PAPER-BASED SOLUTIONS FOR NICHE MARKETS WORLDWIDE

Transcription

1 PAPER-BASED SOLUTIONS FOR NICHE MARKETS WORLDWIDE Henry C. Newell President and Chief Executive Officer Sherri L. Lemmer Senior Vice President and Chief Financial Officer Matthew L. Urmanski Senior Vice President, Tissue Michael W. Nelson Senior Vice President, Paper Perry D. Grueber Director Investor Relations Investor Presentation Boston September 18, 2012 New York September 19, 2012

2 Agenda Strategic Overview Hank Newell Financial Overview Sherri Lemmer Tissue Segment Matt Urmanski Paper Segment Mike Nelson Concluding Remarks and Q&A Hank Newell Boston / NY

3 Forward Looking Statements The matters discussed in this presentation concerning the company s future performance or anticipated financial results are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Reform Act of Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in these statements. Among other things, these risks and uncertainties include the strength of the economy and demand for paper products, increases in raw material and energy prices, manufacturing problems at company facilities, and other risks and assumptions described under Information Concerning Forward-Looking Statements in Item 7 and in Item 1A of the company s Form 10-K for the year ended December 31, The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Non-GAAP Financial Measures This presentation refers to certain non-u.s. GAAP financial measures. A reconciliation of those numbers to U.S. GAAP financial measures is provided on the Company's website at: Boston / NY

4 Boston / NY 2012 * Continuing Operations 4 Mosinee, Wisconsin Corporate Headquarters Mosinee, Wisconsin Technical Brainerd, Minnesota Technical Middletown, Ohio Tissue Harrodsburg, Kentucky Tissue Rhinelander, Wisconsin Technical Company Profile Founded in 1899 Provider of paper-based brands and solutions for Tissue and Technical Specialty markets Five manufacturing facilities in four states $850 million in revenues* 2,000 employees

5 Vision, Purpose and Goals Vision We will be the leading provider of paper based, environmentally sensitive brands and solutions to the markets we serve, driven by our business model of collaborative innovation Purpose A sustainable enterprise that delivers long-term attractive returns Strategic Goals (Five Year): 4-5% Revenue Growth (CAGR) +15% Return on Capital Employed Earn the Right to Accelerate Growth and Investment Boston / NY

6 Operating Strategies Focus on Strategic Markets Drive growth through Strategic Innovation Deploy Integrated Value Delivery System(s) aligned to strategic customers Build a Strategic Operations Platform to support market growth Instill Sustainable Business Practices Boston / NY

7 Management Team Henry C. Newell (54) President & CEO January 2012 Sherri L. Lemmer (45) Senior Vice President and Chief Financial Officer May 2012 Matthew L. Urmanski (39) Senior Vice President, Tissue March 2012 Michael W. Nelson (45) Senior Vice President, Paper March 2011 Patrick J. Medvecz (49) Senior Vice President, Operations March 2011 Boston / NY

8 We Operate in Two Business Segments Tissue Washroom solutions for away-from-home Towel and Tissue markets 41% % of consolidated LTM sales* Paper Paper-based solutions designed for technical requirements of global Food, Coated & Liner and Industrial & Tape markets 59% % of consolidated LTM sales* * Continuing operations for LTM ended June 30, 2012 Boston / NY

9 Paper Tissue Operations Aligned to Support Growth Harrodsburg, Kentucky Converting Harrodsburg, Kentucky Tissue Capacity Expansion Middletown, Ohio Brainerd, Minnesota Mosinee, Wisconsin Rhinelander, Wisconsin Boston / NY

10 Our Markets (Tons) World Paper & Board Demand ~400MM Packaging 50% Specialty ~25MM Industrial & Tape 24% Coated & Liner 5% Specialty 7% Tissue 8% Our Market Segments Tissue ~28MM Food 5% Printing & Writing 27% Sources: AWA, RISI, and Company Newsprint 8% At Home 77% Away-from-Home 23% North America 9% Boston / NY

