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 March 31, ~~2020~~2021

☐ 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~~
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~~) (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 May ~~1, 2020,~~3, 2021, there were ~~16,791,451~~16,842,893 shares of the Company’s Common Stock outstanding.

Table of Contents

TABLE OF CONTENTS



Part I — Financial Information

Item 1. Financial Statements			F-~~F-1~~1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			F-~~F-17~~17

Item 3. Quantitative and Qualitative Disclosure About Market Risk			F-~~F-24~~25

Item 4. Controls and Procedures			F-~~F-24~~25


Part II — Other Information

Item 1. Legal Proceedings			F-~~F-25~~26

Item 1A. Risk Factors			F-~~F-25~~26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			F-~~F-26~~26

Item 6. Exhibits			F-~~F-27~~27

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 March 31,					Three Months Ended March 31,
	2020		2019			2021		2020
Net sales	$	233.6	$	239.7	Net sales	$	227.0	$	233.6
Cost of products sold	179.6		196.0		Cost of products sold	177.4		179.6
Gross profit	54.0		43.7		Gross profit	49.6		54.0
Selling, general and administrative expenses	26.6		25.3		Selling, general and administrative expenses	24.3		26.6
Acquisition costs					Acquisition costs	12.0		1.0

COVID-19 costs	1.1		—		COVID-19 costs	0.5		1.1
Restructuring and other non-routine costs	1.4		—
Acquisition and due diligence costs	1.0		—
Other expense - net	0.3		1.0
Other restructuring and non-routine costs					Other restructuring and non-routine costs	0		1.4

Other (income) expense - net					Other (income) expense - net	(0.8)		0.3
Operating income	23.6		17.4		Operating income	13.6		23.6
Interest expense - net	2.9		3.2		Interest expense - net	3.1		2.9
Income from continuing operations before income taxes	20.7		14.2
Income before income taxes					Income before income taxes	10.5		20.7
Provision for income taxes	4.3		2.4		Provision for income taxes	2.2		4.3

Net income	$	16.4	$	11.8	Net income	$	8.3	$	16.4

Earnings Per Common Share					Earnings Per Common Share

Basic	$	0.97	$	0.70	Basic	$	0.49	$	0.97

Diluted	$	0.97	$	0.69	Diluted	$	0.49	$	0.97

Weighted Average Common Shares Outstanding (in thousands)					Weighted Average Common Shares Outstanding (in thousands)
Basic	16,817		16,862		Basic	16,835		16,817
Diluted	16,850		16,921		Diluted	16,873		16,850

Cash Dividends Declared Per Share of Common Stock	$	0.47	$	0.45	Cash Dividends Declared Per Share of Common Stock	$	0.47	$	0.47

See Notes to Condensed Consolidated Financial Statements

F-1

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended March 31,							Three Months Ended March 31,
	2020			2019				2021		2020
Net income	$	16.4		$	11.8		Net income	$	8.3	$	16.4
Reclassification of amounts recognized in the condensed consolidated statements of operations:							Reclassification of amounts recognized in the condensed consolidated statements of operations:
Amortization of adjustments to pension and other postretirement benefit liabilities (Note 5)	1.6			1.7			Amortization of adjustments to pension and other postretirement benefit liabilities (Note 5)	1.7		1.6
Unrealized foreign currency translation loss	(4.0		)	(3.2		)

Unrealized foreign currency loss							Unrealized foreign currency loss	(9.1)		(4.0)

Loss from other comprehensive income items	(2.4		)	(1.5		)	Loss from other comprehensive income items	(7.4)		(2.4)
Provision for income taxes	0.2			0.2			Provision for income taxes	0		0.2
Other comprehensive loss	(2.6		)	(1.7		)	Other comprehensive loss	(7.4)		(2.6)
Comprehensive income	$	13.8		$	10.1		Comprehensive income	$	0.9	$	13.8

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions, shares in thousands)


	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	—	—		—		1.5		—		—		1.5

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

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 7) —
—
(3.6 ) —
—
—
(3.6 )
Stock options exercised 3
—
—
—
—
—
—
Restricted stock vesting (Note 7) 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


	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 7)	—	��		(3.6)		—		—		—		(3.6)
Stock options exercised	3	—		—		—		—		—		—
Restricted stock vesting (Note 7)	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

2019 Activity
Common Stock
Shares Amount Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total
Balance, December 31, 2018 18,597
$ 0.2
$ (76.6 ) $ 328.5
$ 243.2
$ (105.1 ) $ 390.2
Net income —
—
—
—
11.8
—
11.8
Other comprehensive income, net of income taxes —
—
—
—
—
(1.7 ) (1.7 )
Dividends declared —
—
—
—
(7.6 ) —
(7.6 )
Shares purchased (Note 7) —
—
(0.3 ) —
—
—
(0.3 )
Stock options exercised 9
—
—
—
—
—
—
Restricted stock vesting (Note 7) 3
—
(0.1 ) —
—
—
(0.1 )
Stock-based compensation —
—
—
1.9
—
—
1.9
Balance, March 31, 2019 18,609
$ 0.2
$ (77.0 ) $ 330.4
$ 247.4
$ (106.8 ) $ 394.2

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended March 31,
	2021		2020
OPERATING ACTIVITIES
Net income	$	8.3	$	16.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8.6		8.6

Stock-based compensation	1.5		1.5
Deferred income tax provision (benefit)	(2.4)		1.1

Unrealized loss on foreign currency forward contract (Note 1)	6.2		0


Provision for uncollectible accounts receivable	0		1.0

Decrease (Increase) in working capital	0.5		(13.7)
Pension and other postretirement benefits	(2.0)		(0.4)

Other	0		(0.3)
NET CASH PROVIDED BY OPERATING ACTIVITIES	20.7		14.2

INVESTING ACTIVITIES
Capital expenditures	(4.8)		(4.8)


Other	(0.2)		(0.1)
NET CASH USED IN INVESTING ACTIVITIES	(5.0)		(4.9)

FINANCING ACTIVITIES
Long-term borrowings (Note 4)	0.2		88.7
Repayments of long-term debt (Note 4)	(1.4)		(17.0)
Debt issuance costs	(1.4)		(0.5)
Cash dividends paid	(8.0)		(8.0)
Shares purchased (Note 7)	(0.4)		(3.8)


NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(11.0)		59.4

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(0.8)		(0.2)
NET INCREASE IN CASH AND CASH EQUIVALENTS	3.9		68.5
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	37.1		9.0
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	41.0	$	77.5





SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during period for interest, net of interest costs capitalized	$	2.6	$	0.2
Cash paid during period for income taxes	$	1.5	$	2.0
Non-cash investing activities:
Liability for equipment acquired	$	2.5	$	2.4

See Notes to Condensed Consolidated Financial Statements

NEENAH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in millions, except as noted)

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 9, "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.

The Company ~~assessed~~continues to assess the impacts of the novel coronavirus pandemic (“COVID-19” or the "pandemic") on its various accounting estimates and significant judgments, including those that require consideration of forecasted financial information in the context of the unknown future impacts of COVID-19, using information that is reasonably available at this time. The accounting estimates and other matters assessed included, but were not limited to, goodwill, indefinite-lived intangibles and other long-lived assets, allowance for uncollectible accounts receivable, valuation allowances for tax assets and ~~revenue recognition. Based on~~allowances for sales discounts and returns. During the ~~Company’s current assessment of these estimates, there was not a material impact to the condensed consolidated financial statements as of and for the quarter~~three months ended March 31, ~~2020. As additional information becomes available,~~2021, the ~~Company’s future assessment of these estimates,~~Company qualitatively reviewed its fixed assets and intangibles including ~~updated expectations at the time regarding the duration, scope~~goodwill and ~~severity of the pandemic, could materially~~indefinite-lived intangibles and ~~adversely impact its consolidated financial statements in future reporting periods.~~ noted no impairment indicators were triggered.

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 Per Diluted Common Share

(a)For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, there were ~~267,152~~324,197 and ~~231,332~~267,152 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.

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).

March 31, 2020 December 31, 2019

Carrying
Value
Fair Value (a)
Carrying
Value
Fair Value (a)
2021 Senior Notes (5.25% fixed rate) $ 175.0
$ 174.3
$ 175.0
$ 174.3
Global Revolving Credit Facilities (variable rates) 93.0
93.0
21.6
21.6
German loan agreement (2.45% fixed rate) 3.4
3.5
3.5
3.6
German loan agreement (1.45% fixed rate) 3.6
3.7
3.7
3.7
Total debt $ 275.0
$ 274.5
$ 203.8
$ 203.2

~~(a)~~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.

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.

