Investor Presentation May 2020 Image-oriented Performance-based - - PowerPoint PPT Presentation

Investor Presentation

May 2020

60% 40%

A global specialty materials company focused in high value niche markets

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Image-oriented

FINE PAPER & PACKAGING

Performance-based

TECHNICAL PRODUCTS

Proven strategies to create long-term value

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

• n optimizing operational efficiencies

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Filtration Digital Print Media Pkg & Design

✓ Margins recover as pricing/cost actions overcome unprecedented run-up in input costs ✓ Added US filtration capacity ramping up (though cost inefficiencies remain due to underutilization in initial years) ✓ COVID-19 impacting demand near term; actions taken to reduce costs, optimize cash flow and preserve strong liquidity position

Emerging from recent challenges (prior to COVID) Long-term growth catalysts in place

Targeted markets provide growth opportunities w/out requiring significant capital

✓ US transportation filtration capacity addition to provide profitable ~$70-80 mm EOC sales ✓ Leading position in a fast growing digital transfer media, recent breakthrough technology doubling addressable market size ✓ Premium packaging products capitalizing on demand for plastic alternatives ✓ Industrial filtration markets in air/water offer

• pportunities to expand existing technology base

Target Market Size ($3bn)

$116 $110 $115 $122 $128

11% 11% 12% 13% 14%

LTM Q119 LTM Q219 LTM Q319 LTM Q419 LTM Q120

EBITDA Margin

5

Performance Materials (~55%) Filtration (~45%)

> $500MM Net Sales

TECHNICAL PRODUCTS

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Tape, abrasives, digital transfer media, labels, security and other niche products High-performance filtration media for transportation, water and other markets

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

Technical Products

Why we are successful

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Europe NAFTA Asia RoW

Other Neenah H&V Ahlstrom

35 55 75 95 115 135 155 175

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Transportation filtration media

 Media for air, fuel, oil and cabin air in cars and heavy

duty equipment. > 80% of sales recurring (after-market)

 Market growing ~3+% /yr, with tight capacity and only 3

global players. Neenah a leader in Europe, with recent US expansion providing an added growth opportunity

 Trend towards more demanding engines and higher

performing filters. Electrification growing, but studies show limited impact on demand in next 10-15 years

Other filtration markets

 Present in fast-growing markets including water,

industrial and beverage filter media

 Planned small capital investment in 2020 to increase

capacity for fast-growing water filtration media

Neenah Transportation Filtration Net Sales € Organic CAGR 7% Global Transportation Filtration Market/Shares

~ US $1.3 billion

Runway for growth

 US plant provides ~$70-80 million EOC sales at

attractive margins with best in class capabilities

 lead to meaningful profit growth (from losses

during start up) #1

FILTRATION:

An attractive growth platform

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▪ Focused on performance niches where we

add value downstream applications (saturation and coating)

▪ Backings the most sizeable global category

with our media primarily used in specialty performance tapes and abrasives

▪ Other specialty markets include digital

transfer media, labels, security and others

▪ Innovation pipeline and R&D enabling

faster growth in digital printing, labeling and other categories

Abrasive Backings Tape Backings Digital Transfer Media Medical Packaging Performance Labels Security Covers

PERFORMANCE MATERIALS:

A collection of growing niche businesses

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$352 $336 $353 $404 $429 $466 $502 $583 $542 $544

14% 15% 15% 15% 16% 18% 15% 13% 12% 13%

• 3%

2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM Q120 Net Sales

• Adj. EBITDA %

*

Technical Products

Financial trends

CAGR 5%/yr

Growing markets; recent margins reflect US filtration asset start-up

▪ Markets growing GDP+ ▪ Organic investments supplemented with M&A lead to volume and share gains through performance, innovation and geographic expansion ▪ 2019 top line pressured by lower sales to China and currency ▪ Opportunity to expand margins 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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2011-2013 excludes Lahnstein includes US filtration plant start-up losses * includes ~$16 mm for products previously in “Other” segment

FINE PAPER & PACKAGING

Premium Packaging (~20%) Graphic Imaging (~80%)

