UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.~~
	For the quarterly period ended	~~September~~June 30, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
			For the transition period from __________________to __________________

1-13948

(Commission file number)

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware		62-1612879
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 North Point Center East,	Suite 600
Alpharetta,	Georgia	30022
(Address of principal executive offices)		(Zip Code)

1-800-514-0186

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $0.10 par value	~~SWM~~MATV	New York Stock Exchange


			Schweitzer-Mauduit International, Inc.
			(Former name, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer," “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The Company had ~~31,458,255~~54,913,447 shares of common stock ~~issued and~~ outstanding as of ~~November 3, 2021.~~July 31, 2022.

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC.

TABLE OF CONTENTS


		Page
	Part I. - Financial Information
Item 1.	Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3230

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4643

Item 4.	Controls and Procedures	4644
	Part II. - Other Information
Item 1.	Legal Proceedings	4745

Item 1A.	Risk Factors	4745

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4746

Item 3.	Defaults Upon Senior Securities	4746

Item 4.	Mine Safety Disclosures	4746

Item 5.	Other Information	4746

Item 6.	Exhibits	4847

Signatures		4948

Glossary of Terms		5049

EXPLANATORY NOTE

On July 6, 2022, Schweitzer-Mauduit International, Inc. ("SWM") consummated its previously announced merger transaction involving Neenah, Inc. ("Neenah"). A wholly-owned subsidiary of SWM merged with and into Neenah (the "Merger"), with Neenah surviving the Merger as a direct and wholly-owned subsidiary of SWM. Effective as of the closing date of the Merger, SWM changed its name to Mativ Holdings, Inc.

Although this Quarterly Report on Form 10-Q is filed after the completion of the Merger, unless otherwise specifically noted herein, information set forth herein is as of and for the period ended June 30, 2022; and, therefore, does not include the information of Neenah. Accordingly, unless otherwise specifically noted herein, references herein to "Mativ", "the Company", "we", or "our" refer only to Mativ and its subsidiaries prior to the Merger and do not include Neenah and its subsidiaries.

Beginning with the Quarterly Report on Form 10-Q for the period ended September 30, 2022, the Company will report on a consolidated basis representing the combined operations of SWM and Neenah and their respective subsidiaries. Because SWM was deemed the accounting acquirer under accounting principles generally accepted in the United States, the historical financial statements of SWM will be treated as the historical financial statements of the combined company and will be reflected in the Company's future quarterly and annual reports.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(~~dollars~~ in millions, except per share amounts)

(Unaudited)

Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Net sales $ 383.6 $ 279.3 $ 1,049.6 $ 795.0
Cost of products sold 298.4 199.1 795.5 566.2
Gross profit 85.2 80.2 254.1 228.8
Selling expense 13.2 9.0 34.2 27.3
Research and development expense 5.7 3.6 14.9 10.4
General expense 41.4 24.6 126.7 77.9
Total nonmanufacturing expenses 60.3 37.2 175.8 115.6
Restructuring and impairment expense 1.9 6.0 5.9 7.7
Operating profit 23.0 37.0 72.4 105.5
Interest expense 15.3 7.8 31.3 22.8
Other income (expense), net 3.7 (1.0) 0.8 (0.7)
Income before income taxes and income from equity affiliates 11.4 28.2 41.9 82.0
Provision for income taxes 1.5 4.8 12.4 15.5
Income from equity affiliates, net of
income taxes 2.3 1.1 6.1 2.0
Net income $ 12.2 $ 24.5 $ 35.6 $ 68.5
Net income per share - basic:
Net income per share – basic $ 0.38 $ 0.78 $ 1.13 $ 2.19
Net income per share – diluted:
Net income per share – diluted $ 0.38 $ 0.78 $ 1.12 $ 2.18
Weighted average shares outstanding:
Basic 31,046,100 30,909,700 31,022,100 30,805,300
Diluted 31,401,000 31,142,500 31,381,600 31,020,100




	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net sales	$	426.4	$	377.8	$	833.2	$	666.0
Cost of products sold	326.8		289.7		641.0		497.1
Gross profit	99.6		88.1		192.2		168.9

Selling expense	15.0		11.9		29.3		21.0
Research and development expense	5.4		5.4		10.6		9.2
General expense	49.0		52.6		98.3		85.3
Total nonmanufacturing expenses	69.4		69.9		138.2		115.5


Restructuring and impairment expense	2.4		2.3		15.6		4.0
Operating profit	27.8		15.9		38.4		49.4
Interest expense	20.4		13.1		34.9		16.0
Other income (expense), net	7.3		(0.3)		12.8		(2.9)
Income before income taxes and income from equity affiliates	14.7		2.5		16.3		30.5
Provision for income taxes	4.6		3.5		6.7		10.9
Income from equity affiliates, net of income taxes	1.7		2.8		3.8		3.8


Net income	$	11.8	$	1.8	$	13.4	$	23.4

Net income per share:


Basic	$	0.36	$	0.06	$	0.41	$	0.75




Diluted	$	0.36	$	0.06	$	0.41	$	0.74

Weighted average shares outstanding:
Basic	31,260,100		31,045,100		31,209,300		31,009,900
Diluted	31,409,800		31,402,400		31,412,000		31,371,700

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS)~~ INCOME

(~~dollars~~ in millions)

(Unaudited)

Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Net income $ 12.2 $ 24.5 $ 35.6 $ 68.5
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (20.2) 7.2 (20.7) 4.3
Unrealized gain (losses) on derivative instruments 1.3 — 3.3 (13.4)
Less: Reclassification adjustment for gain on derivative instruments included in net income 0.4 0.8 2.0 1.4
Net loss from postretirement benefit plans — — — (0.3)
Amortization of postretirement benefit plans' costs included in net periodic cost 0.9 0.8 3.4 2.4
Other comprehensive (loss) income (17.6) 8.8 (12.0) (5.6)
Comprehensive (loss) income $ (5.4) $ 33.3 $ 23.6 $ 62.9


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021


Net income	$	11.8	$	1.8	$	13.4	$	23.4
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(19.8)		9.4		(11.1)		(0.5)

Unrealized gain (loss) on derivative instruments	8.5		(2.4)		30.1		2.0
Less: Reclassification adjustment for gain on derivative instruments included in net income	0.5		1.6		1.6		1.6
Net gain from postretirement benefit plans	—		(0.1)		—		—
Amortization of postretirement benefit plans' costs included in net periodic cost	2.6		0.9		1.9		2.5
Other comprehensive income (loss)	(8.2)		9.4		22.5		5.6
Comprehensive income	$	3.6	$	11.2	$	35.9	$	29.0

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

CONDENSED CONSOLIDATED BALANCE SHEETS

(~~dollars~~ in millions, except per share amounts)

(Unaudited)


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	73.6	$	54.7	Cash and cash equivalents	$	56.3	$	74.7
Accounts receivable, net	Accounts receivable, net	242.2		148.5		Accounts receivable, net	277.0		238.0
Inventories	Inventories	261.3		179.7		Inventories	276.4		259.5
Income taxes receivable	Income taxes receivable	17.1		6.2		Income taxes receivable	21.2		10.0

Assets held for sale						Assets held for sale	6.7		—
Other current assets	Other current assets	15.6		7.3		Other current assets	16.1		12.4
Total current assets	Total current assets	609.8		396.4		Total current assets	653.7		594.6

Property, plant and equipment, net	Property, plant and equipment, net	467.5		339.0		Property, plant and equipment, net	426.2		463.9

Deferred income tax benefits	Deferred income tax benefits	0.1		2.6		Deferred income tax benefits	33.7		33.9
Investment in equity affiliates	Investment in equity affiliates	65.4		59.3		Investment in equity affiliates	63.4		64.6
Goodwill	Goodwill	660.0		403.7		Goodwill	634.1		648.3
Intangible assets	Intangible assets	526.5		314.7		Intangible assets	476.8		513.9
Other assets	Other assets	90.5		69.2		Other assets	107.4		101.1
Total assets	Total assets	$	2,419.8	$	1,584.9	Total assets	$	2,395.3	$	2,420.3

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	Current liabilities					Current liabilities
Current debt	Current debt	$	18.0	$	2.8	Current debt	$	1.9	$	3.2
Accounts payable	Accounts payable	116.7		60.5		Accounts payable	123.3		116.0
Income taxes payable	Income taxes payable	7.6		2.7		Income taxes payable	4.7		2.6

Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	104.3		100.9		Accrued expenses and other current liabilities	112.9		109.3
Total current liabilities	Total current liabilities	246.6		166.9		Total current liabilities	242.8		231.1

Long-term debt	Long-term debt	1,288.2		590.5		Long-term debt	1,252.7		1,267.1

Long-term income tax payable	Long-term income tax payable	16.6		17.7		Long-term income tax payable	12.5		16.6
Pension and other postretirement benefits	Pension and other postretirement benefits	39.5		36.5		Pension and other postretirement benefits	35.8		39.0
Deferred income tax liabilities	Deferred income tax liabilities	109.3		45.1		Deferred income tax liabilities	85.2		95.1
Other liabilities	Other liabilities	83.9		78.6		Other liabilities	71.8		89.2
Total liabilities	Total liabilities	1,784.1		935.3		Total liabilities	1,700.8		1,738.1
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding	Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding	—		—		Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding	—		—
Common stock, $0.10 par value; 100,000,000 shares authorized; 31,456,984 and 31,324,745 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		3.1		3.1
Common stock, $0.10 par value; 100,000,000 shares authorized; 31,922,911 and 31,449,563 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively						Common stock, $0.10 par value; 100,000,000 shares authorized; 31,922,911 and 31,449,563 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	3.1		3.1
Additional paid-in-capital	Additional paid-in-capital	99.3		92.2		Additional paid-in-capital	109.2		101.7
Retained earnings	Retained earnings	657.2		666.2		Retained earnings	678.7		696.4
Accumulated other comprehensive loss, net of tax	Accumulated other comprehensive loss, net of tax	(123.9)		(111.9)		Accumulated other comprehensive loss, net of tax	(96.5)		(119.0)
Total stockholders’ equity	Total stockholders’ equity	635.7		649.6		Total stockholders’ equity	694.5		682.2
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,419.8	$	1,584.9	Total liabilities and stockholders’ equity	$	2,395.3	$	2,420.3

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(~~dollars~~ in millions, except per share amounts)

(Unaudited)

Common Stock Issued
Shares Amount Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
(Loss) Income Total
Balance, June 30, 2020 31,195,009 $ 3.1 $ 87.2 $ 654.1 $ (137.0) $ 607.4
Net income — — — 24.5 — 24.5
Other comprehensive income, net of tax — — — — 8.8 8.8
Dividends declared ($0.44 per share) — — — (13.8) — (13.8)
Restricted stock issuances, net (21,932) — — — — —
Stock-based employee compensation expense — — 1.4 — — 1.4
Stock issued to directors as compensation — — 0.2 — — 0.2
Deferred compensation directors stock trust 149,469 — — — —
Purchases and retirement of common stock (771) — — — — —
Balance, September 30, 2020 31,321,775 $ 3.1 $ 88.8 $ 664.8 $ (128.2) $ 628.5
Balance, June 30, 2021 31,426,129 $ 3.1 $ 97.3 $ 658.9 $ (106.3) $ 653.0
Net income — — — 12.2 — 12.2
Other comprehensive loss, net of tax — — — — (17.6) (17.6)
Dividends declared ($0.44 per share) — — — (13.9) — (13.9)
Restricted stock issuances, net 32,549 — — — — —
Stock-based employee compensation expense — — 1.7 — — 1.7
Stock issued to directors as compensation 588 — 0.3 — — 0.3
Purchases and retirement of common stock (2,282) — — — — —
Balance, September 30, 2021 31,456,984 $ 3.1 $ 99.3 $ 657.2 $ (123.9) $ 635.7


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance, March 31, 2021	31,407,136	$	3.1	$	94.6	$	670.9	$	(115.7)	$	652.9

Net income	—	—		—		1.8		—		1.8
Other comprehensive income, net of tax	—	—		—		—		9.4		9.4
Dividends declared ($0.44 per share)	—	—		—		(13.8)		—		(13.8)
Restricted stock issuances, net	19,566	—		—		—		—		—
Stock-based employee compensation expense	—	—		2.5		—		—		2.5


Stock issued to directors as compensation	484	—		0.2		—		—		0.2

Purchases and retirement of common stock	(1,057)	—		—		—		—		—
Balance, June 30, 2021	31,426,129	$	3.1	$	97.3	$	658.9	$	(106.3)	$	653.0

Balance, March 31, 2022	31,705,664	$	3.1	$	105.4	$	681.2	$	(88.3)	$	701.4

Net income	—	—		—		11.8		—		11.8
Other comprehensive loss, net of tax	—	—		—		—		(8.2)		(8.2)
Dividends declared ($0.44 per share)	—	—		—		(14.2)		—		(14.2)
Restricted stock issuances, net	156,872	—		—		—		—		—
Stock-based employee compensation expense	—	—		3.6		—		—		3.6


Stock issued to directors as compensation	863	—		0.2		—		—		0.2
Deferred compensation directors stock trust	60,899	—		—		—		—		—
Purchases and retirement of common stock	(1,387)	—		—		(0.1)		—		(0.1)
Balance, June 30, 2022	31,922,911	$	3.1	$	109.2	$	678.7	$	(96.5)	$	694.5

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in millions, except per share amounts)

(Unaudited)



	Common Stock
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance, December 31, 2020	31,324,745	$	3.1	$	92.2	$	666.2	$	(111.9)	$	649.6

Net income	—	—		—		23.4		—		23.4
Other comprehensive income, net of tax	—	—		—		—		5.6		5.6
Dividends declared ($0.88 per share)	—	—		—		(27.6)		—		(27.6)
Restricted stock issuances, net	168,096	—		—		—		—		—
Stock-based employee compensation expense	—	—		4.6		—		—		4.6


Stock issued to directors as compensation	1,074	—		0.5		—		—		0.5

Purchases and retirement of common stock	(67,786)	—		—		(3.1)		—		(3.1)
Balance, June 30, 2021	31,426,129	$	3.1	$	97.3	$	658.9	$	(106.3)	$	653.0

Balance, December 31, 2021	31,449,563	$	3.1	$	101.7	$	696.4	$	(119.0)	$	682.2

Net income	—	—		—		13.4		—		13.4
Other comprehensive income, net of tax	—	—		—		—		22.5		22.5
Dividends declared ($0.88 per share)	—	—		—		(28.1)		—		(28.1)
Restricted stock issuances, net	507,026	—		—		—		—		—
Stock-based employee compensation expense	—	—		7.0		—		—		7.0

Stock issued to directors as compensation	1,657	—		0.5		—		—		0.5
Deferred compensation directors stock trust	60,899	—		—		—		—		—
Purchases and retirement of common stock	(96,234)	—		—		(3.0)		—		(3.0)
Balance, June 30, 2022	31,922,911	$	3.1	$	109.2	$	678.7	$	(96.5)	$	694.5

Common Stock Issued
Shares Amount Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
(Loss) Income Total
Balance, December 31, 2019 30,896,661 $ 3.1 $ 78.8 $ 638.4 $ (122.6) $ 597.7
Net income — — — 68.5 — 68.5
Other comprehensive loss, net of tax — — — — (5.6) (5.6)
Dividends declared ($1.32 per share) — — — (41.2) — (41.2)
Restricted stock issuances, net 299,926 — — — — —
Stock-based employee compensation expense — — 5.5 — — 5.5
Modification to director stock-based compensation plan — — 4.0 — — 4.0
Stock issued to directors as compensation 2,198 — 0.5 — — 0.5
Deferred compensation directors stock trust 149,469 — — — — —
Purchases and retirement of common stock (26,479) — — (0.9) — (0.9)
Balance, September 30, 2020 31,321,775 $ 3.1 $ 88.8 $ 664.8 $ (128.2) $ 628.5
Balance, December 31, 2020 31,324,745 $ 3.1 $ 92.2 $ 666.2 $ (111.9) $ 649.6
Net income — — — 35.6 — 35.6
Other comprehensive loss, net of tax — — — — (12.0) (12.0)
Dividends declared ($1.32 per share) — — — (41.5) — (41.5)
Restricted stock issuances, net 200,645 — — — — —
Stock-based employee compensation expense — — 6.3 — — 6.3
Stock issued to directors as compensation 1,662 — 0.8 — — 0.8
Purchases and retirement of common stock (70,068) — — (3.1) — (3.1)
Balance, September 30, 2021 31,456,984 $ 3.1 $ 99.3 $ 657.2 $ (123.9) $ 635.7

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH ~~FLOW~~FLOWS

(~~dollars~~ in millions)

(Unaudited)


		Nine Months Ended					Six Months Ended
		September 30, 2021		September 30, 2020			June 30, 2022		June 30, 2021
Operating	Operating					Operating
Net income	Net income	$	35.6	$	68.5	Net income	$	13.4	$	23.4

Non-cash items included in net income:	Non-cash items included in net income:					Non-cash items included in net income:
Depreciation and amortization	Depreciation and amortization	70.3		52.3		Depreciation and amortization	50.9		44.9

Impairments						Impairments	12.9		—
Deferred income tax	Deferred income tax	2.4		1.5		Deferred income tax	(5.1)		6.8
Pension and other postretirement benefits	Pension and other postretirement benefits	(0.2)		2.6		Pension and other postretirement benefits	(0.4)		1.9
Stock-based compensation	Stock-based compensation	6.3		5.6		Stock-based compensation	7.0		4.6
Income from equity affiliates	Income from equity affiliates	(6.1)		(2.0)		Income from equity affiliates	(3.8)		(3.8)
Brazil tax assessment accruals, net		(6.1)		—
Brazil tax assessment and settlements, net						Brazil tax assessment and settlements, net	(2.2)		(6.1)

Gain on sale of assets						Gain on sale of assets	(2.9)		—

Cash dividends received from equity affiliates	Cash dividends received from equity affiliates	0.8		2.7		Cash dividends received from equity affiliates	1.1		—
Other items	Other items	(4.4)		(4.7)		Other items	(13.5)		(0.9)
Cash received from settlement of interest swap agreements						Cash received from settlement of interest swap agreements	23.6		—
Changes in operating working capital, net of assets acquired:	Changes in operating working capital, net of assets acquired:					Changes in operating working capital, net of assets acquired:
Accounts receivable	Accounts receivable	(30.4)		(21.9)		Accounts receivable	(48.0)		(14.2)
Inventories	Inventories	(29.6)		1.7		Inventories	(30.3)		(11.1)
Prepaid expenses	Prepaid expenses	(2.4)		0.6		Prepaid expenses	(5.1)		(4.3)
Accounts payable and other current liabilities	Accounts payable and other current liabilities	(0.9)		(1.5)		Accounts payable and other current liabilities	25.8		(11.2)
Accrued income taxes	Accrued income taxes	(7.8)		2.1		Accrued income taxes	(5.4)		(10.2)
Net changes in operating working capital	Net changes in operating working capital	(71.1)		(19.0)		Net changes in operating working capital	(63.0)		(51.0)

Net cash provided by operations	Net cash provided by operations	27.5		107.5		Net cash provided by operations	18.0		19.8
Investing	Investing					Investing
Capital spending	Capital spending	(23.8)		(20.7)		Capital spending	(17.8)		(16.3)
Capitalized software costs	Capitalized software costs	(1.9)		(2.8)		Capitalized software costs	(1.6)		(1.3)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(630.6)		(169.3)		Acquisitions, net of cash acquired	—		(630.5)

Cash received from settlement of cross-currency swap contracts						Cash received from settlement of cross-currency swap contracts	35.8		—
Other investing						Other investing	1.6		(0.9)
Net cash provided by (used in) investing						Net cash provided by (used in) investing	18.0		(649.0)
Financing						Financing
Cash dividends paid						Cash dividends paid	(28.1)		(27.6)

Other investing		(2.0)		2.3
Net cash used in investing		(658.3)		(190.5)
Financing
Proceeds from issuances of long-term debt						Proceeds from issuances of long-term debt	40.0		703.7
Payments on long-term debt						Payments on long-term debt	(47.6)		(17.8)
Payments on financing lease obligations						Payments on financing lease obligations	(0.3)		—
Purchases of common stock						Purchases of common stock	(3.0)		(3.1)
Payments for debt issuance costs						Payments for debt issuance costs	(12.5)		(14.5)

Net cash provided by (used in) financing						Net cash provided by (used in) financing	(51.5)		640.7
Effect of exchange rate changes on cash and cash equivalents						Effect of exchange rate changes on cash and cash equivalents	(2.9)		(0.3)
Increase (decrease) in cash and cash equivalents						Increase (decrease) in cash and cash equivalents	(18.4)		11.2
Cash and cash equivalents at beginning of period						Cash and cash equivalents at beginning of period	74.7		54.7
Cash and cash equivalents at end of period						Cash and cash equivalents at end of period	$	56.3	$	65.9

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH ~~FLOW~~FLOWS

(~~dollars~~ in millions)

(Unaudited)

Nine Months Ended
September 30,
2021 September 30,
2020
Cash dividends paid to SWM stockholders (41.5) (41.2)
Proceeds from issuances of long-term debt 729.7 212.7
Payments on long-term debt (19.5) (124.6)
Purchases of common stock (3.1) (0.9)
Payments for debt issuance costs (14.6) —
Net cash provided by financing 651.0 46.0
Effect of exchange rate changes on cash and cash equivalents (1.3) 0.3
Increase (decrease) in cash and cash equivalents 18.9 (36.7)
Cash and cash equivalents at beginning of period 54.7 103.0
Cash and cash equivalents at end of period $ 73.6 $ 66.3
Supplemental Cash Flow Disclosures
Cash paid for interest, net $ 27.5 $ 17.9
Cash paid for taxes, net $ 17.7 $ 11.0
Change in capital spending in accounts payable and accrued liabilities $ 4.7 $ 3.5




	Six Months Ended
	June 30, 2022		June 30, 2021
Supplemental Cash Flow Disclosures
Cash paid for interest, net	$	28.8	$	19.7
Cash paid for taxes, net	$	16.9	$	14.2
Capital spending in accounts payable and accrued liabilities	$	3.3	$	5.1

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. General

Nature of Business

~~Schweitzer-Mauduit International,~~Mativ Holdings, Inc. ("~~SWM,~~Mativ," "we," "our", or the "Company"), headquartered in the United States of America, is a ~~multinational diversified producer of~~leading global performance materials company, focused on bringing best-in-class innovation, design, and manufacturing solutions to our customers. Our highly engineered ~~solutions~~films, adhesive tapes, foams, nets, nonwovens, and ~~advanced materials~~papers are designed and manufactured using resins, polymers, and natural fibers for a variety of ~~industries.~~industries and specialty applications. The Company maintains 2 operating product line segments: Advanced Materials & Structures ("AMS") and Engineered Papers ("EP").

