Welcome to Mativ's Fourth Quarter Full Year 2023 Earnings Conference Call. On the call today from Mativ are Julie Schertell, Chief Executive Officer; Greg Weitzel, Chief Financial Officer; and Chris Kuepper, Director of Investor Relations. Today's call is being recorded and will be available for replay later this afternoon. At this time, all participants have been placed in a listen-only mode. And the floor will be open for your questions following the presentation. [Operator Instructions]. I will now turn the call over to Mr. Chris Kuepper. Sir, you may begin.

Good morning, everyone, and thank you for joining us for Mativ's fourth quarter and full year 2023 earnings call. Before we begin, I'd like to remind you that comments included in today's conference call include forward-looking statements. Actual results may differ materially from these comments for reasons shown in detail in our Securities and Exchange Commission filings, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. Some of the financial measures discussed during this call are non-GAAP financial measures. Reconciliations of these measures to the closest GAAP measures are included in the appendix of the earnings release and accompanying presentation slides. Unless stated otherwise, financial and operational metric comparisons are to the prior-year period and relate to continuing operations. The earnings release issued yesterday afternoon is available on our website at ir.mativ.com as are the slides for today's presentation. You can download the slides and/or click through these slides at your own pace during the call using the webcast interface. Since the SWM and Neenah merger closed on July 6th, 2022, the third and fourth quarters of 2023 are the first reporting periods since the merger that are truly comparable. However, year-to-date GAAP results for the first half of 2022 will still only include legacy SWM. So, this was prior to the merger. Comparable performance for year-to-date figures to illustrate how our results compare on a like-for-like basis are shown in tables in our earnings release and the appendix of our presentation slides. Finally, with the November close of the sale of the engineered papers, results for this business are now being summarized separately as discontinued operations with all remaining businesses being reported as continuing operations. With that, I'll turn the call over to Julie.

Thank you, Chris. Good morning everyone, and thank you for joining our call. Greg and I have a lot of topics to cover with you today. In addition to our quarterly and full-year financial results, an update on our operating environment and our thoughts on the path ahead in 2024, we also want to share more details about our restructuring and overhead cost reduction initiatives that we announced in late January of this year. This effort will streamline our organizational size, shape, and complexity, simplify reporting lines, and amplify the way we leverage our business-critical resources to enhance how we serve and support our customers. I'm excited to share the details of this comprehensive plan with you and the broader investment community as I believe it represents a step change in how we run our business and we'll accelerate our path to growth ahead. Let's start with our Q4 and full-year 2023 results. Sales from continuing operations were $452 million for the quarter, down 14% year over year, and $2 billion for the full year, down 9% on a comparable basis. This performance mainly reflects continued lower volumes due to the challenging macroeconomic environment caused by an industry-wide destocking trend, geopolitical adversity, and high-interest rates impacting our end markets. We believe that the overall destocking trend, which has persisted for over a year, is at or near the bottom, and we have a line of sight to positive signs of demand momentum, and many of our end markets. We are encouraged by these early indicators and look forward to the opportunities that lie ahead. Adjusted EBITDA was $50 million for the quarter down 20% year over year, and $213 million for the full year down 17% on a comparable basis. The biggest driver of this continues to be low volume…

Thanks, Julie, and good morning everyone. Consolidated net sales for the quarter were $452 million compared to $524 million in the prior year with volume down 14% partially offset by favorable currency. Adjusted EBITDA from continuing operations was $50 million down from $62 million in the prior year. Volume presented a $31 million impact, which was only partially offset by combined net selling price input cost benefits, and favorable impacts from a lower SG&A, realized synergies and currency. Turning to each of our legacy segments, net sales and advanced technical materials of $362 million were down 12% year over year. This reflected lower volumes due to continued customer caution in the uncertain macroeconomic environment, as well as high-interest rates that impact our end markets. ATM adjusted EBITDA of $56 million was down 9% year over year, reflecting the effects of lower volumes that were partially offset a positive net selling price input cost distribution efficiencies, and currency translation. Despite weak demand, we improved the adjusted EBITDA margin by 30 basis points year over year and 50 basis points sequentially mainly due to realized synergies. In our fiber-based solutions segment comprised solely of packaging and specialty papers, net sales of $90 million were down 22% from last year, and in line with the broader market. Year-over-year results reflected customer destocking along with suppressed demand for premium paper and packaging. FBS adjusted EBITDA of $13 million was down 35% year over year lower volume and associated manufacturing cost impacts in the current quarter were partially offset by favorable net selling price and input cost. Turning to a few of the corporate items. Unallocated corporate adjusted EBITDA expense of around $19 million was flat year over year and interest expense of $13 million was also essentially flat from the prior period. Other expense…

