SWM - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the SWM’s Third Quarter 2021 Earnings Conference Call. Hosting the call today from SWM is Dr. Jeff Kramer, Chief Executive Officer. He is joined by Andrew Wamser, Chief Financial Officer and Mark Chekanow, Director of Investor Relations. recorded be being later for is afternoon. this call and available will replay Today’s is pleasure now floor It Instructions] [Operator my Mr. over to to the turn Chekanow. Sir, you may begin.

Mark Chekanow

Investor am Peter. us joining our earnings Chekanow, morning. you, XXXX discuss SWM. I quarter Thank Director you Good to of results. Relations third for at Thank Mark

XX-K for today’s differ begin, numerous including forward-looking the the comments and response business statements. include filings, I’d are you number materially impact Before Form by report XX-Q. our call the actions a predict, to our we which suggested that evolving the Exchange Form difficult our uncertain in including to which continues in results on may reasons, conference In extent remind like depends comments and from results the annual factors to our on is Commission particular, included of pandemic are taken which it. in on detail more of quarterly the and duration reports Actual to COVID-XX Securities these discussed and scope and in to pandemic

of www.swmintl.com. the website to are our are release earnings available over and will continuing the section to on earnings Some are measures financial of in presentation the presentation GAAP to closest of are call comparisons prior Investor discussed measures this This and year release. to the this Unless appendix metric period financial stated now relate operations. Jeff. these measures. operational the the Relations the and during turn financial non-GAAP and measures Reconciliations included call otherwise, I

Jeff Kramer

production input seen somewhat, dealt news the continue weak not mid-XXXX, everyone have to raw and as resulting Scapa but resilient caused teams sales world. many with XXXX fully hoped. same reports, many outstanding with was across companies end and lengthy portfolio everyone. quarter already COVID strong shortages expecting coupled you, Thank to performance building I SWM’s by markets, agile interesting be outages These moderating increases exceeding an the unprecedented sometimes morning this We price global good increases times robust SWM’s rapid and with strong, on while similar time, markets key pressures materials. proving in AMS in At good also with our disruptions year our earnings. story the had were third supply April. In and from as COVID-related offered acquisition additional with Paper on of expectations. costs, retreating is widespread many stay-at-home combined were our with several Mark portfolio, capabilities around in demand a by dramatic business have orders, COVID of and quite results demand

growth have strong by line fundamental positive We story demonstrated top as in that the AMS. high remains conviction the continuing

seen chains our materials the impacting headwinds quarter, rapid global by However, higher input raw and global with These challenges key results. supply limited in disarray third are compounded line of XXXX some inflation and availability bottlenecks. bottom clearly has accelerated shipping and throughout costs

the with see adjusted quarter. latest becoming for $X.XX of in we pressuring of EPS still resulting lagging While have round third been and successfully we increases delivering cases, early us to October continue margins price But in the effective moderation. do signs we implement X, many some

actions at continue We deliver fourth margin through to least our conditions these expect the recovery. better quarter before

improvements do expect full near-term below that sequential we view, XXXX results be our for the EPS full XXXX. year year, expect our to-date will but original and throughout guidance Given our adjusted

the profitability good you actions are will to in strong will As of take our the return commentary, confident overall and remains our following good have very to we us company. demand, that levels see portfolio we the continue will very – remains and expected with from

we remains strategic the year, disruptions. last of and filtration driving quarter. in doubled, teams our including agile continue our Fundamentals product several Demand and XX% was AMS, nearly in consumers very Scapa approximately in protection increasing these long-term transportation In despite particularly positioned most are our shorter-term sales of execute paint films. by lines, Transportation to up benefit our organic for remain strong positive strategic end overall the growth well rapid strong demonstrated against acquisition, XX%. plans are markets. to As underlying high-value a sales with

