ALPHARETTA, Ga,--(BUSINESS WIRE)--Mativ Holdings, Inc. ("Mativ" or the "Company") (NYSE: MATV) reported earnings results for the three months ended September 30, 2024. On November 30, 2023, Mativ Holdings, Inc. ("Mativ" or the "Company") completed the sale of its Engineered Papers business. Financial results for continuing operations exclude Engineered Papers in all periods.
Adjusted measures are reconciled to GAAP at the end of this release. Financial comparisons are versus the prior year period unless stated otherwise. Figures may not sum to total due to rounding. "Comparable" non-GAAP measures used to compare current period Mativ results reflect prior period results revised to align with our new segment reporting structure. The Company previously also filed a separate Form 8-K on May 8, 2024, which includes comparable financial statements for all fiscal quarters of 2023 revised to align with the new segment reporting structure.
Mativ Third Quarter 2024 Highlights (Continuing Operations)
- Sales of $498.5 million increased 0.1% year over year, and 1.4% on an organic basis
- GAAP loss was $20.8 million in Q3 2024, an improvement of $443.5 million compared to $464.3 million in the prior year (which included a $401.0 million goodwill impairment charge), GAAP EPS was $(0.38); both included organizational realignment, impairment, divestiture and purchase accounting expenses
- Adjusted income was $11.0 million, Adjusted EPS was $0.21, and Adjusted EBITDA was $60.8 million (see non-GAAP reconciliations)
- Adjusted EBITDA was up 10% versus the prior year, primarily driven by improved manufacturing performance, lower SG&A and distribution expenses, partially offset by lower volumes in advanced films, and less favorable mix
- GAAP operating profit margin improved materially compared to the prior year (which included a $401.0 million goodwill impairment charge) and adjusted EBITDA margin increased 110 basis points
Management Commentary
Chief Executive Officer Julie Schertell commented, "We saw meaningful increases in volume and profitability in Filtration and our overall SAS segment during the third quarter, with SAS segment adjusted EBITDA increasing almost 20% year over year. This was somewhat offset by results in Advanced Films, which were impacted by automotive and construction end markets. As such, we have launched a turnaround effort specific to Advanced Films focused on demand generation, operational performance and increased customer and end market diversification. This turnaround effort will be similar to the approach we used for Healthcare throughout 2023, which year-to-date, resulted in above-market sales growth of more than 5% and materially improved profitability versus the same period in 2023.
Given the prevailing macro-economic conditions and the slow pace of demand recovery, we continue to prioritize those things that we can control and execute on actions to mitigate external market factors, such as the $20 million reduction in non-operating cost announced earlier this year. Additionally, we are increasing capacity in our growth categories of filtration, specialty tapes, release liners and medical films, while at the same time reducing cost and optimizing our supply chain by reducing our plant footprint from 48 sites at the time of the merger to 35 sites today and our warehousing footprint by more than 25%. These actions reduce cost and complexity, and support sustained margin improvements as demand returns."
Mativ Third Quarter 2024 Financial Results (Continuing Operations)
Note: The Financial Results below reflect consolidated Mativ results presented in our revised segment reporting structure in the current and prior year period. See the supplemental tables titled Business Segment Reporting From Continuing Operations for additional information regarding the revised segment reporting structure.
Filtration & Advanced Materials (FAM) | Three Months Ended September 30, | ||||||||||||||||
(in millions; unaudited) | 2024 | 2023 | Change | 2024 | 2023 | ||||||||||||
Net Sales | $ | 189.6 | $ | 195.8 | $ | (6.2 | ) | ||||||||||
GAAP Operating Profit & Margin % | $ | 19.9 | $ | 22.6 | $ | (2.7 | ) | 10.5 | % | 11.5 | % | ||||||
Adjusted EBITDA & Margin % | $ | 36.5 | $ | 39.2 | $ | (2.7 | ) | 19.3 | % | 20.0 | % | ||||||
Filtration & Advanced Materials (FAM) segment sales, comprised primarily of filtration media and components, advanced films, coating and converting solutions, and extruded mesh products, were $189.6 million, down 3.2% versus the prior year period, as higher volumes in filtration & netting were more than offset by lower volumes in advanced films along with lower selling prices.
GAAP Operating Profit in 2024 included $0.8 million of restructuring and impairment expenses primarily related to organizational realignment and footprint rationalization. Adjusted EBITDA (see non-GAAP reconciliations) decreased 7% versus prior year as higher volumes in filtration & netting, lower selling and general expenses, and improved manufacturing efficiencies were more than offset by lower volumes in advanced films, and lower selling prices.
Sustainable & Adhesive Solutions (SAS) | Three Months Ended September 30, | ||||||||||||||||
(in millions; unaudited) | 2024 | 2023 | Change | 2024 | 2023 | ||||||||||||
Net Sales | $ | 308.9 | $ | 302.4 | $ | 6.5 | |||||||||||
GAAP Operating Profit & Margin % | $ | 10.3 | $ | (405.8 | ) | $ | 416.1 | 3.3 | % | (134.2 | )% | ||||||
Adjusted EBITDA & Margin % | $ | 41.0 | $ | 34.2 | $ | 6.8 | 13.3 | % | 11.3 | % | |||||||
Sustainable & Adhesive Solutions (SAS) segment sales, comprised primarily of tapes, labels, liners, specialty paper, packaging and healthcare solutions, of $308.9 million were up 2.1%, and 4.4% on an organic basis, versus the prior year period, as higher volumes across all end-markets and higher selling prices were partially offset by sales associated with closed and divested plants.
