Mativ Holdings, Inc.

Welcome to Mative's fourth quarter earnings conference call. Hosting the call today from Mative is Julie Chattel, Chief Executive Officer. She is joined by Andrew Wamser, Chief Financial Officer, and Mark Checkernell, Director of Investor Relations. Today's call is being recorded and will be available for replay later this afternoon. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. If you should require operator assistance, please press star zero. We ask that you please pick up your handset to allow optimal sound quality. It is now my pleasure to turn the floor over to Mr. Chekhanow. You may begin.

Thank you and good morning. I'm Mark Chekhanow, Director of Investor Relations at Matters. Thank you for joining us to discuss our fourth quarter 2022 earnings results. Before we begin, I'd like to remind you that the comments included in today's conference call include forward-looking statements. Actual results may differ materially from the results suggested by these comments for a number of reasons, which are discussed in more detail in our Securities and Exchange Commission filings, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Some financial measures discussed during this call are non-GAAP financial measures, Reconciliations of these measures to the closest gap measures are included in the appendix of this presentation and the earnings release. Unless otherwise stated, financial and operational metric comparisons are to the prior year period. The earnings release is available on our website at ir.maddiv.com, as are the slides for today's presentation. You can download the slides and or click through these slides at your own pace during the call using the webcast interface. To clarify some aspects of how MATA results were reported and how we will be discussing them, we would first remind everyone that the SWM and MENA merger closed on July 6, 2022. Thus, the fourth quarter reported results reflect the combined company for the full period. However, reported results for the full year only reflect the combined results for the periods after the merger, while the first half of 2022 and all of 2021 reported results reflect only the legacy SWM results. As a result, year-over-year comparisons reflected the addition of the NENA operations and typically resulted in large reported year-over-year increases in sales and profits. On today's call, though, and in our earnings release, we will provide some comments referring to comparable performance to illustrate how our results compare to prior year periods on a like-for-like basis. These figures are shown in tables in our earnings release and the appendix of this presentation, as well as full reconciliations. As previously disclosed, MATTER reports results in two reporting segments, Advanced Technical Materials, or ATM, and Fiber-Based Solutions, or FBS. ATM is essentially comprised of the Legacy SWM Advanced Materials and Structures segment and the Legacy NENA Technical Products segment, while FBS is essentially comprised of the Legacy SWM Engineered Papers segment and the Legacy NENA Fine Papers and Packaging segment. Please follow up with us for any further needed clarifications, as we want to make sure you understand our business trends, financial results, and reporting processes. With that, I'll turn the call over to Julie.

