Mativ Holdings, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights:

• SAS had an excellent quarter, with strong momentum continuing into Q4 2024, sales up almost 13% organically, and adjusted EBITDA up almost 8%. The sales pipeline for 2025 is more than 50% greater than a year ago, and they expanded in targeted growth categories.
• FAM had mixed results in Q4 with challenges in advanced films but progress in turnaround efforts: restored quality in paint protection film, growth in adjacent specialty markets like medical and optical films, developed a mid-tier paint protection product, replaced site leadership, and announced smart glass film partnerships.
• Restructured organization with over $20 million of overhead costs reduced in 2024, continuing to reduce costs and streamline operations. Promoted Ryan Elwart to lead commercial activities across Mativ.

Segment Performance:

• SAS: Net sales were $291 million, up almost 13% organically and up more than $20 million or almost 8% as reported. Adjusted EBITDA was $36 million, up almost 8% year-over-year. All SAS categories delivered volume improvement in Q4 with tapes, labels and liners driving the largest gain followed by paper and packaging and healthcare. Full year adjusted EBITDA was up almost 19% and margin up 210 basis points.
• FAM: Net sales were $168 million, down more than 7% versus Q4 2023. FAM adjusted EBITDA was $26 million, down more than $10 million year-over-year, reflecting lower volumes in high margin advanced films and netting categories, unfavorable net selling price versus input cost, and higher manufacturing costs. Filtration categories showed stable volumes but were offset by lower volumes in advanced films and netting, and lower selling prices.

Guidance:

• Q1 2025 impacted by higher inventory and input costs; first quarter expected to be a moderate net negative.
• Full year 2025 focused on driving profit, cash generation, and further margin improvement, including continued aggressive cost reductions, operational excellence improvements, reduced capital spending while investing for growth, and phasing in raw material expense increases with pricing actions to offset them.

Risks:

• Sluggish industrial macros affecting FAM.
• Volume declines in paint protection film due to production quality issue in late 2023.
• Raw material headwinds expected to have a $10 million to $15 million impact on input costs.

Q: Pete Lucas asked about Q1 being impacted by higher inventory and input costs and input costs subsiding with pricing.

A: Greg Weitzel said there are $10 million to $15 million of potential increased input costs, but there are announced pricing actions to cover it, with the first quarter expected to be a moderate net negative.

Q: Daniel Harriman asked about tariffs and progress of previous investments.

A: Julie Schertell said on tariffs, plans in place to mitigate depending on where they land. On previous investments, most are in infancy stage, meltblown line in German facility operating, coder in Mexico supports release liner growth, tape lines in Italy and Canada in early phases, and healthcare automation in Knoxville facility for capacity additions.