MATV - Earnings call 2 2023 | Mativ Holdings, Inc.

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Operator

Good morning, everyone, and welcome to Mativ's Second Quarter Earnings Conference Call.

Hosting the call today is Mativ's Julie Schertell, Chief Executive Officer. She is joined by Greg Weitzel, Chief Financial Officer; and Mark Chekanow, Vice President of Investor Relations.

Today's call is being recorded and will be available for replay later this afternoon. [Operator Instructions].

to floor pleasure to my now turn over the Mr. It's Chekanow. may Sir, you begin.

Mark Chekanow

and joining you Mativ's morning, thank Good everyone, for XXXX results. second earnings us quarter discuss to

filings, comments to on Before which I'd results are our of detail and these may including the more include remind comments included from Actual in in materially disclosed and suggested quarterly you forward-looking we our in on statements. Form today's like Exchange report our reasons, that Form results begin, differ for XX-Q. call conference number Commission the annual Securities by a XX-K reports

Some metric presentation of as presentation. financial release GAAP financial The discussed the Unless and closest operations. comparisons to the to measures of Reconciliations the are during and this our in the the earnings financial earnings release. ir.mativ.com today's measures. are non-GAAP otherwise, slides the measures period and website measures are prior are relate this year to of stated these included at continuing call on is available operational for appendix

at download slides click the and/or pace using own webcast through slides the these interface. can the during You call your

These full in our periods in on you appendix comparable presentation today's to year results results we be to SWM like-for-like of our how call, period legacy the results reported as release the SWM them, company the provide Mativ of basis. reported and combined illustrate compare well for will we X, will the some comments closed prior though, in of full performance only earnings figures and referring over tables the recall to release, remind that on as results. merger and the reflect quarter second how discussing Neenah year our July were shown Thus, reconciliations. To earnings On prior this XXXX. reflect in are results a the how

turn over to I'll call the Julie. that, With

Julie Schertell

today's thank everyone, you morning, call. Good for and Mark. Thanks, joining

EP call. last proposed to divestiture, second our with our about a solid week consistent last announcement quarter, earnings report pleased we're in transformational our Following very messaging our

in good no improvement first the realization. lingering improving strikes second continued showed for $XXX synergy high a it and As first of increasing with expected, year's cost manufacturing the quarter reductions from the incremental was strong watermark $XX from slowdown pricing the reductions the sequential The combined to was showed from EBITDA quarter address. and And EBITDA This quarter in $XX were from Adjusted EBITDA already million sequential compared inefficiencies million detailed margins performance, message better impact call with cost Last in quarter. of macroeconomic to manufacturing. the with from that manufacturing yet the results was second not effects and discipline. that substantially over working very few progress first and EBITDA quarter on sites QX improvement our last continued for and in the when close strikes million. companies the sales result in past years, to quarter French first the consistent by EBITDA the over other we affected was some quarter, and destocking performance, we

that as margins With I'm stable report pleased a year-over-year despite volume backdrop, to headwinds.

pricing. driving we that reductions synergies, remaining demonstrates delivering on incremental in disciplined merger cost are and this market Importantly,

focused a filtration second was markets lines the the and impacted insulated Relative and execution on of end aspects end the this significant not remain sequential Given extent destocking on geographies many improvement business trends. destocking as with were from new EBITDA of with customers. QX, while view and new softness, in demand liners, building driving premium by products, and influenced markets volume, most new completely And release within destocking we're demonstration the quarter resilient the and and new customer destocking construction product to improved and most soft those care goods, pleased of by overall health the our are incremental volume consumer and we and business in heightened control. the though during

examples. expected invested Let highlight supporting strong new volume in with filtration, North decade lead capacity large greater of portfolio in few release in Release and online strategic America. new year, a come QX which our Mexico, category, to growth have this South largest liner and customers. transportation We've we our We've robust gained me to continue continues with of in growth. filtration in is product a pipeline consistent our share, to and a liner

online new meltblown invested the we've and air develop, $XX buildings The provides a new and test and come additions over and filtration. opportunity capacity science to this a In qualify, few it to support flow capacity to these and launch over costs XXXX nicely This the million price combination expected highlights about in new in first addition, life growth we're in of enforcement quarter. the believe will from continue remaining for stepping taken the add military, to law a vehicles. QX $XX we've input optical private revenue up in in excited In years were year in project positive is over next of the Solutions, very key revenue that's add materials XX in Other months. million versus the new Protective and cash new used grow to future. and ballistic film launched resistant