despite of to already expect ability Though innovate still access greater product our raw to sales scarcity. continue by what supplier be even our expanded that secured Year-to-date, films, our this qualified should been largest To key of even greater As base more strategy offering thereby for against address in offerings and deliver being with additional raw customers if of this have customers to our additional to missed constrained, the these materials our our supply material due we rapid could have last of recent XXXX. further this, solutions tens we noted to support quarter’s our in in of acquisitions growth XXXX. dollars expanding growth call, sales higher to world’s needs. next resins supplier network and have constraint. for We will stated year our midterm millions to allow executing in we on top us suppliers’ XX% area, not than their

continued and growth to We trends. processing unmet depleted Again, remained see we capitalize positive by customers as of restock teams shortage, capacity constrained quarter countries. coming echoing inventory Filtration momentum bullish approximately capacity as also led water levels, makers for in increasing at grew films increased from convey way. call, to drive cleaner in additional work XX% middle-class process demand. emerging worldwide our and filtration chip the continued continued and also protection our comments the to see fulfill continues strong, for second paint materials Process activity on consumer awareness in as semiconductor albeit outlooks they to need online the and purer invest from markets. commercial in also outlooks relay many the but somewhat sites to and the positive quarter Water adoption continue to

is matched filtration third higher-margin demand On our good materials. we roles; care we business a we are increasing reduce quarter the quarter quarter a our multiple categories. more $X our Outside sales widespread compared our air sales, actions wound on growth. address than that the of issues the focus where have be of in to been such constrained that a those total are plants lost in nearly grew equilibrium, labor to million to XX% we side, of in of in markets and last nearly filtration impacted our implying labor there increasing visibility filtration open last automation when on year. the needed year saw in face is are in on been range business And gains will year supporting maintaining tough positions. challenges at third upgrades. currently mask meantime faced sales combination We we and legacy to the total These impact in encouraged level to high on interest as taking investing and reliance estimate various rate increased last to and AMS’ the system specialty comparison activity. million have per by XX% in $X when this actions could from COVID-driven labor the improve overall HVAC of healthcare limited though, our are sales year-on-year Notably up reach both assure unprecedented benefited seeing consumer that, in competitive; wages are efficiencies. business Though

in line Regarding expectations. Scapa’s performance, is with it we our that are pleased sales

and business versus fluctuations levels line. accounting rebounded currency Excluding is the conversions, pre-COVID GAAP overall nearing XXXX top the on strongly and

consumer products, our XXXX. hospital Scapa seeing foot we similar is a whereas growth products side, good remain growth Those and sales saw On pressures we performing more pre-COVID traffic as on wellness of rest levels. are strong supply the experiencing again versus businesses. In in healthcare inflationary are below chain the well. Industrial, reliant

us to many generally early if were last position in and year’s has that are Engineered have the softer pressures, and the disappointed to innovation as been sourcing efficiency pace continued top we actions increasing addressing actions bottom we quarter for material quarterly above note, a labor though top continue we increased line to to operating expected impacted negatively Customers positive improvements do should we we over important past have invest quite AMS and will results as than Though not strong. These On price with fourth position the that our these of ourselves rapidly inflationary we year, to last was times, also material while continues, segments. XXXX. It profits signs this bottom years. accepting successfully these and of multiple Papers, quarterly were cost continued see resin process in are growth. us quarter, X Switching these and sufficient the improved increases, challenges raw that highest achieved have performance trend to line, pricing simply line across we and to allow drive needed. challenges, will prices prices. put the during easing segment Although be been of efforts our have capacity an note in continue is for keep availability was third

the were with happy weak as suffering While businesses we reverse demand, to this the customers that very year builds inventory handle our we pandemic were last time. in performance would took knew from many

level outlined guidance, of our to supply a XX% more was several XX% inventory LIP profit the was segment to exception you to ‘XX sales building XXXX customers the return when an as given historical volume for wood in the not – most costs. Higher of raising been XXXX and benefit our gas EP coming freight, wood costs in we date. inflationary more Unfortunately, anticipated, to may escalating with increases benefit EP catch exceeded prices chains. expectations to generally pulp, across the the contractual far these large recall, to quarters. pressures pace a we our decrease annual was decline global to pulp derisk the As expectation natural while on seen lagged their just standard of prices we expect although have manufacturing. to and input actively But obligations, recoup have higher up energy AMS, Due recently, inflation, large

pricing to a offset to constraints. negotiate We have been also as volumes additional further able

seen with believe have relief. modest Just we near-term we as resin, prices and peak pulp expect do

finding our cost are in demonstrated continued heavily investments in we improve our our reduced-risk invest customers not as to sales momentum Heat-not-Burn innovation Importantly, slowing and structure. ways products.