Sales terms in the technical products business vary depending on the type of product sold and customer category. In general, sales are collected in 45 to 55 days. Extended credit terms of up to 120 days are offered to customers located in certain international markets. Fine paper and packaging sales terms range between 20 and 30 days with discounts of 0 to 2% for customer payments, with discounts of 1% and 20-day terms used most often. Extended credit terms are offered to customers located in certain international markets.

Allowance for Uncollectible Accounts Receivable

~~In January 2020, the Company adopted Accounting Standards Update ("ASU") No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit~~ Losses on ~~Financial Instruments~~ which amends the FASB's guidance on the impairment of financial instruments. The ASU adds to U.S. GAAP an impairment model (known as the "current expected credit loss model" or "CECL") that is based on expected losses rather than incurred losses. The adoption of this standard did not have a material impact on the Company's financial position, results of operations and cash flows. We estimate losses on receivables are estimated based on known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written-off when it is ~~probable~~expected that contractual payments due will not be collected in accordance with the terms of the agreement. The allowance for uncollectible accounts receivable was ~~$2.0~~$1.5 million and $1.5 million as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020, respectively. The Company recorded a $1.0 million provision for uncollectible accounts receivable from the impacts of ~~the~~ COVID-19 ~~pandemic~~ for the three months ended March 31, 2020. There were no significant adjustments for the three months ended March 31, 2021.

The Company has operating leases for corporate offices, warehouses, converting operations, and certain equipment, with remaining lease terms of up to 1110 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 "Lease Right-of-Use Assets", "Lease liabilities payable within one year" and "Noncurrent Lease Liabilities" on the Condensed Consolidated Balance Sheets. As of March 31, ~~2020,~~2021, the Company did not have any material ~~finance~~financing leases.

In March 2020, the Company entered into operating leases for 2 warehouse buildings, and recognized an ROU asset and a corresponding lease liability of $6.6 million with a term of 10 years, and an ROU asset and corresponding lease liability of $1.8 million with a term of 5 years. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

~~As discussed in Note 1, in January 2020, the Company adopted ASU No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~.

~~In March 2020, the FASB issued ASU No. 2020-04,~~ ~~Reference Rate Reform (Topic 848)-Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~. This ASU addresses accounting implications of the replacement of LIBOR (London Inter-Bank Offered Rate) with SOFR (Secured Overnight Financing Rate) or other alternatives by the end of 2021. The FASB allows immediate relief from application of contract modification accounting triggered by reference rate reform that otherwise would be costly to implement and result in burdensome financial reporting. The Company intends to elect the expedients and exceptions offered in the ASU.

As of March 31, ~~2020,~~2021, no ~~other~~ amendments to the ASC ~~have been issued~~ that will have or are reasonably likely to have a material effect on the Company’s financial position, results of operations or cash ~~flows.~~flows upon adoption.


	March 31, 2021		December 31, 2020
Raw materials	$	30.2	$	28.9
Work in progress	24.6		20.1
Finished goods	63.3		61.0
Supplies and other	4.5		5.3
	122.6		115.3
Adjust FIFO inventories to LIFO cost	(7.5)		(6.4)
Total	$	115.1	$	108.9

March 31, 2020 December 31, 2019
Raw materials $ 33.4
$ 32.8
Work in progress 24.8
26.4
Finished goods 76.4
67.3
Supplies and other 5.2
5.2
139.8
131.7
Adjust FIFO inventories to LIFO cost (8.4 ) (8.9 )
Total $ 131.4
$ 122.8


	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)
Other comprehensive loss before reclassifications	(9.1)		0		(9.1)
Amounts reclassified from AOCI	0		1.7		1.7
Income (loss) from other comprehensive income items	(9.1)		1.7		(7.4)
Provision (benefit) for income taxes	(0.4)		0.4		0
Other comprehensive income (loss)	(8.7)		1.3		(7.4)
AOCI — March 31, 2021	$	(10.4)	$	(100.7)	$	(111.1)

Net Unrealized Foreign
Currency Translation
Loss

Net Loss from
Pension and Other
Postretirement
Liabilities

Accumulated Other
Comprehensive Loss
AOCI — December 31, 2019 $ (19.0 ) $ (94.3 ) $ (113.3 )
Other comprehensive income (loss) before reclassifications (4.0 ) —
(4.0 )
Amounts reclassified from AOCI —
1.6
1.6
Income (loss) from other comprehensive income items (4.0 ) 1.6
(2.4 )
Provision (benefit) for income taxes (0.3 ) 0.5
0.2
Other comprehensive income (loss) (3.7 ) 1.1
(2.6 )
AOCI — March 31, 2020 $ (22.7 ) $ (93.2 ) $ (115.9 )

Long-term debt consisted of the following:


	March 31, 2021		December 31, 2020
2020 Term Loan B (variable rates) due June 2027	$	198.5	$	199.0
Global Revolving Credit Facility (variable rates) due December 2023	0		0
German loan agreement (2.45% fixed rate) due in quarterly installments ending September 2022	2.0		2.4
German loan agreement (1.45% fixed rate) due in quarterly installments ending September 2022	2.1		2.6
Debt discounts and deferred financing costs	(10.6)		(9.6)
Total debt	192.0		194.4
Less: Debt payable within one year	4.8		4.9
Long-term debt	$	187.2	$	189.5

March 31, 2020 December 31, 2019
2021 Senior Notes (5.25% fixed rate) due May 2021 $ 175.0
$ 175.0
Global Revolving Credit Facilities (variable rates) due December 2023 93.0
21.6
German loan agreement (2.45% fixed rate) due in quarterly installments ending September 2022 3.4
3.5
German loan agreement (1.45% fixed rate) due in quarterly installments ending March 2023 3.6
3.7
Deferred financing costs (3.1 ) (3.0 )
Total debt 271.9
200.8
Less: Debt payable within one year 3.3
2.6
Long-term debt $ 268.6
$ 198.2

~~2021 Senior Notes~~Term Loan B Credit Facility

~~In May 2013,~~On June 30, 2020, the Company ~~completed an underwritten offering~~entered into a Term Loan Credit Agreement (the “2020 Term Loan Credit Agreement”) which provides a seven-year Term Loan B credit facility (the "Term B Facility") in the initial principal amount of ~~eight-year~~$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 ~~(the "2021 Senior Notes") at a face amount~~due May 2021, repay borrowings under the Company’s senior secured revolving credit facility, pay fees and expenses of ~~$175 million. The 2021 Senior Notes contain terms, covenants~~the transaction and ~~events of default with which the Company must comply, which the Company believes are ordinary and standard~~ for ~~notes of this nature.~~general corporate purposes. As of March 31, 2021, the weighted-average interest rate on outstanding 2020 Term Loan B borrowings was 5.0% per annum. The 2020 Term Loan B was repayable in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount of the Term B Facility (subject to certain reductions in connection with debt prepayments and debt buybacks). As of March 31, 2021, the Company was in compliance with all terms of the ~~indenture for~~2020 Term Loan Credit Agreement.

On April 6, 2021, in connection with the ~~2021 Senior Notes. The~~acquisition of ITASA, the Company ~~continues to actively monitor the debt markets for refinancing opportunities~~entered into an Amendment and ~~believes that it will be able to refinance these notes later this year on more favorable terms than are currently available~~Restatement Agreement (the "Term Loan Credit Agreement"), which provides a seven-year term loan B facility in the ~~market.~~initial principal amount of $450 million (the “Term Loan B”), which replaces the 2020 Term Loan B. See Note 10, "Subsequent Events", for further discussion.

~~Amended and Restated~~

Secured Revolving Credit Facility

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

Availability under the Global Revolving Credit Facilities varies over time depending on the value of the Company’s inventory, receivables and various capital assets. As of March 31, 2020, the Company had $93.0 million of borrowings and $0.5 million in letters of credit outstanding under the Global Revolving Credit Facilities and $117.2 million of available credit (based on exchange rates at March 31, 2020). As of March 31, 2020, the weighted-average interest rate on outstanding Global Revolving Credit Facility borrowings was 2.4 percent per annum. As of December 31, 2019, the weighted-average interest rate under the Global Revolving Credit Facilities was 1.3 percent per annum.

March 31, ~~2020,~~2021, none of these covenants were restrictive to the Company’s ability to repurchase shares of and pay dividends on its Common Stock.

