Macquarie Securities Triple M Conference New York. June 11, 2015

Transcription

1 Macquarie Securities Triple M Conference New York June 11, 2015

2 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 Private Securities Litigation Reform Act of Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in this presentation. 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 in the appendix of this presentation. 1

3 Overview Manufacturer of towel, tissue, soap and dispensing systems for the Away-from-Home ( AFH ) tissue market Approx. 8% share of North American AFH Market Coast to coast distribution Broadest offering of Green Seal -certified, 100% recycled fiber products Only producer of premium 100% recycled fiber products 2

4 A history of innovation Overview Strategy driven by differentiated products, a unique dealercentric distribution model and supported by cost-effective papermaking First greenfield ATMOS enabled premium paper manufacturing in U.S. Awarded PPI s 2014 Most Innovative Product for new DublNature line Important new dispenser launches in

5 AFH Market Summary Wausau Paper s Focus Education & Government Facilities Commercial Office Buildings Lodging, Entertainment, Sports & Other Facilities Health Care Facilities AFH Major Competitors Georgia Pacific Kimberly-Clark SCA Wausau Cascades Commercial Office 12% Health Care 15% Education & Government 18% Lodging & Other 15% Food Service (e.g. napkins) 40% North American AFH Tissue Market 2.5 Million Tons Typical Annual Growth: +1-2% Sources: RISI, Sanitary Maintenance and Internal Estimates 4

6 Our Differentiated Product Strategy Unique Green offering that covers the entire product quality spectrum 5

7 Strategic Product Mix 52% 47% 42% Strategic Mix % of Total Cases Q1 Q2 Q3 Q4 Q Case volume up nearly 7% Strategic product shipments up over 12% from Q Strong pace continues on ATMOS based products sales within DublNature Dispenser driven product sales up nearly 11% over Q

8 Strategic Dispenser Program 700,000 Units Installed Annually Average 1 ½ Year Payback Key to Winning Artisan and DublNature High Margin Premium Product Accounts High Traffic Placements Generate Above Average Paper/Case Sales 7

9 Q Highlights On target with $10-11MM Q1 guidance Significant year-over-year Q1 improvement in EBITDA and EBITDA margin Strong revenue and shipment growth in Q1 - continue to outpace the market Expanded depth in management team with Sales & Marketing, Innovation and Converting operations additions 8

10 Q Financial Summary (MM, except per share data) Q1 15 Q1 14 Net Sales $84.2 $77.5 Case Volume Reported Earnings (Loss) per Share $0.00 ($0.09) Adjusted Loss per Share ($0.04) ($0.09) ($MM) $20 $10 $0 Adjusted EBITDA/Margin % $13.8 $14.9 $9.9 $10.1 $ % 11.1% 14.4% 16.6% 12.0% Q1 Q2 Q3 Q4 Q Adjusted Loss per Share, Adjusted EBITDA and Adjusted EBITDA margins are non-gaap measures and represent continuing operations only. See Appendix for reconciliation of Adjusted Loss per Share, Adjusted EBITDA and Adjusted EBITDA margins. 9

11 ($MM) $14 $7 $0 $5.6 Adjusted EBITDA Q to Q $0.3 $1.3 $3.3 ($0.4) $10.1 Q1 Q Sales '13 Price Sales Sales / Mix Sales Volume OperationsSG&A Q4 Q '14 Price& Volume Mix Financial Review Sales Price & Mix Benefit from 2014 price actions and improved strategic mix of products sold Improved selling price offset by unfavorable Canadian exchange rate impact of $1.0MM Sales Volume (cases) Quarter-over-quarter +7% Strategic products up 12% Support products up 2% Operations Operational improvements Benefits captured from Margin Enhancement Initiative SG&A Higher incentive expenses tied to growth of strategic business and improved year-over-year performance Adjusted EBITDA is a non-gaap measures and represents continuing operations only. See Appendix for reconciliation of Adjusted EBITDA. 10

12 Cash/Debt Utilization Strong focus on liquidity Used $5.6MM of cash in operating and investing activities vs. $14.1MM in same period of prior year Driven by: Improved EBITDA performance Focused effort in inventory / warehouse management resulted in: Q = $0.6MM inventory build vs. Q = $5.3MM inventory build Disciplined approach to capital spend Q = $2.9MM in cash spend vs. Q = $6.8MM in cash spend Cash Used in Operating & Investing Activities ($MM) $14.1 Q $5.6 Q

13 Cash & Debt at March 31 Cash: $3.7MM Secured Debt Structure Effective July 30, 2014: As of March 31, 2015 ($MM) $179.1 $175MM Term Loan (July 2020) $50MM Revolver (July 2019) $8.5MM drawn at March 31 Cost of Debt 6.6% Debt* *Total Outstanding Debt of $182.2MM, net of original issue discount 12

14 Margin Enhancement Initiative Process SOURCE MAKE SERVICE SELL OPERATIONS, WAREHOUSING, LOGISTICS & ADMINISTRATION PORTFOLIO PROFITABILITY Implementing Business Model Changes to Create EBITDA Run Rate Improvement of at least $30 Million by June 30, 2016 $18 Million to be delivered by end of 2015 Keys to Success: Aggressive Goals Aggressive Schedules Rigorous Routine No Sacred Cows 13