products process finalizing years. could alone customer are non-tobacco, become going our contract hemp in of first non-nicotine-based within X and used commercial, be dollar products. filler products multimillion we also meaningful This for in hemp to commercial smoking the are Our alternative customers

And fruit. profile. outlook bear Our and all headwinds inflation, product these that and investments to an the current innovation drive to like for in with hemp categories. are technologies despite is attractive and customers in botanicals new our supply deliver potential to chain long-term I drive to new margin it lines new processing reiterate and growth partner with innovations, beginning product grappling continue current critical

Though site. our decision to materials turn it shutdown. for decision the Spotswood, to our site I’ll more in prudent have our over Spotswood Regarding announced the we will closing end given was the Manitoba, site at to of close difficult a be Andy believe the detail. With always call financials recently the cost in review closed we Jersey that, structure, processed facilities, the year. that This New Canada, Winkler we primarily

Andrew Wamser

Starting organic Jeff. XX%. increased third with Thank quarter you, at with AMS, XX% growth sales

despite that without growing We Adjusted reflecting sales Scapa. in could the higher we each of is possible operating been of market. limitations. at our transportation particularly high some sites AMS not the of dealing had if profit labor growth understaffing mentioned, XX% our with and the XX% resins, tight sales have for supply due Directionally, organic those could As incremental some constraints performance, chain sales organic are have filtration, to disruptions with coupled increased it and even some been sales specialty excellent X%, up with. a from about profits

the polypropylene, materials, that raw million, increases to points in basis negative pressured along had adjusted higher contracted However, on costs. a of supply XXX margins. chain costs, resin significant issues operating input Higher of margin inflationary net effect $X approximately part due with operating with particularly for third to about that costs, Segment of mostly profits price were recouped our to similar second large a XX.X%, reached up actively cost effective We’ve prices We with half inflation, continued recovery the rapidly in the the and continue the customers quarter. are to during levels period. as quarter to prices we resin catch engaged that market seen escalating record ratio. has raise to

recent about sell, our increased second Due year-over-year. For during per the through the fourth prices context felt when the lag to an up quarter. we to quarter, quarter sharply average third polypropylene during continued rise we price that per XXX% from $X.XX pound, one to quarter, impact $X.XX the purchase, will pound, flow and approximately on third of quarter. the price prices P&L produce escalation, In during the which to

some of We second are, industry and Current for pricing however, half under to in fourth And reach record softness projections call the polypropylene levels to encouraged in the by pullback the show projections high see these very continued year. quarter during market of throughout next XXXX. October. $X

to margin factors costs polypropylene such of as other driver, and higher base contributed freight the materials While is variance business. also contraction single for the other biggest

boosted million, acquisition operating second the AMS adjusted to quarter. the contribution, over profit Scapa’s similar by segment $X profits Regarding

release, Scapa’s booked SG&A our not noted in million were $X.X costs as unallocated However, within of in costs, our AMS. approximately

assessing our beyond to expectations. be conditions our please Scapa’s was sales original progress XXXX and we dilutive The and cost profit that pleased these of with how ability of the materials supply up chain Simply results catches chain and to longer and expect to to the in elevated supply and Outside performing normalize synergies to in deliver elevated in EPS segment pre-COVID costs confident significantly near-term and drive the to raw business the cognizant are with slightly pricing transaction So the are results. factors, we put, commercial rebounding external variance improved our environment. the in term. when synergies financial and in with quarter, is causing disruptions as adjusted our levels

For sales Engineered were on quarter Papers, down decline. a XX% volume third XX%

