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."
Mativ Third Quarter 2023 Financial
Results from Continuing Operations
Note: The Reported Results below reflect consolidated Mativ
results in the current and prior period. See the supplemental
tables titled Non-GAAP Reconciliation of Continuing Operations for
additional financial information regarding the combined company’s
financial information.
Advanced Technical Materials
(ATM)
Three Months Ended September
30,
(in millions; unaudited)
2023
2022
Change
2023
2022
Net Sales
$
393.8
$
426.1
$
(32.3
)
GAAP Operating Profit & Margin %
$
(378.8
)
$
31.5
$
(410.3
)
(96.2
)%
7.4
%
Adjusted EBITDA & Margin %
$
58.7
$
62.2
$
(3.5
)
14.9
%
14.6
%
Advanced Technical Materials (ATM) segment sales of
$393.8 million were down 7.6% versus the prior year period,
reflecting lower volume partly offset by higher selling prices and
favorable currency translation. Lower volume across the segment
reflect increased customer caution in the current uncertain
economic environment, as well as impacts of seasonal slowing,
particularly in Europe. Healthcare was a top performer, with
double-digit growth for the quarter.
GAAP Operating Profit in 2023 included the goodwill impairment
charge of $401.0 million as well as $8.7 million in other expenses
related to footprint rationalization. Adjusted EBITDA (see non-GAAP
reconciliations) decreased 6% compared to the prior year period,
with lower volumes offsetting favorable impacts of net selling
price/input cost increases, and currency translation. Margins were
sustained at mid-teen levels and increased 30 basis points versus
the prior year, in part due to merger synergies and more profitable
mix of products sold.
Fiber-Based Solutions (FBS)
Three Months Ended September
30,
(in millions; unaudited)
2023
2022
Change
2023
2022
Net Sales
$
104.4
$
125.4
$
(21.0
)
GAAP Operating Profit & Margin %
$
(4.4
)
$
10.3
$
(14.7
)
(4.2
)%
8.2
%
Adjusted EBITDA & Margin %
$
14.8
$
25.8
$
(11.0
)
14.2
%
20.6
%
Fiber-Based Solutions (FBS) segment sales, now comprised
solely of Packaging and Specialty Papers, were $104.4 million, down
16.7% versus a very strong prior year period. Volume was lower
compared to the prior year when significant industry-wide customer
inventory builds occurred. Lower demand for premium business papers
and packaging, along with continued customer destocking, offset
benefits from increased sales of consumer papers and higher selling
prices.
GAAP Operating Profit in 2023 included $10.4 million of other
expenses primarily related to fixed asset write-downs. Adjusted
EBITDA (see non-GAAP reconciliations) decreased 43% versus prior
year as favorable net selling price/input costs and cost reduction
initiatives were more than offset by lower volumes and associated
fixed cost absorption. In addition, manufacturing costs in 2022
benefited from a significant one-time positive impact following the
merger and harmonization of inventory costing systems.
Unallocated
Three Months Ended September
30,
(in millions; unaudited)
2023
2022
Change
2023
2022
GAAP Operating Expense & % of
Sales
$
(36.7
)
$
(73.4
)
$
36.7
(7.4
)%
(13.3
)%
Adjusted EBITDA & % of Sales
$
(18.1
)
$
(18.4
)
$
0.3
(3.6
)%
(3.3
)%
Adjusted unallocated expenses (EBITDA) (see non-GAAP
reconciliations) were in line with prior year. GAAP operating
expenses included $5.2 million of EP divestiture expenses.
Interest expense was $16.8 million versus $14.9
million in the prior year period. The increase was primarily due to
higher interest rates on floating rate debt in 2023.
Other income (expense), net of $(0.3) million decreased
$1.7 million compared with the prior year income of $1.4 million.
The decrease in 2023 was primarily due to losses on foreign
exchange contracts.
Tax rate was (6.2)% during 3Q:23. The unusually low tax
rate was driven by a goodwill impairment that was not deductible
for tax purposes and a $31.7 million tax expense related to a
valuation allowance that reduced the carrying value of a long-term
tax asset, as that asset is not expected to be fully realized in
the future. Excluding the impact of that valuation allowance and
other non-GAAP adjustments, the Company's tax rate was 17.1%.
