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MH

Mativ Holdings, Inc. (MATV)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $458.6M, up 1.4% YoY; adjusted EPS was $0.05 and adjusted EBITDA was $44.8M, down 10% YoY as FAM margins compressed on Advanced Films weakness, while SAS delivered strong organic growth and margin resilience .
  • Management emphasized SAS momentum (organic revenue up ~12.8%, adj. EBITDA up ~8%) and an ongoing Advanced Films turnaround (quality fixed, adjacencies gaining traction), with pricing actions and cost programs to offset 2025 input cost headwinds .
  • FY 2025 modeling: normalized tax rate 24%, capex ~$50M, interest ~$70M plus ~$8M AR securitization fees, adjusted unallocated expenses ~$80M; raw materials headwind $10–15M expected to be offset through pricing .
  • Dividend of $0.10 per share announced (payable Mar 28, 2025), net debt at year-end was $995.0M with ~$451M liquidity; debt maturities staggered 2027–2029 after redeeming 2026 notes and issuing $400M due 2029 .

What Went Well and What Went Wrong

What Went Well

  • SAS delivered organic revenue growth of ~12.8% and adjusted EBITDA up ~8% in Q4; CEO: “SAS segment turned in another excellent quarter… increasing order pace and momentum… continuing into 2025” .
  • Optical and medical films revenues (adjacent film categories) were up ~30% in Q4; CEO cited improving cost, quality, lead time, and order delivery in Advanced Films as turnaround progresses .
  • Corporate cost discipline: unallocated adjusted EBITDA expense decreased YoY; FY 2024 adjusted EBITDA up 2% driven by favorable price/input costs and lower SG&A/distribution .

What Went Wrong

  • FAM segment revenue declined 7.8% YoY; adjusted EBITDA fell to $26.3M (margin 15.7%, down ~460 bps YoY) driven by lower volumes/pricing in Advanced Films and netting and higher manufacturing costs .
  • Consolidated adjusted EBITDA margin compressed to 9.8% (from 11.1% in Q4’23), with $9M headwind from input and fixed absorption costs (partially offset by volume/mix and lower SG&A/distribution) .
  • Interest expense rose to $19.7M vs $13.4M YoY, with Q1 expected to be pressured by high cost inventory sell-through and early-year input cost increases prior to pricing offsets .

Financial Results

Headline Financials (Sequential)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$523.8 $498.5 $458.6
GAAP EPS ($USD)$(0.03) $(0.38) $0.03
Adjusted EPS ($USD)$0.34 $0.21 $0.05
Adjusted EBITDA ($USD Millions)$66.6 $60.8 $44.8
Adjusted EBITDA Margin (%)12.7% 12.2% 9.8%
Operating Margin (%; return on net sales)2.0% 1.4% 0.6%

Q4 Year-over-Year and vs Prior Quarter

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$452.3 $498.5 $458.6
GAAP EPS ($USD)$(0.25) $(0.38) $0.03
Adjusted EPS ($USD)$0.23 $0.21 $0.05
Adjusted EBITDA ($USD Millions)$50.0 $60.8 $44.8
Adjusted EBITDA Margin (%)11.1% 12.2% 9.8%
Operating Margin (%; return on net sales)(0.5)% 1.4% 0.6%

Segment Performance

Segment MetricQ2 2024Q3 2024Q4 2024
FAM Net Sales ($USD Millions)$206.4 $189.6 $167.8
FAM Adjusted EBITDA ($USD Millions)$42.3 $36.5 $26.3
FAM Adj. EBITDA Margin (%)20.5% 19.3% 15.7%
SAS Net Sales ($USD Millions)$317.4 $308.9 $290.8
SAS Adjusted EBITDA ($USD Millions)$46.2 $41.0 $35.8
SAS Adj. EBITDA Margin (%)14.6% 13.3% 12.3%

KPIs

KPIQ2 2024Q3 2024Q4 2024
Net Debt ($USD Millions)$1,003.0 $981.2 $995.0
Liquidity ($USD Millions)~$436 ~$463 ~$451
Free Cash Flow ($USD Millions)$36.8 $23.9 $1.9
Interest Expense ($USD Millions)$18.4 $18.3 $19.7
Reported Tax Rate84.4% 13.3% 109.7% benefit; ex-discrete ~30.6%
Dividend per Share ($)$0.10 (Sep 20) $0.10 (Dec 20) $0.10 (Mar 28)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Q4 2024 SalesQ4 2024Up mid-single digits YoY +1.4% YoY actual Lower than guided
Q4 2024 Adjusted EBITDAQ4 2024Down low double digits YoY $44.8M (down ~10% YoY from $50.0M) In line with guidance
CapexFY 2024~$50M (revised from $60M) Capital spending $55.0M; software $0.6M (total $55.6M) Above revised level
Normalized Tax RateFY 2025—~24% Set
Interest ExpenseFY 2025~$75M annualized post-refi ~$70M + ~$8M AR fees Lower core interest; AR fees added
Adjusted Unallocated ExpensesFY 2025~ $80M ~ $80M Maintained
Raw Material InflationFY 2025—$10–15M headwind; offset via pricing New headwind; offset plan
CapexFY 2025—~$50M Set
DividendQ1 2025—$0.10 per share (Mar 28, 2025) Continued distribution