LIP last year, costs higher well, we due and which inputs. As as negative This prior other to $X inherent compounded would carries was net very knew in volumes. the a Pulp of this to effective year, comparison were our the a large million pulp profits by alone a negative costs be for increases during mix part to compared wood approximately Jeff price quarter. impact of detailed, on an challenging normalization impact

is price more has executed some half. we’ve While increases recovery to so based, business rate customers, contract less been than our this

to second XX% recent third in projections nearly flowed through quarter to compared up $X,XXX in For quarters. quarter coming XX% in more $X,XXX nearly impact per to context, at the relief have wood the year, NBSK and the pulp will level ton some in up per the ton, index are fourth peaked quarter, last index elevated which was and industry third which to results. was The months for index P&L appears the quarter modest this the

adjusted the Regarding increase expenses, of we during unallocated $X saw million quarter. an

expenses increased related unallocated of higher the However, well to increase remainder unallocated $X.X million as costs. increase basis. noted, higher booked to basis, as consolidated operating a On business. consulting but million. of IT Adjusted the million the as organic fees in sales to XX% Scapa’s decreased of was our on costs third-party The for decreased $XXX $XX X% XX% growth an the to support profit the quarter

GAAP due versus share Third Scapa EPS, The year of material are $X.XX adjusted acquisition. were $X.XX. quarter compared higher items $X.XX purchase most from GAAP XXXX that to per last EPS accounting EPS excluded $X.XX to the expenses was

growth, on very are sales had but EPS they and the relief for cost comparisons comments quarter challenges inflationary our chain adjusted headwinds LIP past To $X.XX $X.XX fourth and reiterate on Normalizing are and not growth perspective, $X.XX was despite we year. resins next results should year’s we pulp as a business. cost like that which magnitude per estimates on quarter these have Though them, some this for was move that transportation those and – $X.XX than several share down To resins EPS getting and from on adjusted and real, the did anticipated. put films we throughout EPS impacts. other inflation of put improving supply $X.XX, have last see us specialty with signs transportation the share. they clearly integration could addition, alone other into of combined our we easier more recap, financial the we recoup expenses and the the additional alone impact over on To impact. from energy of seen convey share. had in quarter, up the with the directional were indications, for and price increases through costs When lost an freight best items clearly difficult In our of last per other estimate of comparisons we quarter items, the well secured per we films constraints are

costs. that continue costs be to see synergies on And realized input Our fourth price increases cost are for to we and up Scapa to in resin next of catch and quarter commercial visibility will have easing We pulp year. in XXXX. expected

this that original We finish below will earnings are year’s expectations. disappointed our

full believe we prior-year the are third tax due to With and $X.XX range. high-cost of variables the many our understaffing with in the reflects some quarter, lost and challenges and being fourth year are final our raw materials rate. XX% firmly the during through finish in This could results corner. scarcity continued from to end original quarter However, sites, EPS venture below the down guided XX% joint material be key P&L, approximately the currently low adjusted the temporary other flowing implying to about of year purchased turning EPS quarter, we expect respect the adjusted sales

guidance before we assuming EPS, approaching run This this could $X generally exiting with in issue outlook, escalated. challenges original profit growth February. assessing potentially stage, We’re issued on of adjusted tax XXXX still mean strong operating is the year’s guidance XXXX. rate current will XXXX rate, of which these a see our consistent But many we in next and at we

cash incurred flows, profits $XX And we million million outflows. increase operating down acquisition. $XX operating Scapa from lower $XXX prior capital We Year-to-date expenses of year-to-date million. by a million, in were with related in Regarding cash saw in working million was the year. cash and connection flow adjusted the approximately costs fees $X $XX

still cash outflows to pushing higher. robust growth, working inflationary of would In naturally significantly outflows of accounts alone factor drive $XX cost capital inventories inventory higher approximately last addition for receivables, our million balance environment the to sales sheet the to This higher which is related compared on year. cash

