- Transaction consistent with Mativ’s strategy to focus the
portfolio on end-markets with the strongest long-term growth
opportunities
- Company intends to use net sale proceeds of approximately
$575 million to reduce debt
- Company revises capital allocation strategy with re-sized
annual dividend and new share repurchase program
- Proposed sale price reflects an approximate 6.5x multiple on
Engineered Papers’ trailing 12-month Adjusted EBITDA
- Investor call to discuss proposed transaction scheduled for
10:00 AM ET today
Mativ Holdings, Inc. (“Mativ” or the “Company”) (NYSE: MATV)
announced today that it has received a binding offer from Evergreen
Hill Enterprise, Pte. Ltd., to acquire Mativ’s Engineered Papers
business (“EP”), part of Mativ’s Fiber Based Solutions reporting
segment, for $620 million. Subject to customary closing date
adjustments, Mativ expects to receive net proceeds (net of taxes
and other items) of approximately $575 million in the proposed
transaction, which would be primarily used for debt paydown.
Julie Schertell, CEO of Mativ, commented, “The proposed sale of
Engineered Papers is a key milestone in the transformation of Mativ
and aligns with our strategy to focus our efforts, accelerate
growth, and drive value for our shareholders. This pivotal action
positions our portfolio for faster growth and focuses our resources
on categories with the most promising revenue and margin expansion
opportunities. While a solid business, EP’s concentration in the
tobacco industry is not aligned with Mativ’s long-term ambition and
presents a more attractive value proposition under new strategic
ownership. Our talented and dedicated employees will continue to
deliver outstanding products and service to EP’s long-standing
customer base, and we are confident in a smooth transition.”
“The sale process has also given us the opportunity to rebalance
our capital allocation approach, with the top near-term priority
being debt reduction. In addition to paying down debt from the sale
proceeds, we are also right-sizing our dividend to align with our
reshaped portfolio, support continued near-term de-leveraging, and
position the Company for future growth investments. In addition,
our board has approved a $30 million share repurchase program,
providing added flexibility in our cash returns to shareholders. We
believe our stock represents an attractive value and expect to
opportunistically execute share repurchases going forward.”
“Since our July 2022 merger, the management team and Board of
Directors have been committed to making deliberate and carefully
considered decisions to unlock the long-term value we see in Mativ
as a leading specialty materials provider. The scope of these
decisions and actions include strategic portfolio optimization,
capital allocation, organic investments, restructuring, and many
other critical factors in realizing the enterprise’s full
potential. Ultimately, we see the sale of EP and a more balanced
capital allocation strategy that accelerates de-leveraging as the
strongest path forward to amplify our long-term profit outlook and
drive maximum value creation for our shareholders.”
Transaction Details
- The proposed transaction will also be subject to customary
closing conditions, including regulatory approvals and satisfaction
of the consultation process with the applicable works councils in
France, and is expected to close in the fourth quarter of 2023
- Evergreen Hill Enterprise, Pte. Ltd., an affiliate of BMJ, is
based in Singapore and is part of a successful, Indonesian-based
privately held group of diversified companies serving a wide
variety of industries, such as banking, tobacco, consumer
electronics, telecommunications, fast moving consumer goods,
e-commerce, plantation, hotels & real estate, and many
others
- The potential buyer is expected to fund the proposed
transaction with existing cash balance and is not dependent on
capital markets for financing
Divestiture & Debt Reduction
Highlights
- The gross sale price of $620 million reflects approximate 6.5x
multiple on EP’s trailing 12-month Adjusted EBITDA (as of June 30,
2023 quarter); trailing 12-month sales for EP were approximately
$530 million
- Expected net transaction proceeds of approximately $575 million
will be used primarily to reduce debt; net proceeds represent
approximately 35% of outstanding net debt
- Engineered Papers financial results will be reported as assets
held for sale beginning in 3Q:23
Capital Allocations
Plans
- The Company intends to adjust the annualized dividend of $1.60
per share to $0.40 per share, effective for the September 2023
dividend payment; this represents a total annual dividend payment
reduction from $88 million to $22 million
- Management estimates the new dividend will represent
approximately 25% of annualized free cash flow post-transaction,
reflecting a more growth-oriented and balanced allocation of
capital
- Further, the Company has approved a $30 million stock buyback
program; while opportunistic repurchases are expected to be
executed, debt reduction will continue to be the primary use of
excess cash flow in the near-term
Post-Transaction Mativ Financial
Highlights
- The Company believes its total post-transaction near-term sales
would be approximately $2.2 billion with an Adjusted EBITDA margin
of approximately 13%
- Following the transaction, the Company expects to deliver
long-term annualized sales growth in the 3% to 5% range, and
multi-year margin expansion toward our 15% target
- As a result of debt reduction upon close, a rebalanced capital
allocation strategy, and expected core EBITDA growth, the Company
believes it will be within its targeted credit agreement net
leverage range of 2.5x to 3.5x by the end of 2024
- Following the transaction, Mativ will no longer have exposure
to the tobacco industry
Transaction Investor Conference
Call
- Mativ management will hold a conference call and webcast today,
August 1st at 10:00 am ET to discuss the transaction. The live
event can be accessed directly by visiting the Investor Relations
section of Mativ's website at http://ir.mativ.com or by using the
following link https://events.q4inc.com/attendee/892546572. In
addition, an investor presentation is available on the website.
