Mativ Holdings, Inc. Q3 FY2025 earnings call

• Strategic Priorities: Driving enhanced commercial execution, strengthening balance sheet, and conducting strategic portfolio review.
• SAS Momentum: Strong organic sales growth for sixth consecutive quarter, with tapes and labels, liners and healthcare up mid-to-high single digits, paper and packaging up low single digits. Commercial teams driving incremental revenue in various categories and market share gains.
• FAM Turnaround: First quarter of growth in sales and adjusted EBITDA since merger, with growth in filtration, HVAC, air pollution control, and films regaining business.
• Operational Improvements: Enhanced efficiency at sites, reduced injury rates via safety programs, supply chain streamlining to minimize tariff exposures (less than 6% of sales subject to tariffs), and initiatives to offset distribution expenses.

SAS Segment: Organic sales up 5%, sixth consecutive quarter of year-over-year sales improvement. Adjusted EBITDA for the quarter was $48.3 million, up $7 million or over 17% versus prior year, with a margin of 15.3% (up 200 basis points year-over-year). Revenue contribution from SAS drove a majority of the consolidated EBITDA improvement. FAM Segment: Q3 was the first quarter of growth in sales and adjusted EBITDA since the merger. FAM sales of $198 million increased by more than $8 million or over 4% from last year. Growth was seen in filtration (high single digits) and films regaining business.

• Q4 adjusted EBITDA expected to increase by at least 10% versus last year, driven by volume increase, favorable net selling price vs input cost, operational improvements, and cost savings.
• Tariff guidance updated: less than 6% of annual sales currently subject to tariffs (previously 7%).
• Year-to-date free cash flow doubled, Q4 cash flow expected similar to prior year, with working capital initiatives expected to boost free cash flow in 2026 and beyond.

• Macro environment uncertainty with tariffs and macroeconomic policies impacting sales and operating leverage.
• Elevated distribution expenses due to cross-sourcing to mitigate tariffs.

Q: Clear that commercial actions in SAS are affecting FAM. Curious about timeline for full benefit of commercial initiative and updates on portfolio review.

A: FAM is already seeing impact, first quarter of growth since merger. Strategic portfolio review includes footprint rationalization (closure of Wilson, NC facility, accretive to EBITDA in Q1 2026), R&D optimization, and SKU rationalization, with progress ongoing.

Q: Provide detail on organic performance in subsegments, demand evolution, and closure of North Carolina facility costs.

A: Demand seen in cable tapes, commercial print, water filtration, HVAC, personal care, erosion control. Closure of Wilson facility is accretive to EBITDA, with onetime cash costs but overall positive impact on margins.

Q: Describe mechanics of winning market share with pricing driving margin accretion and outlook for 2026 margins.

A: Sales force focusing on growth segments, cross-selling, better service leading to market share gains. Path to 15% margin is gradual, expecting continuation of margin improvement trend in 2026 but no specific guidance provided yet