~~Borrowings and Repayments~~

Table of ~~Long-Term Debt~~Contents

The Condensed Consolidated Statements of Cash Flows present borrowings and repayments under the Global Revolving Credit Facilities using a gross approach. This approach presents not only discrete borrowings for transactions such as a business acquisition, but also reflects all borrowings and repayments that occur as part of daily management of cash receipts and disbursements. For the three months ended March 31, 2020, the Company made net long-term debt borrowings of $71.7 million of which $6.7 million related to daily cash management activities, and $65.0 million related to increased cash on hand through borrowings near quarter-end as a precautionary measure to protect against any potential disruption in the banking system that would adversely impact the Company's ability to access cash as a result of COVID-19 and to enhance the Company's liquidity. For the three months ended March 31, 2019, the Company made scheduled debt repayments of $0.3 million and net long-term debt borrowings of $7.7 million related to daily cash management activities.

Note 5. 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.

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
Three Months Ended March 31,
2020 2019 2020 2019
Service cost $ 1.2
$ 1.3
$ 0.3
$ 0.3
Interest cost 3.5
4.1
0.2
0.4
Expected return on plan assets (a) (5.2 ) (5.0 ) —
—
Recognized net actuarial loss 1.3
1.5
0.2
0.2
Amortization of prior service benefit 0.1
0.1
—
—
Net periodic benefit cost $ 0.9
$ 2.0
$ 0.7
$ 0.9


	Pension Benefits				Postretirement Benefits Other than Pensions
	Three Months Ended March 31,
	2021		2020		2021		2020
Service cost	$	1.1	$	1.2	$	0.3	$	0.3
Interest cost	3.0		3.5		0.1		0.2
Expected return on plan assets (a)	(4.9)		(5.2)		0		0
Recognized net actuarial loss	1.4		1.3		0.2		0.2
Amortization of prior service benefit	0.1		0.1		0		0

Net periodic benefit cost	$	0.7	$	0.9	$	0.6	$	0.7

(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.

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 - net" on the Condensed Consolidated Statements of Operations.

For the three months ended March 31, ~~2020,~~2021, the Company made ~~$1.8~~$2.7 million of aggregate contributions to qualified and nonqualified defined benefit pension trusts and payments to pension benefits for unfunded pension and other postretirement benefit plans. The Company expects to make ~~$7.4~~$11.8 million of such payments in calendar ~~2020.~~2021. The Company made similar

payments of ~~$2.0~~$1.8 million and ~~$13.1~~$11.5 million for the three months ended March 31, ~~2019~~2020 and for the year ended December 31, ~~2019,~~2020, respectively.

~~Multi-Employer Plan~~

Historically, we have contributed to the PACE Industry Union-Management Pension Fund (the “PIUMPF"), a multiemployer pension plan. The amount of our annual contributions to the PIUMPF was negotiated with the plan and the bargaining unit representing our employees covered by the plan. The PIUMPF was certified to be in "critical status" for the plan year beginning January 1, 2010, and continued to be in critical status for the plan year beginning January 1, 2018.

Effective July 1, 2018, the Company and representatives of the United Steelworkers Union (the "USW") of the Lowville mill initiated actions to withdraw from the PIUMPF. As a result, the Company recorded an estimated withdrawal liability of $1.0 million, which assumed payment of $0.1 million per year over 20 years, discounted at a credit adjusted risk-free rate of 5.7%. In October 2019, the Company received a billing from PIUMPF for the withdrawal liability, which confirmed the $1.0 million liability. In addition to the withdrawal liability, PIUMPF also demanded immediate payment of $1.3 million for the Company's pro-rata share of the fund's accumulated funding deficiency. The Company is challenging this demand and believes it to be unenforceable. As such, the Company has not recorded a liability for this amount as of March 31, 2020.

Note 6. Stock Compensation Plan

Stock Options and Stock Appreciation Rights ("Options")

There were no0 Options awarded during the three months ended March 31, ~~2020.~~2021.

The following table presents information regarding Options that vested during the three months ended March 31, ~~2020:~~2021:

Options vested 66,953
Aggregate grant date fair value of Options vested (in millions) $ 1.0


Options vested	15,869
Aggregate grant date fair value of Options vested (in millions)	$	0.2

F-11

Table of Contents

The following table presents information regarding outstanding Options:

March 31, 2020 December 31, 2019
Options outstanding 406,719
416,548
Aggregate intrinsic value (in millions) $ 0.6
$ 3.9
Per share weighted average exercise price $ 70.59
$ 70.08
Exercisable Options 377,517
318,029
Aggregate intrinsic value (in millions) $ 0.6
$ 3.9
Unvested Options 29,202
98,519
Per share weighted average grant date fair value $ 14.74
$ 14.41


	March 31, 2021		December 31, 2020
Options outstanding	376,354		380,844
Aggregate intrinsic value (in millions)	$	0.8	$	1.2
Per share weighted average exercise price	$	71.47	$	70.99
Exercisable Options	375,339		362,651
Aggregate intrinsic value (in millions)	$	0.8	$	1.2
Unvested Options	1,015		18,193
Per share weighted average grant date fair value	$	10.32	$	14.48

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

For the three months ended March 31, ~~2020,~~2021, the Company granted target awards of ~~27,773~~86,020 PSUs. The measurement period for the PSUs is January 1, ~~2020~~2021 through December 31, ~~2022.~~2023. The PSUs vest on ~~December 31, 2022.~~the third anniversary from the date of grant. Common Stock of an amount between 0 and 200 percent of the PSUs target will be awarded based on the Company’s return on invested capital, consolidated revenue growth, free cash flow as a percentage of net sales, and total return to shareholders relative to the companies in the Russell 2000® Value small cap index. 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 Award Agreement. The ~~market~~average price on the ~~date~~dates of grant for the PSUs was ~~$71.88~~$54.34 per share.

For the three months ended March 31, ~~2020,~~2021, the Company awarded ~~58,587~~39,521 RSUs to certain employees. The weighted average grant date fair value of such awards was ~~$68.54~~$53.06 per share and ~~the~~ one third of the shares will vest on each of the first three anniversaries of the grant date, with certain exceptions for retiring employees. During the vesting period, the holders of the RSUs are entitled to dividends, but the RSUs do not have voting rights.

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 7. Stockholders' Equity

Common Stock

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had ~~16,791,000~~16,841,000 shares and ~~16,843,000~~16,829,000 shares of Common Stock outstanding, respectively.

In November ~~2019,~~2020, the Company's Board of Directors authorized aan evergreen program for the purchase of up to $25 million of outstanding Common Stock effective January 1, ~~2020~~2021 (the ~~"2020 Stock~~"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 ~~2020~~ 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. ~~Among the measures taken to manage the Company's cash flow and preserve its liquidity, purchases under the 2020 Stock Purchase Plan were curtailed in March 2020 and remain suspended.~~ The Company also had $25 million repurchase programs in place during the preceding two years that expired in December 2020 (the “2020 Stock Purchase Plan”) and December 2019 (the “2019 Stock Purchase Plan”) ~~and December 2018 (the “2018 Stock Purchase Plan”)~~, respectively.

The following table shows shares purchased and value ($ in millions) under the respective stock purchase plans:

Three Months Ended March 31,
2020 2019
Shares Amount Shares Amount
2020 Stock Purchase Plan 59,577
$ 3.6
—
$ —
2019 Stock Purchase Plan —
—
4,285
0.3


	Three Months Ended March 31,
	2021			2020
	Shares	Amount		Shares	Amount
Stock Purchase Plan	0	$	0	0	$	0
2020 Stock Purchase Plan	0	0		59,577	3.6

For the three months ended March 31, 2021 and 2020, the Company acquired 6,881 and 3,476 shares of Common Stock, respectively, at a cost of $0.4 million and $0.2 million, respectively for shares surrendered by employees to pay taxes due on vested restricted stock awards.

F-12

Note 8. 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 the Netherlands, most of our employees are eligible to be represented by the ~~CNV~~Christelijke Nationale Vakbond ("CNV") and the ~~FNV.~~Federatie Nederlandse Vakvereniging ("FNV"). As of March 31, ~~2020,~~2021, the Company had ~~205~~275 U.S. employees covered under collective bargaining agreements that ~~have or~~ 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 ~~2020~~2021

Eerbeek, Netherlands

CNV, FNV

(a) ~~(b)~~

~~August 2020~~November 2021

~~Neenah Germany~~Lowville, NY

~~IG BCE~~USW

~~(a)~~88

January ~~2021~~2022

Whiting, WI

USW

~~205~~187

~~June 2021~~May 2022

~~Neenah,~~Appleton, WI

USW

~~228~~85

~~July 2021~~June 2022

~~Munising, MI~~Neenah, WI

USW

~~182~~179

~~November 2021~~July 2022

~~Lowville, NY~~Munising, MI

USW

96178

~~May~~September 2022

~~Appleton, WI~~Neenah Germany

~~USW~~IG BCE

(a)

(a) Under German and Dutch laws, 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 IG BCE, and the CNV and FNV cannot be determined.

