Mativ Holdings, Inc.

Previous wording

This MD&A discusses the financial condition and results of operations of the Company as of and for the three and six months ended June 30, 2025.

Current wording

This MD&A discusses the financial condition and results of operations of the Company as of and for the three and nine months ended September 30, 2025.

Previous wording

In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign governments. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. For instance, beginning in July 2025, the U.S. government issued letters to more than 20 countries, including Canada, Mexico, Brazil, Japan and the European Union, which outlined reciprocal tariff rates that would take effect, unless a trade agreement was separately agreed upon with the U.S. government. Uncertainties about tariffs and their effects on trading relationships, including as a result of future developments, may impact the macroeconomic conditions in the markets in which we operate. Although we are continuing to monitor the impact of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.

Current wording

Throughout 2025, the U.S. government has implemented a comprehensive tariff regime, including baseline tariffs on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign governments. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Uncertainties about tariffs and their effects on trading relationships, including as a result of future developments, may impact the macroeconomic conditions in the markets in which we operate. Although we are continuing to monitor the impact of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.

Previous wording

As of June 30, 2025, the Company had $1,090.6 million of total debt, $95.6 million of Cash and cash equivalents, $10.4 million of Restricted cash, and $357.2 million of undrawn capacity on its $600.0 million revolving line of credit facility (the "Revolving Facility"). Per the terms of the Company's amended credit agreement (the "Amended Credit Agreement"), net leverage was 4.5x at the end of the second quarter, versus a current maximum covenant ratio of 5.50x.

Current wording

As of September 30, 2025, the Company had $1,028.9 million of total debt, $97.1 million of Cash and cash equivalents, $5.8 million of Restricted cash, and $420.2 million of undrawn capacity on its $600.0 million revolving line of credit facility (the "Revolving Facility"). Per the terms of the Company's amended credit agreement (the "Amended Credit Agreement"), net leverage was 4.2x at the end of the third quarter, versus a current maximum covenant ratio of 5.50x.

Previous wording

FAM segment net sales of $204.4 million during the three months ended June 30, 2025 decreased $2.0 million, or 1.0%, compared to the prior-year quarter. The FAM net sales decline reflected lower selling prices (an approximately 2% decrease) along with lower volume/mix (an approximately 1% decrease), partially offset by favorable currency translation (an approximately 1% increase).

Current wording

FAM segment net sales of $198.3 million during the three months ended September 30, 2025 increased $8.7 million, or 4.6%, compared to the prior-year quarter. The FAM net sales increase reflected higher volume/mix (an approximately 4% increase) along with favorable currency translation (an approximately 2% increase), partially offset by lower selling prices (an approximately 1% decrease).

Previous wording

SAS segment net sales of $321.0 million during the three months ended June 30, 2025 increased $3.6 million, or 1.1%, compared to the prior-year quarter, reflecting higher volume/mix (an approximately 2% increase), higher selling prices (an approximately 1% increase) and favorable currency translation (an approximately 1% increase), partially offset by sales associated with closed facilities in the prior year (an approximately 4% decrease).

Current wording

SAS segment net sales of $315.4 million during the three months ended September 30, 2025 increased $6.5 million, or 2.1%, compared to the prior-year quarter, reflecting higher volume/mix (an approximately 3% increase), higher selling prices (an approximately 1% increase) and favorable currency translation (an approximately 1% increase), partially offset by sales associated with exited facilities in the prior year (an approximately 3% decrease).

Previous wording

Gross profit of $103.7 million during the three months ended June 30, 2025 decreased $5.2 million, or 4.8%, compared to the prior-year quarter. The decrease in gross profit reflected higher manufacturing and distribution costs, unfavorable relative net selling price versus input cost performance, partially offset by higher volume/mix.

Current wording

Gross profit of $99.4 million during the three months ended September 30, 2025 increased $5.8 million, or 6.2%, compared to the prior-year quarter. The increase in gross profit reflected favorable relative net selling price versus input cost performance, higher volume/mix, and lower manufacturing costs, partially offset by higher distribution costs.

Previous wording

The Company incurred total restructuring and other impairment expense of $3.8 million and $11.8 million in the three months ended June 30, 2025 and 2024, respectively.

