MATV - Earnings call transcript Q1 2024

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Operator

Welcome to the Mativ First Quarter 2024 Earnings Conference Call.

On the call today from Mativ are Julie Schertell, Chief Executive Officer; Greg Weitzel, Chief Financial Officer; and Chris Kuepper, Director, Investor Relations. Today's call is being recorded and will be available for replay later this afternoon. [Operator Instructions]

It is now my pleasure to turn the call over to Mr. Kuepper. Chris begin. may you Sir,

Chris Kuepper

morning, everyone, Mativ's joining for you and Quarter XXXX thank First for Earnings us Good Call.

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

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

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

Julie Schertell

call. Chris. morning, joining everyone, and thank for you our Thanks, Good

report XXXX positive step-up is a our demand earnings and demand a and markets playing good with recovery our start, off in many sequential happy momentum of to of end the as in of We QX. evidence meaningful on sales left that QX from to call expectation is last you our signs out expected. of to I'm

increases I'm which across volume QX sequentially all pleased was categories. in QX, to million, from product confirm were up with $XXX that sales XX% more than

motivating sight that in X% remainder demand almost which, to more we XXXX, for are positive can of demand than of XXXX. year-over-year, be While the in as have early were What to year sequential sales strong QX believe uncertainty, sales. QX of And drive our you improvement QX will we the comping a of momentum, in the recovery. continued after destocking line down especially what and is encouraging, customer is a was economic see, we days

higher some inefficiencies QX. through that cost in of adjusted adjusted production lower higher drivers QX have in We and to would a quarter at of That for earnings with for EBITDA that favorable coming the improvement our $XX in inventory call and combination QX our on meaningful the of of and fourth mentioned impact XXXX. inventory, absorption reoccurring, slightly selling QX also resulted the sales this our in mix, year-over-year fixed EBITDA of main million. EBITDA in were our on inventory an line bottom you cost during cost in we is facilities not impact remainder the expect Most less

optimistic an XXXX, demand macroeconomic recovery comments geopolitical and sales few of on and tensions destocking year. EBITDA unprecedented I'm about this and Throughout unpredictable uncertain why A the created combination environment and most leverage setting the operating slowdown demand that continued manufacturing and geographies reduction in output sites. industries resulting negative drove This and compete. our across in manufacturing we our impacted significantly which across

we exit as reduce year. to been and continue expenses quickly to a those this executed million throughout accelerated on and the line focused taking will to we that We unusual consolidation, by value about is reductions, areas actions that to expected recognized restructuring Those this and synergies site nonoperating including navigate control, this bottom warehouse staff $XX XXXX. our and environment, effort have operating could action deliver

accountability provides faster reporting a overhead minimize opportunities, operating and our visibility XX the to more alignment reorg corporate leverages and customer-facing resources enables reevaluate This on efficient cross-category and segment streamline for quarter. touch greater our cost. further structure in complexity, decision-making right merger, months our time we into our me also way. to announced model the was that Roughly organizational Let and the during organizational our and restructuring it reduce

aligned and customers our we are go how to with market. by product segments Our categories and

FAM and driven serves and Primarily coating components, customers Advanced water, security air such end applications. extruded of transportation, variety & and segment, and as solutions Filtration mesh safety products filtration converting by industrial and markets FAM, films, and as supports media or agriculture, a advanced such filtration and and films, nettings on building Our Materials and construction directly and spacers. process focuses purification,

Our Adhesive such through and end and SAS applications. directly care medical on supplies commercial health building Solutions athletics, papers, as consumer construction, paper, distribution as advanced personal care labels, and as health Sustainable well & SAS, care focuses segment, solutions. or tapes, and specialty liners, infrastructure, and serves customers packaging, packaging markets

SAS FAM in our increased next and do for agile and portfolio with customer-facing providing have and to a making clarity products customer Mativ externally, resources easier complementary and more has of leverages our technologies and segment manufacturing The been positive. already step business very and internally of efficient made customers. It's us our the changes across us the alignment categories, one our solution logical and achieving These response capabilities.

we We prioritize Germany reduction. Also, We debt as actions up our delivered of liners, The warehousing and us announced our our our long-term state-of-the-art XXXX to Mexico reducing XX a will XXXX that to over and reminder, in and and merger Papers unlock synergies. on during we success we rightsized growing sites. cash business that new release filtration in and for in and footprint, have on in assets overarching in to set decisions dividend continue XXXX, support Engineered that we facility consolidated use invested took the make our and beyond. and value both divested demand and theme actions and is take short-

XXXX, successful the faced with important commercial value and customers spread between allowed An input price were teams versus X. costs. stickiness a and the EBITDA to the significant We that and favorable us we to of historically impact. maintain price a pricing price our offset spread driving XXXX. believe to is Throughout the to in Turning input in performance ability our the inflation input that has our solutions provide our costs, was record-level of our result associated business and favorable costs maintain our component between to

