UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-32240

(Exact name of registrant as specified in its charter)


Delaware						20-1308307
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3460 Preston Ridge Road

Alpharetta

Georgia

30005

(Address of principal executive offices, including zip code)

(678) 566-6500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	NP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

(Do not check if a smaller reporting company)

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 1, 2021,~~May 2, 2022, there were ~~16,758,957~~16,788,143 shares of the Company’s Common Stock outstanding.

Table of Contents

TABLE OF CONTENTS


Part I — Financial Information

Item 1. Financial Statements			F-1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			F-2218

Item 3. Quantitative and Qualitative Disclosure About Market Risk			F-3125

Item 4. Controls and Procedures			F-3125


Part II — Other Information

Item 1. Legal Proceedings			F-3226

Item 1A. Risk Factors			F-3226

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			F-3226

Item 6. Exhibits			F-3327

Table of Contents

Part I—FINANCIAL INFORMATION

Item 1. Financial Statements

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net Sales $ 267.9 $ 190.7 $ 764.2 $ 585.7
Cost of products sold 229.5 155.5 637.8 475.1
Gross Profit 38.4 35.2 126.4 110.6
Selling, general and administrative expenses 26.1 19.1 77.9 66.5
Impairment and asset restructuring costs (Note 11) 0.4 — 34.8 55.3
Acquisition and integration costs (Note 4) 0.3 — 12.4 1.1
Other restructuring and non-routine costs 0.6 1.4 1.5 4.1
COVID-19 costs 0.5 0.6 1.2 2.1
Loss on debt extinguishment (Note 6) — — 7.2 1.9
Pension settlement losses (Note 7) — — 1.0 —
Other (income) expense - net (0.9) 0.2 (2.0) 0.6
Operating Income (Loss) 11.4 13.9 (7.6) (21.0)
Interest expense - net 5.1 3.6 13.0 9.5
Income (Loss) Before Income Taxes 6.3 10.3 (20.6) (30.5)
Provision (Benefit) for income taxes 3.0 2.4 (2.5) (4.7)
Net Income (Loss) $ 3.3 $ 7.9 $ (18.1) $ (25.8)
Earnings (Loss) Per Common Share
Basic $ 0.19 $ 0.46 $ (1.09) $ (1.55)
Diluted $ 0.19 $ 0.46 $ (1.09) $ (1.55)
Weighted Average Common Shares Outstanding (in thousands)
Basic 16,827 16,802 16,831 16,810
Diluted 16,867 16,821 16,831 16,810
Cash Dividends Declared Per Share of Common Stock $ 0.47 $ 0.47 $ 1.41 $ 1.41


	Three Months Ended March 31,
	2022		2021
Net Sales	$	284.8	$	227.0
Cost of products sold	236.5		177.4
Gross Profit	48.3		49.6
Selling, general and administrative expenses	30.3		24.3
Acquisition-related costs (Note 4)	5.3		12.0
Asset restructuring costs (Note 10)	0.6		—

COVID-19 costs	0.6		0.5



Other income, net	(0.7)		(0.8)
Operating Income	12.2		13.6
Interest expense, net	5.0		3.1
Income Before Income Taxes	7.2		10.5
Provision for income taxes	1.5		2.2


Net Income	$	5.7	$	8.3

Earnings Per Common Share



Basic	$	0.34	$	0.49




Diluted	$	0.34	$	0.49

Weighted Average Common Shares Outstanding (in thousands)
Basic	16,808		16,835
Diluted	16,852		16,873

Cash Dividends Declared Per Share of Common Stock	$	0.475	$	0.47

See Notes to Condensed Consolidated Financial Statements

F-1

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net Income (Loss) $ 3.3 $ 7.9 $ (18.1) $ (25.8)
Reclassification of amounts recognized in the condensed consolidated statements of operations:
Amortization of adjustments to pension and other postretirement benefit liabilities (Note 7) 1.3 1.6 4.3 4.7
Pension settlement and curtailment losses (Notes 7 and 11) — — 1.3 —
Amounts recognized in the condensed consolidated statements of operations 1.3 1.6 5.6 4.7
Unrealized foreign currency translation gain (loss) (10.5) 7.9 (15.0) 7.5
Net gain from pension plans (Note 3) — — 16.0 —
Income (Loss) From Other Comprehensive Income Items (9.2) 9.5 6.6 12.2
Provision for income taxes (0.1) 0.8 4.7 1.4
Other Comprehensive Income (Loss) (9.1) 8.7 1.9 10.8
Comprehensive Income (Loss) $ (5.8) $ 16.6 $ (16.2) $ (15.0)


	Three Months Ended March 31,
	2022		2021
Net Income	$	5.7	$	8.3
Reclassification of amounts recognized in the condensed consolidated statements of operations:
Amortization of adjustments to pension and other postretirement benefit liabilities (Note 6)	1.0		1.7


Unrealized foreign currency translation loss	(8.1)		(9.1)

Loss From Other Comprehensive Income Items	(7.1)		(7.4)
Provision for income taxes	—		—
Other Comprehensive Loss	(7.1)		(7.4)
Comprehensive Income (Loss)	$	(1.4)	$	0.9

See Notes to Condensed Consolidated Financial Statements

F-2

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	31.7	$	37.1	Cash and cash equivalents	$	25.2	$	23.9

Accounts receivable (less allowances of $1.8 million and $1.5 million)		150.4		100.2
Accounts receivable (less allowances of $1.8 million and $1.6 million)						Accounts receivable (less allowances of $1.8 million and $1.6 million)	165.1		142.3
Inventories (Note 3)	Inventories (Note 3)	133.8		108.9		Inventories (Note 3)	148.3		138.5
Assets held for sale (Note 11)		10.6		—
Assets held for sale (Note 10)						Assets held for sale (Note 10)	10.5		10.5
Prepaid and other current assets	Prepaid and other current assets	32.4		25.1		Prepaid and other current assets	30.0		31.8
Total Current Assets	Total Current Assets	358.9		271.3		Total Current Assets	379.1		347.0
Property, Plant and Equipment	Property, Plant and Equipment					Property, Plant and Equipment
Property, plant and equipment, at cost	Property, plant and equipment, at cost	792.1		812.8		Property, plant and equipment, at cost	797.0		796.8
Less accumulated depreciation	Less accumulated depreciation	497.0		483.4		Less accumulated depreciation	505.5		501.3
Property, Plant and Equipment—net		295.1		329.4
Finance Lease Right-of-Use Assets (Note 1)		21.3		—
Operating Lease Right-of-Use Assets (Note 1)		18.4		20.2
Property, Plant and Equipment, net						Property, Plant and Equipment, net	291.5		295.5
Finance Lease Right-of-Use Assets						Finance Lease Right-of-Use Assets	20.2		20.8
Operating Lease Right-of-Use Assets						Operating Lease Right-of-Use Assets	17.6		17.8
Deferred Income Taxes	Deferred Income Taxes	25.1		18.3		Deferred Income Taxes	28.0		25.1
Goodwill	Goodwill	202.2		87.4		Goodwill	195.6		198.6
Intangible Assets—net		159.0		62.6
Intangible Assets, net						Intangible Assets, net	150.3		154.6
Over-funded Employee Benefit Plan (Note 6)						Over-funded Employee Benefit Plan (Note 6)	10.8		9.5
Other Noncurrent Assets	Other Noncurrent Assets	13.0		17.4		Other Noncurrent Assets	12.7		12.8
TOTAL ASSETS	TOTAL ASSETS	$	1,093.0	$	806.6	TOTAL ASSETS	$	1,105.8	$	1,081.7

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities	Current Liabilities					Current Liabilities
Debt payable within one year (Note 6)		$	7.1	$	4.9
Debt payable within one year (Note 5)						Debt payable within one year (Note 5)	$	5.7	$	6.4
Finance lease liabilities payable within one year	Finance lease liabilities payable within one year	0.8		—		Finance lease liabilities payable within one year	0.8		0.8
Operating lease liabilities payable within one year	Operating lease liabilities payable within one year	3.3		3.2		Operating lease liabilities payable within one year	3.3		3.3
Accounts payable	Accounts payable	94.8		46.0		Accounts payable	114.5		97.4
Liabilities of assets held for sale (Note 11)		0.6		—
Liabilities of assets held for sale (Note 10)						Liabilities of assets held for sale (Note 10)	0.5		0.5
Accrued expenses	Accrued expenses	72.9		61.9		Accrued expenses	64.1		66.6
Total Current Liabilities	Total Current Liabilities	179.5		116.0		Total Current Liabilities	188.9		175.0
Long-term Debt (Note 6)		434.6		189.5
Finance Lease Liabilities, Noncurrent (Note 1)		20.8		—
Operating Lease Liabilities, Noncurrent (Note 1)		16.5		18.4
Long-term Debt (Note 5)						Long-term Debt (Note 5)	456.7		434.9
Finance Lease Liabilities, Noncurrent						Finance Lease Liabilities, Noncurrent	19.9		20.4
Operating Lease Liabilities, Noncurrent						Operating Lease Liabilities, Noncurrent	15.7		15.9
Noncurrent Employee Benefits	Noncurrent Employee Benefits	70.9		96.8		Noncurrent Employee Benefits	75.9		77.7
Deferred Income Taxes	Deferred Income Taxes	37.4		12.3		Deferred Income Taxes	37.1		38.2
Other Noncurrent Obligations	Other Noncurrent Obligations	5.9		6.0		Other Noncurrent Obligations	3.8		3.6
TOTAL LIABILITIES	TOTAL LIABILITIES	765.6		439.0		TOTAL LIABILITIES	798.0		765.7
Contingencies and Legal Matters (Note 10)		—		—
Contingencies and Legal Matters (Note 9)						Contingencies and Legal Matters (Note 9)	—		—
TOTAL STOCKHOLDERS’ EQUITY	TOTAL STOCKHOLDERS’ EQUITY	327.4		367.6		TOTAL STOCKHOLDERS’ EQUITY	307.8		316.0
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,093.0	$	806.6	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,105.8	$	1,081.7

See Notes to Condensed Consolidated Financial Statements

F-3

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions, shares in thousands)

(Unaudited)

2021 Activity
Common Stock
Shares Amount Treasury
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Balance, December 31, 2020 18,746 $ 0.2 $ (87.6) $ 338.3 $ 220.4 $ (103.7) $ 367.6
Net income — — — — 8.3 — 8.3
Other comprehensive loss, including income taxes — — — — — (7.4) (7.4)
Dividends declared — — — — (8.0) — (8.0)
Stock options exercised 3 — — — — — —
Restricted stock vesting (Note 9) 16 — (0.4) — — — (0.4)
Stock-based compensation — — — 1.5 — — 1.5
Balance, March 31, 2021 18,765 0.2 (88.0) 339.8 220.7 (111.1) 361.6
Net loss — — — — (29.7) — (29.7)
Other comprehensive income, net of income taxes — — — — — 18.4 18.4
Dividends declared — — — — (8.1) — (8.1)
Stock options exercised 1 — — — — — —
Restricted stock vesting (Note 9) 22 — (0.1) — — — (0.1)
Stock-based compensation — — — 1.3 — — 1.3
Other — — — 0.1 — — 0.1
Balance, June 30, 2021 18,788 $ 0.2 $ (88.1) $ 341.2 $ 182.9 $ (92.7) $ 343.5
Net income — — — — 3.3 — 3.3
Other comprehensive loss, including income taxes — — — — — (9.1) (9.1)
Dividends declared — — — — (8.0) — (8.0)
Shares purchased (Note 9) — — (3.4) — — — (3.4)
Restricted stock vesting (Note 9) 1 — — — — — —
Stock-based compensation — — — 1.1 — — 1.1
Balance, September 30, 2021 18,789 $ 0.2 $ (91.5) $ 342.3 $ 178.2 $ (101.8) $ 327.4


	2022 Activity
	Common Stock
	Shares	Amount		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance, December 31, 2021	18,819	$	0.2	$	(93.6)	$	342.9	$	163.4	$	(96.9)	$	316.0
Net income	—	—		—		—		5.7		—		5.7
Other comprehensive loss, including income taxes	—	—		—		—		—		(7.1)		(7.1)
Dividends declared	—	—		—		—		(8.2)		—		(8.2)

Stock options exercised	2	—		—		—		—		—		—
Restricted stock vesting (Note 7)	11	—		(0.2)		—		—		—		(0.2)
Stock-based compensation (Note 7)	—	—		—		1.6		—		—		1.6

Balance, March 31, 2022	18,832	$	0.2	$	(93.8)	$	344.5	$	160.9	$	(104.0)	$	307.8

~~F-4~~

~~Table of Contents~~

2020 Activity
Common Stock
Shares Amount Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total
Balance, December 31, 2019 18,678 $ 0.2 $ (82.8) $ 334.1 $ 268.1 $ (113.3) $ 406.3
Net income — — — — 16.4 — 16.4
Other comprehensive loss, including income taxes — — — — — (2.6) (2.6)
Dividends declared — — — — (8.0) — (8.0)
Shares purchased (Note 9) — — (3.6) — — — (3.6)
Stock options exercised 3 — — — — — —
Restricted stock vesting (Note 9) 8 — (0.2) — — — (0.2)
Stock-based compensation — — — 1.5 — — 1.5
Balance, March 31, 2020 18,689 0.2 (86.6) 335.6 276.5 (115.9) 409.8
Net loss — — — — (50.1) — (50.1)
Other comprehensive income, net of income taxes — — — — — 4.7 4.7
Dividends declared — — — — (8.0) — (8.0)
Stock options exercised 2 — — — — — —
Restricted stock vesting (Note 9) 9 — — — — — —
Stock-based compensation — — — 1.6 — — 1.6
Balance, June 30, 2020 18,700 $ 0.2 $ (86.6) $ 337.2 $ 218.4 $ (111.2) $ 358.0
Net income — — — — 7.9 — 7.9
Other comprehensive income, net of income taxes — — — — — 8.7 8.7
Dividends declared — — — — (7.9) — (7.9)
Restricted stock vesting (Note 9) 1 — — — — — —
Stock-based compensation — — — 0.3 — — 0.3
Balance, September 30, 2020 18,701 $ 0.2 $ (86.6) $ 337.5 $ 218.4 $ (102.5) $ 367.0


	2021 Activity
	Common Stock
	Shares	Amount		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance, December 31, 2020	18,746	$	0.2	$	(87.6)	$	338.3	$	220.4	$	(103.7)	$	367.6
Net income	—	—		—		—		8.3		—		8.3
Other comprehensive loss, including income taxes	—	—		—		—		—		(7.4)		(7.4)
Dividends declared	—	—		—		—		(8.0)		—		(8.0)

Stock options exercised	3	—		—		—		—		—		—
Restricted stock vesting (Note 7)	16	—		(0.4)		—		—		—		(0.4)
Stock-based compensation (Note 7)	—	—		—		1.5		—		—		1.5

