MATV - Earnings call transcript Q4 2024

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Operator

Thank you and welcome to Mativ Fourth Quarter and Full Year 2024 Earnings Conference Call.

On the call today from Mativ are Julie Schertell, Chief Executive Officer; Gregory Weitzel, Chief Financial Officer; and Chris Kuepper, Director of 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 Call. joining for you and Quarter and thank Fourth Earnings for Full us Good Year XXXX

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

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

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

Julie Schertell

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

Before from to we get into X call. today's key me the highlight our results, allow takeaways

First, of segment. strong performance will results, another upcoming Mativ, and cover across capping excellent is positive all confidence the improving us I our can we SAS success that the more quarter categories we broadly momentum continually very in XXXX, in year in gives a segment expand which remarks. SAS to continue see turned across my in

previous experienced stemming industrial difficult quality a film our FAM in production quarter continue call, paint acknowledged with together XXXX. macros, sluggish issue during volume to our we Second, endure as declines we from late protection as in

our customers and quality the have this in fully You'll regaining this assured the key rest category. of on focused about we hear more trust are issue shortly. Though addressed

and restructured over XXXX, operations. of organization streamline the costs costs to continuing $XX we in million further removed reduce while Third, we are overhead and

profitability improve have will actions, can acting to we further what from prior cost it on Our the proven take focused enterprise. for of and generate prepared that the we results internally meaningful are and efforts

many increases product Sales We discuss partially films. our QX primarily by of FAM our in had our in softness categories. will We in and offset up that, volume with categories, let's strong with performance advanced which advanced improvement X% results. last in again, update strength overall organically. continued Mativ offset in increased categories, and filtration about in some With we I results quarter mixed SAS, momentum In demand were in saw momentarily. volume demonstrated our which of lower films business, provide an highlighted all by

XXXX On paper XXX by adjusted full margin in SAS followed gain quarters basis largest year in health year and have and categories delivered up X% the almost full in all driving prior year-over-year EBITDA and care. and meaningful we the strong XX% produced basis, liners of a continued Adjusted improvement packaging EBITDA with up volume All labels year. QX fourth to compared sales early with organic since that The on tapes, resulting momentum up quarter, almost and in XXXX, SAS in reported was margin XX% seen points. an EBITDA up four basis. improvement SAS almost adjusted

it within than order SAS sales the The XXXX what pipeline focused XX% QX, our lie is XXXX. One greater in that that and pace is strong has ago. a than and was the example on team the opportunities into year discipline is ahead upside today team SAS more continued of commercial the

in improved with well as the growth have specialty significantly tapes presence We the targeted e-commerce our also as financial very in our such profile print, of segment. this am and volume business. pleased as digital progress I health expanded and care categories

FAM. to Turning

call performance QX advanced we films in in consistent with our in mixed in previous were results discussed filtration what November. challenges overall with Our stable and in

plan film, turnaround comprehensive During which underway. that now well is paint protection on call, commented our for we

Our manufactured significantly process film driven first has resulted with quality technology in late sustainability primarily demand, site our a by in investment in paint controls, and XXXX film, largest quality with products was of improvement. recent detection issue quality restoring mid-XXXX, to our priority in improved our visual quality. protection share low Within ensure loss. Since improved

existing We are actively customers improvements. these products to control working closely qualify our quality with new and to new subject

and pace on protection, as such Second, specialty carrying films. these versus growing film paint are QX product we markets, to are adjacent that our QX. XX% in report volume into After prior and with stronger was optical categories, focused order share I'm medical pleased largest up in year

adding plant growing this aggressively U.S. to operator film keep We our capacity in demand. with the largest at are up

Third, to our price profiles customers advance has will and that products developed margin year. mid-tier continue paint a point existing product to similar with we we have film this that thin protection

We to year. throughout with expect gain this initiative traction the

we in categories, leadership support that in Fourth, and film sales efforts business. comfort. of costs that and smart well our improve improvements film site leadership new we have adjacent drive X as as upskilled replaced this in solutions and announced glass glass partnerships reduce and with to innovative lastly, companies And create quality

beyond. received and existing While and early interest expect in from development, customers, we new support to these in XXXX strong growth products films these optical have in and longer-term relationships

adjacent These impact in be and seeing very as material biggest chain albeit we part into supply The well see are business, protection are pricing recover demand raw all isolated on challenge material raw input both we diversify product film film enter Notably, expecting areas announced the categories. working a headwinds segments. paint sequential in From expeditiously important to costs improved imbalance. product of moderate inflation, to where expected our we will an targeted we as across are QX, film actions offset we strong as categories. selective to and have pricing perspective, actions affects part, we an

