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INVESTOR PRESENTATION

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Bank of America Securities LLC. Arrangers. 40. Contacts. 901 320 8908. 901 320 8352. 901 320 8100 ... Investor Relations. Steve Dean. Company Contacts. Buckeye ... – PowerPoint PPT presentation

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Title: INVESTOR PRESENTATION


1
MAKING PROGRESSMORE TO GO
  • INVESTOR PRESENTATION
  • September 2009

2
Safe Harbor Statement
  • These slides and the accompanying presentation
    contain forward-looking statements.
    Forward-looking statements include information
    concerning possible or assumed future results of
    operations, capital expenditures, the outcome of
    pending legal proceedings and claims, goals and
    objectives for future operations, including
    descriptions of the Companys business strategies
    and purchase commitments from customers, among
    other things. These statements are typically
    identified by words such as believe,
    anticipate, expect, plan, intend,
    estimate and similar expressions. Management
    bases these statements on particular assumptions
    made in light of industry experience, as well as
    Managements perception of historical trends,
    current conditions, expected future developments
    and other factors that Management believes are
    appropriate under the circumstances. These
    statements are not guarantees of performance or
    results and involve risks, uncertainties and
    assumptions. Although Management believes that
    these forward-looking statements are based on
    reasonable assumptions, many factors could affect
    the Companys actual financial results or results
    of operations and could cause actual results to
    differ materially from those expressed in the
    forward-looking statements. These factors
    include, among other things, cyclical changes in
    the demand for some of the Companys products
    changes in pricing policies by the Company or its
    competitors changes in the cost of labor, energy
    and other manufacturing costs debt levels the
    size and timing of significant orders changes in
    operating expenses or the need for additional
    capital expenditures changes in corporate
    strategy and general economic conditions. In
    light of these risks and uncertainties, there can
    be no assurance that the results and events
    contemplated by the forward-looking statements
    contained in these slides and the accompanying
    presentation will in fact transpire.

3
Overview
  • Buckeye Technologies is the only manufacturer in
    the world that offers cellulose based, specialty
    products made out of both cotton and wood.
  • In the past few years weve made significant
    progress
  • Grown sales and earnings
  • Reduced debt to internal target levels
  • As a result
  • Our Balance Sheet is much stronger
  • Paid down 53 of debt since 2002
  • Well positioned to ride out the economic slowdown
  • Theres still more progress to be made
  • Debt reduction remains top priority
  • Focused on strengthening our existing business
  • Energy and other potential opportunities

4
Products
Nonwoven Materials 32
  • The diversity of our product mix is a strength,
    helping us navigate through the current economic
    downturn

Specialty Fibers 68
5
Niche Markets
  • Market leader in attractive niches

Source LMC International, Lockwood-Post,
Nonwovens World and Company Estimates
6
Global Pulp Market
7
Geographic Diversity
  • 1444 Employees

Tennessee
North Carolina
Europe34
Florida
Canada / BC
Asia14
North America45
Beijing
South America4
Other3
Brazil
  • 66 of sales outside US
  • 78 of sales produced in US

Based on fiscal 2009 Sales
8
Focus on Debt
  • Debt Reduction
  • Used free cash flow to reduce debt by 374
    million since 2002, and have a debt target of
    275 million by June 30, 2010
  • Received 38.0 million in net cash proceeds from
    alternative fuel mixture credits (Feb. 12 Jun.
    30)

9
Debt Maturities
  • Debt Maturities
  • Retired 110 million in 2010 bonds on 07/31/09
    (14 months early)
  • Replaced 8 debt with debt at LIBOR 1.25
    (interest savings)
  • Nearest maturity is Bank Credit Facility due in
    2012

10
Debt Covenants Calculations
1 LT Debt / (LT Debt Stockholders Equity)
11
Net Sales
  • Diversified product mix and reduced reliance on
    fluff pulp
  • Grew sales 30 from 2002 to 2008 (CAGR 3.8)
  • 2009 impacted by recession, but 18.9 better than
    2002

12
Earnings Growth
  • Improved sales pricing, mix and volume
  • Implementation of Lean Enterprise and improved
    cost structure
  • 2009 excludes 54.2mm in Alternative Fuel Mixture
    Credits (AFMC)

See Appendix for reconciliation of non-GAAP
measures to related GAAP measures
13
Business Strategy
  • Near term our strategy is to use free cash flow
    to pay down debt
  • New internal debt target of below 275MM by June
    30, 2010
  • Capital spending, including the Foley energy
    project, estimated at 50MM in 2010
  • Continued focus on Lean Enterprise, reducing
    costs and working capital, and eliminating waste
  • Longer term were focused on a number of
    initiatives
  • Organic growth
  • Extend current businesses into new and different
    value streams
  • Strategic opportunities
  • Lean Enterprise

14
Business Strategy
  • Organic Growth
  • Utilize Existing Capacity
  • Fill up Nonwoven and Cotton assets
  • Cotton Linter Availability
  • Explore means of securing additional raw material
  • Develop New Products and Markets
  • Nonwovens Wiping and Feminine Hygiene
  • UltraFiber 500
  • High-purity Cotton Cellulose for use in Liquid
    Crystal Displays

15
Business Strategy
  • Extend Current Businesses into New and Different
    Value Streams and Markets
  • Foley Energy Project
  • 45 million investment at Perry, Florida facility
  • Will increase energy self-sufficiency to
    approximately 95
  • Estimated to save the equivalent of 200,000
    barrels of oil per year
  • Wood Sustainability
  • Reduce reliance on fossil fuels
  • Possible green energy sales to the public
  • Bio-Energy Opportunities