The AMS segment offers design and manufacturing solutions for the ~~filtration, transportation,~~ healthcare, construction, industrial, transportation and ~~industrial~~filtration end-markets. We manufacture resin-based rolled goods such as nets, films and meltblown materials, bonding products and adhesive components, along with providing adhesives and other coating solutions and converting services for our customers.

The EP segment primarily serves the tobacco industry with production of various cigarette papers and reconstituted tobacco products ("Recon"). Traditional reconstituted tobacco leaf ("RTL") is used as a blend with virgin tobacco in cigarettes and used in the production of small cigars. Recon, as well as low ignition propensity ("LIP") cigarette paper, a specialty product with fire-safety features, are two key profit drivers, which together account for more than half of segment net sales. The EP segment also produces non-tobacco papers for premium applications, such as energy storage and industrial commodity paper grades.

We conduct business in over 90 countries and operate 3937 production locations worldwide, with offices and facilities in the ~~U.S.,~~United States, Canada, United Kingdom, France, Luxembourg, Belgium, Brazil, China, Italy, Malaysia, India and Poland.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and the notes thereto have been prepared in accordance with the instructions ofon Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). However, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods.

The results of operations for the three ~~or nine~~and six months ended ~~September~~June 30, ~~2021,~~2022 are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated financial statements and these notes thereto included herein should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, as filed with the SEC on March 1, ~~2021.~~2022.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned, majority-owned and controlled subsidiaries. The Company’s share of the net income of its 50%-owned joint ventures in China is included in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~income~~Income as Income from equity affiliates, net of income taxes. Intercompany balances and transactions have been eliminated.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the unaudited condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, inventory valuation, useful lives of tangible and intangible assets, fair values, sales returns and rebates, receivables valuation, pension, postretirement and other benefits, restructuring and impairment, taxes and contingencies. Furthermore, the Company considered the continuing impact from the global economic and social disruption caused by the novel coronavirus (“COVID-19”) in estimates used in the Company’s financial statements as of and for the ~~periods~~period ended ~~September~~June 30, ~~2021.~~2022. The Company determined changes to these estimates did not have a material impact on our assessment of recoverability of our assets, including Accounts receivable, net, Goodwill, Intangible assets or long-lived assets. There may also be long-term undetermined effects on some of our customers and suppliers, and as a result of these uncertainties, actual results could differ materially from these estimates and assumptions.

Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The new standard simplifies income tax accounting requirements by removing certain exceptions to the general principles in Topic 740, Income Taxes. The provisions of this ASU were adopted effective January 1, 2021 and did not have a material impact on the condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." The new standard modifies the annual disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans and requires the amendments to be applied on a retrospective basis for all periods presented. The provisions of this ASU were adopted effective January 1, 2021 and the required changes, are not expected to have a material impact and will be reflected in the annual financial statements for the year ended December 31, 2021.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Recently Issued Accounting Standards~~

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The new standard provides optional expedients and exceptions for applying generally accepted accounting principles ~~("GAAP")~~ to contracts, hedging relationships, and other transactions affected by reference rate reform and the anticipated discontinuance of the London Interbank Offered Rate ("LIBOR") if certain criteria are met. The amendments in this ASU are effective for all entities as of March 12, 2020, through December 31, 2022. ~~The Company does not currently have any contracts that have been changed~~We adopted this ASU as of April 1, 2022 with no material impact to ~~a new reference rate but will continue to evaluate the applicability and impact of the guidance.~~our financial statements.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Note 2. Revenue Recognition

The Company has 2 main sources of revenue: product sales and materials conversion. The Company recognizes product sales revenues when control of a product is transferred to the customer. For the majority of product sales, transfer of control occurs when the products are shipped from one of the Company’s manufacturing facilities to the customer. The cost of delivering finished goods to the Company’s customers is recorded as a component of Cost of products sold. Those costs include the amounts paid to a third party to deliver the finished goods. Any freight costs billed to and paid by a customer are included in net sales. The Company also provides services to customers through the conversion of customer-owned raw materials into processed finished goods. In these transactions, the Company generally recognizes revenue as processing is completed.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Generally, the Company considers collectability of amounts due under a contract to be probable upon inception of a sale based on an evaluation of the credit worthiness of each customer. If collectability is not considered to be probable, the Company defers recognition of revenue on satisfied performance obligations until the uncertainty is resolved. We record estimates for bad debts based on our expectations for the collectability of amounts due from customers, considering historical collection history, expectations for future activity and other discrete events as applicable.

Variable consideration, such as discounts or price concessions, is set forth in the terms of the contract at inception and is included in the assessment of the transaction price at the outset of the arrangement. The transaction price is allocated to the individual performance obligations due under the contract based on the relative stand-alone fair value of the performance obligations identified in the contract. The Company typically uses an observable price to determine the stand-alone selling price for separate performance obligations.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company does not typically include extended payment terms or significant financing components in its contracts with customers. Certain product sales contracts may include cash-based incentives (volume rebates or credits), which are accounted for as variable consideration. We estimate these amounts at least quarterly based on the expected forecast quantities to be provided to customers and reduce revenues recognized accordingly. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred. The Company generally expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within selling expenses. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. As a practical expedient, the Company treats shipping and handling activities that occur after control of the good transfers as fulfillment activities, and therefore, does not account for shipping and handling costs as a separate performance obligation.

~~Following is~~Net sales attributed by geographic location based on the location of the Company’s direct customers were as follows (in millions):


	Three Months Ended
	June 30, 2022						June 30, 2021
	AMS		EP		Total		AMS		EP		Total
United States	$	174.6	$	37.1	$	211.7	$	154.1	$	38.4	$	192.5
Europe and the former Commonwealth of Independent States	65.4		51.0		116.4		55.8		48.1		103.9
Asia/Pacific (including China)	38.6		26.2		64.8		28.5		23.5		52.0
Americas (excluding U.S.)	3.5		16.9		20.4		9.1		11.1		20.2
Other foreign countries	6.0		7.1		13.1		4.5		4.7		9.2
Net sales (1)	$	288.1	$	138.3	$	426.4	$	252.0	$	125.8	$	377.8

(1) Net sales ~~disaggregated by revenue source ($ in millions). Sales and usage-based taxes are excluded from Net sales.~~

Three Months Ended
September 30, 2021 September 30, 2020
AMS EP Total AMS EP Total
Product revenues $ 254.7 $ 112.7 $ 367.4 $ 135.8 $ 126.6 $ 262.4
Materials conversion revenues 2.9 9.6 12.5 2.5 12.5 15.0
Other revenues 2.5 1.2 3.7 0.6 1.3 1.9
Total revenues (1)
$ 260.1 $ 123.5 $ 383.6 $ 138.9 $ 140.4 $ 279.3

~~(1) Revenues~~ include net hedging gains and losses for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.


	Six Months Ended
	June 30, 2022						June 30, 2021
	AMS		EP		Total		AMS		EP		Total
United States	$	326.6	$	75.7	$	402.3	$	259.8	$	75.8	$	335.6
Europe and the former Commonwealth of Independent States	129.5		102.0		231.5		73.6		97.5		171.1
Asia/Pacific (including China)	74.0		51.1		125.1		60.9		45.7		106.6
Americas (excluding U.S.)	17.7		29.6		47.3		13.5		22.2		35.7
Other foreign countries	13.2		13.8		27.0		7.2		9.8		17.0
Net sales (1)	$	561.0	$	272.2	$	833.2	$	415.0	$	251.0	$	666.0

(1) Net sales include net hedging gains and losses for the six months ended June 30, 2022 and 2021.

The AMS segment supplies customers serving generally high-growth end-markets, as follows.

Healthcare - Sales to the medical market include products used in woundcare, diagnostic test strips, consumer wellness, and hospital-setting products.

Industrial - Sales to the industrial end-market include products for high-end coated digital printing, packaging, undersea cable wraps, consumer-oriented specialty tapes and wind-turbine production.

Construction - Sales to the construction end-market are comprised mostly of netting products for a range of erosion control and building applications.

1011

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Nine Months Ended
September 30, 2021 September 30, 2020
AMS EP Total AMS EP Total
Product revenues $ 659.1 $ 334.8 $ 993.9 $ 379.9 $ 361.2 $ 741.1
Materials conversion revenues 8.8 36.4 45.2 11.3 35.5 46.8
Other revenues 7.2 3.3 10.5 3.4 3.7 7.1
Total revenues (1)
$ 675.1 $ 374.5 $ 1,049.6 $ 394.6 $ 400.4 $ 795.0
Transportation - The Company’s primary products are aftermarket automotive paint protection films, in addition to ballistic resistant and security glass used in various transportation modes.

~~(1) Revenues include net hedging gains~~

Filtration - The Company serves liquid and ~~losses~~other filtration markets, producing reverse osmosis and other water filtration products along with media and support materials for ~~the~~ ~~nine months ended September 30, 2021~~ ~~and 2020.~~air filtration devices.

Net sales ~~are attributed to the following geographic locations based on the location of the Company’s direct customers ($ in millions):~~

Three Months Ended
September 30, 2021 September 30, 2020
AMS EP Total AMS EP Total
United States $ 152.3 $ 40.8 $ 193.1 $ 103.6 $ 45.3 $ 148.9
Europe and the former Commonwealth of Independent States 60.9 42.3 103.2 9.0 40.1 49.1
Asia/Pacific (including China) 32.3 16.0 48.3 21.9 30.0 51.9
Americas (excluding US) 8.1 11.8 19.9 1.6 11.9 13.5
Other foreign countries 6.5 12.6 19.1 2.8 13.1 15.9
Total revenues (1)
$ 260.1 $ 123.5 $ 383.6 $ 138.9 $ 140.4 $ 279.3

~~(1) Revenues include net hedging gains and losses~~as a percentage by end market for the ~~three months ended September 30, 2021 and 2020.~~AMS business were as follows:

Nine Months Ended
September 30, 2021 September 30, 2020
AMS EP Total AMS EP Total
United States $ 412.1 $ 116.6 $ 528.7 $ 275.7 $ 127.9 $ 403.6
Europe and the former Commonwealth of Independent States 134.5 139.8 274.3 32.7 123.4 156.1
Asia/Pacific (including China) 93.2 61.7 154.9 68.3 82.8 151.1
Americas (excluding US) 21.6 34.0 55.6 6.4 32.5 38.9
Other foreign countries 13.7 22.4 36.1 11.5 33.8 45.3
Total revenues (1)
$ 675.1 $ 374.5 $ 1,049.6 $ 394.6 $ 400.4 $ 795.0

~~(1) Revenues include net hedging gains and losses for the~~ ~~nine months ended September 30, 2021~~ ~~and 2020.~~


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Healthcare	24	%	26	%	23	%	21	%
Industrial	23	%	21	%	24	%	19	%
Construction	21	%	21	%	20	%	21	%
Transportation	17	%	15	%	17	%	19	%
Filtration	15	%	17	%	16	%	20	%
Net sales	100	%	100	%	100	%	100	%

Note 3. Other Comprehensive ~~(Loss)~~ Income

Comprehensive ~~(loss)~~ income includes Net income, as well as certain items charged and credited directly to stockholders' equity, which are excluded from net income. The Company has presented Comprehensive ~~(loss)~~ income in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~comprehensive (loss) income.~~Comprehensive Income. Reclassification adjustments of derivative instruments from Accumulated other comprehensive loss, net of tax are presented in Net ~~sales,~~sales; Other ~~(expense)~~ income ~~net,~~(expense), net; or Interest expense in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~income. See~~Income. Refer to Note 11. Derivatives for additional information. Amortization of accumulated pension and other post-employment benefit ("OPEB") liabilities are included in the computation of net periodic pension and OPEB costs, which are more fully discussed in Note 13. Postretirement and Other Benefits.

Components of Accumulated other comprehensive loss, net of tax, were as follows ~~($ in~~(in millions):


	June 30, 2022		December 31, 2021


Accumulated pension and OPEB liability adjustments, net of income tax benefit of $8.0 million and $8.9 million at June 30, 2022 and December 31, 2021, respectively	$	(12.5)	$	(14.4)
Accumulated unrealized gain (loss) on derivative instruments, net of income tax benefit (provision) of $(1.1) million and $2.1 million at June 30, 2022 and December 31, 2021, respectively	29.8		(1.9)
Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $26.0 million and $9.5 million at June 30, 2022 and December 31, 2021, respectively	(113.8)		(102.7)
Accumulated other comprehensive loss, net of tax	$	(96.5)	$	(119.0)

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

September 30, 2021 December 31, 2020
Accumulated pension and OPEB liability adjustments, net of income tax benefit of $11.6 million and $11.6 million at September 30, 2021 and December 31, 2020, respectively $ (17.1) $ (20.5)
Accumulated unrealized loss on derivative instruments, net of income tax benefit of $2.1 million and $2.8 million at September 30, 2021 and December 31, 2020, respectively (7.8) (13.1)
Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $6.6 million and $10.1 million at September 30, 2021 and December 31, 2020, respectively (99.0) (78.3)
Accumulated other comprehensive loss $ (123.9) $ (111.9)

Changes in the components of Accumulated other comprehensive ~~(loss) income~~loss, net of tax, were as follows ~~($ in~~(in millions):

Three Months Ended
September 30, 2021 September 30, 2020
Pre-tax Tax Net of
Tax Pre-tax Tax Net of
Tax
Net gain (loss) on pension and OPEB liability adjustments $ 1.1 $ (0.2) $ 0.9 $ 1.1 $ (0.3) $ 0.8
Unrealized gain (loss) on derivative instruments 2.3 (0.6) 1.7 1.1 (0.3) 0.8
Unrealized (loss) gain on foreign currency translation (20.1) (0.1) (20.2) 5.5 1.7 7.2
Total $ (16.7) $ (0.9) $ (17.6) $ 7.7 $ 1.1 $ 8.8




	Three Months Ended
	June 30, 2022						June 30, 2021
	Pre-tax		Tax		Net of Tax		Pre-tax		Tax		Net of Tax
Pension and OPEB liability adjustments	$	1.5	$	1.1	$	2.6	$	1.2	$	(0.4)	$	0.8
Derivative instrument adjustments	12.5		(3.5)		9.0		(2.6)		1.8		(0.8)
Unrealized foreign currency adjustments	(33.7)		13.9		(19.8)		9.3		0.1		9.4
Total	$	(19.7)	$	11.5	$	(8.2)	$	7.9	$	1.5	$	9.4

Nine Months Ended
September 30, 2021 September 30, 2020
Pre-tax Tax Net of
Tax Pre-tax Tax Net of
Tax
Unrealized gain (loss) on pension and OPEB liability adjustments $ 3.4 $ — $ 3.4 $ 2.9 $ (0.8) $ 2.1
Unrealized gain (loss) on derivative instruments 6.1 (0.8) 5.3 (14.3) 2.3 (12.0)
Unrealized (loss) gain on foreign currency translation (17.3) (3.4) (20.7) 0.6 3.7 4.3
Total $ (7.8) $ (4.2) $ (12.0) $ (10.8) $ 5.2 $ (5.6)




	Six Months Ended
	June 30, 2022						June 30, 2021
	Pre-tax		Tax		Net of Tax		Pre-tax		Tax		Net of Tax
Pension and OPEB liability adjustments	$	2.8	$	(0.9)	$	1.9	$	2.3	$	0.2	$	2.5
Derivative instrument adjustments	34.9		(3.2)		31.7		3.8		(0.2)		3.6
Unrealized foreign currency translation adjustments	(27.6)		16.5		(11.1)		2.8		(3.3)		(0.5)
Total	$	10.1	$	12.4	$	22.5	$	8.9	$	(3.3)	$	5.6

Note 4. Business Acquisitions

Neenah

On March 28, 2022, the Company entered into an Agreement and Plan of Merger to combine with Neenah, Inc. ("Neenah"), a specialty materials company incorporated in Delaware, in an all-stock merger of equals (the "Merger Agreement"). The Merger was approved by the shareholders of both the Company and Neenah on June 29, 2022 and was consummated on July 6, 2022. Under the terms of the Merger Agreement, which was unanimously approved by the board of directors of both companies, Neenah merged into a directly owned subsidiary of the Company, with Neenah surviving the Merger as a direct, wholly-owned subsidiary of Mativ.

Pursuant to the Merger Agreement, each share of Neenah's common stock outstanding was exchanged for 1.358 shares of common stock in the Company. As such, the Company issued approximately 22.8 million shares of its common stock to Neenah's shareholders under the terms of the Merger Agreement. Based on the Company's closing stock price on July 5, 2022, the total value of shares issued to Neenah's shareholders was approximately $534.0 million.

During the three months and six months ended June 30, 2022, the Company recognized direct and indirect costs related to the Merger of $7.8 million and $13.6 million, respectively. These costs were expensed as incurred and are included in the General expense line item in the Condensed Consolidated Statements of Income.

The transaction will be accounted for as a business combination with the Company being treated as the accounting acquirer. The assets acquired and liabilities assumed will be measured at fair value as of the Merger date primarily using Level 3 inputs. The initial purchase price allocation was not complete as of the date of this report and once available, will be revised during the measurement period, not to exceed one year, as new information is received and analyzed.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Scapa

On April 15, 2021, ~~SWM~~we completed ~~its~~the previously announced acquisition of Scapa Group plc (“Scapa”), a ~~UK- based~~UK-based innovation, design, and manufacturing solutions provider for healthcare and industrial markets for aggregate cash consideration of $630.6 million, net of $22.7 million of Cash and cash equivalents acquired and including $568.9 million for the purchase of all Scapa ordinary shares, $75.9 million for the repayment of Scapa debt and $8.5 million for the repayment of acquisition costs incurred by Scapa. The acquisition adds to ~~SWM’s~~our portfolio of precision engineered performance materials, expands ~~the Company’s~~our innovation, design, and formulation capabilities, and brings a variety of new coating and converting technologies to ~~SWM.~~the Company. Scapa is part of the AMS segment and operates globally with manufacturing and sales operations in the Americas, Asia and Europe.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The purchase price was funded with borrowings under the amended Credit Agreement, as defined and discussed in Note 10. Debt.

The acquisition was accounted for as a business combination with the assets acquired and liabilities assumed measured at their fair values as of the acquisition date, primarily using Level 3 inputs.

The acquisition consideration allocation below is preliminary, pending completion of the fair value analyses of acquired assets and liabilities, including deferred taxes and the valuations of certain intangibles and personal property. The excess of the acquisition consideration over the estimated fair values of the acquired assets and assumed liabilities is assigned to goodwill. The goodwill ~~which~~ is assigned to the AMS reportable segment and is primarily attributable to expected revenue ~~synergies and~~synergies. It is not expected to be deductible for tax purposes. The estimated purchase price allocation disclosed as of June 30, 2021 was revised during the ~~third quarter~~measurement period as new information was received and analyzed resulting in a decrease in Deferred tax liabilities of $12.3 million, an increase in ~~property,~~Property, plant and equipment of ~~$4.8~~$7.7 million, an increase in ~~deferred~~Other non-current liabilities, primarily due to changes in certain tax ~~liabilities~~positions of ~~$3.1~~$7.0 million, a $3.0 million decrease in Other non-current assets, and other ~~adjustments~~insignificant changes, as presented in the table below. As additional information becomes available, we may further revise the preliminary acquisition consideration allocation during the remainder of the measurement period, which will not exceed twelve months from the closing of the acquisition. Such revisions or changes may be material.

The consideration paid for Scapa, and the ~~preliminary estimated~~ fair values of the assets acquired and liabilities assumed as of the April 15, 2021 acquisition date were as follows ~~($ in~~(in millions):


		Preliminary Fair Value as of September 30, 2021		Adjustments		Preliminary Fair Value as of April 15, 2021			Final Fair Value as of June 30, 2022		Adjustments		Preliminary Fair Value as of April 15, 2021
Cash and cash equivalents	Cash and cash equivalents	$	22.7	$	—	$	22.7	Cash and cash equivalents	$	22.7	$	—	$	22.7
Accounts receivable	Accounts receivable	67.7		—		67.7		Accounts receivable	67.7		—		67.7
Inventory	Inventory	60.0		0.9		60.9		Inventory	60.0		(0.9)		60.9
Other current assets	Other current assets	9.7		0.1		9.8		Other current assets	9.7		(0.1)		9.8
Property, plant and equipment	Property, plant and equipment	156.9		(4.8)		152.1		Property, plant and equipment	159.8		7.7		152.1
Identifiable intangible assets	Identifiable intangible assets	246.2		—		246.2		Identifiable intangible assets	246.2		—		246.2
Other noncurrent assets		25.4		0.9		26.3
Other non-current assets								Other non-current assets	23.3		(3.0)		26.3
Total assets	Total assets	$	588.6	$	(2.9)	$	585.7	Total assets	$	589.4	$	3.7	$	585.7

Current debt	Current debt	$	15.0	$	—	$	15.0	Current debt	$	15.0	$	—	$	15.0
Accounts payable and other current liabilities	Accounts payable and other current liabilities	$	84.2	$	1.7	85.9		Accounts payable and other current liabilities	83.9		(2.0)		85.9
Deferred income tax liabilities	Deferred income tax liabilities	64.6		$	(3.1)	61.5		Deferred income tax liabilities	49.2		(12.3)		61.5
Other noncurrent liabilities		33.2		(0.1)		33.1
Other non-current liabilities								Other non-current liabilities	40.1		7.0		33.1
Net assets acquired	Net assets acquired	$	391.6	$	(1.4)	$	390.2	Net assets acquired	$	401.2	$	11.0	$	390.2
Goodwill	Goodwill	261.7		1.4		263.1		Goodwill	252.1		(11.0)		263.1
Total consideration	Total consideration	$	653.3	$	—	$	653.3	Total consideration	$	653.3	$	—	$	653.3

The fair value of receivables acquired approximates the gross contractual value. The contractual amount not expected to be collected is ~~immaterial.~~not material.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Acquired inventory was comprised of finished goods and raw materials. The fair value of finished goods was based on net realizable value adjusted for the costs of selling and a reasonable profit margin on selling effort. The fair value of raw materials was determined to approximate book value.