Additionally, streamline and our organization further complexity chain costs. initiatives working on and to we supply are reduce reduce operating

XXXX divested we we our enter In XXXX. underperforming and plans by over of with over nonstrategic our last restructured footprint debt $XX streamlined slow culture an of XX million XX%, and XXXX. end our plant months, additional not assets, reduced costs portfolio, reduction as Our repositioned commitment $XX of will for reducing and the the continuous by nonoperating overhead the improvement in by XX% by organization, million over have

X to in cross of leadership, across his and responsibility this joined to stacked SAS business leader customer activities and we most with reported adjusted effort our margin of sales part further opportunities, his to XXXX, the our further Mativ and Ryan and team's discipline these am unlock leverage growth. commercial and customer confident EBITDA quarters driving As in deliver we results, consecutive Ryan capabilities growth including commercial consecutive instrumental I and customers. for of and promoted and with have us has early FAM. segment strategic focus current strong X SAS Elwart, strong all of Mativ lead our quarters been will across of

to turn I Greg, with words want our over it few Before to about execution I XXXX. and end strategy a in approach

generation strategy focused we We platforms our liners, care. have aligned enter customers. reducing a future, tapes markets are XXXX, debt with portfolio the laser approach, on investments health From as with and and an release in capabilities and specialty strongest flow identified for and growth execution in This our and capacity growth, leverage. investments filtration, cash clear profit we and includes

the and achieved believe this in While they the right I up actions for us firmly team past initiatives year the future. set the has and are successes

a been environment low have We longer demand in expected. industrial than

supply reducing our such, by in at efforts, capital as costs. for while our complexity streamline plans while investing in and organization be XXXX, based market And to chain the in in aggressive best keen will relationships. practices on spending us across footprint are as we you we manufacturing optimistic teams overall and even excellence Mativ. accomplish we to commercial As These well as what see costs our actions simultaneously targeted and customer continue growing we awareness improving still how and reducing momentum go SAS reduce FAM, reduce further more are growth, supporting and can and about success upon action our leverage

more it Greg financial With that, a I'll of performance. turn for discussion over detailed to our

Greg Weitzel

operations prior was sales continuing as were Higher Consolidated volume million million year. partially flat million prior essentially EBITDA selling year. versus while were year-over-year higher in morning, and combined XX% driven prior on by operations $XX the everyone. the good a the mix the impact, X.X% $XX.X combined costs X.X% costs higher which an million, and costs. for to by reported, basis Sales up Adjusted represented Julie, offset SG&A absorption compared net in $X prices of year. lower $X organic million Thanks, $X distribution $XXX input $XXX and a and million of manufacturing from down from from quarter were fixed was million unfavorable continuing

prior last almost across our on of XX% almost $XX SAS, sales and year up net Organic EBITDA were all more or cost reflected basis prices. million, adjusted almost up than strong year-over-year. all growth markets of from $XX up selling as net categories year-over-year performance 'XX. volumes increased higher versus manufacturing million Net more were of unfavorable the versus and price slightly of X% selling costs. our offset costs, higher versus distribution $XXX year. in The million volumes higher which than performance million margin $XXX EBITDA SAS input higher reported. generated favorable X% Adjusted across reflected QX and organic In and was partially sales an end FAM X% by down

our filtration water categories filtration in categories. were distribution growth earlier, FAM along As than advanced films, lower well with reported higher million input volumes that optical prices. lower and selling manufacturing advanced offset We price as volumes effects partially million EBITDA $XX and and high-margin in in than the our with of more and net down these films of netting in $XX our was Julie with we more versus as films reflecting lower year-over-year, pressures offset medical by netting lower cost categories, mentioned stable costs. selling volumes adjusted air costs. and and unfavorable

Turning items. to few the of corporate a

million efforts the at increased million XXXX. of our to basis matures XXXX. $XX $XX operations year of over on Unallocated taking a debt a and and When portion rate continue account, to primarily staggered is interest corporate from discontinued down driven of due expense prior of previous as the fixed of a XXXX hedges XX% reduction deliver. in expense expenses our overhead SG&A primarily adjusted year, between lower prior Interest versus allocation XX% our was to into by EBITDA the million $X expense

