Neptune Insurance Holdings, Inc. Q1 FY2022 earnings call

• Top-line growth: Net sales were up 25% in Q1 2022 to almost $285 million, marking the third consecutive quarterly top-line record.
• Pricing initiatives: Aggressively executing pricing strategies to offset inflationary costs, with additional pricing actions effective in Q2. Adjusted EBITDA margins improved sequentially from Q4 to Q1.
• Segment performance: Technical Products volume up 23%, Fine Paper & Packaging volume up 7%; adjusted EBITDA margins improved from ~9% in Q4 to ~11% in Q1.
• Acquisition: The ITASA acquisition continues to exceed expectations and deliver record performance.
• New products: Launched a medical packaging solution in April 2022, capable of withstanding various sterilization technologies.
• Merger with SWM: Transformative merger to form a leading global specialty materials company with strategic, synergy, and scale benefits; expects at least $65 million of initial cost synergies with potential for more.

Technical Products: Sales were $186 million, up 28% from 2021, with adjusted EBITDA of $20.2 million, down from $24.9 million last year. Fine Paper & Packaging: Sales were almost $100 million, up 21% from 2021, with adjusted EBITDA of $14.5 million, down slightly from $15.3 million last year. Technical Products sales growth was driven by 23% volume increase, while Fine Paper & Packaging saw 7% volume growth. Technical Products faced challenges with raw material availability and operating inefficiencies, while Fine Paper & Packaging was impacted by availability issues and the Brownville fire.

• Reaffirmed full-year 2022 adjusted EBITDA guidance of $135 million to $145 million, a 15%-25% increase vs prior year.
• Expect pricing efforts to continue offsetting rising input costs, with additional Q2 pricing actions. Strong demand for products, with orders into Q4. Progress on growth drivers like the ITASA acquisition and release liner capacity expansion. Improving manufacturing performance and innovation driving margins.

• Supply chain challenges: Labor shortages, raw material availability issues, ongoing inflationary pressures including pulp and energy costs.
• Logistics and exchange rate: Unfavorable impact of Euro appreciation on U.S. dollar results.
• Indirect impacts: European energy and logistic disruptions from the Russia/Ukraine conflict.

Q: Regarding inflation and logistics, clarified that while the rate of increase in chemicals has slowed, pulp and energy haven't slowed as desired, and pricing mechanisms are sped up to offset changes faster.

A: Paul DeSantis Q: Inquire about utilization and potential additional sales if throughput improves, with Julie Schertell stating variation by business, with opportunities in filtration, release liners, and packaging as operations improve.

A: Julie Schertell Q: Ask about portfolio rationalization post-merger and ESG, with Julie Schertell noting focus on growth platforms and portfolio optimization with scale providing more options.

A: Julie Schertell Q: Question on recession fears and impact on business, with Julie Schertell stating strong demand and monitoring volume trends but no immediate volume slowdown seen yet.

A: Julie Schertell Q: Inquire about packaging investment and merger details, with Julie Schertell discussing R&D investments in packaging and positive customer reaction to the merger, plus $65 million initial cost synergies with additional revenue synergy opportunities.

A: Julie Schertell