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.
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. "Organic" – non-GAAP measure to reflect acquired/merged
companies as if they were owned/merged for the full comparable
periods and adjusted to exclude sales related to assets that have
been sold or closed. "Comparable" – a non-GAAP measure used to
compare current period Mativ results with the combined reported
results for legacy Neenah and SWM operations, adjusted for certain
reclassifications and other reporting conformations in the periods
prior to the close of the merger. Please see December 22, 2022 8-K
for additional reconciliations of periods prior to the merger.
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."
Mativ First Quarter 2023 Financial
Results
Note: The Reported Results below reflect consolidated Mativ
results in the current period, whereas the prior year period
reflects only legacy SWM results. The Comparable Results reflect
the inclusion of the legacy Neenah operations in the prior year
period. See the supplemental tables titled Non-GAAP Reconciliation
of Combined Legacy Neenah and SWM Operating Profit for
Comparability for additional financial information regarding the
combined company’s legacy financial information.
Advanced Technical Materials (ATM) as
Reported
Three Months Ended March
31,
(in millions; unaudited)
2023
2022
Change
2023
2022
Net Sales
$
434.3
$
272.9
$
161.4
GAAP Operating Profit & Margin %
$
37.6
$
10.3
$
27.3
8.7
%
3.8
%
Adjusted EBITDA & Margin %
$
58.8
$
42.4
$
16.4
13.5
%
15.5
%
ATM Comparable Results
Net Sales
$
434.3
$
439.6
$
(5.3
)
GAAP Operating Profit & Margin %
$
37.6
$
24.1
$
13.5
8.7
%
5.5
%
Adjusted EBITDA & Margin %
$
58.8
$
63.5
$
(4.7
)
13.5
%
14.4
%
Advanced Technical Materials (ATM) segment sales were
$434.3 million, up 59.1%, and reflect the merged company results
versus the prior year period which reflected only legacy SWM
results. Constant currency organic sales growth was 2%. Release
liners was the top performing category, up over 20%. For the
segment, price increases of 9% were offset by lower volume/mix of
7%. Volumes were driven by de-stocking across categories as
customers reduce inventories in response to supply chain
improvements and increased economic uncertainty. Comparable
Adjusted EBITDA decreased 7%, or $4.7 million, (see non-GAAP
reconciliations). While pricing was positive across the portfolio
and more than offset input cost inflation, nearly all categories
experienced volume contraction versus 1Q:22, driving inefficiencies
and lower overall profitability as sites were overstaffed relative
to volumes. The Company is implementing additional cost reduction
programs to contain spending in the near-term.
Fiber-Based Solutions (FBS) as
Reported
Three Months Ended March
31,
(in millions; unaudited)
2023
2022
Change
2023
2022
Net Sales
$
244.7
$
133.9
$
110.8
GAAP Operating Profit & Margin %
$
6.2
$
25.7
$
(19.5
)
2.5
%
19.2
%
Adjusted EBITDA & Margin %
$
28.4
$
30.9
$
(2.5
)
11.6
%
23.1
%
FBS Comparable Results
Net Sales
$
244.7
$
252.0
$
(7.3
)
GAAP Operating Profit & Margin %
$
6.2
$
38.7
$
(32.5
)
2.5
%
15.4
%
Adjusted EBITDA & Margin %
$
28.4
$
47.3
$
(18.9
)
11.6
%
18.8
%
Fiber-Based Solutions (FBS) segment sales were $244.7
million, up 82.7%, and reflect the merged company results versus
the prior year period which reflected only legacy SWM results.
Constant currency organic sales were down 1%, with price increases
of 8% offset by lower volume/mix of 9%. Comparable Adjusted EBITDA
decreased 40%, or $18.9 million (see non-GAAP reconciliations).
