Filtration Commercial and Consumer Fine Papers. Backings (Tape & Abrasives) Other Specialty Materials (Labels, Coated Covers, etc )

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2 Filtration Commercial and Consumer Fine Papers Premium Packaging Digital Transfer Media Paper Gift Cards & Packaging High End Spirits Labels Backings (Tape & Abrasives) Other Specialty Materials (Labels, Coated Covers, etc ) 2

3 Enhance leadership in core categories Transportation filtration Coated backings Fine papers Total Shareholder Return % CAGR ( ) 29% Capital-efficient investments in growing markets Organic and M&A Filtration Premium Packaging Digital transfer 13% 16% NP R2000 S&P500 Sound financial position and attractive shareholder returns Strong balance sheet Increasing dividends $28 NP Stock Price $85 $60 $62 $43 $

4 North American transportation filtration capacity expansion U.S. laminating acquisition adding to premium packaging capabilities European digital transfer media acquisition 4

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6 Leading Positions in Defensible Niche Markets High value, growing specialty markets Long customer qualifications - strong barrier Our media is a key performance driver, but a small part of product cost Broad Range of Technical Abilities Multiple technologies and chemistries Proprietary formulations & strong dark IP Leading performance and innovation Strong customer relationships with long qualification periods Innovative offerings from a global footprint Long-term joint development relationships Strong technical support and service 6

7 Consolidated global market growing ~4%, with tight global capacity Products include air, fuel, oil and cabin air filters for cars and trucks, with >80% of sales to after-market More demanding engines requiring higher performing filters Net Sales Organic CAGR 7% '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 ' Growth consumed European capacity; world class US asset started up in 2017 Common global customers and competitors Five-year ramp up to $80 mm EOC sales, supporting historic growth rate Asia an exciting future opportunity Global Transp. Filtration Market/Shares ~ US $1 billion Other Neenah H&V Ahlstrom Present in fast-growing markets including water, industrial, and beverage filters Europe NAFTA Asia RoW 7

8 Sizeable global category with media primarily used in tapes and abrasives Markets generally grow with GDP Focused on performance niches requiring downstream applications, opportunity to gain share overseas Smaller, specialty markets include digital transfer, labels, security, décor, and others Markets generally growing at GDP+ Saturating and coating know-how used to impart unique characteristics 8

9 Based in the Netherlands, Coldenhove is a leading producer of dye sublimation media used for digital image transfer for clothing, sportswear, and other materials Complementary technologies and geographies that expand our digital transfer platform and global customer base Combined with our existing heat transfer business, provides Neenah leadership in fast-growing ~$200 million digital transfer market Purchase price of ~$45 million equivalent to pre-synergy EBITDA multiple of ~7.5x Immediately accretive, sales of ~$45 mm and EBITDA of $6 mm Synergies (purchasing, sales, manufacturing, new products) to further grow returns Digital Transfer Market ~$200 million Neenah 28% Others 72% 9

10 20% 18% 16% 14% 12% 10% 8% 6% $514 $464 $414 $364 5 Yr CAGR > 8%/yr $353 $404 $429 $466 $502 14% present in growth markets gaining share through performance, innovation and geographic expansion investing organically and through M&A $314 $264 $214 11% 12% 13% 14% 11% mix enhancement, led by profitable and faster growing filtration products $164 cost efficiencies and scale $ Net Sales Adjusted EBIT % Excluding U.S. Filtration start-up R&D investments driving new or improved products valued by customers 2017 reflects temporary impact of US filtration start-up 10

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12 Leading Brands Creating image and leading brand equity pulls demand Demonstrated pricing ability to recoup input costs over time Best in Class Manufacturing Capabilities Unique purpose-built assets able to provide fast, flexible and low cost offerings at highest quality Specialty coating, saturation, colors and textures allow creation of a unique and customized breadth of portfolio Go To Market Innovation Design and rapid prototyping, provides customers a more holistic solution and create barriers for competitors Able to replicate short lead times with outstanding service 12

13 Consolidated $650 million niche market of premium textured and colored papers Neenah 63% Others 18% Mohawk Fine Papers 19% Neenah is the clear market leader in both commercial and consumer channels Uses include high-end commercial print applications, marketing collateral and wellknown brands at retail Market Size ~$650 million Market is pressured by electronic substitution 13

14 Beauty 49% Alcohol 29% Retail/ Other 22% Premium niche market growing 3-5% annually Products include spirit & wine labels, premium folding board, luxury box wrap, and others Targeting beauty, alcohol and retail categories; largest opportunity in beauty products Paper (gift) cards growing as green alternative to plastic. Recent investment to accelerate growth. $450 million addressable market Shares Fine Paper asset base with high quality and texture/color capabilities to provide customers preferred products unique to their brands New Neenah Design Center helping customers visualize final products more quickly and accelerate time to commercialization 14

15 $455 $452 $436 $443 $428 14% 14% 16% 16% 15% Net Sales Adjusted EBIT % 40.0% 38.0% 36.0% 34.0% 32.0% 30.0% 28.0% 26.0% 24.0% 22.0% 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% strong growth in fragmented packaging market and in digital and wide format categories with recent investments in capabilities potential for small, consolidating acquisitions stable mid-teen EBIT margins with brand equity that supports pricing through input cost cycles efficient cost position and high ROIC substantial cash generation 15

16 Consistent, profitable growth Return on Capital Focused Flexible and prudent capital structure Attractive shareholder returns 16