Although sales our billion. typically more have cash and adjusted into over debt generation just fourth half normalize third impacted the historically as growth $X.X the and second higher Net resume costs flow we strong strong would of the debt cash revolving levels increasing, expect XXXX. third agreement million working capital quarter flows, the Net finished $XXX quarter EBITDA in X.Xx for during to credit we availability of current our on and at Despite our terms $XX below facility. of balance and remain of end our cash X.X credit of covenant million consisting quarter. our the comfortably million was level approximately $XX to leverage liquidity, have

expected the sale the we addition, completed during of to in which operations, is assets related the quarter. process to fourth are discontinued In closing be of

to Jeff. Now back

Jeff Kramer

Andy. Thanks,

out we ups past As XXXX, of in we keep XX perspective. and to months downs want close the the

sourcing supply our and in to operational laser-focused this these to And performance remain many higher projects staffing addressing and deliver demand. very year, and ultimately sites increases grappling our scarcity, material We initiatives are meet last those at control, strong issues, year to price chain overcame production will challenges to raw offset levels we financial to with combat costs, improve XXXX. two normalize. headwinds with though Our within issues different teams on global uncertainties while

customers imperatives to XXXX address in strategic can lost required we confident synergies run we technology years underscoring approach current not long-term cultural are challenges, all for have for stage a with unwavering innovation products, and times. is rate $X our to expanded other recent the to improve solutions, acquisitions the in Despite of the follow. per And leveraging share realizing imperatives to and these the include set growth manufacturing each operations. of sight those growth. earnings we the We position in navigate foundation of our a X.X return These all-hands-on-deck on new us as offering to based of later sustained commitments initiatives to unprecedented

the please concludes portends. excited That growth Peter, questions. open the line are portfolio and future our our We about for it remarks.

Operator

with question Thank you. your Instructions] Company. [Operator will McGinnis And Chris Sidoti first & come from

open. is line Your

Chris McGinnis

Good at are environment maybe and my segments, and morning. obviously, where And external to go Is Thanks the questions, for the for on the, you be you just guidance you are issue around to start in a little quarter? it? mind the the detail. On or thanks providing the would walk much each cost through as to you versus into to that that inflation. so going just That’s for of going that the I price just inventory? guess taking QX, the of bit close lag for when you still explaining the me stronger? Can Thanks. kind quarter. price

Jeff Kramer

Yes.

think price, will be a we quarter little bit, fourth I on as still discussed. lagging we

us raises open but a For that, put to industry, had volumes up little we to that had We those the got behind. of bit We contracts. of Paper some times. offset additional contractual

just a ways get in But there. and be October, side, through I we AMS us on little the that. we’ve On will price put that our increase a think lagging next still bit good will

Chris McGinnis

think I of there, you can was still – out especially. – Okay. am couple about talked will the mentioned you on of just think the business that of just go you be it when it the a I lines or it’s the kind do just transportation, matter Does about on away, it lost going get business. product a you thinking that’s business door? to And of

Jeff Kramer

you continue when economy And be are both to forward. think of And we – frustrating seeing be believe we very us I to Yes. are particularly that have Is our this our orders year. because customers our will customers. will has implies and the filtration go we those transportation, been still as that Chris, throughout have the strong for strong, for strong $XX,XXX we relations there. for we to all it remain everything going that question the talk remainder the with

really going sites. don’t this were us, for at as filtration that expectation, they But are. it’s get of so few our as to critical I months, our be have frustrating. number The as of tight couldn’t a to some to And that to We have TPU least. And be heard be been honest. you side secured us, has to think additional components labor supplies going be the enough tight of supplies. unique didn’t during and little that’s or our just we a we us. comments, We underway, activities expect the one next in for still But surprised

Andrew Wamser

say, would we expect though, to I But – for we year, will lose just next don’t directionally sales. those

of as we suppliers And those plus And now, double-digit right sure make growth adequate that that with are expect expect TPU sales segment. north We to working different supply. we to have flow a of we through. in

Jeff Kramer

Yes.

to clear, not issue, supplies. demand SWM Just that this we is is can the are right. there, supplier, the so industry-wide trends. But be the we it’s an have good is long-term market And issue. This imagine an you largest

just about just transportation consumer we greater can have we of think I business. our are see continue see how to we We been adoption. – talking excited

really we advantage are think And excited that. so this, are of positioned we well take long-term, and to we very about