Balance, March 31, 2021	18,765	$	0.2	$	(88.0)	$	339.8	$	220.7	$	(111.1)	$	361.6

See Notes to Condensed Consolidated Financial Statements

~~F-5~~F-4

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net Loss		$	(18.1)	$	(25.8)
Net Income						Net Income	$	5.7	$	8.3
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	31.8		28.2		Depreciation and amortization	10.6		8.6
Stock-based compensation	Stock-based compensation	3.9		3.4		Stock-based compensation	1.7		1.5
Deferred income tax benefit	Deferred income tax benefit	(12.9)		(11.3)		Deferred income tax benefit	(3.3)		(2.4)
Impairment loss (Note 11)		32.4		52.3
Loss on debt extinguishment (Note 6)		7.2		1.9
Loss on foreign currency forward contracts (Note 1)		5.1		—
Pension settlement and curtailment losses (Notes 7 and 11)		1.3		—
Provision for uncollectible accounts receivable		—		0.7
Loss on asset dispositions		0.4		—

Unrealized loss on foreign currency forward contracts (Note 1)						Unrealized loss on foreign currency forward contracts (Note 1)	—		6.2

Decrease (increase) in working capital	Decrease (increase) in working capital	(3.1)		28.7		Decrease (increase) in working capital	(16.3)		0.5
Pension and other postretirement benefits	Pension and other postretirement benefits	(7.4)		(0.3)		Pension and other postretirement benefits	(0.8)		(2.0)
Long-term payroll taxes		—		2.9

Other	Other	(0.3)		(0.3)		Other	0.4		—
Net Cash Provided By Operating Activities		40.3		80.4
Net Cash Provided by (Used In) Operating Activities						Net Cash Provided by (Used In) Operating Activities	(2.0)		20.7

INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(19.0)		(11.8)		Capital expenditures	(8.3)		(4.8)
Acquisition of Itasa (Note 4)		(240.2)		—
Sale (purchase) of marketable securities		3.7		(0.1)

Other	Other	(0.1)		(0.3)		Other	(0.1)		(0.2)
Net Cash Used in Investing Activities	Net Cash Used in Investing Activities	(255.6)		(12.2)		Net Cash Used in Investing Activities	(8.4)		(5.0)

FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Long-term borrowings (Note 6)		457.5		291.2
Repayments of long-term debt (Note 6)		(209.8)		(294.3)
Long-term borrowings (Note 5)						Long-term borrowings (Note 5)	41.2		0.2
Repayments of long-term debt (Note 5)						Repayments of long-term debt (Note 5)	(20.6)		(1.4)
Debt issuance costs	Debt issuance costs	(9.0)		(5.4)		Debt issuance costs	—		(1.4)
Cash dividends paid	Cash dividends paid	(23.9)		(23.9)		Cash dividends paid	(8.0)		(8.0)
Shares purchased (Note 9)		(3.6)		(3.8)
Shares purchased (Note 8)						Shares purchased (Note 8)	(0.2)		(0.4)

Other	Other	(0.5)		—		Other	(0.2)		—
Net Cash Provided by (Used in) Financing Activities	Net Cash Provided by (Used in) Financing Activities	210.7		(36.2)		Net Cash Provided by (Used in) Financing Activities	12.2		(11.0)

Effect of Exchange Rate Changes on Cash and Cash Equivalents	Effect of Exchange Rate Changes on Cash and Cash Equivalents	(0.8)		0.3		Effect of Exchange Rate Changes on Cash and Cash Equivalents	(0.5)		(0.8)
Net Increase (Decrease) in Cash and Cash Equivalents		(5.4)		32.3
Net Increase in Cash and Cash Equivalents						Net Increase in Cash and Cash Equivalents	1.3		3.9
Cash and Cash Equivalents, Beginning of Year	Cash and Cash Equivalents, Beginning of Year	37.1		9.0		Cash and Cash Equivalents, Beginning of Year	23.9		37.1
Cash and Cash Equivalents, End of Period	Cash and Cash Equivalents, End of Period	$	31.7	$	41.3	Cash and Cash Equivalents, End of Period	$	25.2	$	41.0

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:					SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during period for interest, net of interest costs capitalized	Cash paid during period for interest, net of interest costs capitalized	$	10.9	$	9.7	Cash paid during period for interest, net of interest costs capitalized	$	4.3	$	2.6
Cash paid during period for income taxes	Cash paid during period for income taxes	$	8.8	$	3.9	Cash paid during period for income taxes	$	4.3	$	1.5
Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:
Liability for equipment acquired	Liability for equipment acquired	$	4.1	$	2.4	Liability for equipment acquired	$	4.3	$	2.5

See Notes to Condensed Consolidated Financial Statements

~~F-6~~F-5

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in millions, except as noted)

Note 1. Background and Basis of Presentation

Background

Neenah, Inc. ("Neenah" or the "Company"), is a Delaware corporation incorporated in April 2004. The Company has 2 primary operations: its Technical Products business and its Fine Paper and Packaging business. See Note ~~12,~~11, "Business Segment Information."

Basis of Consolidation and Presentation

These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Management believes that the disclosures made are adequate for a fair presentation of the Company’s results of operations, financial position and cash flows. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results of operations, financial position and cash flows for the interim periods presented herein. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make extensive use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.

The condensed consolidated financial statements of Neenah and its subsidiaries included herein are unaudited. The condensed consolidated financial statements include the financial statements of the Company and its wholly owned and majority owned subsidiaries. Intercompany balances and transactions have been eliminated.

Earnings per Share ("EPS")

The following table presents the computation of basic and diluted EPS (dollars in millions except per share amounts, shares in thousands):

Earnings ~~(Loss)~~ Per Basic Common Share

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Income (Loss) from continuing operations $ 3.3 $ 7.9 $ (18.1) $ (25.8)
Amounts attributable to participating securities — (0.1) (0.2) (0.2)
Net income (loss) available to common stockholders $ 3.3 $ 7.8 $ (18.3) $ (26.0)
Weighted-average basic shares outstanding 16,827 16,802 16,831 16,810

Basic earnings (loss) per share $ 0.19 $ 0.46 $ (1.09) $ (1.55)


	Three Months Ended March 31,
	2022		2021
Income from continuing operations	$	5.7	$	8.3
Amounts attributable to participating securities	—		—


Net income available to common stockholders	$	5.7	$	8.3

Weighted-average basic shares outstanding	16,808		16,835



Basic earnings per share	$	0.34	$	0.49

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Earnings ~~(Loss)~~ Per Diluted Common Share


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Income (Loss) from continuing operations		$	3.3	$	7.9	$	(18.1)	$	(25.8)
Income from continuing operations										Income from continuing operations	$	5.7	$	8.3
Amounts attributable to participating securities	Amounts attributable to participating securities	(0.1)		(0.1)		(0.2)		(0.2)		Amounts attributable to participating securities	(0.1)		(0.1)

Net income (loss) available to common stockholders		$	3.2	$	7.8	$	(18.3)	$	(26.0)
Net income available to common stockholders										Net income available to common stockholders	$	5.6	$	8.2

Weighted-average basic shares outstanding	Weighted-average basic shares outstanding	16,827		16,802		16,831		16,810		Weighted-average basic shares outstanding	16,808		16,835
Add: Assumed incremental shares under stock compensation plans (a)	Add: Assumed incremental shares under stock compensation plans (a)	40		19		—		—		Add: Assumed incremental shares under stock compensation plans (a)	44		38
Weighted-average diluted shares	Weighted-average diluted shares	16,867		16,821		16,831		16,810		Weighted-average diluted shares	16,852		16,873


Diluted earnings (loss) per share		$	0.19	$	0.46	$	(1.09)	$	(1.55)
Diluted earnings per share										Diluted earnings per share	$	0.34	$	0.49

(a) For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there were ~~323,833~~343,000 and ~~330,789~~324,000 potentially dilutive options, respectively, excluded from the computation of dilutive common shares because the exercise price of such options exceeded the average market price of the Company’s Common Stock. For the nine months ended September 30, 2021 and 2020, there were 324,189 and 337,180 potentially dilutive options, respectively, similarly excluded from the computation of dilutive common shares. In addition, as a result of the loss from continuing operations for the nine months ended September 30, 2021 and 2020, incremental shares of 39,912 and 25,626, respectively, resulting from the dilutive options and performance share units, were excluded from the diluted earnings per share calculation as the effect would have been anti-dilutive.

Fair Value of Financial Instruments

The Company measures the fair value of financial instruments in accordance with Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820") which establishes a framework for measuring fair value. ASC Topic 820 provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

As of ~~September 30, 2021,~~March 31, 2022, the carrying values of the Company’s debt approximated fair value. The fair value for all debt instruments was estimated from Level 2 measurements using rates currently available to the Company for debt of the same remaining maturities.

During the three months ended March 31, 2021, in anticipation of the Itasa acquisition (as further defined and discussed in Note 4, "Acquisition"), the Company entered into foreign currency forward contracts to purchase €205.9 million at a weighted average exchange rate of $1.203 per euro on April 6, 2021. These contracts were designed to act as economic hedges for the ~~pending~~ Itasa acquisition and were marked to market at an unrealized loss of $6.2 million at March 31, 2021. The Company settled these contracts on ~~that date with~~April 6, 2021 for a realized loss of $5.1 million.

As of ~~September 30, 2021,~~March 31, 2022, the Company had ~~$0.7~~$0.6 million in marketable securities in the U.S. classified as "Other Noncurrent Assets" on the Condensed Consolidated Balance Sheet. The cost of such marketable securities was ~~$0.7~~$0.6 million. Fair value for the Company’s marketable securities was estimated from Level 1 inputs. The Company’s U.S. marketable securities are designated for the payment of benefits under its supplemental employee retirement plan ("SERP"). As of ~~September 30, 2021,~~March 31, 2022, Neenah Germany had investments of ~~$2.2~~$2.4 million that were restricted to the payment of certain post-retirement employee benefits of which ~~$0.8~~$0.7 million and ~~$1.4~~$1.7 million are classified as "Prepaid and other current assets" and "Other Noncurrent Assets", respectively, on the Condensed Consolidated Balance Sheet. The cost of these investments approximated market.

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Revenue from Contracts with Customers

The Company recognizes sales revenue at a point in time following the transfer of control of the product to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Sales are reported net of allowable discounts and estimated returns. Reserves for cash discounts, trade allowances and sales returns are estimated using historical experience. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. Accordingly, the Company records customer payments of shipping and handling costs as a component of net sales and classifies such costs as a component of cost of sales. The Company excludes tax amounts assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers from our measurement of transaction prices. Accordingly, such tax amounts are not included as a component of net sales or cost of sales.

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The Company considers each transaction/shipment as a separate performance obligation. Neenah recognizes revenue when the title transfers to the customer. As such, the remaining performance obligations at period end are not considered significant.

Refer to Note ~~12,~~11, "Business Segment Information" for disaggregation of segment revenue from contracts with customers for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~

~~Leases~~

As of September 30, 2021, the Company has $21.3 million of finance leases, primarily for manufacturing facilities in Spain and Mexico as a result of the Itasa acquisition. The finance lease Right-of-Use ("ROU") assets acquired were valued at $22.1 million, with corresponding lease liabilities, with a weighted-average term of approximately 19.5 years and weighted-average discount rate of 4.3%. Finance leases with terms greater than 12 months are included in "Finance Lease Right-of-Use Assets", "Finance lease liabilities payable within one year" and "Noncurrent Finance Lease Liabilities" on the Condensed Consolidated Balance Sheets.

The Company has operating leases for corporate offices, warehouses, converting operations, and certain equipment, with remaining lease terms of up to 10 years, some of which include options to extend the leases for up to five years. The Company determines if an arrangement is a lease at inception. Operating leases with terms greater than 12 months are included in "Operating Lease Right-of-Use Assets", "Operating lease liabilities payable within one year" and "Noncurrent Operating Lease Liabilities" on the Condensed Consolidated Balance Sheets.

~~Impacts of COVID-19~~

The Company recorded incremental and direct costs of responding to the coronavirus pandemic (“COVID-19”) of $0.5 million and $1.2 million for the three and nine months ended September 30, 2021, respectively. For the three and nine months ended September 30, 2020, the Company recorded $0.6 million and $2.1 million, respectively, related to COVID-19.2021.

Note 2. Accounting Standards Changes

As of ~~September 30, 2021,~~March 31, 2022, there were no amendments to the ASC that will have or are reasonably likely to have a material effect on the Company’s financial position, results of operations or cash flows upon adoption.

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Note 3. Supplemental Balance Sheet Data

The following table presents inventories by major class:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	47.9	$	28.9	Raw materials	$	52.0	$	54.7
Work in progress	Work in progress	32.0		20.1		Work in progress	43.2		32.6
Finished goods	Finished goods	65.8		61.0		Finished goods	67.2		64.0
Supplies and other	Supplies and other	3.6		5.3		Supplies and other	4.4		3.8
		149.3		115.3			166.8		155.1
Adjust FIFO inventories to LIFO cost		(15.5)		(6.4)
Excess of FIFO over LIFO cost						Excess of FIFO over LIFO cost	(18.5)		(16.6)
Total	Total	$	133.8	$	108.9	Total	$	148.3	$	138.5

The ~~FIFO~~first-in, first-out ("FIFO") values of inventories valued on the ~~LIFO~~last-in, first-out ("LIFO") method were ~~$95.3~~$104.3 million and ~~$88.5~~$95.4 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. For the three and nine months ended September 30, 2021, income from continuing operations before income taxes was increased by less than $0.4 million due to a decrease in certain LIFO inventory quantities. Inventories at September 30, 2021 included $21.7 million from the Itasa acquisition (see Note 4, "Acquisition").

The following table presents changes in accumulated other comprehensive income (loss) ("AOCI") for the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


		Net Unrealized Foreign Currency Translation Loss		Net Loss from Pension and Other Postretirement Liabilities		Accumulated Other Comprehensive Loss			Net Unrealized Foreign Currency Translation Loss		Net Loss from Pension and Other Postretirement Liabilities		Accumulated Other Comprehensive Loss
AOCI — December 31, 2020		$	(1.7)	$	(102.0)	$	(103.7)
AOCI — December 31, 2021								AOCI — December 31, 2021	$	(25.2)	$	(71.7)	$	(96.9)
Other comprehensive income (loss) before reclassifications ~~(a)~~	Other comprehensive income (loss) before reclassifications ~~(a)~~	(15.0)		17.3		2.3		Other comprehensive income (loss) before reclassifications ~~(a)~~	(8.1)		—		(8.1)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		4.3		4.3		Amounts reclassified from AOCI	—		1.0		1.0
Income (loss) from other comprehensive income items	Income (loss) from other comprehensive income items	(15.0)		21.6		6.6		Income (loss) from other comprehensive income items	(8.1)		1.0		(7.1)
Provision (benefit) for income taxes	Provision (benefit) for income taxes	(0.5)		5.2		4.7		Provision (benefit) for income taxes	(0.3)		0.3		—
Other comprehensive income (loss)	Other comprehensive income (loss)	(14.5)		16.4		1.9		Other comprehensive income (loss)	(7.8)		0.7		(7.1)
AOCI — September 30, 2021		$	(16.2)	$	(85.6)	$	(101.8)
AOCI — March 31, 2022								AOCI — March 31, 2022	$	(33.0)	$	(71.0)	$	(104.0)

(a) During the nine months ended September 30, 2021, the Company recorded a net $16.0 million decrease in the pension plan obligations due to remeasurements in conjunction with a redistribution of active and inactive participants between the separate pension plans and the Appleton Mill closure. For the nine months ended September 30, 2021, a $0.3 million pension plan curtailment loss was recorded in conjunction with the mill closure (see Note 11, "Impairment and Asset Restructuring Costs"). In addition, the Company recorded a $1.0 million loss related to a SERP settlement.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company reclassified ~~$4.3~~$1.0 million and ~~$4.7~~$1.7 million of costs, respectively, from AOCI to "Other ~~expense -~~income, net" on the Condensed Consolidated Statements of Operations. For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recognized an income tax benefit of ~~$1.1~~$0.3 million and ~~$1.2~~$0.4 million, respectively, related to such reclassifications classified as "Provision for income taxes" on the Condensed Consolidated Statements of Operations.