Engineered papers accounted for approximately $15 million of the
Adjusted EBITDA decrease, driven in part by nationwide labor
strikes in France in response to recently passed legislation. Both
engineered papers and packaging and specialty papers were also
impacted by manufacturing inefficiencies that began in 4Q:22 and
carried through to 1Q:23. These inefficiencies are largely
attributable to overstaffing relative to volumes and the ramp-up of
new manufacturing operators at several large plants where labor
turnover was elevated in 2022. While pricing more than offset input
cost inflation, the France strikes, segment-wide volume declines,
and manufacturing performance drove lower profitability. Both the
France strike situation and general manufacturing performance are
expected to be less impactful in the remainder of 2023 as the
strikes are expected to decrease in frequency and efficiency
improvement plans are being executed and currently generating
positive results. The Company is implementing additional cost
reduction programs to contain spending in the near-term.
Unallocated as Reported
Three Months Ended March
31,
(in millions; unaudited)
2023
2022
Change
2023
2022
GAAP Operating Expense & % of
Sales
$
(34.5
)
$
(25.4
)
$
(9.1
)
(5.1
)%
(6.2
)%
Adjusted EBITDA & % of Sales
$
(21.5
)
$
(14.8
)
$
(6.7
)
(3.2
)%
(3.6
)%
Unallocated Comparable Results
GAAP Operating Expense & % of
Sales
$
(34.5
)
$
(40.7
)
$
6.2
(5.1
)%
(5.9
)%
Adjusted EBITDA & % of Sales
$
(21.5
)
$
(22.7
)
$
1.2
(3.2
)%
(3.3
)%
Unallocated expenses reflected the merged Company
expenses in 1Q:23, compared to only legacy SWM expenses in the
prior year period. On a comparable basis, Adjusted unallocated
expenses (EBITDA) decreased $1.2 million, as cost savings related
to the merger were partially offset by general inflationary
pressures.
Interest expense was $26.5 million, versus $14.5
million in the prior year period which reflected only the legacy
SWM results. The increase was due to the merger and related
incremental expense of assuming existing debt on the legacy Neenah
balance sheet, as well as higher interest rates on floating rate
debt versus the prior year.
Other income was $7.0 million, versus other income in the
prior year period of $5.5 million; both periods included gains on
sales of non-operating assets, which offset other expenses.
Tax rate was 23.5% during 1Q:23. Excluding the impact of
non-GAAP adjustments, the Company's tax rate was 21.7%.
Non-GAAP Adjustments reflect items included in GAAP
operating profit, income, and EPS, but excluded from Adjusted
Operating Profit, EBITDA, income, and EPS (see non-GAAP
reconciliation tables for additional details). The most significant
adjustments to first quarter 2023 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)
- $0.15 per share of expenses related to the Neenah merger, which
included integration and severance expenses
Cash Flow, Debt &
Dividend
First quarter of 2023 cash provided by operating activities was
negative $20.7 million, and capital spending and software costs
totaled $19.2 million, resulting in negative free cash flow of
$39.9 million. Working capital was a $52.0 million use of cash,
consistent with typical seasonal working capital patterns. The
Company expects seasonally stronger operating and free cash flow in
the second half of the year.
Total debt was $1,733.0 million as of March 31, 2023 and total
cash was $97.0 million resulting in net debt of $1,636.0 million.
Pursuant to the terms of the Company's credit agreement, net debt
to adjusted EBITDA was 4.1x as of March 31, 2023. Net leverage is
defined in the Company's credit agreement, and includes EBITDA
adjustments for certain expected cost synergies. Total liquidity of
approximately $456 million consisted of $97 million of cash and
$359 million of revolver availability. The Company's debt matures
on a staggered basis between 2026 and 2028.
The Company announced a quarterly cash dividend of $0.40 per
share. The dividend will be payable on June 23, 2023 to
stockholders of record as of May 26, 2023.
Conference Call
Mativ will hold a conference call to review first quarter 2023
results with investors and analysts at 8:30 a.m. Eastern time on
Thursday, May 11, 2023. 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.
Mativ will use a presentation in conjunction with its conference
call. The presentation can be found on the Company's website under
the Investor Relations section in advance of the earnings
conference call. The presentation can also be accessed via the
earnings conference call webcast.