Current wording

The Company incurred total restructuring and other impairment expense of $8.1 million and $11.2 million in the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Restructuring and other impairment expenses in the SAS segment for the three months ended June 30, 2025 consisted of severance charges. Restructuring and other impairment expenses for the three months ended June 30, 2024 included severance charges, along with costs associated with facility closures announced in prior years.

Current wording

Restructuring and other impairment expenses in the SAS segment for the three months ended September 30, 2025 consisted of severance charges. Restructuring and other impairment expenses for the three months ended September 30, 2024 included severance charges, along with costs associated with facility exits initiated in prior years.

Previous wording

In the FAM segment, operating income was $22.6 million during the three months ended June 30, 2025 decreased $2.6 million, or 10.3%, compared to the prior year period, primarily due to higher manufacturing and distribution costs, unfavorable relative net selling price versus input cost performance, partially offset by favorable cost mix and lower selling and general expenses.

Current wording

In the FAM segment, operating income was $11.4 million during the three months ended September 30, 2025 decreased $8.5 million, or 42.7%, compared to the prior year period, primarily due to higher restructuring and other impairment expenses and manufacturing costs, partially offset by higher volume/mix.

Previous wording

In the SAS segment, operating income of $24.8 million during the three months ended June 30, 2025 increased $9.2 million, or 59.0%, compared to the prior year period, driven by lower restructuring and other impairment expenses, lower selling and general expenses, partially offset by higher manufacturing and distribution costs.

Current wording

In the SAS segment, operating income of $28.4 million during the three months ended September 30, 2025 increased $18.1 million, compared to the prior year period, driven by lower restructuring and other impairment expenses, favorable net selling price versus input cost performance, lower manufacturing costs and lower selling and general expenses, partially offset by unfavorable mix and higher distribution costs.

Previous wording

A $12.5 million income tax expense in the three months ended June 30, 2025 resulted in an effective tax rate of 416.7% compared with 84.4% in the prior year period. The net change was primarily due to mix of earnings and impact from valuation allowance changes in the current period, and a one-time tax adjustment in the prior period.

Current wording

A $2.4 million income tax benefit in the three months ended September 30, 2025 resulted in an effective tax rate of 42.9% compared with 13.3% in the prior year period. The net change was primarily due to the impact from a one-time tax adjustment and mix of earnings in the current period.

Previous wording

Net loss during the three months ended June 30, 2025 was $9.5 million, or $0.18 per diluted share, compared with net loss of $1.4 million, or $0.03 per diluted share, during the prior-year quarter.

Current wording

Net loss during the three months ended September 30, 2025 was $3.2 million, or $0.06 per diluted share, compared with net loss of $20.8 million, or $0.38 per diluted share, during the prior-year quarter.

Previous wording

FAM segment net sales of $392.0 million during the six months ended June 30, 2025 decreased $17.1 million, or 4.2%, compared to the prior year period primarily due to lower volume/mix (an approximately 3% decrease), and lower selling prices (an approximately 2% decrease).

Current wording

FAM segment net sales of $590.3 million during the nine months ended September 30, 2025 decreased $8.4 million, or 1.4%, compared to the prior year period primarily due to lower volume/mix (an approximately 1% decrease), and lower selling prices (an approximately 1% decrease).

Previous wording

SAS segment net sales of $618.2 million during the six months ended June 30, 2025 increased $3.3 million, or 0.5%, compared to the prior year period, reflecting higher volume/mix (an approximately 4% increase), higher selling prices (an approximately 1% increase), partially offset by sales associated with closed facilities in the prior year (an approximately 5% decrease).

Current wording

SAS segment net sales of $933.6 million during the nine months ended September 30, 2025 increased $9.8 million, or 1.1%, compared to the prior year period, reflecting higher volume/mix (an approximately 3% increase), higher selling prices (an approximately 1% increase), partially offset by sales associated with exited facilities in the prior year (an approximately 4% decrease).

Previous wording

Gross profit of $176.3 million during the six months ended June 30, 2025 decreased $16.6 million, or 8.6%, compared to the prior year period, reflecting higher manufacturing and distribution costs, unfavorable relative net selling price versus input cost performance, and lower volume/mix in our FAM segment, partially offset by higher volume/mix in our SAS segment.

