Welcome to the Mativ Fourth Quarter and Full year 2024 Earnings Conference Call. On the call today from Mativ are Julie Schertell, Chief Executive Officer; Greg Weitzel, Chief Financial Officer; and Chris Kuepper, Director, Investor Relations. Today's call is being recorded and will be available for replay later this afternoon. [Operator Instructions] It is now my pleasure to 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 2024 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 financial metrics discussed during this call are non-GAAP financial metrics. Reconciliations of these metrics to the closest GAAP measures are included in the appendix of the earnings release. 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. With that, I'll turn the call over to Julie.

Thanks, Chris. Good morning, everyone, and thank you for joining our call. Before we get into our results, allow me to highlight the three key takeaways from today's call. First, our SAS segment turned in another excellent quarter of results, capping a very strong year in 2024, and we continue to see positive momentum across all categories in the segment. SAS' continually improving performance gives us confidence that we can expand the success more broadly across Mativ, which I will cover in my upcoming remarks. Second, as we acknowledged during our previous call, FAM experienced a difficult quarter as we continue to endure sluggish industrial macros, together with volume declines in paint protection film stemming from our production quality issue in late 2023. You'll hear more about this shortly, though rest assured we have fully addressed the quality issue and are focused on regaining the trust of our key customers in this category. Third, while we restructured the organization and removed over $20 million of overhead costs in 2024, we are continuing to further reduce costs and streamline operations. Our prior efforts have proven that we can generate meaningful results from internally focused cost actions, and we are prepared for and acting on what it will take to further improve the profitability of the enterprise. With that, let's discuss overall Mativ results. Sales were up 4% organically. We saw volume improvement in many of our product categories, partially offset by lower demand, again, primarily in advanced films. In SAS, our strong performance in Q4 demonstrated continued and increased momentum with volume increases in all categories. We had mixed results in FAM, with strength in some of our filtration categories offset by softness in our advanced films business, which we highlighted last quarter and about which I will provide an update…

Thanks Julie and good morning, everyone. Consolidated net sales from continuing operations for the quarter were $459 million compared to $452 million in the prior year. Sales were up 4.3% year over year on an organic basis and 1.4% as reported while selling prices were essentially flat versus the prior year. Adjusted EBITDA from continuing operations was $44.8 million down 10% from $50 million in the prior year. Higher input costs and higher manufacturing costs driven by fixed absorption represented a combined $9 million unfavorable impact which was partially offset by $2 million of higher volume mix and a combined $2 million of lower SG&A and distribution costs. In SAS, net sales of $291 million were up almost 13% on an organic basis and up more than $20 million or almost 8% from last year as reported. Organic growth reflected higher volumes across all our end markets and higher selling prices. SAS generated strong adjusted EBITDA performance of $36 million which was up almost 8% year-over-year. Adjusted EBITDA margin increased slightly versus the prior year. The year-over-year performance reflected higher volumes across all our categories and favorable distribution costs partially offset by unfavorable net selling price versus input cost and higher manufacturing costs. Net sales in FAM of $168 million were down more than 7% versus Q4 of 2023. As Julie mentioned earlier, we reported stable volumes in our filtration categories that were more than offset by lower volumes in our advanced films and netting categories along with lower selling prices. FAM adjusted EBITDA of $26 million was down more than $10 million year-over-year reflecting the effects of lower volumes in our high margin advanced films and netting categories, unfavorable net selling price versus input cost and higher manufacturing costs. We partially offset these pressures with growth in water and…

Thanks, Greg. What you should take away from this call is that we are executing against initiatives to deliver a more agile operating model, grow share in our current markets, while also expanding our addressable markets and capture incremental value with new products and partnerships. These actions include announced price increases, cost reduction programs expected to yield 20% more savings than prior year, a 50% increase in total company sales pipeline, new leadership across our business and specifically within advanced films, reduced capital spending plans, aggressive footprint optimization, strong progress in our advanced films turnaround effort and continued steps forward in our overhead reduction efforts. I look forward to showing what this team can accomplish in 2025. Thank you for joining us this morning, and please open the line for questions.

Thank you, Julie. [Operator Instructions]. The first question we have on the phone line comes from the line of Jonathan Tanwanteng with CJS Securities. Please go ahead.

Yes. Hi, good morning. It's Pete Lucas for Jon. You touched on it at the end in your prepared remarks. Maybe just a little bit more color. It sounds like once again Q1 going to be impacted by higher inventory and input costs. But it sounds like the input costs over time will start to subside with pricing. Kind of maybe give us a little more color on that?

