Mativ(US:MATV)2025-05-08 13:32Financial Data and Key Metrics Changes - Consolidated net sales from continuing operations for Q1 were $485 million, down 3% year over year, and essentially flat on an organic basis [23] - Adjusted EBITDA from continuing operations was $37.2 million, down 19% from $45.8 million in the prior year [23] - Net debt at the end of the quarter was $1.04 billion, with a net leverage ratio of 4.7 times [27][28] Business Line Data and Key Metrics Changes - In the Filtration and Advanced Materials (FAM) segment, net sales were $188 million, down more than 7% year over year, reflecting lower volumes and unfavorable currency translation [24] - The Sustainable and Adhesive Solutions (SaaS) segment saw net sales of $297 million, up almost 6% on an organic basis, with adjusted EBITDA performance of $33 million, up more than 3% year over year [25][26] Market Data and Key Metrics Changes - Demand patterns reflected in Q1 showed sales were flat organically year over year, with SaaS segment growth offset by softness in FAM results, particularly in automotive and construction end markets [16][17] - Less than 7% of annual sales are currently subject to tariff exposure, indicating a strong localized supply chain [19][20] Company Strategy and Development Direction - The company is focusing on three near-term priorities: enhancing commercial execution, deleveraging the balance sheet, and conducting a strategic review of its portfolio [9][34] - A task force is reviewing cost and operating structures to achieve additional cost reductions of $10 million to $15 million in 2025, alongside previously announced reductions [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a continuously suppressed demand environment and the need for operational improvements [6][8] - There is an expectation for a significant sequential step up in adjusted EBITDA performance in Q2, driven by increased volume and improved pricing [30] Other Important Information - The company plans to reduce capital expenditures to $40 million per year, down from $55 million in 2024, and aims to lower inventory levels by $20 million to $30 million in 2025 [14][29] - A goodwill impairment analysis resulted in a pretax non-cash charge of $412 million due to sustained decline in share price [27] Q&A Session Summary Question: Insights on the portfolio review - Management is evaluating how each product category contributes to the bottom line and overall portfolio diversity, with updates to be provided as progress is made [39][40] Question: Timing for cash flow generation improvements - Significant cash flow increases are expected in Q2, driven by inventory reductions and improved sequential EBITDA [42][43] Question: Margin contraction causes and dividend policy - Management identified that margin suppression is primarily due to the FAM business and is working towards improving margins through cost reductions and pricing actions [49][50] - The decision to continue paying dividends has been discussed with the board, and the current plan is to maintain the dividend [54]