Chris McGinnis

the transportation? chain kind of process color. I driving with just issues around understanding And it’s all a given the cars in what’s through Can I the get current Thanks. me just Great. and automobiles? the discretionary. supply Is I just that how just want offering, I factor? walk – guess that especially you sales that it – of it afterwards? to thought better was automobiles, added around guess is, environment more appreciate

Jeff Kramer

Yes.

it’s aftermarket most an this for the play part, think – I is right.

suppliers, are and new car dealership go you or to buy will there and marketplace, protect, that you to your go have a their you or you number to car. So, independent ask in go to you you a a car will want will them wrap the

So, actually it’s increasing rates to It’s been also are we dramatically It’s increasing, The actually point is something directly play. OEMs OEMs, because tied that a from penetration builder more car is a though very our that seeing new which penetration production. means awareness not and is and actually, a consumer sure from low. greater of confidence the there, value awareness with high are And they investments to are, in as respects seeing are real I even adoption. prices protect now protected as there think some now make car their seeing have and and to we greater a being are because long-term. they that’s are want incentive plus people last

all even this as things really supply, I see the So, penetration of these car limitations And again, play is new very a positives. with from a low number.

dramatically impact short-term. the And so going us we don’t to in that’s think

Andrew Wamser

piggyback wrap Jeff of of are their seeing where that the phenomenon, seeing so you was more as kind to just is just up on car it dramatically, market used cars dynamic point, maybe gone historically, a new you of used used well. to values you people look what cars. one said, how now just Where have also on And are at terms other when car a are it looking in

as think it but sets also new So, well. really up I market us penetration, greater great used the in the really in growth just not for and market,

Chris McGinnis

appreciate I that. Very helpful. Great.

– a so, Are like relation Just in pushed think if And bit? year. out it material $X.XX I still little still Thanks. if to on is you accretion maybe $X.XX, going Is was to next in with track. they challenges just right, Scapa, much it’s on as that remember be possible the inflation? impacted that table, it on or raw do being sounds

Andrew Wamser

Yes.

Scapa, those So, a trending if pre-COVID about line we they reference XXXX. we for are levels kind that of thought about in think to

mix look in the been say, I is, I say, would at healthcare, are the a but When different So, material the million a effect of probably that’s Industrial mix raw it’s of some you impacted you business, of mostly a segment. just One directionally, would of profitability. the probably comments. of think they when on about is couple dollars, couple in terms And inflations is by there target. seeing

over and XXXX, are we just the get we second or that. just months we have availability the So, on a medical talked business were for in things we COVID half some of that delayed is in but systems with – mix of in I terms with But about hospital six above industrial just holistically, dynamics would we sterilization. a surgeries. I say like healthcare have seeing delayed. When for not has the material liners, given profile. what pace of given think we directionally, like that to at look that $X.XX devices, just maybe which that been elective here XXXX, encouraged lower say couple where of accretion consumers like intermediate-term. things But it’s have just think would the the of is I quarters so, in in the it But we It’s slightly on business as things in about, we I on, seen are we release lower are track. maybe

Chris McGinnis

volume much you you components? comparison back, profile that that a bounce margin guess, how then does as environment But segment to quickly the just it just eases that get appreciate just difficult want And inflationary start way? QX and it very quarter, this I going obviously, in how with do the of couple if think into you that, of to was I the see through Engineered guess the versus And I of that. Papers, decline?

Andrew Wamser

Yes.

sort had say pressures inflation, price, So still decline. in volumes. the I fourth you Jeff be then net $X little look pulp, and you over million, probably volume from some balance is would – was million there the there about but energy mentioned, When and really will at the a mainly of there, we are $X additional quarter, are of some as

to lot beginning So, year, we the expect given will When be a offsets. we how up the reset we see of that of our just look contracts. to caught the key of

Chris McGinnis

you about the that you great. you or in it if get much work when about? I annual, talked that guess terms to look environment? – across how think is that easy is ask of the in I lag going much it the how how that. portfolio, does just to – walk when was this of how at you pricing Can it portfolio, Okay, price monthly look is through you

Andrew Wamser

so mean to when the of NBSK see say, And future. index we is in – That we quarters want three year the will contractual. the said, avoid that this, like that historically business being I before. we Yes. let’s reference volatility the in

have the sort opening they so of are volatility forward. can of up we to we how talk contracts about be same don’t So, some going modified that those

versus So, adjusted again, biannually And lion’s modified be maybe of annually. situations, QX. of couple may a certain in the those share just be contracts, in times, most will then they

we have just don’t as we of the escalating price of of some point wrong the costs the So, to contracts sort take of at any brunt the just year.

