Mativ Holdings, Inc. · NYSE:MATV

Mativ — Schweitzer Mauduit International — Investor Presentation (February 2014)

44 slides from Mativ's investor presentation, Feb 18, 2014

  1. Slide 1: Investor Presentation February 2014

    Investor Presentation NYSE: SWM February 2014

  2. Slide 2: Safe Harbor Statement

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Safe Harbor Statement This presentation may contain “forward-looking statements.” All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forwar

  3. Slide 3: Agenda

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Agenda Overview Operations & Products Customers End-Markets 3  Growth Catalysts Financials Summary

  4. Slide 4: Overview – Highlights

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Overview – Highlights A leading global supplier of highly engineered papers and other advanced materials to a diverse customer base CIGARETTE PAPER & RECONSTITUTED TOBACCO OPERATIONS (RTL): Global tobacco industry (80%+

  5. Slide 5: Overview – Segments/Products

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Overview – Segments/Products 5 Paper • 34% SWM share in the global tobacco paper industry (ex-China) • Profit driver is Low Ignition Propensity paper (LIP), a fire safety product/feature that has been mandated in North A

  6. Slide 6: Overview – Historical Financial Performance

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 6 (U.S. $ in millions) Adjusted EBITDA from Continuing Operations & Margin % Free Cash Flow from Continuing Operations Strong cash flow has enabled a nearly five-fold increase in dividends per share in last two years and

  7. Slide 7: Overview – Operational and Strategic Outlook

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Overview – Operational and Strategic Outlook 7 Monetization of key tobacco paper technology driving increased capital return to shareholders, and providing financial flexibility to diversify into highly profitable adjace

  8. Slide 8: Agenda

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Agenda Overview Operations & Products Customers End-Markets 8  Growth Catalysts Financials Summary

  9. Slide 9: Operations & Products – Infrastructure

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Operations & Products – Infrastructure 9 SWM has a global manufacturing infrastructure; DelStar’s strong U.S.-centric business will now have access to SWM’s global infrastructure, opening expansion opportunities China 9%

  10. Slide 10: Operations & Products – Cigarette Paper

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Operations & Products – Cigarette Paper SWM is the global leader in cigarette paper through focus on solving customer issues, collaborative relationships, leading innovation, and global capabilities 10 LIP technology is

  11. Slide 11: Operations & Products – RTL

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Operations & Products - RTL RTL offers 3 key benefits 1) Harmful Constituents Reduction – lower tar and nicotine delivery 2) Cost – RTL’s finished good price is cheaper than high-grade virgin tobacco 3) Flavor Control –

  12. Slide 12: Operations & Products – Filtration

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Operations & Products – Filtration 12 DelStar produces highly engineered filtration components; several niche products have secured strong footholds in water, industrial, and healthcare sub-segments Plastic Netting NALTE

  13. Slide 13: Agenda

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Agenda Overview Operations & Products Customers End-Markets 13  Growth Catalysts Financials Summary

  14. Slide 14: Customers – Tobacco

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Philip Morris International 14% PM - USA 11% BAT 15% Japan Tobacco 13% Imperial 7% China 12% Other 28% Customers – Tobacco 14 SWM’s extensive expertise in the engineering and production of specialty lightweight papers ha

  15. Slide 15: Customers – Chinese Joint Ventures

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Customers – Chinese Joint Ventures • SWM ownership: 50% (signed in 2011) • Expected start-up: 2014 • SWM equity contribution: ≈ $35 million • Potential Annual Net Income (SWM share): $8 - $10 million • Run-rate expected

  16. Slide 16: Customers – Filtration

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Customers – Filtration 16 DelStar, like SWM, has a culture of customer intimacy and innovation, resulting in co-development and proprietary R&D work for many of its top customers, which often leads to unique exclusivity

  17. Slide 17: Agenda

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Agenda Overview Operations & Products Customers End-Markets 17  Growth Catalysts Financials Summary

  18. Slide 18: End-Markets – Tobacco

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential End-Markets – Tobacco 18 Global Marketplace 2012: 6,377 billion sticks, +0.5% (down 1% excluding China) Source: Internal SWM estimates Am & Oceania 2012: 348 bns, -3.5% ~5.5% of total prod. Latin America 2012: 343 bns, +

  19. Slide 19: End-Markets – Tobacco: Global Positioning

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Global Positioning – RTL End-Markets – Tobacco 1 Share by volume, excluding China Source: Company filings, SWM management Global Positioning – Cigarette Paper1 SWM (U.S.) 34% Delfort (Austria) 28% Julius Glatz (Germany)

  20. Slide 20: End-Markets – Tobacco Marketplace Trend Impact on SWM

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential End-Markets – Tobacco 20 Marketplace Trend Impact on SWM LIP compliance fully adopted in North America and Western Europe 2010 - 2012, potential for global adoptions - SWM’s technology is global standard - Significant pr

  21. Slide 21: End-Markets – Filtration (DelStar) Water Filtration

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential End-Markets – Filtration (DelStar) 21 Water Filtration The global reverse osmosis (RO) market is growing in excess of 10% per year, with Asia region forecasted to grow at 12% and Middle East / North Africa region at 15%

  22. Slide 22: End-Markets – Filtration (DelStar) Other Filtration

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential End-Markets – Filtration (DelStar) 22 Other Filtration Other liquid, fuel, and air filtration, primarily in automotive and aerospace, exhibit growth rates in the 5% - 7% range due to expansion of China and India and a gl