~ $400MM Net Sales

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Premium textured and colored papers used for high- end commercial printing and other end uses. Sold through distribution channels and retail Specialty secondary packaging using unique colors, coating, and finished textures to focus on consumer brand enhancement

Fine Paper & Packaging

Why we are successful

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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Neenah 60%

Mohawk Fine Papers 20% Others 20%

▪ Neenah is the clear market leader in both commercial and consumer channels with our well-known brands ▪ Consolidated niche market of unique papers used for high-end commercial printing and consumer applications ▪ Market faces secular pressures from electronic substitution. Opportunistic volume opportunities in lower value premium opaque and other grades

GRAPHIC IMAGING

Premium market $575 MM & shares

12 Opportunistic volume adjacencies

PREMIUM PACKAGING

▪ Targeting “high value items in small packages” ▪ Market growing 3-4%/yr. Neenah target/historical performance = 2x market ▪ Categories include labels for spirits, wine and craft beers, premium folding board and box wrap for retail and beauty products, and plastic- substitute gift cards and advertising signage ▪ Efficiently uses fine paper assets and texture & color capabilities

Beauty 49% Alcohol 29% Retail/ Other 22%

Addressable market by end use ~$ 450MM

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$275 $402 $428 $436 $443 $452 $455 $446 $397 $389 18% 16% 16% 16% 18% 18% 17% 14% 17% 19%

• 4

2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM Q120 Net Sales

• Adj. EBITDA %

Fine Paper & Packaging

Financial trends

CAGR > 4%/yr

Consistent mid to upper-teen EBITDA margins generate important cash flows for redeployment

▪ Commercial print facing continued secular market pressures of 3 to 5% ▪ Neenah battling secular pressure through consolidating acquisitions, growth in premium packaging, and other initiatives ▪ Leading brand power and diligent cost management help support margins ▪ Well-capitalized asset base with limited capital needs generating high return on capital

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✓ Generate consistent profitable growth ✓ Capital efficient decisions, guided by ROIC ✓ Maintain a strong balance sheet ✓ Provide shareholder returns, including an attractive dividend

Financial principles

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✓ Mid-single digit top line growth ✓ Attractive Return on Capital ✓ Strong balance sheet and cash flows ✓ Total shareholder returns of almost 2x the R2000 index

Return to Shareholders $177 MM Value-Adding Organic Capital $150 MM Acquisitions $169 MM

Substantial cash flows and balanced capital deployment has resulted in:

Five-year cash deployment

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Value-adding capital deployment

✓ Top-line growth driven by share gains, new products, price/mix improvement and acquisitions ✓ Recent earnings reflecting costs

• f filtration asset ramp-up and

timing of input cost recovery

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Consistent profitable growth…

$888 $942 $980 $1,035 $939 $932

12% 13% 11% 8% 9% 10%

• 3.0%

2015 2016 2017 2018 2019 LTM Q120

Net Sales Adjusted EBIT %

$3.70 $4.54 $4.32 $3.50 $3.47 $3.90 2015 2016 2017 2018 2019 LTM Q120 Adjusted E.P.S.

✓ Continual focus on asset efficiency and returns ✓ Disciplined organic investments and history of value-adding acquisitions ✓ Willingness to divest non-returning assets or businesses ✓ Continued improvements expected as US filtration capacity continues to ramp up

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…while maintaining an attractive ROIC

12% 13% 10% 9% 9% 10% 2015 2016 2017 2018 2019 LTM Q120

% ROIC

175 175 175 175 175 175 54 46 80 64 26 97

1.6x 1.4x 1.8x 1.9x 1.6x 2.1x

Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 LTM Q120 Bonds S-T Debt

$229 $221

$255

✓ Cash generation and prudent spending has kept debt to EBITDA ratio below 2 times ✓ Ample liquidity and borrowing capacity on existing credit facilities ✓ Currently evaluating refinancing alternatives for Senior Note

$175 million Note due May 2021;

5.25% coupon Ba3/BB rating

Global asset based revolver (~$200+ mm)

Debt

($ millions)

