Welcome to Mativ's Fourth Quarter and Full Year 2025 Earnings Conference Call. On the call today from Mativ are Shruti Singhal, Chief Executive Officer; Scott Minder, Chief Financial Officer; and Chris Kuepper, Director of Investor Relations. Today's call is being recorded and will be made 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 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 SEC 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 to the closest GAAP metrics are included in the appendix of the earnings release, which, along with the accompanying slide deck is now 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. We appreciate your continued interest in Mativ and are pleased to have this opportunity to share our outstanding results for the fourth quarter and full year of 2025, marking a period of remarkable success and progress. As I reflect on the past 12 months, I am incredibly proud and inspired by the unwavering commitment, agility and perseverance the Mativ team has demonstrated. 2025 was not just another year, it was a transformational journey for our company. We faced a convergence of external headwinds from anemic demand in certain industrial sectors to a dynamic and often unpredictable trade and macroeconomic environment. Yet it was also the year we proved that Mativ is built to navigate these challenges and emerge even stronger. We not only overcame these obstacles but also showcased Mativ's strength and determination to thrive and grow. Our fourth quarter results were a powerful culmination to this exceptional year. We delivered year-over-year improvements in sales, adjusted EBITDA and adjusted EBITDA margin. The metric that best showcases our operational discipline was free cash flow. We generated record free cash flow for the full year, more than double compared to the prior year. This is the direct result of an enterprise-wide focus on disciplined execution, prudent inventory management and aggressive expense control. Early on in 2025, our mandate became clear: improve the company's performance and build a foundation for sustainable profitable growth. I can confidently say today that we have made significant progress towards that goal. Over the past year, a cultural transformation has been underway at Mativ that fundamentally reset our trajectory. It fosters agility, speed, and accountability. By streamlining decision-making and bringing our teams closer to the customer, we have shifted from a reactive stance to a productive,…

Thanks, Shruti, and good morning. Let me start by saying that I'm excited to be part of Mativ's dynamic team. The company strengthened its foundation in 2025. And in 2026, we're accelerating progress toward our strategic objectives. Turning to our financials. 2025's results were solid, and we ended the year with a strong quarter. Mativ's full year 2025 net sales were just under $2 billion, up 2.5% organically and up modestly on a reported basis, both compared to prior year. On the positive side, volume mix increases in both segments, favorable selling prices in our SAS segment and favorable currency helped to drive this growth. These benefits were partially offset by sales from closed or divested plants and unfavorable selling prices in our FAM segment. 2025's adjusted EBITDA was $225 million, up 3% versus prior year, a favorable price to input cost ratio and lower SG&A expenses provided an $18 million benefit. Increased distribution costs due to cross sourcing of certain products that would have been subject to tariffs, higher manufacturing costs and unfavorable volume mix provided partial offsets. Adjusted EPS were $0.70 versus $0.62 in the prior year. Turning to Q4. Mativ net sales were $463 million, increasing year-over-year by nearly 2% organically and 1% as reported. Favorable currency and selling prices were partially offset by lower volume mix. Adjusted Q4 EBITDA was $53.5 million, increasing 19% versus prior year. A favorable price-to-input cost ratio, along with lower manufacturing and SG&A expenses were partially offset by unfavorable volume mix and higher distribution costs. Looking at our segments, FAM net sales of $177 million were up over 5% versus Q4 2024. This growth was driven by favorable volume mix and currency translation. These benefits were partially offset by slightly lower selling prices. FAM's adjusted EBITDA of $33 million increased by…

Thank you, Scott. What you should take away from today's call is that Mativ has effectively ignited a comprehensive transformation. 2025 marked a pivotal juncture where we demonstrated the capacity to deliver robust financial results despite a complex macroeconomic landscape. Our performance characterized by year-over-year improvements in sales, adjusted EBITDA and margins serves as a clear validation of our operational strategy and business resilience. Our progress is underpinned by a disciplined adherence to our 3 core pillars: enhanced commercial excellence, balance sheet strengthening and portfolio optimization. By rigorously managing factors within our control, we generated record free cash flow, more than doubling prior year's levels. This fiscal discipline has enabled us to materially reduce net debt and realign our leverage profile, thereby securing the operational flexibility required for future value creation. Looking towards 2026, Mativ is now structurally positioned for sustainable, profitable growth. We have the requisite leadership, strategy and capital discipline to deliver long-term shareholder value. We remain fully committed to delivering for our customers, improving our leverage and balance sheet by generating significant cash flow and capturing volume and share gains that validate our go-to-market strategy. I am excited for our path ahead as we continue our increased pace of execution to drive value for Mativ, our customers and our shareholders. Thank you for joining us this morning. Operator, please open the line for questions.

Our first question is from Daniel Harriman from Sidoti.

