Alpharetta, Aug. 09, 2022 -- Mativ Holdings, Inc. ("Mativ" or the "Company") (NYSE: MATV) reported earnings results for the three month and six month periods ending June 30, 2022. On July 6, 2022, SWM International, Inc. ("SWM") and Neenah, Inc. ("Neenah") completed a merger of equals ("the merger") in which each SWM share was converted into one share of Mativ common stock and each share of Neenah was converted into 1.358 shares of Mativ common stock.
Adjusted measures are reconciled to GAAP at the end of this release. Financial and operating comparisons are versus the prior year period unless stated otherwise. EPS figures are on a diluted basis unless stated otherwise. Figures may not sum to total due to rounding. Definitions: Advanced Materials & Structures (AMS), Engineered Papers (EP), Fine Paper & Packaging (FPP), Technical Products (TP), "organic" for SWM legacy - pro forma to assume Scapa (acquired April 2021) was acquired January 1, 2021, and adjusted to exclude certain AMS sales related to assets classified as held-for-sale; "organic" for Neenah legacy - pro forma to assume Itasa (acquired in April 2021) was acquired January 1, 2021, and adjusted to exclude the impacts of a facility shutdown.
Mativ Second Quarter 2022 Highlights (reflects legacy SWM results)
- Sales increased 13% to $426.4 million; organic sales growth of 11% with strong demand and pricing actions across the business driving top-line gains and offsetting cost increases
- GAAP EPS of $0.36, up from $0.06; Adjusted EPS of $0.86, down 4%; Adjusted EBITDA up 1% year-over-year and up 5% sequentially
Neenah Second Quarter 2022 Highlights (not included in Mativ results)
- Net sales increased 14% to $306.8 million; organic sales growth was 17%, driven by release liners, water filtration, and industrials and broad strength across the paper and packaging portfolio
- GAAP operating income was $17.0 million; Adjusted EBITDA increased 14% to $36.2 million; price increases more than offset higher input costs
Mativ (Combined) Financial Outlook and Dividend
- SWM and Neenah merged to create a ∼$3 billion leader in specialty materials, a highly complementary combination with $65+ million cost synergy plan
- Announced 2H:22 Adjusted EBITDA guidance of $210 to $230 million (on combined basis), consistent with both companies' previously issued annual guidance and includes early synergy capture
- Announced $1.60 annualized quarterly cash dividend per share, demonstrating high confidence in financial outlook, synergy delivery and long-term cash generation; dividend equates to consistent total cash outlay of both legacy companies' dividends
Management Commentary
Julie Schertell, Chief Executive Officer, commented, "With the completion of our merger in early July to form Mativ and the close of a strong second quarter for the legacy SWM and Neenah businesses, we are poised to carry our momentum into the rest of 2022 as a unified and more scaled global leader in specialty materials. We are better and stronger together, and I fully believe the strategic and financial merits of this merger will be realized through delivering increased value to our customers, accelerating growth, and executing on synergies."
"The primary 2022 EBITDA growth catalysts remain solidly intact, with robust sales continuing in the second quarter and significant price/cost improvements flowing through both legacy companies' financials. Year-to-date results have tracked to plan, and we expect positive trends to continue with additional price increases implemented to mitigate continued inflationary pressures. We project total second-half 2022 EBITDA for Mativ of $210 to $230 million, consistent with the previous annual guidance for both legacy companies and inclusive of some very early-stage SG&A synergies. We are very confident that our cost synergy plan will result in at least $65 million of savings, with a year-end 2022 exit run-rate of approximately $20 million. Integration is off to a fast start, our teams are collaborating, and we are laser-focused on a smooth operational transition while also tackling high-value projects to accelerate margin expansion."
Andrew Wamser, Chief Financial Officer added, "Regarding Mativ's capital structure upon the close of the merger, our net leverage per our credit agreement was approximately 4.1x. De-levering is a key priority, and we expect to finish the year at or below 3.75x and to be below 3.5x in 2023. Projected year-over-year EBITDA growth from base business performance and synergy capture is expected to drive this reduction, supplemented by debt paydown. We have also set Mativ’s new annualized dividend at $1.60 per share, continuing our shared track record of providing a highly attractive cash return to shareholders. We elected to maintain the aggregated dividend cash outlay of both companies’ prior payouts, which totals approximately $88 million annually. We are confident in the resilience of our diversified portfolio and long-term cash generation, and believe this dividend offers a compelling and reliable return for investors."
Ms. Schertell concluded, "Mativ’s future is rich with value creation opportunities, with the potential to accelerate top-line growth and expand margins through numerous organic and synergy-related initiatives. Our increased scale also enables greater strategic portfolio optionality as we focus our resources on the company's fastest growing and most profitable product areas. Our global teams are moving forward together with shared purpose and conviction, and we look forward to delivering on the promise of this transformative combination."
Source: Mativ
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