Neenah Announces Refinancing Plans and Q2 Update
June 16 2020 - 8:30AM
Business Wire
Neenah, Inc. (NYSE:NP) announced today that the Company is
seeking to refinance its $175 million of unsecured Senior Notes
which are due in May 2021. The Company anticipates refinancing the
Notes with the proceeds of a new $200 million Term Loan B facility
with a tenor up to seven years.
The objectives of the refinancing are to increase the Company’s
financial flexibility and extend its weighted average debt
maturity. Terms of the potential refinancing will be disclosed upon
the completion of the transaction, which is expected later this
month. The proposed refinancing is subject to market and other
conditions, and there can be no assurance that it will be
completed.
In conjunction with the intended refinancing, the Company is
providing an update on expected second quarter results. Key items
are as follows:
- Year-on-year net sales are expected to decline at the top end
of the 30 to 40 percent range indicated on the Company’s last
earnings call. The decline in net sales for the first two months of
the second quarter was 41 percent, with Technical Products net
sales down 32 percent and Fine Paper & Packaging net sales 53
percent lower.
- While market conditions remain fluid, sales comparisons appear
to have begun to improve modestly in June with the reopening of
global economic activity, and are expected to further improve in
the second half of the year.
- To manage inventories and costs in line with the lower sales,
the Company is taking additional manufacturing downtime and has
implemented further spending reductions. The negative impact on
operating income in the second quarter from the added downtime, due
primarily to unabsorbed fixed costs, is approximately $4
million.
- Liquidity at the end of May of approximately $190 million
remained in line with expected levels and cash from operations in
the second quarter is expected to be robust due to careful control
of working capital.
- In light of the global macroeconomic uncertainties brought on
by the COVID-19 pandemic, the Company has begun to analyze the
carrying values of its assets and to assess whether non-cash
adjustments may be required to write down the value of certain of
these assets in the course of preparing financial statements for
the second quarter.
- The Company will provide further details during its earnings
call in August.
“Coupled with our previously announced measures, the actions
we’re taking in the second quarter will allow us to enter the
second half of the year with an improved cost position and a
stronger balance sheet,” said Julie Schertell, Chief Executive
Officer. “The strength of our business was evident in the first
quarter, and I’m confident that as the economy recovers, Neenah
will be well-positioned to resume executing our growth strategies.
The planned refinancing of our debt provides added flexibility and
will allow us to pursue opportunities that can increase our
long-term growth rate, while maintaining a prudent financial
position.”
About Neenah
Neenah is a leading global specialty materials company focused
on premium niche markets that value performance and image. Key
products and markets include advanced filtration media, specialized
performance substrates used for digital transfer, tape and abrasive
backings, labels and other products, and premium printing and
packaging papers. The Company is headquartered in Alpharetta,
Georgia and its products are sold worldwide from manufacturing
operations in the United States, Europe and the United Kingdom.
Additional information can be found at the Company's web site,
www.neenah.com.
Cautionary Note Regarding Forward-Looking Statements
Statements contained herein, other than statements of historical
fact, which address activities, events and developments that the
Company expects or anticipates will or may occur in the future,
including, but not limited to, statements regarding results and
financial condition of the Company as of June 30, 2020 or future
periods, future economic conditions, financing plans, plans and
objectives of the Company’s management, and the Company’s
assumptions regarding such matters, are “forward-looking
statements” as defined in Section 27A of the Securities Act of 1933
(the “Securities Act”), Section 21E of the Securities Exchange Act
of 1934 (the “Exchange Act”), the Private Securities Litigation
Reform Act of 1995 (the “PSLRA”), or in releases made by the U.S.
Securities and Exchange Commission (“SEC”), all as may be amended
from time to time. Caution is given to investors that any
forward-looking statements are not guarantees or indicative of
future performance.
Numerous factors, many of which are beyond the Company’s
control, could cause actual results to differ materially from any
that may be expressed as forward-looking statements. These risk
factors include risks associated with the duration, scope and
severity of COVID-19 and its effects on the Company’s business and
operations, including the potential disruption or delay of
production and delivery of materials and products in the Company’s
supply chain; a temporary or prolonged shutdown of manufacturing
facilities; general economic, financial and industry conditions and
the impact on customer demand; and uncertainties arising from
national and global events, including the potential impact of civil
unrest, political uncertainty and COVID-19 on economy, our industry
and the credit markets. Other risk factors are set forth under the
captions “Cautionary Note Regarding Forward-Looking Statements”
and/or “Risk Factors” of the latest Form 10-K filed with the SEC as
periodically updated by subsequently filed Form 10-Qs (these
securities filings can be located at www.neenah.com).
The estimated and preliminary financial data and other
information provided herein for the second quarter of 2020 are
subject to the completion of the Company’s financial closing
procedures, final adjustments and any other developments that may
arise between now and the time the financial results for the second
quarter are finalized. Therefore, this data represents management
estimates that constitute forward-looking statements subject to
risks and uncertainties. As a result, the estimated and preliminary
financial data and other information included herein may materially
differ from the actual results that will be reflected in the
consolidated financial statements for the quarter when they are
completed and publicly disclosed. In addition, preliminary results
for the second quarter are not necessarily indicative of operating
results for any future quarter or results for the full year.
Unless specifically required by law, the Company assumes no
obligation to update or revise these forward-looking statements to
reflect new events or circumstances. These cautionary statements
are being made pursuant to the Securities Act, the Exchange Act and
the PSLRA with the intention of obtaining the benefits of the “safe
harbor” provisions of such laws.
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version on businesswire.com: https://www.businesswire.com/news/home/20200616005603/en/
Neenah, Inc. Bill McCarthy Vice
President-Investor Relations 678-518-3278
Neenah (NYSE:NP)
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