I've got a couple for Shruti and then one for Scott today. But Shruti, you kind of talked about the headwinds within SAS, and I was hoping you may be able to provide a little bit more detail on the specific businesses that are being pressured there. And then whether you see any potential catalysts that could support improvement as we move through 2026? And then we've been really impressed with the progress within FAM. And I'm just curious if you could talk to how sustainable you think that momentum is given the current demand backdrop. And then, Scott, we look forward to working with you. Welcome to the team. And I'm just curious if you could talk about the cadence of free cash flow in 2026, if we should expect that to kind of mirror the quarterly cadence from 2025.

I'll start. Thanks, Dan, for that question. I appreciate it and your kind words. Regarding SAS, the good thing about our portfolio is its ability to offset demand that's in weak in some markets with growth in the others. So specifically, we saw some weakness in automotive labels or automotive tapes, sorry, and industrial labels and particularly in release liners in Europe. But what we are doing is we are focusing on share gain opportunities in Europe. And in North America or beyond Europe, we're looking at our overall release liner portfolio and capitalizing on the better free trade agreements to be able to be competitive in the market in North America and also enabling share growth. So I am very optimistic on release liners here going forward, especially in the second half of 2026. Regarding your question on FAM, really outstanding quarter. As we have mentioned in the past, this is an area we focused our investments, our resources, changing leadership and we are seeing the results of that. We are seeing growth in -- despite the markets, growth in transportation and industrial filtration. We are seeing growth in our netting, which is the erosion control market. That we mentioned before, we are benefiting from the tariff that were implemented. And the films business, where we made significant investment, both capital as well as resources, we are seeing an improvement year-on-year and closing that gap. So overall impact is very favorable for FAM in Q4, and I expect that trend to continue in Q1. Scott, over to you.

Yes. Thanks, Dan. I appreciate the comments and looking forward to working with you as well. Really, I'm going to split your question into 2 parts. And I think we'll start with free cash flow and how that dovetails into leverage. The team did a really good job in 2025. We generated record free cash flow of $94 million. That more than doubled our 2024 result. And efforts were broad-based across the board, right, improved profitability by reducing costs. We increased margins. We reduced inventory, and we really showed CapEx discipline. So we'll continue to push in these areas in '26, and we expect meaningful results. We talked about additional cost savings of $15 million to $20 million, ongoing CapEx discipline with some additional focus on growth investments. And we're going to continue the working capital focus. We'll need to fund some growth as we talked about. So if you put all that together for the full year, we do anticipate a small decline from 2025 record levels, but that's primarily to fund growth. We talked about $10 million in working capital, and we talked about an additional $5 million in CapEx. But we also have opportunities to build on our working capital efficiency and continue to improve our profitability. You asked about a cadence. So from a cadence point of view, I think we're going to follow our normal kind of seasonal pattern. We'll have some outflow in Q1, hopefully improving on prior year. And we do that generally to rebuild inventory. We expect strong generation in the middle part of the year and a positive finish to the year. So for me, the bottom line here, I've seen over what I've talked to folks and as I've come in, we really evolved the culture at Mativ to be…

Our next question is from Lars Kjellberg from Stifel.

I'm just looking at or thinking about your guidance for Q1. Of course, you're looking up against a very, very easy comp from 24% last year and talking about up 10%, 15%. It kind of seems to be slowing progress on an underlying basis a bit. So can you talk to us a bit what you're seeing in the market? And if the seasonally weak quarter is sort of from an underlying perspective, low point and how you build through the balance of the year? Because again, if you look at the EBITDA essentially, you're ending up below where you were in '24. I appreciate there's been some corporate changes, but sort of the progress seems to be slowing a bit. So if you can provide any color on that, that would be of interest.

Yes. Maybe I can start off, Scott, and please feel free to comment. So Lars, thanks for that question. Again, good to hear from you. For Q1, I think what Scott mentioned is the guidance of 15% to 20%. And we see some weakness in demand on top line, especially in the categories I mentioned in our SAS segment. But even in that -- in SAS, we are seeing other categories performing well, and I expect them to continue to perform well beyond Q1 and going into the remainder of the year. And as I mentioned, in our FAM category, while remember that FAM because of our presence in filtration is also in Europe, in automotive, the demand is weak there and especially in Q1. But the actions that we have taken and as that pipeline continues to flow, I expect the FAM segment to perform well in Q1 and also as we go into the remainder of the year. So starting off on a positive note in Q1, while navigating through the weak demand. But as we build our pipeline and commercialize those opportunities for the remainder of the year, both in SAS and FAM, I'm optimistic on our performance. Scott, feel free to add anything else.