About Mativ
Mativ Holdings, Inc. is a global leader in specialty materials
headquartered in Alpharetta, Georgia. The Company offers a wide
range of critical components and engineered solutions to solve our
customers’ most complex challenges. With over 7,500 employees
worldwide, we manufacture on four continents and generate sales in
more than 100 countries. The Company’s two operating segments,
Advanced Technical Materials and Fiber-Based Solutions, target
premium applications across diversified and growing end-markets,
from filtration to healthcare to sustainable packaging. 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, the future effects of supply
chain challenges and price increases, future cash flows, net
leverage, purchase accounting impacts, effective tax rates, planned
investments, any lingering impacts of the COVID-19 pandemic on our
operations, profitability, and cash flow, the expected benefits and
accretion of the Neenah merger and Scapa acquisition 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.
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;
- Adverse changes in the filtration, release liners, protective
solutions, industrials and healthcare sectors impacting key ATM
segment 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 in our ATM or FBS operating segments;
- 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;
- Business disruptions from the merger that will harm the
Company’s business, including current plans and operations;
- The possibility that Mativ may be unable to successfully
integrate Neenah’s operations with those of Mativ and achieve
expected synergies and operating efficiencies within the expected
time-frames or at all;
- Potential adverse reactions or changes to business
relationships resulting from the Neenah merger, including as it
relates to the Company’s ability to successfully renew existing
client contracts on favorable terms or at all and obtain new
clients;
- Our ability to attract and retain key personnel, including as a
result of the merger, labor shortages, labor strikes, stoppages or
other disruptions;
- The substantial indebtedness Mativ has incurred and assumed in
connection with the Neenah merger and the need to generate
sufficient cash flows to service and repay such debt;
- 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
Real) and on interest rates;
- The phasing out of USD LIBOR rates after 2023 and the
replacement with SOFR;
- 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, including the dilution caused by Mativ's issuance of
additional shares of its common stock in connection with the Neenah
Merger;
- Changes in employment, wage and hour laws and regulations in
the U.S., France and elsewhere, including the loi de Securisation
de l'emploi in France, unionization rule and regulations by the
National Labor Relations Board in the U.S., 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, 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;
- The continued evolution of COVID-19, or new public health
crises that may arise in the future, could have adverse and
disparate impacts on the Company, our employees and customers;
- The number, type, outcomes (by judgment or settlement) and
costs of legal, tax, regulatory or administrative proceedings,
litigation and/or amnesty programs, including those in Brazil,
France and Germany;
- Increased scrutiny from stakeholders related to environmental,
social and governance (“ESG”) matters, particularly our sales of
combustible products business within the tobacco industry which
represents approximately 17% of the Company’s net sales for the
three months ended March 31, 2023, as well as our ability to
achieve our broader ESG goals and objectives;
- The outcome and cost of the LIP-related intellectual property
litigation against Glatz in Europe;
- 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, 2022 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 ATM and FBS segment
acquisitions, acquisition/merger and integration related costs,
interest expense, the effect of income tax provisions and other tax
impacts, capital spending, capitalized software costs,
cybersecurity expenses, 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.
Combined Legacy Financial
Information
Due to the significance of the merger and the resulting change
in our reportable segments, Mativ is providing the supplemental
combined legacy financial information set forth in the tables below
under the captions “Non-GAAP Reconciliation of Combined Legacy
Neenah and SWM Operating Profit for Comparability” and “Non-GAAP
Reconciliation of Organic Net Sales Growth” to enhance its
investors’ ability to evaluate and compare the Company's operating
performance on a combined basis with Neenah. The purpose of the
supplemental legacy combined financial information is to reflect
changes to our reportable segments and to present certain non-GAAP
financial measures on a combined company basis for the fourth
quarter and full year 2022.
The supplemental combined legacy financial information in the
attached schedules is not necessarily indicative of the operating
results of the combined companies had the merger been completed at
the beginning of or prior to the periods presented or of the
operating results of the combined company in the future. The
supplemental combined legacy financial information for periods
prior to the date of the merger does not reflect cost savings or
other synergies anticipated as a result of the merger. The
supplemental combined legacy financial information is not pro forma
information prepared in accordance with Article 11 of Regulation
S-X of the SEC, and the preparation of information in accordance
with Article 11 would result in a different presentation.
