This document provides an overview of Neenah Paper, including:
1) Neenah Paper has two business segments: Technical Products which produces specialty performance products for filtration, industrial backings, labels, and other specialties, and Fine Paper which produces high-end graphic and premium label papers.
2) Strategic priorities include leading in profitable niche markets, increasing size and growth through organic initiatives and M&A, and delivering consistent returns.
3) Technical Products has experienced growth led by filtration, labels, and abrasives, while Fine Paper provides consistent profits and returns on capital.
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Not only will LogiChem 2011 be a chance for the chemical industry to reminisce about the last ten years but an opportunity to shape the next decade. To celebrate a decade of LogiChem, there will be an exciting three day programme filled with networking opportunities in our new location, Antwerp.
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Companies want to be more agile in driving growth regardless of volatililty in the global business environment. But there is no clear, consistent industry standard definition of business agility. To better understand what this means and how organizations like yours are using S&OP to drive supply chain agility, Lora Cecere, Founder of Supply Chain Insights and former Supply Chain Analyst and Partner with Altimeter Group, conducted a survey of business professionals in April about the importance of agility in business planning. On May 15th, Lora will be sharing her analysis of this research during her featured webinar.
View recorded webinar to learn how others are prioritizing and enabling agility in their organizations. Get tips from Lora and Steelwedge’s VP of Product Marketing, Nari Viswanathan on how you can use S&OP to drive better resilience in your operation.
What's So "Special" About Specialty Paper, Anyway?Raka
Want a first-hand look at how in-plant printers can stop outsourcing and print hundreds of applications in-house using specialty paper? You've come to the right place.
Initially, paper was made out of fibres from mulberry bark,papyrus, straw or cotton. Wood only emerged as the chief raw material for paper mass production as recently as the mid 19th century.
The printed page is immediate, its message cutting across cultures; a tactile experience that demands attention and creates desire. It is a passport to knowledge, a storage medium, a persuasive tool and an entertaining art form.
Paper is a sustainable resource and a permanent document.
Specialty Papers 2014 taking place September 16-18, 2014 in Milwaukee, WI has expert presenters like Graham Moore taking the stage. Moore, a Smithers Pira consultant will be available to chat in Milwaukee!
CIPS presentation: Transforming Your Negotiating Success by Mike Inman, Table...Mike Inman
From the CIPS (Chartered Institute for Purchasing & Supply) Annual Conference 2012. Kings Place, London. Learn to negotiate better deals and have better relationships with your internal customers and suppliers alike.
Purchasing Metrics Dashboard - Bill KohnenBill Kohnen
Sample Purchasing metrics format with benchmark data. For 2013 planning as well as regular reporting. Includes general reporting for key supplier performance. Includes general reporting for key supplier performance and comments about CSR reporting for supply chain. Finally sample CPO level 3 year strategic plan for people, technology and globalization.
From interpretation to execution - for New Product & Business OpportunitiesPrakash Bagri
My presentation across a marathon session in ISB, Hyderabad.
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Companies want to be more agile in driving growth regardless of volatililty in the global business environment. But there is no clear, consistent industry standard definition of business agility. To better understand what this means and how organizations like yours are using S&OP to drive supply chain agility, Lora Cecere, Founder of Supply Chain Insights and former Supply Chain Analyst and Partner with Altimeter Group, conducted a survey of business professionals in April about the importance of agility in business planning. On May 15th, Lora will be sharing her analysis of this research during her featured webinar.
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What's So "Special" About Specialty Paper, Anyway?Raka
Want a first-hand look at how in-plant printers can stop outsourcing and print hundreds of applications in-house using specialty paper? You've come to the right place.
Initially, paper was made out of fibres from mulberry bark,papyrus, straw or cotton. Wood only emerged as the chief raw material for paper mass production as recently as the mid 19th century.