15 Cost of Paper 0% Middletown -3% -6% -9% % Paper Cost Improvement Significant progress on our Margin Enhancement PM3 PM3 Initiative -8.4% PM3 Conventional Middletown Conventional -4.5% ATMOS PM3 Atmos Improvements measure Q vs. the first half of 2014 Focused efforts on energy & water reduction, fiber yield improvement, and efficiency -12% -11.2% 14

16 MEI Examples SKU Optimization Finished Goods Inventory Reductions Warehousing Reductions Middletown Energy Usage Shipping Carton Inventories Converting Changeover Hours Kentucky PM3 Uptime % 15

17 2 nd Quarter 2015 Outlook (Compared to Q2 14) Indicator Comments Sales Price Shipments Fiber Costs Maintenance Outages Operations Base price increase and higher strategic mix Expect above market rate growth Modest increase in wastepaper pricing Annual outages cost Margin Enhancement Initiative Q EBITDA guidance range of $13MM to $14MM 16

18 Full-Year 2015 Outlook (Compared to FY 2014) Indicator Comments Sales Price Shipments Fiber Costs Operations Base price increase and higher strategic mix Expect above market rate growth Modest increase in wastepaper pricing Margin Enhancement Initiative FY 2015 EBITDA guidance range of $60MM to $63MM 17

19 Closing Comments Wausau Paper is an AFH Tissue Market Leader Uniquely Positioned to Deliver Value through Improved Profitability and Growth Excellent 2014 and YTD 2015 Progress Delivering Volume Growth and Margin Recovery Improving Earnings and Increasing Cash Flow is the Priority Near-term Bias Toward Debt Reduction 18

20 APPENDIX 19

21 Key Assumptions ($MM) est. Capital Expenditures $16.4 $13 Net Dispenser Spending $18.6 $21 Depreciation, Depletion and Amortization $41.3 $42 Interest Expense, net of Capitalized Interest $10.7 $14 Tax Rate (Normalized Book) (1) 35.7% 38% Pension: Non-Cash Pension Expense (Including Discontinued Operations/ Settlements) $1.0 $2.5 $1 - Cash Contributions 12.9 (2) $11 (2) (1) At December 31, 2014, pre-tax federal net operating loss carry forwards of approx. $126MM and a Cellulosic Biofuels credit of approx. $13MM to offset cash taxes paid (2) Includes $7.5MM in Q and $8.5MM in 2015 as a result of settlement agreement with the Pension Benefit Guaranty Corporation effective July 30,

22 Reconciliation of Unadjusted EBITDA to Adjusted EBITDA (1) (in thousands) Q Net earnings $ 442 Earnings from discontinued operations, net of taxes (238) Provision for income taxes 76 Interest expense and other, net 3,243 Operating profit 3,523 Depreciation, depletion, and amortization 10,441 EBITDA $ 13,964 Net sales $ 84,181 EBITDA margin 16.6% EBITDA $ 13,964 Credit for contract at former manufacturing facility (3,879) Adjusted EBITDA $ 10,085 Net sales $ 84,181 Adjusted EBITDA margin 12.0% Q Q Q Q FY 2014 Net loss $ (4,900) $ (3,828) $ (9,476) $ (308) $ (18,512) Loss from discontinued operations, net of taxes Provision (credit) for income taxes (2,357) (2,208) (5,734) 15 (10,284) Loss on early extinguishment of debt ,350-14,350 Interest expense and other, net 2,145 2,431 2,908 3,222 10,706 Operating profit (loss) (4,658) (3,498) 2,369 3,025 (2,762) Depreciation, depletion, and amortization 10,289 10,306 10,193 10,464 41,252 EBITDA $ 5,631 $ 6,808 $ 12,562 $ 13,489 $ 38,490 Net sales $ 77,507 $ 89,214 $ 95,423 $ 89,880 $ 352,024 EBITDA margin 7.3% 7.6% 13.2% 15.0% 10.9% EBITDA $ 5,631 $ 6,808 $ 12,562 $ 13,489 $ 38,490 Expense related to change in control provisions - 1, ,432 Expense related to severance benefit of former CEO - 1, ,642 Expense related to proxy settlement charge - - 1,150-1,150 Defined benefit retirement plan settlement charges ,455 1,516 Adjusted EBITDA $ 5,631 $ 9,882 $ 13,773 $ 14,944 $ 44,230 Net sales $ 77,507 $ 89,214 $ 95,423 $ 89,880 $ 352,024 Adjusted EBITDA margin 7.3% 11.1% 14.4% 16.6% 12.6% (1) Totals may not foot due to rounding 21

23 Reconciliation of Unadjusted Earnings Per Share to Adjusted Earnings Per Share (1) Q Net earnings per share $ 0.01 Earnings from discontinued operations, net of tax (0.00) Credit for contract at former manufacturing facility, net of tax (0.05) Adjusted net loss per share $ (0.04) Q Q Q Q FY 12/31/14 Net loss per share $ (0.10) $ (0.08) $ (0.19) $ (0.00) $ (0.37) Loss from discontinued operations, net of tax Loss on early extinguishment of debt, net of tax Expense related to change in control provisions, net of tax Expense related to proxy settlement charge, net of tax Expense related to severance benefit of former CEO, net of tax Defined benefit retirement plan settlement charges, net of tax Adjusted net earnings (loss) per share $ (0.09) $ (0.04) $ 0.01 $ 0.01 $ (0.10) (1) Totals may not foot due to rounding 22