Non-GAAP Adjustments reflect items included in GAAP
operating profit, income, and EPS, but excluded from adjusted
results (see non-GAAP reconciliation tables for additional
details). The most significant adjustments to third quarter 2023
results were as follows:
- $7.30 per share of goodwill impairment expenses related to our
ATM segments
- $0.72 per share of expenses related to discrete tax items,
including tax valuation allowances
- $0.28 per share of costs to write down assets
- $0.23 per share of purchase accounting expenses (purchase
accounting expenses reflect primarily ongoing non-cash intangible
asset amortizations associated with mergers and acquisitions)
- $0.14 per share of expenses related to the Merger, which
included integration and severance expenses
- $0.08 per share of expenses related to the pending sale of our
Engineered Papers business
Cash Flow & Debt
Year-to-date 2023 cash provided by operating activities was
$37.8 million. Capital spending and software costs totaled $49.9
million. Working capital was a $13.4 million use of cash.
Total debt was $1,738.5 million as of September 30, 2023 and
total cash was $84.7 million resulting in net debt of $1,653.8
million. Total liquidity was approximately $414 million, consisting
of $85 million of cash and $329 million of revolver availability.
The Company's debt matures on a staggered basis between 2026 and
2028.
Discontinued Operations
Sales related to the Company's discontinued operations were
$127.2 million in the third quarter and GAAP earnings were $9.3
million, or $0.17 per share.
Dividend & Share
Repurchases
On August 1, 2023, the Company announced capital allocation
changes, including plans to modify the quarterly dividend from
$0.40 to $0.10 per share. The first dividend payment of $5.5
million at this new rate was paid in the third quarter. The Company
announced its next quarterly cash dividend of $0.10 per share
payable on December 15, 2023 to stockholders of record as of
November 24, 2023.
During the third quarter, the company used $4.4 million to
repurchase shares. The Company intends to repurchase shares
periodically and opportunistically to offset dilution due to stock
compensation.
Conference Call
Mativ will hold a conference call to review third quarter 2023
results with investors and analysts at 8:30 a.m. Eastern time on
Thursday, November 9, 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 makes material
impacts on the world every day through a wide range of critical
components and engineered solutions that solve our customers’ most
complex challenges. We manufacture on three continents and generate
sales in nearly 100 countries through our family of
business-to-business and consumer product brands. 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 and more. 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. In addition, the amount of the goodwill
impairment charge announced today is based in part on estimates of
future performance, so this announcement should also be considered
a forward-looking statement.
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,
including the pending sale of the Company's Engineered Papers
business;
- 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, as well
as our ability to achieve our broader ESG goals and
objectives;
- 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, 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.
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) FROM CONTINUING OPERATIONS
(in millions, except per share
amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
% Change
2023
2022
% Change
Net sales
$
498.2
$
551.5
(9.7)%
$
1,573.7
$
1,112.5
41.5%
Cost of products sold
411.5
455.4
(9.6)
1,303.8
893.9
45.9
Gross profit
86.7
96.1
(9.8)
269.9
218.6
23.5
Selling expense
20.5
19.1
7.3
60.6
41.1
47.4
Research and development expense
5.4
5.9
(8.5)
16.6
12.7
30.7
General expense
63.4
100.9
(37.2)
185.8
189.8
(2.1)
Total nonmanufacturing expenses
89.3
125.9
(29.1)
263.0
243.6
8.0
Goodwill impairment expense
401.0
—
N.M.
401.0
—
N.M.
Restructuring and other impairment
expense
16.3
1.8
N.M.
17.6
17.3
1.7
Operating loss
(419.9
)
(31.6
)
N.M.
(411.7
)
(42.3
)
N.M.
Interest expense
16.8
14.9
12.8
48.8
43.7
11.7
Other income (expense), net
(0.3
)
1.4
N.M.
(3.6
)
5.2
N.M.