11 Markets We Serve SECTOR TISSUE FOOD INDUSTRIAL & TAPE COATED & LINER Solutions Washroom Solutions Food Packaging & Processing Solutions Engineered Solutions Pressure Sensitive Solutions End Use Markets Educational Institutions Office Buildings Lodging Healthcare Food Service Consumer Packaging Bakeries Food Processors Food Service Consumer Packaging Construction Automotive Manufacturing Healthcare Consumer Packaging Alternative Energy Aerospace Medical Hygiene Product Categories Towel Products Tissue Products Dispensing Systems Greaseproof Applications Microwavable Applications Baking Papers Crepe Tape Base Coating & Laminating Base Abrasive & Specialty Saturating Base Interleavers Technical Specialties Silicone Coated Papers High Performance Release Liners Supercalendared Kraft Specialty Glassines Boston / NY

12 Wausau Paper Revenue 2011 $1.0B 2012 Expected $0.9B 5-Year $1.1B Print 33% Tissue 31% Food 16% Industrial & Tape 19% Coated & Liner 16% Tissue 41% Food 15% Industrial & Tape 18% Coated & Liner 15% Tissue 52% Transition 8% Executing Growth Strategy (Post Print) Boston / NY

13 High Intensity First Half Tissue Expansion EcoSoft Brand Repositioning Brainerd Commercialization Print Exit Q2 Specific Two Major Maintenance Outages Company-wide ERP Systems Conversion Boston / NY

14 Our Near-Term Outlook Tissue Expanding Margins Demand Recovery Gains through Operations Major Investment on Plan Customer Engagement in 2012 New Product Strategy: High Paper Stable Revenue Transition of Print & Color Outlook Selective Demand Improvement - Global Recovery Inconsistent Commercialization of Brainerd Tape Investment Boston / NY

15 Financial Overview Sherri Lemmer Boston / NY

16 Significant Actions in Capital Investments $27MM Brainerd Investment (Tape) $220MM Tissue Expansion Discontinued Operations Print & Color Sale Brokaw Site Shutdown and Sale Financing Sale of Timberlands Favorable Financing Construct Boston / NY

17 ($MM) Wausau Paper Net Sales $1,200 $1,032 $1,056 $1,035 $1,100 Revenue Growth Tissue: +3-4% (2012) $800 $ % CAGR +6% CAGR (5-year) Technical: +8% (2012) +$500MM Revenue (5 year) $ Print Exit Transition Net sales from continuing operations, unaudited See Appendix for reconciliation of Net Sales for Continued Operations Boston / NY

18 Financial Overview ($MM) $200 $100 $0 $112 Adjusted EBITDA $99 Tissue Expansion Technical Growth $ EBITDA Improvement Tissue Expansion Growth, Cost Structure & Mix Technical Growth Volume & Margin Improvement Adjusted EBITDA as originally reported Adjusted EBITDA from continuing operations See Appendix for reconciliations of Consolidated Net Sales from continuing operations and Adjusted EBITDA. Wausau Paper Adjusted Return on Capital Employed 5.7% 15% 2011 Target Five-year Target + 15% Adjusted ROCE Pressure as we Start-up Tissue Machine See Appendix for reconciliation of Adjusted ROCE Boston / NY

19 Financial Overview Growth Tissue: (Case Growth) 1H: +3% Paper: (Technical Volume) 1H: +8% $192 Net Sales ($MM) $216 $216 $213 $408 $429 Cash Generation Strong Sale of Premium Brands Brokaw Mill Closure and Sale Inventory Reduction Adjusted EPS 1H 2012 $.19 Q1 Q2 Q1 Q2 1H 1H $0.04 Adjusted Earnings Per Share Continuing Operations $0.11 $0.10 $0.09 $0.15 $0.19 1H 2011 $.15 Q1 Q2 Q1 Q2 1H 1H See Appendix for reclassification of Net Sales for Continuing Operations and presentation of Adjusted Earnings per Share reconciled to Earnings per Share Boston / NY

