Mativ Holdings, Inc.

Welcome to the MADF Third Quarter 2024 Earnings Conference Call. On the call today from MADF are Julie Chattel, Chief Executive Officer, Greg Weissel, Chief Financial Officer, and Chris Cooper, Director, 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 1 on your touchtone phone. If you need to remove yourself from the queue, please press the pound key. If you should require operator assistance, please press star 0. 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 third 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 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. 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.mattoff.com. With that, I'll turn the call over to Julie.

Thanks, Chris. Good morning, everyone, and thank you for joining our call. We appreciate the opportunity to share our third quarter results with you, outline a number of initiatives we've undertaken to drive continued improved performance and provide an outlook on the remaining quarter of 2024. Sales were up 1% organically and essentially flat year over year on a reported basis. Volume improvements in most of our product categories were partially offset by lower demand in film which was impacted by ongoing challenges in the automotive and construction end markets, as well as lower productivity in one of our largest films plants. I'll provide more color on this in a moment. For Total Matters, from a bottom line perspective, I'm pleased to report that Q3 results showed meaningful adjusted EBITDA improvement of 10% year over year and adjusted EBITDA margin up 110 basis points year over year. Primary drivers were increased volume and filtration and our overall FAS segment, as well as lower manufacturing costs. Let me touch on FAS first, which delivered adjusted EBITDA up almost 20% and increased margin of 200 basis points. Within FAS, healthcare was very strong, followed by label, commercial prints, and release liners. And we see continued solid volume and growth as we enter Q4, particularly in release liners in North America, as we ramp up and qualify our newest asset in Mexico. Overall, fan performance in the quarter was mixed, with solid results in filtration and challenging results in advanced films. Let me provide a bit more color on this part of our business and what we are doing to improve film's performance going forward. First, in our filtration category, revenues were up almost 6%, led by growth in air filtration using HVAC and air pollution control. Our largest end market in filtration is transportation, which was up over 5%, and continues to have a very healthy pipeline of new products and opportunities in 2025. As a reminder, in transportation filtration, we are mainly driven by the aftermarket, and about 50% of our media goes into heavy-duty fleet vehicles. These markets remain much healthier than the overall automotive market. Now turning to advanced films, which is part of our FAMS segment, as a reminder, the largest part of this category is paint protection film that is applied to new cars, typically at the time of purchase or immediately following. Another large part is optical film, which is often used on the exterior and interior of office buildings. These categories are heavily influenced by the automotive and construction markets, both of which remain soft and which impact about 85% of our film sales. Additionally, paint protection film, which makes up about a quarter of our film's revenue and with historically high margins, is a category where we are seeing increased competition from Asia with lower performance, less costly products. And lastly, we underperformed at our largest films plant, impacting margins in Q3 and Q4 as we sell through high-cost inventory. Given the rapidly evolving markets and the diversity of new applications that we have in development, we've assembled a tiger team to develop quick and aggressive action to improve results over the next 12 months. This effort is focused on demand generation and operational performance centered around three platforms. First, accelerating our presence in targeted markets, particularly in medical and optical films, such as advanced wound care, smart glass, and interlayer applications. These applications play to our strength in advanced materials and technology development. One example of extending our market reach is the partnership we recently announced with Meru Company to develop innovative smart glass products for autos and buildings. These products feature increased energy efficiency, temperature control, and improved aesthetics. We recently showcased this partnership and samples at the International Glass Tech Trade Show and received very positive feedback from key industry leaders who expressed strong interest in this new state-of-the-art technology and the ability to provide improved performance and reduced carbon footprint versus today's solutions. Turning to medical films, we have invested in a new medical films line in the UK that will start up in Q1 of 2025 and provides improved quality and capacity for growth in our healthcare applications. giving us over $15 million of incremental revenue opportunities over the next four years. The second platform is providing a unique capability and holistic supply chain solution, a one-matt solution, for customers to procure not only the base film product, but the fully coated and converted film product for their application. Today, most customers are sourcing this solution through three or more suppliers, Unique to Mativ, we can provide all four steps, improving quality and reducing our customers' supply chain complexity, cost, and lead times. The third platform is aggressive cost reduction in our manufacturing sites, as well as how we develop new products. For instance, we're focused on accelerating qualifications of more cost-efficient resins and raw materials, and introducing a mid-tier product to battle increased imports from Asia. And lastly, we have a core part of the TIGER team in our largest film site focused on driving sustainable improved productivity, quality, and operational performance. The advanced film turnaround effort is similar to the approach we took over the course of 2023 to improve performance in healthcare. The year-to-date results of this effort in healthcare are above market organic sales growth of more than 5% versus prior year and significantly improved profitability that has exceeded our expectations. Based on this similar effort and the outcome, I'm confident we will successfully improve results in advanced film over the course of the next 12 months. I'll now turn to some of our high growth categories where we are investing for additional capacity. We've previously talked about the investments we are making in filtration, specialty tapes, and release liners, and I just touched on the new investment in the UK to expand our medical film capacity. We also recently improved an investment in specialty tapes to support our polyflex and athletic tapes category with a new line in our facility in Canada. We are close to capacity in this category and have significant upside opportunities and commitments from key customers for future growth. We expect the line to start up in early 2026 and support over $20 million in incremental revenue once fully utilized by the end of year three, and with almost 50% of the volume expected to be realized in year one. Combined, the investments in growth that we've announced throughout 2023 and 2024 are expected to provide incremental revenues of over $115 million in the next three to four years. Additionally, our commercial teams are executing well to drive sustained sales growth. Here are just a few examples. In FAM, we've realized over $10 million in share gains with a number of HVAC and air pollution control customers. We also negotiated over $10 million in new customer agreements that will begin mid-2025 and continue to add to our large pipeline for product development with key customers. In SAS, our momentum is strong. We talked about a new leader, Ryan Elwert, that we hired to run this segment earlier this year, and he and his staff team are doing exactly what we wanted from them, which is driving our commercial excellence effort and focusing on new demand generation opportunities. As evidence of this, we recently signed a new long-term commitment for release liners with one of the largest consumer goods companies in North America. In paper and packaging, we previously told you about a major win in our digital print category worth over $10 million annually, and I'm happy to share that we have secured additional commitments totaling another $5 million in opportunities starting in mid-year 2025. And in healthcare, we are launching a new sterilizable medical paper product. This is a reinforced and partially bio-based solution for the healthcare packaging sector and will launch in the first half of next year. I'm very pleased with the sales pipeline that we have in place and with the team driving it. Finally, as a manufacturing company, we are always focused on reducing our costs and optimizing our assets. During this most recent quarter, we added to this list, divesting a small, non-strategic, and high-cost facility in Massachusetts. And this past week, we closed on the sale of our plant in the Netherlands, which is expected to have an immediate accretive effect on our operating margin and will further reduce the complexity of our portfolio by exiting a category. With that, since the merger, we have streamlined our footprint from 48 sites to now 35 sites and reduced our outside warehouses by over 25%. Taken together, these actions have and will continue to reduce our costs, improve the customer experience, and improve our margins, especially as demand returns to more normalized levels. We will continue to evaluate our portfolio and our manufacturing and warehousing footprint for further opportunities to reduce complexity and unlock incremental value. With that, I'll turn it over to Greg for a more detailed discussion of our financial performance.