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

Note 9. Business Segment Information

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

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 $9.9 million of net sales and $1.0 million of operating income for the three months ended March 31, 2020 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.

F-13

Table of Contents

The Technical Products segment is an aggregation of the Company’s fiber-formed, coated and/or saturated specialized media that deliver high performance ~~materials and filtration businesses~~benefits to 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 fiber-formed, coated and/or saturated specialized media that deliver high performance benefits to customers. Included in this segment are tape and abrasives backings products, digital image transfer, durable label and other specialty substrate products ("Performance Materials"), and filtration media for transportation, water and other end ~~use applications ("Filtration").~~ 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, ~~2020,~~2021, the Company ~~aggregated~~further disaggregated the ~~backings~~former performance materials business into industrial solutions and ~~specialties revenues into Performance Materials~~specialty coatings components, and recast the prior year period ~~disclosure based on the economic similarity of the products per ASC Topic 280,~~ ~~Segment Reporting, and changes in the internal management of these products.~~disclosure. The following table presents sales by product category for the ~~technical products business:~~Technical Products businesses:


	Three Months Ended March 31,
	2021		2020
Filtration	52	%	45	%
Industrial solutions	38	%	42	%
Specialty coatings	10	%	13	%
Total	100	%	100	%

Three Months Ended March 31,
2020 2019
Performance Materials 58 % 58 %
Filtration 42 % 42 %
Total 100 % 100 %

The Fine Paper and Packaging segment is a leading supplier of premium printing and other high-end specialty papers ~~("Graphic Imaging"),~~ and premium packaging, ~~("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~~Fine Paper and ~~packaging business:~~Packaging businesses:


	Three Months Ended March 31,
	2021		2020
Commercial	55	%	58	%
Consumer and packaging	45	%	42	%

Total	100	%	100	%

Three Months Ended March 31,
2020 2019
Graphic Imaging 76 % 79 %
Packaging 24 % 21 %
Total 100 % 100 %


	Three Months Ended March 31,
	2021		2020
Net sales
Technical Products	$	145.2	$	132.3
Fine Paper and Packaging	81.8		101.3
Consolidated	$	227.0	$	233.6

Three Months Ended March 31,
2020 2019
Net sales

Technical Products $ 142.2
$ 140.0
Fine Paper and Packaging 91.4
99.7
Consolidated $ 233.6
$ 239.7


	Three Months Ended March 31,
	2021 (a)		2020 (b)
Operating income
Technical Products	$	19.2	$	15.2
Fine Paper and Packaging	12.7		15.8
Unallocated corporate costs	(18.3)		(7.4)
Consolidated	$	13.6	$	23.6

Three Months Ended March 31,
2020 (a) 2019
Operating income (loss)

Technical Products $ 16.2
$ 11.3
Fine Paper and Packaging 14.8
11.9
Unallocated corporate costs (7.4 ) (5.8 )
Consolidated $ 23.6
$ 17.4

(a) Operating income (loss) for the three months ended March 31, 2021 included (1) $12.0 million of acquisition costs for ITASA (see Note 10) within Unallocated corporate costs; (2) $0.5 million of incremental and direct costs of responding to COVID-19 ($0.1 million within Technical Products, $0.3 million within Fine Paper and Packaging, and $0.1 million within Unallocated corporate costs); and (3) $0.0 million of other restructuring and non-routine costs ($0.2 million within Technical Products and $(0.2) million within Fine Paper and Packaging). Refer to Note 1, "Background and Basis of Presentation" for further discussion.

(b) Operating income for the three months ended March 31, 2020 included (1) $1.1 million of costs ($0.6 million within Technical Products and $0.5 million within Fine Paper and Packaging) related to a one-time special payment to its mill operators related to the COVID-19 pandemic; (2) $1.4 million of restructuring and other non-routine costs ($0.2 million within Technical Products, $0.9 million within Fine Paper and Packaging, and $0.3 million within Unallocated corporate costs); and (3) $1.0 million of ~~due diligence and~~ transaction costs of a terminated acquisition attempt within Unallocated corporate costs.


	March 31, 2021		December 31, 2020
Total Assets (a)
Technical Products	$	533.4	$	531.0
Fine Paper and Packaging	227.0		213.4
Corporate and other (b)	62.8		62.2
Consolidated	$	823.2	$	806.6

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

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

The following ~~tables represent~~table represents a disaggregation of revenue from contracts with customers by location of the selling entities for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


	Three Months Ended March 31,
	2021		2020
United States	64	%	70	%
Germany	30	%	23	%
Rest of Europe	6	%	7	%
Total	100	%	100	%

Three Months Ended March 31,
2020 2019
United States 70 % 71 %
Germany 23 % 22 %
Rest of Europe 7 % 7 %
Total 100 % 100 %

On ~~May~~April 6, 2020, Bonnie C. Lind notified Neenah of her plans to retire on October 1, 2020. In addition, Ms. Lind will relinquish her role as Senior Vice President, Chief Financial Officer and Treasurer (“CFO”) as of May 13, 2020. Ms. Lind will remain with2021, the Company completed its previously announced 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 €205 million ($243 million) in cash, inclusive of debt extinguishment and subject to customary closing adjustments. ITASA, through ~~October 1 to ensure~~its subsidiaries, is a ~~smooth transition.~~

~~On May 7, 2020,~~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 below. As of March 31, 2021, the Company ~~announced~~incurred $12.0 million of costs related to the ~~appointment~~Acquisition, including an unrealized loss of ~~Paul DeSantis as CFO, effective as~~$6.2 million related to the foreign currency forward contracts negotiated to fund the purchase price in euros. See Note 1, "Background and Basis of ~~May 13, 2020. Mr. DeSantis, most recently served as Chief Financial Officer of OMNOVA Solutions, Inc.~~Presentation", ~~a global producer of emulsion polymers, specialty chemicals,~~for further discussion on these contracts.

The Company will account for the Acquisition in accordance with ASC 805, Business Combinations, which requires the assets acquired and ~~decorative and functional surfaces. Mr. DeSantis previously served as Chief Financial~~

~~Officer, Treasurer & Assistant Corporate Secretary of Bob Evans Farms, Inc. and as Chief Financial Officer~~the liabilities assumed to be measured at fair value at the date of the ~~A. Schulman Company.~~

Acquisition. The Company has not included the unaudited pro forma information in this filing, as the Company is in process of finalizing the acquisition accounting. The ITASA business will be part of the Company's Technical Products segment.

In connection with ~~his appointment, Mr. DeSantis will participate~~the Acquisition, on April 6, 2021, the Company entered into the Term Loan Credit Agreement, which provides a seven-year term loan B facility in the ~~Company’s long-term equity compensation plan~~initial principal amount of $450 million, which replaces the 2020 Term Loan B. The Term Loan B is repayable in equal quarterly installments commencing on September 30, 2021 in an ~~ongoing basis pursuant~~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). Cash proceeds of borrowings on the closing date under the Term Loan B were used by the Company to pay the cash consideration for the Acquisition, including the repayment of certain existing debt of ITASA, and to pay fees and expenses in connection with the Acquisition, the Term Loan B and the amendment of the ABL Credit Agreement. The Company will use any remaining proceeds of the Term Loan B for general corporate purposes of the Company and its subsidiaries.

Under the terms of the ~~Company’s 2018 Omnibus Stock and Incentive Compensation Plan, all~~Term Loan Credit Agreement, borrowings under the Term Loan B will bear interest 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% per annum, or (b) the Alternate Base Rate, plus an applicable rate of 2.00% per annum. “Alternate Base Rate” will be equal to the greatest of (1) the prime rate as ~~determined~~quoted from time to time in The Wall Street Journal or published by the ~~Company’s Compensation Committee.~~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 interest rate under the Term Loan B was 3.50% as of April 6, 2021, which represented a 150 basis point reduction in the interest rate compared to the 2020 Term Loan B.

The following discussion and analysis presents the factors that had a material effect on our financial position as of March 31, ~~2020~~2021 and our results of operations for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020. 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.

On April 6, 2021, we completed the acquisition of ITASA for approximately €205 million ($243 million) with available cash-on-hand and the net proceeds of the Term Loan B. ITASA is a leading global coater and converter of release liners used in hygiene, tapes, industrial, labels, composites and various other end markets.