Property, plant and equipment is comprised of buildings and leasehold improvements, machinery and equipment, furniture and fixtures, computer equipment, and construction in progress. The ~~preliminary estimated~~ fair value was

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

determined using a reproduction/replacement cost approach which measures the value of an asset by estimating the cost to acquire or construct comparable assets adjusted for age and condition of the asset.

Acquired intangible assets include customer relationships, tradenames and developed technologies. Intangible assets were valued using the multi-period excess earnings and relief-from-royalty methods, both are forms of the income approach which considers a forecast of future cash flows generated from the use of each asset.

The following table shows the ~~preliminary~~ fair values assigned to identifiable intangible assets ~~($ in~~(in millions):


	Fair Value		Weighted-Average Amortization Period (Years)
Amortizable intangible assets:
Customer relationships	$	205.4	15
Tradenames and other	7.7		10
Developed technology	33.1		7
Total amortizable intangible assets	$	246.2

The ~~preliminary estimate of~~ deferred tax effects resulting from the acquisition include the expected federal, state, and foreign tax consequences associated with temporary differences between the ~~preliminary~~ fair values of the assets

acquired, liabilities assumed and the respective tax basis.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022, the Company ~~recognized~~did not incur any direct and indirect acquisition-related costs for the Scapa ~~acquisition of $0.0~~acquisition. During the three and six months ended June 30, 2021, the Company recognized $5.1 million and $8.7 million of direct and indirect acquisition-related costs, respectively. Direct and indirect acquisition-related costs were expensed as incurred and are included in ~~the~~ General expense ~~line item~~ in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~income.~~

~~The amounts of Net sales and Income from Scapa included in the Company's condensed consolidated income statement from the acquisition date are as follows ($ in millions):~~

Three months ended September 30, 2021 April 15, 2021 - September 30, 2021
Net sales $ 107.1 $ 202.2
Net income (loss) $ 1.8 $ (4.2)

~~Tekra~~

On March 13, 2020, the Company completed the acquisition of 100% of the equity interest in Tekra, LLC and Trient, LLC, “Tekra,” pursuant to the definitive agreement signed as of February 20, 2020. Tekra is a converter of high-performance films and substrates which enhances the Company’s films capabilities. Tekra, part of the AMS segment, operates 2 manufacturing facilities located in Wisconsin.

~~The consideration transferred to acquire Tekra was $169.3 million, net of $1.6 million cash and cash equivalents acquired, subject to working capital adjustments that were finalized in 2020.~~ ~~The purchase price was funded with borrowings from our Revolving Credit Facility (See Note 10. Debt).~~

~~The acquisition was accounted for as a business combination with the assets acquired and liabilities assumed measured at their fair values as of the acquisition date, primarily using Level 3 inputs.~~

The estimated purchase price allocation disclosed as of March 31, 2020, was revised during the second and third quarters of 2020 as new information was received and analyzed resulting in a decrease in net intangible assets of $3.4 million, and other adjustments, consisting primarily of reclassifications within working capital, leading to a net decrease in total consideration of $1.8 million.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~The consideration paid for Tekra and the final fair values of the assets acquired, and liabilities assumed as of the March 13, 2020 acquisition date are as follows ($ in millions):~~


	~~Fair Value as of March 13, 2020~~
~~Cash and cash equivalents~~	$	~~1.6~~
~~Accounts receivable~~	~~8.6~~
~~Inventory~~	~~14.2~~
~~Other current assets~~	~~0.2~~
~~Property, plant and equipment~~	~~7.3~~
~~Identifiable intangible assets~~	~~81.8~~
~~Other noncurrent assets~~	~~3.7~~
~~Total assets~~	$	~~117.4~~

~~Accounts payable~~	$	~~3.0~~
~~Other current liabilities~~	~~2.0~~
~~Other noncurrent liabilities~~	~~2.7~~
~~Net assets acquired~~	$	~~109.7~~
~~Goodwill~~	~~61.2~~
~~Total consideration~~	$	~~170.9~~

~~The fair value of receivables acquired approximates the gross contractual value.The contractual amount not expected to be collected is immaterial.~~

~~Acquired inventory was comprised of finished goods and raw materials.The fair value of finished goods was based on net realizable value adjusted for the costs of selling and a reasonable profit margin on selling effort.The fair value of raw materials was determined to approximate book value.~~

Acquired intangible assets include customer relationships, tradenames and unpatented developed technologies. Intangible assets were valued using the multi-period excess earnings and relief-from-royalty methods, both forms of the income approach which considers a forecast of future cash flows generated from the use of each asset. The following table shows the final fair values assigned to identifiable intangible assets ($ in millions):

Fair Value as of March 13, 2020 Weighted-Average Amortization Period (Years)
Amortizable intangible assets:
Customer relationships $ 63.0 15
Tradenames and other 10.8 15
Developed technology 8.0 10
Total amortizable intangible assets $ 81.8

During the three and nine months ended September 30, 2020, the Company recognized $0.0 million and $1.1 million in direct and indirect acquisition-related costs for the Tekra acquisition, respectively.~~Direct and indirect acquisition-related costs were expensed as incurred and are included in the General expense line item in the condensed consolidated statements of income.~~

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~The amounts of Net sales and Net income of Tekra included in the Company's condensed consolidated income statement from the acquisition date are as follows ($ in millions):~~

Three Months Ended September 30, 2020 March 13, 2020 - September 30, 2020
Net sales $ 23.2 $ 53.7
Net income $ 0.4 $ 0.1
Income.

Pro Forma Financial Information

The supplemental pro forma financial information presents the combined results of operations for the periods presented, as if the Scapa acquisition had occurred on January 1, ~~2020 and the Tekra acquisition had occurred on January 1, 2019 and therefore both included in the pro forma results for periods presented.~~2020. The supplemental pro forma financial information includes the following adjustments related to the Scapa acquisition: amortization of intangible assets and fair value adjustments to inventory, interest expense for the additional indebtedness incurred to complete the acquisition, transaction and severance costs, and applicable tax adjustments based on statutory rates in the jurisdictions where the adjustments occurred. The supplemental pro forma financial information does not include Tekra net income for the period from January 1 - March 13, 2020 as preparation of this information was deemed impractical due to changes in the ownership structure of the acquired entities prior to the acquisition. For the nine months ended September 30, 2021, pro forma adjustments caused net income to increase by $10.3 million. For the three and nine months ended September 30, 2020 pro forma adjustments led to decreases in net income of $8.2 million and $35.4 million, respectively.

The supplemental pro forma financial information presented below is not necessarily indicative of consolidated results of operations of the combined business had the Scapa ~~and Tekra acquisitions~~acquisition occurred as of January 1, 2020 ~~and January 1, 2019, respectively, nor is it necessarily indicative of the of the future results of the combined company.~~(in millions):


	Three Months Ended		Six Months Ended
	June 30, 2021		June 30, 2021
Net sales	$	387.2	$	797.0
Net income	$	3.6	$	35.5


	~~Three Months Ended~~
	~~September 30, 2020~~
~~Net sales~~	$	~~363.5~~
~~Net income~~	$	~~15.0~~

Nine Months Ended
September 30, 2021 September 30, 2020
Net sales $ 1,180.2 $ 1,092.0
Net income (loss)(1)
$ 47.9 $ (28.0)

~~(1)~~ ~~Supplemental~~The supplemental pro forma financial information ~~includes~~presented above does not include any adjustments related to the ~~impact of restructuring and the impairment of goodwill and intangible assets totaling $67.5 million on Scapa net income for the nine months ended September 30, 2020.~~Merger.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5. Net Income Per Share

The Company uses the two-class method to calculate earnings per share. The Company has granted restricted stock that contains non-forfeitable rights to dividends on unvested shares. Since these unvested shares are considered participating securities under the two-class method, the Company allocates earnings per share to common stock and participating securities according to dividends declared and participation rights in undistributed earnings.

Diluted net income per common share is computed based on Net income divided by the weighted average number of common and potential common shares outstanding. Potential common shares during the respective periods are those related to dilutive stock-based compensation, including long-term stock-based incentive compensation and directors’ accumulated deferred stock compensation, which may be received by the directors in the form of stock or cash. A

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following table is a reconciliation of the average number of common and potential common shares outstanding used in the calculations of basic and diluted net income per share ~~follows ($ in~~(in millions, shares in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Numerator (basic and diluted):	Numerator (basic and diluted):									Numerator (basic and diluted):
Net income	Net income	$	12.2	$	24.5	$	35.6	$	68.5	Net income	$	11.8	$	1.8	$	13.4	$	23.4
Less: Dividends paid to participating securities	Less: Dividends paid to participating securities	(0.2)		(0.1)		(0.5)		(0.5)		Less: Dividends paid to participating securities	(0.3)		(0.2)		(0.5)		(0.3)
Less: Undistributed earnings available to participating securities	Less: Undistributed earnings available to participating securities	—		(0.2)		—		(0.4)		Less: Undistributed earnings available to participating securities	—		0.1		—		—
Undistributed and distributed earnings available to common stockholders	Undistributed and distributed earnings available to common stockholders	$	12.0	$	24.2	$	35.1	$	67.6	Undistributed and distributed earnings available to common stockholders	$	11.5	$	1.7	$	12.9	$	23.1

Denominator:	Denominator:									Denominator:
Average number of common shares outstanding	Average number of common shares outstanding	31,046.1		30,909.7		31,022.1		30,805.3		Average number of common shares outstanding	31,260.1		31,045.1		31,209.3		31,009.9
Effect of dilutive stock-based compensation	Effect of dilutive stock-based compensation	354.9		232.8		359.5		214.8		Effect of dilutive stock-based compensation	149.7		357.3		202.7		361.8
Average number of common and potential common shares outstanding	Average number of common and potential common shares outstanding	31,401.0		31,142.5		31,381.6		31,020.1		Average number of common and potential common shares outstanding	31,409.8		31,402.4		31,412.0		31,371.7

Note 6. Inventories

Inventories are valued at the lower of cost (using the ~~First-In, First-Out~~first-in, first-out and weighted average methods) or net realizable value. The Company's costs included in inventory primarily include resins, pulp, chemicals, direct labor, utilities, maintenance, depreciation, finishing supplies and an allocation of certain overhead costs. Machine start-up costs or abnormal machine shutdowns are expensed in the period incurred and are not reflected in inventory. The Company reviews inventories at least quarterly to determine the necessity of write-offs for excess, obsolete or unsalable inventory. The Company estimates write-offs for inventory obsolescence and shrinkage. These reviews require the Company to assess customer and market demand.

The following ~~schedule~~table details inventories by major class ~~($ in~~(in millions):

September 30,
2021 December 31,
2020
Raw materials $ 113.8 $ 65.3
Work in process 43.4 23.2
Finished goods 95.7 83.5
Supplies and other 8.4 7.7
Total $ 261.3 $ 179.7




	June 30, 2022		December 31, 2021
Raw materials	$	114.5	$	113.4
Work in process	43.9		41.9
Finished goods	108.9		95.7
Supplies and other	9.1		8.5
Total inventories	$	276.4	$	259.5

1716

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 7. Goodwill

The changes in the carrying amount of goodwill by reportable segment ~~for the nine months ended September 30, 2021~~ were as follows ~~($ in~~(in millions):

AMS EP Total
Goodwill as of December 31, 2020 $ 398.4 $ 5.3 $ 403.7
Goodwill acquired during the period 261.7 — 261.7
Foreign currency translation adjustments (5.1) (0.3) (5.4)
Goodwill as of September 30, 2021 $ 655.0 $ 5.0 $ 660.0


	AMS		EP		Total
Balance at December 31, 2021	$	643.4	$	4.9	$	648.3
Goodwill acquired during the period(1)	1.4		—		1.4
Foreign currency translation and other(2)	(15.2)		(0.4)		(15.6)
Balance at June 30, 2022	$	629.6	$	4.5	$	634.1

(1) Related to measurement period adjustments for the Scapa acquisition.

(2) During the first quarter of 2022, goodwill with a carrying amount of $2.1 million was allocated to the disposal group classified as held for sale and subsequently impaired. Goodwill was allocated to the disposal group on the basis of relative fair value, primarily utilizing Level 3 inputs which included forecasted future cash flows. We considered the planned divestiture of this business as a potential indicator that the fair value of the AMS reporting unit may be below its carrying amount and performed a qualitative impairment assessment in the first quarter of 2022. As a result of this assessment, we concluded the fair value of the reporting unit was in excess of its carrying value and therefore no additional impairment was identified or recognized.

Note 8. Intangible Assets

The gross carrying amount and accumulated amortization for intangible assets which are in our AMS segment consisted of the following ~~($ in~~(in millions):


		September 30, 2021							June 30, 2022
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized Intangible Assets	Amortized Intangible Assets							Amortized Intangible Assets
Customer relationships	Customer relationships	$	543.2	$	110.8	$	432.4	Customer relationships	$	530.3	$	134.0	$	396.3
Developed technology(1)	Developed technology(1)	74.7		18.7		56.0		Developed technology(1)	71.2		22.5		48.7

Trade names	Trade names	19.0		2.3		16.7		Trade names	18.2		3.3		14.9
Non-compete agreements	Non-compete agreements	2.9		2.5		0.4		Non-compete agreements	2.9		2.6		0.3
Patents	Patents	1.5		0.6		0.9		Patents	1.9		0.7		1.2
Total	Total	$	641.3	$	134.9	$	506.4	Total	$	624.5	$	163.1	$	461.4

Unamortized Intangible Assets	Unamortized Intangible Assets							Unamortized Intangible Assets
Trade names(1)	Trade names(1)	$	20.1	$	—	$	20.1	Trade names(1)	$	15.4	$	—	$	15.4

(1) Intangible assets with a net carrying amount of $4.7 million are included as part of the disposal group classified as held for sale at June 30, 2022.

December 31, 2020
Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Amortized Intangible Assets
Customer relationships $ 343.9 $ 89.7 $ 254.2
Developed technology 42.4 14.2 28.2
Trade names 11.7 1.4 10.3
Non-compete agreements 2.9 2.4 0.5
Patents 1.5 0.5 1.0
Total $ 402.4 $ 108.2 $ 294.2
Unamortized Intangible Assets
Trade names $ 20.5 $ — $ 20.5

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized Intangible Assets
Customer relationships	$	541.7	$	119.2	$	422.5
Developed technology	74.6		20.7		53.9

Trade names	18.9		2.7		16.2
Non-compete agreements	2.9		2.5		0.4
Patents	1.5		0.6		0.9
Total	$	639.6	$	145.7	$	493.9

Unamortized Intangible Assets
Trade names	$	20.0	$	—	$	20.0

Amortization expense of intangible assets was ~~$11.2~~$11.1 million and ~~$6.8~~$10.7 million for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$28.4~~$22.2 million and ~~$18.1~~$17.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Finite-lived intangibles in the AMS segment are expensed using the straight-line

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

amortization method. The estimated average aggregate amortization expense is ~~$44.3~~$43.6 million in each of the next five years.

Note 9. Restructuring and Impairment Activities

The Company incurred restructuring and impairment ~~expense~~expenses of ~~$1.9~~$2.4 million and $5.9 million in the three months ended September 30, 2021 and 2020, respectively, and $5.9 million and $7.1 million in the nine months ended September 30, 2021 and 2020, respectively, in the EP segment.

During the third quarter of 2021, we announced plans to close the Winkler, Manitoba facility in Canada. The decision was part of our ongoing manufacturing optimization efforts. The anticipated closure date is December 31, 2021.

As a result of this decision, $0.7 million of restructuring and impairment expense was recognized in the three months ended September 30, 2021 related to severance and other accruals. In the three months ended September 30, 2021, we also recorded $0.5 million of other restructuring related charges in Cost of products sold, including the write down of certain inventories to net realizable value and the acceleration of depreciation of machinery and equipment due to the change in the estimated lives of these assets.

During the third quarter of 2020, we announced plans to shut down the Spotswood, New Jersey facility and shift the production of paper made there to other SWM facilities. This decision was part of our ongoing manufacturing optimization efforts and involved the co-development of a new paper production technology with one of the Company’s key customers. Production of paper at this facility ceased as of December 31, 2020.

As a result of this decision, $0.5 million of restructuring and impairment expense was recognized in the three months ended September 30, 2021 related to the costs associated with closing this facility, maintaining the property and preparing it for sale.

~~In addition to restructuring costs relating to the Spotswood and Winkler facilities, the EP segment recognized $0.7 million and $1.8~~$2.3 million for the three months ended ~~September~~June 30, 2022 and 2021, respectively, and $15.6 million and $4.0 million for the six months ended June 30, 2022 and 2021, respectively.

In the EP segment, restructuring and impairment expenses were $1.3 million and $2.3 million for the three months ended June 30, 2022 and 2021, respectively. Restructuring and impairment expenses for the three months ended June 30, 2022 included $1.1 million primarily related to pension benefits for the Winkler, Manitoba facility, which was closed in 2021. Restructuring and impairment expenses for the three months ended June 30, 2021 ~~and 2020, respectively,~~included $1.3 million related to severance accruals ~~for employees~~ at other manufacturing ~~facilities. These restructuring charges relate~~facilities as part of the ongoing optimization project and $1.0 million related to the Spotswood site closure.

Restructuring and impairment expenses in the EP segment were $1.6 million and $4.0 million for the six months ended June 30, 2022 and 2021, respectively. Restructuring and impairment expenses for the six months ended June 30, 2022 included $1.4 million primarily related to pension benefits for the Winkler, Manitoba facility. Restructuring and impairment expense for the six months ended June 30, 2021 included $2.4 million related to the Spotswood site closure and $1.6 million related to severance accruals at other manufacturing facilities as part of the ongoing cost optimization initiatives to remain competitive within the EP segment. The cost optimization initiative project started in 2019 and is expected to be completed in 2022. The EP segment has recognized $9.2 million of restructuring charges cumulatively through September 30, 2021 related to this project.

~~The~~During the remainder of 2022, the Company expects to record additional restructuring and impairment ~~and restructuring~~ related costs in the EP segment ~~during 2021~~ of approximately $0.5 million ~~relating~~related to the closing of the Winkler, Manitoba facility for accelerated depreciation, severance and retention and $0.6 million relating to the shutdown of the Spotswood, New Jersey facility, primarily associated with closing the facility and maintaining the property until it is sold. The Company does not expect to incur significant restructuring expenses related to the cost optimization initiatives in the EP segment during the remainder of 2021.facility.

In the AMS segment, ~~there~~restructuring and impairment expenses were ~~insignificant restructuring~~$1.1 million and $14.0 million for the three and six months ended June 30, 2022, respectively. Restructuring and impairment expenses for the three months ended ~~September~~June 30, ~~2021~~2022 were due to the termination of a contract with an existing customer related to exclusivity in product manufacturing. Restructuring and ~~2020, respectively and $0.0 million and $0.5 million in~~impairment expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were primarily related to the impairment of certain assets in conjunction with the planned divestiture of a portion of the segment serving the construction end-market. After considering the impact of impairments, assets held for sale consist primarily of accounts receivable and ~~2020, respectively.~~inventories. There were no restructuring and impairment expenses for the three and six months ended June 30, 2021.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes total restructuring and related charges ~~for the three and nine months ended September 30, 2021 and 2020:~~(in millions):

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Restructuring and impairment expense:
Severance $ 1.2 $ 5.7 $ 2.8 $ 7.4
Other 0.7 0.3 3.1 0.3
Total restructuring and impairment expense $ 1.9 $ 6.0 $ 5.9 $ 7.7
Other restructuring related charges - Cost of products sold
Accelerated depreciation and amortization $ 0.1 $ 1.2 $ 0.1 $ 1.2
Spare parts and inventory write-downs to estimated net realizable value $ 0.4 $ 2.0 $ 0.4 $ 2.0
Total other restructuring related charges - Cost of products sold $ 0.5 $ 3.2 $ 0.5 $ 3.2
Total restructuring costs and related charges $ 2.4 $ 9.2 $ 6.4 $ 10.9


	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Restructuring and impairment expense:
Severance	$	1.1	$	1.3	$	1.3	$	1.6
Other	1.3		1.0		1.4		2.4
Asset impairment	—		—		12.9		—
Total restructuring and impairment expense	$	2.4	$	2.3	$	15.6	$	4.0

The following table summarizes changes in restructuring liabilities ~~during the periods ended September 30, 2021 and 2020.($ in~~(in millions):


		Nine Months Ended					Six Months Ended
		September 30, 2021		September 30, 2020			June 30, 2022		June 30, 2021
Balance at beginning of year		$	7.4	$	0.5
Balance at beginning of period						Balance at beginning of period	$	6.2	$	7.4
Accruals for announced programs	Accruals for announced programs	2.8		7.7		Accruals for announced programs	0.4		1.5
Cash payments	Cash payments	(4.8)		(1.3)		Cash payments	(1.9)		(3.7)
Foreign exchange impact	Foreign exchange impact	(0.1)		—		Foreign exchange impact	(0.2)		(0.1)
Balance at end of period	Balance at end of period	$	5.3	$	6.9	Balance at end of period	$	4.5	$	5.1

Restructuring liabilities were classified within Accrued expenses and other current liabilities and Other liabilities in each of the ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Note 10. Debt

The components of total debt are summarized in the following table ~~($ in~~(in millions):


	June 30, 2022		December 31, 2021
Revolving credit facility - U.S. dollar borrowings	$	389.0	$	393.0

Term loan A facility	193.0		193.5

Term loan B facility	346.5		348.2
6.875% senior unsecured notes due October 1, 2026, net of discount of $5.7 million and $5.2 million at June 30, 2022 and December 31, 2021, respectively(1)	345.1		344.8
French employee profit sharing	2.7		4.1
Finance lease obligations	2.4		2.8

Debt issuance costs and discounts	(24.1)		(16.1)
Total debt	1,254.6		1,270.3
Less: Current debt	(1.9)		(3.2)
Total long-term debt	$	1,252.7	$	1,267.1

September 30,
2021 December 31,
2020
Revolving credit facility - U.S. dollar borrowings $ 414.0 $ 50.0
Term loan A facility 194.0 195.5
Term loan B facility 349.1 —
6.875% senior unsecured notes due October 1, 2026, net of discount of $5.4 million and $6.1 million at September 30, 2021 and December 31, 2020, respectively 344.6 343.9
French employee profit sharing 3.8 5.0
Finance lease obligations 17.7 3.5
Debt issuance costs and discounts (17.0) (4.6)
Total debt 1,306.2 593.3
Less: Current debt (18.0) (2.8)
Long-term debt $ 1,288.2 $ 590.5
(1) Net of $0.2 million decrease related to fair value hedge accounting adjustments.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Credit Facility

On September 25, 2018, the Company entered into a $700.0 million credit agreement (the “Credit Agreement”), which replaced the Company’s previous senior secured credit facilities and ~~provides~~provided for a ~~five year~~five-year $500.0 million revolving line of credit (the “Revolving Credit Facility”) and a ~~seven year~~seven-year $200.0 million bank term loan facility (the “Term Loan A Facility”). Subject to certain conditions, including the absence of a default or event of default under the Credit Agreement, the Company may request incremental loans to be extended under the Revolving Credit Facility or as additional Term Loan Facilities so long as the Company is in pro forma compliance with the financial covenants set forth in the Credit Agreement and the aggregate of such increases does not exceed $400.0 million.

