EX-99.1 2 tinex99slides20091202.htm DECEMBER 2009 INVESTOR PRESENTATION tinex99slides20091202.htm
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Our job is to be the best
Investor Presentation
 
 
 
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This presentation contains “forward-looking statements” within the meaning of
the federal securities laws. These statements reflect management’s current views
with respect to future events and are subject to risk and uncertainties. We note
that a variety of factors and uncertainties could cause our actual results to differ
significantly from the results discussed in the forward-looking statements.
Factors and uncertainties that might cause such differences include, but are not
limited to: general economic, market, or business conditions; the opportunities
(or lack thereof) that may be presented to us and that we may pursue;
fluctuations in costs and expenses including the costs of raw materials,
purchased energy, and freight; changes in interest rates; current conditions in
financial markets could adversely affect our ability to finance our operations;
demand for new housing; accuracy of accounting assumptions related to
impaired assets, pension and postretirement costs, contingency reserves, and
income taxes; competitive actions by other companies; changes in laws or
regulations; our ability to execute certain strategic and business improvement
initiatives; the accuracy of certain judgments and estimates concerning the
integration of acquired operations; and other factors, many of which are beyond
our control.
This presentation includes non-GAAP financial measures. The required
reconciliations to GAAP financial measures are included on our website,
www.templeinland.com.
Forward Looking Statements
 
 
 
3
Create Superior and Sustainable Value
• Maximize ROI
• Profitably grow our business
 
 
 
4
2009 First Nine Months Results
• Corrugated Packaging
 – Record first nine months EBIT - $290 million
 – 18.3% ROI
• Building Products
 – Nine months EBITDA - $25 million
 – $16 million improvement from first nine
 months 2008
 
 
 
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• Corrugated Packaging
• Building Products
Business Description
Financial Highlights
($ in Millions)
2004
2005
2006
2007
2008
Revenue
$3,587
$3,723
$4,096
$3,850
$3,884
EBIT
$134
$133
$331
$161
$111
Investment
$2,370
$2,431
$2,620
$2,570
$2,484
ROI
5.7%
5.5%
12.6%
6.3%
4.5%
EBITDA
$340
$339
$542
$364
$317
Notes: Excludes 2004-2007 timber and timberland segment results.
Temple-Inland
 
 
 
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• 7 mills
 - 3.9 million tons
• 63 converting facilities
 - 3.7 million tons
• # 3 industry producer
Business Highlights
Financial Highlights
($ in Millions)
2003
2004
2005
2006
2007
2008
Revenue
$2,700
$2,736
$2,825
$2,977
$3,044
$3,190
EBIT
$18
$96
$120
$255
$287
$225
Investment
$2,237
$2,042
$2,125
$2,039
$2,004
$1,990
ROI
0.8%
4.7%
5.6%
12.5%
14.3%
11.3%
EBITDA
$185
$255
$280
$408
$429
$371
Corrugated Packaging Segment Highlights
 
 
 
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• Maintain high integration level
    - Box plant consumption = mill capacity
• Drive for low cost
 - Asset utilization and manufacturing excellence
• Improve mix and margins
   - Sales excellence
• Profitably grow business
   - Organically / Acquisition
Lowering Costs, Improving Efficiencies and Growing Profitably
Corrugated Packaging Strategic Initiatives
 
 
 
8
Source: Company reports
Temple-Inland is the most integrated producer of corrugated containers
Integration Level - Highest in the Industry
 
 
 
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Drive For Low Cost
• Lower mill costs
 – Enhanced reliability
 – Targeted investments to reduce energy consumption and
 enhance mix flexibility
• Lower box plant costs
 – Box plant transformation
 • Cultural change to lower costs by driving asset utilization
 • Fewer plants, fewer machines, fewer people
 
 
 
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Tracy, CA
Biglerville, PA
Lexington, SC
Crawfordsville, IN
24/7 Plants
 
 
 
11
98” CORRUGATOR
12 Machines
Asset Utilization
Lexington Plant - Old Layout
 
 
 
12
98” CORRUGATOR
T-CART
T-CART
66”
D/C
35”
EVOL
66”
D/C
4 Machines
35”
EVOL
Asset Utilization
Lexington Plant - New Layout
 
 
 
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Old
Future
% ∆
Machines
42
22
(48%)
People
920
703
(24%)
$ Cost/Ton
(34%)
Fewer machines, fewer people, and lower costs
Note: Representative of transformation of our four largest box plants.
Structural Cost Change Underway
 
 
 
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Improve Mix and Margins
• Centralized pricing decision making
• Structured and disciplined approach to
 market
• Target customers where we can create
 value
 
 
 
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Food & Beverage
63%
Misc. Mfg.
3%
Other
14%
Chemicals
4%
Rubber & Plastics
5%
Paper & Allied
11%
Food & Beverage
49%
Paper & Allied
22%
Rubber & Plastics
6%
Chemicals
5%
Misc.
Nondurables
4%
Misc. Durable Goods
14%
Temple-Inland
Industry*
*Source: Fibre Box Association
Shipments by End-Use Industry
 
 
 
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EBIT
 Historical PBL JV EBIT (50%)
 Synergies
 White-top linerboard production
 Total EBIT
3Q/2009
Annualized
 $ 9
 20
 30
 $ 59
Investment
 Acquisition (50% interest/50% JV debt)
 White-top production equipment
 Total investment
ROI
 $ 87
 10
 $ 97
 61%
($ In Millions)
Premier Boxboard Acquisition Update
 
 
 
