Investor Presentation Greg Yull | President & CEO ... relations/presentations... · Investor...

Investor PresentationSeptember 2019

Greg Yull | President & CEOJeff Crystal | CFO

SAFE HARBOR STATEMENT

INTERTAPE POLYMER GROUP 2

Certain 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, "forward-looking statements"), which are made in reliance upon the protections provided by such legislation for forward-looking statements. All statements other than statements of historical facts included in this presentation, including statements regarding the Company’s protection from high input costs due to its “at will” contracts with customers, the Company’s focus on gross profit dollars rather than margin, the Company’s growth opportunities, including its 2022 financial goals, the Company's capital expenditures, including its anticipated cost and return expectations and additional related costs, the Company’s integration of its recent acquisitions, including the expected positive benefits from such acquisitions, the Company’s near-term growth drivers, the Company’s expected Adjusted EBITDA growth and margin expansion opportunities from acquisitions, and the end of the Company’s current investment cycle, along with the related effects of the end of such cycle, may constitute forward-looking statements. These forward-looking statements are based on current beliefs, assumptions, expectations, estimates, forecasts and projections made by the Company's management. Words such as "may," "will," "should," "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 the Company believes 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: business conditions and growth or declines in the Company's industry, the Company's customers' industries and the general economy; the anticipated benefits from the Company's manufacturing facility expansions, greenfield developments, manufacturing cost reduction programs and other restructuring efforts; the anticipated benefits from the Company’s acquisitions and partnerships; accounting adjustments; the anticipated benefits from the Company’s capital expenditures; the quality and market reception of the Company's products; the effective tax rate and income tax expenses; the Company's anticipated business strategies; risks and costs inherent in litigation; risks and costs inherent in the Company’s intellectual property; the Company’s ability to maintain and improve quality and customer service; the Company’s ability to retain, and adequately develop and incentivize, its management team and key employees; anticipated trends in the Company's business; anticipated cash flows from the Company’s operations; the Company’s flexibility to allocate capital as a result of the Notes Offering; availability of funds under the Company’s 2018 Credit Facility; the Company's ability to continue to control costs; the impact of raw material price fluctuations; movements in the prices of key inputs such as raw material, freight, energy and labor; government policies, including those specifically regarding the manufacturing industry, such as industrial licensing, environmental regulations, labor and safety regulations, import restrictions and duties, intellectual property laws, excise duties, sales taxes, and value added taxes; accidents and natural disasters; changes to accounting rules and standards; expected strategic and financial benefits from the Company’s ongoing capital investment and mergers and acquisitions programs; and other factors beyond the Company's control. The Company can give no assurance that these statements 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. You are cautioned not to place undue reliance on any forward-looking statement.

