ALPHARETTA, Ga.- Mativ Holdings, Inc. ("Mativ" or the "Company") (NYSE: MATV) reported earnings results for the three months ended June 30, 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. "Comparable" or "organic" – non-GAAP measures 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. December 22, 2022 8-K includes reconciliations of periods prior to the merger.
Mativ Second Quarter 2023 Highlights
- Sales increased 56.7% to $668.3 million, reflecting the benefit of the merger; 8% organic sales decline with negative volume/mix offsetting price increases
- GAAP loss was $4.5 million, GAAP EPS was $(0.08), which all included merger integration and purchase accounting expenses
- Adjusted income was $27.7 million, Adjusted EPS was $0.51, and Adjusted EBITDA was $87.4 million (see non-GAAP reconciliations); comparable Adjusted EBITDA was down 10% versus a very strong 2Q:22, and increased 33% sequentially from 1Q:23
- Substantially higher sequential margins driven by significantly improved operations versus 1Q:23
- Comparable Adjusted EBITDA margin was flat versus prior year; strong pricing, moderating input costs and expense reductions were offset by lower volumes from customer de-stocking and demand softness
- On August 1, Company announced the proposed sale of Engineered Papers and capital allocation changes
- Proposed sale price of $620 million, or approximately 6.5x EP's trailing twelve-month Adjusted EBITDA; expected to close in 4Q:23, subject to customary closing conditions and regulatory approvals
- Approximately $575 million of expected net proceeds to be used to reduce net debt by 35%
- Rebalanced capital allocation strategy: re-sized dividend, new $30 million share repurchase program
Chief Executive Officer Julie Schertell commented "We were pleased to report that second quarter results reflect strong sequential EBITDA growth, driven by improved manufacturing execution, incremental cost reductions, synergy realization, and continued positive price/cost performance. While volumes remained challenged due to heightened de-stocking across much of our customer base and continued macro uncertainty, we remain focused on those areas within our control to deliver improved profitability. We have reduced capacity and operating costs and remained disciplined in our pricing, and expect to deliver solid margin expansion when demand returns to more robust levels."
"We also announced a transformational strategic transaction earlier this month with the proposed divestiture of our Engineered Papers business. The merger of SWM and Neenah provided the benefits of increased scale and unlocked the opportunity to focus our portfolio on those categories with the greatest growth and margin opportunities. We firmly believe this is the right move for Mativ to accelerate our growth strategy, with increased focus on product areas and end-markets with the greatest potential. We are pleased with the valuation and sale price of the proposed transaction and will use the cash proceeds to pay down 35% of our net debt. In concert with this transaction announcement, we also shifted our capital allocation approach to provide greater flexibility to support continued debt reduction, long-term growth investments, and a newly approved $30 million stock buyback plan. We look forward to closing the proposed transaction later this year and supporting a smooth transition for our employees and customers to the new owners."
Ms. Schertell concluded, "It has been just over a year since we completed the merger to become Mativ, and we are encouraged by what we have achieved in the face of a challenging backdrop. A key focus has been synergy delivery, and we are pleased to share that we have executed over half of our $65 million plan in our first year as a combined company, consistent with the expectations we announced at the time of the merger. These actions position us well to deliver accelerated longer-term growth and margin expansion as demand normalizes. Beyond synergies, we have integrated and aligned our global organization on our strategy with clearly communicated priorities to amplify our growth, focus our efforts, and drive value creation for our stakeholders."