Mativ Holdings, Inc.

Welcome to Mative's fourth quarter and full year 2023 earnings conference call. On the call today from Mative are Julie Shurtle, Chief Executive Officer, Greg Whitesell, Chief Financial Officer, and Chris Cooper, 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'd like to ask a question at that time, please press star followed by one on your touchtone phone. If you need to remove yourself from the queue, please press star followed by two. If you require operator assistance, please press star followed by zero. And we ask that you please pick up your headset to allow optimal sound quality. I'll now turn the call over to Mr. Chris Cooper. Sir, you may begin.

Good morning, everyone, and thank you for joining us for Madoff's fourth quarter and full year 2023 earnings call. Before we begin, I'd like to remind you that comments included in today's conference call include forward-looking statements. Actual results may differ materially from these comments for reasons shown in 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 GAAP measures are included in the appendix of the earnings release and accompanying presentation slides. Unless stated otherwise, financial and operational metric comparisons are to the prior year period and relate to continuing operations. The earnings release issued yesterday afternoon is available on our website at ir.madef.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. Since the SWM and NENA merger closed on July 6, 2022, the third and fourth quarters of 2023 are the first reporting periods since the merger that are truly comparable. However, year-to-date gap results for the first half of 2022 will still only include legacy SWM, since this was prior to the merger. Comparable performance for year-to-date figures to illustrate how our results compare on a like-for-like basis are shown in tables in our earnings release and the appendix of our presentation slides. Finally, with the November close of the sale of the engineered papers, results for this business are now being summarized separately as discontinued operations, with all remaining businesses being reported as continuing operations. With that, I'll turn the call over to Julie.

Thank you, Chris. Good morning everyone and thank you for joining our call. Greg and I have a lot of topics to cover with you today. In addition to our quarterly and full year financial results, an update on our operating environment, and our thoughts on the path ahead in 2024, we also want to share more details about our restructuring and overhead cost reduction initiatives that we announced in late January of this year. This effort will streamline our organizational size, shape, and complexity, simplify reporting lines, and amplify the way we leverage our business critical resources to enhance how we serve and support our customers. I'm excited to share the details of this comprehensive plan with you and the broader investment community, as I believe it represents a step change in how we run our business and will accelerate our path to growth ahead. Let's start with our Q4 and full year 2023 results. Sales from continuing operations were $452 million for the quarter, down 14% year over year, and $2 billion for the full year, down 9% on a comparable basis. This performance mainly reflects continued lower volumes due to the challenging macroeconomic environment caused by an industry-wide destocking trend geopolitical adversity, and high interest rates impacting our end markets. We believe that the overall destocking trend, which has persisted for over a year, is at or near the bottom, and we have a line of sight to positive signs of demand momentum in many of our end markets. We are encouraged by these early indicators and look forward to the opportunities that lie ahead. Adjusted EBITDA was $50 million for the quarter. down 20% year-over-year, and $213 million for the full year, down 17% on a comparable basis. The biggest driver of this continues to be low volume as it impacts fixed cost absorption and reduces the realization of our implemented pricing actions and merger synergies. We combat this trend through a relentless focus on continuous operational improvement and cost minimization throughout the manufacturing process and broader supply chain, as well as consistent and disciplined price management. Especially in this low demand environment, we are laser focused on implementing these actions to deliver immediate and lasting results. We also expect to realize increased operating leverage when our demand profile improves. You can see the impact of these efforts in both segments' ability to drive tangible adjusted EBITDA margin improvement quarter over quarter. This quarter also marked the finish of our first full fiscal year as MATIV. A year and a half ago, we set out to combine two separate successful legacy companies into a more powerful and focused specialty materials leader. Today, we look back at an eventful 18 months that included many accomplishments and milestones against a backdrop of a very challenged macro environment. We started 2023 by setting our enterprise ambition, defining our operating model, and benefiting from the results of early SG&A synergies during our initial integration period. This allowed us to press forward to streamline our business operations and procurement activities to deliver on our synergy potential. We began the year with a goal of $25 million in realized synergies in 2023, and I'm pleased to share that we achieved this goal at a faster pace than initially expected, realizing over $30 million in synergies in the year, and that our journey to achieve our total of $65 million in synergies is ahead of schedule. Most of the remaining synergies are focused on efficiencies within our procurement and supply chain areas, And we expect to capture these savings quickly and efficiently over the next 18 months. In November, we closed on the sale of our engineered papers business to a Singapore-based Evergreen Hill Enterprise. The sale of engineered papers was the culmination of a strategic initiative that began after the merger to focus our portfolio on our fastest growing end markets. I'm very pleased with the outcome of this transaction. as I believe we were able to find a great partner for engineered papers while significantly enhancing our portfolio mix. Furthermore, the transaction aligned with our commitment to prioritize debt reduction. Net proceeds realized from the engineered paper sale were in excess of our initial projections and were used to reduce our outstanding debt balance by more than $600 million, or approximately 35%. At the same time, we took a hard look at our capital allocation priorities and decided to further support debt reduction. We reduced our dividend effective September 2023, committed to a share buyback program intended to counter dilution, and right-sized our capital spending plans by more than 10%. In support of our strategy of focused investments to accelerate growth, We announced and are in the process of starting up new assets in our filtration and release liners business. These are two of our identified growth platforms where we provide unique solutions to meet our customers' most challenging needs. Our new filtration meltblown line will start up in Germany in Q1 2024, and we added a silicone release coder in Mexico to target growth in North and South America and fast-growing applications such as label, adult care, and composites. This new coder in Mexico has started up and is running trials for customer qualifications, performing in line with our investment thesis. Combined, these investments will support $50 million of revenue growth as they ramp up, qualify, and become fully utilized. Also, as expected, we are continuing to consolidate our asset and warehouse footprint. We are currently in the process of streamlining our operations through the consolidation of three less profitable manufacturing sites into larger, more scalable facilities. Among those efforts was a sale of a small facility in the UK, an announced closure of a plant, and the consolidation of another small facility, both in the U.S. We are also actively streamlining our warehousing and distribution network. For example, we've reduced the number of warehouses by about 10% since the merger and plan to reduce this number by another 10% by the end of this year. Taken together, these long-term decisions will drive benefits in reducing costs, improving the customer experience, and driving margin performance. especially as demand returns to more normalized levels. With that, I'll turn it over to Greg for a more detailed discussion of our financial performance, and then I'll provide some color on our new structure and MADF going forward.