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," "Item 5. Operating and Financial Review and Prospects (Management's Discussion & Analysis)" and statements located elsewhere in the Company's annual report on Form 20-F for the year ended December 31, 2018 and the other statements and factors contained in the Company's 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, including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Earnings, Adjusted Earnings Per Share, Secured Net Leverage Ratio, Total Leverage Ratio and Free Cash Flow. The Company has included these non-GAAP financial measures because it believes that they allow investors to make a more meaningful comparison between periods of the Company’s performance, underlying business trends and the Company’s ongoing operations. The Company further believes these measures may be useful in comparing its operating performance with the performance of other companies that may have different financing and capital structures, and tax rates. Adjusted EBITDA excludes costs that are not considered by management to be representative of the Company’s underlying core operating performance, including certain non-operating expenses, non-cash expenses and non-recurring expenses. In addition, adjusted EBITDA is used by management to set targets and is a metric that, among others, can be used by the Company’s Compensation Committee to establish performance bonus metrics and payout, and by the Company’s lenders and investors to evaluate the Company’s performance and ability to service its debt, finance capital expenditures and acquisitions, and provide for the payment of dividends to shareholders. The Company has included Adjusted Net Earnings and Adjusted Earnings Per Share because it believes that they permit investors to make a more meaningful comparison of the Company’s performance between periods presented by excluding certain non-cash expenses and non-recurring expenses. In addition, Adjusted Net Earnings and Adjusted Earnings Per Share are used by management in evaluating the Company’s performance because it believes they provide indicators of the Company’s performance that are often more meaningful than GAAP financial measures for the reasons stated in the previous sentence. The Company has included Secured Net Leverage Ratio and Total Leverage Ratio measures because it believes that they allow investors to make a meaningful comparison of the Company’s liquidity level and borrowing flexibility. In addition, Total Leverage Ratio and Secured Net Leverage Ratio are used by management in evaluating the Company’s performance because it believes that they allow management to monitor the Company's liquidity level and borrowing flexibility as well as evaluate its capacity to deploy capital to meet its strategic objectives. The Company has included Free Cash Flows because it is used by management and investors in evaluating the Company’s performance and liquidity. As required by applicable securities legislation, the Company has provided definitions of these non-GAAP measures contained in this presentation, as well as a reconciliation of each of them to the most directly comparable GAAP measure, on its website at http://www.itape.com under “Investor Relations” and “Events and Presentations” and “Investor Presentations”. You are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures set forth on the website and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.

3

Distributors

Food & beverageManufacturingTransportationEcommerce fulfillment

OUR CUSTOMERS

THEIR CUSTOMERS

INTERTAPE POLYMER GROUP

Industrial & Packaging

DESIGNING A PRODUCT BUNDLE FOR OUR CUSTOMER


SCALE

INVENTORY TURNOVER

LOYALTY PROGRAMS

BREADTH

DIFFERENTIATED APPROACH TO THE CUSTOMER


Intertape’s comprehensive product bundle

DELIVERY PER weekone

monthoneDELIVERY PER

Unique product bundle

More tripsMore SKUs

Air pillows

Bubble cushioning

Foam

Mailers

Paper void fill

COMPREHENSIVE & DIVERSE PRODUCT BUNDLE


Hot melt

Acrylic

Natural rubber

Water-activated

Paper

Flatback

Filament

Sheathing

Stencil

Carton sealing

Industrial & Speciality

Stretch

Shrink

Structure fabrics

Woven coated geomembrane

Hay cover fabric

Poultry fabric

Lumber wrap

Tapes58%

Films16%

Protective packaging12%

Note: Pro-forma revenue shown includes the full year impact of Polyair and Maiweave of $132 and $25 million in the twelve months ending December 31, 2018, respectively.

Woven14%

ASSEMBLED A HARD TO REPLICATE, SPECIALIZED, PRODUCTION BASE


WORLD CLASS

LOW COSTASSETS

Driving operational efficiencies: Annual performance plans at each facility

1. Atlanta, GA2. Bardstown, KY (2)4. Blythewood, SC5. Brighton, CO6. Carbondale, IL7. Carlstadt, NJ8. Carrollton, TX9. Chicago, IL10. Corona, CA11. Danville, VA12. Marysville, MI13. Menasha, WI14. Midland, NC15. Salisbury, NC16. Springfield, OH17. Tremonton, UT

UNIT

EDST

ATES

18. Cornwall, ON19. Delta, BC20. Montreal, QC21. Toronto, ON22. Truro, NS

CAN

ADA

23. Porto, Portugal

EURO

PE

24. Chopanki, India25. Dahej, India26. Daman, India27. Karoli, India

ASIA

19

917 1221

1820

6

13

5

22

NORTH AMERICA

ASIA

26

24

EUROPE

23

8

10

16 72 14

1

1115 4

27

25

“AT WILL” PRICING WITH BOTH SUPPLIERS AND CUSTOMERSPROVIDES PROTECTION FROM HIGHEST INPUT COSTS


34%

18% 19%

29%

Resin Adhesive Paper Other

Fluid resin pricing environment: Focused on gross profit dollars not margin

Major resin inputs:Polyethylene – films, wovenPolypropylene – tapes, woven

Raw material inputs1,2 At will pricing mitigates impact of resin pricing movements