Loss from continuing operations before
income taxes
(437.0
)
(45.1
)
N.M.
(464.1
)
(80.8
)
N.M.
Income tax expense (benefit), net
27.3
(11.1
)
N.M.
30.0
(14.4
)
N.M.
Net loss from continuing operations
(464.3
)
(34.0
)
N.M.
(494.1
)
(66.4
)
N.M.
Income (loss) from discontinued
operations
9.3
11.5
(19.1)
26.9
57.3
(53.1)
Net loss
(455.0
)
$
(22.5
)
N.M.
(467.2
)
(9.1
)
N.M.
Dividends to participating securities
(0.5
)
$
(0.2
)
N.M.
(0.7
)
(0.7
)
—
Net loss attributable to Common
Stockholders
(455.5
)
$
(22.7
)
N.M.
(467.9
)
(9.8
)
N.M.
Net loss per share - basic:
Loss per share from continuing
operations
$
(8.50
)
$
(0.65
)
N.M.
$
(9.06
)
$
(1.74
)
N.M.
Income per share from discontinued
operations
0.17
0.22
(22.7)
0.49
1.49
(67.1)
Basic
$
(8.33
)
$
(0.43
)
N.M.
$
(8.57
)
$
(0.25
)
N.M.
Net loss per share – diluted:
Loss per share from continuing
operations
$
(8.50
)
$
(0.65
)
N.M.
$
(9.06
)
$
(1.74
)
N.M.
Income per share from discontinued
operations
0.17
0.22
(22.7)
0.49
1.49
(67.1)%
Diluted
$
(8.33
)
$
(0.43
)
N.M.
$
(8.57
)
$
(0.25
)
N.M.
Weighted average shares outstanding:
Basic
54,659,100
52,593,900
54,600,100
38,415,900
Diluted
54,659,100
52,593,900
54,600,100
38,415,900
N.M. - Not Meaningful
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
September 30,
2023
December 31,
2022
ASSETS
Cash and cash equivalents
$
84.7
$
101.1
Accounts receivable, net
179.3
178.2
Inventories, net
364.6
414.6
Income taxes receivable
18.4
19.4
Other current assets
29.1
27.6
Current assets held for sale
238.3
233.8
Total current assets
914.4
974.7
Property, plant and equipment, net
665.2
691.5
Finance lease right-of-use assets
16.7
17.3
Operating lease right-of-use assets
38.9
30.6
Deferred income tax benefits
2.8
34.4
Goodwill
468.0
844.2
Intangible assets, net
636.6
710.3
Other assets
128.6
110.1
Noncurrent assets held for sale
246.6
256.1
Total assets
$
3,117.8
$
3,669.2
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current debt
$
34.5
$
33.6
Finance lease liabilities
0.9
0.9
Operating lease liabilities
8.5
8.5
Accounts payable
149.3
180.6
Income taxes payable
11.8
10.2
Accrued expenses and other current
liabilities
108.8
129.0
Current liabilities held for sale
89.7
103.4
Total current liabilities
403.5
466.2
Long-term debt
1,704.0
1,656.4
Finance lease liabilities, noncurrent
17.1
17.6
Operating lease liabilities,
noncurrent
30.5
25.0
Long-term income tax payable
7.7
13.9
Pension and other postretirement
benefits
55.6
60.3
Deferred income tax liabilities
137.2
152.1
Other liabilities
26.2
31.5
Noncurrent liabilities held for sale
63.0
66.9
Total liabilities
2,444.8
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; 54,454,709 and 54,929,973 shares issued and
outstanding at September 30, 2023 and December 31, 2022,
respectively
5.4
5.5
Additional paid-in-capital
668.3
658.5
Retained earnings
86.3
610.7
Accumulated other comprehensive loss, net
of tax
(87.0
)
(95.4
)
Total stockholders’ equity
673.0
1,179.3
Total liabilities and stockholders’
equity
$
3,117.8
$
3,669.2
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FROM CONTINUING OPERATIONS
(in millions)
(Unaudited)
Nine Months Ended September
30,
2023
2022
Operating
Loss from continuing operations
$
(494.1
)
$
(66.4
)
Non-cash items included in net loss:
Depreciation and amortization
112.4
72.5
Amortization of deferred issuance
costs
5.6
5.1
Goodwill Impairment
401.0
—
Other impairments
14.8
13.6
Deferred income tax
24.9
(5.0
)
Pension and other postretirement
benefits
(10.4
)
(5.9
)
Stock-based compensation
9.3
16.5