17 Our businesses provide substantial cash flows that we ve deployed in a balanced manner to result in: Return to Shareholders $140mm Double digit earnings growth High Return on Capital Acquisitions $250mm Increasing cash returns to shareholders Value-Adding Organic Capital $150mm Strong balance sheet Market-beating shareholder returns Five-year key cash deployment 17

18 1100 Net Sales 19.0% 12.0% 10.0% 8.0% 6.0% 4.0% % Annual Growth % 6% 10% Adjusted EBIT % $840 $782 11% 11% $888 12% $942 13% $980 * 11% 17.0% 15.0% 13.0% 11.0% % 2.0% 0.0% % Sales Adj. EBIT Adj. E.P.S Five-year sales growth driven by share gains, new products, price/mix improvement and acquisitions Adjusted E.P.S. $2.87 $3.21 $3.70 $4.54 * $ results impacted by impact of U.S. filtration start up *U.S. Filtration start-up impact 18

19 Profitable growth 12% 13% 12% 13% Continual focus on asset efficiency and footprint optimization Disciplined organic capital spending 10% WACC ~ 7-9% Value-adding acquisitions (and divestitures) Component of compensation metrics * *2017 U.S. Filtration start-up impact 19

20 Strong cash generation keeping Debt/EBITDA below targeted range of 2 to 3x (even with organic capital investments and acquisitions) $175 mm bond due in 2021; 5.25% rate and Ba3/BB rating Debt ($ millions) $ x $228 $229 $ x 1.6x 1.4x $ x Debt/ 2 EBITDA 1.5 Short-term debt primarily from existing ABL (sized at $200 million) Capital structure and credit availability provides significant flexibility to act on opportunities 0 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Bonds S-T Debt 0 20

21 Strong business cash flows, compounded with acquisitions Favorable cash tax position with prior period R&D tax credits, US tax changes to provide future $3-5 mm/yr benefit Well-funded pension plan Efficient asset base; capital spend 3-5% of sales; maintenance spend < $20 mm Cash From Operations $84 $95 $111 $116 $ * Priority on highest returning investments Organic initiatives Value-adding M&A Committed to cash returns via attractive dividend. Five-year compound growth rate of ~20% Authorized $25 mm stock buyback plan Dividends per share 0 $0.70 $1.02 $1.20 $1.32 $1.48 $ *2017 includes US filtration asset start up 21

22 All employees have a component of pay that is performance-based Management required to hold a multiple of salary in stock (4-6 times) Majority of pay is performance-based (CEO = 70%) Return on Capital Total Shareholder Return (vs. Russell 2000) Revenue Growth Earnings per Share Performance Share Metrics 22

23 Focused on growing, profitable and defensible niche markets, with bias to performance-based technical products Active and disciplined process with dedicated resources. Ideas come from robust network of sources Most targets sized between $50 and $250 million of sales Expect strategic fit to unlock synergies Strategic Touch Points Products/ End Markets Customers Technologies Geographies 2013 Southworth (Fine Paper) 2014 Crane (Filtration) 2015 FiberMark (Packaging, Other) 2017 Hazen (Packaging) 2017 Coldenhove (Perf. Matls) Effective process leading to demonstrated record of value-adding deal execution and integration and a continued pipeline of targets 23

24 Leading positions in defensible and profitable core categories generating cash and double digit Return on Capital Catalysts to enhance organic growth Transp. Filtration geographic share gains Adjacent technical product markets Premium packaging expansion Financial strength and flexibility to act on additional attractive opportunities Track record of value-adding capital deployment Technical Products Technical Products Fine Paper & Packaging Fine Packaging & Paper Neenah Today Neenah Future 24

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26 Continuing Operations $ millions GAAP Operating Income $ 82.6 $ 86.6 $ $ $ Acquisition/Integration/Restructuring Costs Pension/Insurance Settlement/Other (2.6) Adjusted Operating Income $ 83.7 $ 92.6 $ $ $ Depreciation & Amortization Amort. Equity-Based Compensation Adjusted EBITDA $ $ $ $ $ Earnings (Loss) per Share $ 2.91 $ 3.99 $ 3.53 $ 4.26 $ 4.68 Acquisition/Integration/Restructuring Costs Prior Period R&D Tax Credits (0.08) (1.00) (0.07) Tax Adjustment for Indefinite Reinvestment (0.24) TCJA and Other Tax Adjustments (0.08) Pension/Insurance Settlement/Other (0.10) Adjusted Earnings per Share $ 2.87 $ 3.21 $ 3.70 $ 4.54 $ 4.32 Results for year ended December 31, 2013, include integration and restructuring costs of $0.4 million, a post-retirement benefit plan settlement charge of $0.2 million and costs related to the early extinguishment of debt of $0.5 million. Results for the year ended December 31, 2014, include integration and restructuring costs of $2.3 million, a pension plan settlement charge of $3.5 million and costs related to the early extinguishment of debt of $0.2 million. Results for the year ended December 31, 2015, include integration and restructuring costs of $6.5 million. Results for the year ended December 31, 2016, include integration and restructuring costs of $7.0 million and a pension plan settlement charge of $0.8 million. Results for the year ended December 31, 2017, include integration and restructuring costs of $1.3 million, a pension plan settlement charge of $0.6 million and Insurance Settlement of ($3.2). 26

27 Statements in this presentation which are not statements of historical fact are forwardlooking 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 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 27

28 Visit Our Website: Bill McCarthy VP Investor Relations and Corporate Analysis 3460 Preston Ridge Road Suite 600 Alpharetta, GA Phone: (678)