Mativ Holdings, Inc.

Welcome to MADF's second quarter 2024 earnings conference call. On the call today from MADF are Julie Chittal, Chief Executive Officer, Greg Weissel, 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 the 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 on your touchtone phone. If you would like to remove yourself from the queue, please press 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 call over to Mr. Chris Cooper. Sir, you may begin.

Good morning, everyone, and thank you for joining us for MADF's second quarter 2024 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 SEC 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. 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.madoff.com. With that, I'll turn the call over to Julie.

Thanks, Chris. Good morning, everyone, and thank you for joining our call. I'm pleased to report that Q2 results showed strong adjusted EBITDA improvement, as well as being the second consecutive quarter of volume growth. We generated adjusted EBITDA of $67 million, which was up 45% from the previous quarter and up 13% year over year. Additionally, adjusted EBITDA margin was up 350 basis points sequentially and 150 basis points year over year. Results came in ahead of expectations due to a strong spread between selling price and input costs, as well as operational improvements that came in earlier than expected. While both segments performed well, our SaaS segment was the biggest driver this quarter, delivering over $10 million of incremental EBITDA and over 300 basis points of margin improvement year over year. On a consolidated basis, the primary driver of this quarter's adjusted EBITDA performance was our commercial team's pricing discipline and their ability to maintain a favorable net selling price versus input cost spread. Throughout the most recent period of supply challenges and extraordinary inflation over the past two years, our commercial team has done an excellent job of driving pricing to offset the impact of material inflation. While we experienced some deflation on input costs in Q2, maintaining a positive net selling price versus input cost spread historically has been and continues to be a key success factor and primary performance metric for our teams. We also implemented new tools last year to ensure we minimize leakage and continue to drive value with our pricing decisions. Sequentially, consolidated sales were up almost 5% this quarter, after being up more than 10% in Q1, mainly due to volume growth. Volume gains were most pronounced in our fast segment, which is also where we felt the most volume pressure last year, and which therefore presented the greater recovery opportunity this year. Across both segments, the categories with our highest volume growth year over year were were tapes and labels up 11%, filtration up 8%, and release liners up 5%. While volume is improving, there continues to be headwinds. In discussions with our customers, we know that a number of them remain cautious about building inventory due to the general instability of the market. While we have seen modest demand improvement, it remains tempered, This is consistent with the continuing contraction of the global PMI metric and leads to another top priority of ours, aggressive cost management. Our teams are relentless in their pursuit to transform MATIV into a more agile and flexible entity. We've focused on making more of our cost variable, and we're seeing these results in our operational cost performance. Additionally, we restructured the organization in Q1 with expected savings of $20 million this year. These actions have been executed and we are seeing the benefits. In addition to these efforts, we've optimized our manufacturing footprint from 48 manufacturing plants at the time of the merger two years ago to 38 manufacturing plants today and implemented the majority of our original $65 million synergy commitment. We've structured our commercial teams and operational functions to align to our customers and market, making us more responsive and customer-centric. And we've integrated our systems and harmonized our technology for better, faster decision-making. As a result, our operational efficiency and customer satisfaction levels have continued to increase. Let me give you a few examples. We've always been known for the quality of our products, but that doesn't stop us from continuing to invest in and grow our quality performance. Year to date, we have improved our quality to customers by over 30%, and at the same time, we've improved our already high service levels by over 5%. We've done this while reducing year-over-year inventory levels by $50 million, and with improved performance and manufacturing costs, driven by increased operating efficiencies, as evidenced in Q2. Our purpose-built assets are ideal for quick changeovers and provide a flexible supply chain that our customers value. As you can see from these examples, our team is focused on execution, and that means in our plants as well as in the marketplace. So let me spend a few minutes updating you on our demand generation activities. As I mentioned earlier, sequential volume has grown nicely over the past two quarters after the significant destocking and slowdown in 2023. And while demand is expected to stabilize versus Q2, we also expect significant improvement versus prior year, providing ample opportunity for us to grow and execute in the marketplace. Let me give you a few examples. In Q2, we finalized long-term customer agreements in our film, filtration, and healthcare categories with the potential to increase volume by more than 10% with some of our largest customers. This is driven by the continuous improvement in quality, reliable and flexible supply chains, and co-development of new products. Secondly, we continue to launch new products that improve our customers' performance and environment footprint. This quarter, we've launched a new high-efficiency water filtration product in alignment with our largest global water filtration customer and also earned a new commitment from one of the largest automotive technology companies to provide wire tape solutions for their EV and ICE platforms. Lastly, We also recently approved new investments to provide netting capacity for our filtration business, as well as a new technology in our automotive tape business. Together, these investments will enable additional revenue of up to $30 million and are expected to start up in late 2025. In the past, I've mentioned the recent investments in our filtration business in Germany, and in our release liner business in Mexico. Both of these assets have come online as expected, and the incremental capacity in Mexico has exceeded our volume forecast for the second month in a row. With that, I'll turn it over to Greg for a more detailed discussion of our financial performance, and then I'll provide some closing thoughts on our path forward.