Neptune Insurance Holdings, Inc. Q4 FY2020 earnings call

• In 2020, key accomplishments included putting in place new health and safety protocols, implementing a Neenah operating system at two largest facilities using lean principles, aggressively reducing cost and working capital to achieve free cash flow of $75 million, and developing high-performance media for face masks. • Fourth quarter saw both segments deliver sequential improvement in quarterly revenues, operating income and margins. Technical Products sales up 11% vs 2019 with adjusted operating income at highest quarterly level. Fine Paper & Packaging on track to recover 90% of pre-COVID quarterly run-rate. • 2021 will focus on driving profitable organic growth via three core competencies: manufacturing excellence, customer intimacy, and robust innovation process. Neenah operating system to deliver value, customer intimacy strengthened with R&D teams working closely with customers, and recent hire of global head of innovation process to accelerate innovation.

In the fourth quarter, both segments showed sequential improvement. The Technical Products segment, making up almost 65% of total revenue, had sales of $137 million in the quarter, up from the third quarter and 11% versus last year. Adjusted operating income was $18 million, the highest quarterly level in recent history. The Fine Paper & Packaging segment is on track to recover 90% of its pre-COVID quarterly run-rate of $90 million this year. Technical Products sales increased 11% vs 2019, while Fine Paper & Packaging has a more extended recovery curve but is on track for recovery.

• Expect sequential quarterly gains in 2021 with both segments seeing improving margins and profitability. • Technical Products already exceeded pre-COVID levels in recent quarter, Fine Paper & Packaging tracking with targeted recovery pace. • Expect to offset raw material inflation this year while continuing growth strategy. • Technical Products seeing nice demand and growth in Europe and North America, influenced by economy rather than new car inventories. • Fine Paper expected to have majority of recovery from legacy business with some new product introductions, aiming to return to about $80 million a quarter average.

• Input costs rising could put pressure on margins. • Qualification process out of Appleton has been lengthy and taken more time than originally anticipated.

Q: Jon Tanwanteng asked about 2021 quarterly trends, margin growth with input cost headwind, and Tech Products Q1 strength.

A: Julie Schertell said not to annualize Q4, margin improvement in Q4 with both segments, expect to recover raw material inflation, and Tech Products seeing nice demand in Europe and North America influenced by economy.

Q: Chris McGinnis asked about Appleton, Fine Paper recovery构成, sustainable products marketing, new hire focus, M&A pipeline, and Premium Packaging growth.

A: Julie Schertell said Appleton qualification process lengthy, Fine Paper majority recovery from legacy business with new products, innovation acceleration in sustainability, new hire to accelerate global innovation process, focus on filtration, custom engineered materials, specialty coding, and premium packaging in M&A, and Premium Packaging had mid single-digit growth in Q4.