GAAP Operating Profit in 2024 included $10.5 million in restructuring, restructuring related, and impairment expenses primarily related to organizational realignment and footprint rationalization and included $401 million in goodwill impairment in 2023. Adjusted EBITDA (see non-GAAP reconciliations) increased $6.8 million (or almost 20%) compared to the prior year period, driven by favorable manufacturing and distribution costs, favorable relative net selling price versus input cost performance, and higher volumes were partially offset by unfavorable mix and higher SG&A expenses. Adjusted EBITDA margin of 13.3% increased 200 basis points versus the prior year.
Unallocated | Three Months Ended September 30, | ||||||||||||||||
(in millions; unaudited) | 2024 | 2023 | Change | 2024 | 2023 | ||||||||||||
GAAP Operating Expense & % of Sales | $ | (23.2 | ) | $ | (36.7 | ) | $ | 13.5 | (4.7 | )% | (7.4 | )% | |||||
Adjusted EBITDA & % of Sales | $ | (16.7 | ) | $ | (18.0 | ) | $ | 1.3 | (3.4 | )% | (3.6 | )% | |||||
Adjusted unallocated expenses (EBITDA) (see non-GAAP reconciliations) were in line with prior year. GAAP operating expenses in 2024 included $1.5 million in organizational realignment and integration costs, and $0.4 million of EP divestiture expenses.
Interest expense was $18.3 million versus $16.8 million in the prior year period. The increase was primarily due to higher average interest rates and higher average balances on the floating portion of our outstanding debt in 2024.
Other expense, net was $12.7 million increased $12.4 million compared with the prior year $0.3 million primarily driven by foreign currency losses and other asset related charges.
Tax rate was 13.3% for the three months ended September 30, 2024. The lower tax rate was driven by impact of one-time tax adjustments. Excluding the impact of these one-time tax adjustments, the Company's tax rate was 21.1%.
Non-GAAP Adjustments reflect items included in GAAP operating profit, income, and EPS, but excluded from adjusted results (see non-GAAP reconciliation tables for additional details). The most significant adjustments to the third quarter 2024 results were as follows:
- $0.22 per share of purchase accounting expenses (purchase accounting expenses reflect primarily ongoing non-cash intangible asset amortizations associated with mergers and acquisitions)
- $0.20 per share of restructuring, restructuring related, impairment, and other expenses
Cash Flow & Debt
Year-to-date 2024 cash provided by operating activities was $70.7 million. Capital spending and software costs totaled $35.6 million. Working capital was a $0.8 million source of cash due to an increase in accounts payable and other current liabilities, partially offset by an increase in accounts receivable and an increase in inventories.
Total debt was $1,143.4 million as of September 30, 2024 and total cash was $162.2 million resulting in net debt of $981.2 million. Total liquidity was approximately $463 million, consisting of $162 million of cash and $301 million of revolver availability. The Company's debt matures on a staggered basis between 2027 and 2029. The Company redeemed the 2026 senior unsecured notes on October 7, 2024 and issued $400 million senior unsecured notes due October 1, 2029.
Dividend & Share Repurchases
On November 6, 2024 the Company announced its next quarterly cash dividend of $0.10 per share payable on December 20, 2024 to stockholders of record as of November 29, 2024.
During the third quarter, the company did not repurchase shares. The Company intends to repurchase shares periodically and opportunistically to offset dilution due to stock compensation.
Conference Call
Mativ will hold a conference call to review third quarter 2024 results with investors and analysts at 8:30 a.m. Eastern time on Thursday, November 7, 2024. The earnings conference call will be simultaneously broadcast over the Internet at http://ir.mativ.com. To listen to the call, please go to the Company's website at least 15 minutes prior to the call to register and to download and install any necessary audio software. For those unable to listen to the live broadcast, a replay will be available on the Company's website shortly after the call.
About Mativ
Mativ Holdings, Inc. is a global leader in specialty materials, solving our customers' most complex challenges by engineering bold, innovative solutions that connect, protect and purify our world. Headquartered in Alpharetta, Georgia, we manufacture on three continents and generate sales in over 100 countries through our family of business-to-business and consumer product brands. The company's two operating segments, Filtration & Advanced Materials and Sustainable & Adhesive Solutions, target premium applications across diversified and growing categories. Our broad portfolio of technologies combines polymers, fibers and resins to optimize the performance of our customers' products across multiple stages of the value chain. Our leading positions are a testament to our best-in-class global manufacturing, supply chain and materials science capabilities. We drive innovation and enhance performance, finding potential in the impossible.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act") that are subject to the safe harbor created by that Act and other legal protections. Forward-looking statements include, without limitation, those regarding EPS and other financial guidance, acquisition integration and performance, growth prospects, future end-market trends, future macro-economic trends, the future effects of supply chain challenges and price increases, future cash flows, net leverage, purchase accounting impacts, effective tax rates, planned investments, profitability, and cash flow, the expected benefits of the Neenah merger and integration, whether the strategic benefits and accretion of the sale of the Company's Engineered Papers business can be achieved, the expected benefits, of our organizational restructuring, our ability to execute our growth strategy for 2024, and integration and other statements generally identified by words such as "believe," "expect," "intend," "guidance," "plan," "forecast," "potential," "anticipate," "confident," "project," "appear," "future," "should," "likely," "could," "may," "will," "typically," and similar words. In addition, the amount of the goodwill impairment charge previously announced is based in part on estimates of future performance, so this announcement should also be considered a forward-looking statement.