Gain on sale of assets
—
(2.9
)
Gain on foreign currency transactions
(1.2
)
(19.8
)
Other non-cash items
(7.3
)
3.3
Cash received from settlement of interest
swap agreements
—
23.6
Other operating
(3.8
)
—
Net changes in operating working
capital
(13.4
)
(79.3
)
Net cash provided by (used in) operating
activities of:
Continuing operations
37.8
(44.7
)
Discontinued operations
14.6
61.8
Net cash provided by operations
52.4
17.1
Investing
Capital spending
(49.4
)
(27.1
)
Capitalized software costs
(0.5
)
(2.1
)
Acquisitions, net of cash acquired
—
(462.5
)
Proceeds from sale of assets
—
7.4
Cash received from settlement of
cross-currency swap contracts
—
35.8
Other investing
0.5
(4.9
)
Net cash used in investing of:
Continuing operations
(49.4
)
(453.4
)
Discontinued operations
(8.8
)
(8.2
)
Net cash used in investing
(58.2
)
(461.6
)
Financing
Cash dividends paid
(49.8
)
(50.1
)
Proceeds from long-term debt
180.0
720.4
Payments on long-term debt
(134.2
)
(179.5
)
Payments for debt issuance costs
(1.5
)
(22.6
)
Payments on financing lease
obligations
(0.7
)
(0.3
)
Purchases of common stock
(7.0
)
(6.4
)
Net cash provided by (used in) financing
of:
Continuing operations
(13.2
)
461.5
Discontinued operations
(0.9
)
(1.2
)
Net cash provided by (used in)
financing
(14.1
)
460.3
Effect of exchange rate changes on cash
and cash equivalents
(0.9
)
(8.2
)
Increase (decrease) in cash and cash
equivalents
(20.8
)
7.6
Cash and cash equivalents at beginning of
period
124.4
74.7
Cash and cash equivalents at end of
period
$
103.6
$
82.3
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
BUSINESS SEGMENT REPORTING FROM
CONTINUING OPERATIONS
(in millions)
(Unaudited)
NOTE REGARDING SEGMENT REPORTING AND
COMPARABILITY
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.
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 from Continuing
Operations
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
% Change
2023
2022
% Change
ATM
$
393.8
$
426.1
(7.6
)%
$
1,248.0
$
987.1
26.4
%
FBS
104.4
125.4
(16.7
)%
325.7
125.4
159.7
%
Total Consolidated
$
498.2
$
551.5
(9.7
)%
$
1,573.7
$
1,112.5
41.5
%
Operating Profit from Continuing
Operations
Three Months Ended September
30,
Nine Months Ended September
30,
Return on Net Sales
Return on Net Sales
2023
2022
2023
2022
2023
2022
2023
2022
ATM
$
(378.8
)
$
31.5
(96.2
)%
7.4
%
$
(306.1
)
$
71.2
(24.5
)%
7.2
%
FBS
(4.4
)
10.3
(4.2
)%
8.2
%
(1.1
)
9.1
(0.3
)%
7.3
%
Unallocated
(36.7
)
(73.4
)
(7.4
)%
(13.3
)%
(104.5
)
(122.6
)
(6.6
)%
(11.0
)%
Total Consolidated
$
(419.9
)
$
(31.6
)
(84.3
)%
(5.7
)%
$
(411.7
)
$
(42.3
)
(26.2
)%
(3.8
)%
Non-GAAP Adjustments to Operating
Profit
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
ATM - Amortization of intangibles and
other purchase accounting adjustments
$
14.5
$
16.1
$
35.9
$
38.3
ATM - Restructuring, impairment, and other
expenses
409.7
2.2
411.2
16.5
FBS - Amortization of intangibles and
other purchase accounting adjustments
1.1
8.6
11.0
8.6
FBS - Restructuring, impairment, and other
expenses
10.3
0.1
10.3
1.5
FBS - Acquisition/Merger and integration
costs
—
(0.1
)
—
(0.1
)
FBS - Divestiture costs
0.1
—
0.1
—
Unallocated - Restructuring, impairment,
and other expenses
—
5.2
1.1
5.2
Unallocated - Acquisition/Merger and
integration costs
9.2
46.8
28.7
60.4
Unallocated - Divestiture costs
5.2
—
5.2
—
Unallocated - Financing fees(1)
2.4
—
2.4
—
Total Consolidated
$
452.5
$
78.9
$
505.9
$
130.4
(1) Financing fees incurred for the
Receivables Sales Agreement for the three months ended September,
30, 2023.