$XX a meaningful team are positive million As we year. our And costs, a reminder, increases maintain to we last in as even confident some price spread. over in are ability experiencing input in decrease our realized

is our top Since to wins me early we some let are examples few provide a we and a of how seeing are drive result. volume priority, demand working growth as business

and layers segment's today, different base they technologies solution. First, our FAM additional to mean we pressure-sensitive breadth value customers And top capture by simplify have suppliers. chains. leveraging media, in I coat of supply that many What are and from buy are these various coating customers' that this to is our buying a instances, solution a a we

which consistency and enables can supply to chain, quality capabilities, of better breadth entire simplifies become our improves customers' With our we provide our bigger for and us a customers. solution, the partner

streamlining We from our a the base media, spacers, their are chain have as customers well in as qualifying supply engaged that of approach X and with can similar the in filtration, us largest where provide films we our separation mesh, and all minds reliable source. this tubing of share pleatable and and and the customers' membrane, Again, life wallets. unique to make our easier one is partner customers' increase to our opportunity

FAM, we in reduces film reoccurring also that in reflective the efficiency and for equipment proprietary the absorption our aerospace UV used business Secondly, new heat industry. awarded of increases were recently

transportation to filtration. And FAM, in turning finally,

and in in QX than We we volume had transportation comping highest-margin, have customers and share pipeline up opportunities. and is and year-over-year, it's year. a up years our stronger filtration, product, project to are a last gain largest X the X% market over almost have innovation experiencing strong Relative with XX%, our growth both last highest-efficacy

customers solutions medical finished Turning to and selling product. are to that have as many liner their release tape, instances are health packaging part SAS. There care where a specified we of

release our not it's liner. sometimes, And

are months, working to we chain to nicely We while progressing the have large and transition customers a as spec can And take qualification product creating holistic several supply projects XX with consumer part to our companies. with own of XX more underway solution.

sales now Furthermore, products account our recently starting $XX specialty are up in doubled been with months. the for new a space ramping million X XXXX. new team in last working over orders the cross-category year. And paper new Those customer that for acquisition, a the and over in business has we've landed pipeline throughout new on SAS of and

in new is as customers back-to-school large at Lastly, retail consumer the segment largest crafting we've several business, upcoming retail us. at space expansion as in the a our season awarded new customers, which our placement incremental of placement featured permanent one well been for for

examples, additional the filtration proprietary products that encouraged the While also our are specific by a recent and for market. for efficacy I'm for are applications highest sustainable technologies of innovative using products wall new aerospace we all currently to our customers, provide number these and coating solutions that are customers many working on mechanical including coverings,

forward. and of then over that, Greg to With detailed financial on our thoughts turn path some for it our provide closing I'll performance, discussion a I'll more

Greg Weitzel

in Consolidated to good down with million favorable and offset sales million were X%, $XXX Julie, currency. prices Thanks, by morning, the selling the prior everyone. for down volume net compared partially year, quarter X% and $XXX

As the that expected. while we than basis, demand is were Julie see on year-over-year evidence XX% a also more pickup down out we intangible a mentioned, did sequential playing on a as basis, sales step-up

$XX.X from of impact, distribution combined represented and $XX inclusive prior manufacturing also year. mix synergies; from a from million costs, and synergies. $X net impacts benefit EBITDA million Adjusted price cost million input costs SG&A; lower combined of $X is Volume, lower million, continuing which operations by and partially from million down $X favorable offset inclusive was selling of million was $XX.X which the in

effects cost XXXX. net XX% year. Turning volumes of the year-over-year offset absorption and to price QX by XX% comp cost Net of were to of prior associated to selling each compares strong produced cost & and was in and decrease and of due reflected million EBITDA macroeconomic benefit, adjusted volumes, a The sequentially continued down quarter, distribution environment Advanced inventory of lower of reflecting the Filtration partially in prior reduction $XXX Materials positive but customer lower sell-through higher uncertain year-over-year, $XX the efficiencies new cost in year-over-year initiatives. fixed down caution up and the million segments. the sales X% versus input our FAM

cost than and and XXX net input sequentially million adjusted manufacturing the of last associated Sustainable Lower impacts margin million basis QX XX% current versus our X% by of for up sales Solutions year-over-year SAS favorable initiatives. volume In while down from and distribution points year-over-year. adjusted improved $XXX more but cost & $XX cost XX% selling EBITDA up efficiencies quarter EBITDA year price, reduction XXXX. Adhesive segment, net were of SAS were offset was in