20 Balance Sheet Highlights ($MM) 6/30/12 12/31/11 Cash & Equivalents $33.1 $26.7 Net Working Capital $58.2 $71.0 Long-Term Debt $150.0 $127.7 Shareholders Equity $204.7 $196.2 Debt/Total Capital* 42.3% 39.4% Total Borrowing Base $325 Remaining Available Borrowing Capacity $175 * The calculation of Debt/Total Capital is not intended to be used for purposes of calculating debt covenant compliance Boston / NY

21 Print Exit Brokaw Mill Closure February 2012, Papermaking May 2012, Converting Net Cash Generation Target was $20MM in 2012 Projection at $35-$40MM for 2012 Boston / NY

22 ($MM) $46 $43 Capital Investment Funding Capital Spending $78 $162 $35 Expect $162MM 2012 Capital Spend F 2013F All Other Brainerd Investment Tissue Expansion $325MM Capacity under Existing Credit Agreements ($MM) Net Long-term Debt $117* $325 Capacity Secured to Fulfill Funding Obligations 6/30/12 Credit Capacity * Net of $9.9MM in cash & cash equivalents Boston / NY

23 Change in Net Debt ($MM) (1) See Appendix for reconciliation of EBITDA (2) See Appendix for details of the Other category Six Months Ended 6/30/12 Year Ended 12/31/11 EBITDA (1) $37.9 $29.8 Capital Expenditures, Net of Grants (73.6) (77.5) Change in Receivables Change in Inventories Change in Other Assets/Liabilities (18.7) (19.2) Proceeds on Disposals Other (2) (15.2) 22.1 Net Change in Debt $(15.9) $24.4 Beginning Net Debt $101.0 $125.4 Ending Net Debt $116.9 $101.0 Boston / NY

24 Second Half Outlook Cautious Economic Outlook New Tissue Machine Startup Brainerd Machine Commercialization Full Year Adjusted EPS $.39-$.41 per Share 1H $.19 $.10 $.09 Adjusted EPS 2H $.20-$.22 $.39-$.41 $.33 Q1 Q2 Q3 Q4 FY 12 FY Boston / NY

25 Value Drivers 2012 Five Year Target Tissue Growth (Cases) +3-4% +6% (CAGR) Operating Margin 13% 13-15% Paper Growth (Technical) +8% (Volume) +$500MM (Revenue) Operating Margin Cash Focus 7-8% Boston / NY

26 Tissue Segment Matt Urmanski Boston / NY

27 Tissue - Overview Annual Sales $343MM (LTM*) 8% share of North American AFH market Consistently achieving above-market growth and margins Broad line of towel, tissue, soap and dispensing systems Sold exclusively through distribution Major $220MM investment underway: Expand premium offering Raise product quality Reduce cost to manufacture * LTM ended June 30, 2012 Boston / NY

28 North American Away-From-Home Tissue (Tons) Demand 2.5MM Wausau Paper.2MM Lodging / Other 23% Food Service 40% Sources: AF&PA, RISI and Company Healthcare 15% Education 10% Office Buildings 12% Lodging / Other 26% Food Service 3% Healthcare 8% Education 27% Office Buildings 36% Boston / NY

29 Tissue Highlights 1 st Half Case Growth of 3.3% Case Growth (MM) +3.3% +4.0% Taking Share Q2 Adjusted Operating Profit $10.6MM Expanding Operating Margin Tissue Expansion on Plan 1H 11 1H 12 2H 11 2H 12 Adjusted Operating Profit ($MM) $10.4 $11.1 $10.6 $9.0 $7.7 $6.5 Q1 Q2 Q3 Q4 Q1 Q See Appendix for presentation of Adjusted Operating Profit reconciled to Operating Profit Boston / NY

30 Tissue Expansion $220MM Highly flexible manufacturing asset (conventional tissue, premium towel & tissue) Premium attributes equivalent to TAD (virgin) Fiber flexibility 100% recycled fiber or virgin Strong competitive cost position 75,000 TPY Boston / NY