Adjusted Operating Profit from
Continuing Operations
Three Months Ended September
30,
Nine Months Ended September
30,
Return on Net Sales
Return on Net Sales
2023
2022
2023
2022
2023
2022
2023
2022
ATM
$
45.4
$
49.8
11.5
%
11.7
%
$
141.0
$
126.0
11.3
%
12.8
%
FBS
7.1
18.9
6.8
%
15.1
%
20.3
19.1
6.2
%
15.2
%
Unallocated
(19.9
)
(21.4
)
(4.0
)%
(3.9
)%
(67.1
)
(57.0
)
(4.3
)%
(5.1
)%
Total Consolidated
$
32.6
$
47.3
6.5
%
8.6
%
$
94.2
$
88.1
6.0
%
7.9
%
Non-GAAP Adjustments to Adjusted
Operating Profit
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
ATM - Depreciation and stock-based
compensation
$
13.3
$
12.4
$
39.6
$
27.8
FBS - Depreciation and stock-based
compensation
7.7
6.9
23.4
6.9
Unallocated - Depreciation and stock-based
compensation
1.8
3.0
6.2
8.0
Total Consolidated
$
22.8
$
22.3
$
69.2
$
42.7
Adjusted EBITDA from Continuing
Operations
Three Months Ended September
30,
Nine Months Ended September
30,
Return on Net Sales
Return on Net Sales
2023
2022
2023
2022
2023
2022
2023
2022
ATM
$
58.7
$
62.2
14.9
%
14.6
%
$
180.6
$
153.8
14.5
%
15.6
%
FBS
14.8
25.8
14.2
%
20.6
%
43.7
26.0
13.4
%
20.7
%
Unallocated
(18.1
)
(18.4
)
(3.6
)%
(3.3
)%
(60.9
)
(49.0
)
(3.9
)%
(4.4
)%
Total Consolidated
$
55.4
$
69.6
11.1
%
12.6
%
$
163.4
$
130.8
10.4
%
11.8
%
Non-GAAP Reconciliation of Organic Net
Sales Growth
Advanced Technical
Materials
Fiber-Based Solutions
Consolidated Mativ
Three Months Ended September
30,
Mativ 2022 Net Sales from Continuing
Operations
$
426.1
$
125.4
$
551.5
July 1 to July 6 Neenah stub period
adjustment (1)
4.0
5.5
9.5
Divestiture/closure adjustments
(3.7
)
—
(3.7
)
Mativ 2022 comparable Net Sales from
Continuing Operations
$
426.4
$
130.9
$
557.3
Mativ 2023 Net Sales
$
393.8
$
104.4
$
498.2
Divestiture/closure adjustments
—
—
—
Mativ 2023 comparable Net Sales from
Continuing Operations
$
393.8
$
104.4
$
498.2
Organic growth
(7.6
)%
(20.2
)%
(10.6
)%
Currency effects on 2023
$
(9.3
)
$
0.2
$
(9.1
)
Mativ 2023 comparable Net Sales from
Continuing Operations with Currency Adjustment
$
403.1
$
104.2
$
507.3
Organic constant currency growth
(5.5
)%
(20.4
)%
(9.0
)%
(1) Adjustment for estimated Net Sales for
the period July 1st to July 6th not included in SWM's or Neenah's
Reported Net Sales.