TIMELINE

Polyethylene price increase

Announce stretch film price increase

Price increase effective

Price change reflected in income statement

DAY 0

DAY 37

DAY 7

DAY 60

60 day avg. price increase to flow through income statement

1) Based on purchases of raw materials in 20182) Pro forma to include a full year impact of Polyair and Maiweave3) Other includes but is not limited to Latex, Fiberglass and Starch

3

9

GROWTH OPPORTUNITIES


2022 GOALS

revenue adj. EBITDA(1) adj. EBITDA margin (1)15% $225M $1.5B ≥≥

1) Non-GAAP financial measure. Please see the “Safe Harbor Statement” for an explanation of the Company’s use of these measures and a cross-reference to a reconciliation to their respective most directly comparable GAAP measure.

ECOMMERCE: OUTSIZED GROWTH SEGMENT


Dominant market position in water-activated tapes

DIRECT RELATIONSHIPS WITH LARGEST RETAILERS:

Largest ecommerce retailer(product in 70 locations)

Largest big box retailersWATER-ACTIVATED TAPES PRODUCTION:

2 lines in Midland, NC§ $48M first line – Q3 2017§ $15M second line – Q1 2019

DOUBLES PRODUCTION –1/3 CAPITAL COST

… plus Menasha, WI, production

PACKAGING:Water-activated tapesHot-melt & acrylic tapesStretch filmPROTECTIVE:Bubble cushionMailersAir pillowFoamPaper void fill

SHIP IN OWN CONTAINER (SIOC):Shrink wrap

SUCCESSFUL COMPLETION OF CAPITAL INVESTMENT STRATEGY


Capex Investment Profile(USD millions)

after-tax, expected hurdle rates on capital projects

Transitioning from a cycle of investment to a focus on execution

Focused on start-up, base-loading and optimizing production at 3 new greenfield facilities

in the three major projects online in 2019

15%IRR $190M deployed sinceJan 1, 2017 including…

$67Mto achieve expected 2019 capex run rate of $45-55M

$29Mdeployed in YTD June 2019

ON TRACK4134

50

85

76

45-55 40-60

FY2014A FY2015A FY2016A FY2017A FY2018A FY2019E FY2020E

$15-20M: minimum level of annual capex

TRACK RECORD OF SUCCESSFUL ACQUISITIONS


Prioritizing integration of existing acquisitions

ConsolidationDrive operational efficiencies

Cantech, Taratape

New product categories Stronger product bundle

Polyair, Better Packages, Maiweave, Cantech

Vertical integration Drive operational efficiencies

Airtrax, Powerband

New markets Geographic expansion

Airtrax, Powerband, Maiweave

Successful integrations completed:

Better Packages

Taratape

Integrations ongoing:

Cantech

Powerband

Capstone

Polyair

Maiweave

TaratapeFilament

and pressure sensitive tapes

PowerbandAcrylic tapes

CantechIndustrial &

speciality tapes

Airtrax(Capstone)

Woven

Polyair Protective packaging solutions

MaiweaveWoven

Q2 2015

Q4 2015

Q3 2016

Q3 2017

Q2 2018

Q3 2018

Q4 2018

Better Packages

Water-activated tape dispensers

NEAR-TERM GROWTH DRIVERS


Industrial tapes (Cantech)Protective packaging (Polyair)Woven products (Maiweave)

Complete integration of acquisitions driving cost and revenue synergies

Track e-commerce accounts around the globe

Start-up and optimize run rateof greenfield investments

Indian tape (Powerband)Indian woven (Capstone)

Scale second Midland lineCross sell protective packaging

Execution is our priority

0201

03

14

POSITIONED TO DELIVER


FINANCIAL PERFORMANCE


(USD millions)

Q2 2019 Q2 2018 Change % 2018 2017 Change %(except per share amounts)

Revenue $295.6 $249.1 18.7%$1,053.