Debt/ EBITDA

19 $239 $201

….and a strong balance sheet

$272

Cash & Cash Equivalents $4.2 $3.1 $4.5 $9.9 $9.0 $77.5 Net Debt/ EBITDA 1.6x 1.4x 1.8x 1.9x 1.6x 1.5x

Cash Uses

▪ Prioritize highest returns (organic,

value-adding M&A, debt reduction)

▪ Track record of growing dividend with attractive yield ▪ $25MM opportunistic buyback plan

Cash Generation

▪ Sizeable cash generation ▪ Efficient asset base; capital spend 2-4% of sales (maintenance ~ $15MM) ▪ Low cash tax rate supported by prior period R&D tax credits

$1.32 $1.48 $1.64 $1.80 $1.88

2016 2017 2018 2019 2020

Dividends per share

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Disciplined capital deployment

$63 $47 $57 $55 $76 $87 7% 5% 6% 5% 8% 9%

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

2015 2016 2017 2018 2019 LTM Q120

Free Cash Flow

FCF FCF % NS

Compensation philosophy

▪ 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)

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

Performance Share Metrics

Free Cash Flow Efficiency

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, strong bias to technical products categories ▪ Most targets $50 - $250MM of sales ▪ Look for strategic fit and touch points to unlock synergies

Strategic Touch Points

Geographies Technologies Products/ End Markets Customers 2014 Crane (TP) 2015 FiberMark (TP/FPP) 2017 Hazen (FPP) 2017 Coldenhove (TP) 2013 Southworth (FPP)

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Track record of value-adding M&A to accelerate ongoing growth rate

2014 Crane (TP) 2015 FiberMark (TP/FPP) 2013 Southworth (FPP)

✓ Long tenures with blue-chip customers ✓ Substantial cash flows with strong liquidity and low leverage

Why we have been successful

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✓ Leading positions in end markets with portfolio of highly recognized brands ✓ Defensible niche / hard to replicate products with clear barriers to entry ✓ Variety of best in class manufacturing capabilities with well-capitalized assets ✓ Experienced management team

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▪ Strong core business, with leading positions in defensible and profitable core categories with mid-teen EBIT margins ▪ Catalysts in place to drive organic growth without significant capital required

▪ US filtration ramp up and share gains ▪ Expanded presence in digital transfer ▪ Premium packaging

▪ Sizeable cash flow and a strong balance sheet ▪ Experienced management with track record of value-adding capital deployment

Fine Paper & Packaging Technical Products

Neenah Today

Packaging & Fine Paper

Technical Products

Neenah Future

Take-Aways

For more information

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

Investor 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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Contact Us

Appendix

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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Forward Looking Statements

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GAAP Reconciliation

Results for the year ended December 31, 2015, include integration and restructuring costs of $6.5MM. Results for the year ended December 31, 2016, include integration and restructuring costs of $7.0MM and a pension plan settlement charge of $0.8MM. Results for the year ended December 31, 2017, include integration and restructuring costs of $1.3MM, a pension plan settlement charge and insurance settlement of ($2.6MM). Results for the year ended December 31, 2018, include an impairment loss of $31.1MM, restructuring, integration and other costs of $2.1MM and a pension plan settlement charge and insurance settlement of ($2.5MM). Results for the year ended December 31, 2019, include restructuring, integration, and other costs $6.2MM and pension plan settlement charge ($1.4MM).

Continuing Operations $ millions 2015 2016 2017 2018 2019 LTM Q120 Net income $ 51.1 $ 73.0 $ 80.3 $ 36.4 $ 55.4 $60.0 Loss from discontinued operations 9.4 0.4

• 0.8
• Income from continuing operations

60.5 73.4 80.3 37.2 55.4 60.0 Plus: Provision for income taxes 29.4 29.6 11.4 3.9 11.1 13.0 Plus: Interest expense, net 11.5 11.1 12.6 13.0 11.8 11.5 EBIT (Operating Income) 101.4 114.1 104.3 54.1 78.3 84.5 Plus: Impairment loss