Current wording

Gross profit of $275.7 million during the nine months ended September 30, 2025 decreased $10.8 million, or 3.8%, compared to the prior year period, reflecting higher manufacturing and distribution costs, partially offset by higher volume/mix.

Previous wording

Nonmanufacturing expenses of $164.8 million during the six months ended June 30, 2025 decreased $5.2 million, or 3.1%, compared to the prior year period primarily due to lower selling and general expense, as a result of actions taken under the Plan, partially offset by $5.9 million incurred during the first quarter of 2025 related to our previously disclosed Chief Executive Officer transition.

Current wording

Nonmanufacturing expenses of $240.1 million during the nine months ended September 30, 2025 decreased $5.3 million, or 2.2%, compared to the prior year period primarily due to lower selling and general expense, as a result of actions taken under the Plan, partially offset by $5.9 million incurred during the first quarter of 2025 related to our previously disclosed Chief Executive Officer transition.

Previous wording

The Company incurred total restructuring and other impairment expense of $10.1 million in the six months ended June 30, 2025 compared with $26.2 million in the prior year period.

Current wording

The Company incurred total restructuring and other impairment expense of $18.2 million in the nine months ended September 30, 2025 compared with $37.4 million in the prior year period.

Previous wording

Restructuring and other impairment expenses in the SAS segment for the six months ended June 30, 2025 consisted of severance charges. Restructuring and other impairment expenses for the six months ended June 30, 2024 included severance charges, along with costs associated with facility closures announced in prior years.

Current wording

Restructuring and other impairment expenses in the SAS segment for the nine months ended September 30, 2025 consisted of severance charges. Restructuring and other impairment expenses for the nine months ended September 30, 2024 included severance charges, along with costs associated with facility exits initiated in prior years.

Previous wording

Operating loss was $410.5 million during the six months ended June 30, 2025 compared to operating loss of $3.3 million in the prior year period.

Current wording

Operating loss was $394.5 million during the nine months ended September 30, 2025 compared to operating profit of $3.7 million in the prior year period.

Previous wording

In the FAM segment, operating loss was $387.4 million during the six months ended June 30, 2025 reflecting a $427.2 million decrease, compared to operating profit of $39.8 million in the prior year period primarily due to the $411.9 million goodwill impairment during the first quarter of 2025, see Note 6. Goodwill. Excluding the goodwill impairment, operating profit was $24.5 million, a $15.3 million decrease from the prior year due to higher manufacturing and distribution costs, unfavorable net selling price versus input cost performance and lower volume/mix, partially offset by lower selling and general expenses.

Current wording

In the FAM segment, operating loss was $376.0 million during the nine months ended September 30, 2025 reflecting a $435.7 million decrease, compared to operating profit of $59.7 million in the prior year period primarily due to the $411.9 million goodwill impairment during the first quarter of 2025, see Note 6. Goodwill. Excluding the goodwill impairment, operating profit was $35.9 million, a $23.8 million decrease from the prior year due to higher restructuring and other impairment expenses, higher manufacturing and distribution costs, unfavorable net selling price versus input cost performance, partially offset by higher volume/mix and lower selling and general expenses.

Previous wording

In the SAS segment, operating profit was $37.8 million during the six months ended June 30, 2025 reflecting a $18.0 million increase, compared to the prior year period, driven by lower restructuring and other impairment expenses, higher volume/mix net of sales associated with closed facilities, and lower selling and general expenses, partially offset by higher manufacturing and distribution costs.

Current wording

In the SAS segment, operating profit was $66.2 million during the nine months ended September 30, 2025 reflecting a $36.1 million increase, compared to the prior year period, driven by lower restructuring and other impairment expenses, favorable net selling price versus input cost performance, lower selling and general expenses and lower manufacturing costs, partially offset by higher distribution costs.

Previous wording

Unallocated expenses of $60.9 million during the six months ended June 30, 2025 decreased $2.0 million compared to the prior year, primarily related to a decrease in selling and general expenses as a result of actions taken under the Plan.

Current wording

Unallocated expenses of $84.7 million during the nine months ended September 30, 2025 decreased $1.4 million compared to the prior year, primarily related to a decrease in selling and general expenses as a result of actions taken under the Plan.