16
Bio-Energy Opportunities
  • We believe that our Foley wood mill is a unique
    facility and that it has a number of
    characteristics that make it suitable for a
    bio-refinery effort
  • A pulp mill that will be one of the North
    American survivors that has the staying power to
    take advantage of the long term opportunities
    that renewable fuels offer due to the valued
    niche products that it produces
  • An infrastructure for processing wood, including
    a modern wood yard
  • An opportunity to more fully utilize the
    components of wood cellulose, hemicellulose, and
    lignin
  • The conditions to potentially grow other fuel
    rich biomasses including energy cane, switch
    grass and eucalyptus
  • An environment potentially conducive to growing
    algae for oil including ample sunlight, waste
    ponds for nutrients and CO2 necessary for growth
  • Opportunity to utilize Floridas avoidable cost
    pricing for electricity production

17
Bio-Energy Opportunities
  • In addition to improving costs through energy
    self-sufficiency,
  • we see the opportunity to gradually add on high
    return capabilities/revenue streams in the form
    of renewable energy, fuel, and chemical sales
  • Although the technology for many of these
    processes is developing, the current regulatory
    environment promotes renewable alternatives and
    we plan to stay abreast of changes
  • in legislation and incentive programs in
    addition to partnership opportunities that will
    help sustain Buckeye into the foreseeable future.

18
Current Pulp Mill Business Model
FOSSIL FUEL BIOMASS ELECTRICITY
PULP
TREES
19
Future Bio-Energy Business Model
  • Leads to a cleaner environment and less waste

OTHER BIOMASS
PULP
TREES
ELECTRICITY CHEMICALS FUELS
20
Business Strategy
  • Strategic Opportunities
  • Debt repayment remains our top priority
  • We have also developed a framework to pursue
    improved profitability and long-term sustainable
    growth. At the right time, this framework will
    help us evaluate opportunities, like strategic
    partnerships, to help strengthen our position as
    a value added cellulose provider.

21
Business Strategy
  • Lean Enterprise
  • Focus on improving flow and reducing waste on the
    production floor as well as in the office
  • Reduce lead times
  • Change work culture to support a Lean Enterprise
  • Protect and build our margins

22
Business Strategy
  • Company Goals
  • Reduce debt to below 275 million
  • Earn returns greater than the cost of capital
  • Earn gross margins greater than 20
  • Grow cash flow and EBITDA through cost reduction
    and organic growth

23
Business Strategy
  • Company Risks
  • Continued weakness in consumer discretionary
    spending (namely TV and Auto markets)
  • Weak cotton pulp demand
  • Fluff Pulp price declines
  • Currency movements
  • Long term Cotton Raw Material Availability and
    Price (Linters)

24
Financials
  • Stronger Balance Sheet
  • Leverage Ratio reduced from 7.7x in 2002 to 1.8x
  • Interest Coverage Ratio increased from 1.8x in
    2002 to 5.9x

25
Financials
  • Reduced investment in working capital
  • Lean initiatives and focus on debt reduction has
    generated good progress in this area

26
Financials
  • Specialty Fibers

27
Financials
  • Nonwoven Materials

CAGR 5.1
CAGR 5.1
28
Financials
  • Total year sales
  • Net Sales down 9 year over year
  • Volume loss due to reductions in consumer
    discretionary spending and customer inventory
    adjustments
  • Specialty wood cotton prices up 13 and 15
    respectively fluff pulp prices decreased 23 per
    ton (year over year)

29
Financials
  • Total year Adjusted EPS
  • Higher selling prices year-over-year partially
    offset lower shipment production volumes
  • Higher raw material, chemical, energy, and
    transportation costs in 2009 vs. 2008
  • Gross margin 14.5 vs. 18.1 last year

FY2009 EPS excludes (3.30) in Goodwill
Impairment charges, and 1.02 in Alternative Fuel
Mixture Credits (0.58 - 3.30 1.02 -1.69
Reported EPS per diluted share)
30
Conclusion
  • Buckeye has made significant progress these past
    few years
  • The ground work laid will help us battle through
    these tough economic times
  • We are well within our debt covenants, and have
    no significant debt maturities until 2012
  • We have sufficient liquidity within our current
    debt structure
  • We plan to continue to pay down debt, using free
    cash flow, to an internal target of below 275
    million by June 30, 2010
  • We have a defined contribution pension plan with
    no pension liability
  • Long term we have developed a framework to help
    grow and sustain profitability.

31
APPENDIX
32
History
  • 1900 - Established by Procter Gamble (PG) as
    Buckeye Cottonseed Oil Company to provide a
    source of vegetable oil.
  • 1914 - During World War I began to manufacture
    cellulose for munitions.
  • 1950 - Expanded into wood based cellulose to
    supply the chemical and specialty fiber
    industries.
  • 1993 - Became an independent company as the
    result of a management buyout with Madison
    Dearborn.
  • 1995 - Held an initial public stock offering.
  • 1996 - Acquired Alpha and Temming, 2 cotton
    cellulose businesses.
  • 1997 - Acquired Merfin, an airlaid nonwovens
    business.
  • 1999 - Acquired Walkisoft, an airlaid nonwovens
    business.
  • 2000 - Acquired Vicunhas cotton cellulose
    facility in Americana, Brazil.
  • 2001 - Started up the worlds largest airlaid
    nonwovens facility.
  • 2004 - Announced the upgrade of the Americana,
    Brazil cotton cellulose facility to produce
    specialty market pulps.

33
Capacity
Nonwoven Material totals based on current
product mix. Excludes converting facility in
King, North Carolina which currently produces
900,000 cases of tissue/toweling products.
34
Product Diversity
Based on fiscal 2009 Net Sales
35
Specialty Wood Pulp Market
36
Global Fluff Pulp Market
37
Investor Information
38
Description of Notes
39
Description of Credit Facility
40
Contacts
41
Non-GAAP Reconciliations
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