ALPHARETTA, Ga. - Mativ Holdings, Inc. ("Mativ" or the "Company") (NYSE: MATV) reported earnings results for the three months ended September 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 July 6, 2022 merger reflect only the continuing operations of legacy SWM results. On August 1, 2023, Mativ Holdings, Inc. (“Mativ” or the “Company”) announced the planned sale of its Engineered Papers business, which is now presented as discontinued operations. 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 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. The Company's December 22, 2022 Form 8-K includes reconciliations of periods prior to the merger.
Mativ Third Quarter 2023 Highlights (Continuing Operations)
- Sales decreased 9.7% to $498.2 million, reflecting lower volume partly offset by higher selling prices and currency translation
- GAAP loss was $464.3 million, GAAP EPS was $(8.50). Results included a non-cash goodwill impairment charge of $401.0 million ($7.30 per share) and $24.3 million ($0.40 per share) related to asset write-downs and the planned divestiture of Engineered Papers
- Adjusted income was $11.2 million, Adjusted EPS was $0.21, and Adjusted EBITDA was $55.4 million (see non-GAAP reconciliations). Adjusted EBITDA was down 20% versus the prior year, as impacts from lower volumes more than offset net benefits of price/input costs and synergies
Non-Cash Goodwill Impairment Charge
During the third quarter of fiscal 2023 the Company performed a goodwill impairment analysis which resulted in recording $401.0 million of pre-tax, non-cash goodwill impairment. The impairment was attributable to certain acquisitions and the sustained weakening of macroeconomic conditions, as well as the Company’s market valuation evolution since the merger.
Management Commentary
Chief Executive Officer Julie Schertell commented, "As we mark the start of our second year as Mativ, despite the current challenging environment, I am encouraged by what we have accomplished and where we are headed. During the past year we brought two great companies together, established a can-do culture, and quickly identified and began realizing significant synergies. Additionally, we completed a rigorous assessment of our business portfolio, leading to the decision to divest Engineered Papers (EP). As we move forward, in addition to targeted volume and growth initiatives, our teams are focused on increasing operating and capital efficiencies to further enhance cash flows, and multiple actions are underway to reduce spending, optimize our footprint, and continue to deliver working capital efficiencies."
"Our actions are especially appropriate in today’s uncertain economic and geopolitical environment. Third quarter results reflect the continued impact of weak customer demand and destocking in this environment, as well as normal seasonal slowing in the second half of the year. With volume the biggest near-term challenge in both segments, we are working very closely with our customers, aggressively managing costs, and continuing to deliver positive price/input cost performance."
Ms. Schertell concluded, "Following the EP sale, Advanced Technical Materials will represent 80 percent of Mativ. Our ATM businesses are well-positioned in large, fast-growing markets where we provide unique, defensible solutions and deliver attractive mid-teen EBITDA margins. As volumes recover throughout the next year, we expect to increase margins across both segments and reach our stated quarterly EBITDA target of $70 million and grow from there. Our teams are prioritizing actions to actively address short-term challenges, while continuing to execute against a clear long-term strategy, part of which is a continued commitment to de-lever, as exemplified by our previously communicated intent to use net proceeds from the EP sale to reduce our debt by more than one third. I’m confident these efforts, in tandem, will accelerate our growth, strengthen our financial position, and deliver added value to our shareholders."
Source: Mativ
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