Mativ Announces First Quarter 2023 Results

Mativ Holdings, Inc. (“Mativ” or the “Company”) (NYSE: MATV) reported earnings results for the three months ended March 31, 2023. On July 6, 2022, Schweitzer-Mauduit International, Inc. (“SWM”) and Neenah, Inc. (“Neenah”) completed a merger of equals (“the merger”). Financial results for periods prior to the merger reflect only the legacy SWM results.

Mativ First Quarter 2023 Highlights
Sales increased 66.9% to $679.0 million, reflecting the benefit of the merger; 1% constant currency organic sales growth
GAAP loss was $7.7 million, GAAP EPS was $(0.14), and GAAP Operating Profit was $9.3 million, which all included merger integration and purchase accounting expenses
Adjusted Income was $13.7 million, Adjusted EPS was $0.25, and Adjusted EBITDA was $65.7 million (see non-GAAP reconciliations); engineered papers Adjusted EBITDA decreased approximately $15 million, accounting for roughly two-thirds of total year-over-year EBITDA decline, mainly due to labor strikes in France and manufacturing inefficiencies
Price increases more than offset the impacts of higher input costs; however, lower volumes primarily from customer de-stocking and manufacturing challenges drove margin pressure
$25 million incremental synergy realization still expected in 2023, with procurement and supply chain activities building upon 2022 SG&A actions; easing input costs also expected to support sequential margin improvements

Management Commentary
Chief Executive Officer Julie Schertell commented “We continue to navigate an uncertain macro environment, focusing our efforts on internal actions we can control and working to mitigate external factors. While the first quarter was particularly difficult, we anticipate delivering significantly improved sequential EBITDA for the remainder of the year. The first quarter of 2023 was impacted by a combination of customer de-stocking across the business, operational inefficiencies in our French facilities, where we experienced a number of strikes in response to governmental actions related to social benefits, and inefficiencies in several US sites. We believe the key issues affecting first quarter margin performance will prove temporary, as customer indications suggest we are currently moving past the peak de-stocking impacts, and that more normalized volume activity should resume in the second half of the year. Further, we are starting to see improved manufacturing performance across the business, which we expect will translate into better margins as the year progresses. Despite a tough first quarter and some continued headwinds expected in the second quarter, we expect to exit 2023 on a strong trajectory toward $100 million EBITDA quarters.”

“Looking into the second half of 2023, we are encouraged by several trends. First, while the overall economic backdrop remains difficult to predict, customer indications signal that the de-stocking that began late last year should be essentially complete. This would ease some of the recent volume volatility and improve absorption at many of our sites. Second, our synergy execution remains on track, and we are confident in the $25 million EBITDA benefit in 2023 we communicated in February. The SG&A synergies we executed late last year will be fully realized this year, while procurement and supply chain synergy execution has begun and is expected to accelerate throughout the year. Third, input costs are easing, and we believe that these benefits will flow through to our margins in the coming quarters.”

Ms. Schertell concluded, “In the near-term, we are laser-focused on accelerating cost synergies and implementing additional expense reductions to drive margins, as well as maximizing cash flow through working capital efficiency and curbed capital spending. While we are operating in a tough macro environment and extremely focused on these short-term improvements, we are also prudently evaluating longer-term strategic decisions regarding portfolio optionality and capital allocation to support both our growth ambitions and de-leveraging priorities. We believe the opportunities that existed at the time of the merger remain intact, and are confident that we are taking the right steps to set Mativ up for sustained top and bottom-line gains for years to come.”
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