MATV - NYSE

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, growth-driven approach, confidently shaping our future. We also moved from a defensive posture, reacting to market volatility to an offensive one, where we drive our own destiny through focused execution. We established a strong foundation built on 3 strategic pillars: driving enhanced commercial excellence, strengthening our balance sheet and optimizing our portfolio. Let's start with the first pillar, commercial excellence. In a global environment characterized by weak end market demand, driving top line growth requires more than just serving the current market. It requires share growth and value maximization. Capping off this year, Q4 net sales grew to $463 million, with organic sales up 1.9% compared to prior year. These results validate how our unified sales force is collaborating across segments, leveraging the full Mativ portfolio to expand our growth pipeline and deliver innovative solutions to both existing and new customers. The resilience of our results also underlines how our portfolio of highly engineered technical materials is instrumental to our customers' success. We are partnering with customers to solve their most complex challenges, supporting their global operations with a reliable and localized supply chain and cutting-edge products. In the second pillar, strengthening our balance sheet, operational and working capital efficiencies was central to achieving this objective. Recognizing in early 2025 that volume leverage would be a challenge during the year, we focused on what was within our control, our pricing, our cost structure, our capital investments and our inventory levels. We successfully drove pricing execution with precision to carefully manage our price versus input cost performance, ensuring coverage of our raw material inflation while we captured additional value through innovation and supply chain excellence. In 2025, our cost-cutting efforts yielded savings across the business of nearly $20 million. The results were evident throughout 2025, culminating with Q4's adjusted EBITDA growing 19% to $53.5 million and margins increased by 180 basis points compared to prior year. This margin expansion is clear evidence that our determined initiatives are taking hold and driving value. Another principle of this pillar is cash flow. I am pleased to report that we generated record free cash flow of $94 million in 2025, increasing nearly 140% year-over-year. In 2025, with a focus on inventory efficiency, we intentionally lowered our inventory levels by $26 million versus 2024, while supporting full year organic sales growth of 2.5% and not compromising customer service levels. We also lowered our annual capital expenditures by $15 million while prioritizing safety and growth projects. The additional free cash flow allowed us to reduce our net debt by over $60 million and advance towards our target leverage range. This continued focus on cash flow generation provides us with liquidity and flexibility to navigate future uncertainties while continuing to invest in our highest return opportunities. Finally, our third pillar centers around optimizing our portfolio. Over the past 3 quarters, we have performed a comprehensive portfolio review, including assets, product categories, facilities and support functions. In 2025, we took decisive steps in closing an underperforming facility in Wilson, North Carolina, and we further optimized our supply chain support infrastructure. We streamlined SKUs and optimized R&D resources by prioritizing efforts and expenditures to better leverage resources while minimizing impact to our commercial pipeline. Portfolio optimization remains a top priority for 2026. We are harmonizing our go-to-market strategies to match customer needs and demand trends. aligning our broad portfolio with areas of strongest growth. This approach will guide innovation, manufacturing, supply chain and sales resources, ensuring capital is deployed where it can deliver the greatest impact. With that, let's turn to our segment results for the quarter. Our Filtration and Advanced Materials segment, or FAM, had an outstanding quarter and built on its momentum from last quarter. This marks the second quarter of sales and adjusted EBITDA growth since the merger. Net sales were up more than 5% versus prior year. with notable growth in all categories, led by double-digit growth in transportation and industrial filtration, paint protection films and erosion control netting. In our Sustainable and Adhesive Solutions segment, or SAS, sales were down slightly on an organic basis, driven by lower-than-expected volumes. SAS growth in key categories was led by health care, cable tapes as well as commercial print, more than offset by headwinds in labels, automotive tapes and release liners, partly in Europe. We remain optimistic about overcoming these pockets of softness and are confident in our ability to adapt effectively as market conditions evolve throughout 2026. Before I turn to our outlook, I'll provide a few thoughts on the macro environment, how it affects Mativ and how we drive value. We are operating in a world of heightened complexity with dynamic trade movements and pockets of significant geopolitical instability. These realities require us to remain agile and adapt our