Mativ Q1 2026 Earnings Call Summary

1Key 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.

2Strategic 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.

3Forward 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.

4Bad 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.

5Notable 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.