Investor Presentation 2Q 2013 082713 [Read-Only] relations...Investor Presentation 2 ... fully...

Investor Presentation

August 2013

Investor Presentation 2

Safe Harbor StatementCertain statements and information included in this presentation constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of United States federal securities legislation (collectively, "forward-looking statements"). All statements other than statements of historical facts included in this presentation, including statements regarding our industry and our prospects, plans, financial position and business strategy, may constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate as well as beliefs and assumptions made by our management. Such statements include, in particular, statements about our plans, prospects, financial position and business strategies. Words such as "may," "will," "expect," "continue," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "seek" or the negatives of these terms or variations of them or similar terminology are intended to identify such forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements, by their nature, involve risks and uncertainties and are not guarantees of future performance. Such statements are also subject to assumptions concerning, among other things: our anticipated business strategies; anticipated savings from the Company’s manufacturing plant rationalization initiatives; anticipated trends in our business; anticipated cash flows from the Company’s operations; availability of funds under the Company’s Asset-Based Loan facility; and our ability to continue to control costs. The Company can give no assurance that these estimates and expectations will prove to have been correct. Actual outcomes and results may, and often do, differ from what is expressed, implied or projected in such forward-looking statements, and such differences may be material.

For additional information regarding important factors that could cause actual results to differ materially from those expressed in these forward-looking statements and other risks and uncertainties, and the assumptions underlying the forward-looking statements, you are encouraged to read "Item 3. Key Information - Risk Factors" as well as statements located elsewhere in the Company's annual report on Form 20-F for the year ended December 31, 2012 and the other factors contained in our filings with the Canadian securities regulators and the US Securities and Exchange Commission. Each of these forward-looking statements speaks only as of the date of this presentation. The Company will not update these statements unless applicable securities laws require it to do so.

This presentation contains certain non-GAAP financial measures as defined under applicable securities legislation. The Company believes such non-GAAP financial measures improve the transparency of the Company’s disclosures, and improves the period-to-period comparability of the Company’s results from its core business operations. As required by applicable securities legislation, the Company has provided a reconciliation of the non-GAAP financial measures contained in this presentation to the most directly comparable GAAP measures on its website at http://www.intertapepolymer.com under “Investor Relations” and “Financial Presentations”.


• The second largest tape manufacturer in North America

• Tapes (~66% of 2012 sales)

• Films (~19% of 2012 sales)

• Woven and other products (~15% of 2012 sales)

• Employs ~1,800 persons with 10 manufacturing facilities in North America and one in Europe

• June 2013 TTM revenue of $777.9 million

Profile


Manufacturing Footprint

Langley,British Columbia

Truro,Nova Scotia

Porto,Portugal

Tampa, Florida

Columbia, (1)

South Carolina

Danville,Virginia

Marysville,Michigan

Carbondale,Illinois

Brighton, Colorado

Tremonton,Utah

Menasha,Wisconsin

(1) In February 2013, the Company announced its plans to relocate and modernize the Columbia, South Carolina manufacturing operation to Blythewood, South Carolina, which is in close proximity to Columbia.


IPG at a Glance Industrial Packaging

Marine & Composites

Building & ConstructionHVAC

Geo Membrane AerospaceStructured FabricsAutomotive Aftermarket


Market Leadership Positions in Core Products

• Approximately 60% of 2012 sales from products with a top 2 market position

North American Market Position #1 #2Carton Sealing TapesHot Melt

Natural Rubber

Water-Activated

Industrial & Specialty TapesPaper

Flatback

Filament

Stencil

North American Market Posit ion #1 #2Building & ConstructionLumber Wrap

Fiberglass Sleeves

Agro-Environmental

Structure Fabrics

Hay Cover Fabrics

Poultry Fabrics

Woven Coated Geo Membrane


Gross Margin Focus Components of Improvement

• Market Pricing Dynamics– Internal– External

• Mix– Focus on a portfolio of higher margin products– Launch of new products– New markets

• Cost Reduction and Leverage– Manufacturing cost reduction programs– Leverage existing resources

The Company does not update forward looking statements unless required by applicable securities laws. All forward looking statements set forth herein are made as of August 14, 2013 and should not be interpreted as a confirmation of any estimates set forth herein.