$X income due million period, to gains related on with asset compared was prior benefit million as XXX% as well on rationalization to in sales facility Tax increased onetime gains Other $XXX million. the the an available year liquidity and largely exchange. of $XX quarter, $XXX a effective net tax by million was tax adjustment, excluded, end was which, of the rate XX%. driven if quarter, At would the of yield foreign debt

X.Xx. was agreement, net leverage credit ratio, defined Our as in our

a for through continues of #X and and debt. outstanding more flow cash and reduced the more contributed repatriation reduction. requirements in $XX than debt part Our the to excess QX, cash available utilization of cash be priority effort of the than We by $XX is balances. effort from size million they deleveraging reassessed million our to end balance this company-wide The our large paying down proceeds us consolidated since

As our leverage to a range X.Xx. X.X is reminder, target

Turning to to QX XXXX.

results. demand inventory through QX highest higher we to also be year in to remains of this expected our Market is in our the patterns that prior be cost challenged, than QX, year. due you to normal selling impact like our and remind and QX will seasonality this that will I'd

will be costs that offset Additionally, year. the have with remainder impact announced of QX will to pricing likely the input higher

cash margin excellence As aggressive and improvement, we're cost XXXX, including reductions for the profit, on generation focused operational continued driving improvements. full and year further

to costs of through FX we million. our tax slight million be in for Capital Depreciation, using to expect million, to comp purposes million. top $X $XX million and another we headwind for year. For year, XX%. rate, million. modeling net to Onetime unallocated $XX $XX the $XX increase to million. around full be capital stock-based adjusted of in amortization be working around AR $XX Interest million around suggest our normalized securitization. $XX of expense the fees expenses around for be $XXX plus And around million. line around A expenditures $XX

across in a $XX of are the these headwind million of half increases XXXX polymers. of then on to increases From pulp, half we steady course expect price the raw slight be in year. Timing-wise, million to perspective, phased expecting a of input expense and papers, back first material the over costs, resins $XX we mainly to by the driven hold and the

the expect raw the actions through fully We offset to material the inflation pricing course over of year.

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

Julie Schertell

initiatives against savings market partnerships. this with announced from away take new programs value reduction are deliver operating to model, more our we should include addressable current that while products films, continued efforts. XX% reduced total share you company yield expanding than expected prior footprint XX% step call increase markets, new our What capital cost and overhead price capture advanced plans Greg. reduction is this specifically also grow a a Thanks, leadership executing These actions incremental agile can sales increases, progress within what in more showing turnaround aggressive to in and our to forward optimization, advanced strong business in and XXXX. year, our I across in our effort accomplish pipeline, look and forward team in films spending

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

Operator

line line first comes The from John the with CJS Tanwanteng the Instructions] on have Securities. of [Operator question phone we

Peter Lukas

John. for Lukas It's Yes. Pete

a in sounds by higher to costs, to like more input with Kind but start at the a inventory little input costs sounds that. of on it QX little just and once over touched impacted You like color bit is again, maybe more maybe us your going prepared subside It remarks, will give color. time on be it the end pricing?

Greg Weitzel

$XX we as a we're overall, we're at point, increased potential input $XX seeing million Yes, costs really of -- to mentioned, across areas. million Pete. Thanks, spread Sure. different few this

about selling plans I actions be course over of where the inventory to pricing for negative higher we said, earlier place we have be well to talked quarter, expect that net in some first the quarter. that cover be that through costs the the the announced we'll net moderate That would year, as again. a positive yes, in QX. We with

Peter Lukas

just and have strategy? covered potential And I any your from get I to anything competitors left. And guess it's and you tariffs? I'll have ask X for for in know but Canada strategy you Great. a unknown, only lot, the tariff just hard specific there? a Mexico the seen question

Julie Schertell

we of I said, Yes. seen our been very they look that those Mexico, mitigate if really The pricing anything tariffs on to you standpoint because around in the from Canada minimal get place to would and we implemented marketplace. depending haven't impact have a the us. implemented bit a plans have in yet uncertainty where shift well opportunity chain as at others far, quite land. we the from mitigate tariff have say competitive And costs. so supply the options as on standpoint, what ones for a to just in other

Operator

your & Instructions] with question from [Operator And comes next Harriman Daniel Sidoti Company.

