Mativ (MATV) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $523.8 million, down 0.5% year-over-year but up 4.7% sequentially, with gross profit up 14% to $108.9 million due to favorable net selling price versus input cost and higher volumes.

• Adjusted EBITDA reached $66.6 million, up 45% sequentially and 13% year-over-year, with margin up 350 bps sequentially and 150 bps year-over-year.

• Net loss from continuing operations was $1.4 million ($0.03 per diluted share), a significant improvement from a $14.3 million loss in Q2 2023.

• Performance was driven by favorable net selling price versus input cost, especially in the SAS segment, and operational efficiencies.

• Organizational realignment in Q1 2024 resulted in two new segments: Filtration & Advanced Materials (FAM) and Sustainable & Adhesive Solutions (SAS).

Financial highlights

• Gross margin improved to 20.8% from 18.1% year-over-year; operating profit was $10.5 million, flat year-over-year.

• Free cash flow for Q2 was $36.8 million; year-to-date operating cash flow was $33.1 million.

• Net debt at quarter-end was $1.003 billion, with available liquidity of $436 million.

• Interest expense increased to $18.4 million in Q2 2024, up 12% year-over-year due to higher average debt and rates.

• Adjusted EPS was $0.34, up from $0.32 prior year.

Outlook and guidance

• Management expects continued year-over-year adjusted EBITDA improvement for the remainder of 2024.

• Net sales for the second half of 2024 expected to be in line with Q2, with normal year-end seasonality.

• Q3 EBITDA expected to be similar to Q2, except for ~$2 million in additional annual outage expenses.

• Dividend policy will be assessed in light of strategy, cash generation, and debt levels; a $0.10/share dividend was declared for Q3 2024.

• 2024 full-year capital expenditures planned at ~$60 million; interest expense ~$75 million; D&A ~$100 million.