0 $898.1 17.2%

Gross profit $64.7 $54.4 18.8% $218.9 $201.4 8.7%

Gross Margin 21.9% 21.9% 2 bps 20.8% 22.4% (-164 bps)

IPG Net Earnings $6.6 $15.1 (56.5)% $46.8 $64.2 (27.2)%

IPG Adj Net Earnings(1) $14.6 $15.8 (7.7)% $62.2 $63.7 (2.3)%

Adj EBITDA(1,2,3) $44.2 $34.6 27.6% $140.9 $129.6 8.7%

Adj EPS, fully diluted(1) $0.25 $0.27 (7.4)% $1.05 $1.07 (1.5)%

Effective tax rate(4) 46.2% 19.6% 2,654 bps 17.4% 16.9% 50 bps(1) Non-GAAP financial measure. Please see “Safe Harbor Statement” for an explanation of the Company’s use of this

measure and a cross-reference to a reconciliation to its most directly comparable GAAP measure. (2) Includes the favourable impact of operating lease payments totaling $1.7 million that were capitalized in the first quarter of

2019 in accordance with new lease accounting guidance implemented on January 1, 2019.(3) Includes the favourable impact of operating lease payments totalling $1.8 million and $3.4 million that were capitalized in

the second quarter and first six months of 2019, respectively, in accordance with new lease accounting guidance implemented on January 1, 2019.

(4) The increase in the effective tax rate in the three months ended June 30, 2019 as compared to the same periods in 2018 was primarily due to the proposed state income tax assessment and the elimination of certain tax benefits as a result of the Tax Cuts and Jobs Act related to intercompany debt. Excluding the proposed state income tax assessment, the effective tax rate would have been 28.7%.Our primary focus: accretive Adj. EPS & Adj. EBITDA

dollars

Organic plus acquisitions driving adj EBITDA(1,2,3)

growth:Margin expansion opportunities exist from acquisitions below Intertape margin, but create short-term pressure on margins(USD millions)

122129.6

140.9

34.644.2

64.8

82.5

15.1% 14.4%

13.4% 13.9%

14.9%

13.3%

14.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0

20

40

60

80

100

120

140

160

180

200

FY2016A FY2017A FY2018A FY2019E Q22018 Q22019 YTD2018 YTD2019

164-174

CONSERVATIVE CAPITAL STRUCTURE: SUSTAINABLE CASH FLOW PROFILE


Well positioned to grow free cash flow with completion of capex program

$250M at 7%

§ Flexibility to allocate capital at a historically attractive fixed interest rate

§ Repaid a portion of the borrowings outstanding under $600M credit facility & general corporate purposes

Senior Unsecured Notes

2018 Credit Facility$600M facility

§ $324.1M unused availability (as of 6/30/2019)

§ 3.92% annualized effective interest rate in the second quarter of 2019 including 162 bps of credit spread on average over the quarter

Sustainable dividends with increasing ability for debt repayment(USD millions)

-

20.0

40.0

60.0

80.0

100.0

2015A 2016A 2017A 2018A 2019E

Capex

1) Non-GAAP financial measure. Please see the “Safe Harbor Statement” for an explanation of the Company’s use of these measures and a cross-reference to a reconciliation to their respective most directly comparable GAAP measure.

2) The 2018 Credit Facility has two financial covenants that were amended in July 2019 to account for the associated impacts of new lease accounting guidance implemented on January 1, 2019 requiring operating leases to be accounted for as debt (with corresponding interest payments). The amendment increased the secured net leverage ratio covenant threshold 20bps to 3.7x and decreased the interest coverage ratio covenant threshold 25 bps to 2.75x.

