Executive Summary

Solid inaugural quarter post-merger: revenue $702M, adjusted EBITDA $84M, and GAAP EPS $(1.69), with merger contributions and favorable price/cost spread offset by FX headwinds .
Management introduced FY25 guidance of comparable adjusted EBITDA $385–$405M and post‑merger adjusted free cash flow $75–$95M; focus is deleveraging (4.0x net leverage at quarter-end) and synergy capture .
Key drivers: $186M of revenue and $16M of adjusted EBITDA from the Glatfelter merger since Nov 4 close; price/cost +$6M; FX headwinds revenue −$14M and EBITDA −$4M .
Catalysts to watch: execution on $55M synergy plan, mix upgrades toward higher-value applications, and deleveraging toward ~3x; management emphasized ramp of synergies across 2025 and typical seasonal step-up after Q1 .

What Went Well and What Went Wrong

What Went Well

Integration and synergy execution off to a “solid start,” with teams “on track to our three year plan to achieve $55 million of net synergies” and momentum building post day-1 stand-up .
Mix and price/cost favorable: adjusted EBITDA rose to $84M (up 8% YoY comparable) with price/cost spread +$6M; CFO noted adjusted EBITDA margin of ~12% (up 68 bps YoY) on flat volumes and improved mix .
Liquidity and deleveraging priority: quarter-end net debt $1.781B (4.0x), cash $215M, and post‑merger adjusted free cash flow of $16M for the quarter; management reiterated near-term debt paydown focus .

What Went Wrong

GAAP profitability remains pressured: operating loss $(22)M and net loss $(60)M in the quarter (EPS $(1.69)) amid integration costs and higher interest expense .
FX headwinds and market softness: FX reduced revenue by $14M and adjusted EBITDA by $4M; management cited ongoing supply/demand challenges and geopolitical volatility .
Industry capacity overhang in personal care nonwovens; company is idling certain facilities to balance supply and focusing lines on higher-value applications .

Financial Results

Consolidated P&L vs Prior Year and Estimates

Metric	Q1 2024 (Dec 30, 2023)	Q1 2025 (Dec 28, 2024)	Vs. Estimates
Revenue ($USD Millions)	$519	$702	N/A (S&P Global consensus unavailable)
Operating Income ($USD Millions)	$(12)	$(22)	N/A
Net Income ($USD Millions)	$(8)	$(60)	N/A
Diluted EPS ($USD)	$(0.25)	$(1.69)	N/A
Adjusted EBITDA ($USD Millions)	$66	$84	N/A
Adjusted EBITDA Margin (%)	N/A	~12%	N/A

Notes: Management attributes Q1 2025 drivers to merger contribution ($16M EBITDA), price/cost (+$6M), and FX headwinds (−$4M EBITDA) .

Segment Breakdown

Segment	Net Sales Q1 2024 ($M)	Net Sales Q1 2025 ($M)	Adjusted EBITDA Q1 2024 ($M)	Adjusted EBITDA Q1 2025 ($M)
Americas	$348	$420	$51	$56
Rest of World	$171	$282	$15	$28
Total	$519	$702	$66	$84

Additional Q1 context: Americas saw merger +$70M and improved price/mix; FX −$13M; RoW saw merger +$116M; adjusted EBITDA up with +$10M from merger and +$4M price/cost .

KPIs and Balance Sheet

KPI	Q1 2024	Q1 2025
Cash from Operating Activities ($M)	$(27)	$(58)
Capital Expenditures, net ($M)	$(16)	$(16)
Post‑merger Adjusted Free Cash Flow ($M)	N/A	$16
Cash & Equivalents ($M)	$167	$215
Total Debt ($M)	N/A	$1,996
Net Debt ($M)	N/A	$1,781
Leverage (Net Debt/Adj. EBITDA)	N/A	4.0x

Estimate comparisons: Wall Street consensus via S&P Global was unavailable at time of analysis; therefore, beats/misses vs estimates cannot be determined.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance (Q1 release)	Change
Comparable Adjusted EBITDA	FY2025	N/A	$385–$405M	Introduced
Post‑merger Adjusted Free Cash Flow	FY2025	N/A	$75–$95M	Introduced
Comparable Adjusted EBITDA (Updated in Q2)	FY2025	$385–$405M	$360–$380M	Lowered
Post‑merger Adjusted Free Cash Flow (Updated in Q2)	FY2025	$75–$95M	$75–$95M	Maintained