Previous wording

A $12.2 million income tax benefit in the six months ended June 30, 2025 resulted in an effective tax rate of 2.7% compared with 25.4% in the prior year period. The net change was primarily due to mix of earnings, impact from a $59.4 million increase to our valuation allowance, and goodwill impairment not deductible for tax purposes in the current period.

Current wording

A $14.6 million income tax benefit in the nine months ended September 30, 2025 resulted in an effective tax rate of 3.2% compared with 20.8% in the prior year period. The net change was primarily due to the impact from a $57.0 million increase to our valuation allowance, goodwill impairment not deductible for tax purposes, and mix of earnings in the current period.

Previous wording

Net loss during the six months ended June 30, 2025 was $435.0 million, or $(7.98) per diluted share, compared to net loss of $29.4 million, or $(0.54) per diluted share, during the prior year period.

Current wording

Net loss during the nine months ended September 30, 2025 was $438.2 million, or $(8.04) per diluted share, compared to net loss of $50.2 million, or $(0.93) per diluted share, during the prior year period.

Previous wording

As of June 30, 2025, $82.6 million of the Company's $95.6 million of Cash and cash equivalents was held by foreign subsidiaries. Restricted cash of $10.4 million represents primarily retained contributions associated with our UK Pension scheme, the use of which is restricted to obligations related to the scheme. We believe our sources of liquidity and capital, including cash on-hand, cash generated from operations, our Revolving Facility, and our Receivables Sales Agreement (an off-balance sheet arrangement as defined in Item 303(a)(4)(ii) of SEC Regulation S-K), will be sufficient to finance our continued operations, our current and long-term growth plan, and dividend payments.

Current wording

As of September 30, 2025, $78.4 million of the Company's $97.1 million of Cash and cash equivalents was held by foreign subsidiaries. Restricted cash of $5.8 million primarily represents retained contributions associated with our UK Pension scheme, the use of which is restricted to obligations related to the scheme. We believe our sources of liquidity and capital, including cash on-hand, cash generated from operations, our Revolving Facility, and our Receivables Sales Agreement (an off-balance sheet arrangement as defined in Item 303(a)(4)(ii) of SEC Regulation S-K), will be sufficient to finance our continued operations, our current and long-term growth plan, and dividend payments.

Previous wording

As of June 30, 2025, the Company had net operating working capital of $398.4 million, including Cash and cash equivalents of $95.6 million, compared to net operating working capital of $386.2 million, including Cash and cash equivalents of $94.3 million as of December 31, 2024. The increase was attributable primarily to an increase in accounts receivable, partially offset by an increase in accounts payable, and a decrease in inventories.

Current wording

As of September 30, 2025, the Company had net operating working capital of $354.8 million, including Cash and cash equivalents of $97.1 million, compared to net operating working capital of $386.2 million, including Cash and cash equivalents of $94.3 million as of December 31, 2024. The decrease was attributable primarily to an increase in accounts payable and accrued expenses and other current liabilities, along with a decrease in inventories, partially offset by an increase in accounts receivable.

Previous wording

Net cash provided by operating activities was $41.7 million during the six months ended June 30, 2025 compared to net cash provided of $33.1 million during the prior year period. The increase reflected lower cash payments related to restructuring activities, partially offset by unfavorable year-over-year movements in working capital related cash flows.

Current wording

Net cash provided by operating activities was $114.5 million during the nine months ended September 30, 2025 compared to net cash provided of $70.7 million during the prior year period. The increase was due to favorable year-over-year movements in working capital related cash flows and lower cash payments associated with restructuring activities.

Previous wording

During the six months ended June 30, 2025, net changes in operating working capital resulted in cash outflows of $11.1 million, compared to $3.6 million of outflows during the prior year period. The $7.5 million change was due to an increase in net changes of accounts payable and other current liabilities, partially offset by a decrease in net changes of inventories.

Current wording

During the nine months ended September 30, 2025, net changes in operating working capital resulted in cash inflows of $22.5 million, compared to $0.8 million of inflows during the prior year period. The $21.7 million change was driven by inflows associated with inventories, partially offset by changes in accounts payable and accrued expenses and other current liabilities.

Previous wording

Cash used in investing activities during the six months ended June 30, 2025 was $17.6 million, compared to cash outflows of $20.0 million during the prior year period, primarily attributable to changes in proceeds from settlement of swap contracts. Capital spending was $22.6 million compared to $20.8 million in the prior year period.