These forward-looking statements are prospective in nature and not based on historical facts, but rather on current expectations and on numerous assumptions regarding the business strategies and the environment in which Mativ will operate in the future and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. No assurance can be given that such expectations will prove to have been correct and persons reading this presentation are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this press release. These statements are not guarantees of future performance and involve certain risks and uncertainties, and assumptions that may cause actual results to differ materially from our expectations as of the date of this release. These risks include, among other things, the following factors:
- Risks associated with the implementation of our strategic growth initiatives, including diversification, and the Company's understanding of, and entry into, new industries and technologies;
- Risks associated with acquisitions, dispositions, strategic transactions and global asset realignment initiatives of Mativ, including the recent EP divestiture;
- Adverse changes in our end-market sectors impacting key customers;
- Changes in the source and intensity of competition in our commercial end-markets;
- Adverse changes in sales or production volumes, pricing and/or manufacturing costs;
- Seasonal or cyclical market and industry fluctuations which may result in reduced net sales and operating profits during certain periods;
- Risks associated with our technological advantages in our intellectual property and the likelihood that our current technological advantages are unable to continue indefinitely;
- Supply chain disruptions, including the failure of one or more material suppliers, including energy, resin, fiber, and chemical suppliers, to supply materials as needed to maintain our product plans and cost structure;
- Increases in operating costs due to inflation and continuing increases in the inflation rate or otherwise, such as labor expense, compensation and benefits costs;
- Our ability to attract and retain key personnel, labor shortages, labor strikes, stoppages or other disruptions;
- Changes in general economic, financial and credit conditions in the U.S., Europe, China and elsewhere, including the impact thereof on currency exchange rates (including any weakening of the Euro) and on interest rates;
- A failure in our risk management and/or currency or interest rate swaps and hedging programs, including the failures of any insurance company or counterparty;
- Changes in the manner in which we finance our debt and future capital needs, including potential acquisitions;
- Changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities;
- Uncertainty as to the long-term value of the common stock of Mativ;
- Changes in employment, wage and hour laws and regulations in the U.S. and elsewhere, including the unionization rules and regulations by the National Labor Relations Board, equal pay initiatives, additional anti-discrimination rules or tests and different interpretations of exemptions from overtime laws;
- The impact of tariffs, and the imposition of any future additional tariffs and other trade barriers, and the effects of retaliatory trade measures;
- Existing and future governmental regulation and the enforcement thereof that may materially restrict or adversely affect how we conduct business and our financial results;
- Weather conditions, including potential impacts, if any, from climate change, known and unknown, and natural disasters or unusual weather events;
- International conflicts and disputes, such as the ongoing conflict between Russia and Ukraine, the war between Israel and Hamas and the broader regional conflict in the Middle East, which restrict our ability to supply products into affected regions, due to the corresponding effects on demand, the application of international sanctions, or practical consequences on transportation, banking transactions, and other commercial activities in troubled regions;
- Compliance with the FCPA and other anti-corruption laws or trade control laws, as well as other laws governing our operations;
- Risks associated with pandemics and other public health emergencies, including the COVID-19 pandemic and its variant strains;
- The number, type, outcomes (by judgment or settlement) and costs of legal, tax, regulatory or administrative proceedings, litigation and/or amnesty programs;
- Increased scrutiny from stakeholders related to environmental, social and governance ("ESG") matters, as well as our ability to achieve our broader ESG goals and objectives;
- Costs and timing of implementation of any upgrades or changes to our information technology systems;
- Failure by us to comply with any privacy or data security laws or to protect against theft of customer, employee and corporate sensitive information;
- The impact of cybersecurity risks related to breaches of security pertaining to sensitive Company, customer or vendor information, as well as breaches in the technology that manages operations and other business processes; and
- Other factors described elsewhere in this document and from time to time in documents that we file with the U.S. Securities and Exchange Commission (the "SEC").
All forward-looking statements made in this document are qualified by these cautionary statements. Forward-looking statements herein are made only as of the date of this document, and Mativ undertakes no obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise. For a more detailed discussion of these factors, also see the information under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Mativ's most recent annual report on Form 10-K for the year ended December 31, 2023 and any material updates to these factors contained in any of Mativ's future filings with the SEC. The discussion of these risks is specifically incorporated by reference into this release. The financial results reported in this release are unaudited.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such and should only be viewed as historical data. The financial results reported in this release are unaudited.
Non-GAAP Financial Measures
Certain financial measures and comments contained in this press release exclude restructuring and impairment expenses, certain purchase accounting adjustments related to prior acquisitions, organizational realignment and integration costs, divestiture costs, interest expense, stock compensation expense, inventory step-up expense, the effect of income tax provisions and other tax impacts, capital spending, capitalized software costs, cloud-based software costs and depreciation and amortization. This press release also provides certain information regarding the Company's financial results excluding currency impacts. This information estimates the impact of changes in foreign currency rates on the translation of the Company's current financial results as compared to the applicable comparable period and is derived by translating the current local currency results into U.S. Dollars based upon the foreign currency exchange rates for the applicable comparable period. Financial measures which exclude or include these items have not been determined in accordance with accounting principles generally accepted in the United States (GAAP) and are therefore "non-GAAP" financial measures. Reconciliations of these non-GAAP financial measures to the most closely analogous measure determined in accordance with GAAP are included in the financial schedules attached to this release.