The printed page is immediate, its message cutting across cultures; a tactile experience that demands attention and creates desire. It is a passport to knowledge, a storage medium, a persuasive tool and an entertaining art form.
Paper is a sustainable resource and a permanent document.
Specialty Papers 2014 taking place September 16-18, 2014 in Milwaukee, WI has expert presenters like Graham Moore taking the stage. Moore, a Smithers Pira consultant will be available to chat in Milwaukee!
All about paper Manufacturing: Paper Making Process
Industry and businesses provide almost half the amount of recovered paper in the form of cuttings/shavings and unsold newspapers/magazines. Households contribute over a third. Almost any household paper, including used newspapers, cardboard, packaging, stationery, direct mail, magazines, catalogues, greeting cards and wrapping paper, can be recycled. Recovered paper compares favorably with the production of wood-based pulp made by chemical or mechanical means in terms of environmental pollution and energy consumption.
THE HISTORY OF CHINA, as documented in ancient writings, dates back some 3,300 years. Modern archaeological studies provide evidence of still more ancient origins in a culture that flourished between 2500 and 2000 B.C. in what is now central China and the lower Huang He (Yellow River) Valley of north China. Centuries of migration, amalgamation, and development brought about a distinctive system of writing, philosophy, art, and political organization that came to be recognizable as Chinese civilization. What makes the civilization unique in world history is its continuity through over 4,000 years to the present century.
The Chinese have developed a strong sense of their real and mythological origins and have kept voluminous records since very early times. It is largely as a result of these records that knowledge concerning the ancient past, not only of China but also of its neighbors, has survived.
Chinese history, until the twentieth century, was written mostly by members of the ruling scholar-official class and was meant to provide the ruler with precedents to guide or justify his policies. These accounts focused on dynastic politics and colorful court histories and included developments among the commoners only as backdrops. The historians described a Chinese political pattern of dynasties, one following another in a cycle of ascent, achievement, decay, and rebirth under a new family.
Of the consistent traits identified by independent historians, a salient one has been the capacity of the Chinese to absorb the people of surrounding areas into their own civilization. Their success can be attributed to the superiority of their ideographic written language, their technology, and their political institutions; the refinement of their artistic and intellectual creativity; and the sheer weight of their numbers. The process of assimilation continued over the centuries through conquest and colonization until what is now known as China Proper was brought under unified rule. The Chinese also left an enduring mark on people beyond their borders, especially the Koreans, Japanese, and Vietnamese.
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The environmental impact of paper is significant, which has led to changes in industry and behavior at both business and personal levels. With the use of modern technology such as the printing press and the highly mechanized harvesting of wood, disposable paper has become a cheap commodity. This has led to a high level of consumption and waste. With the rise in environmental awareness due to the lobbying by environmental organizations and with increased government regulation there is now a trend towards sustainability in the pulp and paper industry.
The results have poured in from our 6th Annual State of Partnering research. This year’s study was the biggest and most comprehensive yet – with 98 global vendors and 250 solution provider participants.
This year’s study focused on several key partnering topics including enablement, cloud engagement models, field sales coverage and channel spending trends.
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2. Company Overview
Technical Products
Specialty, performance-based products
End markets: filtration, industrial
backings, labels, and other specialties
Manufacturing in Germany and the U.S.
Fine Paper
High-end textured and colored graphic papers
End markets: premium print communications,
Net Sales luxury packaging, crafting and premium labels
$800+ million
Manufacturing in the U.S.