On February 10, 2021 we amended our Credit Agreement to, among other things, add a new ~~seven year $350~~seven-year $350.0 million Term Loan B Facility (the “Term Loan B Facility”) and to decrease the incremental loans that may be extended at the Company’s request to ~~$250~~$250.0 million. The ~~balance under~~Credit Agreement was further amended effective February 22, 2022 to adjust the step-down schedule for the maximum net debt to EBITDA ratio.

In connection with the Merger, we amended our Credit Agreement on May 6, 2022 in order to extend the maturity of the Revolving Credit Facility and the Term Loan BA Facility ~~was $349.1~~to May 6, 2027, and to increase the availability under the Revolving Credit Facility, subject to consummation of the Merger, to $600.0 million. Additionally, we added a $650.0 million asdelayed draw term loan facility (the "Delayed Draw Term Loan Facility") to be funded concurrent with the closing of ~~September 30, 2021.~~the Merger.

Borrowings under the amended Term Loan A Facility ("Term Loan A Credit Facility") will bear interest, at a rate equal to either (1) a forward-looking term rate based on the Secured Overnight Financing Rate (“Term SOFR”), plus the applicable margin or (2) the highest of (a) the federal funds effective rate plus 0.5%, (b) the rate of interest as published by the Wall Street Journal as the “bank prime loan” rate, and (c) Term SOFR plus 1.0%, in each case plus the applicable margin. The applicable margin for borrowings under the Term Loan A Credit Facility is expected to range from 1.25% to 2.75% for SOFR loans and from 0.25% to 1.75% for base rate loans, in each case depending on the Company’s then current net debt to EBITDA ratio.

Borrowings under the amended Revolving Credit Facility ~~currently~~(Revolving Facility) or the Delayed Draw Term Loan facility in U.S. dollars will bear interest, at the Company’s option, at a rate equal to either ~~(i) 2.25%~~(1) a forward-looking term rate based on Term SOFR, plus the applicable margin or (2) the highest of (a) the federal funds effective rate plus 0.5%, (b) the rate of interest as published by the Wall Street Journal as the “bank prime loan” rate, and (c) one-month Term SOFR plus 1.0%, in ~~excess of LIBOR or (ii) 1.25% in excess of an alternative base rate.~~each case plus the applicable margin. Borrowings under the ~~Term Loan A~~Revolving Facility ~~currently~~in Euros will bear interest at a rate equal to the reserve-adjusted Euro interbank offered rate, or EURIBOR, plus the applicable margin. The applicable margin for borrowings under the revolving credit agreement is expected to range from 1.00% to 2.50% for SOFR loans and EURIBOR loans, and from 0.00% to 1.50% for base rate loans, in each case, depending on the Company’s option, at either (i) 2.50% in excess of LIBOR or (ii) 1.50% in excess of an alternative base rate. The Term Loan amortizes at the rate of 1.0% per year and will mature on September 25, 2025. Any borrowingsthen current net debt to EBITDA ratio.

Borrowings under the Term Loan B Facility will bear interest, at the Company's option, at either (i) 3.75% in excess of a reserve adjusted LIBOR rate (subject to a minimum floor of 0.75%) or (ii) 2.75% in excess of an alternative base rate.

Under the terms of the amended Credit Agreement, the Company is required to maintain certain financial ratios and comply with certain financial covenants, including maintaining a net debt to EBITDA ratio, as defined in the amended Credit Agreement, calculated on a trailing four fiscal quarter basis, not greater than ~~5.50x~~5.75x and an interest coverage ratio, also as defined in the amended Credit Agreement, of not less than 3.00x. The maximum allowable net debt to EBITDA ratio will decrease ~~over the course of 24 months,~~quarterly returning to 4.50x effective as of June 30, 2023. Subsequent to the closing of the Merger, the maximum allowable net debt to EBITDA ratio will be 5.50x, decreasing to 4.50x as of the end of the sixth fiscal quarter following the Merger. In addition, borrowings and loans made under the amended Credit Agreement are secured by substantially all of the Company’s and the guarantors’ personal property, excluding certain customary items of collateral, and will be guaranteed by the Company’s existing and future wholly-owned direct material domestic subsidiaries and by SWM Luxembourg. Refer to Note 16. Subsequent Events for further information related to the amended Credit Agreement.

The Company was in compliance with all of its covenants under the Credit Agreement at ~~September~~June 30, ~~2021.~~

2022.

2120

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Debt Commitment Letter

In connection with the proposed merger, we had obtained financing commitments for (i) a $648.0 million senior 364-day unsecured bridge facility (the “Bridge Facility”) and (ii) a $500.0 million senior secured revolving credit facility pursuant to a commitment letter (the “Debt Commitment Letter”) dated as of March 28, 2022. On May 6, 2022, in conjunction with the amendment of our Credit Agreement, the Debt Commitment Letter was amended, reducing the commitments under the Bridge Facility and senior secured revolving credit facility to $50.0 million and zero, respectively.

Indenture for 6.875% Senior Unsecured Notes Due 2026

On September 25, 2018, the Company closed a private offering of $350.0 million of 6.875% senior unsecured notes due 2026 (the “Notes”). The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended, pursuant to a purchase agreement between the Company, certain subsidiaries of the Company and J.P. Morgan Securities LLC, as representative of the initial purchasers. The Notes are guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly-owned subsidiaries that is a borrower under or that guarantees obligations under the Credit Agreement or that guarantees certain other indebtedness, subject to certain exceptions.

The Notes were issued pursuant to an Indenture, dated as of September 25, 2018 (the “Indenture”), by and among the Company, the guarantors listed therein and Wilmington Trust, National Association, as trustee. The Indenture provides that interest on the Notes will accrue from September 25, 2018 and is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2019, and the Notes mature on October 1, 2026.

The Company may redeem some or all of the Notes at any time on or after October 1, 2021, at the redemption prices set forth in the Indenture, together with accrued and unpaid interest, if any, to, but excluding, the redemption date. Prior to October 1, 2021, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium as set forth in the Indenture. The Company may redeem up to 35% of the original aggregate principal amount of the Notes on or prior to October 1, 2021 with the proceeds of certain equity offerings at a redemption price equal to 106.875% of the principal amount of the Notes. If the Company sells certain assets or consummates certain change of control transactions, the Company will be required to make an offer to repurchase the Notes, subject to certain conditions.

The Indenture contains certain covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to incur additional indebtedness, make certain dividends, repurchase Company stock or make other distributions, make certain investments, create liens, transfer or sell assets, merge or consolidate and enter into transactions with the Company’s affiliates. Such covenants are subject to a number of exceptions and qualifications set forth in the Indenture. The Indenture also contains certain customary events of default, including failure to make payments in respect of the principal amount of the Notes, failure to make payments of interest on the Notes when due and payable, failure to comply with certain covenants and agreements and certain events of bankruptcy or insolvency. The Company was in compliance with all of its covenants under the Indenture at ~~September~~June 30, ~~2021.~~2022.

As of ~~September~~June 30, ~~2021,~~2022, the average interest rate was ~~2.44%~~4.22% on outstanding Revolving ~~Credit~~ Facility borrowings, ~~2.63%~~4.38% on outstanding Term Loan A Credit Facility borrowings, and ~~4.50%~~5.44% on outstanding Term Loan B Facility borrowings. The effective rate on the 6.875% senior unsecured notes due 2026 was 7.248%. The weighted average effective interest rate on the Company's debt facilities, including the impact of interest rate hedges, was approximately ~~4.12%~~4.52% and ~~3.98%~~4.11% for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

As of ~~September~~June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, the Company's total deferred debt issuance costs and discounts, net of accumulated amortization, were ~~$17.0~~$24.1 million and ~~$4.6~~$16.1 million, respectively. Amortization expense of $2.8 million and $1.0 million was recorded during the nine months ended September 30, 2021 and 2020, respectively, and has been included as a component of Interest expense in the accompanying condensed consolidated statements of income.

2221

~~SCHWEITZER-MAUDUIT INTERNATIONAL,~~MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Principal Repayments

~~Following are~~The following is the expected maturities for the Company's debt obligations as of ~~September~~June 30, ~~2021 ($ in~~2022 (in millions):

2021 $ 15.9
2022 5.7
2023 419.2
2024 4.8
2025 190.8
Thereafter 686.8
Total $ 1,323.2


2022	$	3.0
2023	6.7
2024	6.3
2025	7.0
2026	351.7
Thereafter	904.0
Total	$	1,278.7

Fair Value of Debt

At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the fair market value of the Company's 6.875% senior unsecured notes was ~~$364.2~~$315.4 million and ~~$371.0~~$365.8 million, respectively. The fair market value for the senior unsecured notes was determined using quoted market prices, which are directly observable Level 1 inputs. The fair market value of all other debt as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 approximated the respective carrying amounts as the interest rates are variable and based on current market indices.

~~Debt Issuance Costs~~

In conjunction with the amendment to our Credit Agreement on February 10, 2021, the Company capitalized approximately $14.5 million of debt issuance costs during the nine months ended September 30, 2021 which will be amortized over the term of the various facilities under the amended Credit Agreement.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Note 11. Derivatives

In the normal course of business, the Company is exposed to foreign currency exchange rate risk and interest rate risk on its variable-rate debt. To manage these risks, the Company utilizes a variety of practices including, where considered appropriate, derivative instruments. The Company has no derivative instruments for trading or speculative purposes or derivatives with credit risk-related contingent features. All derivative instruments used by the Company are either exchange traded or are entered into with major financial institutions in order to reduce credit risk and risk of nonperformance by third parties. The fair values of the Company’s derivative instruments are determined using observable inputs and are considered Level 2 assets or liabilities.

The Company utilizes currency forward, swap and, to a lesser extent, option contracts to selectively hedge its exposure to foreign currency risk when it is practical and economical to do so. The use of these contracts minimizes transactional exposure to exchange rate changes. We designate certain of our foreign currency hedges as cash flow hedges. Changes in the fair value of cash flow hedges are reported as a component of Accumulated other comprehensive loss, net of tax and reclassified into earnings when the forecasted transaction affects earnings. For foreign exchange contracts not designated as cash flow hedges, changes in the contracts’ fair values are recorded to net income each period.

The Company selectively hedges its exposure to interest rate increases on variable-rate, long-term debt when it is practical and economical to do so. Changes in the fair value of interest rate contracts considered cash flow hedges are reported as a component of Accumulated other comprehensive loss, net of tax and reclassified into earnings when the forecasted transaction affects earnings. Interest rate contracts are also used to hedge changes in the fair value of a portion of our senior unsecured notes attributable to changes in the benchmark interest rate. Changes in the fair value of the interest rate contracts and corresponding portion of the hedged debt are recognized in interest expense.

The Company also uses cross currency swap contracts to selectively hedge its exposure to foreign currency related changes in our net investments in certain foreign operations. We designate these cross currency swap contracts as net investment hedges. Changes in the fair value of these hedges are deferred within the foreign currency translation component of Accumulated other comprehensive ~~income~~loss, net of tax and reclassified into earnings when the foreign investment is sold or substantially liquidated.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During the three months ended June 30, 2022, cross-currency swaps with a combined notional value of €488.8 million ($550.0 million) were terminated and a total settlement of $35.8 million was received from the counterparties. Immediately following the termination of the aforementioned swaps, the Company entered into cross-currency swaps with a combined notional value of €450.0 million ($478.2 million), maturing on April 1, 2024 and 2025 and October 1, 2026, designated as a hedge of a portion of the Company’s net investment in Euro-denominated subsidiaries. These contracts involve the periodic exchange of U.S. dollar fixed interest rate payments for fixed Euro-denominated payments over the respective contract terms, in addition to an exchange of notional amounts upon maturity. One cross-currency swap involves the periodic exchange of U.S dollar variable interest rate payments for Euro-denominated variable payments.

During 2019 and 2021, the Company entered into a series of pay-fixed, receive-variable interest rate swaps, maturing on January 31, 2027 and December 31, 2027. During March of 2022, the interest rate swaps, which had a combined notional value of $500.0 million were terminated and a total settlement of $23.6 million was received from the counterparties. The settlement amount, which represents the fair value of contracts at the time of termination, was recorded in Accumulated other comprehensive loss, net of tax and will be amortized as a component of Interest expense over the remaining term of the hedged forecasted transaction.

During March of 2022, immediately following the termination of the aforementioned interest rate swaps, the Company entered into pay-fixed, receive-variable interest rate swaps, ~~with a maturity date of~~maturing on January 31, 2027 and December 31, 2027. The ~~instruments hedge~~swaps have a ~~portion~~combined notional value of ~~the Company’s debt facility through the Credit Agreement. Under~~$500.0 million which declines over the terms of the interest rate swaps, SWM will pay a fixed amount of interest each period in an amount equal to 0.974% and 1.4135% on notional amounts of $260 million and $140 million, respectively, and receive interest payments monthly in an amount equal to the One-Month USD-LIBOR rate on the notional amount. The notional amount will reduce throughout the term of the swap as follows:

•~~June 30, 2021 - December 31, 2021 $400 million notional~~

•~~December 31, 2021 - December 31, 2024 $350 million notional~~

•~~December 31, 2024 - December 31, 2025 $300 million notional~~

•~~December 31, 2025 - December 31,2026 $200 million notional~~

•~~December 31, 2026 - December 31, 2027 $190 million notional~~

On September 11, 2019, the Company entered into a pay-fixed, receive-variable interest rate swap with a maturity date of January 31, 2027. The instrument is a hedge on a portion of the Company’s debt facility through the Credit Agreement. Under the terms of the interest rate swap, SWM will pay a fixed amount of interest each period in an amount equal to 1.724% on a notional amount of $185 million and receive interest payments monthly in an amount equal to the One-Month USD-LIBOR rate on the notional amount. The notional amount will reduce throughout the term of the swap as follows:

•~~September 13, 2019 - December 31, 2020 $185 million notional~~

•~~December 31, 2020 - December 31, 2021 $150 million notional~~

•~~December 31, 2021 - January 31, 2027 $100 million notional~~

underlying contracts. The terms of the interest rate swaps mirror the terms of the underlying debt, including timing of the payments and interest rates.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~On October 24, 2018,~~In addition, the Company entered into a ~~cross-currency~~fixed to float interest rate swap ~~designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on~~with a notional amount of ~~$75~~$173.4 million swapped to €65.4 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 3.6725% per annum. The cross-currency swap will matureduring the three months ended June 30, 2022, maturing on October 1, ~~2021.~~

~~On January 29, 2019, the Company entered into a cross-currency~~2026. The swap was designated as a fair value hedge offor a portion of our 6.875% senior unsecured notes due in 2026. The contract involves the ~~Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an~~periodic exchange of principal on a notional amount of $75 million swapped to €66.0 million at maturity. On September 30, 2021, the term of the cross-currency swap was extended until October 1, 2031. The Company will receive from our swap counterparty U.S. dollarfixed interest ~~at a fixed~~ rate ~~of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 5.117% per annum on €66.0 million.~~

On September 11, 2019, the Company entered into a new pay-EUR, receive-USD cross-currency swap arrangement with a major financial institution having a maturity date of April 1, 2023. The terms of the cross-currency swap providepayments for an exchange of principal on a notional amount of $100 million swapped to €90.9 million at maturity. Under the terms of the new cross-currency swap, SWM will pay a fixed amount of Euro-denominated interest at a rate of 5.638% semiannually and receive USD denominated payments at a rate of 6.875% semiannually on the notional amount of the swap.variable payments.

The following table presents the fair value of asset and liability derivatives and the respective ~~condensed consolidated balance sheet~~ locations on the Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2021 ($ in~~2022 (in millions):


	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts - net investment hedge	Accounts receivable, net	$	1.2	Accrued expenses and other current liabilities	$	—
Foreign exchange contracts - net investment hedge	Other assets	4.0		Other liabilities	3.2
Interest rate contracts - cash flow hedge	Accounts receivable, net	0.2		Other liabilities	—
Interest rate contracts - cash flow hedge	Other assets	9.0		Other liabilities	—
Interest rate contracts - fair value hedge	Other assets	—		Other liabilities	0.2
Total derivatives designated as hedges		$	14.4		$	3.4

Derivatives not designated as hedges:
Foreign exchange contracts	Accounts receivable, net	—		Accrued expenses and other current liabilities	1.4
Total derivatives not designated as hedges		$	—		$	1.4
Total derivatives		$	14.4		$	4.8

Asset Derivatives Liability Derivatives
Balance Sheet
Location Fair
Value Balance Sheet
Location Fair
Value
Derivatives designated as hedges:
Foreign exchange contracts Accounts receivable, net $ 2.7 Accrued expenses and other current liabilities $ 1.3
Foreign exchange contracts Other assets — Other liabilities 8.8
Interest rate contracts Accounts receivable, net 0.2 Other liabilities 3.8
Total derivatives designated as hedges 2.9 13.9
Derivatives not designated as hedges:
Foreign exchange contracts Accounts receivable, net — Accrued expenses and other current liabilities 0.2
Total derivatives not designated as hedges — 0.2
Total derivatives $ 2.9 $ 14.1

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~


		Asset Derivatives			Liability Derivatives				Asset Derivatives			Liability Derivatives
		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:	Derivatives designated as hedges:							Derivatives designated as hedges:
Foreign exchange contracts		Accounts receivable, net	$	0.9	Accrued expenses	$	11.0
Foreign exchange contracts		Other assets	—		Other liabilities	12.3
Interest rate contracts		Accounts receivable, net	0.3		Accrued expenses	—
Interest rate contracts		Other assets	—		Other liabilities	7.8
Foreign exchange contracts - net investment hedge								Foreign exchange contracts - net investment hedge	Accounts receivable, net	$	1.6	Accrued expenses and other current liabilities	$	—
Foreign exchange contracts - net investment hedge								Foreign exchange contracts - net investment hedge	Other assets	—		Other liabilities	9.8
Interest rate contracts - cash flow hedge								Interest rate contracts - cash flow hedge	Accounts receivable, net	0.2		Accrued expenses	—
Interest rate contracts - cash flow hedge								Interest rate contracts - cash flow hedge	Other assets	3.3		Other liabilities	2.1
Total derivatives designated as hedges	Total derivatives designated as hedges		$	1.2		$	31.1	Total derivatives designated as hedges		$	5.1		$	11.9

Derivatives not designated as hedges:								Derivatives not designated as hedges:
Foreign exchange contracts								Foreign exchange contracts	Accounts receivable, net	0.2		Accounts payable	0.6
Total derivatives not designated as hedges								Total derivatives not designated as hedges		$	0.2		$	0.6
Total derivatives	Total derivatives		$	1.2		$	31.1	Total derivatives		$	5.3		$	12.5

The following table provides the net effect that derivative instruments designated in hedging relationships had on Accumulated other comprehensive loss, net of tax and results of operations ~~($ in~~(in millions):

Derivatives Designated in Hedging Relationships Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax Location of (Loss) Gain Reclassified
from AOCI (Loss) Gain Reclassified
from AOCI
Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2021 2020 2021 2020 2021 2020 2021 2020
Derivatives designated as cash flow hedge
Foreign exchange contracts $ (0.2) $ (0.3) $ (0.1) $ (6.1) Net sales $ (0.3) $ (0.9) $ (1.3) $ (2.5)
Foreign exchange contracts (0.4) — (0.5) 1.4 Other (expense) income, net (0.1) 0.1 (0.7) 1.1
Interest rate contracts 1.9 0.2 3.9 (8.8)
Derivatives designated as net investment hedge
Foreign exchange contracts 1.9 (10.0) 7.1 (3.4)
Total gain (loss) $ 3.2 $ (10.1) $ 10.4 $ (16.9) $ (0.4) $ (0.8) $ (2.0) $ (1.4)


Derivatives Designated in Hedging Relationships	Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax								Location of (Loss) Gain Reclassified from AOCI	Loss Reclassified from AOCI

	Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
	June 30,				June 30,					June 30,				June 30,
	2022		2021		2022		2021			2022		2021		2022		2021
Derivatives designated as cash flow hedge
Foreign exchange contracts	$	—	$	0.7	$	—	$	0.1	Net sales	$	—	$	(0.4)	$	—	$	(1.0)
Foreign exchange contracts	0.3		(1.0)		0.2		(0.1)		Other income (expense), net	—		(1.2)		(0.1)		(0.6)
Interest rate contracts	6.4		(2.1)		28.1		2.0		Interest expense	(0.5)		—		(1.5)		—
Derivatives designated as net investment hedge
Foreign exchange contracts	30.0		(1.8)		43.6		5.2
Total gain (loss)	$	36.7	$	(4.2)	$	71.9	$	7.2		$	(0.5)	$	(1.6)	$	(1.6)	$	(1.6)

The Company's designated derivative instruments are highly effective. As such, related to the hedge ineffectiveness or amounts excluded from hedge effectiveness testing, there were no gains or losses recognized immediately in income for the three and ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~or 2020,~~ other than those related to the cross-currency swap, noted below.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company’s ~~cross currency swaps~~net investment hedges were designated with terms based on the spot rate of the EUR. Future changes in the components related to the spot change on the notional will be recorded in OCI and remain there until the hedged subsidiaries are substantially liquidated. All coupon payments are recorded in earnings and the initial value of excluded components currently recorded in Accumulated other comprehensive loss, net of tax as an unrealized translation adjustment are amortized to interest expense over the remaining term of the swap. For the three months ended ~~September~~June 30, 2022 and 2021, ~~and 2020, respectively, $2.4~~we recognized as income $2.2 million and ~~$1.4~~$1.0 million, ~~was recognized~~respectively, in ~~income~~Interest expense as derivative amounts excluded from effectiveness ~~testing as Interest expense.~~testing. For the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020, respectively, $4.5~~we recognized as income $4.8 million and ~~$4.9~~$2.1 million, ~~was recognized~~respectively, in ~~income~~Interest expense as derivative amounts excluded from effectiveness ~~testing as Interest expense.~~

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

testing.