The Company believes that the presentation of non-GAAP financial measures in addition to the related GAAP measures provides investors with greater transparency on the information used by the Company's management in its financial and operational decision-making. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the Company's financial and operational performance in the same way that management evaluates the Company's financial performance. Management believes that providing this information enables investors to better understand the Company's operating performance and financial condition. These non-GAAP financial measures are not calculated or presented in accordance with, and are not intended to be considered in isolation or as alternatives or substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP, and should be read only in conjunction with the Company's financial measures prepared and presented in accordance with GAAP. The non-GAAP financial measures used in this release may be different from the measures used by other companies.
MATIV HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) FROM CONTINUING OPERATIONS (in millions, except per share amounts) (Unaudited) | |||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||
Net sales | $ | 498.5 | $ | 498.2 | 0.1% | $ | 1,522.5 | $ | 1,573.7 | (3.3)% | |||||||||
Cost of products sold | 404.9 | 411.5 | (1.6)% | 1,236.0 | 1,303.8 | (5.2)% | |||||||||||||
Gross profit | 93.6 | 86.7 | 8.0% | 286.5 | 269.9 | 6.2% | |||||||||||||
Selling expense | 18.1 | 20.5 | (11.7)% | 54.6 | 60.6 | (9.9)% | |||||||||||||
Research and development expense | 5.7 | 5.4 | 5.6% | 17.5 | 16.6 | 5.4% | |||||||||||||
General expense | 51.6 | 63.4 | (18.6)% | 173.3 | 185.8 | (6.7)% | |||||||||||||
Total nonmanufacturing expenses | 75.4 | 89.3 | (15.6)% | 245.4 | 263.0 | (6.7)% | |||||||||||||
Goodwill impairment expense | - | 401.0 | N.M. | - | 401.0 | N.M. | |||||||||||||
Restructuring and other impairment expense | 11.2 | 16.3 | (31.3)% | 37.4 | 17.6 | N.M. | |||||||||||||
Operating profit (loss) | 7.0 | (419.9 | ) | N.M. | 3.7 | (411.7 | ) | N.M. | |||||||||||
Interest expense | 18.3 | 16.8 | 8.9% | 55.0 | 48.8 | 12.7% | |||||||||||||
Other expense, net | (12.7 | ) | (0.3 | ) | N.M. | (12.1 | ) | (3.6 | ) | N.M. | |||||||||
Loss from continuing operations before income taxes | (24.0 | ) | (437.0 | ) | (94.5)% | (63.4 | ) | (464.1 | ) | (86.3)% | |||||||||
Income tax expense (benefit), net | (3.2 | ) | 27.3 | N.M. | (13.2 | ) | 30.0 | N.M. | |||||||||||
Net loss from continuing operations | (20.8 | ) | (464.3 | ) | (95.5)% | (50.2 | ) | (494.1 | ) | (89.8)% | |||||||||
Net income from discontinued operations | - | 9.3 | N.M. | - | 26.9 | N.M. | |||||||||||||
Net loss | (20.8 | ) | (455.0 | ) | (95.4)% | (50.2 | ) | (467.2 | ) | (89.3)% | |||||||||
Dividends to participating securities | (0.1 | ) | (0.5 | ) | (80.0)% | (0.2 | ) | (0.7 | ) | (71.4)% | |||||||||
Net loss attributable to Common Stockholders | $ | (20.9 | ) | $ | (455.5 | ) | (95.4)% | $ | (50.4 | ) | $ | (467.9 | ) | (89.2)% | |||||
Net loss per share - basic: | |||||||||||||||||||
Loss per share from continuing operations | $ | (0.38 | ) | $ | (8.50 | ) | (95.5)% | $ | (0.93 | ) | $ | (9.06 | ) | (89.7)% | |||||
Income per share from discontinued operations | - | 0.17 | N.M. | - | 0.49 | N.M. | |||||||||||||
Basic | $ | (0.38 | ) | $ | (8.33 | ) | (95.4)% | $ | (0.93 | ) | $ | (8.57 | ) | (89.1)% | |||||
Net loss per share - diluted: | |||||||||||||||||||
Loss per share from continuing operations | $ | (0.38 | ) | $ | (8.50 | ) | (95.5)% | $ | (0.93 | ) | $ | (9.06 | ) | (89.7)% | |||||
Income per share from discontinued operations | - | 0.17 | N.M. | - | 0.49 | N.M. | |||||||||||||
Diluted | $ | (0.38 | ) | $ | (8.33 | ) | (95.4)% | $ | (0.93 | ) | $ | (8.57 | ) | (89.1)% | |||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic | 54,327,500 | 54,659,100 | 54,305,800 | 54,600,100 | |||||||||||||||
Diluted | 54,327,500 | 54,659,100 | 54,305,800 | 54,600,100 | |||||||||||||||
N.M. - Not Meaningful | |||||||||||||||||||
MATIV HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions) (Unaudited) | |||||||
September 30,
| December 31,
| ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 162.2 | $ | 120.2 | |||
Accounts receivable, net | 208.5 | 176.5 | |||||
Inventories, net | 354.3 | 352.9 | |||||