For the three months ended March 31, ~~2020,~~2021, consolidated net sales of ~~$233.6~~$227.0 million decreased ~~$6.1~~$6.6 million (3%) from the prior year period. The ~~decline~~10% increase in ~~revenues resulted from~~Technical Products revenue was more than offset by lower ~~volumes~~sales in ~~the~~our Fine Paper and Packaging ~~segment, including impacts~~business (down 19%) primarily due to ongoing effects of COVID-19. The impact from ~~the change from a major distributor,~~ lower net selling prices ~~in both segments and unfavorable currency translation effects. These items were only partly~~was partially offset by ~~increased volumes in Technical Products. On a constant~~favorable currency ~~basis, net sales declined 2 percent compared with the prior year.~~effects.

~~Impact of COVID-19 on Our Business~~

As are virtually all other companies, we are dealing with the outbreak and pandemic of COVID-19. The COVID-19 pandemic and measures to prevent its spread, including imposition of quarantines and prolonged closures of manufacturing facilities and retail stores, may impact our business in a number of ways. These impacts are expected to include an adverse effect from significantly reduced global economic activity and resulting demand for our products and our customers’ products and, therefore, the products we manufacture. They could also adversely affect our ability to operate our business, including potential disruptions to our supply chain and workforce. The COVID-19 impact on capital markets could also impact the timing of our plans to refinance our long-term debt and the cost of borrowing.

The impact of the COVID-19 pandemic on our business operations and results of operations began to be noticeable to a limited degree in March, with decreased customer demand and interruptions of collections of some accounts receivable. We expect the ongoing COVID-19 pandemic to have a material adverse impact on our business operations and our financial results, including our net sales, earnings and cash flows in the upcoming quarters. While it is currently too early to estimate, we expect the ultimate significance of the impact of these disruptions, including the extent of their adverse impact on our financial results, will be determined by the length of time that such disruptions continue, which will, in turn, depend on the duration of the COVID-19 pandemic and the impact of governmental regulations or guidelines in response to the pandemic. We have been designated as an "essential business" by the U.S. federal and state governments, and thus far have had no manufacturing operations disruptions at any U.S. or European facility due to governmental orders or labor availability. At this time, we do not foresee any mandated closures of any of our global manufacturing facilities.

We have been taking, and will continue to take actions to ensure our employees' safety, manage our cash flow and preserve our liquidity. Such measures could include reducing discretionary spending, minimizing capital expenditures and contributions to pension plans, postponing acquisition and other investment initiatives, suspending purchases under our 2020 Stock Purchase Plan, consolidating our manufacturing footprint and reducing payroll costs through a wage increase deferral, hiring freeze, furloughs or other measures.

~~As of March 31, 2020, there was no indication that the carrying values of our goodwill, indefinite-lived intangibles or long-lived assets were impaired as a result of impacts from COVID-19.~~

~~Refer to Part II, Item 1A,"Risk Factors," for the risk factor related to COVID-19.~~

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 months ended March 31, ~~2020~~2021 and ~~2019.~~

Analysis of Net Sales — Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

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


	Three Months Ended March 31,
	2021				2020
Net sales
Technical Products	$	145.2	64	%	$	132.3	57	%
Fine Paper and Packaging	81.8		36	%	101.3		43	%
Consolidated	$	227.0	100	%	$	233.6	100	%

Three Months Ended March 31,
2020 2019
Net sales

Technical Products $ 142.2
61 % $ 140.0
58 %
Fine Paper and Packaging 91.4
39 % 99.7
42 %
Consolidated $ 233.6
100 % $ 239.7
100 %

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

•Net sales in our technical products business increased ~~$2.2~~$12.9 million ~~(2%~~(10%) from the prior year period. The revenue increase ~~resulted~~was primarily driven by growth in transportation and industrial filtration sales, as well as media for face masks in Europe. The favorable currency effects from ~~higher volumes in the performance materials and filtration businesses,~~a stronger euro were partly offset by lower net selling prices ~~a lower-priced mix~~in 2021. Net sales also continued to grow sequentially since the second quarter of 2020 and ~~unfavorable foreign currency effects.~~were 11% higher than the fourth quarter of 2020.

•Net sales in our fine paper and packaging business decreased ~~$8.3~~$19.5 million ~~(8%~~(19%) from the prior year period. The decline was primarily due to lower volumes resulting from COVID-19, with the largest impact in commercial print ~~volume, reflecting unusually weak market conditions~~products used for advertising and ~~the impact of a change in the relationship with a major distributor, along with lower~~marketing. In addition, net selling prices were lower in 2021 due to a lower priced mix. Although down from prior year, net sales continued to grow sequentially since the second quarter of 2020 and ~~a less favorable sales mix. These items~~ were ~~only partly offset by sales growth in both premium packaging and~~8% higher than the ~~consumer channel.~~fourth quarter of 2020.

Analysis of Operating Income — Three ~~and Nine~~ Months Ended March 31, ~~2020~~2021 and ~~2019~~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:

The following table presents our operating income by segment for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:

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

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

(c)Includes the net favorable effects of other manufacturing costs, over (under) absorption of fixed costs, distribution and SG&A expenses. In addition, these amounts include the net change in ~~2020 it included $1.1~~non-GAAP adjustments of $0.5 million, ~~of unfavorable adjustments related to COVID-19 (as described below), $1.4~~$1.3 million, ~~of restructuring~~ and ~~other non-routine~~$(10.8) million in Technical Products, Fine Paper and Packaging, and Unallocated corporate costs, ~~and $1.0 million of acquisition and due diligence costs.~~respectively. See ~~the breakdown by segment and~~ the reconciliation table on ~~F-19~~F-20 for further ~~detail.~~detail by segment and type of cost.

•Operating income for our technical products business increased ~~$9.7 million (56%), to $27.1~~$4.0 million from ~~$17.4 million. Adjusting~~the prior year period to $19.2 million, primarily as a result of lower manufacturing costs, increased volume, lower SG&A spending, favorable foreign currency, partly offset by net of lower selling prices. Excluding unfavorable adjusting items of $0.3 million in 2021 and $0.8 million in 2020 included an accrual for a one-time special payment to our mill operators related to COVID-19, costs for the intended Vectorply acquisition, and restructuring and other non-routine costs. There were no adjusting items for the same period in 2019. Seeshown on the reconciliation table on ~~F-19 for further detail.~~

Operating income for our technical products business increased $4.9 million from the prior year period. Excluding unfavorable adjusting items of $0.8 million in 2020 related to COVID-19 and restructuring costs,F-20, adjusted operating income increased $3.5 million (22%) from $16.0 million to $19.5 million.

•~~$5.7 million~~ ~~(50%) from $11.3 million to $17.0 million. Operating income increased as a result of~~

lower input costs, higher sales volumes and improved manufacturing costs, which more than offset lower net selling prices and $1.3 million of higher SG&A expense due to increased provisions for uncollectible accounts and legal costs.

unfavorable adjusting items of $0.1 million in 2021 and ~~lower net selling prices.~~$1.4 million in 2020 shown on the reconciliation table on F-20, adjusted operating income of $12.8 million in 2021 decreased $4.4 million (26%) from $17.2 million in the prior year.

•Unallocated corporate expenses of $18.3 million increased $10.9 million from the prior year primarily due to costs of $12.0 million related to the ITASA acquisition, including a $6.2 million unrealized loss on the foreign currency forward contracts negotiated to fund the purchase price in euros. Excluding unfavorable adjustments in 2021 and 2020 of $12.1 million and $1.3 million, respectively, shown on the reconciliation table on F-20, adjusted unallocated corporate expenses of $6.2 million increased $0.1 million from prior year.

•

Unallocated corporate expenses for the three months ended March 31, 2020 of $7.4 million increased $1.6 million from the prior year. Excluding 2020 adjustments of $1.3 million primarily related to acquisition and due diligence costs, adjusted unallocated corporate expenses increased $0.3 million.