The following table provides the effect that derivative instruments not designated as cash flow hedging instruments had on net income ~~($ in~~(in millions):


Derivatives Not Designated as Cash Flow Hedging Instruments	Derivatives Not Designated as Cash Flow Hedging Instruments	Location of Gain Recognized in Income	Amount of Gain (Loss) Recognized in Income								Derivatives Not Designated as Cash Flow Hedging Instruments	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income

			Three Months Ended				Nine Months Ended						Three Months Ended				Six Months Ended
			September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020				June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Foreign exchange contracts	Foreign exchange contracts	Other income (loss), net	$	(0.3)	$	(0.6)	$	(0.6)	$	(0.1)	Foreign exchange contracts	Other income (expense), net	$	0.6	$	6.3	$	(0.5)	$	(0.3)

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

12. Commitments and Contingencies

Litigation

Brazil

~~SWM-B~~SWM-Brazil ("SWM-B") received assessments from the tax authorities of the State of Rio de Janeiro (the "State") for unpaid Imposto sobre Circulação de Mercadorias e Serviços ("ICMS") and Fundo Estadual de Combate à Pobreza ("FECP") value-added taxes on interstate purchases of electricity. The State issued 4 sets of assessments against SWM-B ~~one~~ for periods from May 2006 - November 2007, a second for January 2008 - December 2010, a third for September 2011 - September 2013, which was replaced by a smaller assessment for January - June 2013, and a fourth for July 2013 -through December 2017 (collectively the "Electricity Assessments"). SWM-B challenged all Electricity Assessments in administrative proceedings before the State tax council (in the ~~first-level court~~ Junta de Revisão Fiscal “first-level administrative court” and the ~~appellate court~~ Conselho de ~~Contribuintes)~~Contribuintes “administrative appellate court”) based on Resolution 1.610/89, which defers these taxes on electricity purchased by an "electricity-intensive consumer." In 2014, a majority of the ~~Conselho de Contribuintes~~administrative appellate court sitting en banc ruled against SWM-B in each of the first and second Electricity Assessments ($~~3.4~~10.7 million ~~and $6.6 million, respectively,~~ based on the foreign currency exchange rate at ~~September~~June 30, ~~2021)~~2022), and SWM-B is now pursuing challenges to these assessments in the State judicial system where SWM-B obtained preliminary injunctions against enforcement of both assessments. In March 2020, the first-level judicial court ruled in favor of SWM-B in the second Electricity Assessment, a decision that is now on appeal. The third Electricity Assessment was dismissed on technical grounds ~~by the Conselho de Contribuintes~~ in ~~2018 after the State admitted the tax did not apply as it had asserted. Instead, in~~2018. In August 2018, the State filed a revised third and fourth Electricity ~~Assessment in the~~Assessments for a combined amount of $0.5 million for ICMS on electricity purchased during part of 2013, and a fourth Electricity Assessment in the amount of $7.5 million pertaining to ICMS and FECP on electricity purchased from July 2013 to December 2017.$8.6 million. SWM-B filed challenges to these 2018 assessments in the first-level administrative court on the same grounds as the older ~~cases. The Junta de Revisão Fiscal rejected SWM-B’s challenge to~~cases, receiving unfavorable rulings from the revised third Electricity Assessment, but the Conselho de Contribuintes agreed with SWM-B that the 2013 claim was time-barred. Both the Junta de Revisão Fiscal and the Conselho de Contribuintes ruled against SWM-Bcourts in ~~the fourth Electricity Assessment.~~2019. Both 2019 decisions ~~from the Conselho de Contribuintes~~ are being ~~appealed to the full bench of the Conselho de Contribuintes.~~appealed. The State issued a new regulation effective January 1, 2018 that only specific industries are “electricity-intensive consumers,” a list that excludes paper manufacturers. SWM-B contends this regulation shows that paper manufacturers were electricity-intensive consumers eligible to defer ICMS before 2018.

SWM-B cannot determine the outcome of the Electricity Assessments matters; as such, no loss has been accrued in our unaudited condensed consolidated financial statements.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In December of 2000, SWM-B received 2 assessments from the tax authorities of the State for unpaid ICMS taxes on certain raw materials from January 1995 through October 1998 and from November 1998 through November 2000 (collectively, the "Raw Materials Assessments"). The Raw Materials Assessments concerned the accrual and use by SWM-B of ICMS tax credits generated from the production and sale of certain non-tobacco related grades of paper sold domestically. An adverse judgement was received during 2019 and a provision of $8.6 million (based on the foreign currency exchange rate at March 31, 2021) was recorded in Other Liabilities. On April 9, 2021, SWM-B resolved the Raw Materials Assessment by paying $2.6 million (based on the foreign currency exchange rate at March 31, 2021) under a tax amnesty program which reduced the tax liability by approximately 70%. All litigation is now concluded on this matter which is fully resolved. As the result of the favorable settlement, we recognized a total benefit of $6.1 million in the first quarter of 2021, of which $4.6 million was in Interest expense and $1.6 million was in Other income (expense), net.

Germany

In January 2015, the Company initiated patent infringement proceedings in Germany against Glatz under multiple LIP-related patents. In December 2017, the Dusseldorf Appeal Court affirmed the German District Court judgment on infringement of EP1482815 against Glatz. The Company filed an action against Glatz in the German District Court to set the amount of damages for the infringement and Glatz has filed a counterclaim. Glatz ~~has~~ filed an action in the German Patent Court to invalidate the German part of EP1482815. The German Patent Court held that some of the patent claims at issue were invalid and also that another claim at issue was valid. The Company has appealed the portion of the decision with respect to the claims held to be invalid. The German Supreme Court ~~confirmed~~held that the claims of German ~~Patent Court~~counterpart of EP1482815 relevant to the Glatz infringement action were invalid. This ruling has the effect of nullifying the infringement decision ~~on appeal.~~and injunction against Glatz and the Company’s claim for damages against Glatz. Glatz’s counterclaim against the Company is still pending and is scheduled for hearing in February, 2023. The cost, timing and outcome of intellectual property litigation can be unpredictable and thus no assurances can be given as to the outcome or impact ~~on us~~ of such litigation.

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Environmental Matters

The Company's operations are subject to various nations' federal, state and local laws, regulations and ordinances relating to environmental matters. The nature of the Company's operations exposes it to the risk of claims with respect to various environmental matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims. While the Company has incurred in the past several years, and will continue to incur, capital and operating expenditures in order to comply with environmental laws and regulations, it believes that its future cost of compliance with environmental laws, regulations and ordinances, and its exposure to liability for environmental claims and its obligation to participate in the remediation and monitoring of certain hazardous waste disposal sites, will not have a material effect on its financial condition or results of operations. However, future events, such as changes in existing laws and regulations, or unknown contamination or costs of remediation of sites owned, operated or used for waste disposal by the Company (including contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional costs which could have a material effect on its financial condition or results of operations.

General Matters

In the ordinary course of conducting business activities, the Company and its subsidiaries become involved in certain other judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured regulatory, employment, intellectual property, general and commercial liability, environmental and other matters. At this time, the Company does not expect any of these proceedings to have a material effect on its reputation, business, financial condition, results of operations or cash flows. However, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, financial condition, results of operations or cash flows.

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 13. Postretirement and Other Benefits

The Company sponsors pension benefits in the United States, France, United Kingdom, Italy, and Canada and OPEB benefits related to postretirement healthcare and life insurance in the United States and Canada. The Company’s Canadian and Italian pension benefits and U.S. and Canadian OPEB liability are not material and therefore are not included in the following disclosures.

Pension and OPEB Benefits

The components of net pension benefit costs for ~~U.S., French~~the employees in the United States, France and ~~UK employees during the three or nine months ended September 30, 2021 and 2020~~United Kingdom were as follows ~~($ in~~(in millions):


		Three Months Ended September 30,												Three Months Ended June 30,
		U.S. Pension Benefits				French Pension Benefits				UK Pension Benefits					United States				France				United Kingdom
		2021		2020		2021		2020		2021		2020					2022		2021		2022		2021		2022		2021
Service cost	Service cost	$	—	$	—	$	0.5	$	0.3	$	—	$	—			Service cost	$	—	$	—	$	0.3	$	0.4	$	—	$	—
Interest cost	Interest cost	0.7		0.9		—		—		0.9		—				Interest cost	0.8		0.7		—		0.1		0.6		0.8
Expected return on plan assets	Expected return on plan assets	(1.0)		(1.2)		—		—		(1.0)		—				Expected return on plan assets	(1.0)		(1.0)		—		—		(0.7)		(0.9)
Amortizations and other	Amortizations and other	0.9		0.9		0.2		0.3		—		—				Amortizations and other	0.4		0.9		0.2		0.2		—		—
Net periodic benefit cost	Net periodic benefit cost	$	0.6	$	0.6	$	0.7	$	0.6	$	(0.1)	$	—			Net periodic benefit cost	$	0.2	$	0.6	$	0.5	$	0.7	$	(0.1)	$	(0.1)

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~


		Nine Months Ended September 30,												Six Months Ended June 30,
		U.S. Pension Benefits				French Pension Benefits				UK Pension Benefits					United States				France				United Kingdom
		2021		2020		2021		2020		2021		2020					2022		2021		2022		2021		2022		2021
Service cost	Service cost	$	—	$	—	$	1.2	$	0.9	$	—	$	—			Service cost	$	—	$	—	$	0.7	$	0.7	$	—	$	—
Interest cost	Interest cost	2.1		2.8		0.1		0.1		1.7		—				Interest cost	1.6		1.4		0.1		0.1		1.1		0.8
Expected return on plan assets	Expected return on plan assets	(3.0)		(3.7)		—		—		(1.9)		—				Expected return on plan assets	(2.0)		(2.0)		—		—		(1.3)		(0.9)
Amortizations and other	Amortizations and other	2.7		2.5		0.7		0.7		—		—				Amortizations and other	0.8		1.8		0.3		0.5		—		—
Net periodic benefit cost	Net periodic benefit cost	$	1.8	$	1.6	$	2.0	$	1.7	$	(0.2)	$	—			Net periodic benefit cost	$	0.4	$	1.2	$	1.1	$	1.3	$	(0.2)	$	(0.1)

The components of net periodic benefit cost other than the service cost component are included in Other income (expense) ~~income,~~, net in the ~~condensed consolidated statements~~Condensed Consolidated Statements of income. During the fiscal year ending December 31, 2021, the Company expects to recognize approximately $3.6 million of amortization in Accumulated other comprehensive loss related to its U.S. pension and OPEB plans and approximately $1.0 million for its French pension plans.Income.

Note 14. Income Taxes

For interim financial reporting, the Company estimates the annual tax rate based on projected taxable income for the full year and records a quarterly income tax provision in accordance with ASC No. 740-270 "Accounting for Income Taxes in Interim Periods." These interim estimates are subject to variation due to several factors, including the ability of the Company to accurately forecast pre-tax and taxable income and loss by jurisdiction, changes in laws or regulations, and expenses or losses for which tax benefits are not recognized. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective tax rate calculations could result in a higher or lower effective tax rate during a quarter, based upon the mix and timing of actual earnings versus annual projections.

~~As a result of~~

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Prior to the Tax Cuts and Jobs Act of 2017, the Company asserted that substantially all of the undistributed earnings of its foreign subsidiaries were considered indefinitely reinvested and accordingly, no deferred taxes were provided. Due to the Tax Act, the Company has significant previously taxed earnings and profits from its foreign subsidiaries, as a result of transition tax, that it is generally able to ~~repatriate~~be repatriated free of U.S. federal ~~tax, due to transition tax and global intangible low taxed income (“GILTI”) treatment. Further, to the extent that any untaxed~~tax. In addition, future earnings ~~and profits are distributed from~~of foreign subsidiaries ~~such dividends should~~are generally expected to be able to be repatriated free of U.S. federal income tax because these earnings were taxed in the U.S. under the GILTI regime or would be eligible for a 100% dividends received deduction. As a result of the Company’s treasury policy to simplify and expediate the intercompany cash flows to SWM US, as evidenced by the implementation of the Cash Pool, and in light of the Company’s demonstrated goal of driving growth though inorganic/acquisitional means, the Company has decided to no longer assert indefinite reinvestment with respect to earnings generated by foreign subsidiaries prior to January 1, 2018. Therefore, the Company does not intend to assert indefinite reinvestment onof its foreign subsidiaries to the extent of each CFC’s earnings ~~generated after December 31, 2017. The~~and profits and to the extent of any foreign partnership’s U.S. tax capital accounts. As a result, the Company ~~provides~~has provided for ~~deferred~~ non-U.S. withholding taxes, U.S. federal tax related to currency movement on previously-taxed earnings and profits, and U.S. state taxes on ~~hypothetical repatriation of earnings generated after December 31, 2017.~~unremitted earnings.

All unrecognized tax positions could impact the Company's effective tax rate if recognized. With respect to penalties and interest incurred from income tax assessments or related to unrecognized tax benefits, the Company’s policy is to classify penalties as provision for income taxes and interest as interest expense in its ~~condensed consolidated statement~~Condensed Consolidated Statements of ~~income.~~Income. There were no material income tax penalties or interest accrued during the three ~~or nine~~and six months ended ~~September~~June 30, ~~2021~~2022 or ~~2020.~~2021.

The Company's effective tax rate from continuing operations was ~~13.2%~~31.3% and ~~17.0%~~140.0% for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The decrease was materially due to significant discrete items related to the Scapa acquisition in the three months ended June 30, 2021, as well as more favorable mix of earnings by ~~jurisdiction and discrete items.~~jurisdiction. The Company's effective tax rate from continuing operations was ~~29.6%~~41.1% and ~~18.9%~~35.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The increase was materially due to ~~unfavorable~~discrete items partially offset by favorable mix of earnings by ~~jurisdiction and discrete items.~~jurisdiction.

Note 15. Segment Information

~~SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The Company's 2 operating product line segments are also the Company's reportable segments: Advanced Materials & Structures and Engineered Papers. The AMS segment designs and produces resin-based rolled goods such as nets, films, tapes and meltblown materials, typically through an extrusion process or other non-woven technologies across the filtration, transportation, healthcare, construction, and industrial end-markets, and it provides converting and adhesive and other coating services related to some of these products. AMS segment consists of the operations of various acquisitions. The EP segment primarily produces various cigarette papers and Recon for sale to cigarette manufacturers. The EP segment also includes non-tobacco paper for battery separators, printing and writing, foodservice packaging and furniture laminates.

Information about Net Sales and Operating Profit

The accounting policies of these segments are the same as those described in Note 2. Summary of Significant Accounting Policies in the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. The Company primarily evaluates segment performance and allocates resources based on operating profit. Expense amounts not associated with segments are referred to as unallocated expenses.

($ in millions) Net Sales
Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
AMS $ 260.1 67.8 % $ 138.9 49.7 % $ 675.1 64.3 % $ 394.6 49.6 %
EP 123.5 32.2 140.4 50.3 374.5 35.7 400.4 50.4
Total Consolidated $ 383.6 100.0 % $ 279.3 100.0 % $ 1,049.6 100.0 % $ 795.0 100.0 %

($ in millions) Operating Profit
Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
AMS $ 15.9 69.1 % $ 18.5 50.0 % $ 56.1 77.5 % $ 45.3 42.9 %
EP 24.0 104.4 28.2 76.2 78.1 107.9 93.3 88.4
Unallocated (16.9) (73.5) (9.7) (26.2) (61.8) (85.4) (33.1) (31.3)
Total Consolidated $ 23.0 100.0 % $ 37.0 100.0 % $ 72.4 100.0 % $ 105.5 100.0 %
Net sales and operating profit by segments were (in millions):


	Net Sales


	Three Months Ended								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
AMS	$	288.1	67.6	%	$	252.0	66.7	%	$	561.0	67.3	%	$	415.0	62.3	%
EP	138.3		32.4	%	125.8		33.3	%	272.2		32.7	%	251.0		37.7	%
Total Consolidated	$	426.4	100.0	%	$	377.8	100.0	%	$	833.2	100.0	%	$	666.0	100.0	%

MATIV HOLDINGS, INC. AND SUBSIDIARIES

(formerly Schweitzer-Mauduit International, Inc.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Operating Profit


	Three Months Ended								Six Months Ended
	June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
AMS	$	29.4	105.8	%	$	18.9	118.9	%	$	39.7	103.4	%	$	40.2	81.4	%
EP	22.4		80.5	%	24.2		152.2	%	48.1		125.2	%	54.1		109.5	%
Unallocated	(24.0)		(86.3)	%	(27.2)		(171.1)	%	(49.4)		(128.6)	%	(44.9)		(90.9)	%
Total Consolidated	$	27.8	100.0	%	$	15.9	100.0	%	$	38.4	100.0	%	$	49.4	100.0	%

Note 16. Subsequent Events

On July 5, 2022, in connection with the consummation of the Merger, the Company borrowed $650.0 million under the Delayed Draw Term Loan Facility. The funds were used to repay all of Neenah's outstanding debt of $445.9 million under its term loan B facility and $59.0 million under its global secured revolving credit facility, as well as pay down $100.0 million of our Revolving Facility. We also terminated our Bridge Facility. Refer to Note 10. Debt for further information related to the Delayed Draw Term Loan Facility. Refer to Note 4. Business Acquisitions for information on the merger with Neenah.

3129

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our financial condition and results of operations. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report and the audited consolidated financial statements and related notes and the selected financial data included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. The discussion of our financial condition and results of operations includes various forward-looking statements about our markets, the demand for our products, our future prospects and other matters. These statements are based on certain assumptions and estimates that we consider reasonable. For information about risks and exposures relating to us and our business, you should read the section entitled "Risk Factors" in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020 and~~2021, the ~~sections~~section entitled "Forward-Looking Statements" at the end of this Item 2.2 and the section entitled “Risk Factors” at Part II, Item 1A hereof. Unless the context indicates otherwise, references to ~~"SWM,~~"Mativ," "we," "us," "our," the "Company" or similar terms include ~~Schweitzer-Mauduit International,~~Mativ Holdings, Inc. and our consolidated subsidiaries.

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our financial statements with an understanding of our recent performance, our financial condition and our prospects.

Merger

On July 6, 2022, the Company completed its previously announced merger with Neenah under the terms of an Agreement and Plan of Merger ("Merger Agreement"), pursuant to which a wholly-owned subsidiary merged with and into Neenah, with Neenah surviving as a direct and wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, each share of Neenah common stock outstanding was exchanged for 1.358 shares of common stock in the Company. As a result of the Merger, the Company issued approximately 22.8 million shares of its common stock to Neenah shareholders under the terms of the Merger Agreement. Based on our closing stock price on July 5, 2022, the total value of shares issued to Neenah shareholders was approximately $534.0 million.

Upon completion of the Merger, the Company changed its name to Mativ Holdings, Inc. Shares of the Company's common stock commenced trading on the New York Stock Exchange under the ticker symbol "MATV" as of market open on July 6, 2022. The Company's previous ticker symbol was "SWM". Refer to Note 4. Business Acquisitions in the notes to the condensed consolidated financial statements for further information related to the Merger.

This Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the financial condition and results of operations of the Company as of and for the period ended June 30, 2022, excluding Neenah except as otherwise specifically noted herein.