Today’s conference call may also be accessed by dialing
833-470-1428 or 404-975-4839 and providing the access code
320046
- A replay of the webcast will be available on the Company’s
website at http://ir.mativ.com or by dialing 866-813-9403 or
929-458-6194 and providing the access code 320252
Advisors
- Morgan Stanley & Co. LLC served as financial advisor and
King & Spalding LLP served as legal advisor to Mativ
Second Quarter 2023
Results
- 2Q:23 earnings release scheduled for August 9th, 2023, after
the market closes, with investor call the morning of August 10th at
8:30 AM ET
- The Company expects to report strong sequential improvement in
Adjusted EBITDA for 2Q:23 versus 1Q:23, consistent with comments
provided in the first quarter earnings release
About Mativ
Mativ Holdings, Inc. is a global leader in specialty materials
headquartered in Alpharetta, Georgia. The Company offers a wide
range of critical components and engineered solutions to solve our
customers’ most complex challenges. With over 7,500 employees
worldwide, we manufacture on four continents and generate sales in
more than 100 countries. The Company’s two operating segments,
Advanced Technical Materials and Fiber-Based Solutions, target
premium applications across diversified and growing end-markets,
from filtration to healthcare to sustainable packaging. Our broad
portfolio of technologies combines polymers, fibers, and resins to
optimize the performance of our customers’ products across multiple
stages of the value chain. Our leading positions are a testament to
our best-in-class global manufacturing, supply chain, and materials
science capabilities. We drive innovation and enhance performance,
finding potential in the impossible.
Forward-Looking
Statements
This press release 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 that Act
and other legal protections. Forward-looking statements include,
without limitation, those regarding whether or when the sale of
Engineered Papers (the “Transaction”) will be consummated, the
estimated proceeds from the Transaction, the application of the
anticipated net proceeds from the Transaction, Mativ’s expected
financial position, business strategy, operating plans, capital and
other expenditures, acquisitions and divestitures, and other plans
and objectives following the completion of the Transaction, 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.
These forward-looking statements are prospective in nature and
not based on historical facts, but rather on current expectations
and on numerous assumptions regarding the business strategies and
the environment in which Mativ will operate in the future and are
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed or implied by those
statements. No assurance can be given that such expectations will
prove to have been correct and persons reading this press release
are therefore cautioned not to place undue reliance on these
forward-looking statements which speak only as at the date of this
press release. These statements are not guarantees of future
performance and involve certain risks and uncertainties, and
assumptions that may cause actual results to differ materially from
our expectations as of the date of this release. These risks
include, among others, the possibility that Mativ may be unable to
obtain regulatory approval or that other conditions to closing the
Transaction may not be satisfied such that the Transaction will not
close or that the closing may be delayed, general economic
conditions, the possibility of unexpected costs, liabilities or
delays in connection with the Transaction, risks that the
Transaction disrupts current plans and operations of Mativ, the
ability to recognize the benefits of the Transaction, the amount of
the costs, fees, expenses and charges related to the Transaction,
the outcome of any legal proceedings that may be related to the
Transaction, the occurrence of any event, change or other
circumstances that could give rise to the termination of the
agreement for the sale of Engineered Papers or the related put
option agreement, and uncertainties with respect to the completion,
timing and terms of any disposition of Engineered Papers. All
forward-looking statements made in this document are qualified by
these cautionary statements. Forward-looking statements herein are
made only as of the date of this document, and Mativ undertakes no
obligation, other than as may be required by law, to update or
revise any forward-looking or cautionary statements to reflect
changes in assumptions, the occurrence of events, unanticipated or
otherwise, or changes in future operating results over time or
otherwise. Also see the information under the captions “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in Mativ's most recent annual
report on Form 10-K for the year ended December 31, 2022 and any
material updates to these factors contained in any of Mativ’s
future filings with the U.S. Securities and Exchange Commission.
The discussion of these risks is specifically incorporated by
reference into this release.
Non-GAAP Financial
Measures
In this press release we refer to EBITDA, Adjusted EBITDA,
Adjusted EBITDA margin, and Free Cash Flow, which are "non-GAAP"
financial measures.
The Company believes that the presentation of non-GAAP financial
measures in addition to the related GAAP measures provides
investors with greater transparency on the information used by the
Company’s management in its financial and operational
decision-making. Management also believes that the non-GAAP
financial measures provide additional insight for analysts and
investors in evaluating the Company’s financial and operational
performance in the same way that management evaluates the Company's
financial performance. Management believes that providing this
information enables investors to better understand the Company’s
operating performance and financial condition. These non-GAAP
financial measures are not calculated or presented in accordance
with GAAP and are not intended to be considered in isolation or as
alternatives or substitutes for, or superior to, financial measures
prepared and presented in accordance with GAAP, and should be read
only in conjunction with the Company's financial measures prepared
and presented in accordance with GAAP. The non-GAAP financial
measures used in this release may be different from the measures
used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230731213416/en/
Investors Mark Chekanow, CFA VP, Investor Relations
+1-770-569-4229 Mark.chekanow@mativ.com
Media Brendan Streich VP, Global Communications
media@mativ.com
Website: http://www.mativ.com
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