Mativ Q2 2026 earnings: SAS drives margin expansion

Mativ Holdings (NYSE: MATV) reported Q2 2026 net sales of $531.8 million, up 1.2% from $525.4 million, while diluted EPS improved to $0.06 from a loss of $0.18. For the three months ended June 30, 2026, organic sales increased 1.7%, and adjusted EBITDA rose 12% as margin gains in Sustainable & Adhesive Solutions outweighed softer Filtration & Advanced Materials sales. Quarterly free cash flow increased 24% to $60.4 million.

Core earnings data

Profit increased substantially faster than revenue during the quarter. Gross profit rose 9.3%, operating profit increased 75.6%, and adjusted EBITDA margin expanded by 130 basis points, reflecting pricing actions and lower expenses despite continued volume and manufacturing-cost pressure.

GAAP net income returned to positive territory, but remained well below adjusted income because of purchase accounting expenses, a debt-extinguishment loss, interest expense, and a 47% effective tax rate.

The gross and operating margins above are calculated from the reported sales and profit figures. Adjusted results are non-GAAP measures and should be considered alongside the corresponding GAAP figures.

Business and segment performance

Sustainable & Adhesive Solutions, or SAS, generated all of the company’s net sales growth and was the main source of the adjusted EBITDA increase. Filtration & Advanced Materials, or FAM, reported lower sales but still improved its adjusted EBITDA margin.

FAM sales were affected by lower volume and mix in the Filtration & Netting business, including the effect of an exited facility. Higher prices and favorable currency movements partly offset those pressures. Gross margin declined to 23.6% from 23.9%, but proactive pricing and lower selling and administrative expenses helped adjusted EBITDA rise 1.4% despite higher manufacturing costs.

SAS benefited from higher selling prices, favorable currency, and growth in Tapes, Labels & Liners. Lower volume and mix in other categories limited the segment’s sales growth. Even so, gross profit rose 19.9% to $65.7 million, and gross margin expanded to 19.9% from 17.1%. Pricing actions more than offset higher manufacturing, distribution, and administrative costs, lifting adjusted EBITDA by 18.8%.

Unallocated adjusted EBITDA expense increased to $10.9 million from $10.2 million, primarily because of higher advisory expenses.

Profitability, cash flow, and the balance sheet

Cost of products sold declined 0.8% to $418.5 million even as revenue increased. Total nonmanufacturing expenses also fell 3.1% to $77.3 million, while restructuring and impairment expense declined to $0.7 million from $3.8 million. These changes supported the improvement in operating profit.

Below the operating line, interest expense increased to $19.3 million from $18.6 million because of higher average rates on the floating-rate portion of Mativ’s debt. The company also recorded an $8.7 million loss on debt extinguishment. Its 47% effective tax rate reflected the geographic mix of earnings and an inability to recognize benefits from losses in jurisdictions with full valuation allowances.

The most significant adjustments between GAAP and adjusted EPS were $0.25 per share of purchase accounting expenses, primarily noncash intangible-asset amortization associated with acquisitions, and $0.16 per share related to the debt-extinguishment loss.

The release separately reported Q2 operating cash flow of $67.9 million and free cash flow of $60.4 million. For the first six months of 2026, operating cash flow was $68.9 million, compared with $41.7 million a year earlier, while capital spending totaled $15.9 million. Working capital used $2.6 million because increases in accounts receivable and inventory were only partly offset by higher accounts payable and accrued income taxes.

Total debt was $974.5 million at June 30, down by about $43.7 million from December 31, 2025. With $66.3 million of cash, net debt stood at $908.2 million. Total liquidity was approximately $345.5 million, including $279.2 million of available revolving credit, and debt maturities are staggered through 2033.

Year-to-date financing activities used $70.8 million of cash. Mativ made $716.9 million of debt payments against $693.7 million of new long-term borrowings, paid $32.6 million of debt issuance costs, and distributed $11.5 million in dividends. The company also declared its next quarterly dividend of $0.10 per share, payable September 25, 2026, to holders of record on August 28.

Management’s view

President and CEO Shruti Singhal described Q2 as Mativ’s strongest financial quarter since the company was formed four years ago. Management attributed the result to modest organic growth, pricing, cost discipline, and changes to its new-business development process, operating cadence, and cost structure. It also emphasized that stronger free cash flow allowed the company to improve leverage materially.

Recent insider transactions

The supplied insider data reports no open-market purchase or sale transactions during the latest six-month period. Among the latest two-year records with disclosed terms, the following entries were stock awards rather than open-market trades.

These grants do not establish an insider view on Mativ’s valuation or future performance.

Risks investors should monitor

• Volume and mix remain soft. FAM reported lower volume and mix, while growth in SAS’s Tapes, Labels & Liners business was offset by weakness in other categories. Continued volume pressure could limit revenue growth even if pricing remains favorable.
• Margin gains depend partly on pricing. Both segments used pricing actions to offset manufacturing and other cost increases. A weaker ability to pass through costs could pressure gross and adjusted EBITDA margins.
• Debt continues to carry meaningful costs. Total debt remained $974.5 million, and interest expense increased because of higher average floating rates. Refinancing activity also produced an $8.7 million extinguishment loss and $32.6 million of year-to-date issuance costs.
• The tax rate may remain volatile. The 47% quarterly rate reflected geographic earnings mix and valuation allowances that prevented Mativ from recognizing benefits from certain jurisdictional losses.
• Working capital required additional investment. Higher receivables and inventories contributed to a $2.6 million year-to-date cash use, making working-capital management relevant to sustaining free cash flow.

Summary

Mativ’s Q2 2026 results showed a clear improvement in profitability despite only modest revenue growth. SAS pricing and margin expansion were the main operating drivers, while FAM remained constrained by lower volume and mix. Stronger cash generation supported debt reduction, but investors still need to monitor demand, cost pass-through, interest expense, taxes, and working-capital requirements.