COVID-19 Pandemic

We continue to monitor the impact of the COVID-19 pandemic (including its variant strains) on all aspects of our business. At present, all of our facilities remain operational. Furthermore, there have been only isolated and temporary customer shutdowns, and the Company is maintaining active dialogue with ~~all~~employees, key customers and suppliers regarding supply chain and production planning. Further ~~we are not expected to have further shutdowns unless local governments mandate temporary closure or there are additional health~~details about the risks and ~~safety concerns beyond~~impacts discussed in the ~~current circumstances.~~

section below can be found in the forward-looking statements. In general, our business was resilient in the face of sales volatility and limited visibility during the early stages of the pandemic, ~~in 2020,~~ while those areas that were most negatively affected ~~such as transportation and construction,~~ began improving ~~during the fourth quarter of~~late in 2020 and ~~continued to perform~~performed well during 2021. ~~Year-to-date double-digit sales growth in AMS, excluding the benefit of acquisitions, demonstrates the strength of the demand recovery.~~ However, increased global economic activity and high demand across many industries following Covid-related disruption has caused significant input cost inflation and strained supply chains ~~which have negatively impacted profitability~~ (more detailed discussion below throughout MD&A).

Given the recent financial results, we believe the Company’s operating cash flows and available liquidity are ample to support operations and financial obligations. The Company also continues to actively assess the credit worthiness of its customers in the context of the potential business disruptions from COVID-19 but has not yet seen evidence of a material change to its ability to collect accounts receivable balances.

Senior management is meeting regularly to address all aspects of the pandemic, including employee safety, continuity of business operations, sales and profit impacts directly or indirectly related to the pandemic, and potential governmental and third-party responses to the pandemic. Further details about the risks and impacts discussed in the section below can be found in the forward-looking statements.

Liquidity & Debt ~~Overview.~~Overview ~~The~~

As of June 30, 2022, the Company ~~currently has $1,306.2~~had $1,254.6 million of total debt, ~~$73.6~~$56.3 million of cash, and undrawn capacity on its ~~$500.0~~$600.0 million revolving line of credit facility (the "Revolving ~~Credit~~ Facility") of ~~$81.2 million at the end of the third quarter of 2021.~~$106.0 million. Per the terms of the Company's ~~$700.0 million~~amended credit agreement (the ~~"Credit~~"Amended Credit Agreement"), net leverage was ~~4.8x~~4.9x at the end of the ~~third~~second quarter, versus a current maximum covenant ratio of 5.5x. The Company’s nearest debt maturity is ~~the Revolving Credit Facility~~our 6.875% senior unsecured notes which isare due in ~~2023. Please refer~~2026. Refer to ~~liquidity~~"Liquidity and ~~capital resources~~Capital Resources" section for additional detail.

SUMMARY


	Three Months Ended								Six Months Ended
	June 30,				Percent of Net Sales				June 30,				Percent of Net Sales
(in millions, except per share amounts)	2022		2021		2022		2021		2022		2021		2022		2021
Net sales	$	426.4	$	377.8	100.0	%	100.0	%	$	833.2	$	666.0	100.0	%	100.0	%
Gross profit	99.6		88.1		23.4	%	23.3	%	192.2		168.9		23.1	%	25.4	%
Restructuring & impairment expense	2.4		2.3		0.6	%	0.6	%	15.6		4.0		1.9	%	0.6	%
Operating profit	27.8		15.9		6.5	%	4.2	%	38.4		49.4		4.6	%	7.4	%
Interest expense	20.4		13.1		4.8	%	3.5	%	34.9		16.0		4.2	%	2.4	%


Net income	$	11.8	$	1.8	2.8	%	0.5	%	$	13.4	$	23.4	1.6	%	3.5	%


Diluted earnings per share	$	0.36	$	0.06					$	0.41	$	0.74
Cash provided by operations	$	13.0	$	7.1					$	18.0	$	19.8
Capital spending	$	9.1	$	9.2					$	17.8	$	16.3

~~SUMMARY~~

($ in millions, except per share amounts) Three Months Ended Nine Months Ended
September 30, Percent of Net Sales September 30, Percent of Net Sales
2021 2020 2021 2020 2021 2020 2021 2020
Net sales $ 383.6 $ 279.3 100.0 % 100.0 % $ 1,049.6 $ 795.0 100.0 % 100.0 %
Gross profit 85.2 80.2 22.2 28.7 254.1 228.8 24.2 28.8
Restructuring & impairment expense 1.9 6.0 0.5 2.1 5.9 7.7 0.6 1.0
Operating profit 23.0 37.0 6.0 13.2 72.4 105.5 6.9 13.3
Interest expense 15.3 7.8 4.0 2.8 31.3 22.8 3.0 2.9
Net income $ 12.2 $ 24.5 3.2 % 8.8 % $ 35.6 $ 68.5 3.4 % 8.6 %
Diluted earnings per share $ 0.38 $ 0.78 $ 1.12 $ 2.18
Cash provided by operations $ 7.7 $ 58.2 $ 27.5 $ 107.5
Capital spending $ 7.5 $ 5.8 $ 23.8 $ 20.7

RESULTS OF OPERATIONS

Three Months Ended ~~September~~June 30, ~~2021~~2022 Compared with the Three Months Ended ~~September~~June 30, ~~2020~~2021

Net Sales

~~($ in millions)~~


		Three Months Ended									Three Months Ended
		September 30, 2021		September 30, 2020		Change		Percent Change
(in millions)										(in millions)	June 30, 2022		June 30, 2021		Change		Percent Change
Advanced Materials & Structures	Advanced Materials & Structures	$	260.1	$	138.9	$	121.2	87.3	%	Advanced Materials & Structures	$	288.1	$	252.0	$	36.1	14.3	%
Engineered Papers	Engineered Papers	123.5		140.4		(16.9)		(12.0)		Engineered Papers	138.3		125.8		12.5		9.9	%
Total	Total	$	383.6	$	279.3	$	104.3	37.3	%	Total	$	426.4	$	377.8	$	48.6	12.9	%

Net sales were ~~$383.6~~$426.4 million in the three months ended ~~September~~June 30, ~~2021~~2022 compared with ~~$279.3~~$377.8 million in the prior-year quarter. The increase in net sales consisted of the following:


(in millions)	Amount		Percent

Changes in volume, product mix and selling prices (excluding Scapa)	$	39.0	10.3	%
Incremental net sales from Scapa	14.6		3.9	%
Changes due to net foreign currency impacts	(5.0)		(1.3)	%

Total	$	48.6	12.9	%

AMS segment net sales were $288.1 million for the three months ended June 30, 2022 compared to $252.0 million during the prior-year quarter. The increase in organic sales primarily reflected price increases across the product lines, with the strongest sales gains coming from transportation, filtration, construction, and industrial end-markets.

EP segment net sales during the three months ended June 30, 2022 of $138.3 million increased by $12.5 million, or 9.9%, versus net sales of $125.8 million in the prior-year quarter. The increase in net sales was primarily the result of higher volumes and price increases. Volumes benefited from gains across the portfolio, highlighted by continued rapid growth in Heat-not-Burn reduced-risk products.

Gross Profit


	Three Months Ended						Percent Change		Percent of Net Sales
(in millions)	June 30, 2022		June 30, 2021		Change				2022		2021
Net sales	$	426.4	$	377.8	$	48.6	12.9	%	100.0	%	100.0	%
Cost of products sold	326.8		289.7		37.1		12.8	%	76.6	%	76.7	%
Gross profit	$	99.6	$	88.1	$	11.5	13.1	%	23.4	%	23.3	%

Gross profit increased by $11.5 million during the three months ended June 30, 2022 to $99.6 million versus the prior-year quarter of $88.1 million.

AMS gross profit increased by $13.1 million, primarily due to organic sales growth driven by volume and price increases, which more than offset higher input costs.

In the EP segment, gross profit decreased by $1.7 million primarily resulting from higher input costs, particularly energy costs in Europe, as well as higher wood pulp and other material costs. The increase in input costs was partially offset by volume increases and pricing actions.

Nonmanufacturing Expenses


	Three Months Ended						Percent Change		Percent of Net Sales
(in millions)	June 30, 2022		June 30, 2021		Change				2022		2021
Selling expense	$	15.0	$	11.9	$	3.1	26.1	%	3.5	%	3.1	%
Research expense	5.4		5.4		—		—	%	1.3	%	1.4	%
General expense	49.0		52.6		(3.6)		(6.8)	%	11.5	%	14.0	%
Nonmanufacturing expenses	$	69.4	$	69.9	$	(0.5)	(0.7)	%	16.3	%	18.5	%

Nonmanufacturing expenses in the three months ended June 30, 2022 decreased by $0.5 million to $69.4 million from $69.9 million in the prior-year quarter.

Restructuring and Impairment Expense


	Three Months Ended							Percent of Net Sales
(in millions)	June 30, 2022		June 30, 2021		Change		2022			2021
Advanced Materials & Structures	$	1.1	$	—	$	1.1		0.4	%		—	%
Engineered Papers	1.3		2.3		(1.0)			0.9	%		1.8	%

Total	$	2.4	$	2.3	$	0.1		0.6	%		0.6	%

The Company incurred total restructuring and impairment expenses of $2.4 million and $2.3 million in the three months ended June 30, 2022 and 2021, respectively. In the current-year quarter, restructuring expenses in the AMS segment were due to the termination of a contract with an existing customer related to exclusivity in product manufacturing. In the prior-year quarter, there were no restructuring expenses in the AMS segment.

In the current-year quarter, restructuring expenses in the EP segment included $1.1 million primarily related to pension benefits for the Winkler, Manitoba facility, which was closed in 2021. In the prior-year quarter, restructuring expenses included $1.3 million related to severance accruals at other manufacturing facilities as part of the ongoing optimization project and $1.0 million as a result of the decision to shut down the Spotswood, New Jersey facility, which was sold in December 2021.

Operating Profit


	Three Months Ended						Percent Change		Return on Net Sales
(in millions)	June 30, 2022		June 30, 2021		Change				2022		2021
Advanced Materials & Structures	$	29.4	$	18.9	$	10.5	55.6	%	10.2	%	7.5	%
Engineered Papers	22.4		24.2		(1.8)		(7.4)	%	16.2	%	19.2	%
Unallocated expenses	(24.0)		(27.2)		3.2		(11.8)	%
Total	$	27.8	$	15.9	$	11.9	74.8	%	6.5	%	4.2	%

Operating profit was $27.8 million in the three months ended June 30, 2022 compared with $15.9 million during the prior-year quarter.

The AMS segment's operating profit in the three months ended June 30, 2022 was $29.4 million compared to $18.9 million in the prior-year period, an increase of $10.5 million, or 55.6%. The increase reflects strong organic sales gains, including price increases. The impact of inflationary and supply chain pressures were offset by price increases implemented since the prior year quarter.

The EP segment's operating profit in the three months ended June 30, 2022 was $22.4 million, a decrease of $1.8 million, or 7.4%, from $24.2 million in the prior-year quarter. The decrease was primarily driven by higher energy costs, while other inflationary pressures also contributed to the decline. These decreases were partially offset by volume growth and price increases.

Unallocated expenses in the three months ended June 30, 2022 were $24.0 million compared to $27.2 million in the prior-year quarter, a decrease of $3.2 million, or 11.8%, primarily due to a decrease in merger and integration related costs incurred within Scapa compared to the prior year.

Non-Operating Expenses

Interest expense was $20.4 million in the three months ended June 30, 2022, an increase from $13.1 million in the prior-year quarter. The increase was due to $3.3 million of Bridge Facility expenses, with the remainder related to higher interest rates compared to the prior year.

Other income (expense), net was income of $7.3 million during the three months ended June 30, 2022 compared to an expense of $0.3 million in prior year quarter. The current year included $2.4 million from the sale of assets at the Winkler facility, $2.2 million for the sale of carbon dioxide credits in France, and $1.6 million of foreign currency gains. The prior year included $2.7 million of foreign currency loss, of which $1.3 million was realized foreign currency loss related to the timing of the Scapa acquisition cash settlement, partially offset by $2.2 million of income for the sale of carbon dioxide credits in France.

Income Taxes

A $4.6 million provision for income taxes in the three months ended June 30, 2022 resulted in an effective tax rate of 31.3% compared with 140.0% in the prior-year quarter. The decrease was materially due to significant discrete items in the prior year, as well as more favorable mix of earnings by jurisdiction.

Income from Equity Affiliates

Income from equity affiliates, which reflects the results of operations of our joint ventures in China, was $1.7 million in the three months ended June 30, 2022 compared to 2.8 million during the prior-year quarter. The decrease is due to higher input costs.

Net Income and Income per Share

Net income in the three months ended June 30, 2022 was $11.8 million, or $0.36 per diluted share, compared with $1.8 million, or $0.06 per diluted share, during the prior-year quarter.

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Net Sales


	Six Months Ended
(in millions)	June 30, 2022		June 30, 2021		Change		Percent Change
Advanced Materials & Structures	$	561.0	$	415.0	$	146.0	35.2	%
Engineered Papers	272.2		251.0		21.2		8.4	%
Total	$	833.2	$	666.0	$	167.2	25.1	%

Net sales were $833.2 million in the six months ended June 30, 2022 compared with $666.0 million in the prior-year period. The increase in net sales consisted of the ~~following ($ in millions):~~following:


		Amount		Percent
(in millions)						(in millions)	Amount		Percent

Incremental net sales from Scapa	Incremental net sales from Scapa	$	107.1	38.3	%	Incremental net sales from Scapa	$	120.2	18.0	%
Changes in volume, product mix and selling prices (excluding Scapa)	Changes in volume, product mix and selling prices (excluding Scapa)	(5.5)		(2.0)		Changes in volume, product mix and selling prices (excluding Scapa)	56.5		8.5	%
Changes due to net foreign currency impacts	Changes due to net foreign currency impacts	2.5		0.9		Changes due to net foreign currency impacts	(9.5)		(1.4)	%
Changes due to royalties		0.2		0.1

Total	Total	$	104.3	37.3	%	Total	$	167.2	25.1	%

AMS segment net sales were ~~$260.1~~$561.0 million for the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$138.9~~$415.0 million during the prior-year period. The increase of ~~$121.2~~$146.0 million, or ~~87.3%~~35.2%, included the benefit from the Scapa acquisition ~~(completed April 15, 2021). Scapa net sales were $107.1 million for the three months ended September 30, 2021.~~of $120.2 million. The increase in organic sales ~~reflected continued rapid growth in~~was driven by transportation, ~~sales, specifically automotive paint protection films, as they continued to rebound sharply from negative COVID-19 impacts that began early in 2020, and broad strength across our~~ filtration, ~~portfolio, particularly water and process filtration products. Transportation and filtration sales each grew approximately 25%. Construction sales, led by erosion control and turf products,~~construction, and industrial sales, led by digital printing products, also increased. Healthcare sales (excluding Scapa) declined as certain products that saw short-term COVID-related demand spikes in prior year quarters, such as facemask materials, started to normalize. While total sales increased, sales performance was negatively impacted by tight labor markets, which constrained production of certain product lines.end-markets.

EP segment net sales during the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 of ~~$123.5~~$272.2 million ~~decreased~~increased by ~~$16.9~~$21.2 million ~~or 12.0%,~~ versus net sales of ~~$140.4~~$251.0 million in the prior-year ~~quarter.~~period. The ~~decrease~~increase in net sales was primarily the result of ~~10%~~ volume ~~decrease, unfavorable price/mix of 3%, slightly offset by a 1% currency benefit.~~and price increases. The increase in volume ~~decline~~ was primarily attributable to lower tobacco-related papers, including LIP, as certain customers resumed more normalized order patterns compared to the third quarter of 2020 when they increased inventory levels to help avoid potential supply chain disruptions from COVID-19. Continued growth in ~~HnB products partially offset the decrease within the tobacco business.~~Heat-not-Burn products.

Gross Profit

~~($ in millions)~~

Three Months Ended Percent Change Percent of Net Sales
September 30, 2021 September 30, 2020 Change 2021 2020
Net sales $ 383.6 $ 279.3 $ 104.3 37.3 % 100.0 % 100.0 %
Cost of products sold 298.4 199.1 99.3 49.9 77.8 71.3
Gross profit $ 85.2 $ 80.2 $ 5.0 6.2 % 22.2 % 28.7 %


	Six Months Ended						Percent Change		Percent of Net Sales
(in millions)	June 30, 2022		June 30, 2021		Change				2022		2021
Net sales	$	833.2	$	666.0	$	167.2	25.1	%	100.0	%	100.0	%

Cost of products sold	641.0		497.1		143.9		28.9	%	76.9	%	74.6	%
Gross profit	$	192.2	$	168.9	$	23.3	13.8	%	23.1	%	25.4	%

Gross profit increased by ~~$5.0~~$23.3 million during the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 to ~~$85.2~~$192.2 million versus the prior-year period of ~~$80.2~~$168.9 million.

AMS gross profit increased by ~~$14.1~~$29.6 million primarily due to ~~the incremental benefit of the acquired Scapa business and~~ strong organic sales ~~growth. These~~growth across transportation, filtration, construction, and industrial end-markets. Inflationary factors ~~were offset by~~such as higher input costs ~~primarily of polypropylene resin, as well as higher energy and freight costs resulting from economic inflation and supply chain challenges, which~~for raw materials impacted results, but were ~~not fully~~more than offset by pricing actions. The margin percentage decline was primarily attributable to these cost increases and supply chain challenges, as well as limited supplies of specialty resins used in the growing transportation films business, which is typically a positive contributor to margins.price increases.

In the EP segment, gross profit decreased by ~~$8.9~~$6.5 million, ~~resulting from a combination of the LIP volume decline and associated negative mix impacts. The decrease was also driven by significantly higher~~primarily due to inflationary pressures on input costs, particularly energy, as well as wood pulp ~~input costs, increases in energy costs~~ and ~~freight costs. Foreign currency movements also negatively impacted gross profit by $1.9 million. Prior year gross profit included $3.2 million~~ other ~~restructuring related charges in Cost of goods sold associated with the plant shutdown of Spotswood, NJ facility.~~raw materials.

Nonmanufacturing Expenses

~~($ in millions)~~


		Three Months Ended						Percent Change				Percent of Net Sales							Six Months Ended												Percent Change			Percent of Net Sales
		September 30, 2021		September 30, 2020		Change				2021				2020
(in millions)																		(in millions)	June 30, 2022				June 30, 2021				Change						Percent Change			2022				2021
Selling expense	Selling expense	$	13.2	$	9.0	$	4.2			46.7	%			3.4	%			3.2	%	Selling expense	$	29.3			$	21.0			$	8.3				3.5	%			3.2	%
Research expense	Research expense	5.7		3.6		2.1		58.3				1.5				1.3		Research expense	10.6				9.2				1.4				15.2	%				1.3	%			1.4	%
General expense	General expense	41.4		24.6		16.8		68.3				10.8				8.9		General expense	98.3				85.3				13.0				15.2	%		11.8	%			12.8	%
Nonmanufacturing expenses	Nonmanufacturing expenses	$	60.3	$	37.2	$	23.1	62.1	%			15.7	%			13.3	%	Nonmanufacturing expenses	$	138.2			$	115.5			$	22.7			19.7	%		16.6	%			17.4	%

Nonmanufacturing expenses in the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 increased by ~~$23.1~~$22.7 million to ~~$60.3~~$138.2 million from ~~$37.2~~$115.5 million in the prior-year period. The increase ~~included $3.3 million of transaction and integration costs associated with the Scapa acquisition and~~primarily reflects the addition of ongoing SG&A costs from the acquired Scapa operations.

Restructuring and Impairment Expense

~~($ in millions)~~


		Three Months Ended							Percent of Net Sales						Six Months Ended							Percent of Net Sales
(in millions)														(in millions)	June 30, 2022		June 30, 2021		Change		2022			2021
Advanced Materials & Structures														Advanced Materials & Structures	$	14.0	$	—	$	14.0		2.5	%		—	%
Engineered Papers														Engineered Papers	1.6		4.0		(2.4)			0.6	%		1.6	%
		September 30, 2021		September 30, 2020		Change		2021			2020

Engineered Papers		$	1.9	$	5.9	$	(4.0)		1.5	%		4.2	%
Unallocated expenses		—		0.1		(0.1)			—			—
Total	Total	$	1.9	$	6.0	$	(4.1)		0.5	%		2.1	%	Total	$	15.6	$	4.0	$	11.6		1.9	%		0.6	%

The Company incurred total restructuring and impairment expense of ~~$1.9 million and $6.0~~$15.6 million in the ~~three~~six months ended ~~September~~June 30, ~~2021 and 2020, respectively.~~2022 compared with $4.0 million in the prior-year period. In the ~~2021~~AMS segment, the Company recognized $14.0 million of restructuring and impairment expenses in the current-year period primarily related to the write-down of certain assets in conjunction with the planned divestiture of a portion of the segment serving the construction end-market. No restructuring and impairment expenses were recognized in the prior-year period.

In the current-year period, restructuring ~~expense~~expenses in the EP segment included ~~$0.5~~$1.4 million primarily related to pension benefits for the ~~shut-down of~~Winkler, Manitoba facility. In the prior-year period, restructuring expenses included $2.4 million in severance and other accruals related to the Spotswood, New Jersey facility, ~~as well as $0.7 million severance-related restructuring expenses associated with the closure of the Winkler facility~~which was sold in ~~Canada, discussed in Note 9. Restructuring of the notes to the unaudited condensed consolidated financial statements.~~

~~In the 2021 period the~~December 2021. The EP segment also recognized ~~$0.7~~$1.6 million of restructuring expenses primarily related to severance accruals for employees at our manufacturing operations in France.

In the comparable 2020 period, restructuring expense in the EP segment included $4.2 million relating to severance and other accruals as a result of the decision to shut down the Spotswood, New Jersey facility and $1.8 million of restructuring expenses primarily related to severance accruals at our manufacturing operations in France and Poland.