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Note 4. Acquisition

Acquisition of Itasa

On April 6, 2021, the Company completed the acquisition (the “Acquisition”) of all of the outstanding capital stock of Global Release Liners, S.L., a Spanish limited company (“Itasa”), from Magnum Capital and other minority shareholders for ~~approximately~~ $240.2 million in cash, net of cash on hand and debt extinguishment, and including a loss on foreign currency forward contracts. Itasa, through its subsidiaries, is a leading global coater and converter of release liners used in hygiene, tapes, industrial, labels, composites and various other end markets. The Acquisition was funded with available cash-on-hand and the net proceeds of the Term Loan B discussed in Note 6,5, "Debt." ~~The~~In 2021, the Company incurred ~~$12.4~~$12.8 million of costs related to the Acquisition, including a realized loss of $5.1 million related to the foreign currency forward contracts negotiated to fund the purchase price in euros. See Note 1, "Background and Basis of Presentation," for further discussion on these contracts. The Itasa business is ~~now~~ part of the Company's Technical Products segment.

The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805, Business Combinations ("ASC Topic 805"). The preliminary allocation of the purchase price was based on estimates of the fair value of assets acquired and liabilities assumed as of April 6, 2021, and certain inventory and income tax balances are subject to adjustment as additional information is obtained. We may further revise the preliminary allocation of the purchase price during the remainder of the measurement period, which will not exceed twelve months from the closing of the acquisition, and such revisions may be material.

~~The~~ following table summarizes the ~~preliminary~~final allocation of the purchase price to the ~~estimated~~ fair value of the assets acquired and liabilities assumed as of April 6, ~~2021.~~2021:

As of April 6, 2021

Assets Acquired

Cash and cash equivalents

34.0

Cash and cash equivalents

34.0

Accounts receivable

20.7

Accounts receivable

20.7

Inventories

24.5

Inventories

24.6

Prepaid and other current assets

2.1

Prepaid and other current assets

2.1

Property, plant and equipment

19.6

Property, plant and equipment

19.8

Finance lease Right-of-Use assets

22.1

Finance lease Right-of-Use assets

22.1

Operating lease Right-of-Use assets

0.1

Operating lease Right-of-Use assets

0.1

Non-amortizable intangible assets

4.1

Non-amortizable intangible assets

4.1

Amortizable intangible assets

100.5

Amortizable intangible assets

100.5

Other assets

0.3

Other assets

0.3

Goodwill

120.0

Goodwill

119.5

Total assets acquired

348.0

Total assets acquired

347.8

Liabilities Assumed

Accounts payable

22.3

Accounts payable

22.3

Accrued expenses

6.6

Accrued expenses

6.5

Long-term debt

26.4

Long-term debt

26.4

Lease liabilities - Finance

22.1

Lease liabilities - Finance

22.1

Lease liabilities - Operating

0.1

Lease liabilities - Operating

0.1

Deferred income taxes

27.6

Deferred income taxes

27.5

Other noncurrent obligations

0.3

Other noncurrent obligations

0.3

Total liabilities assumed

105.4

Total liabilities assumed

105.2

Net assets acquired

242.6

Net assets acquired

242.6

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The Company estimated the ~~preliminary~~ fair value of the assets and liabilities acquired in accordance with ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). The ~~preliminary~~ fair value of amortizable and non-amortizable intangible assets was ~~estimated~~determined by applying a royalty rate to projected revenue, net of tax impacts and adjusted for present value considerations. The Company ~~estimated~~determined the ~~preliminary~~ fair value of acquired property, plant and equipment using a combination of cost and market approaches. In general, the ~~preliminary~~ fair value of other acquired assets and liabilities was ~~estimated~~determined using the cost basis of Itasa. There were no material changes to the ~~preliminary~~final purchase price allocation during the three months ended ~~September 30, 2021.~~March 31, 2022.

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The excess of the purchase price over the ~~estimated~~ fair value of the tangible net assets and identifiable intangible assets acquired was recorded as goodwill. The factors contributing to the amount of goodwill recognized are based on several strategic and synergistic benefits that are expected to be realized from the acquisition of Itasa. These benefits include entry into profitable new markets for silicone release liners with new capabilities and recognized brands and synergies from combining the business with Neenah's existing infrastructure. None of the goodwill recognized as part of the Itasa acquisition will be deductible for income tax purposes. All of the acquired goodwill was allocated to the Technical Products segment.

For three and nine months ended September 30, 2021, the Company recorded net sales of $36.0 million and $69.2 million, respectively, and an income (loss) from operations before income taxes of $2.2 million and $0.0 million, respectively, for the acquired business. Such results included $0.5 million and $5.6 million, respectively for three and nine months ended September 30, 2021, of one-time costs including the step-up in inventory to fair value on the date of acquisition.

The following selected unaudited pro forma consolidated statement of operations data for the nine months ended September 30, 2021 and 2020, was prepared as though the Acquisition had occurred as of the beginning of 2020. The information does not reflect events that occurred after April 6, 2021 or any operating efficiencies or inefficiencies that may result from the Acquisition. The pro forma information below includes $17.8 million of non-recurring transaction costs directly attributable to the Acquisition. Therefore, the information is not necessarily indicative of results that would have been achieved had the businesses been combined during the period presented or the results that the Company will experience going forward.

Nine Months Ended September 30,
2021 2020
Net Sales $ 796.8 $ 671.1
Operating Income (Loss) 20.5 (40.5)
Net Income (Loss) 1.8 (44.8)
Earnings (Loss) Per Common Share:
Basic $ 0.11 $ (2.67)
Diluted $ 0.10 $ (2.67)

Note 5. ~~Income Taxes~~

~~The Company accounts for income taxes in accordance with ASC Topic 740,~~ ~~Income Taxes.~~ Income tax provision (benefit) represented 48% and 23% of pre-tax book income for the three months ended September 30, 2021 and 2020, respectively, and (12)% and (15)% of pre-tax book loss for the nine months ended September 30, 2021 and 2020, respectively. The effective income tax benefit rates in 2021 and 2020, were significantly impacted by the effects of the $32.4 million and $52.3 million, respectively, of impairment losses of the Appleton Mill (see Note 11, "Assets Held For Sale and Impairment and Asset Restructuring Costs") which resulted in consolidated pre-tax book losses in each period. During the three months ended June 30, 2021, the Company recorded $2.9 million of income tax expense to reflect the elimination of certain deferred tax benefits due to the Appleton Mill closure. In addition, during that period, the Company recorded an income tax benefit of $1.4 million upon filing income tax returns to utilize the NOL carryback provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). Combined with the estimated benefit recorded as of December 31, 2020, the Company has recorded an income tax benefit of $2.3 million and a corresponding tax receivable of $9.1 million for the tax refund.

As of June 30, 2020, the Company evaluated its ability to utilize its deferred tax assets, including research and development and other tax credits and net operating losses ("NOLs"), before they expire. As a result of the impacts of COVID-19 and other factors, tax expense of $4.0 million was recorded to increase the valuation allowance against certain state tax credits and NOLs. An additional $0.6 million of tax expense was charged as of December 31, 2020 to further increase this valuation allowance. As of September 30, 2021, tax expense of $1.7 million was recorded to increase the valuation allowance against these state tax credits and NOLs. In determining the need for a valuation allowance, the Company considered many factors, including specific taxing jurisdictions, sources of taxable income and income tax strategies. A valuation allowance is recognized if, based on the

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~~weight of available evidence, the Company concludes that it is more likely than not that some portion or all of the deferred income tax asset will not be realized.~~

~~The following table presents the principal reasons for the difference between the Company's effective income tax (benefit) rate and the U.S. federal statutory income tax (benefit) rate:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
U.S. federal statutory income tax rate 21 % 21 % (21) % (21) %
U.S. state income taxes, net of federal income tax effect (3) % (1) % (12) % (7) %
Impact of Appleton Mill closure on deferred tax benefits — % — % 14 % — %
Benefit of CARES Act NOL carryback — % — % (7) % — %
Foreign tax rate differences and financing structure 13 % 10 % 9 % 3 %
U.S. taxes on foreign earnings 5 % 3 % 4 % 2 %
Research and development and other tax credits (24) % (10) % (13) % (7) %
Excess tax benefits from stock compensation — % — % 1 % 1 %
Uncertain income tax positions — % (8) % 1 % (2) %
Valuation allowances 28 % 1 % 8 % 14 %
Other differences - net 8 % 7 % 4 % 2 %
Effective income tax rate 48 % 23 % (12) % (15) %

~~Note 6.~~ Debt

Long-term debt consisted of the following:

September 30, 2021 December 31, 2020
2021 Term Loan B (variable rates) due April 2028 $ 448.9 $ —
2020 Term Loan B (variable rates) extinguished April 2021 — 199.0
Global Revolving Credit Facility (variable rates) due December 2023 — —
German loan agreement (2.45% fixed rate) due in quarterly installments ending September 2022 1.2 2.4
German loan agreement (1.45% fixed rate) due in quarterly installments ending September 2022 1.4 2.6
Debt discounts and deferred financing costs (9.8) (9.6)
Total debt 441.7 194.4
Less: Debt payable within one year 7.1 4.9
Long-term debt $ 434.6 $ 189.5


	March 31, 2022		December 31, 2021
Term Loan B Credit Facility (variable rates) due April 2028	$	446.6	$	447.8
Global Revolving Credit Facility (variable rates) due December 2023	23.3		0.9
Second German loan agreement (2.45% fixed rate) due in quarterly installments ending September 2022	0.6		1.0
Third German loan agreement (1.45% fixed rate) due in quarterly installments ending September 2022	0.6		0.9
Deferred financing costs	(8.7)		(9.3)
Total debt	462.4		441.3
Less: Debt payable within one year	5.7		6.4
Long-term debt	$	456.7	$	434.9

Term Loan B Credit Facility

On June 30, 2020, the Company entered into a Term Loan Credit Agreement (the “2020 Term Loan Credit Agreement”) which provides a seven-year term loan B credit facility in the initial principal amount of $200 million (the "2020 Term Loan B".) The 2020 Term Loan B was executed in a single $200 million draw on the closing date. Proceeds under the Term B Facility were used to redeem in full $175 million of senior unsecured notes due May 2021, repay borrowings under the Company’s senior secured revolving credit facility, pay fees and expenses of the transaction and for general corporate purposes.

On April 6, 2021, in connection with the acquisition of Itasa, the Company entered into an Amendment and Restatement Agreement (the "Term Loan Credit Agreement"), which provides a seven-year term loan B facility (the "Term B Facility") in the initial principal amount of $450 million (the “Term Loan B”)~~, which replaced the 2020 Term Loan B.~~. The Term Loan B is repayable in equal quarterly installments ~~commencing on September 30, 2021~~ in an aggregate annual amount equal to 1% of the original principal amount of the Term Loan B (subject to certain reductions in connection with debt prepayments and debt buybacks). The entire unpaid principal balance of the Term Loan B will be due and payable at maturity on April 6, 2028. Cash proceeds of borrowings on the closing date under the Term Loan B were used by the Company to pay ~~the~~ cash consideration for

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the Itasa Acquisition, including the repayment of certain existing debt of Itasa, and to pay fees and expenses in connection with the Itasa Acquisition, the Term Loan B and the contemporaneous amendment of the ~~ABL~~Global Revolving Credit ~~Agreement. The Company recognized $7.2 million of loss on debt extinguishment in connection with~~Facility to permit the ~~transaction.~~Itasa Acquisition.

Under the terms of the Term Loan Credit Agreement, borrowings under the Term ~~Loan~~ B Facility will bear interest, as selected by the Company, at a per annum rate equal to either (a) the reserve-adjusted LIBOR rate for interest periods of one ~~two~~ or three months, plus an applicable rate of ~~3.00%~~3.0% per annum, or (b) the Alternate Base Rate (as defined in the Term B Credit Agreement), plus an applicable rate of ~~2.00%~~2.0% per annum. “Alternate Base Rate” will be equal to the greatest of (1) the prime rate as quoted from time to time in The Wall Street Journal or published by the Federal Reserve Board, (2) the overnight bank funding rate established by the Federal Reserve Bank of New York, plus 50 basis points, and (3) one-month reserve-adjusted LIBOR plus 100 basis points. The Alternate Base Rate is subject to a “floor” of 1.5%, and the adjusted LIBOR rate is subject to a “floor” of 0.5%. ~~The applicable~~As of March 31, 2022, the weighted-average interest rate ~~under the~~on outstanding Term Loan Bborrowings was ~~3.50%~~3.5% per annum. The Term Loan Credit Agreement includes customary LIBOR replacement language, including, but not limited to, the use of rates based on the secured overnight financing rate (“SOFR”) recommended by the Alternative Reference Rates Committee, a steering committee comprised of U.S. financial market participants, as a replacement rate for LIBOR. SOFR is a broad measure of ~~September 30, 2021.~~the cost of borrowing cash in the overnight U.S. Treasury repo market, and is administered by the Federal Reserve Bank of New York.

The Term Loan Credit Agreement contains covenants with which the Company and its subsidiaries must comply during the term of the agreement, which the Company believes are ordinary and standard for agreements of this nature.

Secured Revolving Credit Facility

In December 2018, the Company amended its existing global secured revolving credit facility (the “Global Revolving Credit Facility”) by entering into a Fourth Amended and Restated Credit Agreement, dated December 10, 2018 (the “ABL Credit Agreement”). The Global Revolving Credit Facility will mature on December 10, 2023.

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On April 6, 2021, in connection with the acquisition of Itasa, the Company amended the ABL Credit Agreement by entering into a Fourth Amendment to Fourth Amended and Restated Credit Agreement (the "Fourth Amendment"). The Fourth Amendment, among other things, adds provisions (a) specifically permitting the consummation of the Acquisition, (b) permitting the incurrence of the Term Loan B, and (c) permitting certain indebtedness, liens and other transactions to facilitate consummation of the Acquisition and the financing of working capital for Itasa.