Income taxes receivable | 16.6 | 30.6 | |||||
Other current assets | 35.7 | 32.3 | |||||
Total current assets | 777.3 | 712.5 | |||||
Property, plant and equipment, net | 635.5 | 672.5 | |||||
Finance lease right-of-use assets | 17.3 | 18.2 | |||||
Operating lease right-of-use assets | 44.6 | 45.6 | |||||
Deferred income tax benefits | 10.4 | 6.4 | |||||
Goodwill | 475.6 | 474.1 | |||||
Intangible assets, net | 585.5 | 631.3 | |||||
Other assets | 76.9 | 81.8 | |||||
Total assets | $ | 2,623.1 | $ | 2,642.4 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current debt | $ | 2.8 | $ | 2.8 | |||
Finance lease liabilities | 1.6 | 1.4 | |||||
Operating lease liabilities | 9.5 | 9.9 | |||||
Accounts payable | 172.7 | 139.3 | |||||
Income taxes payable | 10.1 | 14.3 | |||||
Accrued expenses and other current liabilities | 131.3 | 113.7 | |||||
Total current liabilities | 328.0 | 281.4 | |||||
Long-term debt | 1,140.6 | 1,101.8 | |||||
Finance lease liabilities, noncurrent | 17.2 | 18.2 | |||||
Operating lease liabilities, noncurrent | 34.8 | 35.3 | |||||
Long-term income tax payable | - | 7.7 | |||||
Pension and other postretirement benefits | 58.5 | 62.2 | |||||
Deferred income tax liabilities | 116.1 | 142.3 | |||||
Other liabilities | 45.6 | 44.4 | |||||
Total liabilities | 1,740.8 | 1,693.3 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding | - | - | |||||
Common stock, $0.10 par value; 100,000,000 shares authorized; $54,328,913 and 54,211,124 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | 5.4 | 5.4 | |||||
Additional paid-in-capital | 671.9 | 669.6 | |||||
Retained earnings | 168.3 | 235.0 | |||||
Accumulated other comprehensive income, net of tax | 36.7 | 39.1 | |||||
Total stockholders' equity | 882.3 | 949.1 | |||||
Total liabilities and stockholders' equity | $ | 2,623.1 | $ | 2,642.4 | |||
MATIV HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW FROM CONTINUING OPERATIONS (in millions) (Unaudited) | |||||||
Nine Months Ended September 30, | |||||||
2024 | 2023 | ||||||
Operating | |||||||
Loss from continuing operations | $ | (50.2 | ) | $ | (494.1 | ) | |
Non-cash items included in net loss: | |||||||
Depreciation and amortization | 108.4 | 112.4 | |||||
Amortization of deferred issuance costs | 5.9 | 5.6 | |||||
Goodwill impairment | - | 401.0 | |||||
Asset impairments | 16.2 | 14.8 | |||||
Deferred income tax | (22.2 | ) | 24.9 | ||||
Pension and other postretirement benefits | (4.5 | ) | (10.4 | ) | |||
Stock-based compensation | 8.7 | 9.3 | |||||
Loss on sale of assets | 9.7 | - | |||||
(Gain) loss on foreign currency transactions | 3.0 | (1.2 | ) | ||||
Other non-cash items | (2.9 | ) | (7.3 | ) | |||
Other operating | (2.2 | ) | (3.8 | ) | |||
Net changes in operating working capital | 0.8 | (13.4 | ) | ||||
Net cash provided by operating activities of: | |||||||
Continuing operations | 70.7 | 37.8 | |||||
Discontinued operations | - | 14.6 | |||||
Net cash provided by operations | 70.7 | 52.4 | |||||
Investing | |||||||
Capital spending | (32.9 | ) | (49.4 | ) | |||
Capitalized software costs | (0.5 | ) | (0.5 | ) | |||
Proceeds from sale of assets | 4.5 | - | |||||
Cash received from (paid on) settlement of cross-currency swap contracts | (1.7 | ) | - | ||||
Other investing | 1.2 | 0.5 | |||||
Net cash used in investing of: | |||||||
Continuing operations | (29.4 | ) | (49.4 | ) | |||
Discontinued operations | (12.0 | ) | (8.8 | ) | |||
Net cash used in investing | (41.4 | ) | (58.2 | ) | |||
Financing | |||||||
Cash dividends paid | (16.2 | ) | (49.8 | ) | |||
Proceeds from long-term debt | 127.0 | 180.0 | |||||
Payments on long-term debt | (97.0 | ) | (134.2 | ) | |||
Payments for debt issuance costs | - | (1.5 | ) | ||||
Payments on financing lease obligations | (0.8 | ) | (0.7 | ) | |||
Purchases of common stock | (0.8 | ) | (7.0 | ) | |||
Net cash provided by (used in) financing of: | |||||||
Continuing operations | 12.2 | (13.2 | ) | ||||
Discontinued operations | - | (0.9 | ) | ||||
Net cash provided by (used in) financing | 12.2 | (14.1 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 0.5 | (0.9 | ) | ||||
Increase (decrease) in cash and cash equivalents | 42.0 | (20.8 | ) | ||||
Cash and cash equivalents at beginning of period | 120.2 | 124.4 | |||||
Cash and cash equivalents at end of period | $ | 162.2 | $ | 103.6 | |||
MATIV HOLDINGS, INC. AND SUBSIDIARIES |