2
3. Strategic Priorities
Lead in profitable, specialty niche markets
Increase participation in markets that can provide us with leading
positions and value our core competencies in high performance
media , coating and saturating
Expand in new geographies and market adjacencies
Increase our size, growth rate and portfolio diversification
through organic initiatives and M&A
Invest to grow in our higher value performance and image-driven
products (e.g. melt blown filtration premium label , luxury packaging)
Supplement organic growth with acquisitions that deliver value and
expand our presence in growing specialty markets
Deliver consistent, attractive returns
Pricing power and ability to offset input cost variability
Sizeable cash flow generation and conservative balance sheet
providing flexibility to pursue attractive opportunities
Cash deployment to shareholders via dividend and share buybacks
Return on Capital a key performance metric
3
4. Segment Financial Trends
440 Net Sales $ million
OP% $429 0.145
430
$420 0.135
420 Currency
0.125
Impact Technical Products
410 0.115
400 $407 0.105 Growth led by filtration, labels and abrasives
9.2% 0.095
390 $384 8.0%
Margins expanding with higher value mix, sales
0.085
380 7.6%
0.075
growth, cost efficiencies and pricing
370 0.065
360 0.055
2010 2011 2012
Net Sales $ millions
OP% $373 20.0%
19.0%
Fine Paper
$273 $275 18.0%
17.0% Segment providing consistent and attractive
15.0%
13.6%
14.4%
16.0%
15.0%
profits, cash flow and returns on capital
14.0%
13.0% Three years of top-line growth, boosted in 2012
12.0%
11.0% by acquisition of brands
10.0%
2010 2011 2012
Businesses able to grow and increase margins
despite rising input costs
4
5. Technical Products
Filtration
High-performance filtration
media for fuel, air, oil, cabin air
in transportation, as well as
products for other markets
Specialties
Products for a variety of end
markets including labels, non-
woven wall cover, medical
packaging, durable print
media and other markets
Industrial Backings
Saturated and coated papers
used for backing of specialty
abrasives and tapes
5
6. Success Factors
Ability to Meet Customer
Strong Intimacy
Specialized
Barriers and
Performance
to Entry Qualification
Requirements
Key technologies Long-standing relationships
Multi-fiber forming capabilities Global market-leading customers
Saturation, coating and surface treatments
Intricate qualification requirements
Polymer chemistries
Ongoing joint product development
Innovative new products
6
7. A Diversified Global Portfolio
Key Est.
Strategic
Customers/ Market
Priorities Growth
Filtration
Competitors
Mann & Hummel, Specialties Tape
Higher value melt Mahle, Hengst
blown products 2x
Filtration Internationalization Ahlstrom, Abrasives
GDP
Market Adjacencies H&V
Sales by
Avery Dennison, Product Group
Performance labels 3M, Saint-Gobain
Specialties High-end wall cover GDP+
Medical packaging Multiple based on
markets
3M, Shurtape, IPG,
Differentiation via Alpha Beta, Tesa
Europe
Industrial saturating/coating
Backing- Tape Optimize costs Wausau, Ahlstrom
RoW
Asia North
3M, St. Gobain, GDP
Enter new America
Industrial Hangzhou Star,
adjacencies Starcke
Backing- Follow customers in
Abrasives emerging markets
Ahlstrom, Munksjo Sales by
Geography
7
8. Filtration:
A Platform for Growth
Neenah Net Sales
Transp. Filtration Transportation Filtration Core Growth
CAGR 8%
Historically focused only in European auto filtration
(fuel, oil, engine & cabin air) to OEMs and aftermarket
Growth in higher value products and new adjacencies
requiring third melt blown line (2013 start-up)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Global Transportation Filtration
Market Size and Share
Global Market ~ US $1 billion
Geographic Expansion Opportunities
