Mativ (MATV) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $498.5 million, flat year-over-year, with organic growth of 1.4% and gross profit up 8% to $93.6 million due to lower manufacturing costs.

• Adjusted EBITDA rose 10% year-over-year to $60.8 million, with margin up 110 basis points; adjusted income was $11.0 million and adjusted EPS $0.21.

• GAAP net loss from continuing operations was $20.8 million, a significant improvement from a $464.3 million loss in Q3 2023, which included a $401 million goodwill impairment.

• SAS segment delivered nearly 20% adjusted EBITDA growth, while FAM segment faced headwinds from lower advanced films volumes and prices.

• Management is executing a turnaround in Advanced Films, investing in filtration, specialty tapes, release liners, and medical/optical films, and reducing plant and warehousing footprint.

Financial highlights

• Gross margin improved to 18.8% from 17.4% in Q3 2023; operating profit was $7.0 million, reversing a $419.9 million loss last year.

• Net debt at quarter end was $981.2 million, with available liquidity of $463 million and net leverage ratio of 4.1x.

• Interest expense increased to $18.3 million due to higher rates and balances.

• Free cash flow for the nine months was $35.1 million, with $70.7 million cash from operations year-to-date.

• Total debt to capital ratio was 56.4% at September 30, 2024.

Outlook and guidance

• Q4 2024 sales expected up mid-single digits year-over-year; adjusted EBITDA expected down low double digits year-over-year.

• Full-year 2024 capital expenditures planned at $50 million, down from $60 million.

• No signs of near-term demand recovery; sluggish environment expected to persist until broader economic improvement.

• Target leverage ratio remains 2.5–3.5x, but timeline likely extends into 2026.

• Management expects to complete restructuring activities in 2024 with minimal additional costs.