segment results this basis. compare this published first it for year new to under easier comparable was XXXX we QX our also have reporting X-K provides last make breakdowns all segmentation, like-for-like our to a separate quarter that night and of on quarters a

recent the the few items. by of $XX million Unallocated restructuring X% adjusted around corporate a of initiative. driven to year-over-year, expense Turning corporate EBITDA improved primarily

be expect to year. We the full million unallocated corporate for around $XX

$XX higher coupled period, expense balances prior XX% increased to rates on the million with Interest higher rate revolver of in our the XXXX. from interest year primarily debt, floating due

hedges taking rate when reminder, between is into account, XXXX a and staggered of approximately fixed XXXX. As a matures on a our XX% and basis at debt

compared primarily increased prior foreign $X.X million exchange gains of to year income $X.X Other on due million with period, the contracts.

tax rate X% in quarter. Our the was

available of the the million. quarter, was and $XXX liquidity was end debt At net $X.XX billion

as Our improving at ratio, second expect net paydown the we a in realize of we X.Xx decrease to with basis. free agreement, end and defined year-over-year in a was the higher debt flow the XXXX as of our on this balance mainly to credit and half EBITDA cash prioritize leverage quarter, revolver due

We the repurchase during shares did not quarter. any

to Our dilution debt. of be to down intent cash the remains from stock shares compensation, priority opportunistically and paying offset on repurchase to continues flow

XXXX. outlook Turning for to our

be a in continued of result to year's last sequential sales in line in step-up We QX $XXX expect million. with and

in a improvement. also additional We recovering XX% due driving our EBITDA, significant mainly realization sequential of and reduction volumes cost further a improvement, expect initiatives step-up to approaching margin

be to beginning remainder levels out year-over-year the demand of improvement QX pronounced more more throughout of that in normalized XXXX. will expect We the play a

year-end our We $XX previously continue building toward to maintain normal year. discussed the rate improvements, our later to run in subject million sequential seasonality, our quarterly expectation of

supply yielding program, capabilities. EBITDA solidifies We rate while reduction $XX chain this finding Our for continuing complexities by the annualized end eliminating operational increased savings previously overhead and in solutions further also technical of high-demand focused relentlessly to XXXX, million and a announced inefficiencies invest on remain level.

our XXXX our capital $XX year we depreciation expect and are be planning expenditures and approximately full $XXX to For for around $XX interest of amortization year to million. expense million XXXX be expense around full modeling and million, purposes,

that, for With hand back you, I'll it remarks. your to Julie, over closing

Julie Schertell

X all I Greg. unusual I Thanks, less team reiterate In years a accomplished of very market and than this in to how post environment. merger closing, that during want proud they've am and

taken months, in beginning of over and are and encouraged the hard our strong XX and by team decisions actions forward We I'm place. the the path past that have the benefits see we to

that to report further You've stakeholders, signs to we full mention deliver value need heard improvement. a bit, our capabilities me return Mativ's I'm pleased to to demand really and that demand unleash of we're seeing and incremental

I look in forward us XXXX. ahead quarters of what lies to the for coming

focus markets compete in leading protect by the that on to winning world. supply which unique innovative with customers continue will solutions We expectations, we complexity reducing exceeding our connect, in their providing chain and purify and

for and for please open morning, questions. you joining us line Thank this the

Operator

from with CJS Instructions] is Tanwanteng [Operator Our Securities. first Jon question

Justin Ages

EBITDA, drag, a and flattish I Jon. there. sequentially expected. for color EBITDA Last on takes had down actually quarter, you Justin is This think more the than recovering the and mentioned but EBITDA creating puts you previewed was Appreciated and volumes, on

if So just that. by wondering surprised you were

Julie Schertell

surprised no, expecting. say in what much we pretty weren't by it. line was It we with I'd were

a So we inventory differently. we through. messaged had in QX to that built we flush maybe high-cost it But bit little that had we knew

through. say sales favorable less that than we originally flushed a little mix And bit what then we had forecasted. So had maybe I'd

as line and top much QX are there well. continue the the and we bottom seeing we're expect and recovery and into as to impacts improve But to were we line quarters future that expecting, pretty

to I we XX% expect Greg, to in As up mentioned his QX. comments, close think, QX versus be

to to greater that degree. through flushed bottom line line that and drop we to higher-cost top start So a the inventory, all continued recovery, will

Justin Ages

Okay. And most any you are comment market last the you're me, can then That's seeing strength? end conditions And on just is helpful. for there where where deteriorating?