BUSINESS SEGMENT REPORTING FROM CONTINUING OPERATIONS |
(in millions) |
(Unaudited) |
NOTE REGARDING SEGMENT REPORTING AND COMPARABILITY |
The Company filed a Current Report on Form 8-K/A on December 6, 2023 to reflect the impact of the Engineered Papers ("EP") Divestiture as discontinued operations and to present certain Non-GAAP financial measures quarterly on a comparable basis beginning with the first quarter of 2022 (the "EP Supplemental Financial Information"). The Company filed a Current Report in form 8-K on May 8, 2024 to update the presentation of such Non-GAAP financial measures previously disclosed in the EP Supplemental Financial Information in order to reflect the changes to the Company's reportable segments discussed below and enhance the Company's shareholders' ability to evaluate Company operating performance. The EP business is presented as a discontinued operation for all periods and certain prior period amounts were retrospectively revised to reflect these changes. |
As part of the organizational realignment effective during the first quarter of 2024, we have reorganized into two new reportable segments: (1) Filtration & Advanced Materials ("FAM") focused primarily on filtration media and components, advanced films, coating and converting solutions, and extruded mesh products, and (2) Sustainable & Adhesive Solutions ("SAS"), focused primarily on tapes, labels, liners, specialty paper, packaging and healthcare solutions. The change in reportable segments reflects the realignment of segment level management and the related internal review of our operating segments. The prior period segment results have been revised to align with our current segment reporting structure and is presented on a continuing operations basis. |
Net Sales from Continuing Operations | |||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||
FAM | $ | 189.6 | $ | 195.8 | (3.2 | )% | $ | 598.7 | $ | 628.1 | (4.7 | )% | |||||||||
SAS | 308.9 | 302.4 | 2.1 | % | 923.8 | 945.6 | (2.3 | )% | |||||||||||||
Total Consolidated | $ | 498.5 | $ | 498.2 | 0.1 | % | $ | 1,522.5 | $ | 1,573.7 | (3.3 | )% | |||||||||
Operating Profit (Loss) from Continuing Operations | |||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
Return on Net Sales | Return on Net Sales | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
FAM | $ | 19.9 | $ | 22.6 | 10.5 | % | 11.5 | % | $ | 59.7 | $ | 78.3 | 10.0 | % | 12.5 | % | |||||||||||
SAS | 10.3 | (405.8 | ) | 3.3 | % | (134.2 | )% | 30.1 | (385.4 | ) | 3.3 | % | (40.8 | )% | |||||||||||||
Unallocated | (23.2 | ) | (36.7 | ) | (4.7 | )% | (7.4 | )% | (86.1 | ) | (104.6 | ) | (5.7 | )% | (6.6 | )% | |||||||||||
Total Consolidated | $ | 7.0 | $ | (419.9 | ) | 1.4 | % | (84.3 | )% | $ | 3.7 | $ | (411.7 | ) | 0.2 | % | (26.2 | )% | |||||||||
Non-GAAP Adjustments to Operating Profit (Loss) | |||||||||||||||
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
FAM - Amortization of intangibles and other purchase accounting adjustments | $ | 8.7 | $ | 8.4 | $ | 26.0 | $ | 25.1 | |||||||
FAM - Restructuring, restructuring related, impairment, and other expenses | 0.8 | 1.1 | 5.2 | 2.4 | |||||||||||
FAM - Organizational realignment and integration costs(2) | 0.1 | - | 0.2 | - | |||||||||||
SAS - Amortization of intangibles and other purchase accounting adjustments | 7.1 | 7.2 | 21.3 | 21.8 | |||||||||||
SAS - Restructuring, restructuring related, impairment, and other expenses | 10.5 | 418.9 | 28.2 | 419.3 | |||||||||||
SAS - Organizational realignment and integration costs(2) | - | - | (0.1 | ) | - | ||||||||||
Unallocated - Restructuring, restructuring related, impairment, and other expenses | - | - | 3.4 | 1.1 | |||||||||||
Unallocated - Organizational realignment and integration costs(2) | 1.5 | 9.2 | 8.0 | 28.7 | |||||||||||
Unallocated - Divestiture costs | 0.4 | 5.3 | 3.6 | 5.3 | |||||||||||
Unallocated - Financing fees(1) | 2.3 | 2.4 | 6.9 | 2.4 | |||||||||||
Unallocated - Amortization of cloud-based software costs | 0.1 | - | 0.3 | - | |||||||||||
Total Consolidated | $ | 31.5 | $ | 452.5 | $ | 103.0 | $ | 506.1 | |||||||
(1) Financing fees incurred for the Receivables Sales Agreement for the three and nine months ended September 30, 2024 and for the three months ended September 30, 2023. | |||||||||||||||