On November 16, 2021, the Company further amended the ABL Credit Agreement by entering into a Fifth Amendment to the Fourth Amended and Restated Credit Agreement (the “Fifth Amendment”). The Fifth Amendment modified certain provisions of the ABL Credit Agreement to address the discontinuation of LIBOR published rates for Euro and Sterling denominated borrowings on December 31, 2021 and the planned discontinuation of LIBOR published rates for United States Dollar denominated borrowings after June 30, 2023. The Fifth Amendment provides customary LIBOR replacement language, including, among other things, (i) rules on determination of the replacement reference interest rates upon occurrence of specific events, (ii) the mechanics of how applicable interest rates will be determined in each case, (iii) the applicable fallback reference interest rates in case determination fails or rate ceases to be determinable. For loans not denominated in United States dollars, the Fifth Amendment provided that from the effective date of such amendment, (a) Euro-denominated loans under the Global Revolving Credit Facility would bear interest based on (1) the Euro short-term rate for German swingline borrowings, and (2) the Euro interbank offered rate for loans under the German Revolving Credit Facility other than swingline borrowings, for interest periods of one or three months, and (b) Sterling-denominated loans would bear interest based upon the Sterling overnight index average (“SONIA”). There were no Euro or Sterling-denominated loans outstanding under the Global Revolving Credit Facility as of March 31, 2022. For United States dollar-denominated loans under the Global Revolving Credit Facility, the LIBOR replacement language includes, without limitation, the use of rates based on SOFR as a replacement rate for LIBOR.

Availability under the Global Revolving Credit Facility varies over time depending on the value of the Company’s inventory, receivables and various capital assets. As of ~~September 30, 2021,~~March 31, 2022, the Company had no$23.3 million borrowings and $0.3 million in letters of credit outstanding under the Global Revolving Credit Facility and ~~$158.2~~$137.8 million of available credit (based on exchange rates at ~~September 30, 2021)~~March 31, 2022). As of ~~September 30, 2021,~~March 31, 2022, the weighted-average interest rate under the Global Revolving Credit Facility was ~~1.3 percent~~2.4% per annum.

The ABL Credit Agreement contains covenants with which the Company and its subsidiaries must comply during the term of the agreement, which the Company believes are ordinary and standard for agreements of this nature.

Under the terms of the Term Loan Credit Agreement and the ABL Credit Agreement, the Company has limitations on its ability to repurchase shares of and pay dividends on its Common Stock. These limitations are triggered depending on the Company’s credit availability under the ABL Credit Agreement and leverage levels under the Term Loan Credit Agreement. As of ~~September 30, 2021,~~March 31, 2022, none of these covenants were restrictive to the Company’s ability to repurchase shares of and pay dividends on its Common Stock.

Note 7.6. Pension and Other Postretirement Benefits

Pension Plans

Substantially all active employees of the Company’s U.S. operations participate in defined benefit pension plans and/or defined contribution retirement plans. The Company has defined benefit plans for substantially all its employees in Germany and the United Kingdom. In addition, the Company maintains a SERP, which is a non-qualified defined benefit plan, and a supplemental retirement contribution plan (the "SRCP"), which is a non-qualified, unfunded defined contribution plan. The Company provides benefits under the non-qualified SERP and SRCP plans to the extent necessary to fulfill the intent of its retirement plans without regard to the limitations set by the Internal Revenue Code on qualified retirement benefit plans.

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The following table presents the components of net periodic benefit cost for the Company’s defined benefit plans and postretirement plans other than pensions:

Components of Net Periodic Benefit Cost for Defined Benefit Plans


		Pension Benefits				Postretirement Benefits Other than Pensions					Pension Benefits				Postretirement Benefits Other than Pensions
		Three Months Ended September 30,									Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021		2022		2021
Service cost	Service cost	$	0.9	$	1.1	$	0.3	$	0.2	Service cost	$	0.9	$	1.1	$	0.2	$	0.3
Interest cost	Interest cost	3.2		3.5		0.2		0.3		Interest cost	2.7		3.0		0.2		0.1
Expected return on plan assets (a)	Expected return on plan assets (a)	(5.0)		(5.1)		—		—		Expected return on plan assets (a)	(4.2)		(4.9)		—		—
Recognized net actuarial loss	Recognized net actuarial loss	1.0		1.4		0.2		0.1		Recognized net actuarial loss	0.8		1.4		0.2		0.2
Amortization of prior service benefit	Amortization of prior service benefit	0.1		0.1		—		—		Amortization of prior service benefit	—		0.1		—		—

Net periodic benefit cost	Net periodic benefit cost	$	0.2	$	1.0	$	0.7	$	0.6	Net periodic benefit cost	$	0.2	$	0.7	$	0.6	$	0.6

Pension Benefits Postretirement Benefits
Other than Pensions
Nine Months Ended September 30,
2021 2020 2021 2020
Service cost $ 3.0 $ 3.5 $ 0.8 $ 0.8
Interest cost 9.3 10.5 0.5 0.7
Expected return on plan assets (a) (14.8) (15.5) — —
Recognized net actuarial loss 3.4 4.0 0.7 0.4
Amortization of prior service benefit 0.2 0.3 — —
Amount of settlement and curtailment losses recognized (b) 1.3 — — —
Net periodic benefit cost $ 2.4 $ 2.8 $ 2.0 $ 1.9

(a) The expected return on plan assets is determined by multiplying the fair value of plan assets at the prior year-end (adjusted for estimated current year cash benefit payments and contributions) by the expected long-term rate of return. The Dutch pension plan is funded through an insurance contract, and the expected return on plan assets is calculated based on the discount rate of the insured obligations.

(b) For the nine months ended September 30, 2021, the Company recognized a settlement loss of $1.0 million related to the SERP and a curtailment loss of $0.3 million related to the Appleton Mill closure. See Note 11, "Assets Held for Sale and Impairment and Asset Restructuring Costs," for further discussion of the Appleton Mill closure.

The Company records the service cost component of net periodic benefit cost as part of cost of sales and selling, general and administrative ("SG&A") expenses; and the non-service cost components of net periodic benefit cost (i.e., interest cost, expected return on plan assets, net actuarial gains or losses, and amortization of prior service cost or credits) as part of "Other ~~expense -~~income, net" on the Condensed Consolidated Statements of Operations.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company made ~~$9.7~~$1.9 million of aggregate contributions to qualified and nonqualified defined benefit pension trusts and payments of pension benefits for unfunded pension and other ~~postretirement~~post-employment benefit plans. The Company expects to make ~~$11.6~~$10.0 million of such payments in calendar ~~2021.~~2022. The Company made similar payments of ~~$5.3~~$2.7 million and $11.5 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and for the year ended December 31, ~~2020,~~2021, respectively.

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Note 8.7. Stock Compensation Plan

Stock Options and Stock Appreciation Rights ("Options")

There were no Options awarded ~~during the nine months ended September 30, 2021.~~

~~The following table presents information regarding Options that~~or vested during the ~~nine~~three months ended ~~September 30, 2021:~~


~~Options vested~~	~~16,529~~
~~Aggregate grant date fair value of Options vested (in millions)~~	$	~~0.2~~

March 31, 2022.

The following table presents information regarding outstanding Options:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Options outstanding	Options outstanding	372,918		380,844		Options outstanding	357,963		361,431
Aggregate intrinsic value (in millions)	Aggregate intrinsic value (in millions)	$	0.5	$	1.2	Aggregate intrinsic value (in millions)	$	0.1	$	0.4
Per share weighted average exercise price	Per share weighted average exercise price	$	71.75	$	70.99	Per share weighted average exercise price	$	73.23	$	72.76
Exercisable Options	Exercisable Options	372,160		362,651		Exercisable Options	357,205		359,543
Aggregate intrinsic value (in millions)	Aggregate intrinsic value (in millions)	$	0.5	$	1.2	Aggregate intrinsic value (in millions)	$	0.1	$	0.4
Unvested Options	Unvested Options	758		18,193		Unvested Options	758		1,888
Per share weighted average grant date fair value	Per share weighted average grant date fair value	$	10.32	$	14.48	Per share weighted average grant date fair value	$	10.32	$	10.32

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Performance Share Units ("PSUs") and Restricted Share Units ("RSUs")

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company granted target awards of ~~86,584~~105,126 PSUs. The measurement period for the PSUs is January 1, ~~2021~~2022 through December 31, ~~2023. The PSUs vest on the third anniversary from the date of grant.~~2024. Common Stock ~~of an amount between zero and~~equal to not more than 200 percent of the PSUs target will be awarded based on the Company’s return on invested capital, consolidated revenue growth and free cash flow as a percentage of net ~~sales, and~~sales. The Company's total return to shareholders relative to the companies in the Russell 2000® Value small cap ~~index.~~index is a modifier in the calculation. The Company’s return on invested capital, consolidated revenue growth and free cash flow ~~as a percentage of net sales~~ are adjusted for certain items as further described in the Performance Share Unit Award Agreement. The average price on the dates of grant for the PSUs was ~~$54.34~~$45.96 per share.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company awarded ~~44,196~~50,316 RSUs to ~~certain~~ employees. The ~~weighted average~~weighted-average grant date fair value of such awards was ~~$53.00~~$45.95 per share and ~~one third of the shares will~~ vest ~~on each of the first~~in equal amounts per year for three ~~anniversaries of~~years on the grant date anniversary, with certain exceptions for retiring employees. For the nine months ended September 30, 2021, the Company also awarded 11,119 RSUs to non-employee members of the Board of Directors. The weighted average grant date fair value of such awards was $54.06 per share and the awards vest one year from the date of grant. During the vesting period, the holders of the RSUs are entitled to dividends, but the RSUs do not have voting ~~rights.~~rights and are forfeited in the event the holder is no longer an employee on the vesting date, as further described in the Restricted Stock Unit Award Agreement.

Generally, the RSUs and PSUs are forfeited in the event the holder is no longer working for the Company on the vesting date. However, under specific circumstances, vesting may be accelerated or reflect pro-rata vesting.

Note 9.8. Stockholders' Equity

Common Stock

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had ~~16,792,000~~16,788,000 shares and ~~16,829,000~~16,779,000 shares of Common Stock outstanding, respectively.

In November 2020, the Company's Board of Directors authorized an evergreen program for the purchase of up to $25 million of outstanding Common Stock effective January 1, 2021 (the "Stock Purchase Plan"). The program does not require the Company to purchase any specific number of shares and may be suspended or discontinued at any time. Purchases under the Stock Purchase Plan will be made from time to time in the open market or in privately negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share price, market conditions and other factors. ~~The Company also had $25 million repurchase programs in place during~~For the ~~preceding two years that expired in December 2020 (the “2020 Stock Purchase Plan”) and December 2019 (the “2019 Stock Purchase Plan”), respectively.~~

~~F-16~~

~~The following table shows~~three months ended March 31, 2022, there were no shares ~~purchased and value ($ in millions)~~repurchased under ~~the respective stock purchase plans:~~

Nine Months Ended September 30,
2021 2020
Shares Amount Shares Amount
Stock Purchase Plan 70,970 $ 3.4 — $ —
2020 Stock Purchase Plan — — 59,577 3.6
this program.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company acquired an additional ~~8,766~~4,671 and ~~3,801~~6,881 shares of Common Stock, respectively, at a cost of ~~$0.5~~$0.2 million and ~~$0.2~~$0.4 million, respectively for shares surrendered by employees to pay taxes due on vested restricted stock awards.

Note ~~10.~~9. Contingencies and Legal Matters

Litigation

The Company is involved in certain legal actions and claims arising in the ordinary course of business. While the outcome of these legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of any such claim which is pending or threatened, either individually or on a combined basis, will not have a material effect on the consolidated financial condition, results of operations or cash flows of the Company.

Income Taxes

The Company periodically undergoes examination by the IRS, as well as various state and foreign jurisdictions. These tax authorities routinely challenge certain deductions and credits reported by the Company on its income tax returns. No significant tax audit findings are being contested at this time with either the IRS or any state or foreign tax authority.

Employees and Labor Relations

The Company’s U.S. union employees are represented by the USW. Approximately 50 percent of salaried employees and 80 percent of hourly employees of Neenah Germany are eligible to be represented by the Mining, Chemicals and Energy Trade Union, Industriegewerkschaft Bergbau, Chemie and Energie (the "IG BCE"). In Spain and Mexico, most of our employees are eligible to be represented by the local workers' unions: Confederacion Sindical de Comisiones Obreras ("CCOO") and Langile Abertzaalen Batzordeak ("LAB") in Spain; and Federacion de Trabajadores del Estado de Queretaro ("CTM") in Mexico. In the Netherlands, most of our employees are eligible to be represented by the Christelijke Nationale Vakbond ("CNV") and the

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Federatie Nederlandse Vakvereniging ("FNV"). As of ~~September 30, 2021,~~March 31, 2022, the Company had ~~652~~690 U.S. employees covered under collective bargaining agreements that will expire in the next 12 months.

The following table shows the expiration dates of the Company’s various bargaining agreements and the number of employees covered under each of these agreements:


Contract Expiration Date	Location	Union	Number of Employees
~~April 2021~~	~~Eerbeek, Netherlands~~	~~CNV, FNV~~	~~(a)~~
November 2021 (b)	Lowville, NY	USW	8584
December 2021 (b)	Andoain, Spain	CCOO, LAB	(a)
January 2022 (b)	Whiting, WI	USW	~~186~~192
June 2022	Neenah, WI	USW	~~190~~213
July 2022	Munising, MI	USW	~~191~~201
September 2022	~~Neenah~~Weidach and Bruckmuhl, Germany	IG BCE	(a)
~~March~~April 2023	Eerbeek, Netherlands	CNV, FNV	(a)
(c)	Queretaro, Mexico	CTM	(a)

(a) Under the local laws, ~~of international subsidiaries,~~ union membership is voluntary and does not need to be disclosed to the Company. As a result, the number of employees covered by the collective bargaining agreement with the CCOO, LAB, IG BCE, ~~CCOO~~CNV, FNV and ~~LAB,~~ CTM ~~and the CNV and FNV~~ cannot be determined.

(b) The Company is currently in negotiations with the ~~CNV and FNV.~~respective unions. Until new contracts are signed, the terms of the previous contracts still apply.

~~The Company’s United Kingdom salaried and hourly employees are eligible to participate in Unite the Union ("UNITE") on an individual basis, but not under a collective bargaining agreement.~~

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Note ~~11.~~10. Assets Held For Sale ~~and Impairment~~ and Asset Restructuring Costs

2021 Appleton Mill Closure

On June 28, 2021, the Company's Board of Directors approved the permanent closure of the manufacturing facility in Appleton, Wisconsin (the “Appleton Mill”) used in the Technical Products segment. The closure of the facility was substantially complete as of September 30, 2021. In connection with the closure, the Company reduced the carrying value of these assets from the net book value of $43.0 million to an estimated salvage value, ~~of $10.6 million,~~ which resulted in a non-cash impairment loss of $32.4 million ($24.3 million, net of tax). The salvage value was determined using third-party appraisal estimates based on observable market inputs (Level 2). In addition, the Company recorded $5.0 million of other restructuring charges, including reserves for obsolescence of inventory and environmental exposure, severance costs and a curtailment loss on the pension obligations of the terminated workers. Further, the Company incurred a charge of $2.9 million relating to the loss of certain deferred income tax benefits.