Thanks, Mark. Good morning, everyone, and thank you for joining today's call. We have a lot to cover today. In addition to our normal quarterly results and highlights, a view of the current operating environment, and some commentary on what we see going forward, we will also share some additional color on our newly aligned strategic framework. This work stream is the culmination of months of rigorous assessments since the close of the merger. We've worked with our board and our leadership team and recently shared this messaging and direction with our employees. We are excited to now bring it to the investment community to help establish and build a strong MADIS identity. Let's start with Q4 results. On our last call, we indicated fourth quarter EBITDA would be consistent with third quarter results of $93 million, and that is where we landed. For the quarter, that represents 30% growth compared to last year. This also puts MADIS at $370 million of EBITDA in 2022 on a combined basis. Additionally, we remain confident in the resilience of our portfolio, near-term cost synergies, as a controllable profit catalyst and longer-term value creation opportunities ahead for MATIV. I'd like to touch on a few key fourth quarter highlights. First, this was another strong quarter of top-line gains with constant currency organic growth of 6% driven by disciplined pricing actions. Consistent with our strategy, our growth platforms of release liners and protective solutions, delivered the highest growth in the portfolio. Second, price versus cost has been a theme throughout 2022 as manufacturers battle raw material inflation and pass prices downstream. During the quarter, pricing exceeded input cost increases by over $35 million on a comparable basis for the combined company. I'm pleased with the team's pricing discipline and agility as we implemented new approaches to pricing throughout 2022. And third, we delivered as expected on synergy execution, exiting the year with a little over $20 million of executed synergies, most of which will be realized and hit the P&L in 2023. We are highly focused on synergy capture. as our $65 million Synergy plan is largely within our control and offers built-in profit improvement regardless of external factors. I want to commend our global operating teams and our transformation office leaders for parallel passing this high-value set of opportunities while navigating a very dynamic macro environment. Beyond Synergy delivery, we've made tremendous strides in all facets of integration, from finance and accounting to HR and IT to organizational design and operations. We know integration can create a risk of disruption when executed at scale, and I can confidently say our thoughtful planning and discipline has paid off with a relatively smooth process in our first six months together. Beyond our mat of walls is a fairly choppy economy. There are mixed signals on the direction of inflation, and indications of softening demand, at least in the near term, from customer destocking. Concerns of a recession coupled with inventory drawdowns from customers who built excess inventories during supply chain uncertainties are impacting manufacturers and clouding near-term visibility. While we have confidence in the resilience of our portfolio during periods of soft economic conditions, we do expect some near-term impact, particularly in Q1, before order patterns are expected to begin to normalize in the second quarter and even more so in the second half of the year. Looking at the quarter and current operating environment, it is definitely a dynamic time with several drivers influencing the global economic climate. In some respects, inflation seems to be cooling, and we are seeing some moderation in both prices and forecasts of key inputs like pulp, resin, and energy. However, indications of continued interest rate increases continue to weigh on sentiment. We are also seeing reduced demand as customers take down inventory levels. Coming out of a period of supply chain uncertainty and availability, many customers built much higher than normal levels of safety stock in an effort to assure supply and a willingness to carry excess working capital. As supply chain constraints ease and concerns about availability lessen, customers are aggressively working to reduce excess inventories. Additionally, customers are also cautious about the direction of demand. We are seeing signs of demand slowing, particularly in Europe and in certain product categories, and uncertainty about the duration and degree of demand contraction. Most customers that are destocking have indicated a general expectation of normalization by the end of the second quarter. However, it's then clear what level of demand that normal environment will entail. With respect to our business, we are seeing the most impact of inventory destocking in our packaging and specialty papers and markets, as well as industrial and areas tied to construction and automotive. These areas also tend to correlate more with the broader economy. For us, this means focusing on internal elements we can control in this uncertain environment, including working capital reductions, operating costs, synergy execution, and innovation. Looking at other areas of demand trends and indications from customers, filtration was a mixed bag. There is some softness in transportation filtration as consumers may be delaying aftermarket filter replacements in response to inflation-driven spending pressures. In addition, we are seeing tough comps on some COVID-driven products, like face masks and home air filters, as COVID's concerns ease. Water and industrial process filtration sales performed better, as we would typically expect more resilience in these categories. Release liners delivered a very strong quarter, as demand remained healthy, with sales up over 20%. Our diversified offering of release liners serving industrial and consumer markets continues to be a leader in the portfolio, and we expect it to remain resilient in the face of potential economic volatility. Similarly, protective solution sales were up over 20%, and we are also confident in the resilience of this business, as it relies far more on global product penetration and consumer adoption that we believe will remain largely intact in a challenged environment. Also, demand for engineered papers remained relatively predictable, with minimal impact from inventory destocking at the customer level. We know there are various end markets and product categories across the enterprise, but to summarize destocking as a broad topic, again, we saw some impact in the fourth quarter, which will likely peak in the first quarter, before normalizing by mid-year. And with respect to demand, we see some softness, mostly in very economically correlated product areas, and expect resilience in several others. We continue to believe that over 60% of our portfolio should exhibit recession resilience. That segues into one of my favorite topics, synergies. In addition to the long-term value we can create with the merger, We have solid plans in place and are executing on $65 million of cost synergies, which I believe represents an insurance policy for profit growth in 2023. Andy will elaborate shortly, but I want to hit a few highlights. First, we are living up to our commitment to end 2022 with at least $20 million of executed synergies. As you recall, this is one of our goals. as well as executing half of the plan a year from close, meaning over $30 million in run rate by mid 2023. We remain on track for this as well. Realized synergies that will hit our P&L in 2023 create a full year profit growth buffer against the impact of the first half destocking or potential further economic turbulence. And perhaps the most appealing aspect of these actions is that they are within our control. We are laser focused on synergy realization. Our entire company is heavily incented on synergy delivery, and our execution thus far gives me confidence in successfully achieving our objectives. With that, I'll turn it over to Andy to review the quarter's financials and comment on 2023. Thanks, Julie.