2019 marks expected end of current investment cycle:Expect ↓ Capex and ↑ Operating Cash Flow to drive significant Free Cash Flow(1)

Increased the annualized dividend 5.4% from $0.56 to $0.59 per common share beginning with quarterly dividend declared on August 7, 2019.

Overall§ $342.4M cash and loan availability (as of 6/30/2019)

§ 1.9x Secured Net Leverage Ratio(1,2)

§ 3.5x Total Leverage Ratio(1)


harvest$190M capex deployed

since Jan 1, 2017

7 strategic acquisitions

new greenfieldfacilities

3

conservativecapital structure

invest

18

APPENDIX


COMPANY OVERVIEW


TSX Symbol ITP

Shares Outstanding 58.9M

Market Capitalization(as at 8/2/19)

CDN $1.1B

Net Debt(as of 6/30/2019)

USD $572M

Available Liquidity (as of 6/30/2019)

USD $342M

OPERATIONAL EXPERTISE TO DRIVE EFFICIENCIES AND INTEGRATION


Greg A.C. Yull, President & CEO28 years with Intertape Polymer Group (IPG), formerly President Tapes and Films Division, EVP of Industrial Business Unit, and roles in Sales and Product Management.

Jeffrey Crystal, CPA, CA, CFO5 years with IPG, formerly CFO, American Iron & Metal, VP of Finance of Optimal Payments and Audit Manager, Raymond Chabot Grant Thornton LLP.

Douglas Nalette, SVP Operations20 years with IPG, formerly Director Carton Sealing Manufacturing, IPG, formerly with Central Products Company, Arkwright Advanced Coating and Venture Tape.

Shawn Nelson, SVP Sales24 years with IPG including several sales roles within the company, formerly Regional Sales Manger of Polychem.

Joseph Tocci, SVP Global Sourcing and Supply Chain14 years with IPG within Supply Chain Management, formerly with Polo Ralph Lauren, The Home Depot, Atari and Nabisco.

Randi Booth, SVP & General Counsel3 years with IPG, formerly VP and Counsel at Deutsche Bank, formerly with Arnold & Porter LLP and Pillsbury Winthrop Shaw Pittman LLP.

Silvano Iaboni, GM Engineered-coated Products (Woven) 25 years with IPG in roles of progressive responsibility primarily in operations management and engineering.

Mary Beth Thompson, VP Human Resources2 years with IPG, formerly with Sonoco Products Company.

James Pantelidis, Chairman of the BoardChairman, Parkland Fuel Company, former Chairman, EnerCare Inc., former board member of RONA Inc., IA Insurance and Financial Services, Equinox Minerals Ltd. among others.

Greg A.C. Yull, President & CEO

Robert M. Beil32 years with The DOW Chemical Company including various roles in Executive Management, Sales and HR.

Robert J. FosterPresident and CEO, Capital Canada Limited, former board member of CHC Helicopters, Golf Town Income Fund, Cargojet, Canada 3000 and Canadian Airlines Regional among others.

Dahra GranovskyCEO Beresford Accurate Folding Cartons, a folding carton packaging company, Managing Director of Chem- Ecol, a lubricant company.

Jorge N. QuintasPresident of Nelson Quintas SGPS, SA, a holding company for the manufacturing of electrical and telecommunications cables, hazardous waste treatment, telecommunications networks and real estate.

Mary Pat SalomoneFormer SVP & COO of Babcock Wilcox Company, board member of TransCanada and HercHoldings, Inc.

Frank Di Tomaso, FCPA, FCA, ICD.DFormer Partner and Advisory Partner at Raymond Chabot Grant Thornton LLP, board member of ADF Group Inc., Birks Group Inc., National Bank Trust, National Bank Life Assurance and Laurentian Pilotage Authority.

Melbourne F. YullFounder and formerly Chairman and CEO of IPG, and President, Sammana Properties LLC and Affinity Kitchen & Bath LLC.

MANAGEMENT: BOARD OF DIRECTORS:

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