Sure. Thanks, Pete. Yes, overall as we mentioned we're at this point we're seeing $10 million to $15 million of potential increased input costs really spread across a few different areas. We have plans in place with some announced pricing actions to cover that where over the course of the year we'll be net positive again. That said, yes, the first quarter we expect that to be a moderate net negative for the quarter. Talked earlier about the higher inventory cost as well that we would be selling through in Q1.

Great. Thanks. And I guess you covered a lot. Only one left. I'll just get in the tariff question and just ask any specific strategy. I know it's hard to have a strategy for the unknown, but for potential Canada and Mexico tariffs and have you seen anything from your competitors there?

Sure. Yeah, I would say on tariffs from a competitive standpoint, we haven't really seen anything yet because of just what you said, the uncertainty in the marketplace and we have plans in place to mitigate the tariffs depending on where they land. The ones that have been implemented so far, very minimal impact for us. If others get implemented in Canada and Mexico, we have the opportunity to shift our supply chain around quite a bit, as well as look at other options from a pricing standpoint to mitigate those costs.

Very helpful. Thanks. I'll jump back in the queue.

Thanks, Pete.

Thank you. And your next question comes from Daniel Harriman with Sidoti & Company. Please go ahead when you're ready.

Hey, good morning, everyone. Thank you so much for taking my questions. That's really exciting news about Ryan. So Julie, I'm just kind of wondering, what can FAM gain from the successes you've seen within the SAS segment? And then along kind of the same lines, with the FAM segment going through the tiger team right now, which you've installed there. You saw great success within the healthcare turnaround in 2023, strong organic growth. Is the healthcare turnaround sustainable long term? And do you expect similar success with the FAM segment and advanced films in particular moving forward?

Sure. Thanks, Dan. Let me start with your first question, which was what will we leverage in SAS -- I'm sorry, in FAM that we might be leveraging in SAS today. I think there's four key areas that we would focus on. The first is demand generation. That means the pipeline discipline and the tools that we use effectively in SAS. We target about 50% of our revenue to be in our pipeline, and we'll continue to refine that in our FAM segment. The second one is strategic customer management. Have a very mature and effective joint business planning model that customers value, and that has opened up several new doors within our SAS segment, and we expect to do the same in FAM. The third one is cross business and cross selling opportunities, and that's with customers as the priority. But this will even more so open the door to how we look within customers deep and broadly and across the entire portfolio of Mativ to support them in a more holistic manner. And then the fourth one is really leveraging our talent across segments toward the greatest opportunities. And that could mean R&D expertise, marketing expertise, selling capabilities that we'll leverage more broadly within Mativ. So I'm excited about that. I think we'll see continued improvement and progress in FAM. It really is primarily impacted by one specific market right now. And there's a lot of momentum in some of the other markets within FAM, particularly in filtration and air and water, HVAC, industrial process and life sciences. If I turn to your second question, which was about the tiger team and the fact that we had referenced previously that we had done a similar exercise on healthcare and is that sustainable? And let me just give you…

Perfect. And then if I can, I'm going to sneak in one more quick one. On last quarter's call and then in recent calls in general, you've highlighted some of the investments that you've made into new filtration line, release liner line, automotive tapes, athletic tapes. And I understand that the CapEx is going to be down in 2025. But could you just update us on the progress of those previous investments and how you see those playing out moving forward?

Sure. Most of them are still kind of in the infancy stage. The meltblown line in our German facility is up and operating and that supports saturated transportation filtration. And so we'll continue to optimize the system there. The coder in Mexico supports release liner growth, which is growing really well America and with great opportunities in South America. The tape lines that you mentioned in Italy and in Canada are really just in the early phases. So those haven't been installed and started up yet. And then we recently invested in healthcare automation in our Knoxville facility to support our largest customer and capacity and capability additions there as well. So even though we are reducing our CapEx spending, I feel very confident we have the right spending in place from a growth standpoint. We'll cut back some on our cost reduction capital and on our maintenance capital that we can defer into some future years.

Okay. Thanks so much, Julie. I really appreciate it. Best of luck in the coming quarter, guys.

Thanks, Dan.

Thank you. I can confirm we currently have no further questions registered. So I would like to hand it back to Julie Schertell, Chief Executive Officer for some final closing comments.

Thank you. I want to thank everyone for joining us on the call this morning. We look forward to talking to many of you later this afternoon and tomorrow, and look forward to talking to you at our next call.

[Operator Closing Remarks].