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES AND SUPPLEMENTAL DATA
(in millions, except per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Operating profit from continuing
operations
$
(419.9
)
$
(31.6
)
$
(411.7
)
$
(42.3
)
Plus: Restructuring and other impairment
related expenses
19.0
1.8
21.6
17.5
Plus: Goodwill impairment
401.0
—
401.0
—
Plus: Purchase accounting adjustments
15.6
24.7
46.9
46.9
Plus: Acquisition/merger and integration
related costs
9.2
46.7
28.7
60.3
Plus: Divestiture costs
5.3
—
5.3
—
Plus: Cybersecurity expenses
—
5.7
—
5.7
Plus: Financing fees
2.4
—
2.4
—
Adjusted Operating Profit from continuing
operations
$
32.6
$
47.3
$
94.2
$
88.1
Income (loss) from continuing
operations
$
(464.3
)
$
(34.0
)
$
(494.1
)
$
(66.4
)
Plus: Restructuring and other impairment
expenses
16.3
$
1.8
17.6
17.3
Less: Tax impact of restructuring and
other impairment expense
(1.6
)
$
(0.4
)
(1.9
)
(3.7
)
Plus: Goodwill impairment
401.0
$
—
401.0
—
Less: Tax impact of goodwill
impairment
—
$
—
—
—
Less: Gain on sale of assets
—
$
—
—
(2.9
)
Plus: Tax impact on gain on sale of
assets
—
$
—
—
0.8
Plus: Other restructuring related
expenses
2.8
$
—
4.2
—
Less: Tax impact of other restructuring
related expenses
(0.7
)
$
—
(1.0
)
—
Plus: Purchase accounting adjustments
15.6
$
24.7
46.9
46.9
Less: Tax impact of purchase accounting
adjustments
(2.5
)
$
(5.7
)
(10.2
)
(10.4
)
Less: Litigation/tax settlement
—
$
—
4.9
—
Plus: Tax impact of litigation/tax
settlement
1.2
$
—
—
—
Plus: Cybersecurity expenses
—
$
5.7
—
5.7
Less: Tax impact of cybersecurity
expenses
—
$
(1.3
)
—
(1.3
)
Plus: Acquisition/merger and integration
related costs
9.6
$
46.7
29.2
63.6
Less: Tax impact on acquisition/merger and
integration related costs
(2.1
)
$
(6.4
)
(6.8
)
(10.0
)
Plus: Divestiture costs
5.3
$
0.4
5.3
0.4
Less: Tax impact of divestiture costs
(1.2
)
$
(0.1
)
(1.3
)
—
Less: Luxembourg valuation allowance
release
31.7
$
—
31.7
—
Plus: Reversal of valuation allowance on
prior year tax credits
6.4
$
—
6.4
—
Plus: Tax legislative changes, net of
other discrete items
(6.3
)
$
(3.2
)
2.2
(1.1
)
Adjusted Income from continuing
operations
$
11.2
$
28.2
$
34.1
$
38.9
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES AND SUPPLEMENTAL DATA
(in millions, except per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Earnings (loss) per share from continuing
operations - diluted
$
(8.50
)
$
(0.65
)
$
(9.06
)
$
(1.74
)
Plus: Restructuring and other impairment
related expenses
0.31
0.03
0.32
0.46
Less: Tax impact of restructuring and
other impairment expense
(0.03
)
(0.01
)
(0.03
)
(0.09
)
Plus: Goodwill impairment
7.30
—
7.30
—
Less: Tax impact of goodwill
impairment
—
—
—
—
Less: Gain on sale of assets
—
—
—
(0.07
)
Plus: Tax impact on gain on sale of
assets
—
—
—
0.02
Plus: Other restructuring related
expenses
0.05
—
0.09
—
Less: Tax impact of other restructuring
related expenses
(0.01
)
—
(0.02
)
—
Plus: Purchase accounting adjustments
0.28
0.47