31 Tissue Expansion Progress Boston / NY

32 Product Grade/Brand Strategy New Premium Brand High-end premium brand offering Uniquely green Broad application / technological advantage Premium Green Seal Traditional brand offering Proprietary and universal Boston / NY

33 Product Spectrum Current Future New Premium Brand DublSoft DublNature DublNature EcoSoft EcoSoft Boston / NY

34 Accelerated Growth Today Target DublSoft 5% Dubl-Nature 5% New Premium 10% EcoSoft 90% Tissue Expansion Project EcoSoft 50% Dubl-Nature 40% Boston / NY

35 EBITDA Improvement ($MM*) EBITDA Expansion Growth 40-50% Manufacturing Cost 30-35% Product Mix 20-25% 95% of Benefit $ % of Benefit $60 $78 $76 $64 $ Base Performance Accelerated Growth * Represents Adjusted EBITDA. See Appendix for reconciliation of EBITDA and 2017 represent estimates of Adjusted EBITDA. Boston / NY

36 Momentum into 2013 Continue to deliver above market rate growth Build on early successes of new product launch plans with customer base Deliver new paper machine on time and on budget Successful machine start-up and commercialization Boston / NY

37 Paper Segment Mike Nelson Boston / NY

38 Paper Overview Annual Sales $500MM (LTM*) Growing Technical Specialty Expanding Margins Despite Elevated Input Costs 2011 Strongest Technical Specialty Profit in 13 Years Exited Print & Color * LTM ended June 30, 2012 Boston / NY

39 FOOD Paper Segment INDUSTRIAL & TAPE COATED & LINER Markets Bakery & Restaurant Food Processing Consumer Packaging Markets Building & Construction Automotive & Electronics Diversified Manufacturing Markets Aerospace Composite Alternative Energy Electronics & Consumer 90% of Sales Customer Specific 800 Unique Grades Boston / NY

40 Market Position # 1 # 2-3 # 4-10 FOOD TAPE Sector INDUSTRIAL COATED LINER SUMMARY Worldwide Market Position Category Premium Greaseproof Baking Papers Full Range Premium - Value Saturating / Abrasives Coating Base Protective Interleave Micro Markets Composite Casting Niche Glassine Specialty Commodity TECHNICAL SPECIALTY North America B7 New Entrants Global Trend B7 Sources: AWA, Fisher and Company research Boston / NY

41 Performance Drivers Brand Owner Engagement Integrated Value Delivery MARKET CENTRIC Manufacturing Optimization First Quadrant Assets OPERATIONAL IMPROVEMENT Performance Drivers GLOBAL GROWTH Focus on Emerging Markets Leverage Product Leadership PRODUCT DEVELOPMENT Collaborative Innovation Premium Positioning Intense Focus on our Performance Drivers Boston / NY

42 Revenue Food Sector ($MM) NET SALES MARKET DRIVERS 13.5% CAGR Population Growth 2% Paper Replacing Film Consumer Preferences STRATEGY Collaborate with Brand Owners Drive Eco-Sensitive Solutions Accelerate Product Development Boston / NY

43 Applications for Food Products 2011 Baking Management Innovation Award recipient for Packaging and Handling Boston / NY

44 Revenue ($MM) Industrial & Tape Sector NET SALES MARKET DRIVERS 6.8% CAGR 3% Emerging Markets Infrastructure Expansion Domestic Growth STRATEGY Penetrate Europe and Asia Leverage Brainerd Investment Drive New Category Growth Boston / NY

45 Revenue ($MM) Coated & Liner Sector NET SALES MARKET DRIVERS (1.5)% CAGR 4% Global Economy Alternative Energy Durable Goods STRATEGY Grow in Target Segments Accelerate International Sales Optimize Mix Boston / NY

