TEKRA & TRIENT ACQUISITION Leaders In Technical Films Converting February 2020 © 2020 Schweitzer-Mauduit International, Inc.
Forward Looking Statements, Non- GAAP Disclosure, & Definitions This presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws that are subject to the safe harbor created by such laws and other legal protections. Caution should be taken not to place undue reliance on any such forward-looking statements because actual results may differ materially from the results suggested by these statements. These forward-looking statements are made only as of the date of this presentation. We undertake no obligation, except as may be required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical
experience and present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part I, “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the period ended December 31, 2018 and those described from time to time in our periodic and other reports filed with the Securities and Exchange Commission, including the 8-K filed in conjunction with this acquisition announcement Certain financial measures and comments contained in this presentation are “non- GAAP” financial measures, specifically measures which exclude one or more of the following: restructuring and impairment expenses, depreciation and amortization, interest expense, tax provision (benefit), capital spending, capitalized software expenditures, purchase accounting adjustments, and tax valuation adjustments. We believe that investors’ understanding is enhanced by
disclosing these non-GAAP financial measures as a reasonable basis for comparison of our ongoing results of operations The following terms/abbreviations are used throughout the presentation and are defined as follows: AMS - Advanced Materials & Structures segment, EBITDA - earnings before interest taxes depreciation and amortization, TPU - thermoplastic polyurethane, PET - Polyethylene terephthalate © 2020 Schweitzer-Mauduit International, Inc. 2
Transaction Summary Tekra and Trient are strategic additions to SWM’s technical films business • Leaders in technical films converting, focused on high-value applications in medical, graphics, electronics, and automotive Tekra / Trient • Annual revenue ≈ $100 million, ≈ 16% EBITDA margin Overview • 3% - 4% stand-alone long-term sales growth + sales synergy potential • Assets are a PE-owned carve-out Purchase Price • $155 million transaction value, subject to closing adjustments/fees & Timing • Expected to close in March 2020 • Expected to be accretive to adjusted EPS in year 1 (≈ 9 months of ownership) • Purchase accounting expenses (mostly customer relationships amortization) to be Financial assessed at close, will be excluded from adjusted EPS Impact • Estimated 2020 transaction and integration expenses of ≈ $2 million • Financed through existing credit facility, consolidated pro forma net
leverage (1) ≈ 2.7x (1) Net leverage is a non-GAAP financial measure and is defined as total debt less cash divided by trailing 12-month adjusted EBITDA, and is subject to certain adjustments per the terms of the Company’s credit agreement. © 2020 Schweitzer-Mauduit International, Inc. 3
Tekra and Trient Business Overview Technical film converting businesses, focused on high-value specialty applications in a diverse set of attractive end-markets Capabilities End- Markets Experience with a range of films and flexible 2019 Sales Breakdown materials: polyester/PET, polycarbonate, rigid vinyl, polystyrene, TPU, digital printing films ≈ $100 million Converting: slitting, sheeting, laminating, die cutting, kitting and packaging, clean room environment Coating: Customized solutions supported by extensive Medical R&D staff, proprietary and branded formulations Industrial / Other 25% Supports Critical Performance Features 28% Graphics & Clarity Matte / high-gloss finishes Moisture resistance Electronics Digital Media Dry erase Temperature resistance FDA compliance 10% 20% Anti-glare Multi-layer lamination Low iridescence Automotive Bonding Skin-to-skin contact Sound abatement 17% Anti-fog Ink
adhesion UV resistance Durability Pressure sensitivity Layered assembly Light diffusion Puncture resistance Vibration dampening © 2020 Schweitzer-Mauduit International, Inc. 4
High-Value Applications Similar to SWM, Tekra and Trient focus on critical components for a range of their customers’ specialty end-products Medical Automotive Diagnostic test strips: partners with medical OEM’s, Surface/display ehnancement: enhance appearances, beneficiary of health trends (e.g., glucose monitoring for mirror button adhesives, instrument clusters, interior LED diabetes) and disease control (e.g., Ebola) films, heads-up displays, lightweighting and safety trends Graphics & Digital Media Electronics Films for graphic printing/display: high visual and Substrates for flexible devices: membrane switch durability performance required, appliance overlays, high- components, conductive inks, flexible electronics, end digital printing, industrial formats digitization trend © 2020 Schweitzer-Mauduit International, Inc. 5
Strategic Fit & Synergies Key competitive advantages align with SWM; Capabilities complement AMS’s extrusion technology; Opportunity to leverage broader solutions set across customer base Competitive Adds complementary converting capabilities and broadens Advantages That Drive technical film portfolio Market Leadership - Acquisition adds a suite of converting capabilities that enhance SWM’s ability to Tekra & customize products, consistent with company-wide focus on customer intimacy; SWM Trient opportunities beyond AMS’s existing film operations Manufacturing - Acquisition broadens expertise and creates access to additional film technologies and markets Expertise þ - SWM’s global film capacity investments demonstrate track record of internationalizing acquired businesses; target’s facilities in Wisconsin Operational þ Excellence + additional opportunities Long-term cross-selling synergy potential accessing
Tekra/Trient customers, particularly Medical and Graphics, and vice versa Global - Graphics: AMS has sub-scale TPU film presence in end-market; Tekra and Capabilities ý Opportunities Trient serve many customers in high-end graphics and digital printing - Medical: AMS has presence, focused on woundcare and other niches; Customer Tekra and Trient bring relationships with large medical customers Intimacy þ © 2020 Schweitzer-Mauduit International, Inc. 6
Compelling Adjacency Acquisition fits SWM “sandbox” framework as an adjacency, further penetrating existing end-markets with new technologies End-markets/ Infrastructure & Add New Filtration Transportation Industrial Medical Tobacco Technologies Construction End-Markets Nets ✓ ✓ ✓ ✓ Films ✓ ✓ ✓ ✓ Similar assets & Fibers/Paper ✓ ✓ ✓ technologies (cost synergies) Non-Wovens ✓ ✓ ✓ Add New Expand capabilities and offerings in existing end-markets (commercial synergies) Technologies Converting TEKRA and TRIENT ✓ ✓ ✓ Last acquisition was “to-the-right”, with similar technologies driving strong cost synergies…Tekra and Trient is a downward adjacency, expanding our offerings in existing end-markets with commercial synergy potential © 2020 Schweitzer-Mauduit International,
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