Schweitzer-Mauduit International, Inc.

fourth quarter and four-year 2020 earnings conference call. Hosting the call today from SWM is Dr. Jeff Kramer, Chief Executive Officer. He is joined by Andrew Wamser, Chief Financial Officer, and Mark Chekhanow, 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 questions following the presentation. If you would like to ask a question at that time, please press star 1 on your touch-tone 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 0. 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. Checker now. Sir, you may begin.

Thank you, Janika. Good morning. I am Mark Checkenow, Director of Investor Relations at SWM, and thank you for joining us to discuss SWM's fourth quarter and full year 2020 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. In particular, the extent to which the COVID-19 pandemic continues to impact our business is uncertain and depends on numerous evolving factors which are difficult to predict, including the duration and scope of the pandemic and of actions taken in response to it. 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 this presentation and the earnings release. Unless stated otherwise, financial and operational metric comparisons are to the prior year period and relate to continuing operations. This presentation and the earnings release are available on the investor relations section of our website, www.swmintl.com. I'll now turn the call over to Jeff.

Thank you, Mark, and good morning, everyone. As you may have already seen in our financial results pre-release last week, SWM delivered a strong 2020 despite many challenges and uncertainties, demonstrating the strength and resilience of our global portfolio. We are equally encouraged by the positive momentum we are carrying into 2021. Before we get into details, I'd like to again express the heartfelt appreciation of the SWM executives and the entire Board of Directors for the incredible efforts our global teams continue to put forth. Our results and achievements this year would not be possible without their remarkable commitment to each other's safety and outstanding service to our customers. Fourth quarter results capped off a very good year for SWM with respect to our financial results and overall health of the business. We do not use the term resilient lightly when we describe our results and believe our diversified and balanced portfolio served us well this year. Our EP business had an exceptional year, with demand unaffected by the pandemic and its related economic uncertainties, while AMS bounced back quickly from mid-year softness in some areas, delivering outstanding organic sales growth of 21% in the fourth quarter. Bottom line for the year, both AMS and EP grew adjusted operating profits. We grew adjusted EPS 4% to 368, and free cash flow increased to $128 million, all while we continued to de-level the balance sheet. I would also note that while in abundance of caution we withdrew our annual adjusted EPS guidance at the outset of the pandemic, At the time, we communicated our conviction regarding the expected resilience of the business. Ultimately, as shown today, we delivered within that original range. Further, in late January, we announced an offer to acquire Scapa Group, a best-in-class innovation, design, and manufacturing solutions provider for healthcare and industrial markets. Scapa is expected to significantly increase our capabilities and propel us towards $1.5 billion of annual sales with an enhanced growth profile. We expect to close the transaction during our second quarter and look forward to providing further updates after completion. For AMS, overall sales increased double digits for the year with the addition of TECRA, and despite a challenging backdrop, organic sales declined a small 2%. We believe this demonstrated the resilience of our diverse end markets and the specialty applications which many of our key products support. Breaking down our organic sales for all of 2020 by market, medical sales continued to lead the portfolio with strength in face mask materials and specialty hospital products. Filtration sales increased, led by the air subsegment, and industrial sales increased with gains in packaging and green energy products. Infrastructure and construction and transportation both finished lower for the year, but we were pleased to see each of them rebound in the fourth quarter. I'd also like to highlight that excluding transportation, which was our most COVID impacted end market, organic sales would have actually increased for the year. Specifically for the fourth quarter, organic growth was 21%, and we were especially pleased with the resurgence of our transportation film sales following some choppiness earlier this year. We had signal during our third quarter call that we were seeing signs of global improvement, and our optimism was justified as those sales grew materially versus last year's fourth quarter. We continue to expect very strong sales in this market for several quarters as we get back to normalized levels. Double-digit filtration growth was another key driver for the strong organic sales growth, with gains across our water, process, and air subsegments. Resilience across the portfolio, coupled with good cost performance and the TECRA acquisition, contributed to our ability to grow AMS segment profits by 6% for the full year. Looking back, we were very encouraged that our various end markets performed generally as we had expected, and we exit 2020 with good momentum and increased confidence that our balanced portfolio and robust supply chain are well positioned over the long term to withstand periodic economic challenges. Switching to engineered papers, the segment wrapped up a banner 2020 with solid execution in the fourth quarter. During the quarter, we also successfully closed the Spotswood facility, transitioning those volumes to other sites while maintaining high levels of customer service across the business. For the year, volumes decreased 3%, a rate consistent with our expectations given global industry attrition and a continued de-emphasis on lower margin products. That said, we still delivered another year of positive price mix shifts as Heat Not Burn grew and our portfolio continued to shift toward our higher value product lines. More importantly, however, segment profits had a notable jump from recent years. We note that we had been running in the low to mid $120 million range for EP operating profits from 2017 through 2019, but increased 8% for about $10 million in 2020. Much of this was the previously discussed inventory builds that benefited our third quarter, but we also saw great execution throughout the year and benefited from favorable input costs. 2020 will be difficult to repeat, but we are pleased to have such strong segment performance and associated cash flows during an uncertain year. All told, despite some temporary site shutdowns early in the year, We were flexible and agile in responding to our customers' needs, earning our reputation as a trusted strategic supplier to our pay-for-customers. With that, I'll turn the call over to Andy.