Welcome to Mativ's Second Quarter 2025 Earnings Conference Call. On the call today from Mativ are Shruti Singhal, 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. [Operator Instructions] It is now my pleasure to turn the call over to Mr. Chris Kuepper. You may begin. Mr. Chris Kuepper, you may begin.

Good morning, everyone, and thank you for joining us for Mativ's Second Quarter 2025 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 metrics 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 and the accompanying slide deck are available on our website at ir.mativ.com. With that, I'll turn the call over to Shruti.

Thanks, Chris. Good morning, everyone, and thank you for joining our call. On our last earnings call in May, we communicated our expectations that we would see a material step-up in both sales and adjusted EBITDA over Q1 results. Sequentially, our sales in Q2 came in more than $40 million higher or up more than 8% and adjusted EBITDA increased $30 million or up more than 80%. Overall, a significant step change versus the previous quarter. On a year-over-year basis, we delivered strong results in Q2, with both adjusted EBITDA and free cash flow comparing favorably and exceeding our expectations, driven by improvements in volume and lower SG&A expenses across the company. Much of this improvement is attributable to the great work of our global cross-functional teams who delivered continued improvements in this challenging trade, ever-changing tariff and uncertain macroeconomic environment. Our return to a more normalized performance in Q2 is also more reflective of the shape of the P&L we expect to see in the back half of this year. On a year-over-year basis, sales were up over 2% organically and adjusted EBITDA was up 1% over a strong Q2 comp in the prior year. I am extremely proud of the resilience and creativity that our teams demonstrate on a daily basis and which yield tangible results in finding new and innovative ways to win in the marketplace and drive commercial execution. We have made impactful changes by delayering the organization, promoting talent from within and optimizing our resource allocation for faster decision-making. These are some of the factors behind this quarter's results, which represents our second highest adjusted EBITDA and free cash flow quarter since the merger. Let me touch briefly on our segment results. SAS sales continued their strong momentum from the previous quarters and were up…

Thanks, Shruti, and good morning, everyone. Consolidated net sales from continuing operations for the quarter were $525 million, up slightly compared to $524 million in the prior year on a reported basis and up $40 million or 8% versus Q1 of this year. Sales were up over 2% year-over-year on an organic basis as increases in volume mix, currency and SAS selling prices were partially offset by slightly unfavorable FAM selling prices. Adjusted EBITDA from continuing operations was $67.2 million, up 1% from $66.6 million in the prior year, our strongest quarter in 2024 and also up $30 million sequentially. Versus the prior year, high volume mix and lower SG&A costs represented a combined $8 million favorable impact, which was partially offset by a combined $5 million of higher manufacturing and distribution costs, which were isolated to a small number of sites and $2 million of unfavorable net selling price versus input costs, primarily in FAM. Price versus input cost, while unfavorable for this quarter, was a slight improvement versus last quarter and is expected to be favorable for the remainder of this year. Adjusted EPS were $0.33 a share versus $0.34 a share in the prior year period. Turning to each of our segments. Net sales in our Filtration & Advanced Materials segment of $204 million were down 1% versus Q2 of 2024. The year-over-year decrease reflected lower selling prices slightly lower volume mix due to continued customer caution and the uncertain macroeconomic environment, partially offset by favorable currency translation. FAM adjusted EBITDA of $40 million decreased by just under $2 million year-over-year, narrowing the year-over-year comparison gap from Q1 and reflecting the effects of higher manufacturing and distribution costs and unfavorable relative net selling price versus input costs, partially offset by lower SG&A expenses and favorable cost mix.…

Thank you, Greg. What everyone should take away from this call is that our pivot towards our 3 strategic priorities: Driving enhanced commercial execution, sharpening efforts to delever the balance sheet, and conducting a strategic review of our portfolio. Combined with a company-wide increased pace of execution, delayering of the organization for faster decision-making and improved employee engagement are driving quantifiable results that are already reflected in our Q2 performance. Throughout Mativ, there is a renewed focus on strategic initiatives that drive incremental value and a determined mindset to act swiftly, comprehensively and decisively to do what it takes to succeed in this challenging environment. I want to thank our talented and engaged global Mativ team that is executing with unwavering results and delivering results that grow our market share, return our performance to sustainable and profitable growth and most importantly, restore value to our shareholders. Thank you for joining us this morning. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Daniel Harriman with Sidoti.

Congratulations on the great quarter. I just have two pretty quick ones here this morning. Number one, Shruti, can you just provide a little bit more of an update on the turnaround effort within paint protection film. Obviously, you've made a lot of progress there. And just wanted to get an update in terms of how you're regaining share in that market. And then maybe an update on optical films because that seems to be a bright spot over the last couple of quarters. And then, Greg, you talked about cash flow for 2025 being double the level of 2024. And I'm just curious, should we think of that as at a minimum $80 million? And could you just kind of walk us through how you get there and the cadence between the third quarter and the fourth quarter.

