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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 5% on an organic basis, the fifth consecutive quarter of year-over-year improvement in sales. Adjusted EBITDA was down slightly versus a strong comp in the prior year, mainly due to higher manufacturing and distribution costs. We continue to see solid sales improvement this quarter across many of our SAS categories with tapes and labels, liners, health care and commercial print leading the charge and our pricing efforts were key in offsetting slight input cost headwinds. Our SAS commercial teams have secured new long-term commitments from customers that are driving incremental annual revenue in construction tape, consumer tape and health care categories and driving market share gains in commercial print and consumer. Disciplined management of our growing sales pipeline is also enabling us to expand our customer base and volumes and is expected to have a positive impact in the second half of this year. In our FAM segment, while overall demand patterns continue to be mixed and affected by the ongoing challenges in the construction and automotive sectors, we saw strong pockets of growth in HVAC, air pollution control filtration and optical films. Embracing our heightened sense of urgency and pace of execution, the FAM team has started to implement our proven cross-company go-to- market approach that has been the driver behind SAS' continued momentum. Additionally, we made measurable progress over the past quarter on closing the year-over-year gap. We expect TAM to compare favorably on a year-over-year basis for the remainder of the fiscal year. We have also seen sequential improvement in our advanced films business as a result of our focus on operations, customers and the investments we have made. While our paint protection film volumes are still below their corresponding 2024 levels, the gap is narrowing, and we are seeing good momentum on a sequential basis for the past 2 quarters. We have made good progress in our initiatives regarding mid-tier strategy in Asia and are prioritizing our improved quality in North America, where we are regaining share in our premium segment with a long- term and new customers. On the commercial side, FAM teams have driven 20-plus percent growth in HVAC and air pollution control market with significant increases in customer commitments. These products ultimately go into the data center market, which has seen strong year-over-year growth. We expect this trend to continue as AI data center capacity expansions continue to see growth for the foreseeable future. Our optical films category is also up over 20% year-over-year on strong incremental customer commitment for high-performance application in transportation, military and construction end markets. Finally, on the product innovation side, we are actively supporting our filtration customers with new-to-market reduced carbon footprint solutions. Much of the momentum that you can see in our Q2 results is measurable evidence that our pivot and turnaround plan is working. On our last earnings call, we announced 3 priorities to improve performance and position matter for value creation. These were driving enhanced commercial execution, sharpening efforts to delever the balance sheet and conducting a strategic review of our portfolio. To drive enhanced commercial execution, we transition a uniform commercial leadership structure across FAM and SAS that is focused on profitable growth, generating incremental demand, strategic pricing initiatives and a cross-company go-to-market strategy. The impact of this change drove organic volumes and select pricing actions, especially in our SAS segment and is expected to drive FAM favorability as well in the back half of 2025. To sharpen our efforts to delever the balance sheet, we announced a number of initiatives that are aimed at driving margin improvement and cash flow generation. The team accepted my challenge to deliver $30 million to $35 million in cost reductions by year-end 2026. I am pleased to also announce that after comprehensively reviewing our expense and operating structure to further reduce costs, we identified an additional $5 million in cost improvement opportunities that are comprised mainly of expenses at the SG&A level. In total, we are now targeting $35 million to $40 million in cost reductions by year-end 2026, $15 million to $20 million of which are expected to be realized and flowing through the P&L in 2025. To support our cash flow improvement goals, we are well underway in reducing our annual capital expenditure levels to $40 million. And the team is working hard to reduce our year-end 2025 inventory by $20 million to $30 million versus year-end 2024, with no impact on customer service levels. We kicked off our strategic portfolio review with the aim of evaluating opportunities to unlock value, strengthen our balance sheet and go-to-market positioning. We will share updates as this review moves along. Greg will provide a more detailed overview of our outlook for the remainder of 2025 and Q3 in particular. But when you add up all the initiatives we just walked through, you see the key components that make us confident in our ability to outperform in Q3 and Q4 versus the prior year quarters from both an adjusted EBITDA and free cash flow perspective. As a matter of fact, for the full year 2025, we are expecting to deliver approximately twice the free cash flow as compared to the full year 2024. Let me take a pause here to highlight the incredible transformation we have made over the past 5 months. I am very pleased at how the entire matter team embraced this new sense of urgency and pace of execution throughout everything they do. We are acting swiftly, comprehensively and decisively to undertake the necessary changes to grow our market share, return our performance to sustainable and profitable growth and most importantly, deliver value to our shareholders. From an operations standpoint, we have several manufacturing, supply chain excellence and continuous improvement work streams underway that will have a tangible impact on our results going forward. Early results of these work streams are improved on-time in full service levels that compare favorably year-over-year in Q2. Additionally, we are seeing improved employee engagement, better morale and reduced turnover across our global workforce. On the supply chain side, we are streamlining our product portfolios and SKUs, repurposing slow-moving stock, optimizing inventory levels and enhancing our demand planning through S&OP. These initiatives are already making a favorable impact on our results, and we expect to gain further momentum over the coming 2 quarters. Finally, on the distribution cost side, we have multiple initiatives underway to ensure more favorable levels starting in the back half of 2025. Those are comprised of managing order cutoff times, optimizing our warehouse processes and footprint and controlling our freight costs. The team fully understands that we need to keep a confident stance and agile footing and an innovative mindset to successfully navigate and execute in the current demand environment. We must, first and foremost, serve our existing customers on time and on spec has their value certainty and reliability even more in this environment. Secondly, we need to attract new customers and new volumes by proving our value proposition and how we can be a critical partner in where and how they go to market. Additionally, we need to allocate our assets and resources in the most efficient way possible. As we align this clear cut go-to-market approach with the increased cadence and prominence of our pipeline reviews and the unwavering engagement and commitment that we have seen firsthand in our employees, we are creating meaningful value for all our stakeholders in the process. I am confident our team will continue to successfully execute on this mandate. On the tariff front, while changes in trade policies and actual tariffs imposed have had both direct and indirect impact on our business over the past quarter, less than 7% of our annual sales are currently subject to tariffs with China at 2%; Mexico at 1%; Europe, 1.5%; and U.K. at 1% of total Mativ annual sales. Most of our business with Canada remains exempt under USMCA. We are striving to fully offset our direct exposures through alternative sourcing strategies and pricing negotiations. We remain focused on driving enhanced commercial execution and tactical network optimization to minimize the more indirect impacts that affect our customers' order patterns and impose operational inefficiencies throughout the system. As a result of our localized supply chain and our ability to partner with our customers in each of their go-to-market regions, the direct impacts of the current trade environment remain fully manageable, while the indirect effects introduce a level of uncertainty that is reflected in weak demand patterns and transactional inefficiencies. We are leveraging our proven playbook to focus on what we can control in mitigating these ramifications until trade policies stabilize. With that, I'll turn it over to Greg for a more detailed discussion of our financial performance.