Operating Profit

~~($ in millions)~~


		Three Months Ended						Percent Change				Return on Net Sales							Six Months Ended												Percent Change			Return on Net Sales
		September 30, 2021		September 30, 2020		Change				2021				2020
(in millions)																		(in millions)	June 30, 2022				June 30, 2021				Change						Percent Change			2022			2021
Advanced Materials & Structures	Advanced Materials & Structures	$	15.9	$	18.5	$	(2.6)			(14.1)	%			6.1	%			13.3	%	Advanced Materials & Structures	$	39.7			$	40.2			$	(0.5)				7.1	%		9.7	%
Engineered Papers	Engineered Papers	24.0		28.2		(4.2)		(14.9)				19.4				20.1		Engineered Papers	48.1				54.1				(6.0)				(11.1)	%				17.7			21.6	%
Unallocated expenses	Unallocated expenses	(16.9)		(9.7)		(7.2)		74.2										Unallocated expenses	(49.4)				(44.9)				(4.5)				(10.0)	%
Total	Total	$	23.0	$	37.0	$	(14.0)	(37.8)	%			6.0	%			13.2	%	Total	$	38.4			$	49.4			$	(11.0)			(22.3)	%		4.6	%		7.4	%

Operating profit was ~~$23.0~~$38.4 million in the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~$37.0~~$49.4 million during the prior-year period.

The AMS segment's operating profit in the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$15.9~~$39.7 million compared to ~~$18.5~~$40.2 million in the prior-year period. The decrease of ~~$2.6~~$0.5 million, or 14.1%, was driven by $4.8 million higher purchase accounting expenses associated with Scapa acquisition, partially offset by strong organic sales growth and the incremental benefit of the acquired Scapa business. The profit margin percentage decline was primarily attributable to higher raw material costs and higher energy and freight costs. The impact of inflationary and supply chain pressures were not fully offset by pricing actions taken during the quarter.

The EP segment's operating profit in the three months ended September 30, 2021 was $24.0 million, a decrease of $4.2 million, or 14.9%, from $28.2 million in the prior-year period. The decrease was primarily driven by lower sales in high-margin LIP products and significant wood pulp cost increases. Further, the Company incurred higher energy costs, particularly in Brazil and France, and higher freight costs. These decreases were partially offset by a total of $6.8 million lower restructuring expenses and other costs primarily related to Spotswood plant shutdown. Unfavorable foreign currency movements resulted in a $2.0 million negative impact on operating profit as well.

~~Unallocated expenses in the three months ended September 30, 2021 were $16.9 million compared to $9.7 million in the prior-year period, an increase of $7.2 million, or 74.2%~~1.2%, primarily ~~due to Scapa acquisition costs of $3.3 million, and an incremental $2.5 million of costs incurred within Scapa for shared services such as finance, HR, and IT, which were reported in~~reflected the Company's segment financials as unallocated expenses. The remainder of the increase was driven by higher third-party consulting fees for finance and legal as well as higher IT expenses to support the growth of the business.

~~Non-Operating Expenses~~

Interest expense was $15.3 million in the three months ended September 30, 2021, an increase from $7.8 million in the prior-year period. The increase was primarily due to higher average debt balances as a result of the Scapa acquisition which closed in April 2021.

Other income, net, was $3.7 million during the three months ended September 30, 2021, compared to an Other expense of $1.0 million in prior year quarter. The 2021 period included $1.8 million net currency gains as compared to a $1.1 million net currency loss in the prior year quarter. The remainder increase was primarily due to higher sales of carbon dioxide credits in France.

~~Income Taxes~~

A $1.5 million provision for income taxes in the three months ended September 30, 2021 resulted in an effective tax rate of 13.2% compared with 17.0% in the prior-year quarter. The decrease was materially due to favorable mix of earnings by jurisdiction and discrete items.

~~Income from Equity Affiliates~~

Income from equity affiliates, which reflects the results of operations of CTM and CTS, was $2.3 million in the three months ended September 30, 2021 compared with income of $1.1 million during the prior-year period due to volume growth.

~~Net Income and Income per Share~~

~~Net income in the three months ended September 30, 2021 was $12.2 million, or $0.38 per diluted share, compared with $24.5 million, or $0.78 per diluted share, during the prior-year period.~~

~~Nine Months Ended September 30, 2021 Compared with the Nine Months Ended September 30, 2020~~

~~Net Sales~~

~~($ in millions)~~

Nine Months Ended
September 30, 2021 September 30, 2020 Change Percent Change
Advanced Materials & Structures $ 675.1 $ 394.6 $ 280.5 71.1 %
Engineered Papers 374.5 400.4 (25.9) (6.5)
Total $ 1,049.6 $ 795.0 $ 254.6 32.0 %

Net sales were $1,049.6 million in the nine months ended September 30, 2021 compared with $795.0 million in the prior-year period. The increase in net sales consisted of the following ($ in millions):

Amount Percent
Incremental net sales from Scapa $ 202.2 25.4 %
Changes in volume, product mix and selling prices (excluding Scapa) 33.7 4.2
Changes due to net foreign currency impacts 18.7 2.4 %
Changes due to royalties — —
Total $ 254.6 32.0 %

AMS segment net sales were $675.1 million for the nine months ended September 30, 2021 compared to $394.6 million during the prior-year period. The increase of $280.5 million, or 71.1%, included the benefit from the Scapa acquisition of $202.2 million (completed April 15, 2021) and Tekra acquisition (completed March 13, 2020). The increase in organic sales was driven by strong double digit gains in filtration, transportation, and construction end-markets with growth across product lines including water, process, and air filtration materials, automotive paint protection films, and erosion/sediment control construction products. Healthcare sales declined due to certain products that benefited from COVID-19 related demand in the prior year, such as facemask materials. Industrial sales declined mostly in lower-margin product lines. While total sales increased, sales performance was negatively impacted by tight labor markets, which constrained production of certain product lines.

EP segment net sales during the nine months ended September 30, 2021 of $374.5 million decreased by $25.9 million versus net sales of $400.4 million in the prior-year period. The decrease in net sales was primarily the result of a 5% volume decline, and unfavorable price/mix impacts of 5%, which were partially offset by a 4% currency benefits mainlyasset impairment related to the ~~Euro. The volume decline was primarily attributable to lower tobacco-related papers, including LIP, as certain customers resumed more normalized order patterns compared to 2020.Growth in HnB products offset declines within the tobacco business. Non-tobacco paper volumes declined slightly.~~

~~Gross Profit~~

~~($ in millions)~~

Nine Months Ended Percent Change Percent of Net Sales
September 30, 2021 September 30, 2020 Change 2021 2020
Net sales $ 1,049.6 $ 795.0 $ 254.6 32.0 % 100.0 % 100.0 %
Cost of products sold 795.5 566.2 229.3 40.5 75.8 71.2
Gross profit $ 254.1 $ 228.8 $ 25.3 11.1 % 24.2 % 28.8 %

~~Gross profit increased by $25.3 million during the nine months ended September 30, 2021 to $254.1 million versus the prior-year period~~planned divestiture of ~~$228.8 million.~~

~~AMS gross profit increased by $43.3 million primarily due to the incremental benefit~~a portion of the ~~acquired Scapa and Tekra businesses and strong organic sales growth in transportation, filtration, and~~segment serving the construction ~~end-markets, partially~~end market (referenced above), which offset by higher raw material costs, primarily of polypropylene resin, which had not yet been offset by selling price increases the Company has implemented. Other inflationary factors such as higher energy and freight costs also

negatively affected the gross margin. In addition, the limited supply of certain specialty resins used to manufacture transportation films, has constrained growth of this product line, which is typically a positive contributor to margins.

In the EP segment, gross profit decreased by $17.7 million, primarily due to LIP volume decline and associated negative mix impact, significantly higher wood pulp costs, and increases in energy and freight costs. Year-to-date profits were also impacted by inefficiencies in the first half of 2021 related to the Spotswood transition. Currency movements resulted in a $5.3 million benefit to gross profit.

~~Nonmanufacturing Expenses~~

~~($ in millions)~~

Nine Months Ended Percent Change Percent of Net Sales
September 30, 2021 September 30, 2020 Change 2021 2020
Selling expense $ 34.2 $ 27.3 $ 6.9 25.3 % 3.3 % 3.4 %
Research expense 14.9 10.4 4.5 43.3 1.4 1.3
General expense 126.7 77.9 48.8 62.6 12.1 9.8
Nonmanufacturing expenses $ 175.8 $ 115.6 $ 60.2 52.1 % 16.8 % 14.5 %

Nonmanufacturing expenses in the nine months ended September 30, 2021 increased by $60.2 million to $175.8 million from $115.6 million in the prior-year period. The increase included $19.0 million of transaction and integration costs associated with the Scapa acquisition and the addition of ongoing SG&A costs from the acquired Scapa operations.

~~Restructuring and Impairment Expense~~

~~($ in millions)~~

Nine Months Ended Percent of Net Sales
September 30, 2021 September 30, 2020 Change 2021 2020
Advanced Materials & Structures $ — $ 0.5 $ (0.5) — % 0.1 %
Engineered Papers 5.9 7.1 (1.2) 1.6 1.8
Unallocated expenses — 0.1 (0.1) — —
Total $ 5.9 $ 7.7 $ (1.8) 0.6 % 1.0 %

The Company incurred total restructuring and impairment expense of $5.9 million in the nine months ended September 30, 2021 compared with $7.7 million in the nine months ended September 30, 2020. In the 2021 period, restructuring expense included $3.5 million in the EP segment relating to severance and other accruals as a result of the decision to shut down the Spotswood, New Jersey facility and Winkler, Canada facility.

In the 2021 period the EP segment also recognized $2.4 million of restructuring expenses primarily related to severance accruals at our manufacturing operations in France. In the comparable 2020 period, the restructuring expense included $4.2 million in the EP segment as a result of the decision to shut down the Spotswood, New Jersey facility, and $2.9 million in severance accruals for employees at our manufacturing operations in France and Poland.

In the AMS segment, the Company recognized no restructuring and impairment expense in the 2021 period versus $0.5 million in the 2020 period related to severance accruals as a result of department realignments.

~~Operating Profit~~

~~($ in millions)~~

Nine Months Ended Percent Change Return on Net Sales
September 30, 2021 September 30, 2020 Change 2021 2020
Advanced Materials & Structures $ 56.1 $ 45.3 $ 10.8 23.8 % 8.3 % 11.5 %
Engineered Papers 78.1 93.3 (15.2) (16.3) 20.9 23.3
Unallocated expenses (61.8) (33.1) (28.7) (86.7)
Total $ 72.4 $ 105.5 $ (33.1) (31.4) % 6.9 % 13.3 %

~~Operating profit was $72.4 million in the nine months ended September 30, 2021 compared with $105.5 million during the prior-year period.~~

The AMS segment's operating profit in the nine months ended September 30, 2021 was $56.1 million compared to $45.3 million in the prior-year period. The increase of $10.8 million, or 23.8%, primarily reflected strong organic sales growth and the incremental operating profits of the acquired Scapa business. The margin declined to ~~8.3%~~7.1% in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~11.5%~~9.7% in the prior-year ~~period. The decline was attributable~~period primarily due to ~~a combination of factors including inflation pressure~~the asset impairment, as inflationary pressures were largely offset by organic sales growth from pricing and supply chain challenges which resulted in higher raw material, energy and freight costs. In addition, the limited supply of certain specialty resins for used to manufacture transportation films, has constrained growth of this product line, which is typically a positive contributor to margins. Purchase accounting expenses in the nine months ended September 30, 2021 were also $12.8 million higher than prior-year period as a result of Scapa acquisition.volume increases.

The EP segment's operating profit in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$78.1~~$48.1 million, a decrease of ~~$15.2~~$6.0 million, or ~~16.3%~~11.1%, from ~~$93.3~~$54.1 million in the prior-year period. The ~~decrease~~margin declined to 17.7% in ~~operating profit and margin~~the six months ended June 30, 2022 compared to 21.6% in the prior-year period. The decrease was primarily ~~due to the LIP volume decline~~driven by higher energy costs, particularly in Europe, and ~~associated negative mix impact, as well as significantly~~ higher ~~wood pulp costs and increases in energy and freight as discussed above.~~raw material costs. These decreases were partially offset by ~~a total of $4.5 million lower restructuring expenses~~volume growth and ~~other costs primarily related to Spotswood plant shut-down. Currency movements resulted in a $4.1 million benefit to operating profit.~~price increases.

Unallocated expenses in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were ~~$61.8~~$49.4 million compared to ~~$33.1~~$44.9 million in the prior-year period, an increase of ~~$28.7~~$4.5 million, or ~~86.7%,~~10.0%. The increase in unallocated expenses is primarily due to ~~$19.0 million transaction and integration costs related to the~~certain expenses incurred by Scapa ~~acquisition, and $4.1 million of costs incurred within Scapa as shared services such as finance, HR, and IT, which were reported~~but recorded in ~~the Company's segment financials as~~ unallocated expenses. ~~Higher deferred compensation expenses and higher HR, IT, and finance organizational investments to support growth of the business also contributed to the increase.~~

Non-Operating Expenses

Interest expense was ~~$31.3~~$34.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, an increase from ~~$22.8~~$16.0 million in the prior-year period. Excluding a benefit of $4.5 million prior year expense reversal related to the favorable settlement of Brazil tax assessments as discussed in Note 12. Contingencies of the notes to the unaudited condensed consolidated financial statements, ~~the~~ interest expense increased ~~$13.0~~$14.4 million mainly due ~~mainly~~ to $3.3 million Bridge Facility expense related to the Merger and higher average interest rates and incremental debt ~~balances as a result~~related to the Scapa acquisition.

Other income (expense), net was income of $12.8 million during the six months ended June 30, 2022, primarily due to $7.3 million of sales of carbon dioxide credits in France and $2.9 million for the sale of equipment at the Winkler facility. Other income (expense), net was an expense of $2.9 million during the six months ended June 30, 2021, primarily due to $6.9 million of realized foreign currency loss related to the timing of the Scapa acquisition ~~which closed in April 2021.~~

~~Other~~cash settlement, partially offset by $2.0 million of income ~~net, was $0.8 million during~~related to the ~~nine months ended September 30, 2021, mainly reflecting $1.6 million favorable Brazil tax assessment settlement, $4.0 million~~ sale of carbon dioxide credits in France ~~as well gains from sales of equipment at the Spotswood facility, offset by $6.9~~and a $1.6 million ~~realized foreign currency loss related to timing of the Scapa acquisition cash~~favorable Brazil tax assessment settlement. ~~During the nine months ended September 30, 2020, Other expense was $0.7 million.~~

Income Taxes

A ~~$12.4~~$6.7 million provision for income taxes in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 resulted in an effective tax rate of ~~29.6%~~41.1% compared with ~~18.9%~~35.7% in the prior-year period. The increase was materially due to ~~unfavorable~~discrete items, partially offset by favorable mix of earnings by ~~jurisdiction and discrete items.~~jurisdiction.

Income from Equity Affiliates

Income from equity affiliates was ~~$6.1~~$3.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021 compared with income of $2.0 million during~~2022 and 2021. Higher sales volume in the ~~prior-year period, due to increased volumes.~~current year was offset by higher input costs.

Net Income and Income per Share

Net income in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$35.6~~$13.4 million, or ~~$1.12~~$0.41 per diluted share, compared with ~~$68.5~~$23.4 million, or ~~$2.18~~$0.74 per diluted share, during the prior-year period.

4138

LIQUIDITY AND CAPITAL RESOURCES

A major factor in our liquidity and capital resource planning is our generation of cash flow from operations, which is sensitive to changes in the mix of products sold, ~~sales~~ volume and ~~selling prices~~pricing of our products, as well as changes in our production volumes, costs ~~foreign currency exchange rates~~ and working capital. Our liquidity is supplemented by funds available under our ~~Credit Agreement~~Revolving Facility with a syndicate of banks that is used as either operating conditions or strategic opportunities warrant.

Cash Requirements

As of ~~September~~June 30, ~~2021, $50.2~~2022, $45.3 million of the Company's ~~$73.6~~$56.3 million of cash and cash equivalents was held by foreign subsidiaries. We believe that our sources of liquidity and capital, including cash on-hand, cash generated from operations and our existing credit facilities, will be sufficient to finance our continued ~~operations. We believe our cash and the proceeds from our revolving credit facility will be sufficient to fund~~operations, our current and long-term growth ~~plan.~~plan, and dividend payments.

Cash Provided by ~~Operations~~Operating Activities

Net cash provided by ~~operations~~operating activities was ~~$27.5~~$18.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared with ~~$107.5~~$19.8 million in the prior-year period. The decrease ~~was primarily related~~is due to lower net income and unfavorable year-over-year movements in working capital related ~~cash flows as well as cash costs related to advisory fees, transaction expenses, and integration costs all relating~~ to the ~~Scapa acquisition.~~growth in receivables (higher sales) and inventories (higher cost inventories due to rising input costs), partially offset by cash received from the settlement of interest rate swaps.

Working Capital

As of ~~September~~June 30, ~~2021,~~2022, the Company had net working capital of ~~$381.2~~$412.8 million, including cash and cash equivalents of ~~$73.6~~$56.3 million, compared with net working capital of ~~$232.3~~$366.7 million, including cash and cash equivalents of ~~$54.7~~$74.7 million as of December 31, ~~2020.~~2021. These changes primarily reflect the timing of payments and collections, as well as increased raw material prices and timing of shipments.

In the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, net changes in operating working capital used cash of ~~$71.1~~$63.0 million, up from ~~$19.0~~$51.0 million in the prior year period. The increased outflows reflect higher receivables related to ~~strong~~ sales growth in both EP and AMS and higher costs of inventories on hand related to significantly higher ~~raw material prices.~~

~~Cash Used for Investing~~

Cash used for investing activities during the nine months ended September 30, 2021 was $658.3 million, compared to $190.5 million in the prior year. The change primarily reflects the net $630.6 million consideration to acquire Scapa versus $169.3 million for Tekra in prior year. Capital spending and capitalized software totaled $25.7 million in the nine months ended September 30, 2021, up $2.2 million from the prior-year period.input costs.

Cash Provided by (Used in) Investing Activities

Cash provided by investing activities during the six months ended June 30, 2022 was $18.0 million, compared to cash used of $649.0 million in the prior year. In the current year period, we had cash received from settlement of cross-currency swap contracts of $35.8 million, partially offset by capital spending, whereas in the prior year period, the cash used in investing activities was primarily due to the Scapa acquisition.

Cash Provided by (Used in) Financing Activities

Cash used in financing activities during the six months ended June 30, 2022 was $51.5 million, compared to cash provided of $640.7 million in the prior year. During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, cash used in financing activities primarily consisted of ~~$729.7~~$47.6 million ~~proceeds from borrowings under the revolving credit facility primarily to fund the Scapa acquisition including $350 million under the Term Loan B Facility and $364.0 million incremental borrowings~~ of ~~revolver loans, $41.5~~payments on our long-term debt, $28.1 million in cash paid for dividends declared to ~~SWM~~the Company's stockholders, ~~$19.5~~and $12.5 million of payments ~~on long-term debt, $14.6 million payment~~ for debt issuance costs associated with the amendment of our Credit Agreement and the Bridge Facility, as discussed in Note 10. Debt of the notes to the unaudited condensed consolidated financial ~~statements, and share repurchases~~statements. The cash used was partially offset by $40.0 million of ~~$3.1 million.~~proceeds from borrowings under the revolving line of credit, the "Revolving Credit Facility".

In the prior-year period, financing activities primarily consisted of ~~$212.7~~$703.7 million ~~net~~of proceeds from borrowings under the Revolving Credit Facility, ~~primarily to fund the Tekra acquisition, $41.2~~partially offset by $27.6 million in cash paid for dividends declared to ~~SWM~~the Company's stockholders, ~~$124.6~~$17.8 million of payments on our long-term debt, and ~~share repurchases~~$14.5 million of ~~$0.9 million.~~payments for debt issuance costs associated with the amendment of our Credit Agreement.

The Company presently believes that the sources of liquidity discussed above are sufficient to meet its anticipated funding needs for the foreseeable future.

Dividend Payments

We have declared and paid cash dividends on our common stock every fiscal quarter since the second quarter of 1996. On ~~November 3, 2021,~~August 9, 2022, we announced a cash dividend of ~~$0.44~~$0.40 per share payable on ~~December 17, 2021~~September 23, 2022 to stockholders of record as of ~~November 26, 2021.~~August 19, 2022. The covenants contained in our Indenture and Credit Agreement require that we maintain certain financial ratios as disclosed in Note 10. Debt of the notes to the unaudited condensed consolidated financial statements, none of which under normal business conditions we would expect to materially limit our ability to pay such dividends. We plan to continue to assess our dividend policy in light of our capital allocation strategy, cash generation, debt levels and ongoing requirements for cash to fund operations and to pursue possible strategic opportunities.

Debt Instruments and Related Covenants

Debt Instruments
($ in millions)
Nine Months Ended
September 30, 2021 September 30, 2020
Proceeds from issuances of long-term debt $ 729.7 $ 212.7
Payments on long-term debt (19.5) (124.6)
Net proceeds from borrowings $ 710.2 $ 88.1




Debt Instruments (in millions)	Six Months Ended
	June 30, 2022		June 30, 2021

Proceeds from issuances of long-term debt	$	40.0	$	703.7
Payments on long-term debt	(47.6)		(17.8)
Net proceeds (payments) from borrowings	$	(7.6)	$	685.9

Net ~~proceeds~~repayments from borrowings were ~~$710.2~~$7.6 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~ 2022, compared to net proceeds of $685.9 million in the prior year.

On February 10, 2021 we amended our Credit Agreement to, among other things, add a new seven year Term Loan B facility, which provides for additional capacity of ~~$350~~$350.0 million (the "Term Loan B Facility"). ~~See~~The Credit Agreement was further amended effective February 22, 2022 to adjust the step-down schedule for the maximum net debt to EBITDA ratio. Refer to Note 10. Debt of the notes to unaudited condensed consolidated financial statements for additional information about the Term Loan B Facility. ~~Other than potential borrowings~~

On May 6, 2022, we amended our Credit Agreement to replace the existing Term Loan A Facility with a new $193.0 million term loan facility, replace the Revolving Credit Facility with a new $600.0 million Revolving Facility, and add a $650.0 million delayed draw term loan facility (the "Delayed Draw Term Loan Facility"). Availability under the ~~Term Loan B~~Revolving Facility was limited to $500.0 million until the ~~Company does not expect to incur any significant additional borrowings during 2021.~~Merger was consummated.