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME (LOSS)
(in millions, except per share
amounts)
(Unaudited)
Three Months Ended March
31,
2023
2022
% Change
Net sales
$
679.0
$
406.8
66.9
%
Cost of products sold
570.0
314.2
81.4
Gross profit
109.0
92.6
17.7
Selling expense
23.9
14.3
67.1
Research and development expense
9.1
5.2
75.0
General expense
65.9
49.3
33.7
Total nonmanufacturing expenses
98.9
68.8
43.8
Restructuring and impairment expense
0.8
13.2
(93.9
)
Operating profit
9.3
10.6
(12.3
)
Interest expense
26.5
14.5
82.8
Other income, net
7.0
5.5
27.3
Income (loss) before income taxes and
income from equity affiliates
(10.2
)
1.6
N.M.
Income tax expense (benefit)
(2.4
)
2.1
N.M.
Income from equity affiliates, net of
income taxes
0.1
2.1
(95.2
)
Net income (loss)
$
(7.7
)
$
1.6
N.M.
Dividends paid to Common Stockholders
(0.1
)
(0.2
)
(50.0
)
Net income (loss) attributable to Common
Stockholders
$
(7.8
)
$
1.4
N.M.
Net income (loss) per share:
Basic
$
(0.14
)
$
0.05
N.M.
Diluted
$
(0.14
)
$
0.05
N.M.
Weighted average shares outstanding:
Basic
54,483,000
31,158,000
Diluted
54,483,000
31,413,700
N.M. - Not Meaningful
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
March 31, 2023
December 31,
2022
ASSETS
Cash and cash equivalents
$
97.0
$
124.4
Accounts receivable, net
304.2
266.8
Inventories, net
544.4
534.9
Income taxes receivable
20.8
19.7
Other current assets
38.8
28.9
Total current assets
1,005.2
974.7
Property, plant and equipment, net
872.4
874.9
Finance lease right-of-use assets
17.2
17.4
Operating lease right-of-use assets
33.7
35.8
Deferred income tax benefits
35.0
34.4
Investment in equity affiliates
59.8
59.1
Goodwill
871.0
847.2
Intangible assets, net
674.9
710.3
Other assets
105.6
115.4
Total assets
$
3,674.8
$
3,669.2
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current debt
$
35.1
$
34.6
Finance lease liabilities
0.9
0.9
Operating lease liabilities
8.9
9.3
Accounts payable
253.5
225.7
Income taxes payable
15.6
11.4
Accrued expenses and other current
liabilities
154.5
184.2
Total current liabilities
468.5
466.1
Long-term debt
1,697.9
1,659.3
Finance lease liabilities, noncurrent
17.8
17.6
Operating lease liabilities,
noncurrent
27.3
29.7
Long-term income tax payable
14.6
14.6
Pension and other postretirement
benefits
79.8
81.6
Deferred income tax liabilities
158.3
172.2
Other liabilities
51.3
48.8
Total liabilities
2,515.5
2,489.9
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; 54,919,923 and 54,929,973 shares issued and
outstanding at March 31, 2023 and December 31, 2022,
respectively
5.5
5.5
Additional paid-in-capital
662.4
658.5
Retained earnings
579.3
610.7
Accumulated other comprehensive loss, net
of tax
(87.9
)
(95.4
)
Total stockholders’ equity
1,159.3
1,179.3
Total liabilities and stockholders’
equity
$
3,674.8
$
3,669.2
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOW
(in millions)
(Unaudited)
Three Months Ended March
31,
2023
2022
Operating
Net income (loss)
$
(7.7
)
$
1.6
Non-cash items included in net income
(loss):
Depreciation and amortization