Global engine filter requirements
Other
continue to become more demanding NP
Existing global customers desire for us to H&V
Ahlstrom
have an expanded geographic presence
Asia NAFTA Europe RoW
Source: company estimates
Life
HVAC Science
/Air
Process
Entry into New Adjacencies
Specialty & Food
filtration Ability to leverage our technologies to enter into other
media markets
> $4 billion
Dust
Water
attractive filtration markets
Control
Recent entry in beverage filtration (coffee capsule) and
Gas Transpo/
Turbine H. Duty industrial filter applications
Source: company estimates 8
9. Fine Paper
Graphic Imaging
Unique colors, textures and
finishes for identity, print
collateral, invitations,
advertising, and other high-
end commercial printing
Luxury Packaging
& Premium Label
Image-enhancing colors and textures
of premium folded cartons, box wrap,
bags, premium wine, beverage and
spirit labels, food labels, hang tags
Retail
Branded specialty papers sold to
consumers for school supplies,
posters, crafting, business and
resume papers, advertising and
promotions
9
10. Success Factors
Value Share- Premium Papers
$650 million market
Others
10 Superior Asset
Leading Brands
Mohawk Base with a
and Supply Chain Neenah
30
60 Leading Cost
Capabilities
Position
Clear Market
Leadership
Powerful brands and tools Efficient Manufacturing Platform
Brands known > 2:1 over competition, Purpose-built assets considered
specified by printers and designers youngest in the industry
Technology tools to drive demand and Redundant capabilities, unique
improve supply chain efficiencies in our category with a variety of
texture and color
10
11. An Evolving Portfolio
Fine Paper $400
Sales Mix
$221
Successful growth post spin-off by Writing
Text & Cover
evolving mix and extending reach… Pkg/Label/Oth
Retail
Expanding in growing niches (luxury
packaging, premium label, scrapbooking)
2004 Today
Supply chain extension (Crane, envelopes,
electronic consumer print applications)
Products Customers/
New products (brights, digital) Crafts
Scrapbooking Retail Supply Chain
Premium
New channels (retail, internet) Brights
Labels Crane
Envelopes
Digital
Papers
New geographies Luxury
Packaging
Core
Writing,
Opportunistic brand acquisitions Text &
Cover
100% PCW
Packaging China
….. while gaining share and driving Durable
Europe South
America
Electronic
consolidation in our core markets Papers
Printing
Applications
Middle
East
Technology Geographies
11
12. Platforms for Growth
Global Luxury Pkg
& Premium Label
Markets
The global market for luxury packaging, $250 million
premium labels and retail solutions is
over $250 million and growing. Our
current share in this market is less than
15%, anchored by labels in North NP
America. Others
Specialty retail papers (excl. copy paper) Retail Paper
$60
is a market of ~$150 million. Neenah Niche Markets
$50 > $150 million
sells to customers like Office Max,
$40
Staples, Michaels, and Target.
$30
On January 31, 2013 we acquired $20
leading business paper brands from $10
Southworth, increasing our presence $0
and gaining distribution at Wal-Mart. Brights Craft Business Stationary
NP SW Acquisition Oppty Areas
Source: company estimates 12
13. Key Financial Objectives
Consistent profitable growth
16 consecutive quarters ahead of expectations
Increasing Return on Capital
Averaging over 150 bps per year since 2009
Efficient capital structure
Debt/EBITDA currently ~1.5x; ample financing availability
Attractive shareholder returns
Top quartile returns for Russell 2000 Value stocks 2010-2012
Competitive and growing dividend
13
14. Profitable Growth
% Change
Full Year 2012 vs. 2011 46%
$ millions 2010 2011 2012 36%
Sales $ 658 $ 696 $ 809
16%
Adj. EBIT1 52 59 80
Adj. E.P.S.1 $ 1.47 $ 1.91 $ 2.78 Sales Adj. EBIT Adj. E.P.S.
