Orchids Paper Products Company
Orchids Paper Products — Investor Presentation (May 2015)
25 slides from Orchids Paper Products's investor presentation, May 5, 2015
Slide 1: Investor Presentation May 2015
. sx Paper Products Investor Presentation May 2015,
Slide 2: Cautionary Statements
Cautionary Statements a Forward-Looking Statements This presentation contains forward-looking statements that involve certain contingencies and uncertainties. The Company intends these forward- looking statements to be covered by the safe harbor provision for forward-looking statements contained in
Slide 3: Introduction to Presenters
Introduction to Presenters or™coc Jeffrey S. Schoen President and Chief Executive Officer, Director e President and CEO of Orchids since November 2013 e Joined the Orchids Board in February 2007 and served as Chairman from May 2013 to November 2013 e Former Executive VP at Cumberland Swan Holdings,
Slide 4: Company Overview
Company Overview Our vision is to be a customer-focused, integrated national supplier of private label tissue products across all quality tiers Growth Focused Market Leading Customers — ” “owe Eel FAMILY? DOLLAR. $150 30.0% 1 zo-o% Walmart >.< 10.0% | 0.0% 2014p) wal TREE lems Net Sales Adjusted EBI
Slide 5: Orchids Transformation
Orchids Transformation ‘+ Jeffrey Schoen appointed President and CEO | November 5, 2013 Fabrica nitiates quarterly di Publi Offering ‘+ Initiated manufacturing expansion plan at Pryor to upgrade paper making and * Entered West Coast through acquisition of ‘* Announce plans for Eastern Expansion in S
Slide 6: Compelling Growth Opportunity
Compelling Growth Opportunity Sa * Expanding National Position Expanding presence and private label penetration in the Southwest U.S. through the Fabrica transaction Focusing on continued penetration in high growth markets, accelerated by the Southeastern Expansion * Capitalizing On Positive Secular
Slide 7: Key Investment Highlights
Key Investment Highlights 6 Capitalizing on Favorable Industry Trends e Ample Opportunity to Grow Share in the Fragmented Tissue Market 3] Versatile Product Capabilities with Low-Cost Platform Established Customer Relationships and Distribution 6 National Supplier of “At-Home” Tissue Products 6 Expe
Slide 8: Capitalizing on Favorable Industry Trends
Capitalizing on Favorable Industry Trends Compound Annual Population At-Home U.S. Tissue Growth(.2) Shipments) Private Label Tissue Sales‘) viv % Tons (millions) Gin billions) 1.3% 1.20% 1.2% 3 1.1% aiers 5 1.0% . 0.9% 0.86 Be 0.8% | 0.76 0.7% 0.6% | 2010-2014 -2014- 2020E 2010 2011 2012 «2013-2014
Slide 9: Ample Opportunity to Grow Share in the Fragmented Tissue Market
Ample Opportunity to Grow Share in the Fragmented Tissue Market Sa <1% Competitors Soundview Orchids Irving Kruger 2% other Sofidel Cascades 2% 4% Royal ‘4% Atlas Clearwater 6% First Quality T% Georgia Pacific 32% Total: 5.5 million tons RED At-Home U.S. Tissue Capacity) Parent Roll Capacity Additio
Slide 10: Versatile Product Capabilities
Versatile Product Capab Platform © Providing high quality products that support customer brand recognition Mexicali facility expands product capabilities into Premium and Ultra-Premium tiers ¢ Freight advantage in attractive demand regions © Cost competitive operations due to vertically integrated m
Slide 11: Established Customer Relationships and Distribution Channels
Established Customer Relationships and Distribution Channels SO yv Strong relationships with market-leading customers v Shift towards discount retailers v Dollar and variety stores sales have grown at an annual rate of 4.8% from 2013-20180) v Greater shift towards premium and ultra-premium tiers wit
Slide 12: National Supplier of "At-Home" Tissue Products
National Supplier of “At-Home” Tissue Products SO Barnwell, South Carolina / Distribution locations Expansion allows us to pursue national customers as well as branch into new retail channels QRGHIDS 12