42.0
23.9
Amortization of deferred issuance
costs
1.8
1.2
Impairments
—
12.9
Deferred income tax
(7.1
)
(6.4
)
Pension and other postretirement
benefits
(3.7
)
(1.9
)
Stock-based compensation
3.7
3.4
Income from equity affiliates
(0.1
)
(2.1
)
Loss (gain) on foreign currency
transactions
2.4
(3.6
)
Other non-cash items
—
(2.2
)
Cash received from settlement of interest
swap agreements
—
23.6
Net changes in operating working
capital
(52.0
)
(45.4
)
Net cash provided by (used in)
operations
(20.7
)
5.0
Investing
Capital spending
(19.1
)
(8.7
)
Capitalized software costs
(0.1
)
(0.9
)
Other investing
(0.2
)
—
Net cash used in investing
(19.4
)
(9.6
)
Financing
Cash dividends paid
(22.0
)
(13.9
)
Proceeds from long-term debt
55.0
20.0
Payments on long-term debt
(19.5
)
(14.4
)
Payments for debt issuance costs
—
(2.2
)
Payments on financing lease
obligations
(0.2
)
(0.2
)
Purchases of common stock
(1.3
)
(2.9
)
Other financing
(0.3
)
—
Net cash provided by (used in)
financing
11.7
(13.6
)
Effect of exchange rate changes on cash
and cash equivalents
1.0
(0.4
)
Decrease in cash and cash equivalents
(27.4
)
(18.6
)
Cash and cash equivalents at beginning of
period
124.4
74.7
Cash and cash equivalents at end of
period
$
97.0
$
56.1
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
BUSINESS SEGMENT REPORTING
(in millions)
(Unaudited)
NOTE REGARDING SEGMENT REPORTING AND
COMPARABILITY
Effective July 6, 2022, in connection with
the close of the merger, Mativ has two reportable segments for
financial reporting purposes: Advanced Technical Materials ("ATM")
and Fiber-Based Solutions ("FBS"). ATM is comprised of the legacy
SWM Advanced Materials & Structures segment and the legacy
Neenah Technical Products segment. FBS is comprised of the legacy
SWM Engineered Papers segment and the legacy Neenah Fine Paper and
Packaging segment. For accounting purposes, SWM was the surviving
entity, thus periods subsequent to the September 2022 quarter
results reflect the merged company's financials while all prior
periods reflect only previously reported SWM consolidated and
segment results.
Net Sales
Three Months Ended March
31,
2023
2022
% Change
ATM
$
434.3
$
272.9
59.1
%
FBS
244.7
133.9
82.7
%
Total Consolidated
$
679.0
$
406.8
66.9
%
Operating Profit
Three Months Ended March
31,
Return on Net Sales
2023
2022
2023
2022
ATM
$
37.6
$
10.3
8.7
%
3.8
%
FBS
6.2
25.7
2.5
%
19.2
%
Unallocated
(34.5
)
(25.4
)
(5.1
)%
(6.2
)%
Total Consolidated
$
9.3
$
10.6
1.4
%
2.6
%
Non-GAAP Adjustments to Operating
Profit
Three Months Ended March
31,
2023
2022
ATM - Amortization of intangibles and
other purchase accounting adjustments
$
7.0
$
11.1
ATM - Restructuring, impairment, and other
expenses
0.7
13.2
FBS - Amortization of intangibles and
other purchase accounting adjustments
8.9
—
FBS - Restructuring, impairment, and other
expenses
0.1
0.3
Unallocated - Acquisition/Merger and
integration costs
10.4
7.1
Total Consolidated
$
27.1
$
31.7
Adjusted Operating Profit
Three Months Ended March
31,
Return on Net Sales
2023
2022
2023
2022
ATM
$
45.3
$
34.6