0.86
1.21
Less: Tax impact of purchase accounting
adjustment
(0.05
)
(0.11
)
(0.19
)
(0.27
)
Less: Litigation/tax settlement
—
—
0.09
—
Plus: Tax impact of litigation/tax
settlement
0.02
—
—
—
Plus: Cybersecurity expenses
—
0.11
—
0.15
Less: Tax impact of cybersecurity
expenses
—
(0.02
)
—
(0.03
)
Plus: Acquisition/merger and integration
related costs
0.18
0.89
0.54
1.65
Less: Tax impact on acquisition/merger and
integration related costs
(0.04
)
(0.12
)
(0.12
)
(0.26
)
Plus: Divestiture costs
0.10
—
0.10
0.01
Less: Tax impact of divestiture costs
(0.02
)
—
(0.02
)
—
Less: Luxembourg valuation allowance
release
0.59
—
0.59
—
Plus: Reversal of valuation allowance on
prior year tax credits
0.13
—
0.12
—
Plus: Tax legislative changes, net of
other discrete items
(0.10
)
(0.06
)
0.05
(0.03
)
Adjusted Earnings Per Share from
continuing operations - diluted
$
0.21
$
0.53
$
0.62
$
1.01
MATIV HOLDINGS, INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES AND SUPPLEMENTAL DATA
(in millions, except per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net Income (loss) from continuing
operations
$
(464.3
)
$
(34.0
)
$
(494.1
)
$
(66.4
)
Plus: Interest expense
16.8
14.9
48.8
43.7
Plus: Financing fees
2.4
—
2.4
—
Plus: Provision for income taxes
27.3
(11.1
)
30.0
(14.4
)
Plus: Depreciation & amortization
36.9
35.0
110.5
72.4
Plus: Stock compensation expense
1.4
2.0
4.0
7.2
Plus: Inventory step up expense
—
10.0
1.4
10.0
Plus: Restructuring and impairment
expense
16.3
1.8
17.6
17.3
Plus: Goodwill impairment
401.0
—
401.0
—
Plus: Other restructuring related
expense
2.8
—
4.2
—
Plus: Cybersecurity expenses
—
5.7
—
5.7
Plus: Acquisition/merger and integration
related costs
9.2
46.7
28.7
60.5
Plus: Divestiture costs
5.3
—
5.3
—
Plus: Litigation/tax settlement
—
—
4.9
—
Plus: Other income, net
0.3
(1.4
)
(1.3
)
(5.2
)
Adjusted EBITDA from continuing
operations
$
55.4
$
69.6
$
163.4
$
130.8
Cash provided by (used in) operating
activities of continuing operations
$
32.3
$
(19.0
)
$
37.8
$
(44.7
)
Less: Capital spending
(14.7
)
(16.7
)
(49.4
)
(27.1
)
Less: Capitalized software costs
—
(0.6
)
(0.5
)
(2.1
)
Free Cash Flow from continuing
operations
$
17.6
$
(36.3
)
$
(12.1
)
$
(73.9
)
September 30, 2023
December 31, 2022
Total Debt
$
1,738.5
$
1,690.0
Less: Cash
84.7
101.1
Net Debt from continuing operations
$
1,653.8
$
1,588.9
Non-GAAP Reconciliation of Continuing
Operations for Comparability
(in millions) (Unaudited)
Three Months Ended
September 30, 2022
September 30, 2023
Legacy Mativ
Adjustments(1)
Mativ Continuing
Operations
Mativ Continuing
Operations
Advanced Technical Materials
(ATM)
Net Sales
$
426.1
$
—
$
426.1
$
393.8
GAAP Operating Profit
31.5
—
31.5
(378.8
)
Amortization of intangibles and other
purchase accounting adjustments
16.1
—
16.1
14.5
Restructuring, impairment, and other
expenses
2.2
—
2.2
409.7
Adjusted Operating Profit
$
49.8
$
—
$
49.8
$
45.4
Adjusted Operating Profit Margin
11.7
%
N/A
11.7
%
11.5
%