Thanks, Greg. There's no question that the environment in 2023 was not what we expected, and our results are not representative of our future expectations. As we saw demand continue to weaken, we focused on those areas that we could control and made several meaningful and impactful decisions throughout the year. Many of those decisions were difficult but necessary, as they paved the path for a more successful enterprise that will drive both growth and margin results. Since the merger, we've established our company strategy, defined our operating model, streamlined our operations and achieved above-targeted synergy levels. We also right sized our portfolio and oriented it towards stronger end markets that will support our growth in top line and bottom line going forward. With the sale of engineered papers and with a lot of integration efforts behind us or in process, now is the right time to streamline our administrative functions in support of a more focused and less complex organization. As part of this initiative, we've announced two discrete waves of cost reduction efforts focused on non-operating costs. The first wave is currently underway and consist mainly of workforce reductions that are indexed towards senior levels of the organization and will have an impact on our P&L this year. We expect to achieve a run rate of $20 million in overhead cost savings by the end of 2024. The associated expenses are expected to be in the $15 million to $20 million range, comprised mainly of severance costs and will hit the P&L predominantly in the first half of 2024. The second wave of cost reduction efforts is driven primarily by system integration. This work will improve transactional efficiencies and further reduce head count, but with longer implementation timelines. With the second effort, we expect to achieve an additional…

[Operator Instructions]. Now our first question comes from Daniel Harriman of Sidoti. Please go ahead.

Thank you, good morning, Julie, Greg, and Chris, thank you so much for all the details on that call and congrats on finishing the first year as a merged company. On the third quarter call, Julie, you mentioned just the issue with demand generation and how that was affecting obviously company performance. Could you provide us a little bit of an update on what you're doing to generate that demand and how you see that plan out thus far into 2024? And then maybe just more generally, what's the shape of demand? You referenced a little bit with some customer conversations, but what's the shape of demand thus far into the year and how do you see that playing out? Referencing seasonality or whatever else may be going on.

Sure. Thanks for the question, Dan. As we enter Q1, we're seeing signs of improved demand in some key areas and end markets in the early days. And from a shape standpoint, we expect significant sequential revenue increases in Q1, and as we work through the year with a little bit more normal seasonality as we end the year in Q4. As Greg mentioned, the bottom line results will take an extra quarter to catch up just because of the high cost inventory and the flow through in Q1. But I'm encouraged by our demand picture, where we sit today and there's some key efforts the team is driving. I'd say R&D and innovation is one of those key efforts. The second one is customer programming and alignment with core customers. And then the third one is we've altered how we incent some of our teams from a revenue generation standpoint, and we've added capabilities in resources in some of those areas as well. So, we've really focused on how do we make sure our customer-facing resources are best leveraged. And that goes into some of the reorganization that we've talked about as well, being able to leverage resources broadly across marketing, sales, and R&D and prioritize where we have the greatest opportunities in those areas.

Great. That's super helpful, thank you. And just one more quick one if I may. Julie, last quarter you referenced kind of some bright spots being healthcare and hygiene, and then struggling in markets and construction and transportation. Is that still playing out kind of how you referenced last quarter or have there been some changes in terms of where you may be seeing some bright spots of demand?

I think it's starting to turn a bit, as I said Q1, we're seeing some bright spots and that's inclusive of our filtration business where we have transportation end markets, as well as life science end markets and clean air and water. It's inclusive of our release liner business that is driven by health and hygiene and labels and composites. Where it's probably still softest is in some of our commercial print markets. And we're seeing that broadly and in the market data, but we're seeing nice demand improvement in Q1. I'm really pleased with the order profile that we have on board today.

Our next question comes from Jon Tanwanteng of CJS. Jon your line is now open, please go ahead.

It's Charlie -- actually for John filling in this morning. Can we spend a couple minutes on the lower interest expense in the quarter and what kind of drove that? And I know you gave the full-year kind of number, but what is the kind of the expected run rate going forward after paying down debt and resetting your interest rate swaps with the proceeds?

So overall, our expectation is that we would be around $70 million in interest for next year. So that would be a pace of about 17 or 18 a quarter. This quarter, you're right, we actually were at $13 million. It would've been about 17 to 18. But ultimately, we had a true up related to the higher price that we received for the EP transaction. And with that true up and the movement between discontinued ops and continuing ops, it actually knocked that down to $13 million for the quarter. But ongoing, we'd expect normally in that 17 to 18 million a quarter.

And just a follow-up there, what in Marcus in Q1 so far or geographies really, are you seeing notable strength or weakness?

I'll maybe start there and then Julie, you can jump in. It's been encouraging the backlog reports that we have across several of our businesses. Of course, [indiscernible] kind of in continued pressure seeing that come down and down, and Julie mentioned the trough that we've hit in Q4. We're seeing that in the backlog of orders now that that is starting to build back, it's not roaring back, but we are actually seeing those build in several different areas, even in packaging and specialty papers. Julie just mentioned still the pressure on commercial print there, but we are seeing the backlog start to build some in packaging and specialty papers. Also, in our industrials business, which was one of the first ones to start to experience the destocking all the way back in late 2022. We're seeing an increase in the backlog of orders there as well.

Thank you. We have no further questions registered by the telephone line, so hand back over to the management team for any further or closing remarks.

Yes, just want to say thank you for joining the call today and for your support of Mativ, and we look forward to our next call next quarter.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.