Slide 13: Low-Cost Flexible Manufacturing
Low-Cost Flexible Manufacturing e Production of high quality tissue products with short production times across all quality tiers e Vertically integrated facilities contributes to competitive position in the marketplace e Able to use both virgin and recycled fibers to control costs e Proximity to ta
Slide 14: Orchids Capacity Growth
Orchids Capacity Growth Converting Capacity Tons (000s) 132 Barnwell, SC 75 Barnwell, SC ‘Startup Line 9 == " . ; Qs Q2'15 415 Q2'16 Total Integration™ 117% 110% 126% 142% 103% Parent Rolls 76,800 93,800 93,800 93,800 128,800 Q1'15 - Startup Paper Machine 5 Q1'17 - Startup Paper Machi Pryor, OK Barn
Slide 15: Experienced Management Team Driving Growth
Experienced Management Team Driving Growth Director Engineering & Reliability CFO Keith Schroeder V.P. Sales & V.P. Operations fit Board of Directors STENINE Former Vice President of Kaiser-Francis Oil Company El Senior executive leadership experience in sales EPS e- ey trom 2004 to 2006, and the Vi
Slide 16: Financial Summary
Financial Summary
Slide 17: Strong Financial Track Record
Strong Financial Track Record Net Sales by Product ($M ions) $175.0 $150.0 $125.0 $100.0 $75.0 $50.0 $25.0 $0.0 + 2010 2011 2012 2013 2014PF” = Converted Product = Parent Rolls Tons Produced Converted a = mm waa =e = es | ger Pd 7
Slide 18: Strong Financial Track Record (Cont'd)
Strong Financial Track Record (Cont’d) Adjusted EBITDA ($1 $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 apg mms Adjusted EBITDA"? 2014PF om Adjusted EBITDA as a % of net sales** (2). bre Form for Fabrica tarcaton a tte trasaston Pad scared on January 1, 2084 (D Steappencic fr lajutea £81704 r
Slide 19: Capital Investments Drive Growth
Capital Investments Drive Growth SO Net Sales & Capital Investments ($Millions) $180.0 157.4 $160.0 * $140.0 $120.0 $100.0 $90.2 eo & Paper Machine 5 $80.0 Automation, sees es es Converting Line & Paper Machine 4 aneces $40.0 Investment — $20.0 $0.0 2004 = 2005-2006 «= 2007, «Ss 2008 «= 2009S «2010S
Slide 20: Return On Invested Capital and Free Cash Flow
Return On Invested Capital and Free Cash Flow 2) Return from Pryor Dollars ($Millions) cer or not yet reflected in $30.0 5280 16% 14% $25.0 12% $20.0 10% oc $15.0 7.4% g ne - 8% Sse Ss = $12.6 6% $10.0 $9.7 4% $5.0 2% $0.0 0% 2010 2011 2012 2013 2014PF mes Free Cash Flow —e= Adjusted ROIC Net Levera
Slide 21: Consistent Dividend Growth
Consistent Dividend Growth Ne Quarterly Dividend / Share $0.40 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 Poe $0.30 gies $0.25 $0.20 $0.20 $0.20 $0.20 $0.20 $0.15 $0.10 $0.10 $0.10 $0.10 $0.05 | | | $0.00 FQU'11 FQ2'11 FQ3'11 FQ4'11 FQ1'12 FQ2'12 FQ3'12 FQ4'12 FQ1'13 FQ2'13 FQ3'13 FQ4'13
Slide 22: Recent Developments - Press Release (4/20/15)
Recent Developments - Press Release (4/20/15) | e Announced plans to build an integrated tissue paper facility in Barnwell, SC — Includes a 35k-40k ton per year paper machine and two converting lines — Ramp up through 2015 and full operation by beginning of 2017 — Total expected investment of $110-$
Slide 23: Appendix
Appendix
Slide 24: Balance Sheet (12/31/14)
Balance Sheet (12/31/14) Assets cash Accounts Receivable, Net Inventories, Net Income Taxes Receivable Prepaid Expenses Receivable from Related Party VAT Receivable Other Current Assets Deferred Income Taxes Net Property, Plant, and Equipment Intangible Assets and Goodwill Deferred Debt Issuance Cos
Slide 25: Income Statement & Adjusted EBITDA Reconciliation
Income Statement & Adjusted EBITDA Reconciliation CorcNcV¥V,_ Year Ended December 31, 2010 2011 2012 2013 2014 (Actual) 2014 (Pro Forma) Converted Product Net Sales 8 74078 $ gig49 0S 9050s $103,611 «= $= 338382 $153,059 Parent Roll Net Sales 12.426 15,g94 10,314 6,763 4342 4342 Net Sales 92,508 97,
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