np-20220331

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, 2022

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

For the transition period from _______ to _______

Commission File Number: 001-32240

(Exact name of registrant as specified in its charter)


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

3460 Preston Ridge Road

Alpharetta

Georgia

30005

(Address of principal executive offices, including zip code)

(678) 566-6500

(Registrant’s telephone number, including area code)

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


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

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

(Do not check if a smaller reporting company)

Emerging growth company

☐

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

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

As of May 2, 2022, there were 16,788,143 shares of the Company’s Common Stock outstanding.

Table of Contents

TABLE OF CONTENTS


Part I — Financial Information

Item 1. Financial Statements			F-1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			F-18

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

Item 4. Controls and Procedures			F-25


Part II — Other Information

Item 1. Legal Proceedings			F-26

Item 1A. Risk Factors			F-26

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

Item 6. Exhibits			F-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,
	2022		2021
Net Sales	$	284.8	$	227.0
Cost of products sold	236.5		177.4
Gross Profit	48.3		49.6
Selling, general and administrative expenses	30.3		24.3
Acquisition-related costs (Note 4)	5.3		12.0
Asset restructuring costs (Note 10)	0.6		—

COVID-19 costs	0.6		0.5



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


Net Income	$	5.7	$	8.3

Earnings Per Common Share



Basic	$	0.34	$	0.49




Diluted	$	0.34	$	0.49

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

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

See Notes to Condensed Consolidated Financial Statements

F-1

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)


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


Unrealized foreign currency translation loss	(8.1)		(9.1)

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

See Notes to Condensed Consolidated Financial Statements

F-2

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)


	March 31, 2022		December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents	$	25.2	$	23.9

Accounts receivable (less allowances of $1.8 million and $1.6 million)	165.1		142.3
Inventories (Note 3)	148.3		138.5
Assets held for sale (Note 10)	10.5		10.5
Prepaid and other current assets	30.0		31.8
Total Current Assets	379.1		347.0
Property, Plant and Equipment
Property, plant and equipment, at cost	797.0		796.8
Less accumulated depreciation	505.5		501.3
Property, Plant and Equipment, net	291.5		295.5
Finance Lease Right-of-Use Assets	20.2		20.8
Operating Lease Right-of-Use Assets	17.6		17.8
Deferred Income Taxes	28.0		25.1
Goodwill	195.6		198.6
Intangible Assets, net	150.3		154.6
Over-funded Employee Benefit Plan (Note 6)	10.8		9.5
Other Noncurrent Assets	12.7		12.8
TOTAL ASSETS	$	1,105.8	$	1,081.7

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Debt payable within one year (Note 5)	$	5.7	$	6.4
Finance lease liabilities payable within one year	0.8		0.8
Operating lease liabilities payable within one year	3.3		3.3
Accounts payable	114.5		97.4
Liabilities of assets held for sale (Note 10)	0.5		0.5
Accrued expenses	64.1		66.6
Total Current Liabilities	188.9		175.0
Long-term Debt (Note 5)	456.7		434.9
Finance Lease Liabilities, Noncurrent	19.9		20.4
Operating Lease Liabilities, Noncurrent	15.7		15.9
Noncurrent Employee Benefits	75.9		77.7
Deferred Income Taxes	37.1		38.2
Other Noncurrent Obligations	3.8		3.6
TOTAL LIABILITIES	798.0		765.7
Contingencies and Legal Matters (Note 9)	—		—
TOTAL STOCKHOLDERS’ EQUITY	307.8		316.0
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,105.8	$	1,081.7

See Notes to Condensed Consolidated Financial Statements

F-3

Table of Contents

NEENAH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions, shares in thousands)

(Unaudited)


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

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

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


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

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

SEC Form 10-Q filed by Neenah Inc.