Unused borrowing capacity under the Credit Agreement was ~~$81.2~~$106.0 million as of ~~September~~June 30, ~~2021.~~2022. We also had availability under our bank overdraft facilities of ~~$6.2~~$1.7 million as of ~~September~~June 30, ~~2021.~~2022.

We had obtained financing commitments for a $648.0 million senior 364-day unsecured bridge facility and $500.0 million senior secured revolving credit facility in conjunction with the proposed Merger. On May 6, 2022, the Debt Commitment Letter was amended, reducing the Bridge Facility and senior secured revolving credit facility to $50.0 million and zero, respectively.

On July 5, 2022, in connection with the consummation of the Merger, the Company borrowed $650.0 million under the Delayed Draw Term Loan Facility. The funds were used to repay all of Neenah's outstanding debt of $445.9 million under its term loan B facility and $59.0 million under its global secured revolving credit facility, as well as pay down $100.0 million of our Revolving Facility. In addition, we terminated the Bridge Facility. Refer to Note 10. Debt for further information related to the Delayed Draw Term Loan Facility.

The Company was in compliance with all of its covenants under the Indenture and Credit Agreement at ~~September~~June 30, ~~2021.~~2022. With the current level of borrowing and forecasted results, we expect to remain in compliance with financial covenants under the Credit Agreement.

Our total debt to capital ratios, as calculated under the Amended Credit Agreement, at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were ~~67.3%~~64.4% and ~~47.7%~~65.1%, respectively.

Following the close of the Merger on July 6, 2022, the Company had total debt of approximately $1.83 billion and total liquidity of $454.0 million, consisting of approximately $148.0 million of cash and $306.0 million of revolver availability. The Company's debt matures on a staggered basis between 2026 and 2028.

At the close of the acquisition on July 6, 2022, net leverage was 4.1x versus a current maximum covenant ratio of 5.5x. The Company expects net leverage to decrease steadily to 3.5x or below by the end of 2023. Net leverage is defined in the Company's Amended Credit Agreement, and includes EBITDA adjustments for certain expected cost synergies.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported. There have been no material changes in our critical accounting policies and estimates since December 31, 2021.

For further information about our critical accounting policies, please see the discussion of critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2021 in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates.”

Off-Balance Sheet Arrangements

As of ~~March 31, 2021,~~June 30, 2022, we did not have any significant off-balance sheet arrangements, as defined in Item

303(a)(4)(ii) of SEC Regulation S-K.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "ACT") that are subject to the safe harbor created by ~~that~~the Act and other legal protections. Forward-looking statements include, without limitation, those regarding the incurrence of additional debt and expected maturities of the Company’s debt obligations, the adequacy of our sources of liquidity and capital, acquisition integration and growth prospects (including international growth), the cost and timing of our restructuring actions, the impact of ongoing litigation matters and environmental claims, the amount of capital spending and/or common stock repurchases, future cash flows, purchase accounting impacts, impacts and timing of our ongoing operational excellence and other cost-reduction and cost-optimization initiatives, the impact of the COVID-19 pandemic on our

operations, profitability, and cash flow, the expected benefits and accretion of the Neenah merger and Scapa acquisition and integration and other statements generally identified by words such as "believe," "expect," "intend," "guidance," "plan," "forecast," "potential," "anticipate," "confident," "project," "appear," "future," "should," "likely," "could," "may," "will," "typically" and similar words. These forward-looking statements are prospective in nature and not based on historical facts, but rather on current expectations and on numerous assumptions regarding the business strategies and the environment in which the Company’s business shall operate in the future and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that may cause actual results to differ materially from our expectations as of the date of this report. These risks include, among other things, those set forth in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, the Risk Factors set forth in the section entitled "Risk Factors" at Part II - Item 1A hereof, as well as the following factors:

•Risks associated with pandemics and other public health emergencies, including the continued impact of, and the governmental and third party response to, the COVID-19 pandemic and its variant strains (including any proposed new regulation concerning mandatory COVID-19 vaccination of employees);

•Changes in sales or production volumes, pricing and/or manufacturing costs of ~~Recon~~reconstituted tobacco products, cigarette paper (including for LIP cigarettes), including any change by our customers in their tobacco and tobacco-related blends for their cigarettes, their target inventory levels and/or the overall demand for their products, new technologies such as e-cigarettes, inventory adjustments and rebalancings in our EP segment.Additionally, competition and changes in AMS end-market products due to changing customer demands;

•Changes in the Chinese economy, including relating to the demand for reconstituted tobacco, premium cigarettes and netting and due to impact of tariffs;

•Risks associated with the implementation of our strategic growth initiatives, including diversification, and the Company's understanding of, and entry into, new industries and technologies;

•Changes in the source and intensity of competition in our commercial segments;

•Our ability to attract and retain key ~~personnel;~~personnel, including in connection with the Merger, labor shortages, labor strikes, stoppages or other disruptions;

•Weather conditions, including potential impacts, if any, from climate change, known and unknown, seasonality factors that affect the demand for virgin tobacco leaf and natural disasters or unusual weather events;

•Seasonal or cyclical market and industry fluctuations which may result in reduced net sales and operating profits during certain periods;

•Increases in commodity prices and lack of availability of such commodities, including energy, wood pulp and resins, which could impact the sales and profitability of our products;

•Adverse changes in the oil, gas, automotive, construction and infrastructure, and mining sectors impacting key AMS segment customers;

•Increases in operating costs due to inflation and continuing increases in the inflation rate or otherwise, such as labor expense, compensation and benefits costs;

•~~Employee retention and labor shortages;~~

•Changes in employment, wage and hour laws and regulations in the U.S., France and elsewhere, including the loi de Securisation de l'emploi in France, unionization ~~rule~~rules and regulations by the National Labor Relations Board in the U.S., equal pay initiatives, additional anti-discrimination rules or tests and different interpretations of exemptions from overtime laws;

•~~Labor strikes, stoppages, disruptions or other disruptions at our facilities;~~

•The impact of tariffs, and the imposition of any future additional tariffs and other trade barriers, and the effects of retaliatory trade measures;

•Existing and future governmental regulation and the enforcement thereof, for example relating to the tobacco industry, taxation and the environment (including the impact thereof on our Chinese joint ventures);

•New reports as to the effect of smoking on human health or the ~~environment;~~environment, and/or the willingness of distributors and retailers to sell tobacco products based on health or other social concerns;

•Changes in general economic, financial and credit conditions in the U.S., Europe, China and elsewhere, including the impact thereof on currency exchange rates (including any weakening of the Euro and Real) and on interest ~~rates and the effects of the ongoing discussions between the U.K. and European Union to determine the terms of the U.K.'s withdrawal from the European Union;~~rates;

•~~Changes in the method pursuant to which LIBOR rates are determined and the~~The phasing out of USD LIBOR rates after ~~2023;~~2023 and the replacement with SOFR;

•Changes in the manner in which we finance our debt and future capital needs, including potential acquisitions;

•The success of, and costs associated with, our current or future restructuring initiatives, including the granting of any needed governmental approvals and the occurrence of work stoppages or other labor disruptions;

•Changes in the discount rates, revenue growth, cash flow growth rates or other assumptions used by the Company in its assessment for impairment of assets and adverse economic conditions or other factors that would result in significant impairment charges;

•Supply chain disruptions, including the failure of one or more material suppliers, including energy, resin and pulp suppliers, to supply materials as needed to maintain our product plans and cost structure;

•International conflicts and disputes, such as the ongoing conflict between Russia and Ukraine, which restrict our ability to supply products into affected regions, due to the corresponding effects on demand, the application of international sanctions, or practical consequences on transportation, banking transactions, and other commercial activities in troubled regions;

•Compliance with the FCPA and other anti-corruption laws or trade control laws, as well as other laws governing our operations;

•The pace and extent of further international adoption of LIP cigarette standards and the nature of standards so adopted;

•Risks associated with our 50%-owned, non-U.S. joint ventures relating to control and decision-making, compliance, accounting standards, transparency and customer relations, among others;

•A failure in our risk management and/or currency or interest rate swaps and hedging programs, including the failures of any insurance company or counterparty;

•The number, type, outcomes (by judgment or settlement) and costs of legal, tax, regulatory or administrative proceedings, litigation and/or amnesty programs, including those in Brazil, France and Germany;

•The outcome and cost of the LIP-related intellectual property ~~infringement and validity~~ litigation against Glatz in ~~Europe and the Glatz's German Patent Court invalidation proceedings;~~Europe;

•Risks associated with our technological advantages in our intellectual property and the likelihood that our current technological advantages are unable to continue indefinitely;

•Risks associated with acquisitions, ~~or other~~dispositions, strategic transactions ~~including acquired liabilities~~ and restrictions, retaining customers from businesses acquired, achieving any expected results or synergies from acquired businesses, complying with new regulatory frameworks, difficulties in integrating acquired businesses or implementing strategic transactions generally and risks associated with international acquisition transactions, including in countries where we do not currently have a material presence;

•Risks associated with dispositions, including post-closing claims being made against us, disruption to our other businesses during a sale process or thereafter, credit risks associated with any buyer of such disposed assets and our ability to collect funds due from any such buyer;

•~~Risks associated with our~~ global asset realignment initiatives including: changes in tax law, treaties, interpretations, or regulatory determinations; audits made by applicable regulatory authorities and/or our auditor; and our ability to operate our business in a manner consistent with the regulatory requirements for such realignment;

•~~Increased taxation on tobacco-related products;~~of Mativ;

•Costs and timing of implementation of any upgrades or changes to our information technology systems;

•Failure by us to comply with any privacy or data security laws or to protect against theft of customer, employee and corporate sensitive information;

•Changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities;

•Changes in construction and infrastructure spending and its impact on demand for certain products;

•Potential loss of consumer awareness and demand for acquired companies’ products if it is decided to rebrand those products under the Company’s legacy brand names;

•Difficulties and delays in integrating the business of the Company and Neenah;

•Failing to fully realize anticipated cost savings and other anticipated benefits of the Merger when expected or at all;

•Business disruptions from the Merger that will harm the Company's business, including current plans and operations;

•Potential adverse reactions or changes to business relationships resulting from the Merger, including as it relates to the Company's ability to successfully renew existing client contracts on favorable terms or at all and obtain new clients;

•The substantial indebtedness Mativ has incurred and assumed in connection with the Merger and the need to generate sufficient cash flows to service and repay such debt;

•The possibility that Mativ may be unable to successfully integrate Neenah's operations with those of Mativ and achieve expected synergies and operating efficiencies within the expected time-frames or at all;

•Uncertainty as to the long-term value of the common stock of Mativ, including the dilution caused by Mativ’s issuance of additional shares of its common stock in connection with the Merger; and

•Other factors described elsewhere in this document and from time to time in documents that we file with the SEC.

All forward-looking statements made in this document are qualified by these cautionary statements. Forward-looking statements herein are made only as of the date of this document, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.

Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such and should only be viewed as historical data.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risk exposure at ~~September~~June 30, ~~2021~~2022 is consistent with, and not materially different than, the market risk and discussion of exposure presented under the caption “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We currently have in place systems relating to disclosure controls and procedures designed to ensure the timely recording, processing, summarizing and reporting of information required to be disclosed in periodic reports under the Securities Exchange Act of 1934, as amended. These disclosure controls and procedures include those designed to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions about required disclosure. Upon completing our review and evaluation of the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2021,~~2022, our Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures were effective as of ~~September~~June 30, ~~2021.~~2022.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting were identified as having occurred in the fiscal quarter ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. During the second quarter of 2021, the Company completed the acquisition of Scapa. As permitted by SEC staff interpretive guidance that an assessment of a recently acquired business may be omitted from the scope of evaluation in the year of acquisition, management excluded Scapa from its interim evaluation of internal control over financial reporting.

4644

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various legal proceedings and disputes. ~~See~~Refer to Note 20. Commitments and Contingencies of the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and Note 12. Commitments and Contingencies of the notes to the unaudited condensed consolidated financial statements included in this report. Except as may have been referenced elsewhere in this report, there have been no material developments with regard to these matters.

Item 1A. Risk Factors

AsIn addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed below and in Part I, "Item 1A, "Risk Factors" of ~~September 30, 2021, there were no material changes~~our most recent Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risks described below and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

The following supplements the risk factors ~~previously~~ disclosed in Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

Our foreign sales and operations may be adversely affected by supply chain disruptions due to political unrest, terrorist acts, and national and international conflict, including Russia's invasion of Ukraine.

We conduct a portion of our sales and manufacturing outside the United States. Our foreign sales and operations are subject to a number of risks, including political and economic instability, which could have a material adverse impact on our ability to increase or maintain our international sales and operations. National and international conflicts such as war, border closures, civil disturbances and terrorist acts, including Russia's invasion of Ukraine, may increase the likelihood of already strained supply interruptions and further hinder our ability to access the materials and energy we need to manufacture our products. Additional supply chain disruptions will make it harder for us to find favorable pricing and reliable sources for the materials and energy we need. As a result, such disruptions will put upward pressure on our costs and increase the risk that we may be unable to acquire the materials and energy we need to continue to make certain products, in particular at our manufacturing facilities in Europe.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities By the Issuer and Affiliated Purchasers

The following table indicates the cost of and number of shares of the Company's common stock it repurchased during ~~2021:~~2022:

Issuer Purchases of Equity Securities
Period Total
Number of
Shares
Purchased Average
Price
Paid per
Share Total Number of Shares
Purchased as Part of
Publicly Announced
Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs
(# shares) ($ in millions) ($ in millions)
January 1 - March 31, 2021 66,729 $ 45.83 — — —
April 1 - June 30, 2021 1,057 46.40 — — —
July 1-31, 2021 14 38.79
August 1-31, 2021 — — — — —
September 1-30, 2021 2,268 35.73 — — —
Total Year-to-Date 2021 70,068 $ 45.51 — $ — —


Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs			Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs
				(# of shares)	(in millions)		(in millions)
January 1 - March 31, 2022	94,847	$	30.96	—	$	—	$	—
April 1 - 30, 2022	1,387	27.50		—	—		—
May 1 - 31, 2022	—	—		—	—		—
June 1 - 30, 2022	—	—		—	—		—
Total Year-to-Date 2022	96,234	$	30.91	—	$	—	$	—

From time to time, the Company uses corporate 10b5-1 plans to allow for share repurchases to be made at predetermined stock price levels, without restricting such repurchases to specific windows of time. Any future common stock repurchases will be dependent upon various factors, including the Company's stock price, strategic opportunities and cash availability.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

4746

Item 6. Exhibits


Exhibit Number						Exhibit
3.1						Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 10-Q for the quarter ended September 30, 2009).
3.2						~~Amended and Restated Bylaws~~Certificate of Amendment to the Certificate of Incorporation of the Company (filed on August 21, 1995), effective as of July 6, 2022 (incorporated by reference to Exhibit 3.1 to the Company's Current Report o n Form 8-K filed on July 6, 2022).
3.3						Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on July 6, 2022 ).
10.1						Letter of Agreement, dated April 25, 2022, between the Company and Cheryl Allegri (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 26, 2022).
10.2						Fifth Amendment, dated as of May 6, 2022, to the Credit Agreement, dated September 25, 2018 (as amended as of February 9, 2021, March 8, 2021, April 20, 2021 and February 22, ~~2019)~~2022), by and among the Company, SWM Luxembourg, the other loan parties thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 9, 2022).
10.3						Amendment, dated as of May 6, 2022, to the Commitment Letter of JPMorgan Chase Bank, N.A., dated March 28, 2022 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on May 9, 2022).
10.4						Transition Services Agreement, by and between Jeffrey Kramer and the Company, dated as of July 6, 2022 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on F o rm 8-K filed on July 6, 2022).
31.1						Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
31.2						Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
32						Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101						The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2021,~~2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the condensed consolidated statements of income, (ii) the condensed consolidated statements of comprehensive income, ~~(loss),~~ (iii) the condensed consolidated balance sheets, (iv) the condensed consolidated statements of changes in stockholders' equity, (v) the condensed consolidated statements of cash flow, and (vi) notes to condensed consolidated financial statements.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in ~~Exhibit101)~~Exhibit 101).

4847

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~Schweitzer-Mauduit International,~~Mativ Holdings, Inc.

(Registrant)

By:

/s/ Julie Schertell

Julie Schertell
President and Chief Executive Officer
(duly authorized officer and principal executive officer)

August 9, 2022

By:

/s/ Andrew Wamser

Andrew Wamser
Executive Vice President and
Chief Financial Officer
(duly authorized officer and principal financial officer)

~~November 3, 2021~~

~~By:~~

~~/s/ Michael Schmit~~

Michael Schmit
Corporate Controller and
Chief Accounting Officer
(principal accounting officer)

~~November 3, 2021~~August 9, 2022

4948

GLOSSARY OF TERMS

The following are definitions of certain terms that may be used in this Quarterly Report on Form 10-Q filing:

•"Total debt to capital ratio" is total debt divided by the sum of total debt and total stockholders' equity.

•"Reconstituted tobacco" is produced in two forms: leaf, or reconstituted tobacco leaf, and wrapper and binder products. Reconstituted tobacco leaf is blended with virgin tobacco as a design aid to achieve certain attributes of finished cigarettes. Wrapper and binder are reconstituted tobacco products used by manufacturers of cigars.

•"Reverse osmosis" is a water purification technology that uses a semipermeable membrane to remove larger particles from drinking water.

•"Tobacco paper" includes cigarette paper which wraps the column of tobacco within a cigarette and has varying properties such as basis weight, porosity, opacity, tensile strength, texture and burn rate, as well as plug wrap paper which wraps the outer layer of a cigarette filter and is used to hold the filter materials in a cylindrical form, and tipping paper which joins the filter element to the tobacco-filled column of the cigarette and is both printable and glueable at high speeds.

5049


	Common Stock Issued
	Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
Balance, June 30, 2020	31,195,009	$	3.1	$	87.2	$	654.1	$	(137.0)	$	607.4

Net income	—	—		—		24.5		—		24.5
Other comprehensive income, net of tax	—	—		—		—		8.8		8.8
Dividends declared ($0.44 per share)	—	—		—		(13.8)		—		(13.8)
Restricted stock issuances, net	(21,932)	—		—		—		—		—
Stock-based employee compensation expense	—	—		1.4		—		—		1.4


Stock issued to directors as compensation	—	—		0.2		—		—		0.2
Deferred compensation directors stock trust	149,469	—		—		—		—
Purchases and retirement of common stock	(771)	—		—		—		—		—
Balance, September 30, 2020	31,321,775	$	3.1	$	88.8	$	664.8	$	(128.2)	$	628.5

Balance, June 30, 2021	31,426,129	$	3.1	$	97.3	$	658.9	$	(106.3)	$	653.0

Net income	—	—		—		12.2		—		12.2
Other comprehensive loss, net of tax	—	—		—		—		(17.6)		(17.6)
Dividends declared ($0.44 per share)	—	—		—		(13.9)		—		(13.9)
Restricted stock issuances, net	32,549	—		—		—		—		—
Stock-based employee compensation expense	—	—		1.7		—		—		1.7


Stock issued to directors as compensation	588	—		0.3		—		—		0.3

Purchases and retirement of common stock	(2,282)	—		—		—		—		—
Balance, September 30, 2021	31,456,984	$	3.1	$	99.3	$	657.2	$	(123.9)	$	635.7


	September 30, 2021		December 31, 2020


Accumulated pension and OPEB liability adjustments, net of income tax benefit of $11.6 million and $11.6 million at September 30, 2021 and December 31, 2020, respectively	$	(17.1)	$	(20.5)
Accumulated unrealized loss on derivative instruments, net of income tax benefit of $2.1 million and $2.8 million at September 30, 2021 and December 31, 2020, respectively	(7.8)		(13.1)
Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $6.6 million and $10.1 million at September 30, 2021 and December 31, 2020, respectively	(99.0)		(78.3)
Accumulated other comprehensive loss	$	(123.9)	$	(111.9)


	Three months ended September 30, 2021		April 15, 2021 - September 30, 2021
Net sales	$	107.1	$	202.2
Net income (loss)	$	1.8	$	(4.2)


	Fair Value as of March 13, 2020		Weighted-Average Amortization Period (Years)
Amortizable intangible assets:
Customer relationships	$	63.0	15
Tradenames and other	10.8		15
Developed technology	8.0		10
Total amortizable intangible assets	$	81.8


	Three Months Ended September 30, 2020		March 13, 2020 - September 30, 2020
Net sales	$	23.2	$	53.7
Net income	$	0.4	$	0.1


	AMS		EP		Total
Goodwill as of December 31, 2020	$	398.4	$	5.3	$	403.7
Goodwill acquired during the period	261.7		—		261.7
Foreign currency translation adjustments	(5.1)		(0.3)		(5.4)
Goodwill as of September 30, 2021	$	655.0	$	5.0	$	660.0


($ in millions)	Net Sales


	Three Months Ended								Nine Months Ended
	September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020
AMS	$	260.1	67.8	%	$	138.9	49.7	%	$	675.1	64.3	%	$	394.6	49.6	%
EP	123.5		32.2		140.4		50.3		374.5		35.7		400.4		50.4
Total Consolidated	$	383.6	100.0	%	$	279.3	100.0	%	$	1,049.6	100.0	%	$	795.0	100.0	%




Debt Instruments ($ in millions)	Nine Months Ended
	September 30, 2021		September 30, 2020

Proceeds from issuances of long-term debt	$	729.7	$	212.7
Payments on long-term debt	(19.5)		(124.6)
Net proceeds from borrowings	$	710.2	$	88.1