business. Mativ is uniquely positioned to navigate this constantly evolving environment. Our global footprint allows us to be close to our customers in over 100 countries, mitigating single region risks. Our diverse supply chain and procurement strategies have proven resilience, ensuring that we can deliver for our customers on time without interruption and at a fair price. To demonstrate our strategy and full range of capabilities and how they drive value, I'll share a brief overview of our value proposition. We engineer surfaces and substrates through coating, saturation, extrusion and adhesive technologies to unlock material performance in some of the most demanding customer applications. Our harmonized global network consistently delivers continuous tight tolerance, highly complex profiles from development through high-volume production. Our global supply chain scale delivered through localized assets and service capabilities guarantees efficient execution and dependable fulfillment. These capabilities are at the core of our customer relationships. Mativ wins when our customers win in their markets. This builds long-lasting relationships on a foundation of trust that drives sustained demand and value creation. We are committed to growing these strategic imperatives in the years ahead. Looking ahead, I'm encouraged by the opportunity to build on the foundation we established in 2025. Scott will walk you through our underlying assumptions for 2026, but I want to leave you with a key takeaway. As we continue to strengthen our performance, I want to emphasize our unwavering focus on profitable growth and confident execution. The improvements we made in 2025, strengthening our balance sheet, rightsizing our inventory and optimizing our cost structure, provide the foundation for future growth and resilience against uncertainty. We have and will continue to transform Mativ into an agile, more capable entity, one that can better navigate dynamic environments to achieve profitable growth and increased cash flow generation. In 2026, our cost-saving efforts will remain a focus with Wave 2 expected to deliver additional $15 million to $20 million of realized savings throughout 2026. Another important priority in 2026 will also be leveraging AI as a foundational enterprise capability. We are strategically pursuing a dual approach to AI, balancing return on investment, use cases like sales lead generation, advanced production scheduling and predictive maintenance with return on employee initiatives that boost productivity, such as AI-powered data analysis and contract management. These applications will be embedded across commercial, operational, supply chain, finance and workforce functions to drive sustained performance and long-term competitive advantage. To sum up, I'm proud of our team's execution in the challenging 2025 demand environment. In both segments, we focused on factors within our control and drove tangible results. As a result, our consolidated adjusted EBITDA margins improved by 180 basis points versus prior year. This strong performance is a testament to the dedication and expertise of the entire Mativ team, who also improved our company-wide safety metrics by almost 10%. I extend my deepest gratitude for their outstanding contribution and efforts. With that, I'll turn the call over to our new CFO, Scott Minder, to provide a more detailed overview of our financial performance. Welcome to the team, Scott.

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 26% year-over-year, while margins of 18.7% improved by 300 basis points over the same period. These gains were led by favorable prices net of input costs, improved volume mix and lower SG&A expenses. Increased manufacturing costs partially offset these gains. In our SAS segment, net sales of $285 million were largely flat year-over-year on an organic basis and were down roughly $5 million on a reported basis. Favorable currency and selling prices were more than offset by lower organic volume mix. As Shruti mentioned, this was driven mainly by lower-than-expected volumes in labels, automotive tapes and release liners in part due to European markets. SAS's adjusted EBITDA of nearly $39 million increased by more than 8% year-over-year with margins of 13.6%, improving by 130 basis points. Earnings benefited from lower manufacturing costs and a favorable price-to-input cost ratio. This was partially offset by lower volume mix and higher distribution expenses. Looking at corporate items, unallocated expense of roughly $19 million increased by $1 million versus prior year due to the timing of employee-related transition costs. Other expenses of roughly $3 million compared to other income of approximately $9 million in 2024. This change was driven by asset sale gains and favorable foreign currency movements in the prior year. Our Q4 2025 tax rate was a benefit driven largely by the impact from reductions in our valuation allowance. Interest expense of $17 million decreased by 14% versus prior year, primarily due to lower debt balances. Throughout 2025, we've updated you on strategic initiatives to improve our cost structures and generate increased cash flow. As Srudhi highlighted, in year 1 of our 2-year cost savings focus, we generated nearly $20 million of realized benefits in 2025's P&L. In Wave 2, we