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. In our Sustainable & Adhesive Solutions segment, net sales of $321 million were up more than $15 million or 5% on an organic basis and increased by just over $3 million or 1% from last year on a reported basis. Organic growth reflected higher volumes across key categories and higher selling prices across the segment, along with favorable currency translation. SAS adjusted EBITDA performance of $45 million decreased by just under 2% year-over-year. The year-over-year performance reflected higher manufacturing and distribution costs, partially offset by lower SG&A expenses, higher volume across key categories and favorable relative net selling price versus input cost. Turning to a few of the corporate items. Unallocated corporate adjusted EBITDA expense of $19 million improved by more than $3 million versus the prior year, heavily driven by lower SG&A expenses as a measurable result of the cost-cutting initiatives we put in place last quarter. Interest expense of just over $18 million was in line with the prior year. When taking hedges into account, over 80% of our debt is at a fixed rate and matures on a staggered basis between 2027 and 2029. Other income was $1.5 million in the current period, which compared to other expense of $1 million in the prior year period, largely due to gains on asset sales and gains on foreign exchange. Our tax rate was 417% in the quarter due to a combination of valuation allowances, onetime tax adjustments and the ratio between tax expense and pretax income. At the end of the quarter, net debt was $995 million, a reduction of more than $40 million versus last quarter and available liquidity was $453 million. Our net leverage ratio, as defined in our credit agreement, was 4.5x, approximately 1 full turn of headroom versus our covenant level of 5.5x. With the high watermark from last quarter behind us, we expect leverage to continue improving throughout the second half of this year. As a reminder, our target leverage range is 2.5 to 3.5x. And with the cash flow initiatives we have discussed earlier underway, we expect to continue to make meaningful progress toward reducing our leverage profile in the back half of 2025. Our #1 priority for cash flow utilization is and continues to be deleveraging and actual debt reduction. With that in mind, as discussed earlier, we have major strategic initiatives underway to materially improve our cash flow generation throughout 2025. They are comprised of the aforementioned pricing actions as well as our cost optimization initiatives. Shruti mentioned earlier that we identified an additional $5 million in cost savings versus what we announced last quarter. So we are now targeting $35 million to $40 million by the end of 2026 with $15 million to $20 million realized and flowing through the P&L in 2025. We are on track to reduce our capital expenditures to $40 million in 2025 and are working diligently to reduce our year-end inventory levels by $20 million to $30 million in 2025 versus 2024. Working capital expectations remain a source of cash of around $10 million. Taken together, all of these efforts and initiatives have made Q2 of 2025 our second highest cash flow quarter since the merger and are expected to drive significant year-over-year improvements in cash flow generation for the remainder of 2025. We did not repurchase any shares during the quarter. Once our leverage returns to our target range, we may continue to opportunistically repurchase shares to offset dilution, but the priority of cash flow until then remains on paying down debt. As we look ahead, we acknowledge that the market demand remains uncertain, with additional impact from tariffs and macroeconomic policy in the market impacting our level of sales and operating leverage. However, with the positive momentum we have seen through early August across key categories in FAM and SAS, combined with our strategic initiatives driving tangible results, we expect Q3 adjusted EBITDA to increase by 5% to 10% versus last year. Cash flow generation is also expected to compare favorably versus Q3 of last year. This step-up will be driven by a year-over-year increase in volume, particularly on the SAS side, favorable relative net selling price versus input costs, operational improvements and cost savings. We also expect Q4 adjusted EBITDA and cash flow levels to compare favorably year-over-year. For modeling purposes for the full year 2025, we are expecting cost reductions of $15 million to $20 million realized in 2025. Depreciation, amortization and stock-based comp to be around $100 million, interest expense to be around $75 million plus another $9 million in fees for our AR facility, capital expenditures of around $40 million, onetime cash costs to be around $15 million to $20 million. Working capital to be a $10 million source of cash, driven primarily by the previously mentioned inventory reduction of $20 million to $30 million. And for our normalized tax rate, we suggest using 24%. With that, Shruti, I'll hand it back over to you for your closing remarks.

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.