Management reiterated near‑term deleveraging priority alongside guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2025)	Trend
Integration & Synergies	N/A (newco; merger closed 11/4/24)	“On track” to $55M net synergies; accelerating capture to offset macro headwinds	Building momentum
Price/Cost & Mix	N/A	Favorable price/cost spread +$6M; mix shift to higher‑value categories	Improving mix discipline
Supply/Demand (Nonwovens)	N/A	Personal care oversupply; idling capacity; expect tighter balance by 2027–2028	Overhang near-term; structurally improves over time
Regional Dynamics	N/A	U.S. most stable; Europe headwinds (inflation/energy); Asia highly competitive; S. America import pressure	Mixed; Europe/Asia challenging
Deleveraging & Liquidity	N/A	Leverage 4.0x; quarter post‑merger FCF $16M; targeted ~3x over time	Gradual improvement
Seasonality	N/A	Q1 is seasonally softer in North America; sequential build expected	Normalizing seasonality
Contracts & Raw Materials	N/A	~56% COGS raw materials; strong pass‑through mechanics; contract “openers” for broader costs	Better pass‑through resilience

Management Commentary

“Our team is laser focused on the execution of our integration plan, delivering on our cost saving initiatives, improving our operating margins and meeting our deleveraging commitments” .
CFO: “Adjusted EBITDA increased 8% to $84 million with an improved adjusted EBITDA margin of 12%… driven by favorable price cost in both The Americas and Rest of World” .
“We will be disciplined in our actions to deliver long‑term shareholder value by prioritizing repayment of debt and reducing our leverage to approximately three times” .

Q&A Highlights

Bridging to FY25 EBITDA: Pro forma Q1 EBITDA would be ~$92M including October GLT month; ramping synergies required to reach ~$395M midpoint; also noted Q1 seasonality softness .
Free cash flow and deleveraging: Post‑merger adjusted FCF of ~$16M in the quarter; implies ~$70M incremental for remainder of FY25 at midpoint; GAAP cash flow includes pre‑merger noise .
Market capacity and portfolio mix: Addressing personal care oversupply by idling capacity and pivoting to differentiated, IP‑rich applications to fill lines with premium products .
Regional challenges: Asia <10% of revenue and very competitive; Europe facing inflation/consumer headwinds; U.S. most stable; imports pressuring South America .
Raw materials and contracts: ~75% of raw materials are polyolefins/fibers plus fluff pulp; improving pass‑through clauses for non‑raw inputs post‑COVID across staggered renewals .
Working capital: Modeling flat for FY25 given tailwinds from GLT terms and offsets at Berry legacy .

Estimates Context

S&P Global Wall Street consensus for Q1 2025 EPS and revenue, and FY25 EBITDA was unavailable at time of analysis due to data access limits. As a result, we cannot quantify beats/misses vs consensus. Management’s FY25 guidance is the primary benchmark: comparable adjusted EBITDA $385–$405M and post‑merger adjusted free cash flow $75–$95M at Q1 (later revised to $360–$380M EBITDA in Q2 while FCF was maintained) .

Key Takeaways for Investors

Integration tracking to $55M net synergies with line‑of‑sight actions; execution here is the core EBITDA and deleveraging driver in FY25–FY27 .
Mix upgrade and price/cost discipline underpinned Q1 margin improvement despite flat volumes and FX headwinds; sustaining this is key while demand normalizes .
Personal care capacity overhang persists near‑term; Magnera is proactively idling and refilling with higher‑value SKUs—positioning for tighter industry balance by 2027–2028 .
Balance sheet: 4.0x leverage with a clear deleveraging path via $75–$95M post‑merger FCF in FY25; target ~3x as synergies ramp and capex normalizes .
Watch Europe energy/consumer headwinds and Asia competition; regional execution and localized supply chain advantages should help defend share/margins .
Guidance risk skewed to macro/tariffs and FX; management lowered FY25 EBITDA guidance early in Q2 while maintaining FCF—cash conversion discipline is the key stock narrative .
Trading setup: delivery against synergy milestones, sequential EBITDA lift post seasonally soft Q1, and visible deleveraging are likely catalysts for multiple support.

Magnera Corp (MAGN)·Q1 2025 Earnings Summary