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TIN has highest ROA improvement relative to Peer Group
Notes: (1) As reported by segment excluding special items for TIN, IP and Weyerhaeuser. For TIN and IP, the asset base was adjusted to include acquisitions made in Q3 2008. (2) For PCA, EBIT =
 Gross profit-selling and administrative expenses. (3) For SSCC, EBIT as reported by segment; total assets reported for the company in 2007, 2008 and first nine months 2009. For prior
 years, total assets = segment assets + other assets of $3.3 billion.
Corrugated Packaging - Highest ROA in
Industry
 
 
 
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North American Corrugated Packaging
Industry Fundamentals
• Consolidating industry
• Significant capacity rationalization and
 downtime
• Improved pricing
 
 
 
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Top 5 Producers= 42%
1998
2009
Top 5 Producers= 74%
North American Containerboard Market Share
1998 versus Today
 
 
 
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(Million Short Tons)
Permanent capacity reductions of 1.8 million tons, 4.5% of North
American capacity, announced for closure by January 2010
Source: RISI and
Company reports
Corrugated Packaging
Industry Containerboard Capacity Changes and Operating Rate
 
 
 
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Source: RISI
Linerboard ($/ton)
Improved Linerboard Pricing
Linerboard Pricing Trends
Average annual linerboard price has declined only modestly in 2009
 
 
 
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Corrugated Packaging Summary
• Track record of success
• Simple, effective strategy…execution = results
• Industry discipline
 
 
 
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• Portfolio of Products
 – Lumber
 – Gypsum
 – Particleboard
 – MDF
• Lowest quartile cost converting
 operations
• Located near large, high-growth
 markets
Financial Highlights
Business Highlights
($ in Millions)
2004
2005
2006
2007
2008
Revenue
$851
$898
$1,119
$806
$694
EBIT
$129
$125
$221
$8
($40)
Investment
$396
$361
$586
$562
$560
ROI
32.6%
34.6%
37.7%
1.4%
(7.1%)
EBITDA
$167
$160
$265
$53
$8
Building Products
 
 
 
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Building Products Strategic Initiatives
• Deliver tailored portfolio of building products
 – Products for new home, repair and remodeling
 and commercial markets
• Drive low cost
 – Manufacturing excellence
• Serve preferred markets
 – Favorable demographics
• Provide sales excellence
 – Unequaled customer service
 
 
 
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Buna
Pineland
Diboll
Rome
DeQuincy
Lumber
Competitive
Position
Temple-Inland Sawmills
1st
Quartile
2nd
Quartile
3rd
Quartile
4th
Quartile
Source: Beck &
RISI Studies
Temple-Inland Sawmills
Sawmill Locations
Lumber
• Low cost, state of art manufacturing system
• Logistically advantaged to large growing markets
• Stable fiber supply at market prices
 
 
 
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Synthetic Gypsum Furnish
Gypsum
Competitive
Position
Cumberland
Fletcher
W. Memphis
McQueeney
1st
Quartile
2nd
Quartile
3rd
Quartile
4th
Quartile
Source:
Internal
Analysis
Gypsum
• Low-cost manufacturing system
• Synthetic gypsum furnish 65% vs. 30% for industry
 
 
 
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Panels
Competitive
Position
Monroeville
Hope
Diboll
Thomson
1st
Quartile
2nd
Quartile
3rd
Quartile
4th
Quartile
Source:
Beck Study
PB
MDF
El Dorado
Mt. Jewett
Industrial Panels - Particleboard & MDF
• Lowest cost system
• High-value engineered family of
 products
• Targeted markets
 – Kitchen cabinets
 – Laminators
 – MDF laminate flooring
 
 
 
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Housing Starts
TIN EBITDA
2006
2007
2008
2,127
2009
981
552
529
9
25
Building Products EBITDA Trends
 
 
 
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($ In Millions)
Temple-Inland
SG&A
Total Cost *
SG&A/Total Cost
9 mos/ 2009
 215
 2,546
 8.4%
Wtd. Avg. SG&A/Total Cost of Peers**
TIN Rank
 10.6%
 1
*Total cost = SG&A + Cost of sales excluding alternative fuel mixture credit
**Peers include: International Paper, Smurfit-Stone, MeadWestvaco, Rock Tenn, Packaging Corp.
Comparative SG&A Expenses
 
 
 
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Total Debt
$879
Borrowings Under
Committed Credit
Facilities
$297
Term Debt
$582
($ In Millions)
Third Quarter-End 2009 Debt Structure
 
 
 
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Term debt
($ In Millions)
Total Term Debt = $582MM
Term Debt Maturity Profile as of Third
Quarter-End 2009
 
 
 
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($ In Millions)
 Accounts
  Receivable Committed
 Securitization Credit
 Facility Agreements Total
Committed
Less:
 Borrowings
 Letters of credit
$ 250
 (225)
 -
 $ 825
 ( 72)
 ( 33)
$1,075
 ( 297)
 ( 33)
Unused borrowing capacity
$ 25
 $ 720
$ 745
Facility Maturities
Oct. 2012
July 2011 ($750MM
revolver)
Covenants (as specifically defined):
 Debt/total capital
 Interest coverage *
3Q-End 2009
 48.7%
 8.4x
 70% Max
 3.0x Min
* Best 4 out of 5 trailing
 quarters 3Q/2009 = 13.2x
Third Quarter-End 2009
Committed Credit Facilities
 
 
 
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Financial Priorities
• Return cash to shareholders
 – Dividend
• Reduce debt
• Invest in our business
• Profitably grow
 
 
 
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Dec 2009
Create Superior and Sustainable Value
• Maximize ROI
• Profitably grow our business