Julie Schertell

volume filtration strong of customers. subcategories really up compete. in our which say with categories in seeing project I'd a most the sequentially filtration all product almost in our in we all across is and Sure. over XX% strength with and pipeline We're

across filtration, inclusive premium tapes, as business, our construction tapes that's business. HVAC, the and within So that's of recovery in strong process, recovery in tapes also as a consumer And industrial industrial transportation really strong categories most well transportation, packaging.

weaker dye of and I'd lesser backings improve products, a but say other than paint seeing in categories. protection films. bit of volume some little some sublimation maybe We're a to our our recovery degree in

seeing deterioration where, aren't point. I'd say, We demand we're end a this any experiencing of markets at

market. So that's the

customers; revised tape, structure, for largest easier agricultural e-commerce can ] aligned applications products market in the that grow geographic adjacencies lot netting the much holistic North how is which share supporting athletic and cross-selling, which a for like with lot mentioned a crafting team in is integration existing America; and we management driving at be release I global then in expansion products. on our the of new and and [ then And account structure of new our retailers in and used our distribution efforts category and our product some incentives; in of South liner, including particularly consumer supply that within business vertical the we expansion, channel markets compete, call; with chain solutions with

that would up deterioration our I lot recovery well point just drive end recovery. across categories growth any those of demand pretty of of as incremental to beyond a sum So of strong Not and efforts this as markets. in at kind real and a market seeing all

Operator

Harriman with next The Daniel from Sidoti & is Company. question

Daniel Harriman

think I with quarter you first question. bunch of but congrats Justin's on But the demand covered I questions up, Julie, a lined had that results.

things. level to a that year generation. pay shifting the and sequential down you're in a target or you to throughout of mind debt bit year? increases cash debt I end in expecting EBITDA flow of by gears side Do specific you're the a the aiming the And rest have guess of the little of Obviously,

Greg Weitzel

capital, Dan. Thanks Yes. we Yes, with the we leverage. actually here, working a with which change the would for seasonality, the ends debt the saw QX, elevating and as and up question, normally associated expect, in

the both debt should the also slightly be leverage So there. very a then The up is at very and leverage year, well. the to that the surprise The had similar started again, year as where we we being started decrease. where at close this debt below the below will should and and level, point no X.X end expectation

Daniel Harriman

are answered know goal? the things, What what what just you're at me well you Perfect. Julie, to any million. from seems give last all? concern, things, targeting are for my quarterly risks to areas end there things biggest of And I a of is going really that from then still I if demand out $XX the demand but with year side already you this, that side achieving one -- you like guess of it And and the EBITDA

Greg Weitzel

start, can on. I'll add Maybe then and Julie

biggest We're in hit on is the the seeing really last it it. the earnings demand. overall, variable to continued Just return call. We

then, right it's It's our we largely grow. saw It's We we at continue a to returning, look it's continuing It's stabilized. back not When increase. now. see to from what -- it. backlogs, roaring and coming it's order slight

point to biggest at at faster see the we does really it now. variable what increase a think is going than what I be even rate

the we costs. we present end to year-over-year. this when of But the year-over-year expecting should half, other within input comps, there's it where still have closely and it's point. But plans not pricing at we're although place lot should outside -- sight pulps in of end look from across variable end see. and million to some see And really the we're modest up up any risk. looking at $XX relatively rise we in should not a up in -- being seeing costs resins, that first We're favorability seeing We we input -- volume,

Julie Schertell

biggest the on risk. Greg with agree would I Yes,

We're share a put business we seeing and control, already seeing and out. think and to new positive EBITDA can things XX% gain across those we're feel number I is high really the about, that I our place FAM categories. actions of the play low delivering margin. teen in we've

that. So I'm with pleased

staff, improvement margin adds year, margin care in seeing we both health about continue ramp that as up we're have announced will exit effort and We Mexico. And the point. one liners. $XX opportunities recently And restructuring then in we to the improve and and as million

revenue films time drivers question. coming, migrate release to happen higher-growth target as growth earlier the advanced of and will mentioned filtration are liner, as we margins I categories over and So as that well the to Justin's growth

we've about the place efforts we good the cost team put and the restructuring and have place the and efforts. the feel I that So reduction focus and in in

So to of I said the think driving that right value is Mativ, year the now, we this is really We for is have job marketplace And that and supporting I volume doing today. the great a execute. and of earlier, think true team execution. and in

Operator

no questions, hand any Julie back We for further remarks. closing currently have to so over I

Julie Schertell

to Sure. this us Thank our to your and higher continue lower our the you QX costs. and I operating next we're positioned and what well year continues, supported streamlined on interest look to you heard call. capture and demand Mativ I forward joining morning improving for structure, hope a agile by EBITDA as appreciate sales in was earnings more call.

Operator

Thank you. call. for This all concludes you today's joining. Thank

now may You your disconnect lines.

Julie Schertell

Thanks.

Mativ (MATV) 9 May 242024 Q1 Earnings call transcript