expect to continue this progress, executing on multiple cost savings initiatives to yield an additional $15 million to $20 million of P&L benefits in 2026. We'll keep you updated as we make progress throughout the year. 2025's free cash flow of $94 million was the highest since the merger in mid-2022 and more than doubled 2024's result. It was driven by operating cash flow of nearly $134 million, which increased by more than 40% compared to prior year. Disciplined capital expenditures of $40 million, as we previously guided, also supported this strong result. At the end of 2025, net debt was $934 million, reducing by $61 million or by more than 6% year-over-year. We closed the year with ample available liquidity of $515 million. Our net leverage ratio, as defined in our credit agreement, was 4.2x. While we made progress deleveraging in our cash flow utilization priority continues to be on debt reduction. In 2026, we expect to make progress toward our leverage goal of 2.5 to 3.5x. Since arriving in January, I've worked with the team to understand our capital structure and develop a plan that thoughtfully addresses our debt maturities on a timely basis while maximizing flexibility and cost efficiency. More to come on this topic as we progress throughout the year. Now I'll share our Q1 and full year 2026 outlook. Similar to 2025, we're navigating an anemic end market demand environment in the first quarter, one that is impacted by tariffs and macroeconomic policies. As a result, demand signals into our business remain soft. We anticipate this to negatively impact our volume growth and operating efficiencies in the quarter. We're working diligently to offset these manufacturing impacts in the near term by streamlining workflows, debottlenecking processes and eliminating waste. As a result of these efforts to offset the impacts from soft demand, we expect Q1 adjusted EBITDA to increase by 15% to 20% versus prior year, driven by a slightly favorable price-to-input cost ratio, operational improvements and SG&A savings. Both of our business segments proved resilient while navigating a similar environment in 2025, and we're confident in our ability to manage through this landscape in early 2026. While we don't provide formal full year guidance, I'll give you some drivers for cash flow and expense. In 2026, we expect to invest $45 million in capital expenditures, increasing from 2025's restrained level. These investments are split roughly 50% on growth projects and 50% on efficiency and safety projects. Additional 2026 drivers include onetime cash costs between $5 million and $10 million to fund savings initiatives, a $10 million investment in net working capital to support volume growth, depreciation, amortization and stock-based compensation of $90 million combined, interest expense of roughly $74 million based on current market conditions; and finally, $8 million in annual fees for our accounts receivable securitization facility. Looking at our raw material costs, we expect a $20 million to $25 million headwind, mainly driven by forecasted market price increases for resins, polymers, pulp and paper. These increases are weighted towards the second half of the year. As you saw in 2025, our commercial teams successfully implemented pricing to offset the impact from rising input costs. We expect to leverage this capability in 2026, maintaining a healthy balance between the timing and magnitude of pricing to offset the expected input cost increases. I'll conclude by highlighting our key financial imperatives for 2026. Cash flow generation and disciplined deployment remain key focus areas. We expect to make progress toward our target leverage range of 2.5 to 3.5x. Rigorous cost discipline remains a focus with an additional $15 million to $20 million in cost savings expected within the year. These efforts, combined with several working capital efficiency projects are expected to drive meaningful free cash flow generation again in 2026. The team made great progress in 2025, and we intend to build on that in 2026. With that, I'll hand the call back to Shruti for his closing remarks.

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 more cash flow centric. And we expect this to produce good results in 2026 and great results over the long term. So that's free cash flow, and I think it dovetails pretty nicely right into leverage. You're going to see some similarities in my answer because the topics are related. So again, I think the team did a great job here in 2025. From peak to where we ended the year, we reduced leverage by 0.5 turn, ended the year at 4.2, which was the low point for the year. And really, it was enabled by improvements across the financial statements. We increased profitability. We improved working capital. We stayed disciplined on our capital spending, and we focused that benefit on leverage reduction. We reduced debt by $60 million. That discipline is really built into the business. So our primary focus remains on leverage reduction in 2026. We expect to continue to make progress towards the goal we've given you of 2.5 to 3.5x, and we should end the year in 2026 as we see now in the mid- to high 3s, and we're going to keep you posted on that as the year progresses and we make progress toward that.

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.