10.4
%
12.7
%
FBS
15.2
26.0
6.2
%
19.4
%
Unallocated
(24.1
)
(18.3
)
(3.5
)%
(4.5
)%
Total Consolidated
$
36.4
$
42.3
5.4
%
10.4
%
Non-GAAP Adjustments to Adjusted
Operating Profit
Three Months Ended March
31,
2023
2022
ATM - Depreciation and stock-based
compensation
$
13.5
$
7.8
FBS - Depreciation and stock-based
compensation
13.2
4.9
Unallocated - Depreciation and stock-based
compensation
2.6
3.5
Total Consolidated
$
29.3
$
16.2
Adjusted EBITDA
Three Months Ended March
31,
Return on Net Sales
2023
2022
2023
2022
ATM
$
58.8
$
42.4
13.5
%
15.5
%
FBS
28.4
30.9
11.6
%
23.1
%
Unallocated
(21.5
)
(14.8
)
(3.2
)%
(3.6
)%
Total Consolidated
$
65.7
$
58.5
9.7
%
14.4
%
Non-GAAP Reconciliation of Organic Net
Sales Growth
Advanced Technical
Materials
Fiber-Based Solutions
Consolidated Mativ
Three Months Ended March
31,
Mativ Combined 2022 Net Sales
$
439.6
$
252.0
$
691.6
Divestiture/closure adjustments
(5.2
)
—
(5.2
)
Mativ Combined 2022 Comparable Net
Sales
$
434.4
$
252.0
$
686.4
Mativ Combined 2023 Net Sales
$
434.3
$
244.7
$
679.0
Divestiture/closure adjustments
—
—
—
Mativ Combined 2023 Comparable Net
Sales
$
434.3
$
244.7
$
679.0
Organic growth
0.0
%
(2.9
)%
(1.1
)%
Currency effects on 2023
$
(9.2
)
$
(4.6
)
$
(13.8
)
Mativ 2023 Comparable Net Sales with
Currency Adjustment
$
443.5
$
249.3
$
692.8
Organic constant currency growth
2.1
%
(1.1
)%
0.9
%
MATIV HOLDINGS, INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP
FINANCIAL MEASURES AND SUPPLEMENTAL DATA(in millions, except per
share amounts)
Three Months Ended March
31,
2023
2022
Operating profit
$
9.3
$
10.6
Plus: Restructuring and impairment related
expenses
0.8
13.5
Plus: Purchase accounting adjustments
15.9
11.1
Plus: Acquisition/merger and integration
related costs
10.4
7.1
Adjusted Operating Profit
$
36.4
$
42.3
Income (loss)
$
(7.7
)
$
1.6
Plus: Restructuring and impairment
expenses
0.8
13.5
Less: Tax impact of restructuring and
impairment expense
(0.2
)
(2.8
)
Less: Gain on sale of assets
—
(0.5
)
Plus: Tax impact on gain on sale of
assets
—
0.1
Plus: Other restructuring related
expenses
0.5
—
Less: Tax impact of other restructuring
related expenses
(0.1
)
—
Plus: Purchase accounting adjustments
15.9
11.1
Less: Tax impact of purchase accounting
adjustments
(3.6
)
(2.3
)
Plus: Acquisition/merger and integration
related costs
10.4
7.1
Less: Tax impact on acquisition/merger and
integration related costs
(2.3
)
(1.5
)
Plus: Tax legislative changes, net of
other discrete items
—
1.8
Adjusted Income
$
13.7
$
28.1
Earnings (loss) per share - diluted
$
(0.14
)
$
0.05
Plus: Restructuring and impairment related
expenses
0.01
0.43
Less: Tax impact of restructuring and
impairment expense
—
(0.09
)
Less: Gain on sale of assets
—
(0.02
)
Plus: Other restructuring related
expenses
0.01
—
Plus: Purchase accounting adjustments
0.29
0.35
Less: Tax impact of purchase accounting
adjustment
(0.07
)
(0.07
)
Plus: Acquisition/merger and integration
related costs
0.19
0.23
Less: Tax impact on acquisition/merger and
integration related costs
(0.04
)
(0.05
)