Daniel Harriman

That's really exciting news about Ryan.

you've and of turnaround similar Is within which And So you what the the strong forward? And success care care Julie, segment in health wondering there, a growth. term? turnaround organic great XXXX, FAM within seen you the health segment? moving same segment can I'm the kind successes expect with the do FAM in sustainable advanced just Tiger particular saw FAM long films right success kind the you've through with along going SAS from lines team now, the then the gain of installed

Julie Schertell

Sure. Thanks, Dan.

we what in sorry, today. which SAS in I'm start might your me was SAS question, Let leveraging leverage we that will in first -- FAM be with

I think focus key there's areas would X on. we that

demand to means in is in the pipeline FAM continue revenue use and and SAS. our target first about our that That segment. discipline XX% in the The tools refine be we'll we of We effectively to our that pipeline, generation.

customer in that effective mature our It's several the has customers management. do segment, strategic and is The up within one that business to new and opened planning FAM. joint doors expect model second we a and same SAS very value

opportunities, a them then mean holistic support Mativ. our selling across even within customers one deep greatest cross-business segments customers this The within how of priority. and and expertise, cross-selling towards And in across and Mativ more manner. that leverage and that will door to portfolio talent fourth a and really open leveraging could expertise, marketing R&D the will broadly the entire look as to more so is is capabilities more But we broadly the the opportunities, with third one that's

So about I'm that. excited

a we'll particularly HVAC, air really and impacted X some of I process market progress other in FAM, in markets by within think is momentum now. there's improvement FAM. continued see It industrial water, lot filtration specific and sciences. life and of right in primarily the in and

If we team update the just was that which question, I that was turn That really the referenced had and about quick focused you done we on let team tiger care. your on is fact health a care similar And to Scapa our that sustainable? second on previously exercise business. and give had a me health health care

that completely what in in from XXXX category, growth of months, the in to that you, stagnant has be segment. the XX% to that the I up XX around a tell accretive about last are So would above and reported performance line, margins And top category. makes SAS health turned care XX% team

health area be opportunities more Most to to So health focused customers. primarily side them customer also, on to health cross-buying provide we're liners able our broadly tell where care I'm pleased release efficient to customers. our and most supply business, and continues with an deeply option new portfolio for and programming, going and revised really notably, for the penetrating been customers provide the we've able agreements, holistic liners. was release customers new a purchased Mativ's would also care the results those more within our And customer of that's leverage an buying chain. care including you I in commercial turnaround. And That

largest with our with point, a investment partnerships in platform, forward. at we as growth and opportunities care, move health the in as because we're team the we the internally the and bit I'm investing the the customers view and with we on it key with that disruption biggest issue this turnaround with So growth in and It's had focused similar tiger was largest expect really, first really more I our sites it. our focused late films. and results XXXX. a in in little quality pleased

been has resolved. that So

in organization. and we've And leadership our invested within upgraded in the quality technology, technology. of that selling leadership changed our virtual out We've our site detection leadership, part

a lot quality. with of because good stumble qualifications but there's think have through we there, I the we our customers on did progress go to

that year. So than this this of to positively in more I half the expect year would of in the half first back ramp

Daniel Harriman

tapes, then of On last release and that made quick understand and automotive Perfect. And down in general, I'm line, filtration be previous in you've sneak investments athletic of that the just I tapes, you've X XXXX. investments then But the some in moving into could if to see can, those new us highlighted to update progress CapEx and how you I call the recent going quarter's calls going forward? one. more out those liner playing on in line, is you

Julie Schertell

facility Sure. of The Most operating, them in melt-blown that up is of are still infancy the in transportation and line German filtration. stage. and our supports saturated kind

Mexico growing you North tape in America early America. optimize continue well liner The and the mentioned And in so are South really Canada there. great The growth, release we'll system phases. lines which to in in that opportunities and the coder is with just supports in in really Italy

So those started installed yet. and up haven't been

support in invested capacity our health then capability our there we care facility And customer recently largest in additions and and well. automation as to Knoxville

reduction from We'll on standpoint. So our the on back have future capital spending, we some our defer maintenance years. and that I feel place are very we can in a even capital our we spending cut into though right confident growth reducing cost CapEx some

Operator

registered. no I we have further currently can questions confirm

Julie closing some Schertell, it So I final back Chief to to would hand for comments. Officer, Executive like

Julie Schertell

thank to forward to I the you. We call. and look forward to talking next afternoon on many and Thank morning. of this us on talking tomorrow call later to our this you to want for you joining everyone look

Operator

Thank you. I conference. confirm that today's can does conclude

disconnect now your may rest the enjoy and please You lines, your of day.

Mativ (MATV) 20 Feb 252024 Q4 Earnings call transcript