(2) Costs associated with the organizational realignment plan ("the Plan") announced on January 24, 2024 totaled $0.7 million and $3.7 million for the three and nine months ended September 30, 2024, respectively, which included advisory fees and system-related initiatives. Integration costs totaled $0.8 million and $4.4 million for the three and nine months ended September 30, 2024, respectively, which included stock-based compensation, employee compensation, and consulting fees. | |||||||||||||||
Adjusted Operating Profit from Continuing Operations | |||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
Return on Net Sales | Return on Net Sales | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
FAM | $ | 29.5 | $ | 32.1 | 15.6 | % | 16.4 | % | $ | 91.1 | $ | 105.8 | 15.2 | % | 16.8 | % | |||||||||||
SAS | 27.9 | 20.3 | 9.0 | % | 6.7 | % | 79.5 | 55.7 | 8.6 | % | 5.9 | % | |||||||||||||||
Unallocated | (18.9 | ) | (19.8 | ) | (3.8 | )% | (4.0 | )% | (63.9 | ) | (67.1 | ) | (4.2 | )% | (4.3 | )% | |||||||||||
Total Consolidated | $ | 38.5 | $ | 32.6 | 7.7 | % | 6.5 | % | $ | 106.7 | $ | 94.4 | 7.0 | % | 6.0 | % | |||||||||||
Non-GAAP Adjustments to Adjusted Operating Profit | |||||||||||||||
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
FAM - Depreciation | $ | 6.7 | $ | 7.0 | $ | 20.2 | $ | 20.6 | |||||||
FAM - Stock-based compensation(1) | 0.3 | 0.1 | 0.7 | 0.3 | |||||||||||
SAS - Depreciation | 12.6 | 13.5 | 39.4 | 41.5 | |||||||||||
SAS - Stock-based compensation(1) | 0.5 | 0.4 | 0.6 | 0.4 | |||||||||||
Unallocated - Depreciation | 0.6 | 0.9 | 1.5 | 3.0 | |||||||||||
Unallocated - Stock-based compensation(1) | 1.6 | 0.9 | 4.1 | 3.2 | |||||||||||
Total Consolidated | $ | 22.3 | $ | 22.8 | $ | 66.5 | $ | 69.0 | |||||||
(1) Stock-based compensation excludes stock-based compensation included in restructuring and integration costs. | |||||||||||||||
Adjusted EBITDA from Continuing Operations | |||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
Return on Net Sales | Return on Net Sales | ||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
FAM | $ | 36.5 | $ | 39.2 | 19.3 | % | 20.0 | % | $ | 112.0 | $ | 126.7 | 18.7 | % | 20.2 | % | |||||||||||
SAS | 41.0 | 34.2 | 13.3 | % | 11.3 | % | 119.5 | 97.6 | 12.9 | % | 10.3 | % | |||||||||||||||
Unallocated | (16.7 | ) | (18.0 | ) | (3.4 | )% | (3.6 | )% | (58.3 | ) | (60.9 | ) | (3.8 | )% | (3.9 | )% | |||||||||||
Total Consolidated | $ | 60.8 | $ | 55.4 | 12.2 | % | 11.1 | % | $ | 173.2 | $ | 163.4 | 11.4 | % | 10.4 | % | |||||||||||
Non-GAAP Reconciliation of Organic Net Sales Growth | |||||||||||
FAM | SAS | Consolidated Mativ | |||||||||
Three Months Ended September 30, | |||||||||||
Mativ 2023 Net Sales from Continuing Operations | $ | 195.8 | $ | 302.4 | $ | 498.2 | |||||
Divestiture/closure adjustments | - | (6.5 | ) | (6.5 | ) | ||||||
Mativ 2023 comparable Net Sales from Continuing Operations | $ | 195.8 | $ | 295.9 | $ | 491.7 | |||||
Mativ 2024 Net Sales | $ | 189.6 | $ | 308.9 | $ | 498.5 | |||||
Divestiture/closure adjustments | - | - | - | ||||||||
Mativ 2024 comparable Net Sales from Continuing Operations | $ | 189.6 | $ | 308.9 | $ | 498.5 | |||||
Organic growth | (3.2 | )% | 4.4 | % | 1.4 | % | |||||
Currency effects on 2024 | $ | 0.9 | $ | 0.7 | $ | 1.6 | |||||
Mativ 2024 comparable Net Sales from Continuing Operations with Currency Adjustment | $ | 188.7 | $ | 308.2 | $ | 496.9 | |||||
Organic constant currency growth | (3.6 | )% | 4.2 | % | 1.1 | % | |||||
MATIV HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTAL DATA | |||||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Operating profit (loss) from continuing operations | $ | 7.0 | $ | (419.9 | ) | $ | 3.7 | $ | (411.7 | ) | |||||
Plus: Restructuring, restructuring related, impairment, and other expenses | 11.3 | 19.0 | 36.8 | 21.8 | |||||||||||
Plus: Goodwill impairment | - | 401.0 | - | 401.0 | |||||||||||
Plus: Purchase accounting adjustments | 15.8 | 15.6 | 47.3 | 46.9 | |||||||||||
Plus: Organizational realignment and integration costs | 1.6 | 9.2 | 8.1 | 28.7 | |||||||||||
Plus: Divestiture costs | 0.4 | 5.3 | 3.6 | 5.3 | |||||||||||
Plus: Financing fees | 2.3 | 2.4 | 6.9 | 2.4 | |||||||||||
Plus: Amortization of cloud-based software costs | 0.1 | - | 0.3 | - | |||||||||||
Adjusted Operating Profit from continuing operations | $ | 38.5 | $ | 32.6 | $ | 106.7 | $ | 94.4 | |||||||