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The following table sets forth our operating income (loss) by segment, adjusted for the effects of certain costs, for the periods indicated:


	Three Months Ended March 31,
	2021		2020
Technical Products
GAAP Operating Income	$	19.2	$	15.2

COVID-19 costs	0.1		0.6
Other restructuring and non-routine costs	0.2		0.2



Adjusted Operating Income	19.5		16.0

Fine Paper and Packaging
GAAP Operating Income	12.7		15.8

COVID-19 costs	0.3		0.5
Other restructuring and non-routine costs	(0.2)		0.9



Adjusted Operating Income	12.8		17.2

Unallocated Corporate Costs
GAAP Operating Loss	(18.3)		(7.4)
Acquisition costs	12.0		1.0
COVID-19 costs	0.1		—
Other restructuring and non-routine costs	—		0.3



Adjusted Operating Loss	(6.2)		(6.1)

Consolidated
GAAP Operating Income	13.6		23.6

Acquisition costs	12.0		1.0
COVID-19 costs	0.5		1.1
Other restructuring and non-routine costs	—		1.4



Adjusted Operating Income	$	26.1	$	27.1

Three Months Ended March 31,
2020 2019
Technical Products

GAAP Operating Income $ 16.2
$ 11.3
COVID-19 costs 0.6
—
Restructuring and other non-routine costs 0.2
—
Adjusted Operating Income 17.0
11.3

Fine Paper and Packaging

GAAP Operating Income 14.8
11.9
COVID-19 costs 0.5
—
Restructuring and other non-routine costs 0.5
—
2016-19 indirect tax costs 0.4
—
Adjusted Operating Income 16.2
11.9

Unallocated Corporate Costs

GAAP Operating Loss (7.4 ) (5.8 )
Restructuring and other non-routine costs 0.3
—
Acquisition and due diligence costs 1.0
—
Adjusted Operating Loss (6.1 ) (5.8 )

Consolidated

GAAP Operating Income 23.6
17.4
COVID-19 costs 1.1
—
Restructuring and other non-routine costs 1.0
—
Acquisition and due diligence costs 1.0
—
2016-19 indirect tax costs 0.4
—
Adjusted Operating Income $ 27.1
$ 17.4

In accordance with generally accepted accounting principles in the United States ("GAAP"), consolidated operating income (loss) includes the pre-tax effects of acquisition costs, COVID-19 costs, and other restructuring and ~~other prior year costs, and acquisition and due diligence~~non-routine 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 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.

Additional Statement of Operations Commentary:

•SG&A expense of ~~$26.6~~$24.3 million for the three months ended March 31, ~~2020~~2021 was ~~$1.3~~$2.3 million ~~higher~~lower than SG&A expense of ~~$25.3~~$26.6 million in the prior year period. Costs in the first quarter of 2021 were lower due to the significant actions taken to manage spending and reduce costs during 2020 in areas such as marketing, travel and payroll. Costs in the first quarter of 2020 also included a higher provision for uncollectible accounts receivable and legal expenses.

•For the three months ended March 31, ~~2020, SG&A expense as a percent of sales increased to 11.4% from 10.6% in the prior year period.~~

~~For the three months ended March 31, 2020,~~2021, net interest expense of ~~$2.9~~$3.1 million ~~decreased compared with $3.2~~was higher than the $2.9 million in the ~~prior year period,~~first quarter of 2020, due to ~~lower average debt levels in 2020.~~higher amortization expense for deferred financing costs on the Term Loan B.

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•Historically, our effective 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 March 31, ~~2020~~2021 and ~~2019,~~2020, we recorded an income tax expense of ~~$4.3~~$2.2 million and ~~$2.4~~$4.3 million, respectively. The effective income tax rate was 21% for both the three months ended March 31, ~~2020~~2021 and ~~17% for the three months ended~~ March 31, ~~2019. The effective income tax rate for the three months ended March 31, 2019 reflected a favorable adjustment to the reserve for uncertain tax positions following completion of a German tax audit.~~2020.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law in the U.S. The CARES Act includes various income and payroll tax provisions that we are in the process of analyzing to determine the financial impact on our financial statements. The most significant impact is expected to result from the ability to delay payment of certain 2020 payroll taxes until 2021 and 2022. Similar COVID-19 relief legislation has also been enacted in Germany, the Netherlands and the U.K. aimed at providing subsidies for employee retention and deferral of tax payments.

Liquidity and Capital Resources

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

Three Months Ended March 31,
2020 2019
Net cash flow provided by (used in):

Operating activities $ 14.2
$ 3.0

Investing activities:

Capital expenditures (4.8 ) (4.3 )
Other investing activities (0.1 ) (0.4 )
Total (4.9 ) (4.7 )

Financing activities:
Net borrowings of long-term debt 71.7
7.4
Cash dividends paid (8.0 ) (7.6 )
Shares purchased (3.8 ) (0.3 )
Other financing activities (0.5 ) (0.2 )
Total 59.4
(0.7 )
Effect of exchange rate changes on cash and cash equivalents (0.2 ) 0.1
Net increase (decrease) in cash and cash equivalents $ 68.5
$ (2.3 )
•no near-term debt maturities, as the Global Revolving Credit Facility matures in December 2023 and the 2020 Term Loan B matures in June 2027;

•significant remaining availability of $155.7 million on our Global Revolving Credit Facility, with no outstanding borrowings;

•$41.0 million of cash and cash equivalents on hand;

•and, on April 6, 2021, in connection with the acquisition of ITASA, we successfully completed the upsizing of our Term Loan B facility from $200 million to $450 million, maturing in April 2028. See Note 10, "Subsequent Events" of Notes to Condensed Consolidated Financial Statements, for further discussion.


	Three Months Ended March 31,
	2021		2020
Net cash flow provided by (used in):
Operating activities	$	20.7	$	14.2

Investing activities:
Capital expenditures	(4.8)		(4.8)

Other investing activities	(0.2)		(0.1)
Total	(5.0)		(4.9)

Financing activities:
Net borrowings (repayments) of long-term debt	(1.2)		71.7
Cash dividends paid	(8.0)		(8.0)
Shares purchased	(0.4)		(3.8)
Other financing activities	(1.4)		(0.5)
Total	(11.0)		59.4
Effect of exchange rate changes on cash and cash equivalents	(0.8)		(0.2)
Net increase in cash and cash equivalents and restricted cash	$	3.9	$	68.5

Operating Cash Flow Commentary

•Cash provided by operating activities of ~~$14.2~~$20.7 million for the three months ended March 31, ~~2020~~2021 was ~~$11.2~~$6.5 million higher than cash provided by operating activities of ~~$3.0~~$14.2 million in the prior year period. The increase resulted ~~primarily~~ from lower working capital requirements that more than offset lower earnings. The significant increases in accounts receivable, accounts payable and ~~higher earnings.~~accrued expenses during the three months ended March 31, 2021 resulted from the sequential growth in business activity and unpaid ITASA acquisition costs.

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Investing Commentary:

•For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, cash used by investing activities was $5.0 million and $4.9 million, ~~and $4.7 million,~~ respectively. ~~Increased capital spending in 2020 of $0.5 million was due to timing of certain projects. For the full year 2020, we~~We expect aggregate annual capital expenditures to return to a range of approximately 2 to 4 percent of net sales. We believe that this level of capital spending can be ~~approximately half~~funded from cash provided from operating activities and allows us to maintain the efficiency and cost effectiveness of our ~~normal range of 2%~~assets while also investing in expanded capabilities to ~~4% of net sales.~~successfully pursue strategic initiatives and deliver attractive returns.

Financing Commentary:

~~Our liquidity requirements are provided by cash generated from operations and short and long-term borrowings.~~

•For the three months ended March 31, ~~2020,~~2021, cash and cash equivalents increased ~~$68.5~~$3.9 million to ~~$77.5~~$41.0 million at March 31, ~~2020~~2021 from ~~$9.0~~$37.1 million at December 31, ~~2019. Total debt increased $71.1 million to $271.9 million at~~2020. As of March 31, ~~2020 from $200.8~~2021, our cash balance consisted of $14.7 million in the U.S. and $26.3 million held at ~~December~~entities outside of the U.S. As of March 31, ~~2019. We~~2021, there were no restrictions regarding the repatriation of our non-U.S. cash.

•For the three months ended March 31, 2021, cash used in financing activities was $11.0 million. Cash related to financing activities consists primarily of net borrowings/repayments of long-term debt, dividends paid and share repurchases. During the three months ended March 31, 2021, we made net repayments of $1.2 million as compared to net borrowings of $71.7 million during the prior year period, when we increased cash on hand through ~~$65.0 million of~~ borrowings against our Global Revolving Credit Facilities near quarter-end as a precautionary measure to protect against any potential disruption in the banking system that would adversely impact our short-term ability to access cash as a result of COVID-19 ~~effects and to enhance our liquidity.~~effects.

As of March 31, 2020, our cash balance of $77.5 million consisted of $71.2 million in the U.S. and $6.3 million held at entities outside of the U.S. As of March 31, 2020, there were no restrictions regarding the repatriation of our non-U.S. cash.

For the three months ended March 31, 2020 and 2019, cash provided by (used in) financing activities was $59.4 million and $(0.7) million, respectively. Cash related to financing activities consists primarily of net borrowings/repayments of long-term debt, dividends paid and share repurchases. During the three months ended March 31, 2020, we made net borrowings of $71.7 million on our debt compared to $7.4 million in the prior year period, as noted above.