During the third quarter of 2021, the Company initiated a process to market for sale the Appleton Mill ("disposal group"). The contemplated disposal transaction does not constitute a strategic shift in the business that will have a major effect on operations of the Company. The disposal group was measured at the lower of carrying value and fair value (a Level 2 measurement, based on observable market inputs), less costs to sell. As of ~~September 30, 2021,~~March 31, 2022, the disposal group of assets of ~~$10.6~~$10.5 million (consisting of property, plant and equipment) was separately reported as Assets held for sale in the Condensed Consolidated Balance Sheet. In addition, an estimated environmental liability of ~~$0.6~~$0.5 million was reported separately as Liabilities of assets held for sale in the Condensed Consolidated Balance Sheet as of ~~September 30, 2021.~~March 31, 2022. For the three months ended ~~September 30, 2021,~~March 31, 2022, the Company ~~adjusted the inventory reserves and severance costs resulting in a net $0.4~~incurred $0.6 million ~~reduction~~ of ~~the restructuring charges.~~

~~2020 Impairment and Asset Restructuring Costs~~

~~During the three months ended June 30, 2020, due to the adverse impacts of COVID-19, the Company recorded non-cash impairment and~~ asset restructuring costs ~~of $55.3 million, of which $52.3 million~~ related to ~~a non-cash impairment loss for long-lived assets~~the closure and sale of the Appleton Mill. The Company determined the fair value of the long-lived assets principally on a probability-weighting of the discounted cash flows expected under multiple operating scenarios, based in part on the Company's current and future evaluation of economic conditions, as well as current and future plans (Level 3). The Company used a credit-adjusted risk-free rate of 9.5% based on the expected rate of return from the highest and best use of similar assets by a market participant. The other charges of $3.0 million arose from accelerated depreciation due to the idling of assets and related employee termination benefits for a workforce reduction in the Fine Paper and Packaging segment.

The Company also tested its indefinite-lived intangible assets (brand names) for impairment using the applicable accounting guidance and as a result recorded an impairment loss of $0.9 million and $0.4 million in the Fine Paper and Packaging and Technical Products segments, respectively. The Company updated the qualitative review of goodwill and other indefinite-lived intangibles, noting that there were no impairment indicators triggered as of September 30, 2020.

~~A summary of the asset restructuring and impairment costs incurred during the three and nine months ended September 30, 2021 and 2020, is as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Impairment loss $ — $ — $ 32.4 $ 52.3
Inventory obsolescence charge (recorded in Cost of Products Sold) (0.8) — 2.2 —
Restructuring charges from idled assets — — — 2.6
Other restructuring charges 0.4 — 2.4 0.4
Total $ (0.4) $ — $ 37.0 $ 55.3
facility.

Note ~~12.~~11. Business Segment Information

The Company’s reportable operating segments consist of Technical Products and Fine Paper and Packaging.

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In January 2021, the Company realigned management of the publishing products component of the Technical Products segment to be part of the Fine Paper and Packaging segment. As a result, the Company recast the comparable 2020 information and presented the $5.0 million and $20.4 million of net sales and $0.8 million and $1.0 million of operating loss for the three and nine months ended September 30, 2020, respectively, formerly in the Technical Products segment as part of the Fine Paper and Packaging segment. The Company also recast the total assets by segment and presented the $21.0 million of total assets as of December 31, 2020 related to publishing products within the Fine Paper and Packaging segment.

The Technical Products segment is an aggregation of the Company’s fiber-formed, coated and/or saturated specialized media that deliver high performance benefits to its international customers, which are similar in terms of economic characteristics, nature of products, processes, customer class and product distribution methods. The segment is an international producer of filtration media for transportation, water and other end uses; tape and abrasives backings products, durable label and other specialty substrates used for industrial solutions; and specialty coatings media used for digital image transfer, release liners and other applications.

During the three months ended March 31, 2021, the Company further disaggregated the former performance materials business into industrial solutions and specialty coatings components, and recast the prior year period disclosure.

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The increase in the specialty coatings component beginning in the second quarter of 2021 was due to the Itasa acquisition (see Note 4, "Acquisition"). The following table presents sales by product category for the Technical Products businesses:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Filtration	Filtration	39	%	52	%	42	%	48	%	Filtration	38	%	52	%
Industrial solutions	Industrial solutions	30	%	35	%	34	%	40	%	Industrial solutions	31	%	38	%
Specialty coatings	Specialty coatings	31	%	13	%	24	%	12	%	Specialty coatings	31	%	10	%
Total	Total	100	%	100	%	100	%	100	%	Total	100	%	100	%

The Fine Paper and Packaging segment is a leading supplier of premium printing and other high-end specialty papers and premium packaging, primarily in North America. During the three months ended March 31, 2021, the Company further disaggregated the former graphic imaging business into commercial and consumer components and recast the prior year disclosure to combine the consumer and packaging businesses based on the similarity of final customers and end markets they serve. The following table presents sales by product category for the Fine Paper and Packaging businesses:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Commercial	Commercial	49	%	51	%	52	%	53	%	Commercial	53	%	55	%
Consumer and packaging	Consumer and packaging	51	%	49	%	48	%	47	%	Consumer and packaging	47	%	45	%

Total	Total	100	%	100	%	100	%	100	%	Total	100	%	100	%

Each segment employs different technologies and marketing strategies. Disclosure of segment information is on the same basis that management uses internally for evaluating segment performance and allocating resources. Transactions between segments are eliminated in consolidation. The costs of shared services, and other administrative functions managed on a common basis, are allocated to the segments based on usage, where possible, or other factors based on the nature of the activity. General corporate expenses that do not directly support the operations of the business segments are shown as Unallocated corporate costs.

The following tables summarize the net sales, operating income (loss), and total assets for each of the Company’s business segments:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net sales	Net sales									Net sales
Technical Products	Technical Products	$	172.7	$	118.5	$	497.5	$	351.4	Technical Products	$	185.6	$	145.2
Fine Paper and Packaging	Fine Paper and Packaging	95.2		72.2		266.7		234.3		Fine Paper and Packaging	99.2		81.8
Consolidated	Consolidated	$	267.9	$	190.7	$	764.2	$	585.7	Consolidated	$	284.8	$	227.0

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		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021 (a)		2020 (c)		2021 (b)		2020 (d)			2022 (a)		2021 (b)
Operating income (loss)	Operating income (loss)									Operating income (loss)
Technical Products	Technical Products	$	10.0	$	13.1	$	0.9	$	(17.8)	Technical Products	$	12.1	$	19.2
Fine Paper and Packaging	Fine Paper and Packaging	6.4		5.2		29.0		15.7		Fine Paper and Packaging	11.9		12.7
Unallocated corporate costs		(5.0)		(4.4)		(37.5)		(18.9)
Unallocated Corporate										Unallocated Corporate	(11.8)		(18.3)
Consolidated	Consolidated	$	11.4	$	13.9	$	(7.6)	$	(21.0)	Consolidated	$	12.2	$	13.6

(a) Operating income for the three months ended ~~September 30, 2021~~March 31, 2022 included (1) ~~$(0.4)~~$4.9 million of ~~non-cash impairment~~due diligence and transaction costs related to the pending merger with SWM (see Note 12, "Merger Agreement"), (2) $0.6 million of asset restructuring costs related to the Appleton Mill closure ~~within Technical Products; (2) $0.6 million of acquisition related costs~~(see Note 10, "Assets Held for ~~Itasa within Technical Products;~~Sale and Asset Restructuring Costs"); (3) $0.6 million of ~~other restructuring~~incremental and ~~non-routine~~direct costs of responding to COVID-19 ($~~0.4~~0.5 million ~~within Technical Products, $(0.1)~~in Unallocated Corporate and $0.1 million ~~within~~in Fine Paper and ~~Packaging,~~Packaging); and ~~$0.3~~(4) $0.4 million of integration costs related to Itasa ($0.2 million in Technical Products and $0.2 million in Unallocated Corporate) (see Note 4, "Acquisition").

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(b) Operating income for the three months ended March 31, 2021 included (1) $12.0 million of acquisition costs for Itasa (see Note 4, "Acquisition") within Unallocated corporate ~~costs); and (4)~~costs; (2) $0.5 million of incremental and direct costs of responding to COVID-19 ($~~0.2~~0.1 million within Technical Products, ~~and~~ $0.3 million within Fine Paper and ~~Packaging). Refer to Note 11, "Assets Held for Sale~~Packaging, and ~~Impairment and Asset Restructuring Costs", Note 4, "Acquisition", and Note 1, "Background and Basis of Presentation" for further discussion.~~

(b) Operating loss for the nine months ended September 30, 2021 included (1) $37.0 million of non-cash impairment and asset restructuring costs related to the Appleton Mill closure within Technical Products; (2) $17.8 million of acquisition related costs for Itasa, $5.7 million within Technical Products and $12.1$0.1 million within Unallocated corporate ~~costs;~~costs); and (3) $7.2 million of loss on debt extinguishment due to upsizing of the Term Loan B within Unallocated corporate costs; (4) a $1.0 million SERP settlement loss within Unallocated corporate costs; (5) $1.5$0.0 million of other restructuring and non-routine costs ($~~1.0~~0.2 million within Technical Products and $(0.2) million within Fine Paper and Packaging, and $0.7 million within Unallocated corporate costs); and (6) $1.2 million of incremental and direct costs of responding to COVID-19 ($0.4 million within Technical Products, $0.6 million within Fine Paper and Packaging, and $0.2 million within Unallocated corporate costs)Packaging). Refer to Note 11, "Assets Held for Sale and Impairment and Asset Restructuring Costs", Note 4, "Acquisition", Note 6, "Debt", Note 7, "Pension and Other Postretirement Benefits", and Note 1, "Background and Basis of Presentation" for further discussion.

(c) Operating income for the three months ended September 30, 2020 included (1) $0.6 million of incremental and direct costs of responding to COVID-19 ($0.2 million within Technical Products and $0.4 million within Fine Paper and Packaging); and (2) $1.4 million of other restructuring and non-routine costs ($0.4 million within Fine Paper and Packaging and $1.0 million within Unallocated corporate costs). Refer to Note 1, "Background and Basis of Presentation" for further discussion.

(d) Operating loss for the nine months ended September 30, 2020 included (1) $55.3 million of asset restructuring and impairment costs ($51.6 million within Technical Products and $3.7 million within Fine Paper and Packaging) related to the impairment of certain long-lived assets, as well as the idling of a paper machine and other smaller assets and related severance costs; (2) $1.9 million of loss on debt extinguishment ($0.1 million within Technical Products and $1.8 million within Unallocated corporate costs) related to the redemption of the 2021 Senior Notes and resizing of the Global Revolving Credit Facility; (3) $2.1 million of incremental and direct costs of responding to COVID-19 ($0.9 million within Technical Products and $1.0 million within Fine Paper and Packaging and $0.2 million within Unallocated corporate costs); (4) $4.1 million of other restructuring and non-routine costs ($0.3 million within Technical Products, $2.2 million within Fine Paper and Packaging, and $1.6 million within Unallocated corporate costs); and (5) $1.1 million of due diligence and transaction costs of a terminated acquisition attempt within Unallocated corporate costs. Refer to Note 11, "Assets Held for Sale and Impairment and Asset Restructuring Costs", Note 6, "Debt", and Note 1, "Background and Basis of Presentation" for further discussion.


		September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Total Assets (a)	Total Assets (a)						Total Assets (a)
Technical Products	Technical Products	$	806.0	$	531.0		Technical Products	$	802.9	$	800.7
Fine Paper and Packaging	Fine Paper and Packaging	232.2		213.4			Fine Paper and Packaging	246.9		228.4
Corporate and other (b)	Corporate and other (b)	54.8		62.2			Corporate and other (b)	56.0		52.6
Consolidated	Consolidated	$	1,093.0	$	806.6		Consolidated	$	1,105.8	$	1,081.7

(a) Segment identifiable assets are those that are directly used in the segments operations.

~~F-20~~

~~Table of Contents~~

(b) Corporate assets are primarily deferred income taxes, lease ROU assets and cash.

The following table represents a disaggregation of revenue from contracts as a percentage of total revenue with customers by location of the selling entities for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
United States		58	%	65	%	60	%	68	%
North America										North America	59	%	64	%
Germany	Germany	23	%	29	%	25	%	25	%	Germany	24	%	30	%
Rest of the world		19	%	6	%	15	%	7	%
Spain										Spain	11	%	—	%
Rest of the Europe										Rest of the Europe	6	%	6	%
Total	Total	100	%	100	%	100	%	100	%	Total	100	%	100	%

Note 12. Merger Agreement

On March 28, 2022, Neenah, Schweitzer-Mauduit International, Inc., a Delaware corporation (“SWM”), and Samurai Warrior Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of SWM (“Merger Sub”), entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”).

Pursuant to the Merger Agreement, and subject to the terms and conditions thereof, Merger Sub will merge with and into Neenah (the “Merger”), with Neenah surviving the Merger as a direct and wholly-owned subsidiary of SWM. Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of Neenah, par value $0.01 per share (“Neenah Common Stock”) then outstanding, other than certain excluded shares of Neenah Common Stock as described in the Merger Agreement, will be automatically converted into the right to receive 1.358 shares of SWM common stock, par value $0.10 per share. Holders of Neenah Common Stock will receive cash in lieu of fractional shares. The Merger Agreement was unanimously approved by the Boards of Directors of each of Neenah and SWM.

The Merger Agreement also provides, among other things, that effective as of the Effective Time, Ms. Julie Schertell, the current Chief Executive Officer of Neenah, will serve as the Chief Executive Officer of the combined company, and Mr. John Rogers will serve as non-executive Chairman of the Board of Directors of the combined company. In addition, from the Effective Time until the 2025 Annual Meeting of SWM stockholders, or December 31, 2025, if an Annual Meeting of SWM Stockholders is not held in 2025, the Board of Directors of the combined company will be composed of nine directors, of which five will be designated by SWM (including Mr. Rogers), each of whom must be independent, and four will be designated by Neenah (including Ms. Schertell).

The Merger Agreement provides the combined company will be headquartered in Alpharetta, Georgia. SWM will change the name and the NYSE ticker symbol of the combined company to such new name and ticker symbol as mutually agreed upon by Neenah and SWM, which change may occur as of or after the Effective Time.