Plus: Tax legislative changes, net of
other discrete items
—
0.06
Adjusted Earnings Per Share - Diluted
$
0.25
$
0.89
MATIV HOLDINGS, INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP
FINANCIAL MEASURES AND SUPPLEMENTAL DATA(in millions, except per
share amounts)
Three Months Ended March
31,
2023
2022
Net Income (loss)
$
(7.7
)
$
1.6
Plus: Interest expense
26.5
14.5
Plus: Provision for income taxes
(2.4
)
2.1
Plus: Depreciation & amortization
42.0
23.9
Plus: Stock compensation expense
1.8
—
Plus: Inventory step up expense
1.4
—
Plus: Restructuring and impairment
expense
0.8
13.5
Plus: Acquisition/merger and integration
related costs
10.4
7.1
Plus: Income from equity affiliates
(0.1
)
(2.1
)
Plus: Other income, net
(7.0
)
(5.5
)
Adjusted EBITDA (1)
$
65.7
$
55.1
Cash provided by (used in) operating
activities
$
(20.7
)
$
5.0
Less: Capital spending
(19.1
)
(8.7
)
Less: Capitalized software costs
(0.1
)
(0.9
)
Free Cash Flow
$
(39.9
)
$
(4.6
)
March 31, 2023
December 31, 2022
Total Debt
$
1,733.0
$
1,693.9
Less: Cash
97.0
124.4
Net Debt
$
1,636.0
$
1,569.5
(1) This reconciliation from Net income to Adjusted EBITDA for the
quarter ended March 31, 2022 is consistent with the press release
filed on May 4, 2022. For conformed reconciliations for the quarter
ended March 31, 2022, refer to the Non-GAAP reconciliations of
combined results in the tables below.
Non-GAAP Reconciliation of
Combined Legacy Neenah and SWM Operating Profit for
Comparability(in millions) (Unaudited)
Three Months Ended
March 31, 2022
March 31,
Legacy Neenah
Adjustments
Legacy Neenah Adjusted
Legacy SWM
Mativ Combined for
Comparison
Mativ
Advanced Technical Materials (ATM)
(1)
Net Sales
$
185.6
$
(18.9
)
$
166.7
$
272.9
$
439.6
$
434.3
GAAP Operating Profit
12.1
1.7
13.8
10.3
24.1
37.6
Amortization of intangibles and other
purchase accounting adjustments
2.2
(0.1
)
2.1
11.1
13.2
7.0
Restructuring, impairment, and other
expenses
0.6
—
0.6
13.2
13.8
0.7
Acquisition/Merger and integration
costs
0.2
—
0.2
—
0.2
—
Adjusted Operating Profit (2)
$
15.1
$
1.6
$
16.7
$
34.6
$
51.3
$
45.3
Adjusted Operating Profit Margin
8.1
%
N/A
10.0
%
12.7
%
11.7
%
10.4
%
Depreciation and stock-based compensation
expense (3)
5.1
(0.7
)
4.4
7.8
12.2
13.5
Adjusted EBITDA (4)
$
20.2
$
0.9
$
21.1
$
42.4
$
63.5
$
58.8
Adjusted EBITDA Margin
10.9
%
N/A
12.7
%
15.5
%
14.4
%
13.5
%
Fiber-Based Solutions (FBS) (1)
Net Sales
$
99.2
$
18.9
$
118.1
$
133.9
$
252.0
$
244.7
GAAP Operating Profit
11.9
1.1
13.0
25.7
38.7
6.2
Amortization of intangibles and other
purchase accounting adjustments
0.2
0.1
0.3
—
0.3
8.9
Restructuring, impairment, and other
expenses
—
—
—
0.3
0.3
0.1
Other
0.1
—
0.1
—
0.1
—
Adjusted Operating Profit (2)
$
12.2
$
1.2
$
13.4
$
26.0
$
39.4
$
15.2
Adjusted Operating Profit Margin
12.3
%
N/A
11.3
%
19.4
%
15.6
%
6.2
%
Depreciation and stock-based compensation
expense (3)
2.3
0.7
3.0
4.9
7.9
13.2
Adjusted EBITDA (4)
$
14.5
$
1.9
$
16.4
$
30.9
$
47.3
$
28.4
Adjusted EBITDA Margin
14.6
%
N/A
13.9
%
23.1
%
18.8
%
11.6
%
Non-GAAP Reconciliation of Combined Legacy Neenah and SWM