  23. Slide 23: Agenda

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Agenda Overview Operations & Products Customers End-Markets 23  Growth Catalysts Financials Summary

  24. Slide 24: Growth Catalysts – Highlights

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Growth Catalysts – Highlights • Currently only ~17% of global cigarette consumption is under LIP regulation • Several countries examining regulations, could adopt in next 2 – 5 years; SWM has no control and limited visib

  25. Slide 25: Growth Catalysts – LIP

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Growth Catalysts – LIP • Potential future LIP adoption driven by governmental regulation - Only viable and accepted technology - Endorsed by World Health Organization • High-margin product driven by technology - Extensiv

  26. Slide 26: Growth Catalysts – LIP

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Growth Catalysts – LIP • North America LIP regulation effective in 2010 • EU LIP regulation effective in 2011 - 2x North American market size • Next likely regulatory actions: Brazil, Japan, South Korea, Russia and Turke

  27. Slide 27: Growth Catalysts – China

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 27 Growth Catalysts – China • China dominates global tobacco industry with 40% of consumption • Chinese smokers are ‘trading up’ • Premium’s segment share was 5% in 2006 and is expected to reach 16% by 2016 • Shift away

  28. Slide 28: Growth Catalysts – Filtration (DelStar)

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 28 Growth Catalysts – Filtration (DelStar) • Revenue growth expected in the 8% - 10% range for next 5 years – General demand for RO • China is expected to grow 4x by 2020…Africa, India, Middle East – General demand for n

  29. Slide 29: Growth Catalysts – Acquisitions

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 29 Growth Catalysts – Acquisitions SWM and DelStar have identified several potential bolt-on acquisitions to build on DelStar’s filtration product portfolio and technologies; opportunistic acquisitions in specialty paper

  30. Slide 30: Agenda

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Agenda Overview Operations & Products Customers End-Markets 30  Growth Catalysts Financials Summary

  31. Slide 31: Financials – Capital Allocation Strategy

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential • Tobacco business • Selective tobacco-related investments - Products (LIP), Geographies (China) - Operational Improvements - Industry Consolidation • Diversification and acquisitions • SWM/DelStar collaborative internal

  32. Slide 32: Overview – Historical Financial Performance

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 32 (U.S. $ in millions) Adjusted EBITDA from Continuing Operations & Margin % Free Cash Flow from Continuing Operations Strong cash flow has enabled a nearly five-fold increase in dividends per share in last two years an

  33. Slide 33: Financials – Recent Results

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential (1) GAAP Net (Loss) Income includes restructuring and impairment expenses. (2) Excludes restructuring and impairment expenses, income tax valuation adjustments, provision for losses on business tax credits and purchase a

  34. Slide 34: Financials – Return on Invested Capital

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 20.6% 23.5% 24.9% 0% 3% 6% 9% 12% 15% 18% 21% 24% 27% 30% 2011 2012 2013 34 Financials – Return on Invested Capital (Excluding Impact of DelStar) Return on Invested Capital (1) well in excess of SWM’s Cost of Capital dem

  35. Slide 35: Financials – Capital Structure & Liquidity

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 2013 Cash Uses: • Capital spending: $29 million • Dividends: $40 million (currently $1.44/share) • Acquisition: $231.3 million for DelStar (1) Net Debt (Cash) is defined as Total Debt less Cash & Cash Equivalents. (2) Ne

  36. Slide 36: Financials – 2013 Review & 2014 Outlook

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 36 • Good operational and financial performance despite difficult tobacco environment • Revenue of $773 million, down slightly • Adjusted EBITDA from Continuing Operations of $213 million • Adjusted EPS from Continuing O

  37. Slide 37: Agenda

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Agenda Overview Operations & Products Customers End-Markets 37  Growth Catalysts Financials Summary

  38. Slide 38: Summary – Investment Considerations

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Summary – Investment Considerations 38 Execution, customer intimacy, and technology are our foundation for success and provide strong financial footing for future growth, despite a challenging 2014 outlook Cash Flow from

  39. Slide 39: Appendix / Additional Slides

    Appendix / Additional Slides 39

  40. Slide 40: Manufacturing Cost Components – 2013 (Pre-DelStar)

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Manufacturing Cost Components – 2013 (Pre-DelStar) 40

  41. Slide 41: SWM Revenue Trends

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential SWM Revenue Trends Revised to reflect continuing operations 41 (1) Net Sales at Constant Currency from Continuing Operations is a non-GAAP measure that excludes the year-over-year impact of exchange rate differences. A r

  42. Slide 42: Capital Spending

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Capital Spending 42 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 2000 2002 2004 2006 2008 2010 2012 M il li o n s Average B a n d e d Ci g a ret te P a p e r L T RI N o . 3 P D M R e stru c tu ri n g Bra z il # 6 P M P h

  43. Slide 43: Reconciliations of Non-GAAP Measures

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential Reconciliations of Non-GAAP Measures Certain financial measures and comments contained in this presentation are “non-GAAP” financial measures, specifically measurements which exclude currency impacts, restructuring and i

  44. Slide 44: Reconciliations of Non-GAAP Measures - Continued

    © 2014 Schweitzer-Mauduit International, Inc. All Rights Reserved. Confidential 44 Reconciliations of Non-GAAP Measures - Continued Certain financial measures and comments contained in this presentation are “non-GAAP” financial measures, specifically measurements which exclude currency impacts, rest

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