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Q1 profitability improved sharply, with adjusted EBITDA rising 28% year over year to $47.5 million and margin expanding to 9.9%. Management credited pricing actions, cost controls and operational changes for the stronger margin and cash flow performance.
Healthcare-related weakness weighed on volumes, especially due to customer destocking and a temporary Knoxville facility outage, though that plant is now fully operational. Mativ expects conditions to improve in the back half of the year, while seeing strength in areas like filtration, paint protection, industrial films and specialty aerospace films.
Debt reduction remains a top priority after Mativ refinanced most of its debt in April, simplifying the capital structure and pushing out maturities until late 2029. The company also expects continued pricing actions to offset higher input costs, which it now estimates at $40 million to $50 million for 2026.
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Mativ (NYSE:MATV) reported higher first-quarter profitability and improved cash flow despite mixed demand across its portfolio, with management pointing to pricing actions, cost controls and operational changes as key drivers of margin expansion.
On the company’s first-quarter 2026 earnings call, President and Chief Executive Officer Shruti Singhal said the quarter marked Mativ’s strongest consolidated first-quarter margin and cash flow performance since its mid-2022 merger. She said the results reflected a yearlong transformation focused on cost discipline, portfolio review, cash generation and debt reduction.
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“We are no longer reacting to the market,” Singhal said. “We are actively shaping our outcomes and focusing aggressively on things we can control.”
Chief Financial Officer Scott Minder said net sales were $480 million, nearly flat year over year on an organic basis and down about 1% as reported. Favorable selling prices and currency were offset by lower volume mix. Adjusted EBITDA was $47.5 million, up 28% from the prior year, while adjusted EBITDA margin expanded 220 basis points to 9.9%.
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Minder said Mativ’s Filtration & Advanced Materials, or FAM, segment posted net sales of $188 million, up more than 2% organically and modestly higher on a reported basis. The increase was driven by favorable currency and slightly higher selling prices, partially offset by lower volume mix.
FAM adjusted EBITDA rose 41% year over year to $27 million, while margins improved 430 basis points to 14.6%. Minder attributed the gains to favorable price-to-input cost performance, lower manufacturing costs, favorable currency and reduced SG&A expenses.
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The Sustainable & Adhesive Solutions, or SAS, segment reported net sales of $291 million, down 2% year over year. Lower volume mix, primarily tied to healthcare, was partially offset by favorable currency and selling prices. SAS adjusted EBITDA increased about 16% to roughly $31 million, with margins up 160 basis points to 10.5%.
Minder also noted a reporting change beginning in the quarter. Certain centralized expenses, including IT infrastructure, finance and accounting shared services, and regional human resources, are now allocated directly to the company’s segments. He said the change lowers reported adjusted EBITDA margins for both segments by about 100 basis points but does not affect consolidated adjusted EBITDA or margin.
Singhal said the company experienced “a few discrete pockets of volume weakness,” most notably in healthcare. She cited customer destocking in the first quarter of 2026, compared with inventory building in the prior year to support product launches, as well as supply chain inefficiencies tied to a temporary outage at Mativ’s Knoxville, Tennessee, facility.
During the question-and-answer session, Singhal said the Knoxville outage has been fully resolved and the plant is fully operational. She said Mativ does not have an exact timeline for normalization in healthcare because it depends on customer end-user demand, but she described the issue as near term and said the company expects improving trends in the back half of the year.
Beyond healthcare, Singhal said demand remains soft in release liner and labels. However, she pointed to strength in European filtration, including aftermarket transportation, water and industrial applications, as well as gains in paint protection and industrial films. In SAS, she said Mativ saw growth across finished tape categories and commercial print.
Singhal also said the company recently secured a “sizable new commitment” for specialty films from a new aerospace customer. In response to an analyst question, she declined to disclose financial terms or precise timing because of customer confidentiality, but said the commercial relationship is expected to begin in the second quarter, with shipments starting later in the quarter and ramping slowly.
Free cash flow was a use of $7 million in the first quarter, improving by more than $22 million from the prior year. Minder said the improvement reflected more than $16 million of operating cash flow improvement, lower restructuring expenses and capital expenditure timing. He noted that the first quarter is historically Mativ’s most demanding period for cash flow because of seasonal working capital buildup and prior-year incentive compensation payouts.
At quarter end, net debt was approximately $954 million, and liquidity was roughly $499 million. Net leverage, as defined in the company’s credit agreement, was 4.1 times, slightly lower than the 2025 year-end level. Minder said debt reduction remains Mativ’s primary capital allocation priority and that the company continues to expect progress toward its leverage goal of 2.5 times to 3.5 times during 2026.
In April, Mativ refinanced the majority of its debt tranches. Minder said the transaction simplified the capital structure, reduced the number of bank group participants from 15 to eight, right-sized the revolving credit facility to $305 million and eliminated the delayed draw term loan. The revised revolver and new $90 million Term Loan A mature in 2031, while a new $500 million Term Loan B matures in 2033. Minder said Mativ now has no debt maturities until late 2029 and expects annual interest expense of about $76 million, slightly above the $74 million estimate under the prior structure.
Management said the ongoing Middle East conflict had limited direct impact on Mativ in the first quarter, largely because of localized supply chains. However, both Singhal and Minder said the conflict has increased input cost volatility, particularly for oil-derived materials such as polymers, resins and certain chemical feedstocks.
Minder said the company initially expected 2026 raw material inflation of $20 million to $25 million and took pricing action in January to offset it. Based on current forecasts, Mativ now expects full-year input cost inflation of $40 million to $50 million. Minder said the company took additional pricing actions across all product categories late in the first quarter and expects those actions to fully recover the additional costs in 2026.
Asked whether Mativ would continue raising prices if input costs rise further, Minder said the company would “follow the same playbook” and take further pricing actions to preserve margins. He said management expects inflation to be “pretty sticky” in 2026 because of infrastructure damage, higher logistics and insurance costs, and a lingering risk premium in oil-related markets.
Looking ahead, Minder said market volatility and geopolitical events have reduced forward visibility. Mativ expects second-quarter adjusted EBITDA to decline by a mid-single-digit percentage compared with a strong prior-year period, primarily because of lower volumes tied to near-term demand weakness in healthcare. He said growth in FAM’s films and filtration businesses, favorable price-to-input cost performance and SG&A savings should provide partial offsets.
Singhal said Mativ’s newly formalized strategic blueprint will guide the company’s next phase, with a focus on becoming the preferred global partner for customers delivering performance-critical material solutions. She said the company will concentrate resources on high-growth, high-return markets, pursue cross-selling opportunities and apply existing capabilities to adjacent markets.
“We have the right talent, the right portfolio, and we refined our strategy blueprint to lead Mativ into its next phase of profitable growth,” Singhal said.
Mativ is a global supplier of specialty fiber-based materials and engineered solutions, established in April 2021 through the spin-off of Ahlstrom-Munksjö’s global filtration and engineered materials business. Trading on the New York Stock Exchange under the ticker MATV, the company focuses on designing and manufacturing high-performance products for a broad range of end markets, including life sciences, energy storage, industrial filtration, and consumer products.
Through its Advanced Solutions segment, Mativ produces innovative materials such as lithium-ion battery separators, specialty release liners, and pressure-sensitive adhesive tapes.
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The article "Mativ Q1 Earnings Call Highlights" was originally published by MarketBeat.
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