46 Paper Highlights Volume Growth Continues in Technical Print Transition Volume Ahead of Plan 1H Technical Growth of 8% Strong Cash Flows Inventory Reduction Print Exit Ahead of Plan Capacity Migrating to Technical Markets 62.6 $3.9 Technical Volume (tons) $5.6 $ $ Q1 Q2 Q3 Q4 Q1 Q Adjusted Operating Profit ($MM) $3.6 $2.0 Q1 Q2 Q3 Q4 Q1 Q See Appendix for presentation of Adjusted Operating Profit reconciled to Operating Profit Boston / NY

47 Paper - Technical Sectors* ($MM) 11% ROCE $21 Brainerd Rebuild Redeployed Paper Machine to Support Technical Growth % Capacity Increase for Technical +$62MM in Capital Employed After Investment 16% ROCE $35-$ * Rhinelander & Mosinee Boston / NY

48 Brainerd Transition to Technical % Machine Hours 60-70% 14% Tape Growth in 1H 45-55% Significant Trial Activity 27% 40% 47% 60-70% Technical by end of 2012 Attain Cost Targets in 1H Launched DuraTec Elite Q4 Q1 Q2 Q3 Q Boston / NY

49 Worldwide Technical Specialty (Tons) Food 1.2MM Specialized Commodity 65% Technical Specialty 35% Industrial & Tape 6.1MM Specialized Commodity 66% Technical Specialty 34% Coated & Liner 1.3MM Technical Specialty 52% Coated 16% Specialized Commodity 32% Our Markets: 8.7MM Specialty Focus: 3.7MM Wausau Capacity: 0.3MM Today s Specialty is Often Tomorrow s Specialized Commodity Sources: AWA and Company research Boston / NY

50 Paper - Technical Sectors Strategic Markets Margins Target Margins Technical Specialty Food 10-12% 10-12% Industrial & Tape 11-13% 10-12% Coated & Liner 0-3% 5-8% Specialized Commodity (0-8%) 0-2% GROWTH OPTIMIZE Core Growth Technical Total 5% 7-8% Boston / NY

51 Paper - Volume Growth 1H Outlook Target Growth Food 8% 3-4% 7-9% Industrial & Tape 6% 9-11% +10% Coated & Liner 11% 5-7% Optimize Boston / NY

52 Segment Summary Achieve above market growth in our Technical sectors Accelerate Brainerd transition to Technical Drive cash generation through Print exit and Technical growth Brainerd PM7 Capitalize on our New Capabilities and Technical focus Boston / NY

53 WHY WAUSAU? Investment Thesis Boston / NY

54 Investment Thesis Wausau: Grow at Target Margins 4-5% Revenue Growth (CAGR) 15% Return on Capital Employed (ROCE) Paper: Tissue: Earn the Right to Grow (ROCE Improvement) Stable Revenue 7-8% Operating Margins within 36 Months 16% ROCE Investing $220MM (High ROCE Business) +6% Case Growth (CAGR) 13-15% Operating Margins 20-25% ROCE ROCE: Return on Capital Employed (pretax) Boston / NY

55 Q&A Boston / NY

56 Upcoming Events: Q Earnings Release - Monday, October 29, 2012 Next Investor and Analyst Conference Call - Tuesday, October 30, AM Central

57 APPENDIX Boston / NY

58 2012 Guidance ($MM) Continuing Operations 2012 Targets Depreciation, Depletion and Amortization $45-$48 Interest Expense, net of Capitalized Interest $2-$3 Tax Rate 37% Capital Expenditures $162 Pension: Cash Contributions $25 Non-Cash Pension Expense $19-$21 Boston / NY

59 Reconciliations Net Earnings to Adjusted Net Earnings Q1 11 Q2 11 Q3 11 Q4 11 FY 11 Q1 12 Q2 12 GAAP Net Earnings (Loss) per Share $ (0.03) $ 0.07 $ 0.10 $ (0.58) $ (0.44) $ 0.20 $ (0.03) Discontinued Operations, Net of Tax (0.17) 0.07 Restated Earnings per Share (1) $ 0.00 $ 0.10 $ 0.11 $ 0.51 $ 0.72 $ 0.03 $ 0.04 Gain on Sale of Timberlands (0.47) (0.47) - - Contract Adjustment at Former Manufacturing Facility Capital-Related Expense Pension Plan Settlement Charges Adjusted Net Earnings per Share (1) $ 0.04 $ 0.11 $ 0.12 $ 0.05 $ 0.33 $ 0.10 $ 0.09 (1) Totals may not foot due to rounding differences Boston / NY