Yes. Lars, good to meet you. I think Sri said most of it there. But top line, we expect probably very low single-digit volume growth rate, reflecting that soft demand environment. We're going to continue working on our pricing initiatives to help offset those input costs. Where we see the leverage coming through is really on the EBITDA. So while top line is muted, we expect EBITDA growth of 15% to 20%. So offsetting that demand weakness in the manufacturing inefficiencies that come along with that with the efforts we worked on last year around operational costs and SG&A costs, we've got a program this year to take out another $15 million to $20 million that gets started on January 1. So I think we're doing a lot to continue to improve the earnings power of the business even despite top line that's relatively soft.

Just a quick follow-up on the commercial pipeline. True to, you obviously made a tremendous change to the commercial approach and you expect to win in the market. Can you share with us how you sort of view that commercial pipeline and how you expect to perform relative to the underlying market in the key segments you pursue?

Right. So it's a very focused approach on the commercial pipeline. The rigor and cadence by our commercial leadership is very different in terms of realistic opportunities. And we're controlling what we can control. As we mentioned, there's different categories in the market, which is weak. But as we look at our -- for example, our films business, we made the investments in resources and capital. We have made good progress in lead time reductions, quality improvements, and we're winning the customer confidence and trust back. And as a result, the business, that's one example of how our commercial pipeline and operations working. Similar in approach in filtration. We have seen good progress, and we know the automotive market, especially in Europe, is anemic. But we have seen good progress in HVAC, air pollution control and water filtration. We built a good pipeline there with customers, and we are winning in those. So to sum it up, both in SAS and FAM segments, we are very surgical on our commercial pipeline. We're pursuing the opportunities with great precision. And our customer collaboration and intimacy, I would say, is better than I've ever seen before and even the customers have alluded to that. So that's why we are optimistic for Q1 and especially beyond in 2026.

Our next question is from Massimiliano Pilato from Stifel.

I have a couple on the comment on capturing volumes and share gains. Of course, you mentioned you had some headwinds in SAS. And you also mentioned higher input costs through 2026 to be offset by price increase. So how do you plan to capture volumes if the demand environment is still very muted and the ability to flex on prices is a little bit limited through 2026. That's the first one, and I'll ask the second one after that.

Thanks, Massi, for your question. Appreciate it. Regarding the share gain and pricing, so this is a collaborative effort. And it's -- like I mentioned in my comments as well, that it's very, very precise. So we are working very closely with our procurement, supply chain, operation teams to balance our costs with the commercial team going in for -- whether it's for the pricing or the share gain. So very, very precise and very surgical process depending on the category. That's the approach we have taken. It's a proven play. We have shown that in our FAM business. As I mentioned, 2 consecutive quarters of growth. And that approach is also working in -- or being applied to SAS and because it's proven approach for us. And as a result, we are winning in the market segments, and that's -- we want to continue -- we will continue to do that in Q1 and beyond.

Yes. And if I could add one thing, Sri, I think -- yes, Massimiliano, if I could add. So our pricing is one, to recover input cost increases, but there's also a connection to value. And our products bring a lot of value to our customers. Think of like a film, a protected film. It's protecting a valuable asset. So we feel like we bring value-add solutions to our customers, so we can get pricing in some of our applications because of the benefit it brings to customers. So one, it's to recover input costs, and we're committed to that, but it's also to capture the value we're bringing to the customer.

Then the second question relates to the rollout of new projects. Of course, you announced the partnership with Miru. How should we be thinking of the contribution of those new projects to flow through the P&L? Is it something that we can see in '26? Or is it more of a 2027 contribution?

Yes. Thanks, Massimiliano for -- so we are very excited about our partnership and collaboration with Miru. As I announced that we made investments and the technology is in terms of improving the energy efficiency in automobiles and buildings is very exciting for Mativ. We continue to work with Miru on a very close basis. We can expect to see some sales depending on market towards the end of 2026, but more flowing into 2027.

Got you. Very good. Then the last one on the outlook for Q1 '26. How much of the $15 million to $20 million of savings through '26 are already baked into Q1.

Well, on a run rate basis, we think we've got $5 million to $7 million that we're going to lap in 2026, not all in Q1. And then the rest of the savings will be new initiatives that we come up with from now until the end of the year. So there'll be a little bit more weighted to the middle to latter part of the year.

We currently have no further questions. So I will hand back to Shruti for closing remarks.

Thank you. First, I want to express my sincere gratitude to all Mativ employees for their dedication and hard work over the past 12 months in embracing change and delivering our Q4 and full year results. And finally, thanks to all of you for joining us this morning for our earnings call. We look forward to staying connected in the coming months and to welcoming you to our next earnings call in May. Have a wonderful day ahead. Thank you for your time.

Thank you. This concludes today's Mathys Fourth Quarter and Full Year 2025 Earnings Call. Thank you for joining. You may now disconnect your lines.