~~F-21~~

F-16

Table of Contents

The completion of the Merger is subject to regulatory approvals, the approval by the shareholders of each company and other customary conditions.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, filed as Exhibit 2.1 to the Neenah, Inc. Current Report on Form 8-K, filed March 28, 2022 and incorporated herein by reference.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents the factors that had a material effect on our financial position as of ~~September 30, 2021~~March 31, 2022 and our results of operations for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. You should read this discussion in conjunction with our consolidated financial statements and the notes to those consolidated financial statements included in our most recent Annual Report on Form 10-K. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See "Forward-Looking Statements" for a discussion of the uncertainties, risks and assumptions associated with these statements.

Executive Summary

For the three months ended ~~September 30, 2021,~~March 31, 2022, consolidated net sales of ~~$267.9~~$284.8 million increased ~~$77.2~~$57.8 million ~~(40%~~(25%) from $227.0 million in the ~~COVID-impacted~~same prior year period. The increase ~~includes strong organic~~included incremental net sales from the Itasa acquisition, selling price actions to recover input costs and higher volume ~~growth~~ in both ~~segments and~~segments. These increases were partially offset by adverse effects of currency movements and a lower value sales mix in the ~~Itasa acquisition.~~Technical Products business.

Consolidated operating income decreased ~~$2.5~~$1.4 million ~~(18%~~(10%) from the prior year period to ~~$11.4~~$12.2 million for the three months ended ~~September 30, 2021. Despite~~March 31, 2022. The reduction was primarily due to the ~~robust sales volume growth in both segments, operating income was challenged by a lower value sales mix in our Technical Products segment, significantly~~impacts of availability of labor and raw materials, which drove higher ~~input~~labor costs, reduced efficiency and higher waste. In addition, distribution costs which were further impacted by supply chain constraints, and costs related to flood damage from Hurricane Ida at our facility in Pennsylvania. Excluding adjusting items in both years, adjusted operating incomeincreased significantly as a result of ~~$12.7 million decreased $3.2 million from $15.9 million in the prior year. See the reconciliation table on F-26 for further detail.~~market inflation.

Cash ~~provided by~~used in operating activities of ~~$40.3~~$(2.0) million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$80.4~~$20.7 million provided in the prior year period. The decrease resulted from the ~~change~~increase in working capital ~~due to~~needs resulting from the ~~COVID-impacted business activity~~growth in ~~2020, including the significant actions to reduce spending, minimize inventories~~net sales, lower cash earnings and ~~cash outflows, as well as from~~ higher ~~pension contributions~~tax payments in ~~2021.~~2022.

For the three months ended September 30, 2021, the acquisition of the Itasa facilities provided $36.0 million of net sales and operating income of $2.5 million (including one-time acquisition adjustments of $0.5 million). See Note 4, "Acquisition" in the Notes to the Condensed Consolidated Financial Statements.

Results of Operations and Related Information

In this section, we discuss and analyze our net sales, earnings before interest and taxes (which we refer to as "operating income") and other information relevant to an understanding of our results of operations for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~

2021.

Analysis of Net Sales — Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

The following table presents net sales by segment, expressed as a percentage of total net sales:


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2021				2020				2021				2020					2022				2021
Net sales	Net sales																	Net sales
Technical Products	Technical Products	$	172.7	64	%	$	118.5	62	%	$	497.5	65	%	$	351.4	60	%	Technical Products	$	185.6	65	%	$	145.2	64	%
Fine Paper and Packaging	Fine Paper and Packaging	95.2		36	%	72.2		38	%	266.7		35	%	234.3		40	%	Fine Paper and Packaging	99.2		35	%	81.8		36	%
Consolidated	Consolidated	$	267.9	100	%	$	190.7	100	%	$	764.2	100	%	$	585.7	100	%	Consolidated	$	284.8	100	%	$	227.0	100	%

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Table of Contents

The following table presents our net sales by segment for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended September 30,						Change in Net Sales Compared to Prior Period												Three Months Ended March 31,						Change in Net Sales Compared to Prior Period
										Change Due To																		Change Due To
				2021			2020			Total Change			Volume			Net Price (a)			Currency			2022			2021			Total Change			Volume			Net Price (a)			Currency
Technical Products	Technical Products	$	172.7		$	118.5		$	54.2		$	53.5		$	(0.3)		$	1.0	Technical Products	$	185.6		$	145.2		$	40.4		$	32.7		$	14.0		$	(6.3)
Fine Paper and Packaging	Fine Paper and Packaging	95.2			72.2			23.0			18.2			4.8			—		Fine Paper and Packaging	99.2			81.8			17.4			6.0			11.4			—
Consolidated	Consolidated	$	267.9		$	190.7		$	77.2		$	71.7		$	4.5		$	1.0	Consolidated	$	284.8		$	227.0		$	57.8		$	38.7		$	25.4		$	(6.3)

(a) Includes changes in selling ~~price~~prices and product mix.

Consolidated net sales of ~~$267.9~~$284.8 million for the three months ended ~~September 30, 2021~~March 31, 2022 increased ~~$77.2~~$57.8 million ~~(40%~~(25%) from the prior year ~~period, which had been heavily impacted by COVID-19.~~period. The increase ~~includes strong organic volume growth, pricing actions, and~~included incremental net sales from the Itasa acquisition, ~~of $36.0 million. The increase was slightly~~selling price actions to recover input costs and higher volume in both segments. These increases were offset by adverse effects of currency movements and a lower value sales mix in the Technical ~~Products.~~Products business. Excluding the effects of the April 2021 Itasa acquisition and a facility closure, consolidated net sales increased 12% from the prior year period.

•Net sales in our Technical Products segment increased ~~$54.2~~$40.4 million ~~(46%~~(28%) from the prior year period. The ~~revenue~~ increase was ~~primarily driven by a rebound in all product categories compared~~attributable to ~~the impact of the pandemic in the third quarter of 2020, and~~net sales from the acquisition of ~~Itasa.~~Itasa and from selling price actions to recover ongoing input cost impacts. These increases were partly offset by lost sales from the facility closure, a lower value ~~sales~~product mix ~~in 2021, which included~~and adverse currency effects. Excluding the effects of ~~limited availability of some raw materials from supply chain constraints.~~the Itasa acquisition and the facility closure, net sales increased 6%.

•Net sales in our Fine Paper and Packaging segment increased ~~$23.0~~$17.4 million ~~(32%~~(21%) from the prior year period. The ~~increase reflects a~~improvement reflected selling price actions to offset ongoing input cost increases and continued ~~rebound~~organic growth in volumes in all product ~~categories, especially in premium packaging and consumer products. In addition, net selling prices were higher in 2021 due to a higher priced mix and input cost recoveries.~~categories.

~~The following table presents our net sales by segment for the nine months ended September 30, 2021 and 2020:~~

Nine Months Ended September 30, Change in Net Sales Compared to Prior Period
Change Due To
2021 2020 Total Change Volume Net Price (a) Currency
Technical Products $ 497.5 $ 351.4 $ 146.1 $ 143.5 $ (12.2) $ 14.8
Fine Paper and Packaging 266.7 234.3 32.4 29.0 3.4 —
Consolidated $ 764.2 $ 585.7 $ 178.5 $ 172.5 $ (8.8) $ 14.8

~~(a) Includes changes in selling price and product mix.~~

Consolidated net sales of $764.2 million for the nine months ended September 30, 2021 increased $178.5 million (30%) from the prior year period. Strong organic volume growth was realized in both segments, coupled with net sales from the Itasa acquisition of $69.2 million and favorable currency effects. The increase was partly offset by lower value sales mix. Excluding the Itasa acquisition, net sales grew 19% from the prior year.

•Net sales in our Technical Products segment increased $146.1 million (42%) from the prior period. The revenue increase reflects a rebound in all product categories, led by sales growth in filtration, incremental sales from the acquisition of Itasa, and favorable currency effects from a stronger euro. These increases were partly offset by lower value sales mix in 2021 and the significant cost impacts from supply chain constraints. Excluding net sales of $69.2 million from the Itasa acquisition, Technical Products net sales increased 22% from the prior year.

•Net sales in our Fine Paper and Packaging segment increased $32.4 million (14%) from the prior year period. The rebound was achieved in all product categories, especially in premium packaging and consumer products. The increase in net sales was slightly offset by a lower value mix in 2021.

~~F-23~~

~~Table of Contents~~

Analysis of Operating Income — Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

The following table sets forth line items from our Condensed Consolidated Statements of Operations as a percentage of net sales for the periods indicated and is intended to provide a perspective of trends in our historical results:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of products sold 85.7 81.5 83.5 81.1
Gross profit 14.3 18.5 16.5 18.9
Selling, general and administrative expenses 9.7 10.0 10.2 11.4
Impairment and asset restructuring costs (Note 11) 0.1 — 4.6 9.4
Acquisition and integration costs (Note 4) 0.1 — 1.6 0.2
Other restructuring and non-routine costs (Note 12) 0.2 0.8 0.2 0.7
COVID-19 costs (Note 1) 0.2 0.3 0.2 0.4
Loss on debt extinguishment (Note 6) — — 0.9 0.3
Pension settlement losses (Note 7) — — 0.1 —
Other (income) expense - net (0.2) 0.1 (0.3) 0.1
Operating income (loss) 4.3 7.3 (1.0) (3.6)
Interest expense - net 1.9 1.9 1.7 1.6
Income (Loss) before income taxes 2.4 5.4 (2.7) (5.2)
Provision (benefit) for income taxes 1.2 1.3 (0.3) (0.8)
Net income (loss) 1.2 % 4.1 % (2.4) % (4.4) %


	Three Months Ended March 31,
	2022		2021
Net sales	100.0	%	100.0	%
Cost of products sold	83.0		78.1
Gross profit	17.0		21.9
Selling, general and administrative expenses	10.6		10.7
Acquisition-related costs (Note 4)	1.9		5.3
Asset restructuring costs (Note 10)	0.2		—

COVID-19 costs (Note 1)	0.2		0.2


Other income, net	(0.2)		(0.4)
Operating income	4.3		6.1
Interest expense, net	1.8		1.4
Income before income taxes	2.5		4.7
Provision for income taxes	0.5		1.0
Net income	2.0	%	3.7	%

F-19

Table of Contents

The following table presents our operating income by segment for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


								Change in Operating Income Compared to Prior Period																								Change in Operating Income Compared to Prior Period
		Three Months Ended September 30,									Change Due To															Three Months Ended March 31,									Change Due To
							Total						Net			Input															Total						Net			Input
				2021			2020			Change			Volume			Price (a)			Costs (b)			Currency			Other (c)			2022			2021			Change			Volume			Price (a)			Costs (b)			Currency			Other (c)
Technical Products	Technical Products	$	10.0		$	13.1		$	(3.1)		$	10.1		$	(0.7)		$	(12.2)		$	0.1		$	(0.4)	Technical Products	$	12.1		$	19.2		$	(7.1)		$	10.0		$	17.6		$	(20.0)		$	(0.6)		$	(14.1)
Fine Paper and Packaging	Fine Paper and Packaging	6.4			5.2			1.2			5.0			4.2			(4.5)			—			(3.5)		Fine Paper and Packaging	11.9			12.7			(0.8)			1.7			14.0			(8.8)			—			(7.7)
Unallocated corporate costs		(5.0)			(4.4)			(0.6)			—			—			—			—			(0.6)
Unallocated Corporate																									Unallocated Corporate	(11.8)			(18.3)			6.5			—			—			—			—			6.5
Consolidated	Consolidated	$	11.4		$	13.9		$	(2.5)		$	15.1		$	3.5		$	(16.7)		$	0.1		$	(4.5)	Consolidated	$	12.2		$	13.6		$	(1.4)		$	11.7		$	31.6		$	(28.8)		$	(0.6)		$	(15.3)

(a) Includes ~~changes in~~ selling price changes and a net favorable change in product mix.

(b) Includes ~~price~~cost changes for raw materials and energy.

(c) Includes the net ~~favorable~~unfavorable effects of other manufacturing costs, ~~over (under) absorption~~under-absorption of fixed costs, distribution and selling, general and administrative ("SG~~&A expenses.~~&A") expenses of $13.6 million in Technical Products and $7.7 million in Fine Paper and Packaging. In addition, these amounts ~~include~~included the net change in non-GAAP adjustments of ~~$(0.6)~~$(0.5) million, ~~$0.6~~$0.0 million, and ~~$0.7~~$6.5 million in Technical Products, Fine Paper and Packaging, and Unallocated corporate costs, respectively. See the reconciliation table on ~~F-26 for further detail by segment and type of cost.~~

Consolidated operating income decreased $2.5 million from the prior year period to $11.4 million for the three months ended September 30, 2021. Higher input costs in both segments, lower value sales mix in Technical Products, and higher distribution costs, which were all impacted by supply chain constraints, as well as operational challenges including costs related to flood damage at our facility in Pennsylvania more than offset the strong sales volume growth. Excluding adjusting items in both years, adjusted operating income of $12.7 million decreased $3.2 million from $15.9 million in the prior year. See the reconciliation table on F-26 for further detail.

•Operating income for our Technical Products segment decreased $3.1 million from the prior year period to $10.0 million. Higher input and distribution costs and lower value sales mix, which were all impacted by supply chain constraints, along with operational challenges including costs related to flood damage at the Pennsylvania facility more than offset the strong sales volume, including benefits from the acquisition of Itasa. Excluding adjusting items shown

~~F-24~~

~~Table of Contents~~

~~on the reconciliation table on F-26, adjusted operating income decreased $2.5 million from $13.3 million to $10.8 million.~~

•Operating income for our Fine Paper and Packaging segment increased $1.2 million from the prior year period to $6.4 million, primarily as a result of higher sales and more favorable sales mix, partly offset by higher input and distribution costs resulting from supply chain pressures. Excluding unfavorable adjusting items of $0.2 million in 2021 and $0.8 million in 2020 shown on the reconciliation table on F-26, adjusted operating income of $6.6 million in 2021 increased $0.6 million from $6.0 million in the prior year.

•Unallocated corporate expenses of $5.0 million increased $0.6 million from the prior year. Excluding unfavorable adjustments in 2021 and 2020 of $0.3 million and $1.0 million, respectively, shown on the reconciliation table on F-26, adjusted unallocated corporate expenses of $4.7 million increased $1.3 million from prior year due to an increase in SG&A spending.

~~The following table presents our operating income (loss) by segment for the nine months ended September 30, 2021 and 2020:~~

Change in Operating Income Compared to Prior Period
Nine Months Ended September 30, Change Due To
Total Net Input
2021 2020 Change Volume Price (a) Costs (b) Currency Other (c)
Technical Products $ 0.9 $ (17.8) $ 18.7 $ 28.4 $ (11.6) $ (17.3) $ 2.4 $ 16.8
Fine Paper and Packaging 29.0 15.7 13.3 8.2 4.9 (4.6) — 4.8
Unallocated corporate costs (37.5) (18.9) (18.6) — — — — (18.6)
Consolidated $ (7.6) $ (21.0) $ 13.4 $ 36.6 $ (6.7) $ (21.9) $ 2.4 $ 3.0

~~(a) Includes changes in selling price and product mix.~~

~~(b) Includes price changes for raw materials and energy.~~

(c) Includes other manufacturing costs, over (under) absorption of fixed costs, distribution and SG&A expenses. In addition, these amounts include the net change in non-GAAP adjustments of $8.8 million, $6.5 million, and $(16.5) million in Technical Products, Fine Paper and Packaging, and Unallocated corporate costs, respectively. See the reconciliation table on F-26F-21 for further detail by segment and type of cost.