Operating Profit for Comparability(in millions) (Unaudited)
Three Months Ended
March 31, 2022
March 31,
Legacy Neenah
Adjustments
Legacy Neenah Adjusted
Legacy SWM
Mativ Combined for
Comparison
Mativ
Corporate Unallocated
GAAP Operating Loss
$
(11.8
)
$
(3.5
)
$
(15.3
)
$
(25.4
)
$
(40.7
)
$
(34.5
)
Acquisition/Merger and integration
costs
5.1
—
5.1
7.1
12.2
10.4
Other
0.5
—
0.5
—
0.5
—
Adjusted Operating Loss (2)
$
(6.2
)
$
(3.5
)
$
(9.7
)
$
(18.3
)
$
(28.0
)
$
(24.1
)
% of total Net Sales
(2.2
)%
N/A
(3.4
)%
(4.5
)%
(4.0
)%
(3.5
)%
Depreciation and stock-based compensation
expense (3)
1.8
—
1.8
3.5
5.3
2.6
Adjusted EBITDA (4)
$
(4.4
)
$
(3.5
)
$
(7.9
)
$
(14.8
)
$
(22.7
)
$
(21.5
)
% of total Net Sales
(1.5
)%
N/A
(2.8
)%
(3.6
)%
(3.3
)%
(3.2
)%
Consolidated
Net Sales
$
284.8
$
—
$
284.8
$
406.8
$
691.6
$
679.0
GAAP Operating Profit (1)
12.2
(0.7
)
11.5
10.6
22.1
9.3
Amortization of intangibles and other
purchase accounting adjustments
2.4
—
2.4
11.1
13.5
15.9
Restructuring, impairment, and other
expenses
0.6
—
0.6
13.5
14.1
0.8
Acquisition/Merger and integration
costs
5.3
—
5.3
7.1
12.4
10.4
Other
0.6
—
0.6
—
0.6
—
Adjusted Operating Profit (2)
$
21.1
$
(0.7
)
$
20.4
$
42.3
$
62.7
$
36.4
Adjusted Operating Profit Margin
7.4
%
N/A
7.2
%
10.4
%
9.1
%
5.4
%
Depreciation and stock-based compensation
expense (3)
9.2
—
9.2
16.2
25.4
29.3
Adjusted EBITDA (4)
$
30.3
$
(0.7
)
$
29.6
$
58.5
$
88.1
$
65.7
Adjusted EBITDA Margin
10.6
%
N/A
10.4
%
14.4
%
12.7
%
9.7
%
The following notes apply to all periods and tables presented
herein: (1) Effective with the merger, certain assets/net sales
were reclassified out of ATM and into FBS, and to conform with
legacy SWM accounting practices certain of legacy Neenah operating
expenses were reclassified out of the ATM and FBS operating
segments and moved to Corporate Unallocated. In addition, certain
legacy Neenah Corporate Unallocated operating expenses were
reclassified out of GAAP Operating Profit and moved to Other
income, net to conform with legacy SWM accounting practices. (2)
Effective with the merger, legacy Neenah's definition of Adjusted
Operating Profit, a non-GAAP financial measure, was conformed to
legacy SWM's Adjusted Operating Profit definition which includes an
add-back for amortization of intangible assets and other purchase
accounting adjustments. (3) Depreciation and stock-based
compensation excludes stock-based compensation included in
acquisition/merger and integration costs. (4) Effective with the
merger, legacy SWM's definition of EBITDA, a non-GAAP financial
measure, was conformed to legacy Neenah's EBITDA definition which
includes an add-back for stock-based compensation. The revised
EBITDA definition is more aligned with the terms of the Company's
Credit Agreement.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005337/en/
Greg Weitzel Chief Financial Officer +1-678-518-3262 Or Mark
Chekanow, CFA VP, Investor Relations +1-770-569-4229 Website:
http://www.mativ.com
Mativ (NYSE:MATV)
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