Chris McGinnis

you just talk market? are just automation, And that. last is? Okay. the your you about changes. about in it like little Thanks. eased sounds How on seeing with guess a greater what thing you labor I And possibly. labor, Can bit it I it’s difficult appreciate that the and talked

Jeff Kramer

some think – are site-to-site, the severe for next competing I And challenge for everybody, it where labor a is that. it’s others doing from sites labor fine are and going Well, be Everybody to varies shortages. having is six months. for

things, some had smaller have we done number and of in salaries raise – So, have a we to ones. seen the we of some have

shifts and We retention, have etcetera. done things around

the just tough it’s be labor starting industry. just some And our see topic But not I think to industry, going is a think so easing. across board every we are for to I for,

that programs for roll have of on automation, that a government bit things been but some manufacturing years. working X.X little hoping are more, we of see start to And that of will these accelerating nature, we over are that. to we off just years some We X.X X

of So, simple more automation analytics to able is it as run use part machine. make to being the as to the easier

training. without So, when they operate and can them as we more bring on people quickly new efficiently

will material handling, Some the etcetera, automation be etcetera. of

going it and for while. this. and So, journey we of to been on continue a that a also we will be And It drives this have quality. combination are journey efficiency

we be clear. got important I to it’s to And it’s trying So, of think not lot it. to are benefits a – also

replace our labor. not trying We are to

continued as continue might trying And are recognizing complement we of it We not it to need labor. be available we are to that that and more amounts efficient, as to make grow, as going needed. just

Chris McGinnis

certainly now I sense. my QX. answering through sure. it. appreciate and for that. That’s time the questions. luck going taking for good not are today questions And in you my one only for Makes the Well, thanks Well, thanks and taking

Jeff Kramer

Chris. Thanks

Andrew Wamser

Chris. Thanks

Operator

Shimojo Kenta with question Your will Capital. come Hayfin next from

Your line is open.

Kenta Shimojo

Thanks morning. for my taking questions. good Hi,

market discussion other is that’s that the term market. gangbusters been mentioned, color looking is market? or those curious auto add about in companies can of if delivering provide sign. has maybe MVCs, these you public going any validated think And I I or the longer am sort any striking more any services just the end has I mean you on contracts at I XXXX. there adding that broadly, in Firstly, protective think value been there just of one

Jeff Kramer

Yes.

we of in is of large among to vary I relationships those a and number those. end-use things think keep contractual supply one the suppliers mind

We have contracts some. in long-term

have We for are business. very business that mean others. the And Europe. more it’s in U.S., based shorter, supply spot suppliers global I we China, a

and are we aligned comfortable So, think with very a we players. we market very the in, it’s key all are

Operator

me, Jeff this at now Excuse any statements. showing for no am it Kramer to hand I questions I further time. will back over speakers, closing

Jeff Kramer

are the for direction the quarter been important appreciate I mind you. bottom heading. to very I the everybody’s comfortable keep But of really where challenging a we it’s am long-term from us think I in time. It’s line. again, of company. Thank

have the that are done paying execute the acquisitions I think steps to we off.

Thank our has been that efforts agility we are the quarter to a think future, for to challenge excited And this that they forward for all place our the even of And show of global look in I doing. I employees you. us. to pay continued the I want all organization success. about thank to off. I continuing though are actions the am have

Operator

call. you conference participating. Thank for today’s concludes This

disconnect. now may You

Mativ (MATV) 6 Nov 212021 Q3 Earnings call transcript