Consolidated operating ~~loss improved by $13.4~~income decreased $1.4 million from the prior year period ~~loss of $21.0 million~~ to ~~a loss of $7.6~~$12.2 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. Excluding adjusting items ~~noted below, operating income increased $14.6~~in both years, adjusted EBITDA of $30.3 million ~~to $58.1~~decreased $5.4 million ~~due primarily to higher sales and related manufacturing cost efficiencies. The impact of higher volumes, including~~from $35.7 million in the acquisition of Itasa, was partly offset by higher input and distribution costs and lower value sales mix in Technical Products, all of which were impacted by supply chain constraints. In addition, as presented onprior year. See the reconciliation table on ~~F-26, we recorded $65.7 million~~F-21 for further detail of ~~impairment~~adjustments, and ~~asset restructuring~~depreciation and amortization. The reduction was primarily due to the impacts of availability of labor and raw materials, which drove higher labor costs, reduced efficiency and higher waste. In addition, distribution costs increased significantly as a result of the Appleton Mill closure, acquisition and integration costs, loss on extinguishment of debt, pension settlement losses, other restructuring and non-routine costs, and incremental costs of responding to COVID-19. Adjusting items of $64.5 million in 2020 included non-cash impairment and asset restructuring costs for long-lived assets, loss on extinguishment of debt, incremental costs of responding to COVID-19, other restructuring and non-routine costs, and acquisition and due diligence costs.market inflation.

•Operating income ~~of $0.9 million~~ for our Technical Products segment ~~increased $18.7~~decreased $7.1 million from the prior year period ~~loss of $17.8~~to $12.1 million. The reduction was driven by labor and raw material availability challenges, reduced efficiency and waste. Despite contractual price adjustments realized, these input and distribution costs remain high and were not fully recovered. These factors more than offset the significant benefit from the Itasa acquisition. Excluding ~~unfavorable~~ adjusting items ~~discussed above and~~ shown on the reconciliation table on ~~F-26,~~F-21, adjusted ~~operating income increased $9.9~~EBITDA decreased $4.7 million ~~(28%)~~ from ~~$35.1~~$24.9 million in the prior year period to $45.0 million, primarily as a result of higher sales and production volumes, including the Itasa acquisition, and related manufacturing cost efficiencies, and favorable foreign currency. The increase was partly offset by higher input and distribution costs and lower value sales mix, which were all impacted by supply chain constraints.$20.2 million.

•Operating income for our Fine Paper and Packaging segment ~~increased $13.3~~decreased $0.8 million from the prior year period to ~~$29.0 million.~~$11.9 million, primarily as a result of higher labor and other manufacturing costs which more than offset favorable input cost recoveries. In addition, current year results included the approximately $2.0 million impact of costs and lost sales related to the fire at our Brownville, NY facility in January. Excluding ~~unfavorable~~ adjusting items ~~discussed above and~~ shown on the reconciliation table on ~~F-26,~~F-21, adjusted ~~operating income~~EBITDA of ~~$29.4~~$14.5 million in ~~2021 increased $6.8~~2022 decreased $0.8 million ~~(30%)~~ from ~~$22.6~~$15.3 million in the prior ~~year~~year.

•Unallocated corporate expenses of $11.8 million decreased $6.5 million from the prior year. Excluding adjustments shown on the reconciliation table on F-21, adjusted EBITDA of Unallocated Corporate was $(4.4) million in 2022 and $(4.5) million in 2021. The excluded costs in 2021 related to the Itasa acquisition and in 2022 primarily ~~as a result of higher sales and production volumes and~~ related ~~manufacturing cost efficiencies. The impact of higher volumes was partly offset by higher input and distribution costs resulting from supply chain constraints.~~to the pending merger with SWM.

~~F-25~~F-20

Table of Contents

•Unallocated corporate expenses for the nine months ended September 30, 2021 of $37.5 million were $18.6 million higher than the prior year period due to costs of $21.2 million including loss on debt extinguishment, acquisition and integration costs, pension settlement losses, restructuring and other non-routine costs, and COVID-19 costs. These costs compared to $4.7 million of one-time costs in 2020. Excluding these items, adjusted unallocated corporate expenses were $2.1 million higher than the prior year period due to higher SG&A spending.

The following table sets forth our operating income (loss) by segment, adjusted for the effects of non-routine certain costs, for the periods indicated:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Technical Products
GAAP operating income (loss) $ 10.0 $ 13.1 $ 0.9 $ (17.8)
Impairment and asset restructuring costs (0.4) — 37.0 51.6
Acquisition and integration costs 0.6 — 5.7 —
Other restructuring and non-routine 0.4 — 1.0 0.3
COVID-19 costs 0.2 0.2 0.4 0.9
Loss on debt extinguishment — — — 0.1
Adjusted operating income 10.8 13.3 45.0 35.1
Fine Paper and Packaging
GAAP operating income 6.4 5.2 29.0 15.7
Asset restructuring costs — — — 3.7
Other restructuring and non-routine (0.1) 0.4 (0.2) 2.2
COVID-19 costs 0.3 0.4 0.6 1.0
Adjusted operating income 6.6 6.0 29.4 22.6
Unallocated Corporate Costs
GAAP operating loss (5.0) (4.4) (37.5) (18.9)
Acquisition and integration costs — — 12.1 1.1
Other restructuring and non-routine 0.3 1.0 0.7 1.6
COVID-19 costs — — 0.2 0.2
Loss on debt extinguishment — — 7.2 1.8
Pension settlement costs — — 1.0 —
Adjusted operating loss (4.7) (3.4) (16.3) (14.2)
Consolidated
GAAP operating income (loss) 11.4 13.9 (7.6) (21.0)
Impairment and asset restructuring costs (a) (0.4) — 37.0 55.3
Acquisition and integration costs (a) 0.6 — 17.8 1.1
Other restructuring and non-routine 0.6 1.4 1.5 4.1
COVID-19 costs 0.5 0.6 1.2 2.1
Loss on debt extinguishment — — 7.2 1.9
Pension settlement costs — — 1.0 —
Adjusted operating income $ 12.7 $ 15.9 $ 58.1 $ 43.5

(a) Each of these non-routine items is reflected on the Condensed Consolidated Statements of Operations as a separate line, with the exception of $(0.8) million and $2.2 million, respectively, of "Impairment and asset restructuring costs" and $0.3 million and $5.4 million, respectively, of "Acquisition and integration costs" for three and nine months ended September 30, 2021, which are reflected in "Cost of products sold".

~~F-26~~

~~Table of Contents~~


	Three Months Ended March 31,
	2022		2021
Technical Products
GAAP operating income	$	12.1	$	19.2
Asset restructuring costs	0.6		—
Acquisition-related costs	0.2		—
Other restructuring and non-routine costs	—		0.2
COVID-19 costs	—		0.1


Adjusted operating income	12.9		19.5
Depreciation and amortization of intangible assets and stock compensation	7.3		5.4
Adjusted EBITDA	20.2		24.9

Fine Paper and Packaging
GAAP operating income	11.9		12.7

Other restructuring and non-routine costs	—		(0.2)

COVID-19 costs	0.1		0.3
Adjusted operating income	12.0		12.8
Depreciation and amortization of intangible assets and stock compensation	2.5		2.5
Adjusted EBITDA	14.5		15.3

Unallocated Corporate Costs
GAAP operating loss	(11.8)		(18.3)
Acquisition-related costs	5.1		12.0

COVID-19 costs	0.5		0.1


Adjusted operating loss	(6.2)		(6.2)
Depreciation and amortization of intangible assets and stock compensation	1.8		1.7
Adjusted EBITDA	(4.4)		(4.5)

Consolidated
GAAP operating income	12.2		13.6
Acquisition-related costs	5.3		12.0
Asset restructuring costs	0.6		—

COVID-19 costs	0.6		0.5


Adjusted operating income	18.7		26.1
Depreciation and amortization of intangible assets and stock compensation	11.6		9.6
Adjusted EBITDA	$	30.3	$	35.7

In accordance with generally accepted accounting principles in the United States ("GAAP"), consolidated operating income ~~(loss)~~ includes the pre-tax effects of ~~impairment and~~ asset restructuring costs, ~~acquisition and integration costs, loss on debt extinguishment, pension settlement losses, other restructuring and non-routine~~acquisition-related costs and COVID-19 costs. We believe that by adjusting reported operating income to exclude the effects of such items, the resulting adjusted operating income is on a basis that reflects the results of our ongoing operations. In assessing COVID-19 impacts, we excluded only costs which were unusual, incremental and directly attributable to mitigating the effects of COVID-19 on our operations. We believe that providing adjusted operating results will help investors gain an additional perspective of underlying business trends and results. Adjusted operating income is not a recognized term under GAAP and should not be considered in isolation or as a substitute for operating income derived in accordance with GAAP. Other companies may use different methodologies for calculating their non-GAAP financial measures and, accordingly, our non-GAAP financial measures may not be comparable to their measures.

F-21

Table of Contents

Additional Statement of Operations Commentary:

•SG&A expense of ~~$26.1~~$30.3 million for the three months ended ~~September 30, 2021~~March 31, 2022 was ~~$7.0~~$6.0 million higher than SG&A expense of ~~$19.1~~$24.3 million in the prior year period. The majority of the increase was due to additional SG&A ~~from~~of the Itasa ~~acquisition. Costs in 2020 were lower due to the significant actions taken to manage spending and temporarily reduce costs in areas such as marketing, travel and payroll.~~business.

SG&A expense of $77.9 million for the nine months ended September 30, 2021 was $11.4 million higher than SG&A expense of $66.5 million in the prior year period. Most of the increase was due to additional SG&A from the Itasa acquisition.

•For the three months ended ~~September 30, 2021,~~March 31, 2022, net interest expense of ~~$5.1~~$5.0 million was higher than the ~~$3.6~~$3.1 million in the ~~third~~first quarter of ~~2020,~~2021 due to the higher borrowing under the upsized Term Loan B and amortization of the associated deferred financing costs.

For the nine months ended September 30, 2021, net interest expense of $13.0 million increased compared to $9.5 million for prior year period, likewise due to higher Term Loan B borrowing and associated deferred financing cost amortization.

•Historically, our effective income tax rate has differed from the U.S. statutory tax rate primarily due to the proportion of pre-tax income in jurisdictions with marginal tax rates that differ from the U.S. statutory tax rate, research and development and other tax credits and excess tax benefits from stock compensation. For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we recorded an income tax provision of ~~$3.0~~$1.5 million and ~~$2.4~~$2.2 million, respectively. The effective income tax rate was 48% and 23% for those periods, respectively. As noted below, the effective income tax rate was higher for the three months ended September 30, 2021 due to an adjustment of $1.7 million to a valuation allowance.

For the nine months ended September 30, 2021 and 2020, we recorded an income tax benefit of $2.5 million and $4.7 million, respectively. The effective income tax rate was (12)% and (15)% for those periods, respectively. See Note 5, "Income Taxes" of Notes to Condensed Consolidated Financial Statements for a reconciliation of the effective income tax (benefit) rate to the U.S. federal statutory income tax (benefit) rate. The effective income tax benefit rates21% in 2021 and 2020, were significantly impacted by the effects of the $32.4 million and $52.3 million, respectively, of impairment losses of the Appleton Mill (see Note 11, "Assets Held For Sale and Impairment and Asset Restructuring Costs") which resulted in consolidated pre-tax book losses in each period. During the three months ended June 30, 2021, the Company recorded $2.9 million of income tax expense to reflect the elimination of certain deferred tax assets due to the mill closure. In addition, during that period, the Company recorded an income tax benefit of $1.4 million upon filing income tax returns to utilize the NOL carryback provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). Combined with the estimated benefit recorded as of December 31, 2020, the Company has recorded an income tax benefit of $2.3 million and a corresponding tax receivable of $9.1 million for the tax refund.

As of June 30, 2020, we evaluated our ability to utilize our deferred tax assets, including research and development and other tax credits and NOLs, before they expire. As a result of the impacts of COVID-19 and other factors, tax expense of $4.0 million was recorded to increase the valuation allowance against our state tax credits and NOLs. As of September 30, 2021, an additional $1.7 million of tax expense was recorded to increase the valuation allowance against these state tax credits and NOLs.both periods.

~~F-27~~

~~Table of Contents~~

Liquidity and Capital Resources

We believe that our financial position and liquidity remain strong, considering as of ~~September 30, 2021~~March 31, 2022, we had:

•no near-term debt maturities, as the Global Revolving Credit Facility matures in December 2023 and the Term Loan B matures in April 2028;

•significant remaining availability of ~~$158.2~~$137.8 million on our Global Revolving Credit Facility, with no$23.3 million outstanding borrowings; and

•$~~31.7~~25.2 million of cash and cash equivalents on hand.


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Net cash flow provided by (used in):	Net cash flow provided by (used in):					Net cash flow provided by (used in):
Operating activities	Operating activities	$	40.3	$	80.4	Operating activities	$	(2.0)	$	20.7

Investing activities:	Investing activities:					Investing activities:
Capital expenditures	Capital expenditures	(19.0)		(11.8)		Capital expenditures	(8.3)		(4.8)
Acquisition of Itasa		(240.2)		—

Other investing activities	Other investing activities	3.6		(0.4)		Other investing activities	(0.1)		(0.2)
Total	Total	(255.6)		(12.2)		Total	(8.4)		(5.0)

Financing activities:	Financing activities:					Financing activities:
Net borrowings (repayments) of long-term debt	Net borrowings (repayments) of long-term debt	247.7		(3.1)		Net borrowings (repayments) of long-term debt	20.6		(1.2)
Cash dividends paid	Cash dividends paid	(23.9)		(23.9)		Cash dividends paid	(8.0)		(8.0)
Shares purchased	Shares purchased	(3.6)		(3.8)		Shares purchased	(0.2)		(0.4)
Other financing activities	Other financing activities	(9.5)		(5.4)		Other financing activities	(0.2)		(1.4)
Total	Total	210.7		(36.2)		Total	12.2		(11.0)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(0.8)		0.3		Effect of exchange rate changes on cash and cash equivalents	(0.5)		(0.8)
Net increase in cash and cash equivalents and restricted cash	Net increase in cash and cash equivalents and restricted cash	$	(5.4)	$	32.3	Net increase in cash and cash equivalents and restricted cash	$	1.3	$	3.9

Operating Cash Flow Commentary

•Cash ~~provided by~~used in operating activities of ~~$40.3~~$(2.0) million for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$40.1~~$22.7 million lower than cash provided by operating activities of ~~$80.4~~$20.7 million in the prior year period. The decrease resulted from the ~~change~~increase in working capital ~~due to~~needs resulting from the ~~COVID-impacted business activity~~growth in ~~2020, including the significant actions to reduce spending, minimize inventories~~net sales, lower cash earnings and ~~cash outflows, as well as from~~ higher ~~pension contributions~~tax payments in ~~2021.~~2022.

