Magnera Corp Q1 FY2026 earnings call

• Financial performance: Quarterly earnings in line with expectations, adjusted EBITDA 9% growth with synergy realization and Project CORE tracking as planned. - Rest of World segment: Improved earnings due to cost structure addressing and consumer solution mix increase. North America organic volume growth offset South America's volume decline due to Asian import pressure. - Innovation: Transformational breakthrough in barrier protection for healthcare applications, progress in advanced materials solution, Kamisoft platform sales growth. - Market performance: Americas region strong in wipes and adult markets; Europe infrastructure business growth; branded Geca Tape had gains. - Strategic priorities: Strengthen global cost structure, product leadership through innovation, commercial excellence initiatives.

Americas division: Delivered 2% organic volume growth during the quarter, driven by strong demand in wipes and adult end markets. Adjusted EBITDA declined by $3 million compared to the prior year, largely due to volume and product mix pressures in South America. Rest of World division: Experienced year-over-year decline in revenues, but adjusted EBITDA increased by 9% to $35 million, reflecting disciplined cost management and synergy realization. Americas contributed 2% organic volume growth, while Rest of World had revenue decline but EBITDA growth.

• 2026 adjusted EBITDA guidance of 9% growth with synergy realization and Project CORE tracking as planned. - Expect earnings stability in South America in coming quarters as prior year comparison is lapped. - Remain confident in delivering full year financial guidance, optimization efforts underway, cultivating innovative culture aligned with customer commitments.

• South America: Open inquiries in several countries related to antidumping concerns and potential countermeasures, with May timeframe expected for Brazil legislation conclusion. - Weather impact: North America factories impacted by storms, affecting roughly 10% of shipping days, with catch-up expected but monitoring freight availability. - Europe: Continued broad-based market softness.

Q: Gabe Hajde asked about timing of antidumping and countermeasures in South America, customer behavior change, and customer partnerships.

A: Antidumping measures in Brazil expected in May, encouraged by dialogue; customer dialogue on supply chain alignment, South America adult incontinence adoption rates ramping up with portfolio pivot.

Q: Gabe Hajde asked about weather impact on plants.

A: Winter storms impacted North America factories, affecting 10% of shipping days, with catch-up expected but no major supply chain disruptions.

Q: Kevin McCarthy asked about PMI and restocking activity, Project CORE update.

A: No strong demand signal yet, but monitoring; Project CORE on schedule with $15M - $20M benefit expected, well within guide.

Q: Roger Spitz asked about 2026 volume growth, EBITDA growth drivers, and free cash flow.

A: 2026 volumes flat, growth driven by synergy realization and Project CORE; free cash flow walk targets midpoint with flat working capital, interest, integration costs, and CapEx.

Q: Edward Brucker asked about innovation product margin and debt reduction.

A: Innovation products expected above average margin; debt reduction of $100M through buying back bonds and term loan in open market.

Q: Gabe Hajde asked about North America oversold platforms and seasonality.

A: Focus on optimizing capacity through operational excellence and material innovation; seasonality varies by region, with Q3, Q2, Q4 having better demand than Q1.