Thanks, Dan, for your kind words. I appreciate it. And regarding the question on paint protection films. So as you may recall, when I came in onboard, we repurposed resources to address any capacity issues, lead time issues. We invested to improve our quality. All those things, I would say, are behind us at this time. Customers are really feeling that positive momentum from us. We've shared the data with the customers. They see it. Mid-tier strategy is working in Asia, as I mentioned, but also the premium segment because of the improvements we have made, that is gaining traction in North America. Our optical films market is growing very well right now, and we are also gaining share back in the premium segment with the films business. So I see an area that we address the challenge. We -- the team is on it, and we are continuing to gain share in this segment as we move forward. I'll let Greg answer the question around cash flow.

Sure. Yes. Thanks, Daniel. Yes, as far as cash flow in the path to $80 million, we started the first quarter with a large increase in accounts receivable with the seasonal change in business. We took a huge step forward in Q2 with close to $49 million in free cash flow. If you look at the first half overall, one of the biggest differences versus last year is the reduction in onetime costs that we've had. A lot of the programs that we've been working through this year have been pretty cash flow efficient in terms of the onetime costs. As we look forward to Q3 and Q4, that's really where all of the efforts that the extended teams have been working on with the inventory as well as terms, CapEx management will really come through, and we expect to have a very strong Q3 for cash flow as well, and yes, should put us well on the path for $80 million for the year.

Our next question comes from Lars Kjellberg with Stifel.

Really solid performance in the quarter. Coming back into that pace of execution, it seems as if certainly relative to our expectations, you outperformed. Is there anything particular that came through earlier than you had expected in terms of what you did yourself, considering the really challenging markets? And I'm -- on a same note, I should say, quite a few companies are talking about incremental uncertainty in the market. So it's interesting to hear your views on what sort of self-help or self-generated profit improvements you can generate considering the current environment? And then just finally, just a separate question, I guess, the strategic review. There's a lot of things move and I appreciate it's early innings on this one, but have you already identified business lines that you could separate possibly without disrupting the significant positive transformation that you have?

Thank you, Lars, for your question and your kind words. I appreciate it. Let me take the first question regarding demand and performance. As I've mentioned in the previous calls as well as today, the market is giving us what it is. We have seen some good progress whether it's with our liners and carriers business or our tapes and labels segment, our commercial print business, filtration categories like HVAC, air pollution, I talked about the optical films. So we're seeing some really positive momentum there. But then the sense of urgency, the pace of execution and a very disciplined approach and also delayering the organization for faster decision-making, that's really making a positive impact on our performance. So if you combine all of those things together, we are outperforming the market and we outperformed the market in Q2. On the strategic review, as I mentioned, we are going through the process. We are -- I'm pleased with the progress that the team has continued to make. We are not committed to any specific asset or any product line at this time, but we will work through the entire process for that. So I feel that we made quite good progress in that. And in due course of time, when ready, we will come back and announce that.

Just to follow up on the first -- the second quarter outperformance. My question was really about self-help and how you think about that in the confidence that you have in continued, I guess, outperformance, both versus your prior year but equally so versus the market, I suppose, considering the opaqueness of the current situation. So if you can sort of help us understand what sort of controllables you have to have that confidence in your capability to drive EBITDA growth in H2.

Correct. So we are -- what I mentioned that having a very solid pipeline, gaining share within our existing customers, attracting new customers a very strong cadence of review of the pipeline that I'm personally involved with the commercial team and the sales leaders. That all coupled together is what's helping us with our performance in Q2 as well as going into the second half. Regarding your question on. Sorry, Lars, yes, you had mentioned also around profitability. And on the profitability, I would say that the initiatives that we have taken in terms of looking at the organization, what we talked about delayering. We talked about SG&A and the team has really responded very well in terms of taken up the challenge. As I've mentioned, we identified another -- an additional $5 million in cost reduction. So altogether, $30 million to $35 million by year-end 2026, $15 million to $20 million of that would flow through 2025 to the P&L this year. So I'm very proud of what the team has been able to accomplish there. And then we are constantly looking at -- I talked about manufacturing, supply chain, distribution costs, all those put together are helping with the profitability of the company.

Thank you very much. That concludes the question-and-answer session. I will now hand back over to Shruti for any closing remarks.

Thank you, everyone, for joining us this morning for our second quarter 2025 earnings call. We look forward to connecting with you throughout the weeks, the coming months and our next earnings call in November. Have a great day ahead. Thank you.

Thank you very much, everyone, for joining. That concludes today's call. You may now disconnect your lines.