previously managing year including aggressively the reduced continued as spending We and reduction in inventory are communicated. throughout capital capital levels

well initiatives we volumes gain our with to position should visibility excellent volume by but flow-through improved as as This incremental gives and encouraged Looking the see that pricing to expansion. of and challenge share half leaner in through place second on a higher operational the customer rebound improved confidence delivery execution, and margins in we business. drive disciplined cost year, remains levels, our are to very the us innovation, synergy as operations demand across

positives as destocking lower the to as counterbalance. synergies the first quarter, volume Turning slide. and cost key Consistent and next price, remain impacts themes and the with key the

discussed costs we been resolved. issues manufacturing have largely say to in inefficiency and pleased May I'm However, the

For successful highlighting and proven in Price price net serve. in favorability the we we largely inflation materials value $XX intact, strong million had this performance bring specialty our increases continuing offsetting cost, markets have about of our the to area. remain

signaled year-over-year during way the P&L, the call, expect maintain pricing we gains lap to last price/cost to as positive some through their expect our half start spread. input in to work large and second As easing costs we a

performance was in strong ATM and Importantly, seen SBS. the price cost both

to Shifting synergies.

we our to into year control continue within and synergies synergy of as total XX offset push and the was achieved to goal that of the Synergy execution plan is we key $XX originally well say date been action to team of delivery We pleased SG&A We're accelerate the target. year. the synergy execution as X have the are million challenges $XX X of find restatements, Most its global synergies, months. key and bottom the timing to the past has outlined the services. targets helping merger, line realization the to been half half achieved job can XXXX, see that in year have a optimized XXXX. that chain program in presented realized our level economy the the in upside great of has over significant within the of the in half contract even a of synergies you To and agreements far second expenses. procurement million materials amplify about done supplier and reduced a which in and with includes the expanded shared and of for reiterate will of more read-through in have million number $X corporate the supply supplier our of XXXX. teams the rosters back we This of executing unallocated Thus to

XXXX first of We expect million the then XXXX $XX $XX and hitting the in and million in XXXX. P&L both the half remaining

current believe are visibility these achieving margin limiting volume of will goals. and long-term the pressures actions a we destocking driving the our force of Although be behind synergies,

more and In on that it is overall markets remain incremental important pressing those that most in indications difficult were mostly This pressure. and remains includes value chains destocking. to pricing Overall, driving customer operate. and focus and end we market areas our while that us, destocking Moving by some and performance, remains predict in under environment, challenged is behind control, encouraged we demand the this challenge we even demand. and which widespread to cost volumes the within

We're addressed on the also no which material strikes, have a schedules, French from results. we to reduction sites increased at quarter with focus to had actions. pleased the several We've impact first inefficiencies as and Moving large temporary cost more manufacturing. an impact stable into on settle

out focused cost-out Impact, in we Last pivoted has of and quarterly called very and spoke be committed are sites targeted actions in efforts, these yields, on put, operational to solid and Excellence the actions staffing margins. driven We softness. results remain results is mitigate improvement. on call, internal executed million reductions. evidenced The cost strong waste delivering productivity improved continued volume key margin to and primarily we Our these $XX of Simply improved about performance. manufacturing EBITDA Ops preserve Program sequential partially by which our to

to financials. to quarter's review turn Greg With I'll it the over that,

Greg Weitzel

Thanks, Julie.

reflect merged year-over-year company for As Mark thus in mentioned the only second but quarter, skewing consolidated year, reported SWM for earlier, Mativ comparisons. prior results the the legacy

business will comments basis. trends on on a my current and focus So margins comparable

offsetting softer and million and X% were Price second company with mix. in conditions. a and to saw decline customer versus best-performing sales X%. economic liner release organic EP mid-single-digit in category across sales up effects $XXX Currency attributable care. the sales the flattish volume with immaterial. The partially gain, business a across was was was year, Total were sales quarter down and we last This destocking XX% health

pressure Packaging felt XX%, declining while and with Julie Protective than was As most Specialty also in in sales declined. Solutions the more Paper discussed, Filtration Industrials, and

