Mativ Holdings, Inc. (($MATV)) has held its Q1 earnings call. Read on for the main highlights of the call.
Mativ Holdings’ latest earnings call struck a cautiously optimistic tone as management balanced tangible margin gains and stronger cash performance against persistent demand softness and higher-than-expected input costs. Executives emphasized that pricing, cost cuts and refinancing have strengthened the company’s financial footing, even as health care volumes and select end markets remain under pressure.
Consolidated Profitability and Margin Expansion
Mativ reported adjusted EBITDA of $47.5 million for the quarter, up 28% from a year ago, with an adjusted EBITDA margin of 9.9%. Management highlighted this as the strongest consolidated first-quarter margin since the mid-2022 merger, underscoring progress on profitability despite flat revenue.
Strong Segment EBITDA Growth — FAM
The Filtration, Aerospace and Metal (FAM) segment delivered net sales of $188 million, with organic growth above 2%. Adjusted EBITDA jumped 41% to $27 million, lifting margins to 14.6% and adding 430 basis points, helped by favorable pricing versus input costs, lower manufacturing expenses, currency benefits and SG&A reductions.
Segment Resiliency — SAS Earnings Improvement
Specialty Adhesives and Solutions (SAS) posted adjusted EBITDA of about $31 million, up roughly 16% despite a near 2% sales decline. Segment margins improved to 10.5%, up 160 basis points, as better price-to-cost dynamics and lower SG&A spending offset volume pressure.
Improved Cash Flow Performance
Free cash flow for the quarter was a use of $7 million, more than $22 million better than the prior year and the best first-quarter cash showing since the merger. Management reiterated that the company produced record free cash flow of $94 million in 2025 and remains on track for a strong cash performance in 2026.
Realized and Targeted Cost Savings
The company has already captured nearly $20 million of savings across SG&A, operations and procurement in 2025. For 2026, Mativ is targeting a further $15 million to $20 million of cost reductions, with management saying initiatives are on schedule and expected to support margins and cash generation.
Capital Structure Simplification and Refinancing
In April, Mativ refinanced most of its debt, trimming the bank group from 15 to 8 and resizing its revolving credit facility to $305 million while removing a delayed-draw term loan. New term loans of $90 million maturing in 2031 and $500 million maturing in 2033 mean no significant maturities until late 2029, easing near-term refinancing risk and boosting financial flexibility.
Commercial Wins and Pipeline Momentum
On the commercial front, the FAM segment secured a sizable new specialty films commitment from a new aerospace customer, with the relationship launching in the second quarter. Management also pointed to a materially larger FAM pipeline, including growth in European filtration, paint protection and industrial films, and noted SAS demand momentum in finished adhesives and commercial print.
Revenue Flat to Slight Decline
Consolidated net sales came in at $480 million, nearly flat year over year on an organic basis and down about 1% as reported. SAS net sales slipped around 2%, as declines in health care volumes weighed on the top line even while profitability improved.
Health Care Demand Weakness and Operational Disruption
Executives flagged “discrete pockets” of weakness in health care, driven by customer destocking compared with prior-year inventory builds. A temporary outage at the Knoxville, Tennessee facility further pressured volumes, and management cautioned that a return to normal health care demand is unlikely before the back half of the year.
Softness in Release Liners and Labels
Beyond health care, management cited ongoing softness in release liners and labels, contributing to what they described as mixed demand across the portfolio. These volume and mix headwinds weighed on overall sales, even as pricing and cost actions helped protect margins.
Input Cost Inflation Increased Substantially
The company sharply raised its full-year raw material inflation outlook to $40 million to $50 million, up from $20 million to $25 million, citing the impact of Middle East tensions and higher oil prices on polymers, resins and chemicals. Mativ has enacted price increases to offset these pressures, but executives acknowledged that inflation remains a key risk factor.
Leverage and Net Debt Remain Elevated
Net debt stood at roughly $954 million, with net leverage at 4.1 times on the company’s credit-agreement basis, still above the 2.5 to 3.5 times target range. Management reiterated that debt reduction is their top capital allocation priority, with improved cash generation and the new capital structure expected to support gradual deleveraging.
Near-Term Profitability Guidance Down
For the second quarter, Mativ expects adjusted EBITDA to decline by a mid-single-digit percentage versus a strong prior-year comparison, largely because of lower near-term health care volumes. Management said that broader geopolitical volatility has reduced visibility, underscoring the importance of cost discipline and pricing actions to sustain profitability.
Increased Corporate Costs and Reporting Reallocation
Corporate unallocated expense rose to about $11 million, nearly $2 million higher year over year due to increased advisory spending. A reporting change that shifts centralized IT, finance and HR costs into segments reduces previously reported segment EBITDA margins by around 100 basis points, though consolidated adjusted EBITDA remains unchanged.
Forward-Looking Guidance and Strategic Outlook
Looking ahead, Mativ expects Q2 to reflect temporary health care softness but believes pricing actions taken earlier in the year should fully offset the now higher $40 million to $50 million inflation outlook. The company plans $15 million to $20 million of additional 2026 cost savings, modest incremental working capital and capital spending, and continues to focus on lowering net leverage from 4.1 times toward its 2.5 to 3.5 times goal.
Mativ’s earnings call painted a picture of a company tightening its operations and balance sheet while navigating uneven demand and rising costs. Investors heard that margins are expanding, cash flow is improving and refinancing risk is reduced, but also that health care and label markets, inflation and elevated leverage will remain watch points in the coming quarters.