F-22

Table of Contents

Investing Commentary:

•~~We acquired Itasa on April 6, 2021, for $240.2 million, net of cash on hand and repayment of existing debt, and including a loss on foreign currency forward contracts.~~

•For the ~~nine~~three months ended ~~September 30,~~March 31, 2022, and 2021, ~~and 2020,~~ capital expenditures were ~~$19.0~~$8.3 million and ~~$11.8~~$4.8 million, respectively. We expect aggregate annual capital expenditures to return to a range of approximately 24 to 45 percent of net sales. We believe that this level of capital spending can be funded from cash provided from operating activities and allows us to maintain the efficiency and cost effectiveness of our assets while also investing in expanded capabilities to successfully pursue strategic initiatives and deliver attractive returns.

~~F-28~~

~~Table of Contents~~

Financing Commentary:

•For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, cash and cash equivalents ~~decreased~~increased to ~~$31.7~~$25.2 million from ~~$37.1~~$23.9 million at December 31, ~~2020.~~2021. As of ~~September 30, 2021,~~March 31, 2022, our cash balance consisted of ~~$7.1~~$4.3 million in the U.S. and ~~$24.6~~$20.9 million held at entities outside of the U.S. As of ~~September 30, 2021,~~March 31, 2022, there were no restrictions regarding the repatriation of our non-U.S. cash.

•For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, cash provided in financing activities was ~~$210.7~~$12.2 million. Cash flows related to financing activities consisted of net borrowings of long-term debt, dividends paid ~~debt issuance costs, and share repurchases. We made net borrowings of $247.7 million by upsizing our Term Loan B from $200 million to $450 million as the source of financing the Itasa acquisition.~~

•For the nine months ended September 30, 2020, cash used in financing activities was $36.2 million. Cash flows related to financing activities consisted of net borrowings of long-term debt, dividends paid, debt issuance costs, and share repurchases.

•Availability under our Global Revolving Credit Facility varies over time depending on the value of our inventory, receivables and various capital assets. As of ~~September 30, 2021,~~March 31, 2022, we had no$23.3 million of outstanding borrowings under our Global Revolving Credit Facility and ~~$158.2~~$137.8 million of available credit (based on exchange rates at ~~September 30, 2021)~~March 31, 2022).

•As of ~~September 30, 2021,~~March 31, 2022, we had required debt principal payments through ~~September 30, 2022~~March 31, 2023 of $4.5 million for the Term Loan B payable in equal quarterly installments.

Transactions With Shareholders

•For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we paid cash dividends of ~~$23.9~~$8.0 million and ~~$23.9~~$8.0 million ($~~1.41~~0.475 and $0.47 per common share)~~. In August 2021, our Board of Directors approved an increase in the quarterly dividend on our Common Stock, to $0.475 per share, effective with the December 2021 dividend payment.~~, respectively.

•In November 2020, the Board of Directors authorized an evergreen program for the repurchase of up to $25 million of outstanding Common Stock. This plan does not require us to purchase any specific number of shares and may be suspended or discontinued at any time. For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~there~~no shares were ~~70,970 shares~~ repurchased ~~for $3.4 million~~ under this program. ~~For the nine months ended September 30, 2020, we repurchased 59,577 shares of Common Stock at a cost of $3.6 million.~~ For further details on our Stock Purchase Plans, refer to Note 9,8, "Stockholders' Equity" of Notes to Condensed Consolidated Financial Statements.

Other Items:

•As of ~~September 30, 2021,~~March 31, 2022, we had ~~$76.7~~$65.7 million of state NOLs. Our state NOLs may be used to offset ~~$4.6~~$4.0 million in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts between ~~2021~~2022 and 2041. In addition, as of ~~September 30, 2021,~~March 31, 2022, we had ~~$29.9~~$27.9 million of U.S. federal and ~~$7.5~~$7.7 million of U.S. state research and development tax credits ("R&D Credits") which, if not used, will expire between ~~2029~~2030 and ~~2041~~2042 for the U.S. federal R&D Credits and between ~~2021~~2022 and ~~2036~~2037 for the state R&D Credits.

Management believes that our ability to generate cash from operations and our borrowing capacity are adequate to fund working capital, capital spending and other cash needs for the next 12 months. Our ability to generate adequate cash from operations beyond ~~2021~~2022 will depend on, among other things, our ability to successfully implement our business strategies, control costs in line with market conditions, and manage the impact of changes in input prices and the impact and duration of COVID-19. We can give no assurance we will be able to successfully implement these items.

~~F-29~~F-23

Table of Contents

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. We believe that the estimates, assumptions and judgments described in "Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Use of Estimates" of our most recent Annual Report on Form 10-K have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. The critical accounting policies used in the preparation of the consolidated financial statements are those that are important both to the presentation of financial condition and results of operations and require significant judgments with regard to estimates used. These critical judgments relate to the timing of recognizing sales revenue, the recoverability of deferred income tax assets, pension benefits, future cash flows associated with impairment testing of long-lived assets and acquisition accounting which requires companies to record assets acquired and liabilities assumed at their respective fair value at the date of acquisition. Actual results could differ from these fair value measurements and estimates and changes in these estimates are recorded when known. We believe that the consistent application of these policies enables us to provide readers of our financial statements with useful and reliable information about our operating results and financial condition. ~~Other than the acquisition accounting related to Itasa, there~~There have been no significant changes in these policies or the estimates used in the application of the policies since December 31, ~~2020.~~2021.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute "forward-looking" statements as defined under federal securities laws. Statements contained in this quarterly report that are not historical facts may be forward-looking statements within the meaning under federal securities laws and we caution investors that any forward-looking statements we make are not guarantees or indicative of future performance. These forward-looking statements rely on a number of assumptions concerning future events and are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties and other factors include, but are not necessarily limited to, those set forth under the captions "Cautionary Note Regarding Forward-Looking Statements" and/or "Risk Factors" of our latest Form 10-K filed with the SEC as periodically updated by subsequently filed Form 10-Qs (these securities filings can be located on our website at www.neenah.com). Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances. These cautionary statements are being made pursuant to federal securities laws with the intention of obtaining the benefits of the "safe harbor" provisions of such laws.

You can identify forward-looking statements as those that are not historical in nature, particularly those that use terminology such as "may," "will," "should," "expect," "anticipate," "contemplate," "estimate," "believe," "plan," "project," "predict," "potential" or "continue," or the negative of these, or similar terms. In evaluating these forward-looking statements, you should consider the following factors, as well as others contained in our public filings from time to time, which may cause our actual results to differ materially from any forward-looking statement:

• changes in market demand for our products due to global economic and political conditions or our inability to execute product innovation strategies;

•the impact of competition, both domestic and international, changes in industry production capacity, including the construction of new mills or new machines, the closing of mills and incremental changes due to capital expenditures or productivity increases;

•the loss of current customers or the inability to obtain new customers;

•increases in commodity prices (particularly for pulp, energy and latex);

•our ability to control costs, including transportation, and implement measures designed to enhance operating efficiencies;

•the availability of raw materials and energy and other supply chain interruptions;

•the impact of cybersecurity risks related to breaches of security pertaining to sensitive Company, customer or vendor information, as well as breaches in the technology that manages operations and other business processes;

•loss and replacement of key personnel;

•our ability to identify attractive acquisition targets and to successfully integrate acquired businesses into our existing operations;

~~F-30~~F-24

Table of Contents

•changes in asset valuations, including write-downs of assets including property, plant and equipment; inventory, accounts receivable, deferred tax assets or other assets for impairment or other reasons;

•the enactment of adverse federal, state or foreign tax or other legislation or changes in government policy or regulation;

•the impact of increased trade protectionism and tariffs on our business, results of operations and financial condition;

•unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;

•fluctuations in foreign currency exchange rates (in particular, changes in the U.S. dollar/Euro currency exchange rates) and interest rates on long-term debt;

•increases in the funding requirements for our pension and postretirement liabilities;

•strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;

•capital and credit market volatility and fluctuations in global equity and fixed-income markets;

•our existing and future indebtedness;

•our NOLs may not be available to offset our tax liabilities and other tax planning strategies may not be effective; and

•other risks that are detailed from time to time in reports we file with the SEC.

Any subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth or referred to above, as well as the risk factors contained in our most recent Annual Report on Form 10-K. Except as required by law, we disclaim any obligation to update such statements or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the disclosure on this matter made in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management in a timely manner.

As of ~~September 30, 2021,~~March 31, 2022, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of ~~September 30, 2021.~~March 31, 2022.

Internal Control over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated whether any change in our internal control over financial reporting occurred during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. Based on that evaluation, we have concluded that there has been no change in our internal control over financial reporting during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~F-31~~F-25

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note ~~10,~~9, "Contingencies and Legal Matters" of Notes to Condensed Consolidated Financial Statements.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A, "Risk Factors" of our most recent Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

~~The following supplements the risk factors disclosed in Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.~~

~~Our financial condition and results of operations have been and are expected to continue to be adversely affected by the recent coronavirus pandemic.~~

COVID-19 and measures to prevent its spread, including imposition of quarantines, governmental vaccination mandates, and prolonged closures of manufacturing facilities and retail stores, may impact our business in a number of ways. These impacts could adversely affect our ability to operate our business, including potential disruptions to our supply chain, increased administrative costs, the availability of raw materials and our ability to recruit and maintain the skilled workforce necessary to operate our businesses.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities:

The following table contains information about our purchases of our equity securities for the three months ended ~~September 30, 2021:~~March 31, 2022:

Shares Purchased as Part of Publicly Announced Plans or Programs in 2021 (b)
Month Total Number of
Shares Purchased (a) Average Price Paid
Per Share Total Number of Shares
Purchased Approximate Dollar
Value of Shares that May
Yet Be Purchased
July 72 $— — $25,000,000
August 18,300 $49.71 18,240 $24,093,290
September 52,730 $47.21 52,730 $21,603,907


	Issuer Purchases of Equity Securities
			Shares Purchased as Part of Publicly Announced Plans or Programs (b)
Month	Total Number of Shares Purchased (a)	Average Price Paid Per Share	Total Number of Shares Purchased	Approximate Dollar Value of Shares that May Yet Be Purchased
January	245	$46.76	—	$20,000,017
February	4,426	$46.30	—	$20,000,017
March	—	$—	—	$20,000,017

(a) Transactions include the purchase of vested restricted shares from employees to satisfy minimum tax withholding requirements upon vesting of stock-based awards. See Note 9,8, "Stockholders' Equity" of Notes to Condensed Consolidated Financial Statements.

(b) In November 2020, our Board of Directors authorized a program for the purchase of up to $25 million of outstanding common stock effective January 1, 2021. The program does not require the Company to purchase any specific number of shares and may be suspended or discontinued at any time. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, there were ~~70,970~~no shares repurchased ~~for $3.4 million~~ under this program.

~~F-32~~F-26

Item 6. Exhibits


Exhibit Number						Exhibit
2.1						Agreement and Plan of Merger, dated March 28, 2022, by and among Neenah, Inc, Schweitzer-Mauduit International, Inc., and Samurai Warrior Merger Sub, Inc. (filed as Exhibit 2.1 to the Neenah, Inc. Current Report on Form 8-K, filed March 28, 2022 and incorporated herein by reference)

3.1						Third Amended and Restated Bylaws of Neenah, Inc. (filed as Exhibit 3.1 to the Neenah, Inc. Current Report on Form 8-K filed March 28, 2022 and incorporated herein by reference)

31.1						Certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2						Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS						XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document (filed herewith).

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).

~~F-33~~F-27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		~~NEENAH, INC.~~Neenah, Inc.

	By:	/s/ Julie A. Schertell
		Julie A. Schertell
		President, Chief Executive Officer and Director (Principal Executive Officer)

		/s/ Paul F. DeSantis
		Paul F. DeSantis
		Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

		/s/ ~~Larry N. Brownlee~~Kimberly A. DeBrock
		~~Larry N. Brownlee~~Kimberly A. DeBrock
		Vice President, Controller (Principal Accounting Officer)


~~November 3, 2021~~May 4, 2022


	2020 Activity
	Common Stock
	Shares	Amount		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance, December 31, 2019	18,678	$	0.2	$	(82.8)	$	334.1	$	268.1	$	(113.3)	$	406.3
Net income	—	—		—		—		16.4		—		16.4
Other comprehensive loss, including income taxes	—	—		—		—		—		(2.6)		(2.6)
Dividends declared	—	—		—		—		(8.0)		—		(8.0)
Shares purchased (Note 9)	—	—		(3.6)		—		—		—		(3.6)
Stock options exercised	3	—		—		—		—		—		—
Restricted stock vesting (Note 9)	8	—		(0.2)		—		—		—		(0.2)
Stock-based compensation	—	—		—		1.5		—		—		1.5

Balance, March 31, 2020	18,689	0.2		(86.6)		335.6		276.5		(115.9)		409.8
Net loss	—	—		—		—		(50.1)		—		(50.1)
Other comprehensive income, net of income taxes	—	—		—		—		—		4.7		4.7
Dividends declared	—	—		—		—		(8.0)		—		(8.0)

Stock options exercised	2	—		—		—		—		—		—
Restricted stock vesting (Note 9)	9	—		—		—		—		—		—
Stock-based compensation	—	—		—		1.6		—		—		1.6

Balance, June 30, 2020	18,700	$	0.2	$	(86.6)	$	337.2	$	218.4	$	(111.2)	$	358.0
Net income	—	—		—		—		7.9		—		7.9
Other comprehensive income, net of income taxes	—	—		—		—		—		8.7		8.7
Dividends declared	—	—		—		—		(7.9)		—		(7.9)


Restricted stock vesting (Note 9)	1	—		—		—		—		—		—
Stock-based compensation	—	—		—		0.3		—		—		0.3

Balance, September 30, 2020	18,701	$	0.2	$	(86.6)	$	337.5	$	218.4	$	(102.5)	$	367.0


	September 30, 2021		December 31, 2020
2021 Term Loan B (variable rates) due April 2028	$	448.9	$	—
2020 Term Loan B (variable rates) extinguished April 2021	—		199.0
Global Revolving Credit Facility (variable rates) due December 2023	—		—
German loan agreement (2.45% fixed rate) due in quarterly installments ending September 2022	1.2		2.4
German loan agreement (1.45% fixed rate) due in quarterly installments ending September 2022	1.4		2.6
Debt discounts and deferred financing costs	(9.8)		(9.6)
Total debt	441.7		194.4
Less: Debt payable within one year	7.1		4.9
Long-term debt	$	434.6	$	189.5