Portfolio of Higher Margin Products• Includes new and existing products with higher

margins

• Important component of plan to increase gross margin

• Sales and marketing emphasis on this group of products – alignment of compensation & efficacy of the CRM tool

• Portfolio expanded due to cost reduction and price optimization programs


New Products

Note: New products include all products introduced over the previous five years

New Products Introduced2013 (F) ≈35

2012 352011 352010 442009 25

New Products % of Total RevenueQ2 2013 >18%Q1 2013 >16%

Total 2012 >15%Total 2011 >10%

Approximately174 new products


Reduce Manufacturing Costs and Leverage Capacity

Initiatives:• Productivity improvements• Material: reducing waste and lower cost raw material substitutions• Energy saving measures• Closure of Richmond manufacturing facility• Transfer of shrink film production to Tremonton from Truro

Manufacturing Cost Reductions Achieved:• Greater than $17 million for 2012• $3 million for Q2 2013• $7 million June 2013 YTD

Manufacturing Cost Reductions Projected:• $15 to $16 million for total 2013• More than $13 million per year for South Carolina Project

• Begin to realize benefits in the first half of 2015• First full year effect in 2016


Facilities involved in the programs:

Brantford (Ont)Announced Q4 2010Completed Q2 2011Annualized savings is (approximately) $4 million (1)

Carbondale (IL), Richmond (KY), Tremonton (UT) and Truro (NS)Announced Q2 2012Production transfers completed; currently resolving start-up issues Q1 2013Annualized savings is (approximately) $6 million (2) $23 million (4)

Columbia (SC)Announced Q1 2013Expected to be completed Q1 2015Annualized savings is (approximately) $13 million (3)

Manufacturing Rationalization ProjectsCompleted and in Progress

(1) Starting in Q2 2011(2) $3 million to $4 million in 2013(3) Savings expected to start in the first half of 2015 with full year benefits of greater than $13 million expected to start in 2016(4) On an annualized basis when in full effect


2013 Q2 Results: Year over Yearin millions US $

Q2 2013 Q2 2012 (1) Change(except per share amounts)

Revenue $193.5 $197.8 -2.2%Gross profit $42.3 $36.1 17.0%Net earnings/(loss) $15.1 ($3.9)Adj net earnings $18.3 $9.4 95.1%Adj EBITDA $28.3 $21.7 30.6%EPS/(loss), fully diluted $0.25 ($0.07)Adj EPS, fully diluted $0.30 $0.15 93.0%• Sales volume decreased approximately 4% when compared to Q2 2012• Selling prices, including the impact of product mix, increased approximately 2%

when compared to Q2 2012

(1) 2012 operating results have been adjusted for the retrospective application of IAS 19 - Employee Benefits


2013 Q1 Results: Sequentialin millions US $

Q2 2013 Q1 2013 Change(except per share amounts)

Revenue $193.5 $196.7 -1.6%Gross profit $42.3 $38.3 10.3%Net earnings/(loss) $15.1 ($15.8)Adj net earnings $18.3 $15.0 22.1%Adj EBITDA $28.3 $24.0 18.1%EPS(loss), fully diluted $0.25 ($0.26)Adj EPS, fully diluted $0.30 $0.24 21.7%

• Sales volume decreased approximately 5% when compared to Q1 2013• Selling prices, including the impact of product mix, increased approximately 4%

when compared to Q1 2013


2013 June Year to Date Resultsin millions US $ June 2013

YTDJune 2012

YTD (1) Change %(except per share amounts)

Revenue $390.2 $396.7 -1.6%Gross profit $80.6 $68.5 17.6%Net earnings/(loss) ($0.7) $3.8 Adj net earnings $33.3 $17.8 87.4%Adj EBITDA $52.3 $41.9 24.7%EPS/(loss), fully diluted ($0.01) $0.06 Adj EPS, fully diluted $0.54 $0.29 85.3%• Sales volume decreased approximately 2% when compared to June 2012 YTD• Selling prices, including the impact of product mix, increased slightly when

compared to June 2012 YTD

(1) 2012 operating results have been adjusted for the retrospective application of IAS 19 – Employee Benefits


Quarterly Adjusted EBITDA (1)$U

S m

illion

s

(1) 2012 and 2011 operating results have been adjusted for the retrospective application of IAS19-Employee Benefits


Debt $U

S m

illion

s


Debt Structure• 8½% Senior Subordinated Notes (“Notes”)

– $100.0 million redeemed over twelve-month period ended June 30, 2013– $18.7 million of remaining Notes to be redeemed in August 2013

• Asset Based Loan (“ABL”) facility– Matures in February 2017– Interest rate of 30-day LIBOR plus spread of 175 – 225 bps

• Equipment Finance Agreement– Capacity of $24 million, $13.5 million used through June 2013– Scheduled into 60 month lease terms at a fixed rate– Inception-to-date amounts capitalized at a fixed rate of less than 3% as of June 30, 2013

• Real Estate Term Loan– $16.6 million agreement in November 2012– Interest rate of 30-day LIBOR plus spread of 250 bps until December 31, 2012, 225 – 275 bps

thereafter• South Carolina Mortgage

– $8.5 million in June 2013 for purchase of land and building– $2.2 million remaining available for improvements– Interest rate of 30-day LIBOR plus 215 bps

