Neenah Paper. Goldman Sachs Investor Event Montreal March 19, 2008

Transcription

1 Neenah Paper Goldman Sachs Investor Event Montreal March 19, 2008

2 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 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, Inc. 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 other filings with the SEC. 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

3 About Neenah Paper Global maker of premium, performance-based papers Three business segments: Fine Paper, Technical Products, Pulp $1 billion in revenue Operations in US, Germany and Canada Own 500,000 acres of Canadian timberlands Traded on NYSE $225 million of 10 year notes (due 2014)

4 Why Invest in Neenah Paper? Spin-off from Kimberly-Clark in Nov-04 providing a unique opportunity to unlock value Leading positions in specialty niche markets Recent acquisitions providing synergies and a more global, growth-oriented and balanced business portfolio Cash flows and timberland holdings support a strong balance sheet with adequate liquidity and financing capabilities Track record of executing strategy to deliver value

5 Unlocking Value Shut down #1 pulp line at Terrace Bay (Apr-05) Sold moneylosing Terrace Bay pulp mill (Aug-06) Announced intent to divest remaining pulp and timberlands (Mar-08) Sold half of timberlands for $140 million (Jun-06) Purchased Neenah Germany (Oct-06) Purchased Fox River Paper (Mar-07) Consistent execution of strategy to transform company

6 US$ millions Resulting Transformation: Profitable Growth Sales +35% Adj. EBITDA % $991 $121 Pulp $733 $57 Paper SALES MIX EBITDA MIX 1 excludes non-cash impairment, timberlands gains and one-time costs for integration and Terrace Bay disposal

7 Resulting Transformation: Balanced Portfolio US$ millions $223 $367 $9 $25 $47 $401 Fine Paper Tech. Products Pulp 2007 SALES 2007 EBIT 50:50 pulp and paper mix evolved to more profitable, better balanced, less cyclical platform

8 Strategic Direction Focus where we can be relevant and win Specialized markets for customized and premium products Use technological know-how and branding expertise Maintain strong balance sheet with disciplined approach to capital allocation Deliver consistent, profitable growth Grow organically in niche markets Improve margins via cost reduction, synergy delivery and mix Acquisitions in profitable, growth markets that can add value Complete transformation; deliver value via exiting pulp

9 Fine Paper Premium branded writing, corporate identity, and text and cover papers

10 Fine Paper N.A. Uncoated Free Sheet Market Grndwd Bristol Desktop 65% text & cover Print Coated Uncoated Free Sheet Forms Envelope 3% Tablets UFS ~50% of P&W Variety of end uses Other Premium ~3% of 13 mm ton UFS market 35% cotton & writing Neenah only competes in the small premium segment of the UFS market Source: AFPA/RISI statistics and company estimates Demand (1.4%)/yr

11 Premium Fine Paper Market Smart 8% Wausau 11% Mohawk 26% Others 15% Super Premium Neenah #1 or #2 position COTTON SMOOTH LINEN LAID TEXTURE $ Share Premium Segment NP 40% Premium Neenah is the leader in premium segment with top selling brands and products across key categories Source: Based on company estimates and competitive research

12 Business Priorities Fine Paper Leverage market position to build upon successful business model Well-known, specified brands Selective distribution Purpose-built assets Reputation for excellence in service and quality Complete Fox River integration and deliver synergies Remaining site consolidation; one face to customer via ERP End-state synergies of $15 million per year Utilize proceeds from asset sales Pursue niche opportunities Neenah Green, luxury packaging, beverage labels, other Utilize strong cash flow generation to fund growth

13 Technical Products Specialty papers and substrates, with saturating, coating and other applications for a variety of end use markets

14 A highly-specialized diverse business-to-business segment; GDP-like growth in overall categories, but higher growth rates in niches and emerging markets Technical Products Global Markets SBU Product Lines Global Growth Filtration Transportation filters, others 4-6% Specialty Tape Specialty & industrial tape applications 3-5% Component Materials Graphics & Identification Coated abrasives, medical packaging, furniture backer, and release papers Décor, image transfer, durable print media, labels, security papers 2-4% 2-4% Wall Covering Specialized, non-woven based substrate 10 + %

15 Technical Products Neenah Sales Mix Business Unit Geography Component Materials Specialty Tape Asia RoW No. America Graphics & Identif. Wall covering Filtration Europe 2007 NP sales $400 million

16 Technical Products Core Competencies Base machine technologies allow for wide range of fit for use substrates Inclined wire and fourdrinier base papers Wet laid nonwovens with up to 65% synthetic addition Polyolefin films Extrusion-coated papers Laminates Supplemented by coatings and saturation for specific end uses Barrier, anti-slip, release, print, bond, anti-curl, heat transfer

17 Business Priorities Technical Products Use technology and customer intimacy to drive innovation, create barriers to entry and lock in relationships Improve margins with focus on cost reduction and mix optimization with shift to higher value products and markets Utilize expanded capacity to grow with customers in filtration and wall covering Evaluate acquisitions that can add value in existing and adjacent markets

18 Pulp Segment Bleached kraft pulp for use in manufacture of tissue and printing/writing papers

19 Pulp & Timberlands Pictou, Nova Scotia 270,000 MT/year mill capacity Supply contract with K-C Timberlands Sold 500,000 acres of timberlands in June 2006 for $140 million ~500,000 acres remain Recently announced intent to divest remaining pulp operations