•Availability under our ~~revolving credit facility~~Global Revolving Credit Facility varies over time depending on the value of our inventory, receivables and various capital assets. As of March 31, ~~2020,~~2021, we had ~~$93.0 million~~no outstanding borrowings under our Global Revolving Credit ~~Facilities~~Facility and ~~$117.2~~$155.7 million of available credit (based on exchange rates at March 31, ~~2020)~~2021).

Our $175.0 million Senior Notes are due on May 15, 2021 and will become a current liability soon. We continue to actively monitor the debt markets for refinancing opportunities and believe that we will be able to refinance these notes later this year on more favorable terms than are currently available in the market. •As of March 31, ~~2020,~~2021, we ~~were in compliance with all terms of the indenture for the 2021 Senior Notes.~~

~~We have~~had required debt principal payments through March 31, ~~2021~~2022 of ~~$3.3~~$2.8 million for principal payments on the two German loan ~~agreements.~~agreements and $2.0 million for the 2020 Term Loan B payable in equal quarterly installments.

•On April 6, 2021, in connection with the acquisition of ITASA, we completed the upsizing of our Term Loan facility from $200 million to $450 million, maturing in April 2028. See Note 10, "Subsequent Events" of Notes to Condensed Consolidated Financial Statements, for further discussion.

Transactions With Shareholders

~~In November 2019, our Board~~•For each of ~~Directors approved a 4% increase in the quarterly dividend on our Common Stock, to $0.47 per share, effective with the March 2020 dividend payment. For~~ the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, we paid cash dividends of $8.0 million ~~(0.47~~($0.47 per common share) ~~and $7.6~~.

•In November 2020, the Board of Directors authorized an evergreen program for the repurchase of up to $25 million ~~(0.45 per common share), respectively.~~

Among the measures taken to manage our cash flow and preserve our liquidity, purchases under the 2020 Stock Purchase Plan were curtailed in March 2020 and remain suspended. The 2020 Stock Purchase Planof 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. We did not purchase any shares during the first quarter of 2021. For the three months ended March 31, 2020, ~~and 2019,~~ we repurchased 59,577 shares of Common Stock at a cost of $3.6 ~~million and 4,285 shares of Common Stock at a cost of $0.3 million, respectively.~~million. For further details on our Stock Purchase Plans, refer to Note 7, "Stockholders' Equity" of Notes to Condensed Consolidated Financial Statements.

Other Items:

•As of March 31, ~~2020,~~2021, we had ~~$42.3~~$69.4 million of state ~~net operating losses ("NOLs").~~NOLs. Our state NOLs may be used to offset ~~$2.6~~$4.3 million in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts between 2021 and ~~2039.~~2040. In addition, as of March 31, ~~2020,~~2021, we had ~~$21.0~~$27.6 million of U.S. federal and ~~$7.6~~$7.3 million of U.S. state research and development tax credits ("R&D Credits") which, if not used, will expire between ~~2032~~2029 and ~~2040~~2041 for the U.S. federal R&D Credits and between ~~2020~~2021 and ~~2035~~2036 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 ~~2020~~2021 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-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 and future cash flows associated with impairment testing of long-lived assets. 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. There have been no significant changes in these policies, or the estimates used in the application of the policies since December 31, ~~2019.~~2020.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), or in releases made by the SEC, all as may be amended from time to time.under federal securities laws. Statements contained in this quarterly report that are not historical facts may be forward-looking statements within the meaning ~~of the PSLRA~~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 ~~the Securities Act, the Exchange Act and the PSLRA~~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;

the potential impact of COVID-19 on our projected customer demand, mill operations and supply chain, as well as our consolidated financial position, consolidated results of operations and consolidated cash flows in 2020;

•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;

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

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

F-24

Table of Contents

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

•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;

•loss of key personnel;

•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 ~~net operating losses~~NOLs may not be available to offset our tax ~~liability~~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, ~~2019.~~2020.

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 March 31, ~~2020,~~2021, 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 March 31, ~~2020.~~2021.

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 three months ended March 31, ~~2020.~~2021. Based on that evaluation, we have concluded that there has been no change in our internal control over financial reporting during the three months ended March 31, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

F-25

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note 8, "Contingencies and Legal Matters" of Notes to Condensed Consolidated Financial ~~Statements of Item 1 — Financial~~ Statements.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed ~~below and~~ 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 ~~below and~~ 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, 2019.~~

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

A novel strain of coronavirus, COVID-19, was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization. The COVID-19 pandemic and measures taken to contain or mitigate the pandemic have caused, and are continuing to cause, business slowdown or shutdown in affected areas and significant disruption in the financial markets both globally and in the U.S., which has led to a decline in discretionary spending by consumers, which in turn has started to adversely impact our business, sales, financial condition and results of operations in March 2020. We cannot predict the degree to, or the time period over, which our sales and operations will be affected by this pandemic and preventive measures.

COVID-19 and measures to prevent its spread, including imposition of quarantines and prolonged closures of manufacturing facilities and retail stores, may impact our business in a number of ways. These impacts are expected to include an adverse effect from significantly reduced global economic activity and resulting demand for our products and our customers’ products and, therefore, the products we manufacture. They could also adversely affect our ability to operate our business, including potential disruptions to our supply chain and workforce. The COVID-19 impact on capital markets could impact our ability to successfully refinance our long-term debt and increase our cost of borrowing. Our $175.0 million Senior Notes mature on May 15, 2021 and the adverse impacts of COVID-19 could prevent us from being able to refinance the 2021 Senior Notes in a timely manner or could result in unfavorable borrowing arrangements due to major volatility in the credit markets.

The impact of the COVID-19 pandemic on our business operations and results of operations began to be noticeable to a limited degree in March, with decreased customer demand and interruptions of collections of some accounts receivable. We expect the ongoing COVID-19 pandemic to have a material adverse impact on our business operations and our financial results, including our net sales, earnings and cash flows in the upcoming quarters. While it is currently too early to estimate, we expect the ultimate significance of the impact of these disruptions, including the extent of their adverse impact on our financial results, will be determined by the length of time that such disruptions continue, which will, in turn, depend on the duration of the COVID-19 pandemic and the impact of governmental regulations or guidelines in response to the pandemic. Although all of our global manufacturing facilities are currently operational and have been designated by governmental authorities as an "essential business", in the future they may be required to curtail or cease production in response to the spread of COVID-19, either in response to changing governmental orders or labor availability. In addition, our customers, distribution partners, service providers or suppliers may experience operational challenges, financial distress, file for bankruptcy protection, go out of business or suffer disruptions in their business due to COVID-19 which would have a material negative impact on our business.

The spread of COVID-19 and the requirements to take action to help limit the spread of the illness, will impact our ability to carry out our business as usual and may materially adversely impact global economic conditions, our business, results of operations, cash flows and financial condition. Even in those regions where we are beginning to experience business recovery, should those regions fail to fully contain COVID-19 or suffer a COVID-19 relapse, those markets may not recover as quickly or at all, which could have a material adverse effect on our business and results of operations.

To the extent the COVID-19 pandemic adversely affects our business, results of operations and financial condition, it may also have the effect of heightening many of the other risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019.

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 March 31, ~~2020:~~2021:


							Shares Purchased as Part of Publicly Announced Plans or Programs in 2021 (b)
Month	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)	Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs (a)	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	343	$—	—	$25,000,000	January	5,213	$—	—	$25,000,000
February	49,560	$61.06	46,667	$22,150,513	February	1,668	$—	—	$25,000,000
March	13,130	$58.18	12,890	$21,400,573	March	—	$—	—	$25,000,000

(a)As Transactions include the purchase of ~~March 31, 2020, the Company has purchased 59,577~~vested restricted shares from employees to satisfy minimum tax withholding requirements upon vesting of ~~Common Stock at an aggregate cost of $3.6 million under the 2019 Stock Purchase Plan. For further discussion on the share repurchase plans refer to~~stock-based awards. See Note 7 ~~"Stockholders' Equity"~~ of Notes to Condensed Consolidated Financial ~~Statements.~~Statements, "Stockholders' Equity."

(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 three months ended March 31, 2021, there were no purchases under this program.

~~_______________________~~

* Indicates management contract or compensatory plan or arrangement.



		NEENAH, INC.

