MATV — Mativ Holdings, Inc.

Mativ Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Sales: $480 million, nearly flat year-over-year on an organic basis and down about 1% as reported.
• Adjusted EBITDA: $47.5 million, up 28% year-over-year, with an adjusted EBITDA margin of 9.9%, a 220 basis point improvement.
• Segment Performance:
  • FAM Segment: Net sales of $188 million (up 2% organically), adjusted EBITDA of $27 million (up 41%), and margins of 14.6% (up 430 basis points).
  • SAS Segment: Net sales of $291 million (down 2% year-over-year), adjusted EBITDA of approximately $31 million (up 16%), and margins of 10.5% (up 160 basis points).
• Free Cash Flow: A use of $7 million, an improvement of over $22 million year-over-year, marking the best Q1 performance since the mid-2022 merger.
• Net Debt: Approximately $954 million, with a net leverage ratio of 4.1x, down slightly from 2025 year-end levels.

2. Strategic Updates and Business Highlights

• Cultural and Operational Transformation: CEO Shruti Singhal highlighted a successful year of transformation, focusing on operational efficiency, margin expansion, and cash flow optimization.
• Cost-Cutting Initiatives: Realized nearly $20 million in savings in 2025, with a target of $15 million to $20 million for 2026.
• Debt Refinancing: Successfully refinanced a majority of debt tranches, simplifying the capital structure and enhancing financial flexibility.
• Portfolio Review: Continued evaluation of assets and business lines, including the closure of an underperforming plant and SKU rationalization to improve efficiency.
• New Business Commitment: Secured a significant commitment for specialty films from a new aerospace customer, expected to start contributing in Q2.

3. Forward Guidance and Outlook

• Q2 2026 Expectations: Anticipate a mid-single-digit percentage decline in adjusted EBITDA compared to the prior year due to lower volumes, particularly in the health care sector.
• Input Cost Inflation: Revised full-year inflation impact estimate to $40 million to $50 million, with pricing actions in place to offset these costs.
• Long-Term Strategy: Focus on high-growth, high-return markets, leveraging pricing strategies to maintain margins amidst market volatility.

4. Bad News, Challenges, or Points of Concern

• Volume Weakness: Experienced destocking actions in the health care vertical and supply chain inefficiencies due to a temporary outage at the Knoxville facility.
• Mixed Demand: Overall demand remains soft in certain segments, particularly in release liners and labels, raising concerns about market conditions.
• Geopolitical Risks: Ongoing Middle East conflict contributing to volatility and increased input costs, with potential indirect impacts on market demand.

5. Notable Q&A Insights

• Health Care Vertical: CEO noted that destocking and operational issues are expected to normalize in the second half of the year, with diversification in the portfolio helping to mitigate impacts.
• Pricing Strategy: CFO emphasized the importance of proactive pricing actions to manage input cost inflation, indicating that pricing adjustments would continue as necessary.
• Cash Flow Cadence: CFO outlined expectations for stronger cash generation in Q2 and Q3, despite seasonal working capital builds, while maintaining a focus on free cash flow generation.
• Portfolio Review Outcomes: CEO indicated that while divestitures of non-core assets are evaluated, the current portfolio is well-positioned for long-term growth, with a focus on operational efficiency and strategic investments.

Overall, Mativ's Q1 2026 results reflect a solid performance amidst challenges, with a clear strategy for navigating market volatility and enhancing long-term value creation.