• Average cost of debt decreased from about 6% at June 30, 2012 to about 3% at June 30, 2013

• As of June 2013, over 80% of debt is floating, primarily based on 30-day LIBOR


Debt to TTM Adjusted EBITDA

4.9 4.9

5.25.8

5.15.1

4.4

3.6

3.1

2.8

2.5

2.1

1.8 1.71.6

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2009 _________________ 2010 __________________ ____________________ 2011 ___________________ ___________________ 2012 __________________ _______ 2013 ________CGAAP


Cash Taxes and Tax ExpensesCash Taxes

•Expected to be less than $2 million for 2013, primarily due to state income tax•NOLs (as of December 31, 2012)

‒ $49.6 million of Canadian NOLs ‒ $140.0 million of US NOLs‒ 99% expire after 2020

Tax ExpensesMay vary significantly from prior years due to the accounting for tax assets in conjunction with the impact of restructuring charges and other adjustments. • No tax asset has been recognized for the US entities as of December 31, 2012• Tax expense may not necessarily be indicative of cash tax payments


• Revenue for Q3 of 2013 is expected to be slightly higher than Q2 of 2013

• Manufacturing overhead in Q3 is expected to be higher than Q2 of 2013 primarily due to planned annual manufacturing maintenance

• Gross margin for Q3 and Q4 of 2013 is expected to be between 20% and 22%

• Adjusted EBITDA for Q3 of 2013 is expected to be slightly lower than Q2 of 2013

• Capital expenditures are expected to be $12 to $15 million for Q3 of 2013, $48 to $54 million for total 2013 and $21 to $25 million in 2014

Outlook


• Total debt at September 30, 2013 is expected to be approximately the same compared to June 30, 2013

• Manufacturing rationalization projects:

– Charges for Q3 of 2013 related to equipment moves and workforce retention costs are expected to be $1 to $2 million

– Charges for the full year of 2013 related to equipment moves, workforce retention costs and environmental costs are expected to be $6 to $8 million. Cash outflows expected in 2013 are estimated to total $3 to $5 million, primarily related to equipment moves

– Charges after 2013 related to equipment moves and workforce retention costs are estimated to be $5 to $7 million, primarily related to the South Carolina Project. Cash outflows expected after 2013 for equipment moves, workforce retention costs and environmental are estimated to be $8 to $11 million

Outlook


Thank YouQuestion and answer period


Appendix


2012 Full Year Results (1)

in millions US $ 2012 2011 Change(except per share amounts) Full Year Full YearRevenue $784.4 $786.7 -0.3%Gross profit 138.7 112.8 23.1%Net earnings 20.4 7.4 176%Adj net earnings 39.6 12.0 229%Adj EBITDA 85.6 62.2 37.6%EPS, fully diluted 0.34 0.12 169%Adj EPS, fully diluted 0.65 0.20 220%

• Sales volume after adjusting for the closure of the Brantford facility, decreased approximately 3% when compared to Full Year 2011

• Selling price, including the impact of product mix, after adjusting for the closure of the Brantford facility, increased approximately 3% from Full Year 2011

(1) 2012 and 2011 operating results have been adjusted for the retrospective application of IAS 19-Employee Benefits


Quarterly Revenue$U

S m

illion

s


Quarterly Gross Profit and Gross Margin (1)$U

S m

illion

s

(1) 2012 and 2011 operating results have been adjusted for the retrospective application of IAS19-Employee Benefits


Components of Debt

3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 3/31 6/30ABL Borrowings 101.2 102.5 85.0 63.7 70.3 60.1 58.4 79.4 76.7 95.5

Bonds Notional Amount 118.7 118.7 118.7 118.7 118.7 118.7 93.7 38.7 38.7 18.7

Term Debt (1) 6.2 5.7 5.1 4.5 4.0 3.6 2.9 18.8 18.0 16.5

Mortgages (2) 4.5 4.3 4.2 4.0 3.9 3.7 3.6 1.6 1.5 10.0

Capital Leases (3) 6.0 6.2 6.1 6.1 6.0 5.9 11.4 15.6 17.3 18.7

Other (4) - - - - - - - 0.2 0.2 0.2

Unamortized Fees (3.6) (3.3) (3.0) (2.7) (3.8) (3.5) (3.0) (3.0) (2.6) (2.4)

Total Debt as Reported 233.0 234.2 216.1 194.3 199.1 188.5 167.0 151.3 149.8 157.3 (1) Includes real estate term loan(2) Three months ended June 30, 2013 includes the loan on the real estate purchased in Blythewood, South Carolina(3) Includes advance fundings on the Equipment Finance Agreement(4) Includes forgivable municipal loan

(Millions of USD) 20122011 2013

Investor Presentation 2Q 2013 082713 [Read-Only] relations...Investor Presentation 2 ... fully...

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