Earnings Call Themes & Trends

TopicQ2 2024 (Prev-2)Q3 2024 (Prev-1)Q4 2024 (Current)Trend
SAS momentumAdj. EBITDA up 28%, margin +310 bps; broad volume strength Adj. EBITDA up ~20%, margin +200 bps; pipeline wins (release liners, digital print) Organic rev +~13%, adj. EBITDA +~8%; 2025 pipeline +50% YoY Strengthening
Advanced FilmsNot a focus in release; general transformation commentary Tiger team launched; automotive/construction softness; plant productivity issues; Asian competition Quality fixed; adjacent optical/medical films +~30%; mid-tier product; leadership changes; smart glass partnerships; sequential demand improving Improving but challenged
Cost reduction/footprint$20M overhead reduction program; restructuring/realignment Footprint reduced to 35 sites; unallocated trending to ~$80M Additional $20M overhead reduction planned by end 2026; continued streamlining Ongoing execution
Pricing vs input costsFavorable net price/input cost; margin gains Favorable manufacturing/distribution; pricing mix headwinds Selective pricing announced to offset $10–15M input cost headwind in 2025 Offsetting inflation
Tariffs/macro—PMI/demand sluggish; cautious 2024 outlook Minimal tariff impact so far; supply chain flexibility to mitigate Manageable
Growth capex/projectsFiltration/tapes/release liners capacity investments Medical film line (UK), tape line (Canada); incremental revenues >$115M over 3–4 years Capex down in 2025; project updates (coder Mexico active; melt-blown line operational) Targeted, capital-light

Management Commentary

  • “Our consolidated performance for Q4 was as expected. We delivered strong Q4 results in our SAS segment… The increasing order pace and momentum in SAS is continuing into 2025.”
  • “Our FAM segment had mixed results… challenges… in Advanced Films… turnaround activities are well underway… optical and medical films… combined revenues were up almost 30% in Q4.”
  • “In 2025, you will see us reduce overall capital spending… be even more aggressive on our footprint efforts… further reduce supply chain and manufacturing costs.”

Q&A Highlights

  • Input costs and Q1 seasonality: Management expects $10–15M input cost headwind phased in H1’25, offset through targeted pricing; Q1 to be pressured by high-cost inventory sell-through .
  • Tariff exposure: Minimal impact to date; flexible supply chain and pricing levers to mitigate potential Canada/Mexico tariffs .
  • Leveraging SAS playbook in FAM: Focus on pipeline discipline, strategic customer management, cross-selling, and talent leverage; health care turnaround viewed as sustainable and accretive .
  • Growth investments update: Melt-blown line (Germany) operating; Mexico coder supports release liners; tape lines (Italy, Canada) in early phases; healthcare automation in Knoxville .
  • Deleveraging timeline: Target leverage 2.5–3.5x remains, likely achieved in 2026 given prolonged recovery .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable at the time of this recap due to SPGI request limits. Values would typically be retrieved from S&P Global; unavailable for this analysis.
  • Implication: Without consensus, we cannot classify Q4 as a formal beat/miss; however, adjusted EBITDA fell ~10% YoY and margin compressed, while SAS outperformed and FAM underperformed (see Financial Results) .

Key Takeaways for Investors

  • SAS is the near-term earnings engine: strong organic growth, steady margins, and a meaningfully larger 2025 pipeline support resilience amid macro sluggishness .
  • Advanced Films recovery is underway: quality fixed, adjacencies (optical/medical) growing ~30% in Q4; expect gradual rebuild with H2’25 improvement, but margin drag likely persists near term .
  • 2025 playbook is cost and price discipline: $10–15M raw material headwind to be offset via targeted pricing; capex curtailed to ~$50M; ongoing overhead and footprint reductions should support margin recovery .
  • Balance sheet: net debt $995M, liquidity ~$451M, >80% fixed-rate debt maturing 2027–2029 post-refinancing; deleveraging remains priority, but timeline extended toward 2026 .
  • Tax dynamics: Q4 benefited from one-time valuation allowance changes; normalized rate guided at 24% for 2025—modeling should exclude discrete items .
  • Dividend continuity ($0.10/share) provides modest yield; buybacks paused to prioritize debt reduction .
  • Near-term trading: Watch Advanced Films updates, pricing actions vs input costs, and SAS order momentum; a credible execution on turnaround and cost takeout is the catalyst for margin and multiple support .