60 Net Sales and Tissue EBITDA ($MM) Net Sales to Net Sales - Continuing Operations WPP Q1 11 Q2 11 Q3 11 Q4 11 FY 11 Q1 12 Q2 12 Consolidated Net Sales $ $ $ $ $ 1,034.5 $ $ Net Sales from Discontinued Operations (57.2) (51.3) (53.3) (49.6) (211.4) (41.5) (3.5) Consolidated Net Sales - Continuing Operations (1) $ $ $ $ $ $ $ Reconciliation of Tissue Segment Adjusted EBITDA FY 08 FY 09 FY 10 FY 11 Operating profit $ 32.8 $ 49.5 $ 46.1 $ 31.4 Depreciation, depletion, and amortization EBITDA Capital-related expenses Adjusted EBITDA $ 60.1 $ 78.0 $ 76.2 $ 63.6 (1) Totals may not foot due to rounding differences Boston / NY

61 Reconciliations EBITDA to Adjusted EBITDA ($MM) EBITDA $ $ $ 29.7 Facility closure charges, net of accelerated depreciation Contract termination charge and other Capital related expenses Black liquor excise tax (13.5) Sale of non-core business (2.7) - - Pension plan curtailment charges Timberland sales (3.2) (7.9) (36.0) Adjusted EBITDA (1) $ $ 99.5 $ 82.4 Adjustment for discontinued operations (0.6) (1) Totals may not foot due to rounding differences Adjusted EBITDA from continuing operations, unaudited $ 81.8 Boston / NY

62 Reconciliations ROCE to Adjusted ROCE % ROCE 2011 ROCE -5.6% Facility closure charges 17.6% Capital related expenses and other 1.3% Timberland sales -7.7% Other 0.1% Adjusted ROCE 5.7% Boston / NY

63 Quarterly Reconciliations Operating Profit to Adjusted Operating Profit ($MM) Paper Segment Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Operating Profit (Loss) $ (1.4) $ 2.4 $ 5.6 $ (82.9) $ 13.3 $ (3.4) Discontinued Operations (13.0) 5.4 Contract Adjustment at Former Manufacturing Facility Capital Related Expenses Adjusted Operating Profit (1) $ 3.9 $ 5.6 $ 5.9 $ 0.7 $ 3.6 $ 2.0 Operating Profit to Adjusted Operating Profit ($MM) Tissue Segment Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Operating Profit $ 6.3 $ 8.7 $ 7.0 $ 9.4 $ 9.2 $9.1 Capital Related Expense Adjusted Operating Profit (1) $ 6.5 $ 9.0 $ 7.7 $ 10.4 $ 11.1 $10.6 (1) Differences in total due to rounding Boston / NY

64 Change in Net Debt Reconciliation of EBITDA Year Ended December 31, 2011 Six Months Ended June 30, 2012 Operating profit $ 62.2 $ 7.5 Earnings (loss) from discontinued operations, net of tax (57.1) 4.8 Tax impact on earnings of discontinued operations (31.1) 2.8 Depreciation, depletion, and amortization $ 29.8 $ 37.9 Reconciliation of "Other" Changes Year Ended December 31, 2011 Six Months Ended June 30, 2012 Compensation expense for stock-based grants $ 3.0 $ 1.5 Change in deferred taxes (23.3) (5.1) Change in accrued taxes Cash paid for taxes (1.2) (2.4) Dividends paid (5.9) (3.0) Gain on sale of business - (12.2) Gain on sale of assets (36.2) - Impairment and writedown of long-lived and other assets Other $ 22.1 $ (15.2) Boston / NY