• 31.1
• Plus: Restructuring, integration and other costs

6.5 7.0 1.3 2.1 6.2 8.6 Plus: COVID-19 costs

• 1.1

Plus: Pension, insurance settlement and other costs

• 0.8

(2.6) (2.5) (1.4) (1.4) Adjusted EBIT 107.9 121.9 103.0 84.8 83.1 92.8 Plus: Net depreciation and amortization 27.5 30.1 32.1 35.0 33.8 33.5 Plus: Stock-based compensation 6.5 5.8 6.4 4.0 5.6 5.2 Adjusted EBITDA $ 141.9 $ 157.8 $ 141.5 $ 123.8 $ 122.5 $131.5 Diluted Earnings per Share $ 3.53 $ 4.26 $ 4.68 $2.17 $3.26 $3.54 Plus: Impairment loss

• 1.37
• Plus: Restructuring, integration and other costs

0.24 0.25 0.06 0.1 0.27 0.37 Plus: COVID-19 costs

• 0.05

Plus: Tax adjustments (0.07)

• (0.32)

0.01

• Plus: Pension, insurance settlement and other costs
• 0.03

(0.10) (0.15) (0.06) (0.06) Diluted Adjusted Earnings per Share $ 3.70 $ 4.54 $ 4.32 $3.50 $3.47 $3.90

GAAP Adjusted EBITDA segment reconciliation

Continuing Operations $ millions 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM Q120 Technical Products

GAAP Operating Income $ 33.9 $ 37.7 $ 38.9 $ 46.0 $ 54.1 $ 65.6 $ 55.3 $ 50.9 $ 44.6 $ 49.5 Plus: Restructuring, integration and other costs

• 1.6

1.8 1.4

• (1.8)

0.3 0.5 Plus: Pension & SERP related costs

• 0.4

(1.5) (1.5) Plus: COVID-19 costs

• 0.6

Adjusted EBIT $ 33.9 $ 37.7 $ 38.9 $ 47.6 $ 55.9 $ 67.0 $ 55.3 $ 49.5 $ 43.4 $ 49.1 Plus: Net depreciation and amortization 13.8 12.6 13.1 11.3 13.9 17.7 19.6 24.5 24.2 24.1 Adjusted EBITDA $ 47.7 $ 50.3 $ 52.0 $ 58.9 $ 69.8 $ 84.7 $ 74.9 $ 74.0 $ 67.6 $ 73.0 Net Sales $ 352 $ 336 $ 353 $ 404 $ 429 $ 466 $ 519 $ 583* $ 542 $ 544

• Adj. EBITDA Margin of NS (%)

14% 15% 15% 15% 16% 18% 15% 13% 12% 13%

Fine Paper and Packaging

GAAP Operating Income $ 32.7 $ 50.0 $ 59.9 $ 60.8 $ 67.3 $ 70.7 $ 69.5 $ 29.4 $ 53.2 $ 56.1 Plus: Restructuring, integration and other costs

• 5.8

0.4 0.0 1.5 1.8 (2.9) 23.9 5.0 5.5 Plus: Pension & SERP related costs

• 0.4
• Plus: COVID-19 costs
• 0.5

Plus: Indirect tax costs

• 0.7

1.1

Adjusted EBIT

$ 32.7 $ 55.8 $ 60.3 $ 60.8 $ 68.8 $ 72.5 $ 66.6 $ 53.7 $ 58.9 $ 63.2

Plus: Net depreciation and amortization

16.5 9.4 9.3 8.6 9.9 10.9 11.0 9.9 9.1 8.9

Adjusted EBITDA

$ 49.2 $ 65.2 $ 69.6 $ 69.4 $ 78.7 $ 83.4 $ 77.6 $ 63.6 $ 68.0 $ 72.1 Net Sales $ 275 $ 402 $ 428 $ 436 $ 443 $ 452 $ 455 $ 446 $ 397 $ 389

• Adj. EBITDA Margin of NS (%)

18% 16% 16% 16% 18% 18% 17% 14% 17% 19%

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Technical Products 2018 NS * includes ~$16 mm for products previously in “Other” segment 2011-2015 excludes Lahnstein