Top line growth via share gains, new products, price/mix and 2012 acquisition
Faster bottom line growth with margin improvement and debt reduction
Cash deployed to support growth, reduce debt, increase dividend and buy shares
(1) Excludes one-time items for divestitures, integration and other costs as noted in GAAP table 14
15. Return on Capital
% Return on
Invested Capital 11%
9%
8% Primary measure to evaluate investment
opportunities and judge business performance
Key metric in compensation plans
Delivering improvement through:
2010 2011 2012
Profitable growth/margin expansion
Sales/Assets Carefully managed assets/investments
1.4
1.2
1.3 Strategic moves (divest pulp, brand acquisitions)
Exceeding double-digit levels
2010 2011 2012
15
16. Capital Structure
Dec Dec Dec
$245
$ millions 2010 2011 2012
230 3.8
Bonds 7 3/8%
$ 223 $ 158 $ 90 3.45
(due Nov. 2014) $186 $182
180 3.1
2.8x
ABL - - 56 2.75
(due Nov. 2017)
130 2.4
Term Loan - - 30
2.0x Target
2.05
(amortized 5 yrs) Range
1.6x 1.5 – 2.5x
80 1.7
Germany 22 28 6
1.35
Debt $ 245 $ 186 $ 182
30 1
Interest Exp. $ 20 $ 16 $ 13 Dec 10 Dec 11 Dec 12
Debt restructuring and reductions lowering interest expense. 2013 projected to decline to
$11 million, following Q4 2012 bond call
Debt well within targeted capital structure range
No short term liquidity events; ample flexibility and additional borrowing capacity
Credit rating Ba3/BB
16
17. Cash Deployment & Returns
Pro Forma Cash Flow $ millions Cash Generation
Pro forma free cash flow of ~ $ 60 million
EBITDA $ 115 Moderate cap-ex needs (maint. of $10 mm/year)
with disciplined allocation process
Interest Expense (10)
Favorable cash tax position (NOLs = $66 mm)
Other (tax, wkg cap, pension, etc..) (15-20)
Cash From Operations $ 85- 90 Cash Deployment
Priority on organic growth and M&A; active
Capital Expenditures (25-30) process to identify and evaluate opportunities
Debt reduction
Free Cash Flow $ 55 – 65
$10 million stock repurchase plan
FCF per share > $3.50
0.7 Competitive dividend
$0.60
0.6 Annual Dividend
per share
Substantial cash flows resulting in
0.5 $0.48
double-digit yields $0.44
$0.40
0.4
0.3 17
2010 2011 2012 2013
18. Investment Conclusions
Leading positions in profitable specialty markets
Track record of consistent momentum in sales and profits
reflecting successful execution of plans
Sustainable, strong cash flows to support growth opportunities
and provide attractive returns to investors
Sound capital structure and financial Consolidated
EBITDA
flexibility (U$ millions) $113
Strategic focus on expanding in defensible $93
$86
and growing specialty markets, further from
historical “pulp & paper” positioning
Attractive returns driven by organic growth,
events and cash return to shareholders 2010 2011 2012
18
19. Contact
For more information Investor Relations
visit our website: www.neenah.com Bill McCarthy
email: investor@neenahpaper.com VP, Financial Planning and Analysis & Investor Relations
3460 Preston Ridge Rd. Suite 600
Alpharetta, GA 30005
Phone: (678) 518-3278
Email: bill.mccarthy@neenahpaper.com
19
20. GAAP Reconciliation
Continuing Operations
$ millions 2010 2011 2012
EBIT (Operating Income) $ 55.1 $ 56.6 $ 70.4
Ripon Mill Close/(Gain on Sale) (3.4)
Acquisition integration costs 5.8
Other1 2.4 4.1
Adjusted EBIT $ 51.7 $ 59.0 $ 80.3
Depreciation & Amortization 29.7 30.0 28.0
Amort. Equity-Based Compensation 4.9 4.3 4.9
EBITDA $ 86.3 $ 93.3 $113.2
Earnings (Loss) per Share $ 1.61 $ 1.82 $ 2.41
Ripon Mill Close/(Gain on Sale) (0.14)
Acquisition integration costs 0.22
Other1 0.09 0.15
Adjusted Earnings per Share $ 1.47 $ 1.91 $2.78
1 Includes in 2011 ($0.09) and 2012 ($0.02) cost of early redemption of bonds, and in 2012 ($0.13) SERP settlement
charge
20
21. Forward Looking Statements
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
21