Depreciation and stock-based compensation
expense (2)
12.4
—
12.4
13.3
Adjusted EBITDA
$
62.2
$
—
$
62.2
$
58.7
Adjusted EBITDA Margin
14.6
%
N/A
14.6
%
14.9
%
Fiber-Based Solutions (FBS)
Net Sales
$
248.0
$
(122.6
)
$
125.4
$
104.4
GAAP Operating Profit
27.8
(17.5
)
10.3
(4.4
)
Amortization of intangibles and other
purchase accounting adjustments
8.6
—
8.6
1.1
Restructuring, impairment, and other
expenses
0.5
(0.4
)
0.1
10.3
Acquisition/Merger and integration
costs
—
(0.1
)
(0.1
)
—
Divestiture costs
—
—
—
0.1
Adjusted Operating Profit
$
36.9
$
(18.0
)
$
18.9
$
7.1
Adjusted Operating Profit Margin
14.9
%
N/A
15.1
%
6.8
%
Depreciation and stock-based compensation
expense (2)
12.1
(5.2
)
6.9
7.7
Adjusted EBITDA
$
49.0
$
(23.2
)
$
25.8
$
14.8
Adjusted EBITDA Margin
19.8
%
N/A
20.6
%
14.2
%
Non-GAAP Reconciliation of Continuing
Operations for Comparability
(in millions) (Unaudited)
Three Months Ended
September 30, 2022
September 30, 2023
Legacy Mativ
Adjustments(1)
Mativ Continuing
Operations
Mativ Continuing
Operations
Corporate Unallocated
GAAP Operating Loss
$
(73.2
)
$
—
$
(73.2
)
$
(36.7
)
Restructuring, impairment, and other
expenses
5.2
—
5.2
—
Acquisition/Merger and integration
costs
46.8
—
46.8
9.2
Divestiture costs
—
—
—
5.2
Financing fees
—
—
—
2.4
Adjusted Operating Loss
$
(21.2
)
$
—
$
(21.2
)
$
(19.9
)
% of total Net Sales
(3.1
)%
N/A
(3.8
)%
(4.0
)%
Depreciation and stock-based compensation
expense (2)
3.0
—
3.0
1.8
Adjusted EBITDA
$
(18.2
)
$
—
$
(18.2
)
$
(18.1
)
% of total Net Sales
(2.7
)%
N/A
(3.3
)%
(3.6
)%
Consolidated
Net Sales
$
674.1
$
(122.6
)
$
551.5
$
498.2
GAAP Operating Profit
(13.9
)
(17.5
)
(31.4
)
(419.9
)
Amortization of intangibles and other
purchase accounting adjustments
24.7
—
24.7
15.6
Restructuring, impairment, and other
expenses
7.9
(0.4
)
7.5
420.0
Acquisition/Merger and integration
costs
46.8
(0.1
)
46.7
9.2
Divestiture costs
—
—
—
5.3
Financing fees
—
—
—
2.4
Adjusted Operating Profit
$
65.5
$
(18.0
)
$
47.5
$
32.6
Adjusted Operating Profit Margin
9.7
%
N/A
8.6
%
6.5
%
Depreciation and stock-based compensation
expense (2)
27.5
(5.2
)
22.3
22.8
Adjusted EBITDA
$
93.0
$
(23.2
)
$
69.8
$
55.4
Adjusted EBITDA Margin
13.8
%
N/A
12.7
%
11.1
%
(1) On August 1, 2023, the company
announced the planned sale of its Engineered Papers (EP) business.
The EP business is accounted for as discontinued operations which
requires retrospective presentation of continuing operations for
all periods presented. The adjustments remove the results of the
discontinued EP business from each line within the Non-GAAP
Reconciliation of Continuing Operations for Comparability
tables.
(2) Depreciation and stock-based
compensation excludes stock-based compensation included in
acquisition/merger and integration costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108153890/en/
Chris Kuepper, IRC Director, Investor Relations +1-770-569-4229
Website: http://www.mativ.com
Mativ (NYSE:MATV)
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