	By:	/s/ ~~John P. O'Donnell~~Julie A. Schertell
		~~John P. O’Donnell~~Julie A. Schertell
		President, Chief Executive Officer and Director (Principal Executive Officer)

		/s/ ~~Bonnie C. Lind~~Paul F. DeSantis
		~~Bonnie C. Lind~~Paul F. DeSantis
		~~Senior~~Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

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


May ~~11, 2020~~6, 2021


	March 31, 2020		December 31, 2019			March 31, 2021		December 31, 2020
ASSETS					ASSETS
Current Assets					Current Assets
Cash and cash equivalents	$	77.5	$	9.0	Cash and cash equivalents	$	41.0	$	37.1
Accounts receivable (less allowances of $2.0 million and $1.5 million)	118.6		102.6

Accounts receivable (less allowances of $1.5 million and $1.5 million)					Accounts receivable (less allowances of $1.5 million and $1.5 million)	117.9		100.2
Inventories	131.4		122.8		Inventories	115.1		108.9

Prepaid and other current assets	16.5		18.3		Prepaid and other current assets	25.0		25.1
Total Current Assets	344.0		252.7		Total Current Assets	299.0		271.3
Property, Plant and Equipment					Property, Plant and Equipment
Property, plant and equipment, at cost	849.9		850.6		Property, plant and equipment, at cost	805.7		812.8
Less accumulated depreciation	475.4		470.0		Less accumulated depreciation	485.4		483.4
Property, Plant and Equipment—net	374.5		380.6		Property, Plant and Equipment—net	320.3		329.4
Lease Right-of-Use Assets (Note 1)	21.8		13.9
Lease Right-of-Use Assets					Lease Right-of-Use Assets	19.9		20.2
Deferred Income Taxes	11.6		13.4		Deferred Income Taxes	20.6		18.3
Goodwill	82.2		83.1		Goodwill	85.3		87.4
Intangible Assets—net	65.3		66.7		Intangible Assets—net	61.3		62.6
Other Noncurrent Assets	16.9		17.4		Other Noncurrent Assets	16.8		17.4
TOTAL ASSETS	$	916.3	$	827.8	TOTAL ASSETS	$	823.2	$	806.6

LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities					Current Liabilities
Debt payable within one year	$	3.3	$	2.6
Lease liabilities payable within one year (Note 1)	2.7		1.9
Debt payable within one year (Note 4)					Debt payable within one year (Note 4)	$	4.8	$	4.9
Lease liabilities payable within one year					Lease liabilities payable within one year	3.3		3.2
Accounts payable	57.8		48.9		Accounts payable	72.4		46.0
Accrued expenses	48.0		47.0		Accrued expenses	65.8		61.9
Total Current Liabilities	111.8		100.4		Total Current Liabilities	146.3		116.0
Long-term Debt	268.6		198.2
Noncurrent Lease Liabilities (Note 1)	20.2		13.0
Long-term Debt (Note 4)					Long-term Debt (Note 4)	187.2		189.5
Noncurrent Lease Liabilities					Noncurrent Lease Liabilities	18.0		18.4
Noncurrent Employee Benefits	89.8		93.1		Noncurrent Employee Benefits	92.5		96.8
Deferred Income Taxes	12.0		12.9		Deferred Income Taxes	11.8		12.3
Other Noncurrent Obligations	4.1		3.9		Other Noncurrent Obligations	5.8		6.0
TOTAL LIABILITIES	506.5		421.5		TOTAL LIABILITIES	461.6		439.0
Contingencies and Legal Matters (Note 8)	—		—		Contingencies and Legal Matters (Note 8)	0		0
TOTAL STOCKHOLDERS’ EQUITY	409.8		406.3		TOTAL STOCKHOLDERS’ EQUITY	361.6		367.6
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	916.3	$	827.8	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	823.2	$	806.6



	2019 Activity
	Common Stock
	Shares	Amount		Treasury Stock			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance, December 31, 2018	18,597	$	0.2	$	(76.6	)	$	328.5	$	243.2		$	(105.1	)	$	390.2
Net income	—	—		—			—		11.8			—			11.8
Other comprehensive income, net of income taxes	—	—		—			—		—			(1.7		)	(1.7		)
Dividends declared	—	—		—			—		(7.6		)	—			(7.6		)
Shares purchased (Note 7)	—	—		(0.3		)	—		—			—			(0.3		)
Stock options exercised	9	—		—			—		—			—			—
Restricted stock vesting (Note 7)	3	—		(0.1		)	—		—			—			(0.1		)
Stock-based compensation	—	—		—			1.9		—			—			1.9
Balance, March 31, 2019	18,609	$	0.2	$	(77.0	)	$	330.4	$	247.4		$	(106.8	)	$	394.2



	March 31, 2020				December 31, 2019
	Carrying Value		Fair Value (a)		Carrying Value		Fair Value (a)
2021 Senior Notes (5.25% fixed rate)	$	175.0	$	174.3	$	175.0	$	174.3
Global Revolving Credit Facilities (variable rates)	93.0		93.0		21.6		21.6
German loan agreement (2.45% fixed rate)	3.4		3.5		3.5		3.6
German loan agreement (1.45% fixed rate)	3.6		3.7		3.7		3.7
Total debt	$	275.0	$	274.5	$	203.8	$	203.2



	March 31, 2020			December 31, 2019
2021 Senior Notes (5.25% fixed rate) due May 2021	$	175.0		$	175.0
Global Revolving Credit Facilities (variable rates) due December 2023	93.0			21.6
German loan agreement (2.45% fixed rate) due in quarterly installments ending September 2022	3.4			3.5
German loan agreement (1.45% fixed rate) due in quarterly installments ending March 2023	3.6			3.7
Deferred financing costs	(3.1		)	(3.0		)
Total debt	271.9			200.8
Less: Debt payable within one year	3.3			2.6
Long-term debt	$	268.6		$	198.2



Options vested	66,953
Aggregate grant date fair value of Options vested (in millions)	$	1.0



	Three Months Ended March 31,
	2020 (a)			2019
Operating income (loss)
Technical Products	$	16.2		$	11.3
Fine Paper and Packaging	14.8			11.9
Unallocated corporate costs	(7.4		)	(5.8		)
Consolidated	$	23.6		$	17.4


	Three Months Ended March 31,				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
		2020		2019		Total Change				Volume			Net Price (a)			Currency					2021			2020			Total Change				Volume			Net Price (a)			Currency
Technical Products	$	142.2	$	140.0	$	2.2			$	10.1		$	(5.8	)	$	(2.1	)	Technical Products		$	145.2		$	132.3		$	12.9			$	10.3		$	(4.3)		$	6.9
Fine Paper and Packaging	91.4		99.7		(8.3		)		(5.8		)	(2.5		)	—			Fine Paper and Packaging	81.8			101.3			(19.5)				(16.0)			(3.5)			—
Consolidated	$	233.6	$	239.7	$	(6.1	)		$	4.3		$	(8.3	)	$	(2.1	)	Consolidated	$	227.0		$	233.6		$	(6.6)			$	(5.7)		$	(7.8)		$	6.9


								Change in Operating Income Compared to Prior Period																											Change in Operating Income Compared to Prior Period
	Three Months Ended March 31,										Change Due To																	Three Months Ended March 31,										Change Due To
							Total							Net				Input																Total							Net				Input
		2020			2019				Change			Volume				Price (a)				Costs (b)		Currency			Other (c)					2021			2020				Change			Volume				Price (a)				Costs (b)			Currency			Other (c)
Technical Products	$	16.2		$	11.3			$	4.9		$	3.1			$	(5.4	)		$	7.4	$	(0.3	)	$	0.1		Technical Products		$	19.2		$	15.2			$	4.0		$	2.2			$	(4.4)			$	(0.5)		$	1.3		$	5.4
Fine Paper and Packaging	14.8			11.9				2.9			(1.5		)		(1.2		)		6.1		—			(0.5		)	Fine Paper and Packaging	12.7			15.8				(3.1)			(5.1)				(2.0)				0.8			—			3.2
Unallocated corporate costs	(7.4		)	(5.8		)		(1.6		)	—				—				—		—			(1.6		)	Unallocated corporate costs	(18.3)			(7.4)				(10.9)			—				—				—			—			(10.9)
Consolidated	$	23.6		$	17.4			$	6.2		$	1.6			$	(6.6	)		$	13.5	$	(0.3	)	$	(2.0	)	Consolidated	$	13.6		$	23.6			$	(10.0)		$	(2.9)			$	(6.4)			$	0.3		$	1.3		$	(2.3)



Exhibit Number		Exhibit
10.1		Term Loan Credit Agreement, dated April 6, 2021, by and among Neenah, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed herewith).

~~Second~~10.2		Fourth Amendment, dated ~~March 12, 2020,~~April 6, 2021, to the Fourth Amended and Restated Credit Agreement dated December 10, 2018 by and among Neenah, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed herewith).

10.2*31.1		~~Form of Performance Share Unit Award Agreement (filed herewith)~~

10.3*	~~Form of Restricted Stock Unit Award Agreement (filed herewith)~~

10.4*	~~Form of Restricted Stock Unit Award Agreement (retirement) (filed herewith)~~

~~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

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