competitive Packaging platform capturing global growth opportunities • Focused on key operating initiatives to drive earnings and cash flow higher − Growth acceleration − Margin improvement • Executing on land strategy to deliver maximum value to shareholders • Long history of returning cash to shareholders 3
- 4. Transforming the Business Model: 2003-2006 Land Papers Sale Operating Cash Sales $2.3 $2.2 $0.9 Stock Repurchases Debt Calmar CAPEX & Dividends Repayment $0.7 $1.2 $1.4 $2.1 - Successfully Refocusing our Business & Returning Cash to Shareholders - 4
- 5. Transformation Is Improving Operating Results 2003 2006 Total Revenue $7.6 Bil. Total Revenue $6.5 Bil. Y-O-Y Revenue Growth 4% Y-O-Y Revenue Growth 6% Debt-to-Total Cap 47% Debt-to-Total Cap 42% ROIC 2.3% ROIC 6.3% Operating Cash Flow $460 Mil. Operating Cash Flow $570 Mil. 5
- 6. Market Leadership in Global Packaging Markets Market Global Outlook Beverage & Food Media Tobacco Healthcare & Pharma Personal Care & Beauty 6
- 7. Strong Global Presence & Customer Base • Manufacturing and sales offices worldwide • Strong customer base • Growing capabilities in China & India 7
- 8. Key Objectives/Actions Key Objectives Actions Improve Growth - New products - “Bolt-on” acquisitions - Emerging markets Expand Operating Margins - Price & productivity improvement - Specialty packaging focus - Footprint & cost actions Execute Land Strategy - Forestland sales - Significant development opportunities - Expect Improved Returns in 2007 and Beyond - 8
- 9. Key Objectives/Actions: Improve Growth • Bringing new products to market • Acquiring IP-based products in target markets – personal care, beauty and home • Extend leadership positions to emerging markets > Rigesa targeting India > Calmar Wuxi fully operational; agri-business market serving strong in-country demand > Calmar pump/sprayer > New Wuxi folding carton dedicating capacity to operational October 1, 2007 meet increasing demand 9
- 10. Key Objectives/Actions: Expand Margins EBIT% Key Drivers 2006 2007E Future 9% 10% 11 -12% Packaging • Mix improvement Resources • Pricing momentum • Productivity actions 4% 8%+ Primary packaging • Consumer 5% Specialty focus Solutions • Capacity optimization • Cost reductions • 10
- 11. Key Objectives/Actions: Execute Land Strategy • New veteran real estate leader – Ken Seeger • Major milestone in unlocking value in land – Forestland sales agreements – $491 million – Value obtained to be returned to shareholders • East Edisto master plan underway • Pursuing additional projects 11
- 12. Real Estate Opportunities in Growth Areas Areas of Population Growth from 2000 to 2005* Covington Mill Forests – VA Charleston Mill Forests – SC • Conservation • Conservation • Recreation • Recreation • Emerging Development • Emerging Development • Development * U.S. Census Bureau 12
- 13. Major Land Strategy Milestones – 3 Year Dual Track 2007 2008 2008 - 2010 • Refine land segmentation • Establish steady • Accelerate sales pace • Identify land value sales pace • Target $300+ million in enhancement opps. • Initiate land value pre-tax proceeds • Fill ’08 & ’09 sales enhancement opps. pipeline • Execute modest ‘07 sales Retail Land Sales Program 2007 2009 - 2010 2008 • Complete preliminary • Projects begin to generate • Build development Edisto Master Plan cash project pipeline • Commence near-term • Secure East Edisto • Begin East Edisto commercial & entitlements entitlement industrial projects process Real Estate Development 13
- 14. South Carolina Lands in Charleston’s Growth Path Source: Clemson University, Strom Thurmond Institute 14
- 15. MWV Well-Positioned to Capture Maximum Value Powerful brand equity in highest value locations • - Excellent reputation - Strong governmental and local relationships Deep knowledge of land – attributes, enhancement • opportunities, regulations Partnership approach to development • 15
- 16. Strong Community Endorsement Charleston, SC “MeadWestvaco’s 70,000-acre plan” “This is a roll-up-the-sleeves moment for our region.” - Charleston Mayor Joe Riley “I think their timing is perfect.” - Dorchester County Council Chairman Larry Hargett Editorial: “Get involved in East Edisto Plan” “MeadWestvaco’s approach to the East Edisto tract is in welcome contrast to much of what passes for planning in the rapidly developing coastal area. The company has provided for extensive public involvement and scrutiny.” The Citistates Report: “Push to preserve is alive and well” “MeadWestvaco seems to be forging a new and welcome form of development, staged over decades, intended to be fully respectful of the region's wondrous natural setting and history.” - Neil Peirce and Curtis Johnson “MeadWestvaco takes public input on developing their forested land ” “Both Charleston Mayor Joe Riley and Coastal Conservation League President Dana Beach have expressed support for the project, citing MeadWestvaco's proactive approach to regional planning, openness to cooperating with environmental groups, and hosting a transparent, public planning process.” 16
- 17. Development Projects Commercial/Industrial Mixed Use Property: ~300 acres Property: ~400 acres Partners: Multiple potential Partners: Major national developer Structure: Outright sales & JVs Structure: 50/50 joint venture Description: Description: Retail, commercial and 2.5 million sq. ft. residential development warehousing for national & projects international tenants 17
- 18. Land Management Structure Focused on proving the value of land strategy • Will explore alternative ownership structures • with Board of Directors Examining all potential ownership structures • Major considerations – valuation, tax, complexity, • market conditions 18
- 19. Investment Rationale • Packaging transformation delivering higher returns to shareholders • Competitive Packaging platform capturing global growth opportunities • Focused on key operating initiatives to drive earnings and cash flow higher − Growth acceleration − Margin improvement • Executing on land strategy to deliver maximum value to shareholders • Long history of returning cash to shareholders 19
- 20. UBS Global Paper & Forest Products Conference