XXXX, we $XX of by of than million. favorable the volume QX of synergies. with QX on essentially million, associated impacts reductions, price/cost, we but cost lower our XX.X%. down decline continued benefit Despite and the We synergy input price fixed not the EBITDA made For year-over-year delivery. for offset of On were XXXX a XXXX Cost manufacturing cost and XX%. adjusted partially positive QX a reductions cost progress a million manufacturing and adjusted higher XX% comped completely. EBITDA accelerated more grew demonstrating $XX of costs flat the versus at on $XX year-over-year we mitigated Approximately pleased delivered margin absorption, net we adjusted of with EBITDA, increased basis, $XX million of total aggressive disciplined very volume, pricing sequentially strong

the like-for-like comparable Looking quarter segments in at second the same the with view.

with sequential basis EBITDA on ATM margin basis, was down with contraction nearly XX% points. For XXXX. X% XXX million against extremely Year-over-year, margin strong expanding Again, second $XX a grew points. this basis was up XXX adjusted an EBITDA of or adjusted quarter of

first basis the cost for controls. adjusted for XXX and effective $X.X an fixed improvements quarter as sequential quarter. basis XX% million the rate or reflecting by basis synergy margin EPS We with think increased remained expense margin $X.XX Interest EBITDA operations. at a X% our run our of $X.X XX% on comparable was XX% year, of for unallocated compared million basis, strikes appropriate was and purposes. on to total comparable reflecting over or is with XXX of Adjusted to approximately points, areas FBS debt of modeling $XX the expenses rates. set approximately a going of the level Year-over-year quarter points in realization were expansion Unallocated forward as the expense prior passing approximately this lower other year. well adjusted grew For in the prior million expanding EBITDA

our on bridges basis. to quarter slide next adjusted The comparable year second prior a EBITDA

benefit our First, was million. $XX price

increases to year look the as the the implemented XXXX. magnitude quarters, progresses, increases and the in in recent price the logically implemented will though we increases will year-over-year maintain lap subside We of

Bottom prior the prices, the cases, P&L. to recent environment cost prices in on higher $XX fronts. first Regarding from benefits the in to yet were should was the than line, year. come input second in approximately a costs down remained half. price impact Several negative inputs by key quarter though the or favorably favorable to inflationary million either in to continue lower from million $XX the million input continues sequentially Overall have most not quarters, last have through $XX ease the improving sequentially quarter, prior versus quarter impact flowed trend and compared year some to year versus the the net second

and about where continue With gains late the index the softening likely marking us some net XX% first favorable. more We and quarter generally NBSK expected XXXX. expect the into shrinking down input since flow-through this prices year index lower was with XXXX later to favorable are to benefits costs key and the pricing the quarter becoming respect inputs, pulp to year-over-year, for with trend in continue was this

below prices. ample demand a year as supply For uncertain on polypropylene, to and prior cap well keep continue industry market remained prices

Regarding essentially last million and the was implementation other versus initiatives showed This and sequential $XX EBITDA. $XX volume adjusted net volume as with as also was efficiency reductions. effect mix costs, improvement of of first variance driven. the million over in and manufacturing of year strikes the approximately well quarter French This is our the passing and cost

progress gains solid exiting execution run dropped that made on and strong and price/cost manufacturing we XXXX have commercial on bottom still we believe a We on to so rate. are the our track line,

post-close is of as While trending quarters EBITDA our toward discontinued aligns expectation being proposed referencing comments been approximate we $X.X XX% will beginning the approximately last our is calls, the Papers, billion $XX in on reframe be million around million operations in have adjusted This margins. with quarters. with to it recent third high-level reported sales, sale week appropriate $XXX EBITDA our and probably business quarter, Engineered reaching which our

the To and sequential close Per by leverage of slide. to was includes sale this stronger flow million cash capital XX-month cash. in of remains second This planned a first our of Turning top well EP from quarter, as the the working was reiterate trailing reduce adjustments on turns the the sequential the $XX combined quarter of quarter deleveraging later was facility, was our that $XX net of our expect X.X range next and million, versus upon expected. working quarter proposed priority, comments net $XX at [indiscernible] the next agreement million ended top quarter EBITDA last a for whereas second Operating X.Xx. week, leverage credit leverage credit of to a EBITDA. improvements targeted a X.Xx strong the as capital. year year. in by within use our the of synergies In end in be our to X.X we a improvement cash, first source the as to terms function