20 Financial Overview

21 1 Excludes timberland sale gains in 2006 ($126mm) and 2007 ($6mm) and 2007 items for Terrace Bay litigation settlement charge($5mm), integration costs ($5mm), and reduced deferred tax expense due to German rate change Key Financials Continuing Operations $ millions Net Sales $535 $594 $991 EBIT ADJ. EBITDA % ADJ. EBITDA ROS Net Interest Expense Effective tax rate 39% 38% 29% E.P.S. 1 $1.51 $1.21 $2.07 Results reflect recent acquisitions that have been accretive to earnings

22 Segment Financials Continuing Operations $ millions Net Sales $991 $223 Pulp ADJ. EBITDA $78 $77 $121 $19 $535 $594 $367 Tech. $1 $15 $0 $15 $42 $184 $189 $222 $224 $401 Fine $68 $66 $63 $131 $ $6 -$4 -$3 Fine Paper base supplemented by German acquisition and improvements in pulp

23 Input Cost Pressures Pulp Oil FP Selling Price TP Selling Price Q = 1.00 q105 q205 q305 q405 q106 q206 q306 q406 q107 q207 q307 q407 Margin pressure due to rises in input costs outpacing selling price increases

24 Capital Spending Fine Paper $6 $5 $10 Technical Products Tech Products -Strategic 3 25 Pulp Corporate (mostly ERP) Total Capital Spending $26 $25 $58 Depreciation $26 $30 $45 Efficient asset base, with sustaining capital of $20-25 million. Added spending justified on benefits

25 Cash Flow Summary Cash Income from Ops $36 $42 $66 Chg in Working Capital (10) 5 - Terrace Bay Divestiture 19 Pension/Other (3) - 4 Cash from Operations $23 $66 $70 Capital Spending Strategic Actions (net) Dividends Net Chg in Cash/Debt (9) (68) (51) Cash flow used for strategic growth initiatives

26 Debt Summary (Year- end) year notes $225 $225 $225 Credit Lines- Drawn Term Loans 38 Other Total Debt $228 $283 $332 Debt/Adj. EBITDA Adj. EBITDA/ Net Interest Debt/Capitalization % 60% 53% Capital metrics improving

27 Equity Exchange Ticker Float Market Cap NYSE NP 14.8 million shares ~$400 million NP Peer Avg RUJ Indices S&P 600, Wilshire 5000, Russell Microcap Dividend $0.10/share per qtr /31/04 3/31/06 9/29/06 3/31/07 9/30/07 Current stock price reflects minimal value for pulp assets when applying normal multiples to paper profits

28 Looking Forward Fox River synergy delivery to gain momentum 2008 effective tax rate to decline Working capital improvements with ERP Potential uses of funds 2008 reverse/forward split share buyback Organic growth/incremental capital spending Acquisitions Pay down short-term debt Increase dividend

29 Summary Leading positions in premium & specialty paper markets Integration of recent acquisitions to yield benefits Transformation leading to improved returns, with remaining plans to exit pulp Strong cash flows and credit metrics providing flexibility and a base for growth Track record of executing strategy to drive value

30 Appendix

31 Reconciliation to Non-GAAP Measures NEENAH PAPER INC AND SUBSIDIARIES Reconciliation of Non-GAAP Disclosure Items (In millions, except per share data) For the Years Ended December 31, Earnings per Share- Continuing Operations $ 1.51 $ 6.43 $ 2.50 Add (subtract): After-tax gain on sale of woodlands - (5.22) (0.25) After tax loss on litigation settlement After tax integration costs Tax benefit of change in German statutory tax rates - - (0.58) Adj. Earnings per Share- Continuing Operations $ 1.51 $ 1.21 $ 2.07 EBIT- Continuing Operations $ 53.4 $ $ 66.9 EBIT- Discontinued Operations (84.2) (53.3) (44.9) Total EBIT (30.8) Add (subtract): Gain on sale of woodlands (125.5) (6.2) Loss on litigation settlement 5.2 Integration costs 4.7 Terrace Bay Impairment/Restructuring 59.8 Terrace Bay Losses on Sale/Pension Settlement/Other Total Adjustments to EBIT $ 59.8 $ (85.1) $ 48.6 Depreciation & Amortization- Continuing Ops Depreciation & Amortization- Disc. Ops Ops 3.4 Amortization of Stock-Based Compensation Adjusted EBITDA $ 56.8 $ 64.1 $ Adjusted EBITDA- Continuing Operations $ 77.8 $ 77.0 $ Notes: In accordance with generally accepted accounting principles in the United States ("GAAP"), reported income from continuing operations and earnings from continuing operations per diluted share include the after-tax effects of unusual and non-recurring items. We believe that by adjusting such reported amounts to exclude the effects of unusual and non-recurring items, the resulting adjusted operating income, adjusted net income and adjusted earnings per share are on a basis that reflects the results of our ongoing operations. Adjusted income from continuing operations and adjusted earnings from continuing operations per share are not recognized terms under GAAP and should not be considered in isolation or as a substitute for income from continuing operations, earnings from continuing operations per diluted share or any other performance measures derived in accordance with GAAP. Other companies may use different methodologies for calculating their non-gaap financial measures and, accordingly, the Company s non-gaap financial measures may not be comparable to their measures.