Current wording

Cash used in investing activities during the nine months ended September 30, 2025 was $23.0 million, compared to cash outflows of $29.4 million during the prior year period, primarily attributable to changes in proceeds from settlement of swap contracts. Capital spending was $28.7 million compared to $32.9 million in the prior year period.

Previous wording

Cash used in financing activities during the six months ended June 30, 2025 was $17.5 million, compared to cash inflows of $16.4 million during the prior year period. During the six months ended June 30, 2025, financing activities primarily consisted of $64.0 million of borrowings under the Revolving Facility, $11.4 million of dividends paid to the Company's stockholders, and payments on our long-term debt of $67.4 million.

Current wording

Cash used in financing activities during the nine months ended September 30, 2025 was $87.8 million, compared to cash inflows of $12.2 million during the prior year period. During the nine months ended September 30, 2025, financing activities primarily consisted of $64.0 million of borrowings under the Revolving Facility, $16.8 million of dividends paid to the Company's stockholders, and payments on our long-term debt of $131.1 million.

Previous wording

During the prior year period, financing activities primarily consisted of $94.0 million of proceeds from borrowings under the Revolving Facility, $65.3 million of payments on our long-term debt, and $10.8 million of dividends paid to the Company's stockholders.

Current wording

During the prior year period, financing activities primarily consisted of $127.0 million of proceeds from borrowings under the Revolving Facility, $97.0 million of payments on our long-term debt, and $16.2 million of dividends paid to the Company's stockholders.

Previous wording

The following table presents activity related to our debt instruments for the six months ended June 30, 2025 and 2024 (in millions):

Current wording

The following table presents activity related to our debt instruments for the nine months ended September 30, 2025 and 2024 (in millions):

Previous wording

Net payments from borrowings were $3.4 million during the six months ended June 30, 2025, compared to net proceeds from borrowings of $28.7 million during the prior year period.

Current wording

Net payments from borrowings were $67.1 million during the nine months ended September 30, 2025, compared to net proceeds from borrowings of $30.0 million during the prior year period.

Previous wording

Unused borrowing capacity under the Amended Credit Agreement was $357.2 million as of June 30, 2025.

Current wording

Unused borrowing capacity under the Amended Credit Agreement was $420.2 million as of September 30, 2025.

Previous wording

Our total debt to capital ratios at June 30, 2025 and December 31, 2024 were 72.4% and 55.9%, respectively.

Current wording

Our total debt to capital ratios at September 30, 2025 and December 31, 2024 were 72.1% and 55.9%, respectively.

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act") that are subject to the safe harbor created by the Act and other legal protections. Forward-looking statements include, without limitation, those regarding the incurrence of additional debt and expected maturities of the Company’s debt obligations, the adequacy of our sources of liquidity and capital, acquisition integration and growth prospects (including international growth), the cost and timing of our restructuring actions, the impact of ongoing litigation matters and environmental claims, the amount of capital spending and/or common stock repurchases, future cash flows, purchase accounting impacts, impacts and timing of our ongoing operational excellence and other cost-reduction and cost-optimization initiatives, profitability, and cash flow, the expected benefits and accretion of the Neenah merger and Scapa acquisition and integration, whether the strategic benefits of the EP Divestiture can be achieved and other statements generally identified by words such as "believe," "expect," "intend," "guidance," "plan," "forecast," "potential," "anticipate," "confident," "project," "appear," "future," "should," "likely," "could," "may," "will," "typically" and similar words.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act") that are subject to the safe harbor created by the Act and other legal protections. Forward-looking statements include, without limitation, those regarding our expectations related to the impact of tariffs, the incurrence of additional debt and expected maturities of the Company’s debt obligations, the adequacy of our sources of liquidity and capital, acquisition integration and growth prospects (including international growth), the cost and timing of our restructuring actions, the impact of ongoing litigation matters and environmental claims, the amount of capital spending and/or common stock repurchases, future cash flows, purchase accounting impacts, impacts and timing of our cost-reduction and cost-optimization initiatives, profitability, and cash flow, and other statements generally identified by words such as "believe," "expect," "intend," "guidance," "plan," "forecast," "potential," "anticipate," "confident," "project," "appear," "future," "should," "likely," "could," "may," "will," "typically" and similar words.