We of year. capital the remainder reduced will working inventory continue to on the and efficiency through focus

where $XX at sequential for margin is quarter, the from we maximization the a putting cash likely strong million should cash and inventory the EBITDA marking We to the million, efficiency negative For down cost volumes, second flow One we're thus on maximization draw ultimate production CapEx for versus temporary reducing and near-term have absorption. expectations fixed decision impacting free $XX quarter, effect believe as reductions first improvement margins flow flow driver. financial the that inventory cash note be the operational was quarter. a is

wrap And to back now to up. Julie

Julie Schertell

Thanks, Greg.

our of of from remainder allocation on the recap, of of few capital the So year takeaways key this the highlights quarter, to then hit a Papers rebalancing. the I'll briefly and about some reiterate and sale proposed recent talk the announcement Engineered

to back half remain The the net benefit the year. first we and remained through price/cost intact of is the takeaway expect that on strong, quarter the

on of and said a execution we is second we lot made The operations progress we takeaway like would. that

in the bit of First but we're an inefficiencies anomaly right strong progress. a and quarter storm a demonstrating our perfect of strikes was track view, and on

this the from quarter a and to Third, expectation aggressively with with path. future. will were improvement this with encouraged plan, are Overall, standpoint, our for takeout on and reduced on synergies current continued continue cost progress align we cost demand we've the in inventories

year this we As in stabilizes we and to XXXX. as QX similar synergies expect later with think and accelerate the potential half as about upside performance exit year, to some volume back the be remainder of we the

sale and of debt. We The to transaction week's expected financially. our net is leaning down million proceeds with immediately once pay price pleased used portfolio of approximately approximately XX% more net repositions Papers headline last X.Xx the million about us to shifting the proposed strategically announcement. $XXX be categories. highlights growth will our closes, the of our of or EBITDA. were And toward both Engineered trailing Now $XXX The from

such, margins financial EBITDA CAGR. X% $X.X XX% and high-level As a revenue EBITDA line laid parameters line a billion out with and expectations post-close We growth X% see top some top to accelerated of multiyear business potential. of we

sales later closes priority Importantly, expect focused This and financial our our solutions. our top to standpoint, growth a deal From this bias the lower. target be of next Leverage debt reduction year. and we're platforms: resources. end XX% and continue range investments that both on year a to be liners path an clear our immediate is to will of we is within from and drive EBITDA metric protective X where we our approximately release growth near-term leverage and our will by deleveraging the when Filtration,

execute we XX% remains $XX that close stock cash to flow buyback stock outlook. We attractive allocation, use clear, rightsizing value has capital of in lastly, to our to repositioned repurchases. faster priority our expect And a expect opportunistically. million an approved portfolio is program, post expected which we believe But more approximately our rebalanced with executing which to our And term. growth be dividend a we our aligned cash of share reduction begin near debt and the represents annualized

financial are line a for of So light quarter us view, capital and was it rebalanced value in good up creation. and some how announced allocation set pleased the performance approach our top transaction especially and accelerated headwinds, we growth, with long-term stronger in

I'd questions. to concludes for open like That our prepared the remarks. line

Operator

Our Jon from comes first Tanwanteng from Securities. CJS question

Peter Lukas

Pete It's Yes. Jon. Lukas for

John everything You of had terms covered in almost questions.

that. for very So thank you much

and in Just, the what on of call. reductions last terms I cost mentioned guess you had

prepared wondering, aggressive in reductions the mentioned you of cost kind continuing. Just remarks,

ones inning what we're kind of we to kind in those where and stand update on us on terms major of come? any of still like Just in

Julie Schertell

communicated. we as even majority reductions, implemented for in. that we had calling started cost the what we say were we have of Yes. our had Thanks, doing last call. And Pete, I'd

advertising So is focused cost marketing well maintenance, inventory. operating really on reduced staffing, reduction as labor, and as

in we're view that type bottom our volume we of working to returns, even own as and destiny we returns, So we efficient drive and as cost really take in the that to drive we're then volume And environment, significant and as well. out through more past improves margin that this the it volume were . and expectation than is as as of to levels. line. maintain But our as flows much market demand control the possible

Peter Lukas

of guess, your I And the pressure. that causes seeing? packaging there industrial then, Kind that just for the and you're outlook main had under what's still you mentioned and of pressure

Julie Schertell

Yes.

a it's as think significant I we're and believe as getting in It our Specialty was couple things. in much the mean destocking Packaging of Papers business, particularly I channel. pretty merchant past I that.