Income (loss) from continuing operations | $ | (20.8 | ) | $ | (464.3 | ) | $ | (50.2 | ) | $ | (494.1 | ) | |||
Plus: Restructuring, restructuring related, impairment, and other expenses | 10.7 | 16.8 | 31.8 | 18.9 | |||||||||||
Plus: Goodwill impairment | - | 401.0 | - | 401.0 | |||||||||||
Plus: Gain/loss on sale of assets | 5.8 | - | 5.8 | - | |||||||||||
Plus: Purchase accounting adjustments | 12.2 | 13.1 | 36.5 | 36.7 | |||||||||||
Plus: Litigation/tax settlement | - | 1.2 | - | 4.9 | |||||||||||
Plus: Organizational realignment and integration costs | 1.2 | 7.5 | 6.1 | 22.4 | |||||||||||
Plus: Divestiture costs | 0.3 | 4.1 | 2.8 | 4.0 | |||||||||||
Plus: Other | 1.1 | - | 1.1 | - | |||||||||||
Less: Luxembourg valuation allowance release | - | 31.7 | - | 31.7 | |||||||||||
Plus: Reversal of valuation allowance on prior year tax credits | - | 6.4 | - | 6.4 | |||||||||||
Plus: Tax legislative changes, net of other discrete items | 0.5 | (6.3 | ) | (2.8 | ) | 2.2 | |||||||||
Adjusted Income from continuing operations | $ | 11.0 | $ | 11.2 | $ | 31.1 | $ | 34.1 | |||||||
Earnings (loss) per share from continuing operations - diluted | $ | (0.38 | ) | $ | (8.50 | ) | $ | (0.93 | ) | $ | (9.06 | ) | |||
Plus: Restructuring, restructuring related, impairment, and other expenses | 0.20 | 0.32 | 0.58 | 0.36 | |||||||||||
Plus: Goodwill impairment | - | 7.30 | - | 7.30 | |||||||||||
Plus: Gain/loss on sale of assets | 0.11 | - | 0.11 | - | |||||||||||
Plus: Purchase accounting adjustments | 0.22 | 0.23 | 0.67 | 0.67 | |||||||||||
Plus: Litigation/tax settlement | - | 0.02 | - | 0.09 | |||||||||||
Plus: Organizational realignment and integration costs | 0.02 | 0.14 | 0.11 | 0.42 | |||||||||||
Plus: Divestiture costs | 0.01 | 0.08 | 0.05 | 0.08 | |||||||||||
Plus: Other | 0.02 | - | 0.02 | - | |||||||||||
Less: Luxembourg valuation allowance release | - | 0.59 | - | 0.59 | |||||||||||
Plus: Reversal of valuation allowance on prior year tax credits | - | 0.13 | - | 0.12 | |||||||||||
Plus: Tax legislative changes, net of other discrete items | 0.01 | (0.10 | ) | (0.05 | ) | 0.05 | |||||||||
Adjusted Earnings Per Share from continuing operations - diluted | $ | 0.21 | $ | 0.21 | $ | 0.56 | $ | 0.62 | |||||||
MATIV HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTAL DATA | |||||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net loss from continuing operations | $ | (20.8 | ) | $ | (464.3 | ) | $ | (50.2 | ) | $ | (494.1 | ) | |||
Plus: Interest expense | 18.3 | 16.8 | 55.0 | 48.8 | |||||||||||
Plus: Financing fees | 2.3 | 2.4 | 6.9 | 2.4 | |||||||||||
Plus: Provision for income taxes | (3.2 | ) | 27.3 | (13.2 | ) | 30.0 | |||||||||
Plus: Depreciation & amortization | 35.7 | 36.9 | 108.4 | 110.5 | |||||||||||
Plus: Amortization of cloud-based software costs | 0.1 | - | 0.3 | - | |||||||||||
Plus: Stock compensation expense | 2.4 | 1.4 | 5.4 | 4.0 | |||||||||||
Plus: Inventory step up expense | - | - | - | 1.4 | |||||||||||
Plus: Restructuring, restructuring related, impairment, and other expenses | 11.3 | 16.3 | 36.8 | 17.6 | |||||||||||
Plus: Goodwill impairment | - | 401.0 | - | 401.0 | |||||||||||
Plus: Other restructuring related expense | - | 2.8 | - | 4.2 | |||||||||||
Plus: Organizational realignment and integration costs | 1.6 | 9.2 | 8.1 | 28.7 | |||||||||||
Plus: Divestiture costs | 0.4 | 5.3 | 3.6 | 5.3 | |||||||||||
Plus: Litigation/tax settlement | - | - | - | 4.9 | |||||||||||
Plus: Other income (expense), net | 12.7 | 0.3 | 12.1 | (1.3 | ) | ||||||||||
Adjusted EBITDA from continuing operations | $ | 60.8 | $ | 55.4 | $ | 173.2 | $ | 163.4 | |||||||
Cash used in operating activities of continuing operations | $ | 37.6 | $ | 32.3 | $ | 70.7 | $ | 37.8 | |||||||
Less: Capital spending | (12.1 | ) | (14.7 | ) | (32.9 | ) | (49.4 | ) | |||||||
Less: Capitalized software costs | (0.4 | ) | - | (0.5 | ) | (0.5 | ) | ||||||||
Less: Cloud-based software costs | (1.2 | ) | - | (2.2 | ) | - | |||||||||
Free Cash Flow from continuing operations | $ | 23.9 | $ | 17.6 | $ | 35.1 | $ | (12.1 | ) | ||||||
September 30, 2024 | December 31, 2023 | ||||||||||||||
Total Debt | $ | 1,143.4 | $ | 1,104.6 | |||||||||||
Less: Cash | 162.2 | 120.2 | |||||||||||||
Net Debt from continuing operations | $ | 981.2 | $ | 984.4 | |||||||||||
Contacts
Chris Kuepper, IRC
Director, Investor Relations
+1-770-569-4229
Website: http://www.mativ.com