related. where driving greatest industrials, And a is would in So level abrasives I in tell impact spending you, tapes saw heightened where very categories we demand, construction there's then premium it's the discretionary of destocking. our and

it's had, release destocking volume I'd So optical. device softer of in particularly some and renegotiated, in and then industrials And and consumer strength strong then we've business. especially in a in pockets say new in that premium health I'd in and we and films, fixation. liners and air care, contracts combination in solid primarily say, have pockets filtration, revenue business, in premium wellness transportation our in where strength I'd papers of packaging, filtration say nice medical also of We particularly

Operator

Harriman Daniel question from Sidoti. from Our Next comes

Daniel Harriman

on than then comments and in from of second this to weaker. volume was it the bit obviously, I strong commentary, prepared first destocking expected team improvement. and just upon may sequential call a Julie, your and the in little and mentioned was and issue bit quarter a also but demand, remarks a based now, seems more know the in you congrats that Mark, you great that an Greg, have quarter Julie, quarter

in performed still environment. obviously You this well

you're for the in us maybe what So your could the bit then give margins just And impacting outlook half? you back of a conversations of are how hearing customers the quarter? maybe from little through insight X into these weeks first third

Julie Schertell

it. of I packaging bit that's signals level we're a where business. I'd again, destocking, merchant packaging QX of and Sure. and is you, specialty felt and would heightened papers, mixed Early our say customers. tell really little primarily in we our the from it's feeling in still channel And and

becomes is soft Same hard at destocking in industrial, performing point, some well consumer we're thing Our where separate business category. and the and that's really that quite destocking continued And inventory Dan, feeling to products volume. greatest rightsizing. in it

So no we've discussion said more destocking. about internally,

we've a taking and in do be really all to can of to volume drive ourselves drive areas. that the have to and We efforts we number worked demand, that

packaging. we've New across products in that board launched the

We mailers prefilter filtration, that Solutions. new we've launched. media we we've launched in have Protective In new have

about. We excited have premium launched that that really a new bulletproof we've film we're

in is volume we worked as Customer about share. we that then continue really the to talked us. drive and big So and and segment. lowest filtration in I value synergies ensuring and that drive that. as that we're cost Paper the gain volume efforts manage invest our to cost And that innovation we've possible, programs well I've think to out And us there in at and think continues facilities that's getting regard. our We're cost drive seeing helping that for on a

of year, pace to and for pace that. we We deliver on first committed the So we're to to on half committed $XX We on in for that. million. that We're had continue had synergies.

possible. mixed, our destiny is we So to position is volume I all customer have we standpoint, drive a of and that as the from pretty much to to think our as say, feedback have own and control

a really margins pleased challenge pleased customers we're We them, sequential and companies, strong improvement. But we're year, with constant understand working with for think from right super with are I to their but now where both the closely a which ended for visibility demand a profile. was quarter very the hard up with quarter, work last it's standpoint.

Daniel Harriman

ask about about a not That's so you don't destocking note again, worry made ever helpful. And to that. I've

Julie Schertell

everybody our building. and in You else

Daniel Harriman

The you EBITDA this of for is major all and the leverage the EP improvement reduction back of of you, down you and sale? close Greg, upon moving in anticipate and able this capital talked focus sequential the this improvement forward. flow question, being second week, investor in is EBITDA and to be mind base half addition obviously, for allocation about of a to last My then a strategy positive but top more sequential at may little year Do this year. quarter a cash XX% and bit the larger portion the pay the

Greg Weitzel

the moment, think have expect EP a that a specifically there sales of potential I sale. X.X EP and for bit the little and that. turns debt we by was we XX%, X.Xx another the beyond Overall, at that is leverage to come down with

Daniel Harriman

And anticipating cash XXXX, $XX you million free flow about and still that then week? for talked cash the last in

Greg Weitzel

Yes, that's right.

Daniel Harriman

Best in of quarter. luck the third

Operator

very the much. questions you line. are no further Thank on There

like any Julie I'd So now to back hand remarks. to closing for

Julie Schertell

you speaking at update. to your your our forward you time we to and for today and interest, next Thank look

Operator

Thanks, everyone. call. This conference now concludes today's

disconnect your now the rest Have of for a may day, lines. You you lovely and thank joining.

Mativ (MATV) 10 Aug 232023 Q2 Earnings call transcript